-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FC5/q3jEa2WsrnbbbMxI/mimZPvrDHGu8TwzQ1Ex4Nr7y+r9U+3nVvUUrT6IbNXZ zj/P7lwlquMb7UYQWhOIDg== 0000927356-96-000143.txt : 19960405 0000927356-96-000143.hdr.sgml : 19960405 ACCESSION NUMBER: 0000927356-96-000143 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951229 FILED AS OF DATE: 19960404 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVANS & SUTHERLAND COMPUTER CORP CENTRAL INDEX KEY: 0000276283 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 870278175 STATE OF INCORPORATION: UT FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-08771 FILM NUMBER: 96544589 BUSINESS ADDRESS: STREET 1: 600 KOMAS DR CITY: SALT LAKE CITY STATE: UT ZIP: 84108 BUSINESS PHONE: 8015825847 MAIL ADDRESS: STREET 1: 600 KOMAS DR CITY: SALT LAKE CITY STATE: UT ZIP: 84108 10-K/A 1 10-K AMENDMENT #1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the Fiscal Year Ended December 29, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the Transition Period from to ---- ---- COMMISSION FILE NUMBER 0-8771 ----------------------------- EVANS & SUTHERLAND COMPUTER CORPORATION (Exact name of registrant as specified in its charter) UTAH 87-0278175 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 KOMAS DRIVE, SALT LAKE CITY, UTAH 84108 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (801) 588-1000 Securities Registered Pursuant to Section 12(b) of the Act: "None" Securities Registered Pursuant to Section 12(g) of the Act: Title of Each Class ------------------- Common Stock, $.20 par value 6% Convertible Debentures Due 2012 Preferred Stock Purchase Rights Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ______ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ((S) 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 1, 1996 was approximately $116,809,000. The Registrant had issued and outstanding 8,738,939 shares of its common stock on March 1, 1996. DOCUMENTS INCORPORATED BY REFERENCE Those sections or portions of the Registrant's 1995 Proxy Statement for its Annual Meeting of Shareholders to be held on May 16, 1996 are incorporated by reference into Part III hereof. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EVANS & SUTHERLAND COMPUTER CORPORATION April 4, 1996 By: /s/ JAMES R. OYLER ------------------------- JAMES R. OYLER, PRESIDENT Pursuant to the requirements of the Securities and Exchange Act of 1934, this report signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ STEWARD CARRELL * Chairman of the April 4, 1996 ------------------------- STEWART CARRELL Board of Directors /s/ JAMES R. OYLER Director and President April 4, 1996 -------------------------- JAMES R. OYLER (Chief Executive Officer) /s/ JOHN T. LEMLEY Vice President and Chief April 4, 1996 -------------------------- JOHN T. LEMLEY Financial Officer (Principal Financial and Accounting Officer) /s/ HENRY N. CHRISTIANSEN * Director April 4, 1996 -------------------------- HENRY N. CHRISTIANSEN /s/ PETER O. CRISP * Director April 4, 1996 -------------------------- PETER O. CRISP /s/ IVAN E. SUTHERLAND * Director April 4, 1996 -------------------------- IVAN E. SUTHERLAND /s/ JOHN E. WARNOCK * Director April 4, 1996 -------------------------- JOHN E. WARNOCK By: /s/ GARY E. MEREDITH * April 4, 1996 -------------------------- GARY E. MEREDITH Attorney-in-Fact FORM 10-K PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K The following constitutes a list of Financial Statements, Financial Statement Schedules, and Exhibits required to be included in this report: 1. FINANCIAL STATEMENTS - INCLUDED IN PART II, ITEM 8 OF THIS REPORT: -------------------- Report of Management Report of Independent Auditors Consolidated Balance Sheets - December 29, 1995 and December 30, 1994. Consolidated Statements of Operations - Years ended December 29, 1995, December 30, 1994, and December 31, 1993. Consolidated Statements of Stockholders' Equity - Years ended December 29, 1995, December 30, 1994, and December 31, 1993. Consolidated Statements of Cash Flows - Years ended December 29, 1995, December 30, 1994, and December 31, 1993. Notes to Consolidated Financial Statements - Years ended December 29, 1995, December 30, 1994, and December 31, 1993. 2. FINANCIAL STATEMENT SCHEDULES - INCLUDED IN PART IV OF THIS REPORT: ----------------------------- Schedule II - Valuation and Qualifying Accounts Schedules other than those listed above are omitted because of the absence of conditions under which they are required or because the required information is presented in the Financial Statements or notes thereto. 3. EXHIBITS -------- 3.1 Articles of Incorporation, as amended, filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 1987, and incorporated herein by this reference. Amendments to Articles of Incorporation filed as Exhibit 3.1.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 1988, and incorporated herein by this reference. 3.2 By-laws, as amended, filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 1987, and incorporated herein by this reference. 10.1 1985 Stock Option Plan, filed as Exhibit 1 to the Company's Post- effective Amendment No. 1 to Registration Statement on Form S-8, SEC File No. 2-76027, and incorporated herein by this reference. 10.2 1989 Stock Option Plan for Non-employee Directors, filed as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 1989, and incorporated herein by this reference. 10.3 The Company's 1981 Executive Stock Bonus Plan, filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1982, and incorporated herein by this reference. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (CONTINUED) 3. EXHIBITS (CONTINUED) -------- 10.4 The Company's 1991 Employee Stock Purchase Plan, filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8, SEC File No. 33-39632, and incorporated herein by this reference. 10.5 Transition Employment and Separation Agreement dated January 19, 1994, between the Company and Mr. Richard F. Leahy, filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1994, and incorporated herein by this reference. 10.6 Terms of Employment Agreement dated June 23, 1994, between the Company and Mr. Steven C. Eror, filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1994, and incorporated herein by this reference. 10.7 Employment Agreement dated November 17, 1994, between the Company and Mr. Gary E. Meredith, filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1994, and incorporated herein by this reference. 10.8 Employment Agreement dated November 29, 1994, between the Company and Mr. James R. Oyler, filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1994, and incorporated herein by this reference. 10.9 Release and Separation Agreement dated January 6, 1995, between the Company and Mr. Robert A. Schumacker, filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1994, and incorporated herein by this reference. 10.10 Mutual Release and Separation Agreement dated January 27, 1995, between the Company and Mr. Rodney S. Rougelot, filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1994, and incorporated herein by this reference. 10.11 The Company's 1995 Long-Term Incentive Equity Plan. 10.12 Asset Purchase Agreement dated March 1, 1995, between the Company and Parametric Technology Corporation as to E&S' divestiture of its Design Software group (CDRS). 10.13 Settlement Agreement dated September 13, 1995, between the Company, Thomson Training and Simulation Limited, and Hughes Aircraft Company. 10.14 The Company's Executive Savings Plan. 10.15 The Company's Supplemental Executive Retirement Plan (SERP). 23.1 Consent of Independent Accountants. 24.1 Powers of Attorney for Messrs. Stewart Carrell, Henry N. Christiansen, Peter O. Crisp, John T. Lemley, Gary E. Meredith, James R. Oyler, Ivan E. Sutherland, and John E. Warnock. No reports on Form 8-K were filed during the fourth quarter of the year ended December 29, 1995. EXHIBITS TO THE ANNUAL REPORT OF FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 29, 1995 OF EVANS & SUTHERLAND COMPUTER CORPORATION EX-10.11 2 1995 LONG-TERM INCENTIVE EQUITY PLAN Exhibit 10.11 ------------- EVANS & SUTHERLAND 1995 LONG-TERM INCENTIVE EQUITY PLAN 1. Purpose This 1995 Long-Term Incentive Equity Plan (the "Plan") is intended to promote the long-term success of Evans & Sutherland (the "Company") by providing its officers and other employees with incentives to create excellent performance and to continue in the employ of the Company, its subsidiaries, and affiliates. By encouraging Plan participants to become shareholders of the Company and by providing actual ownership through Plan awards, it is also intended that participants will view the Company from an ownership perspective. 2. Term The Plan shall terminate at the close of business on the fifth anniversary of its approval by the Company's shareholders. After termination of the Plan, no future awards may be granted but previously granted awards shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of the Plan. 3. Plan Administration A Committee (the "Committee") appointed by the Board shall be responsible for administering the Plan. The Committee shall be comprised of persons, in such numbers as the rules reference herein shall require at any given time, who shall qualify to administer the Plan as contemplated by (a) Rule 16b-3 under the Securities and Exchange Act of 1934 (the "1934 Act"), as now or hereafter applicable to the Company, or any successor rules; and (b) Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee shall have full and exclusive power to interpret the Plan and to adopt such rules, regulations and guidelines for carrying out the Plan as it may deem necessary or proper, all of which power shall be executed in the best interests of the Company and in keeping with the objectives of the Plan. This power includes but is not limited to selecting award recipients, establishing all award terms and conditions and adopting modifications, amendments and procedures, including those contemplated by Section 15 of the Plan, as well as rules and regulations governing awards under the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. 4. Eligibility Any employee of the Company shall be eligible to receive one or more awards under the Plan. "Employee" shall also include any former employee of the Company eligible to receive an assumed or replacement award as contemplated in Sections 5 and 8, and "Company" includes any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee. 5. Shares of Common Stock Subject to the Plan Subject to the provisions of Section 6 of the Plan, the aggregate number of shares of Common Stock ($.20 par value) of the Company ("shares") which may be transferred to participants under the Plan shall be 350,000, plus any shares available for grant on the date the Plan is approved by the Company's shareholders, and any shares which subsequently become available to the extent that outstanding stock options are terminated or canceled 1 under the Company's 1985 Stock Option Plan for Key Employees and the 1981 Stock Bonus Plan (the "Prior Plans"). The aggregate number of shares that may be issued under awards pursuant to Section 8(c) of the Plan and the aggregate number of shares that may be covered by awards granted to any single individual under the Plan shall not exceed 283,000 shares. The aggregate number of shares that may be represented by incentive stock options ("ISOs") intended to comply with Section 422 of the Code shall not exceed 850,000. Shares subject to awards under the Plan, which expire, terminate or are canceled without exercise or vesting shall thereafter be available for the granting of other awards. Any shares tendered, either actually or by attestation, by a person as full or partial payment made to the Company, on or after the effective date of the Plan in connection with any exercise of a stock option or receipt of shares under the Plan or Prior Plans shall again be available for grants under the Plan. Further, in instances where a stock appreciation right ("SAR") or other award is settled in cash, the shares covered by such award shall remain available for issuance under the Plan. Likewise, the payment of cash dividends and dividend equivalents paid in cash in conjunction with outstanding awards shall not be counted against the shares available for issuance. Any shares that are issued by the Company, and any awards that are granted through the assumption, or in substitution for, outstanding awards previously granted by an acquired entity shall not be counted against the shares available for issuance under the Plan. Any shares issued under the Plan may consist in whole or in part of authorized and unissued shares or of treasury shares, and no fractional shares shall be issued under the Plan. Cash may be paid in lieu of any fractional shares in settlements of awards under the Plan. 6. Adjustments and Reorganizations In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to shareholders, or any other change affecting shares or share price, such proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change shall be made with respect to (a) the aggregate number of shares that may be issued under the Plan, (b) each outstanding award made under the Plan, and (c) the exercise price per share for any outstanding stock options, SARs or similar awards under the Plan. In the event that the Company undergoes a change in control (as defined by the Committee), or is liquidated or reorganized, or is not the surviving company in a merger or consolidation with another company, and in the absence of the surviving Company's assumption of outstanding awards made under the Plan, the Committee may provide for appropriate adjustments, including the acceleration of vesting, and settlements of such awards either at the time of award or at a subsequent date. 7. Fair Market Value Fair Market Value for all purposes under the Plan shall mean the closing price of a share as reported daily in the Wall Street Journal or similar readily available public source for the date in question. If no sales of shares were made on such date, the closing price of a share as reported for the preceding day on which sales of shares were made shall be used. 8. Awards The Committee shall determine the type or types of award(s) to be made to each participant. Awards may be granted singly, in combination or in tandem. Awards also may 2 be made in combination or in tandem with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation plan of the Company including the plan of any acquired entity. The types of awards that may granted under the Plan are: a) Stock Options -- This is a grant of a right to purchase a specified number of shares during a specified period as determined by the Committee. The purchase price per share for each stock option shall be not less than 100% of Fair Market Value on the date of grant, except if a stock option is granted retroactively in tandem with or as a substitution for a SAR, the exercise price may be no lower than the Fair Market Value of a share on the date the SAR was granted. A stock option may be in the form of an ISO which, in addition to being subject to applicable terms, conditions and limitations established by the Committee, complies with Section 422 of the Code. The price at which shares may be purchased under a stock option shall be paid in full at the time of the exercise in cash or such other method permitted by the Committee, include (i) tendering (either actually or by attestation) shares, (ii) surrendering a stock award valued at Fair Market Value on the date of surrender, (iii) authorizing a third party to sell the shares (or a sufficient portion thereof) acquired upon exercise of a stock option and assigning the delivery to the Company of a sufficient amount of the sale proceeds to pay for all the shares acquired through such exercise, or (iv) any combination of the above. The Committee may grant stock options that provide for the award of a new stock option when the exercise price has been paid for by tendering shares to the Company. Such a stock option shall be limited to the number of shares tendered, with the stock option purchase price set at the then-current Fair Market Value, and shall not extend beyond the remaining term of the originally exercised option. b) SARs -- This is a right to receive a payment, in cash and/or shares, equal to the excess of the Fair Market Value of a specified number of shares on the date the SAR is exercised over the Fair Market Value on the date the SAR was granted as set forth in the applicable award agreement. Except if a SAR is granted retroactively in tandem with or in substitution for a stock option, the designated Fair Market Value in the applicable award agreement for the date of grant shall be no lower than the actual Fair Market Value of a share on such date of grant. c) Stock Awards -- This is an award made or denominated in shares or units equivalent in value to shares. All or part of any stock award may be subject to conditions and restrictions established by the Committee, and set forth in the award agreement, which may include but are not limited to continuous service with the Company, achievement of specific business objectives and other measurements of individual, business unit or Company performance. 9. Dividends and Dividend Equivalents The Committee may provide that any awards under the Plan earn dividends or dividend equivalents. Such dividends or dividend equivalents may be paid currently or may be credited to a participant's account. Any crediting of dividends or dividend equivalents may be subject to such restrictions and conditions as the Committee may establish, including reinvestment in additional shares or share equivalents. 3 10. Deferrals and Settlements Payment of awards may be in the form of cash, stock, other awards or combinations thereof as the Committee shall determine, and with such restrictions as it may impose. The Committee also may require or permit participants to elect to defer the issuance of shares or the settlement of awards in cash under such rules and procedures as it may establish under the Plan. It also may provide that deferred settlements include the payment or crediting of interest on the deferral amounts, or the payment or crediting of dividend equivalents where the deferral amounts are denominated in shares. 11. Transferability and Exercisability Awards granted under the Plan shall be nontransferable or assignable other than by will or the laws of descent and distribution, except that the Committee may provide for the transferability of particular awards: (a) by gift or other transfer of an award to (i) any trust or estate in which the original award recipient or such participant's spouse or other immediate relative has a substantial beneficial interest or (ii) a spouse or other immediate relative; and (b) pursuant to a qualified domestic relations order (as defined by the Code). However, any award so transferred shall continue to be subject to all the terms and conditions contained in the instrument evidencing such award. In the event that a participant terminates employment with the Company to assume a position with a governmental, charitable, educational or similar non- profit institution, the Committee may subsequently authorize a third party, including but not limited to a "blind" trust, to act on behalf of and for the benefit of such participant regarding any outstanding awards held by the participant subsequent to such termination of employment. If so permitted by the Committee, a participant may designate a beneficiary or beneficiaries to exercise the rights of the participant and receive any distribution under the Plan upon the death of the participant. 12. Award Agreements Awards under the Plan shall be evidenced by agreements that set forth the terms, conditions and limitations for each award which may include the term of an award (except that in no event shall the term of any ISO exceed a period of ten years from the date of its grant), the provisions applicable in the event the participant's employment terminates, and the Company's authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind any award. The Committee need not require the execution of any such agreement, in which case acceptance of the award by the participant shall constitute agreement to the terms of the award. 13. Foreign Participation In order to assure the viability of awards granted to participants employed in foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements or alternative versions shall increase the share limitations contained in Section 5 of the Plan. 4 14. Plan Amendment The Plan may be amended by the Committee as it deems necessary or appropriate to better achieve the purposes of the Plan, except that no such amendment which would increase the number of shares available for issuance in accordance with Sections 5 and 6 of the Plan or cause the Plan not to comply with Rule16b-3 (or any successor rule) under the 1934 Act or Section 162(m) of the Code shall be made without the approval of the Company's shareholders. 15. Tax Withholding The Company shall have the right to deduct from any settlement of an award made under the Plan, including the delivery or vesting of shares, a sufficient amount to cover withholding of any federal, state or local taxes required by law, or to take such other action as may be necessary to satisfy any such withholding obligations. The Committee may permit shares to be used to satisfy required tax withholding and such shares shall be valued at the Fair Market Value as of the settlement date of the applicable award. 16. Other Benefit and Compensation Programs Unless otherwise specifically determined by the Committee, settlements of awards received by participants under the Plan shall not be deemed a part of a participant's regular, recurring compensation for purposes of calculating payments or benefits from any Company benefit plan, severance program or severance pay law of any country. Further, the Company may adopt other compensation programs, plans or arrangements as it deems appropriate or necessary. 17. Unfunded Plan Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any participant or other person. To the extent any person holds any rights by virtue of a grant awarded under the Plan, such rights (unless otherwise determined by the Committee) shall be no greater than the rights of an unsecured general creditor of the Company. 18. Use of Proceeds The cash proceeds received by the Company from the issuance of shares pursuant to awards under the Plan shall be used for general corporate purposes. 19. Regulatory Approvals The implementation of the Plan, the granting of any award under the Plan, and the issuance of shares upon the exercise or settlement of any award shall be subject to the Company's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the awards granted under it or the shares issued pursuant to it. 20. Future Rights No person shall have any claim or rights to be granted an award under the Plan, and no participant shall have any rights under the Plan to be retained in the employ of the Company. 5 21. Governing Law The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of the State of Utah and applicable federal law. 22. Successors and Assigns The Plan shall be binding on all successors and assigns of a participant, including, without limitation, the estate of such participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the participant's creditors. 6 EX-10.12 3 ASSET PURCHASE AGREEMENT EXHIBIT 10.12 ASSET PURCHASE AGREEMENT dated as of March 1, 1995 by and among PARAMETRIC TECHNOLOGY CORPORATION, PTC ACQUISITION CORPORATION and EVANS & SUTHERLAND COMPUTER CORPORATION TABLE OF CONTENTS ----------------- Page ---- ARTICLE I DEFINITIONS SECTION 1.01 Definitions ......................................... ARTICLE II PURCHASE AND SALE SECTION 2.01 Purchase and Sale ..................................... 2.02 Excluded Assets 2.03 Assumption of Liabilities ............................ 2.04 Excluded Liabilities ................................. 2.05 Assignment of Contracts and Rights ................... 2.06 Purchase Price ....................................... 2.07 Closing .............................................. 2.08 Purchase Price Adjustment ............................ ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER SECTION 3.01 Corporate Existence and Power ........................ 3.02 Corporate Authorization .............................. 3.03 Govermental Authorization ............................ 3.04 Non-Contravention .................................... 3.05 Required Consents .................................... 3.06 Finacial Statements .................................. 3.07 Absence of Certain Changes ........................... 3.08 Properties ........................................... 3.09 Sufficiency of Purchased Assets ...................... 3.10 Title to Purchased Assets ............................ 3.11 No Undisclosed Material Liabilities .................. 3.12 Litigation ........................................... 3.13 Material Contracts ................................... 3.14 Licenses and Permits ................................. 3.15 Insurance ............................................ 3.16 Compliance with Laws ................................. 3.17 Proprietary Right .................................... 3.18 Employees ............................................ 3.19 Warranty or Other Claims ............................. -i- 3.20 Finders' Fees ........................................ 3.21 Environmental Compliance ............................. 3.22 Interested Party Transactions ........................ 3.23 Accounts Receivable .................................. 3.24 Representations ...................................... 3.25 Subsidiaries ......................................... ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER SECTION 4.01 Organization and Existence ........................... 4.02 Corporate Authorization .............................. 4.03 Governmental Authorization ........................... 4.04 Non-Contravention .................................... 4.05 Finders' Fees ........................................ 4.06 Litigation ........................................... 4.07 Required Consents .................................... 4.08 Representations ...................................... ARTICLE V COVENANTS OF SELLER SECTION 5.01 Conduct of the Business .............................. 5.02 Access to Information ................................ 5.03 Notices of Certain Events ............................ 5.04 Noncompetition ....................................... 5.05 Confidentiality ...................................... 5.06 Trademarks; Trade names .............................. 5.07 No Negotiation with Third Parties .................... 5.08 Continuation of Certain Services and MIS Support ..... 5.09 Transfer of Purchased Assets by Subsidiaries ......... 5.10 Seller's Guaranty of Subsidiaries' Performance ....... 5.11 Certain Consents ..................................... ARTICLE VI COVENANTS OF BUYER SECTION 6.01 Confidentiality ....................................... 6.02 Noncompetition ........................................ 6.03 Hired Employees' Vacation Pay ......................... -ii- ARTICLE VII MUTUAL COVENANTS SECTION 7.01 Best Efforts; Further Assurances ...................... 7.02 Certain Filings ....................................... 7.03 Public Announcements .................................. ARTICLE VIII TAX MATTERS SECTION 8.01 Tax Definitions ....................................... 8.02 Tax Matters .......................................... 8.03 Tax Cooperation Allocation of Taxes ................... ARTICLE IX EMPLOYEE BENEFITS SECTION 9.01 Employee Benefits Definitions ......................... 9.02 ERISA Representation 9.03 Employees and Consultants ............................. 9.04 Seller's Employee Benefit Plans ....................... 9.05 No Third Party Beneficiaries .......................... ARTICLE X CONDITIONS TO CLOSING SECTION 10.01 Conditions to the Obligations of Each Party .......... 10.02 Conditions to Obligations of Buyer ................... 10.03 Conditions to Obligations of Seller .................. ARTICLE XI SURVIVAL INDEMNIFICATION SECTION 11.01 Survival ............................................. 11.02 Indemnification ...................................... 11.03 Limitations on Liabilities ........................... 11.04 Procedures; No Waiver ................................ ARTICLE XII TERMINATION SECTION 12.01 Grounds for Termination .............................. 12.02 Effect of Termination ................................ -iii- ARTICLE III MISCELLANEOUS SECTION 13.01 Notices 13.02 Amendments; No Waivers .............................. 13.03 Expenses ............................................ 13.04 Successors and Assigns .............................. 13.05 Governing Law ....................................... 13.06 Counterparts; Effectiveness ......................... 13.07 Entire Agreement .................................... 13.08 Captions ............................................ 13.09 Legal Proceedings ................................... 13.10 No Participating or Joint Venture ................... Exhibit A -- Purchased Assets Exhibit B -- Patent Assignment and Grant-Back License Agreement Exhibit C -- Patent License Agreement Exhibit D -- Form of Assumption Agreement Exhibit E -- Form of Bill of Sale Schedule I Hired Employees -iv- ASSET PURCHASE AGREEMENT AGREEMENT dated as of March 1, 1995 by and among Parametric Technology Corporation ("Parent"), a Massachusetts corporation, and PTC Acquisition Corporation ("Buyer"), a Massachusetts corporation wholly-owned by Parent, and Evans & Sutherland Computer Corporation, a Utah corporation ("Seller"). W I T N E S S E T H: WHEREAS, Seller is engaged through its "Design Software Division" in the development, design, manufacture, sale, service, support, marketing and update and enhancements of computer graphics design software for the CAD/CAM systems market (collectively, the "Business"); WHEREAS, Buyer desires to acquire substantially all of the assets of the Business from Seller, and Seller desires to sell such assets to Buyer, upon the terms and subject to conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements herin contained, the Parties agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions (a) The following terms, as used herein, have the following meanings: "Affliate" means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such other Person, "Ancillary Agreement" means the Assignment and Assumption Agreement, Bill of Sale, Patent Assignment and Grant-Back License Agreement in substantially the form attached as Exhibit B hereto, Patent License Agreement in substantially the form attached as Exhibit C hereto, Transition and Services Agreement and Lease. "Assigned Contracts" means the contracts and agreements relating ------------------ to the Business which are listed or described on Exhibit A hereto. "Balance Sheet" means the unaudited balance sheet of the Business as of February 3, 1995 found in Schedule 3.06 (a) of the Disclosure Schedule. "Balance Sheet Date" means February 3, 1995. "Business", as defined above, shall mean and include the Business as conducted as a division of Seller and its Subsidiaries prior to the Closing. "Buyer" means PTC Acquisition Corporation; and as used herein such term ----- shall be deemed to include jointly and severally with PTC Acquisition Corporation, unless expressly provided to the contrary, the Parent; except ------ that Article IV shall make explicit reference to both Buyer and Parent. "Closing Date" means the date of the Closing. ------------ "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, ------- as amended. "Key Customers" means the customers Seller whose contracts with Seller are ------------- identified in Item 4 of Schedule 3.05 of the Disclosure Schedule and Items 2, 10, 11, 12, 18, 20, 23, 29, 33, 34 and 35 of Schedule 3.17(e) of the Disclosure Schedule. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest (other than purchase money security interests arising in the ordinary course of business), restriction or encumbrance of any kind in respect of such asset. "Material Adverse Effect" means a material adverse effect on the business, ----------------------- assets, condition (financial or otherwise) or results of operations of the Business. "Parties" means Parent, Buyer and Seller; "Party" means Parent, Buyer or ------- ----- Seller. "Person" means an individual, corporation, partnership, association, trust ------ or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Proprietary Rights" means all proprietary rights listed on Schedule 3.17 ------------------ of the Disclosure Schedule or Exhibit A hereto. --------- "Retained Technology" means all Proprietary Rights owned or licensed by ------------------- Seller or any Affiliate of Seller (and all future changes in respect thereof), or which they or any of them have any right to use, that are used in the Business but are not included among the Purchased Assets. "Seller" means Evans & Sutherland Computer Corporation. ------ (b) Each of the following terms is defined in the Section set forth opposite such term: Term Section ---- ------- Accounting Referee 2.08 Apportioned Obligations 8.08 Assumed Liabilities 2.03 -2- Base Net Worth 2.08 Basket 11.03 Business Preamble Buyer Health Plan 9.04 Closing 2.07 Closing Balance Sheet 2.08 Closing Net Worth 2.08 Code 8.01 Contract Rights 2.01 Conveyance Documents 2.07 Disclosure Schedule Article III Employee Plans 9.01 Environmental Laws 3.21 Environmental Liabilities 3.21 ERISA 9.01 ERISA Affiliate 9.01 Exchange 6.04 Excluded Liabilities 2.04 Final Net Worth 2.06 GAAP 3.06 Hazardous Substance 3.21 Hired Consultant 9.03 Hired Employee 9.03 Indemnified Party 11.04 lndemnifying Party 11.04 Lease 5.08 Loss 11.02 Multiemployer Plan 9.01 Non-Covered Employees 9.04 Permits 3.14 Post-Closing Tax Period 8.01 Pre-Closlng Tax Period 8.01 Purchased Assets 2.01 Purchased Price 2.06 Release 3.21 Required Consent 3.05 Seller Tradenames 5.06 Subsidiaries 3.25 Subsidiary Agreements 5.10 Tax 8.01 Vacation Payout Amount 2.03 ARTICLE II PURCHASE AND SALE 2.01. Purchase and Sale. Upon the terms and subject to the ----------------- conditions of this Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell, transfer, assign and -3- deliver, or cause to be sold, transferred, assigned and delivered, to Buyer at Closing, free and clear of all Liens, except to the extent such Lien constitutes an Assumed Liability, all of the assets, properties and business, other than the Excluded Assets. of every kind and description, wherever located, real, personal or mixed, tangible or intangible, owned, used or held for use in the conduct of the Business by Seller or any Affiliate of Seller as the same shall exist on the Closing Date (the "Purchased Assets") as specified and listed in Exhibit A hereto, and including, without limitation the following assets: (i) all rights under all Assigned Contracts (collectively, the "Contract Rights"); --------------- (ii) al1 rights, claims, credits, causes of action or rights of set-off against third parties relating to the Purchased Assets or the Business, including without limitation, unliquidated rights under any manufacturers' and vendors' warranties; (iii) the obligations that Seller is required to perform for customers with respect to the customer deposits deducted from the Purchase Price pursuant to Section 2,06(a): and (iv) all goodwill associated with the Business and the Purchased Assets. 2.02. Excluded Assets. Buyer expressly understands and agrees --------------- that the following shall be excluded from the Purchased Assets: (a) all of Seller's contracts that are not Assigned Contracts, (b) work-in- process dedicated solely to such contracts, (c) the Retained Technology, (d) Seller's accounting software and support, (e) a telephone system and (f) Seller's servers connected to the Internet (the "Excluded Assets"); --------------- provided that Buyer shall have received a license to use such retained Technology pursuant to the Patent License Agreement and the right to use the Excluded Assets described in (d), (e) and (f) pursuant to the transition and services agreement described in Section 5.09. 2.03. Assumption of Liabilities. Except as otherwise provided ------------------------- in Section 2.04, and upon the terms and subject to the conditions of this Agreement, Buyer agrees, effective at the time of Closing, to assume the following liabilities of the Business (the "Assumed ------- Liabilities"): ----------- (i) all liabilities accrued on the Balance Sheet, but only to the extent so accrued; (ii) all liabilities arising out of or relating primarily to the Business, and incurred in the ordinary course of Business since the Balance Sheet Date, but only to the extent listed on the Closing Balance Sheet or Section 2.03 of the Disclosure Schedule; ------------ (iii) all liabilities and obligations of Seller arising under the Assigned Contracts (other than liabilities or obligations attributable to any failure by Seller to comply with the terms thereof); (iv) all warranty claims, expenses or obligations, whether existing, contingent or inchoate, of Seller in respect of products sold or services rendered by the Business through the Closing Date, but only to the extent of the reserve therefor shown on the Balance Sheet: -4- (v) Seller's obligation to provide accrued but unused vacation time as of the Closing Date to the Hired Employees, the cash value of which (the "Vacation Payout Amount") is to be certified by Seller in writing on the Closing Date, and is payable by Buyer within 30 days of the Closing Date; (vi) Seller's obligation to provide accumulated sick leave of the Hired Employees, but only a maximum of ten (10) days with respect to each Hired Employee; and (vii) Seller's obligation to provide severance pay with respect to employees not listed on Schedule I. 2.04. Excluded Liabilities. Notwithstanding any provision in -------------------- this Agreement or any other writing to the contrary, Buyer is assuming only the Assumed Liabilities and is not assuming any other liability or obligation of Seller, its Subsidiaries or any Affiliate of Seller or its Subsidiaries (or any predecessor owner of all or part of its business and assets) of whatever nature whether presently in existence or arising or asserted hereafter. All such other liabilities and obligations shall be retained by and remain obligations and liabilities of Seller and its Subsidiaries (all such liabilities and obligations not being assumed being herein referred to as the "Excluded Liabilities"). Without -------------------- limiting the foregoing, all of the following shall be Excluded Liabilities for the purposes of this Agreement: (i) except to the extent of the reserve therefor on the Balance Sheet, any obligation or liability for Tax arising from or with respect to the Purchased Assets or the operation of the Business which is incurred in or attributable to any Pre-Closing Tax Period; (ii) except to the extent provided in Article IX and Section 2.03(v), any liabilities or obligations relating to employee benefits or compensation arrangements existing as of the end of the day on the day preceding the Closing Date, including, without limitation, (A) any liabilities or obligations under any of Seller's employee benefit agreements, plans or other arrangements listed on Schedule 3.18(b) of the Disclosure Schedule and (B) any obligations arising out of Seller's termination of the employment or consultancy of any Hired Employee or Hired Consultant; (iii) any Environmental Liability; (iv) any liability or obligation relating to an Excluded Asset; and (v) except as otherwise provided in Section 2.03, any liability or obligation relating to product returns or allowances, any liability or obligation with respect to any and all products sold by Seller before the Closing, and any liability or obligation relating to damages claimed and established by customers of the Business arising out of or based upon actions or omissions of Seller prior to the Closing. 2.05. Assignment of Contracts and Rights. Anything in this ---------------------------------- Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without consent of a third party thereto, would constitute a -5- breach or other contravention thereof or in any way adversely affect the rights of Buyer or Seller thereunder. Seller and Buyer will use their best efforts (but without any payment of money by Seller or Buyer) to obtain the consent of the other Parties to any such Purchased Asset or claim or right or any benefit arising thereunder for the assignment thereof to Buyer as Buyer may request. If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of Seller thereunder so that Buyer would not in fact receive all such rights, Seller and Buyer will cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, including subcontracting, sublicensing or subleasing to Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer assuming Seller's obligations, any and all rights of Seller against a third party thereto. Seller will promptly pay to Buyer when received all monies received by Seller under any Purchased Asset or any claim or right or any benefit arising thereunder, except to the extent the same represents an Excluded Asset. 2.06. Purchase Price. -------------- (a) The purchase price for the Purchased Assets (the "Purchase Price") -------------- is (i) $34,500,000 in cash, less (A) fifty percent (50%) of the Vacation Payout Amount, (B) the aggregate amount of the customer deposits reflected on the Closing Balance Sheet, and (C) the out-of-pocket fees and expenses incurred by Buyer, including without limitation legal fees and expenses up to a maximum of $5,000, in connection with the Subsidiary Agreements, with the Purchase Price being subject to adjustment as provided in Section 2.08, and (ii) the assumption of the Assumed Liabilities. The Purchase Price shall be paid as provided in Section 2.07. 2.07. Closing. The closing (the "Closing") of the purchase and sale of ------- ------- the Purchased Assets and the assumption of the Assumed Liabilities hereunder shall take place at the offices of Testa, Hurwitz & Thibeault in Boston, Massachusetts as soon as possible, but in no event later than 5 business days after satisfaction of the conditions set forth in Article X, or at such other time or place as Buyer and Seller may agree. At the Closing, (a) Buyer shall Pay the Purchase Price by a wire transfer of same day funds to an account designated by Seller. (b) Seller and Buyer shall enter into an Assumption Agreement substantially in the form attached hereto as Exhibit D and a Bill of Sale --------- substantially in the form attached hereto as Exhibit E, and Seller shall deliver --------- to Buyer such deeds, endorsements, consents, assignments and other good and sufficient instruments of conveyance and assignment (the "Conveyance Documents") -------------------- as the Parties and their respective counsel shall deem reasonably necessary or appropriate to vest in Buyer all right, title and interest in, to and under the Purchased Assets. (c) Seller and Buyer shall enter into the Ancillary Agreements to be entered into at Closing. (d) Without prejudice to Buyer's rights under Section 10.02, Seller shall deliver to Buyer revisions to the Disclosure Schedule updating the information shown thereon to the Closing Date. -6- (e) Seller and Buyer shall also execute and deliver all such instruments, documents and certificates as may be reasonably requested by the other Party that are necessary, appropriate or desirable for the consummation at the Closing of the transactions contemplated by this Agreement. 2.08. Purchase Price Adjustment. ------------------------- (a) Subsidiary Agreements. The Purchase Price will be reduced by the --------------------- amount of the aggregate purchase price set forth in the Subsidiary Agreements. (b) General. As an adjustment to the Purchase Price, Seller agrees to ------- pay Buyer the amount, if any, by which Base Net Worth exceeds Final Net Worth and Buyer agrees to pay Seller the amount, if any, by which Final Net Worth exceeds Base Net Worth; provided that no such amount shall be payable unless the difference between Base Net Worth and Final Net Worth is greater than $200,000. (c) Definitions. The following terms, as used herein, have the ----------- following meanings: "Base Net Worth" means $1,217,694, which amount represents the accounts -------------- receivable on the Balance Sheet less the accounts payable on the Balance Sheet. "Closing Balance Sheet" means a balance sheet for the Business as of the --------------------- Closing Date that (x) fairly presents the financial position of the Business as at the close of business on the date immediately preceding the Closing Date on a basis consistent with the presentation in the Balance Sheet, (y) includes line items substantially consistent with those used in the preparation of the Balance Sheet and (z) is prepared in accordance with the Seller's accounting convention for intra-company operations, consistently applied, and with respect to accounts receivable and payables, in accordance with GAAP as if the Business were a stand-alone business. In the event of a conflict between the accounting policies and procedures used in the preparation of the Balance Sheet and GAAP, GAAP shall prevail. "Closing Net Worth" means the accounts receivable of the Business as of ----------------- the close of business on the Closing Date determined in accordance with GAAP applied a basis consistent with those used in the preparation of the Closing Balance Sheet, less the accounts payable of the Business as of the close of business on the Closing Date determined in accordance with GAAP applied on a basis consistent with those used in the preparation of the Closing Balance Sheet. "Final Net Worth" means Closing Net Worth (i) as shown in Seller's --------------- calculation delivered pursuant to Section 2.08(d) if no notice of disagreement with respect thereto is delivered by Buyer pursuant to Section 2.08(e) or (ii) if such a notice of disagreement is delivered, as resolved by the Parties pursuant to Section 2.08(f). (d) Preparation of Closing Balance Sheet. As promptly as practicable ------------------------------------ after the Closing Date, Seller will cause the Closing Balance Sheet to be prepared. As promptly as practicable, but no later than 45 days after the Closing Date, Seller will cause the Closing Balance Sheet to be delivered to Buyer. -7- (e) Disagreement by Buyer. If Buyer disagrees with Seller's --------------------- calculation of Closing Net Worth, Buyer may, within 20 days after delivery of the documents referred to in Section 2.08(d), deliver a notice to Seller disagreeing with such calculation and setting forth Buyer's calculation of such amount. Any such notice of disagreement shall specify those items or amounts as to which Buyer disagrees, and Buyer shall be deemed to have agreed with all other items and amounts contained in the Closing Balance Sheet and the calculation of Closing Net Worth delivered by Seller pursuant to Section 2.08(d). Seller shall provide Buyer reasonable access to Seller's working papers relating to the Closing Net Worth calculation. (f) Dispute Resolution. If a notice of disagreement shall have been ------------------ delivered by Buyer pursuant to Section 2.08(e), the Parties shall, during the 20 days following such delivery, use their best efforts to reach agreement on the disputed items or amounts in order to determine the amount of Final Net Worth. If the Parties do not reach agreement within that period, they shall attempt to reach agreement on the matter in accordance with the provisions of Section 13.09. If the Parties do not reach agreement pursuant to Section 13.09, they shall promptly thereafter cause a firm of independent nationally recognized accountants mutually acceptable to Buyer and Seller (the "Accounting Referee) promptly to review this Agreement and the disputed items or amounts for the purpose of calculating Final Net Worth as to which Buyer has disagreed. The Accounting Referee shall deliver to Parent and Seller, as promptly as practicable, a written report setting forth such calculation. Such report shall be final and binding upon the Parties. The cost of such review and report shall be borne (i) by Parent if Seller's calculation of Closing Net Worth is closer to Final Net Worth than Parent's calculation thereof, (ii) by Seller if the reverse is true, and (iii) otherwise equally by Parent and Seller. (g) Corporation. The Parties agree that they will, and agree to ----------- cause their respective independent accountants to, cooperate and assist in the preparation of the Closing Balance Sheet and the calculation Of Closing Net Worth referred to in this Section 2.08, including, without limitation the marking available to the extent necessary of books, records, work papers and personnel. (h) Time of Payment. Any payment pursuant to this Section 2,08 --------------- shall be made at a mutually convenient time and place (i) within 30 days after Seller's delivery of the documents referred to in Section 2.08(d) if no notice of disagreement with respect to Closing Net Worth is delivered by Seller or (ii) if a notice of disagreement with respect to Closing Net Worth is so delivered then within 10 days after the earlier of (A) agreement of Parent and Seller pursuant to Section 2.08(d) or (f) with respect to Closing Net Worth, or (B) delivery of the calculation of Closing Net Worth by the Accounting Referee pursuant to Section 2.08(f). (i) Method of Payment. Any payments pursuant to this Section 2.08 ----------------- shall be made by delivery by Seller, or Buyer, as the case may be, of a wire transfer of same day funds to Buyer or Seller, as the case may be, or by causing such payments to be credited to such account of Seller or Buyer as may be designated by Seller or Buyer. The amount of any payment to be made pursuant to this Section 2.08 shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the rate publicly announced from time to time by the First National Bank of Boston as its Base Rate in Boston, Massachusetts in effect from time to time during the period from the Closing Date to the date of payment. Such interest shall be payable at the same time as the payment to which it relates -8- and shall be calculated dally on the basis of a year of 365 days and the actual number of days for which due. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants to Buyer that, except as set forth on the Disclosure Schedule attached hereto (the "Disclosure Schedule"): ------------------- 3.01. Corporate Existence and Power. Seller is & corporation duly ----------------------------- incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on the Business as now conducted. Seller is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary. 3.02. Corporate Authorization. The execution, delivery and performance ----------------------- by Seller of this Agreement and each of the Ancillary Agreements, and the consummation by Seller of the transactions contemplated hereby and thereby are within Seller's corporate powers and have been duly authorized by all necessary corporate action on the part of Seller. This Agreement and each of the Ancillary Agreements constitute valid and binding agreements of Seller, enforceable against Seller in accordance with their respective terms except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar, laws affecting the enforcement of creditors' rights generally and general principles of equity, regardless of whether considered in a proceeding in equity or at law (the "Bankruptcy ---------- Exception"). - --------- 3.03 Governmental Authorization. The execution, delivery and -------------------------- performance by Seller of this Agreement and each of the Ancillary Agreements do not require any action by or in respect of, or filing with, any governmental body, agency, official or authority other than compliance with any applicable requirements of the HSR Act. 3.04. Non-Contravention. The execution, delivery and performance by ----------------- Seller of this Agreement and each of the Ancillary Agreements do not and will not (i) contravene or conflict with the corporate charter or bylaws of Seller, (ii) assuming compliance with the HSR Act, contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to Seller, the Purchased Assets or the Business, (iii) assuming the receipt of all Required Consents, constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Seller or to a loss of any benefit relating to any of the Purchased Assets or the Business to which Seller is entitled under any provision of any agreement, contract or other instrument binding upon Seller or by which any of the Purchased Assets is or may be bound or any Permit or (iv) result in the creation or imposition of any Lien on any Purchased Asset. 3.05 Required Consents. To Seller's best knowledge, Schedule 3.05 of ----------------- the Disclosure Schedule sets forth each agreement, contract or other instrument binding upon Seller or any Permit, in each case relating to the Business and requiring a consent as a result of the -9- execution, delivery and performance of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby (each such consent, a "Required Consent"). ---------------- 3.06. Financial Statements. The Balance Sheet set forth in Schedule -------------------- 3.06(a) of the Disclosure Schedule fairly presents the financial position of the Business (including the Subsidiaries) as of the Balance Sheet Date. Such Balance Sheet was prepared in accordance with the Seller's accounting convention for intra-company operations, consistently applied, and with respect to receivables, payables and accruals, the Balance Sheet is accounted for in accordance with United States generally accepted accounting principles ("GAAP") as if the Business were a stand-alone business. During the twelve-month periods ended December 3l, 1993 and December 31, 1994, the Business had revenues of $6,000,056 and $8,215,000, respectively, which revenues have been determined in accordance with the Seller's accounting convention for intra-company operations, consistently applied, and with respect to accounts receivable and payables, in accordance with GAAP as if the Business were a stand-alone business. Set forth in Schedule 3.06(b) of the Disclosure Schedule is a list of the customers of the Business and the amount of revenues attributable to such customers during such 1993 and 1994 periods. 3.07. Absence of Certain Changes. Since the Balance Sheet Date, Seller -------------------------- has conducted the Business in the ordinary course consistent with past practices, and there has not been: (a) any material adverse change with respect to the Purchased Assets or the Business or any event, occurrence, development or state of circumstances or facts which could reasonably be expected to result in a material adverse change, other than any such change that results from any current customer of Seller limiting or terminating its purchases from Seller as a result of the transactions contemplated herein; (b) any incurrence, assumption or guarantee by Seller of any indebtedness for borrowed money with respect to the Business, except for purchase money security interests incurred in the ordinary course of business and involving property or assets with an aggregate value of no more than $50,000; (c) any creation or other incurrence of any Lien on any Purchased Asset, except for purchase money security interests incurred in the ordinary course of business and involving property or assets with an aggregate value of no more than $50,000; (d) any damage, destruction or other casualty loss (whether or not covered by insurance), with an aggregate value in excess of $50,000, affecting the Business or any Purchased Asset; (e) except with Parent's prior written consent, any material transaction, contract, agreement or other instrument entered into, or commitment made, by Seller relating to the Business or any Purchased Asset (including the acquisition or disposition of any assets other than sales of inventory in the normal course of business) or any relinquishment by Seller of any material contract or other material right; -10- (f) any change in any method of accounting or accounting practice by Seller with respect to the Business; (g) any (i) grant of any severance or termination pay to any Hired Employee, (ii) entering into of any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any Hired Employee, (iii) increase in benefits payable under existing severance or termination pay policies or employment agreements with respect to any Hired Employee or (iv) increase in compensation, bonus or other benefits payable to any Hired Employee; (h) any labor dispute or any activity or proceeding by a labor union or representative thereof to organize any employees of the Business, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such Employees; or (i) any adoption or amendment of any employee benefit plan which changes any benefit accruing or provided to any of the Hired Employees. 3.08. Properties. ---------- (a) Schedule 3.08(a) of the Disclosure Schedule describes in reasonable detail all personal property with a value of $1,000 or more used in the Business and included in the Purchased Assets, including but not limited to machinery, equipment, furniture, vehicles, and other trade fixtures and fixed assets, and any Liens thereon, specifying in the case of leases or subleases which are listed on Schedule 3.08(b) of the Disclosure Schedule, the name of the lessor or sublessor, the lease term and basic annual rent. (b) (i) The Seller has good, valid and indefeasible title to, all Purchased Assets (whether real, personal, tangible or intangile) reflected on the Balance Sheet or acquired after the Balance Sheet Date. (ii) All leases of personal property used in the Business are in good standing and are valid, binding and enforceable in accordance with their respective terms, and there does not exist under any such lease of personal property any default by Seller or, to Seller's knowledge, by any other Party, or any event that, with notice or lapse of time or both, would constitute a default by Seller or, to Seller's knowledge, any other Party. (iii) The machinery and equipment included in the Purchased Assets are in good operating condition and repair (reasonable wear and tear excepted) and, to the extent Seller is responsible for the maintenance thereof, have been reasonably maintained consistent with standards generally followed in the industry (giving due account to the age and length of use of same, ordinary wear and tear excepted). (c) No Purchase Asset is subject to any Lien or to any ownership or economic interest of any other Person. (d) There are no facts known to Seller which would have a Material Adverse Effect. 3.09. Sufficiency of Purchased Assets. The Purchased Assets and the ------------------------------- rights granted to Buyer in the Retained Technology constitute, and on the Closing Date will constitute, all of -11- the assets or property used or held for use in the Business and required for the full and uninterrupted operation of the Business as currently conducted, other than Excluded Assets. 3.10. Title to Purchased Assets. Upon consummation of the transactions ------------------------- contemplated hereby, Buyer will have acquired good and valid title in and to, or a valid leasehold interest in, each of the Purchased Assets, free and clear of all Liens and free and clear of any interest of any third parties. 3.11. No Undisclosed Liabilities. There are no liabilities of the -------------------------- Business of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than: (i) liabilities disclosed or provided for in accordance with the Seller's accounting convention for intra-company operations, consistently applied, and with respect to accounts receivable and payables, in accordance with GAAP as if the Business were a stand-alone business in the Balance Sheet; (ii) liabilities incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date, which in the aggregate do not exceed $50,000; and (iii) liabilities disclosed in the Disclosure Schedule. 3.12. Litigation. There is no action, suit, investigation or ---------- proceeding pending or, to the knowledge of Seller, threatened against the Business or any Purchased Asset before any court or arbitrator or any governmental body, agency or official, or any action, suit, investigation or proceeding that in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated hereby. 3.13. Material Contracts. ------------------ (a) With respect to the Business, Seller is not a Party to or subject to: (i) any lease or related series of leases providing for annual rental of $10,000 or more in the aggregate; (ii) any contract for the purchase of materials, supplies, goods, services, equipment or other assets providing for payments by Seller of, or pursuant to which the Seller has incurred in the aggregate, $10,000 or more; (iii) any sales, distribution or other similar agreement providing for the sale by Seller of materials, supplies, goods, services, equipment or other assets that provides for payments to Seller of, or pursuant to which Seller and its Subsidiaries received in the aggregate, $10,000 or more; (iv) any partnership, joint venture or other similar contract arrangement or agreement; -12- (v) any contract relating to Indebtedness for borrowed money or the deferred purchase price of property (whether incurred, assumed, guaranteed or secured by an asset), except contracts relating to indebtedness incurred in the ordinary Course of business in an amount not exceeding $10,000; (vi) any license agreement or franchise agreement, other than software product licensees in the ordinary course of business described in Section 3.17(e); (vii) any agency, dealer, distributor, sales or marketing representative or other similar agreement; (viii) any agreement, contract or commitment that limits the freedom of the Business to compete in any line of business or with any Person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any Purchased Asset or that would so limit or purport to limit the freedom of the Buyer after the Closing Date; or (ix) any other agreement, contract or commitment not made in the ordinary course of business. (b) Each Assigned Contract is a valid and binding agreement of Seller and is in full force and effect, and Seller nor, to Seller's knowledge, any other Party thereto, is in default under the terms of any such Contract, nor has any event or circumstances occurred that, with notice or lapse of time or both, would constitute any event of default thereunder with respect to Seller or, to Seller's knowledge, any other Party thereto. 3.14. Licenses and Permits. Schedule 3.14 of the Disclosure Schedule -------------------- correctly describes each license, franchise, permit or other similar authorization required by any federal, state or local authority or governmental agency to be maintained in connection with the Business, together with the name of the government agency or entity issuing such license or permit (the "Permits"). Such Permits are valid and in full force and effect and are ------- transferable by Seller and will not be terminated or impaired or become terminable as a result of the transaction contemplated hereby. Upon consummation of such transactions, Buyer will have all right, title and interest in all the Permits. 3.15. Insurance. Seller has furnished to Buyer a list on Schedule --------- 3.15 of the Disclosure Schedule of, and true and complete copies of all insurance policy and fidelity bonds covering the Purchased Assets, the Business and operations of the Business and its employees, if any. 3.16. Compliance with Laws. Seller are not in violation of, and to -------------------- Seller's knowledge is not under investigation with respect to, and has not been threatened to be charged with or given notice of any violation of, any law, rule, ordinance or regulation, or judgment, order or decree (other than any Environmental Law) entered by any court, arbitrator or governmental authority, domestic or foreign, applicable to any of the Purchased Assets or the conduct of the Business. -13- 3.17. Proprietary Rights. ------------------ (a) Schedule 3.17 of the Disclosure Schedule sets forth a list of all Proprietary Rights used or held for use in the Business, specifying as to each, as applicable: (i) the nature of such Proprietary Right; (ii) the owner or owners of such Proprietary Right; (iii) all Persons other than Seller who have an ownership or economic interest in such Proprietary Right; (iv) the jurisdictions by or in which such Proprietary Right is recognized without regard to registration or has been issued or registered or in which an application for such issuance of registration has been filed, including the respective registration or application numbers; and (v) licenses, sublicenses and other agreements as to which Seller or any of its Affiliates a Party and pursuant to which any Person is authorized to use such Proprietary Right (other than software product licenses in the ordinary course of business described in Section 3.17(e) below), including the identity of all Parties thereto, a description of the nature and subject matter thereof, the applicable royalty and the term thereof. (b) Seller owns, or is licensed to use, all Proprietary Rights. Seller is the sole and exclusive owner or licensee of, with all right, title and interest in and to (free and clear of any Liens or other interests), the Proprietary Rights, and has sole and exclusive rights (and is not contractually obligated to pay any comparison to any third party in respect thereof) to the use thereof and the material covered thereby in connection with the Services or products in respect of which proprietary right are being used. No claims with respect to the Proprietary Rights have been asserted or, to the knowledge of Seller, are threatened by any person (i) to the effect that the manufacture, sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by the Seller in connection with the Business infringes on any copyright, patent, trademark, service mark or trade secret of any third party, (ii) against the use by Seller of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in the Business as currently conducted or as proposed to be conducted by Seller, (iii) challenging the ownership, validity or effectiveness of any of the Proprietary Rights, or (iv) that any Person other than the Seller has any ownership or economic interest in any of the Proprietary Rights. All trademarks, service marks and copyrights held by Seller and which relate to Business are valid and subsisting in the jurisdictions in which they are registered. To the knowledge of Seller, there is no unauthorized use, infringement or misappropriation of any of the Proprietary Rights which in any way affects the Business by any third party, including any employee or former employee of the Business. In connection with Seller's conduct of the business, there is not any infringement liability (choate or inchoate) with respect to, or infringement or violation by, Seller of any patent, trademark, service mark, copyright, trade secret or other proprietary right of another Person. No Proprietary Right or product of the Business is subject to any outstanding order, judgment decree, stipulation or agreement restricting in any manner the sale or licensing thereof by Seller. There is no outstanding order, judgment decree or stipulation binding on the Business of Seller, and Seller is not a Party to or bound by any agreement restricting the sale or license of the products of the Business. Seller has not entered into any agreement to indemnify any other Person against any charge of infringement of any of the Proprietary Rights. Each current and former employee of or consultant to Seller relating to the Business has signed a proprietary information agreement substantially in Seller's standard form as certified by Seller and delivered to Buyer. -14- (c) There is not, nor has there been at any time during the past three years, pending or, to the knowledge of Seller, threatened any action, suit, investigation or proceeding (or any basis therefor) contesting the validity, ownership or right to use, sell or otherwise dispose of any proprietary Right or alleging infringement arising therefrom, nor has Seller learned that any Person is or has been in the past asserting that any ownership, use, license, production, development, manufacture, marketing, distribution, lease, sale or other disposition of any of its products or services by the Business conflicts or will conflict with the rights of any other Person. (d) To Seller's best knowledge, none of the former or present employees, consultants, officers or directors of Seller owns, directly or indirectly, or has any other right or interest in, or claim to, in whole or in part, the Business or any of the Proprietary Rights or Purchased Assets. (e) Each customer to whom Seller has delivered a copy of any software product containing any Proprietary Rights has executed and delivered to Seller a license agreement for the use thereof. A copy of each such agreement is set forth in Schedule 3.17(e), and a copy of Seller's current form of license agreement is set forth in Item 34 of Schedule 3.17(e) (the "Base License Agreement"). Each such license agreement is in full force and effect according to its terms and, to Seller's knowledge, the licensee thereunder is not in default under the terms of such license agreement nor has any event or circumstance occurred that, with notice or a lapse of time or both, would constitute any event of default thereunder with respect to such licensee. (f) Seller has the right to license the Retained Technology to Buyer that is to be licensed to Buyer pursuant to the Patent License Agreement or with respect to the Retained Technology being licensed to Buyer pursuant to the Patent License Agreement. With respect to the Retained Technology, there is not any infringement liability (choate or inchoate) with respect to, or infringement or violation by, Seller of any patent, trademark, service mark, copyright, trade secret or other proprietary right of another Person. 3.18. Employees. Schedule 3.18(a) and 3.18(b) of the Disclosure Schedule ---------- sets forth a true and complete list of (a) the names, titles, annual salaries and other compensation of all employees of Seller who are engaged in the Business and are to be offered employment by Buyer prior to the Closing and (b) the wage rates for non-salaried employees of the Business (by classification). None of such employees has indicated to the appropriate Person at Seller under Seller's current policies and procedures that he or she intends to resign or retire as a result of the transactions contemplated by this Agreement. 3.19. Warranty or Other Claims. There are no existing or, to the ------------------------- knowledge of Seller, threatened, claims against Seller for products, parts or services used in the Business which are defective or fail to meet any applicable warranty or other term or provision, except for non-material amounts of product returns in the ordinary course of business. Except as described in the preceding sentence, no claim has been asserted and is currently outstanding against Seller for renegotiation or price redetermination of any business transaction with respect to the Business, nor is there any basis upon which any such claim could be based. The warranty reserve as shown on the Balance Sheet has been established in conformity with GAAP consistent with the conduct of the Business during the prior one-year period. -15- 3.20. Finders' Fees. There is no investment banker, broker, ------------- finder or other intermediary which is or will be entitled to any fee or commission from Buyer or any of its Affiliates upon consummation of the transactions contemplated by this Agreement. 3.21. Environmental Compliance. ------------------------ (a) Environmental Definitions. The following terms, as used ------------------------- herein, have the following meanings: "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "Environmental Laws" means any and all foreign, federal, state and local statutes, laws (including common or case law), regulations, ordinances, rules, judgments, judicial decisions, orders, decrees, codes, plans, injunctions, permits, grants, franchises, licenses, agreements, or governmental restrictions, relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic, radioactive or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals, or industrial toxic, radioactive or hazardous substances or wastes or the clean-up or other remediation thereof. "Environmental Liabilities" means all liabilities arising in connection ------------------------ with or in any way relating to the Purchased Assets or Seller's use or ownership thereof, whether vested or unvested, contingent or fixed, actual or potential, which (i) arise under Environmental Laws or arise in connection with any matter disclosed or required to be disclosed in the Disclosure Schedule and (ii) arise from actions occurring or conditions existing before the Closing Date. "Hazardous Substance" means any toxic, caustic or otherwise hazardous ------------------- substance, including petroleum, its derivatives, by-products and other hydrocarbons, regulated under Environmental Laws. "Release" has the meaning specified in 42 U.S.C. (S)9601(22). ------- (b) Environmental Representations. ----------------------------- (i) No notice, notification, demand, request for information, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending, or to Seller's knowledge, threatened by any governmental or other entity (A) with respect to any alleged violation by Seller of any Environmental Law in connection with the conduct of the Business (B) with respect to any alleged failure by Seller to have any environmental permit, certificate, license, approval, registration or authorization required in connection with the conduct of the Business or (C) with respect to any generation, treatment, storage, recycling, transportation or disposal or Release of any hazardous substance generated by the Business or the Purchased Assets. -16- (ii) In connection with the operation of the Business, (A) Seller has not handled any Hazardous Substance, other than as a user of such Hazardous Substances, on the property to be leased by Seller to Buyer (the "Leased Property"); (B) no polychlorinated biphenyls or urea formaldehyde is or has been present at the Leased Property; (C) no asbestos is or has been present at the leased Property; (D) there are no underground storage tanks for Hazardous Substances, active or abandoned, at the Leased Property; (E) no Hazardous Substance has been Released at, or under the Leased Property and (F) no Hazardous Substance has been released or is present, in a reportable or threshold planning quantity, where such a quantity has been established by statute, ordinance, rule, regulation or order, at, on or under the Leased Property. (iii) In connection with the operation of the Business, Seller has not transported or arranged for the transportation (directly or indirectly) of any Hazardous Substance to any location which is listed or proposed for listing on the National Priorities List promulgated under CERCLA, or on any similar state list or which is the subject of Federal, state or local enforcement actions or other investigations which may lead to claims against Buyer for clean-up costs, remedial work, damages to natural resources or for personal injury claims, including, but not limited to, claims under CERCLA. (iv) No oral or written notification of a Release of a Hazardous Substance has been filed by or on behalf of Seller with respect to the Business and no property now or previously owned or leased by Seller with respect to the Business is listed or, to Seller's knowledge, proposed for listing, on the National Priorities list promulgated pursuant to CERCLA or on any simar state list of sites requiring investigation or clean-up. (v) There are no environmental Liens on any of the Purchased Assets, and no governmental actions have been taken or are in process that could subject any of such Purchased Assets to such Liens. Seller would not be require to place any notice or restriction relating to the presence of Hazardous Substances at any property used in connection with the operation of the Business in any deed to such property. (vi) There have been no environmental investigations, studies, audits, tests, reviews or other analyses conducted by or which are in the possession of Seller in relation to the Leased Property in connection with the operation of the Business which have not been delivered to Buyer prior to the date hereof. 3.22. Interested Party Transactions. To Seller's knowledge, no ----------------------------- officer, director, or Affiliate of the Seller, has or has had, directly or indirectly, (i) an interest in any entity which furnished or sold, or furnishes or sells, services or products which Seller furnishes or sells, or proposes to furnish or sell, relating to the Purchased Assets or the Business, (ii) any interest in any entity which purchases from or sells or furnishes to the Seller, any goods or services relating to the Purchased Assets or the Business, or (iii) a beneficial interest in any contract or agreement relating to the Purchased Assets or the Business. 3.23. Accounts Receivable. Schedule 3.23 of the Disclosure Schedule ------------------- sets forth a true and complete list of the accounts receivable of the Business as of the Balance Sheet Date. No receivables on the books of the Business on the Closing Date shall remain uncollected by Buyer, -17- using commercially reasonable collection efforts (but without, among other things, the commencement of legal proceedings for this purpose) on the date ninety (90) days after the Closing Date due to the alleged unsatisfactory or non-performance of Seller of its obligations that gave rise to such receivable. 3.24. Representations. No representation or warranty by Seller set --------------- forth in this Agreement, and no statement contained in any exhibit or schedule hereto or any certificate or writing delivered in connection with this Agreement and the transactions contemplated herein contains any untrue statement of a material fact, or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. 3.25. Subsidiaries. Schedule 3.25 of the Disclosure Schedule sets ------------ forth a complete list of all Affiliates of the Seller that hold any Purchased Assets or that are otherwise engaged in the Business and that are transferring and assigning to Buyer any Purchased Assets (the "Subsidiaries"). 3.26. Customers. Seller has no knowledge as of the date of this --------- Agreement that any current customer of Seller intends to limit its future purchases in any material respect as a result of the transactions contemplated by this Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller that:. 4.01. Organization and Existence. Each of Parent and Buyer is a --------------------------- corporation duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has all corporate powers and all material Governmental licenses, authorization, consents and approvals required to carry on its business as now conducted. 4.02. Corporate Authorization. The execution, delivery and ----------------------- performance by Parent and Buyer of this Agreement and each of the Ancillary Agreements, and the consummation by Parent and Buyer of the transactions contemplated hereby and thereby, are within the corporate powers of Parent and Buyer and have been duly authorized by all necessary corporate action on the part of Parent and Buyer. This Agreement and each of the Ancillary Agreements to which Parent and Buyer are a Party constitute valid and binding agreements of Parent and Buyer, enforceable against them in accordance with their terms, subject to the Bankruptcy Exception. 4.03. Governmental Authorization. The execution, delivery and -------------------------- performance by Parent and Buyer of this Agreement and each of the Ancillary Agreements require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than (i) compliance with any applicable requirements of the HSR Act and (ii) compliance with any applicable regulatory approvals. 4.04. Non-contravention. The execution, delivery and performance by ----------------- Buyer and Parent of this Agreement and each of the Ancillary Agreements do not and will not (i) contravene or conflict with the corporate charter or bylaws of Buyer or Parent, (ii) assuming -18- compliance with the HSR Act, contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to Buyer or Parent, (iii) constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Buyer or Parent under any provision of any agreement, contract or other instrument binding upon Buyer or Parent or by which any of their respective properties or assets is or may be bound or (iv) result in the creation or imposition of any lien on any of their respective properties or assets. 4.05. Finders' Fees. There is no investment banker, broker, finder ------------- or other intermediary that has been retained by or is authorized to act on behalf of Parent or Buyer who might be entitled to any fee or commission from Seller or any of its Affiliates upon consummation of the transactions contemplated by this Agreement. 4.06. Litigation. There is no action, suit, investigation or ---------- proceeding pending against, or to the knowledge of Parent or Buyer threatened against or affecting, Parent or Buyer before any court or arbitrator or any governmental body, agency or official which in any matter challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated hereby. 4.07. Required Consents. Neither the execution, delivery and ----------------- performance of this Agreement and the Ancillary Agreements, not the consummation of the transactions contemplated hereby and thereby does or will require on the part of Parent or Buyer any consent under any agreement, contract or other instrument binding upon Parent or Buyer, except for those which the failure to obtain would not have a material adverse effect on either of Parent or Buyer or would materially affect the ability of Parent or Buyer to consummate the transactions contemplated by this Agreement and the Ancillary Agreements. 4.08. Representations. No representation or warranty by Parent and --------------- Buyer set forth in this Agreement, and no statement contained in any exhibit or schedule hereto or any certificate or writing delivered in connection with this Agreement and the transactions herein contains any untrue statement of a material fact, or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. ARTICLE V COVENANTS OF SELLER Seller agrees that: 5.01. Conduct of the Business. From the date hereof until the ----------------------- Closing Date, Seller shall conduct the Business in the ordinary course consistent with past practice, use its best reasonable efforts to preserve intact the business organization and relationships with third parties of the Business, and to keep available the services of the Persons designated as Hired Employees. Without limiting the generality of the foregoing, from the date hereof until Closing Date, Seller will not, without the prior written consent of Parent: (a) Enter into any commitment or transaction relating to the Business not in the ordinary course of business; -19- (b) Terminate any Hired Employee; (c) Transfer to any Person any Proprietary Rights, other than software product licenses in the ordinary course of business pursuant to written, software license agreements; (d) Enter into or amend any agreements pursuant to which any other Party is granted exclusive marketing or other rights of any type or scope with respect to the Business; (e) Violate, amend or otherwise modify the terms of any of the Assigned Contracts: (f) Commence any litigation relating to the Business; (g) Acquire or agree to acquire any assets relating to the Business other than inventory and supplies in the ordinary course of business; (h) Sell, lease, license or otherwise dispose of any of the Purchased Assets, other than software product licenses in the ordinary course of business pursuant to the Base License Agreement; or (i) Adopt or amend any employee benefit plan of Seller applicable to any Hired Employee, except with respect to any such plan or amendment applicable to all of Seller's employees generally, or enter into any employment contract with any Hired Employee, pay any special bonus or special remuneration to any Hired Employee, or increase the salaries or wage rates of any Hired Employee. Seller will not (i) take or agree or commit to take any action that would make any representation and warranty of Seller hereunder inaccurate in any respect at, or as of any time from and after the dates hereof and prior to, the Closing Date or (ii) omit or agree to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. 5.02. Access to Information. From the date hereof until the Closing --------------------- Date, Seller (a) will give Buyer, its counsel, financial advisors, auditors and other authorized representatives full access to the offices, properties, books and records of Seller related to the Business during normal business hours and upon reasonable notice, in such a manner as not unreasonably to disrupt Seller's normal business activities, (b) will furnish to Buyer, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the Business as such Persons may reasonably request and (c) will instruct the employees of Seller to cooperate with Buyer in its investigation of the Business; provided that no investigation pursuant to this Section shall affect any representation or warranty given by Seller hereunder. 5.03. Notices of Certain Events. Seller shall promptly notify ------------------------- Buyer of: (i) any notice or other communication from any Person received by Seller alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; -20- (ii) any notice or other communication received by Seller from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; and (iii) any actions, suits, claims, investigations or proceedings commenced or, to Seller's knowledge threatened against, Seller and relating to or involving the Purchased Assets or the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.12 or that relate to the consummation of the transactions contemplated by this Agreement. 5.04. Noncompetition. -------------- (a) Seller agrees that for a period of two full years from the Closing Date, neither it nor any of its Affiliates shall anywhere in the world, without the prior written consent of Buyer. (i) engage, either directly or indirectly, as a principal or for its own account, solely or jointly with others, or as an equity holder in any corporation or joint stock association, or otherwise (other than as a stockholder of any entity the securities of which are listed on a national securities exchange or are regularly traded in the over-the-counter market, provided that neither Seller nor its Affiliates shall at any time own more than 3% of the outstanding equity securities of such entity), in any business engaged (1) in the fields of mechanical (A) computer-aided engineering, design and manufacturing, (B) computer- aided styling and industrial design, and (C) kinematics and structural and thermal dynamics, or (2) in any business that competes with the Business as of the Closing Date or with Parent's business as of the Closing Date; provided, however, that Seller shall not be deemed to be in violation of the foregoing provisions if it shall develop or market any products that contain features or functionality which fall within the Exclusive Field of Use, provided that the resulting products are not competitive with products of Buyer within the Exclusive Field of Use existing at the Closing Date (including those products acquired by Buyer hereunder); or (ii) solicit for employment by Seller or any of its Affiliates any Hired Employee. For purposes of this Section and Section 6.02(a), the terms "Restricted Field of Use" and "Exclusive Field of Use" shall have the meanings set forth in Section 1 of the Patent Assignment and Grant-Back License Agreement. (b) If any provision contained in this Section shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Section, but this Section shall be construed as of such Invalid, illegal or unenforceable provision had never been contained herein. It is the intention of the Parties that if any of the restrictions or covenants contained herein is held to cover a geographic area or to be for a length of time which is not permitted by applicable law, or in any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable law, a court of competent jurisdiction shall construe and interpret or reform this - 21 - Section to provide for a covenant having the maximum enforceable geographic area, time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such applicable law. Seller acknowledges that Buyer would be irreparably harmed by any breach of this Section and that there would be no adequate remedy at law or in damages to compensate Buyer for any such breach. Seller agrees that Buyer shall be entitled to seek injunctive relief requiring specific performance by Seller of this Section, 5.05. Confidentiality. Except as otherwise specifically permitted under the --------------- Patent Assignment and Grant-Back License Agreement and Patent License Agreement, Seller will hold, and will cause its officers, directors, employees, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all proprietary or confidential documents and information concerning Buyer or the Business or the Purchased Assets and will not use and will cause their respective officers, directors, employees, consultants, advisors and agents not to use, any such proprietary or confidential documents or information for any purpose whatsoever; except to the extent that such information can be shown to have been (i) previously known by Seller or any of its Affiliates, (ii) in the public domain through no fault of Seller or any of its Affiliates, (iii) lawfully acquired by Seller or any of its Affiliates from sources other than Buyer, (iv) furnished to a third party by Buyer without a similar restriction on the third party's rights, or (v) approved for release In writing by Buyer. 5.06. Trademarks: Trade name. As soon as practicable after the Closing Date, ---------------------- Seller shall eliminate the use of all of the Seller Tradenames in any of their forms or spellings on all advertising, stationary, business cards, checks, purchase orders and acknowledgments, customer agreements and other contracts and business documents. "Seller Tradenames" meaning all of the trademarks, trade names, service marks and service names as set forth in Schedule 3.17 of the Disclosure Schedule. 5.07. No Negotiation with Third Parties. From the date hereof until the --------------------------------- earlier of the Closing Date or the date on which this Agreement is terminated, Seller agrees that neither Seller, nor any of its Affiliates, agents or representatives shall, directly or indirectly, encourage, solicit or engage in any discussions or negotiations with, or provide any information to, any Person concerning the possible acquisition by such third party of all or any part of the Business or the Purchased Assets other than as contemplated or permitted by this Agreement. Seller agrees promptly to notify Buyer of any contact by any Person with respect to any such possible acquisition. 5.08. Continuation of Certain Services and MIE Support. Seller will ------------------------------------------------ negotiate in good faith the definitive form of the transition and services agreement whereby the Seller will continue to provide, (i) for a period of up to three months after the Closing Date (A) without cost to Buyer (1) continuing computer services and management information services and support, (2) continuing use of accounting software and support (3) continuing use of a telephone system and (4) continuing use of the servers of Seller connected to the Internet, in each case consistent with those provided to the Business by Seller prior to the Closing and (B) at Seller's out-of-pocket cost plus 15%, continuing manufacturing services, and (ii) the use of certain office space to be leased by Buyer from Seller pursuant to a lease (the "Lease") substantially in such form as shall be mutually agreed upon on or prior to March 6, 1995. -22- 5.09. Transfer of Purchased Assets by Affiliates. Seller will cause all ------------------------------------------ of its Affiliates to transfer, assign and deliver all Purchased Assets owned or held by any of them to Buyer. 5.10. Seller's Guaranty of Subsidiaries' Performance. Seller will cause the --------------------------------------------- Subsidiaries to carry out and perform their respective obligations under their respective asset purchase agreements and ancillary agreements with Buyer (the "Subsidiary Agreements") in form and substance substantially similar to this Agreement and the Ancillary Agreements. 5.11. Certain Consents. Seller will use its best efforts to obtain by March ---------------- 15, 1995, the necessary consent to the assignment to Buyer of the agreement described in Item 2 of Schedule 3.13 (c) of the Disclosure Schedule. If such consent is not received by such date, Seller shall thereupon terminate such agreement in accordance with its terms. In exchange for all revenues received by Seller after the date of such termination and after the Closing, Buyer shall provide to Seller, at no cost to Seller, all services necessary for Seller to be able to comply with its maintenance obligations under such agreements. Seller covenants and agrees that it shall not provide any source code to the other party to the agreement described in the preceding sentence. ARTICLE VI COVENANTS OF BUYER Buyer agrees that: 6.01. Confidentiality. Prior to the Closing Date and after any termination --------------- of this Agreement, Buyer and its Affiliates will hold, and will use their best efforts to cause their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Business of Seller and its Subsidiaries furnished to Parent, Buyer or their respective Affiliates in connection with the transactions contemplated by this Agreement on such terms as are set forth in the confidentiality agreement dated as of February 13, 1995 between Seller and Parent, which agreement is incorporated herein by reference and made a part hereof; provided that Buyer may -------- disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement. The obligation of Parent, Buyer and their respective Affiliates to hold any such information in confidence shall be satisfied if they exercise the same care with respect to such information as they would take to preserve the confidentiality of their own similar information. 6.02. Noncompetition. --------------- (a) Buyer agrees that for a period of two full years from the Closing Date, neither it nor any of its Affiliates shall anywhere In the world, without the prior written consent of Seller, use the Proprietary Rights for any use which competes with Seller's business as of the Closing Date (other than the Business); provided, however, that Buyer shall not be deemed to be in violation ----------------- of the foregoing provisions if it shall develop or market any products within the Exclusive Field of Use that contain features or functionality which fall within the Restricted -23- Field of Use, provided that the resulting products are not competitive with products of Seller within the Restricted Field of Use existing at the Closing Date. (b) If any provision contained in this Section shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Section, but this Section shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. It is the intention of the Parties that if any of the restrictions or covenants contained herein is held to cover a geographic area or to be for a length of time which is not permitted by applicable law, or in any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable law, a court of competent jurisdiction shall construe and interpret or reform this Section to provide for a covenant having the maximum enforceable geographic area, time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such applicable law. Buyer acknowledges that Seller would be irreparably harmed by any breach of this Section and that there would be no adequate remedy at law or in damages to compensate Seller or any such breach. Buyer agrees that Seller shall be entitled to seek injunctive relief requiring specific performance by Buyer of this Section. 6.03. Hired Employees' Vacation Pay. Buyer agrees to pay in cash to each ----------------------------- Hired Employee, the aggregate amount of such Hired Employee's accrued but unused vacation time with Seller through the Closing Date, such payment to be made promptly within 30 days after the Closing Date. 6.04. Exchange Cooperation. Buyer shall cooperate in structuring this -------------------- transaction as a like kind exchange for the benefit of Seller ("the Exchange"); provided that Buyer shall incur no additional cost or expense or any other significant adverse consequence in connection therewith. In connection with the Exchange, Seller's rights and obligations under this Agreement shall be assignable to an intermediary party (the "Intermediary") and Buyer acknowledges and consents to such assignment; provided that such assignment shall not relieve -------- Seller of any liability or obligation under this Agreement or the Ancillary Agreements. In no event shall the assignment of the Agreement by Seller to the Intermediary affect any of the representations, warranties or indemnifications made by Buyer or Seller in this Agreement. In the event Seller does not arrange for the Exchange prior to the Closing Date, this transaction shall be consummated as a sale and purchase. ARTICLE VII MUTUAL COVENANTS The Parties agree that: 7.01. Best Efforts: Further Assurances. --------------------------------- (a) Subject to the terms and conditions of this Agreement, each Party will use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. Each Party agrees to execute and deliver such other -24- documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement and to vest in Buyer good and marketable title to the Purchased Assets. (b) Seller hereby constitute and appoint, effective as of the Closing Date, Parent, Buyer and their respective successors and assigns as the true and lawful attorneys of Seller with full power of substitution in the name of Buyer or in the name of Seller, but for the benefit of Buyer (i) to collect for the account of Buyer any items of Purchased Assets and (ii) to institute and prosecute all proceedings which Buyer may in its sole discretion deem proper in order to assert or enforce any right, title or interest in, to or under the Purchased Assets, and to defend or compromise any and all actions, suits or proceedings in respect of the Purchased Assets. Buyer shall be entitled to retain for its account any amounts collected pursuant to the foregoing powers, including any amounts payable as interest in respect thereof. (c) Whenever requested to do so by Buyer in connection with the conduct of the Business, Seller shall execute any and all applications or other instruments which Buyer shall deem necessary in order to apply for and obtain patent and copyright registrations in the United States of America and obtain patents and copyrights in all countries and any and all documents which Buyer shall deem necessary or desirable in order to confirm or evidence the transfer of any of the rights transferred to Buyer hereunder or pursuant to the Patent Assignment and Grant-Back License Agreement and Patent License Agreement and shall cooperate with and assist Buyer in any interference or litigation pertaining thereto, with all out-of-pocket expenses reasonably incurred by Seller or any Subsidiary at the request of Buyer to be borne by Parent. 7.02. Certain Filings. The Parties shall cooperate with one another (a) in --------------- determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from Parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (b) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers. 7.03. Public Announcements. The Parties agree to consult with each other -------------------- before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by applicable law or any listing agreement with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation. ARTICLE VIII TAX MATTERS 8.01. Tax Definitions. The following terms, as used herein, have the --------------- following meanings: "Code" means the Internal Revenue Code of 1986, as amended. ---- -25- "Post-Closing Tax Period" means any Tax period (or portion thereof ending ----------------------- on or after the Closing Date that is not a Pre-Closing Tax Period. "Pre-Closing Tax Period" means any Tax period (or portion thereof ending ---------------------- on or before the close of business on the Closing Date. "Tax" means any net income, alternative or add-on minimum tax, gross income, --- gross receipts, sales, use, ad valorem, franchise, capital, paid-up capital, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax. 8.02. Tax Matters. Seller hereby represents and warrants to Buyer that: ----------- (a) Seller has timely paid all Taxes payable by it or the Pre-Closing Tax Period which will have been required to be paid on or prior to the date hereof, the non-payment of which would result in a Lien on any Purchased Asset would otherwise adversely affect the Business or would result in Buyer becoming liable or responsible therefor. (b) Seller has established, in accordance with generally accepted accounting principles applied on a basis consistent with that of preceding periods, adequate reserves for the payment of, and will timely pay all Tax liabilities which arise from or with respect to the Purchased Assets or the operation of the Business and are incurred in or attributable to the Pre-Closing Tax Period, the non-payment of which would result in a Lien on any Purchased Asset, would otherwise adversely affect the Business or would result in Buyer becoming liable therefor. 8.03. Tax Cooperation; Allocation of Taxes. ------------------------------------ (a) Each Party agrees to furnish or cause to be furnished to the other Parties, upon request, as promptly as practicable, such information and assistance relating to the Purchased Assets and the Business as is reasonably necessary for the filing of all Tax returns, and making of any election related to Taxes, the preparation for any audit by any taxing authority, and the prosecution or defense of any claim, suit or proceeding relating to any Tax return. Each Party shall cooperate with the other Parties in the conduct of any audit or other proceeding related to Taxes involving the Business and each shall execute and deliver such powers of attorney and other documents as are necessary to carry out the intent of this paragraph (a) of Section 8.03. (b) All personal property taxes and similar ad valorem obligations levied -- ------- with respect to the Purchased Assets for a taxable period which includes (but does not end on) the Closing Date (collectively, the "Apportioned Obligations") shall be apportioned between Seller and its Subsidiaries, on the one hand, and Buyer, on the other hand, as of the Closing Date based on the number of days of such taxable period included in the Pre-Closing Tax Period and the number of days of such taxable period included in the Post-Closing Tax period. Seller shall be liable for the amount of such taxes that is attributable to the Pre- Closing Tax Period. Within 30 days after the Closing, Seller and Buyer shall present a statement to the other setting forth the amount of reimbursement to which each is entitled under this Section 8.03 (b) together with -26 - such supporting evidence as is reasonably necessary to calculate the proration amount. The proration amount shall be paid by the Party owing it to the other within 10 days after delivery of such statement. Thereafter, Seller shall notify Buyer upon receipt of any bill for personal property taxes relating to the Purchased Assets, part or all of which are attributable to the Post-Closing Tax Period, and shall promptly deliver such bill to Buyer who shall pay the same to the appropriate taxing authority, provided that if such bill covers the Pre-Closing Tax Period, Seller shall also remit prior to the due date of payment to Buyer payment for the amount of such bill that is attributable to the Pre- Closing Tax Period. If either Seller or Buyer shall thereafter make a payment for which it is entitled to reimbursement under this Section 8.03(b), the other Party shall make such reimbursement promptly but in no event later than 30 days after presentation of a statement setting forth the amount of reimbursement to which the presenting Party is entitled along with such supporting evidence as is reasonably necessary to calculate the amount of reimbursement. Any payment required under this Section 8.03(b) and not made within 30 days of delivery of the statement shall bear interest at the rate per annum determined, from time to time, under the provisions of law related to the late payment of the tax in question for each day until paid. (c) Any transfer, documentary, sales or use Taxes assessed upon the transfer of the Purchased Assets to Buyer and any recording or filing fees with respect thereto shall be shared equally by Seller and Buyer. ARTICLE IX EMPLOYEE BENEFITS 9.01. Employee Benefits Definitions. The following terms, as used herein having the following meanings: "Benefit Agreement" means an employment, severance or similar contract, ----------------- arrangement or policy and each plan or arrangement providing for severance benefits, insurance coverage (including any self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, pension or retirement benefits or for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights or other forms of incentive compensation or post-retirement insurance, compensation or benefits that (i) is not an Employee Plan and (ii) is maintained or contributed to by Seller or any of its ERISA Affiliates or Buyer or any of its ERISA Affiliates, as the case may be. "Employee Plans" means each "employee benefit plan", as such term is -------------- defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA and (ii) is maintained or contributed to by Seller or any of its ERISA Affiliates or Buyer or any of its ERISA Affiliates, as the case may be. "ERISA" means the Employment Retirement Income Security Act of 1974, as ----- amended. "ERISA Affiliate" of any entity means any other entity that, together with --------------- such entity, would be treated as a single employer under Section 414 of the Code. -27- "Multiemployer Plan" means each Employee Plan that is a multiemployer ------------------ plan, as defined in Section 3(37) of ERISA. 9.02. ERISA Representations. Seller hereby represents and warrants to --------------------- Buyer that: (a) Schedule 3.18(b) of the Disclosure Schedule lists each Employee Plan ------------------------------------------- and each Benefit Arrangement that covers any employee or former employee of the Business, copies or descriptions of all of which have previously been made available or furnished to Buyer. With respect to each Employee Plan, Seller has provided the most recently filed Form 5500 and an accurate summary description of such plan. Seller has provided Buyer with, or has caused to be provided to Buyer, complete age, salary, service and related data as of the most recent practicable date for employees of the Business. (b) Neither Seller nor any ERISA Affiliate maintains or has ever maintained or contributed to any Multiemployer Plan or Employee Plan subject to Title IV of ERISA. Neither Seller nor any ERISA Affiliate has incurred any liability under Title IV of ERISA arising in connection with the termination of any plan covered or previously covered by Title IV of ERISA that could become, after the Closing Date, an obligation of Buyer or any of its ERISA Affiliates. (c) To Seller's best knowledge, each Employee Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period from its adoption to date and each trust forming a part thereof is exempt from tax pursuant to Section 501(a) of the Code. Each Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such Plan. (d) To Seller's best knowledge, each Benefit Arrangement has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Benefit Arrangement. (e) With respect to the employees and former employees of the Business, there are no employee post-retirement medical or health plans in effect, except as required by Section 4980B of the Code. (f) Except as disclosed in writing to Buyer prior to the date hereof, there has been no amendment to, written interpretation of or announcement (whether written or not written) by Seller or any of its ERISA Affiliates relating to, or change in employee participation or coverage under, any Employee Plan or Benefit Arrangement which would increase the expense of maintaining such Employee Plan or Benefit Arrangement above the level of the expense incurred in respect thereof for the most recent fiscal year. (g) The Purchased Assets are not now nor will they with the passage of time become subject to any Lien imposed under Code Section 412(n) by reason of the failure of Seller or its ERISA Affiliates to make timely installments or other payments required by Code Section 412. -28- (h) No Hired Employee will become entitled to any bonus, retirement, severance or similar benefit or enhanced benefit solely as a result of the transactions contemplated hereby. (i) None of the Employee Plans or Benefit Arrangements listed on Schedule 3.18(b) of the Disclosure Schedule covers any non-United States - ------------------------------------------- employee or former employee of Seller. (j) No "prohibited transaction," as defined in Section 406 of ERISA or Section 497S of the Code, has occurred with respect to any Employee Plan. (k) No tax under Section 4980B of the Code has been incurred in respect of any Employee Plan that is a group health plan, as defined in Section 5000(b)(1) of the Code. 9.03. Employees and Consultants. ------------------------- (a) On or prior to the Closing Date, Buyer shall offer to engage as independent contractors all consultants to the Business listed on Schedule -------- 3.17(f) of the Disclosure Schedule (to be provided by Buyer to Seller at - ------- least one week before the Closing Date) by assuming the existing consulting agreements with the Hired Consultants. The consultants who accept and commence such engagements with Buyer are hereinafter collectively referred to as the "Hired Consultants". Seller will not take any action that would impede, ----------------- interfere or otherwise compete with Buyer's effort to engage any Hired Consultants. In the event that any consulting agreement does not constitute a Purchased Asset, Buyer shall not assume any obligation relating to any consultant to the Business until the commencement of such consultant's engagement with Buyer. (b) On or prior to the Closing Date, Buyer shall offer employment to all employees of the Business designated by Buyer on Schedule I attached hereto; ---------- provided that Buyer may terminate at any time after the Closing Date the - -------- employment of any employee who accepts such offer. Any such offer shall be at such current base salary or wage and reasonably comparable benefit levels. Buyer shall provide the same severance benefits to Hired Employees whose employment is terminated by Buyer within six months of the Closing Date as Seller would have provided pursuant to Seller's written reduction-in-force policy previously provided to Buyer, provided, however, that for purposes of --------- -------- determining the amount of severance benefits to which a Hired Employee would be entitled pursuant to this sentence and to Parent's vacation policies, such Hired Employee shall be credited with his or her prior service with Seller. In addition, as soon as practicable after the Closing Date, management of Parent shall use reasonable efforts to obtain the approval of Parent's Board of Directors for the waiver of the waiting period for the Hired Employees with respect to Parent's employee stock purchase plan as in effect on the Closing Date. The employees who accept and commence employment with Buyer are hereinafter collectively referred to as the "Hired Employees". Seller will not take any action that would impede, hinder, interfere or otherwise compete with Buyer's effort to hire any Hired Employees. Buyer shall not assume responsibility for any Hired Employee until such employee commences employment with Buyer. -29- 9.04. Seller's Employee Benefit Plans. ------------------------------- (a) Seller shall retain all obligations and liabilities under the Employee Plans and Benefit Arrangements in respect of each employee or former employee (including any beneficiary thereof) who is not a Hired Employee. Except as expressly set forth herein, Seller or its designated ERISA Affiliate shall retain all liabilities and obligations in respect of benefits accrued as of the Closing Date by Hired Employees under the Employee Plans and Benefit Arrangements, and neither Buyer nor any of its Affiliates shall have any liability with respect thereto. Except as expressly set forth herein, no assets of any Employee Plan or Benefit Arrangement shall be transferred to Buyer or any of its Affiliates; or to any plan of Buyer or any of its Affiliates. Accrued benefits or account balances of Hired Employees under the Employee Plans and Benefit Arrangements shall be fully vested as of the Closing Date. (b) With respect to the Hired Employees (including any beneficiary or dependent thereof), Seller shall retain (i) all liabilities and obligations arising under any group life, accident, medical, dental or disability plan or similar arrangement (whether or not insured) to the extent that such liability or obligation relates to contributions or premiums accrued (whether or not payable), or to claims incurred (whether or not reported), on or prior to the Closing Date, (ii) all liabilities and obligations arising under any worker's compensation arrangement to the extent such liability or obligation relates to the period prior to the Closing Date, including liability for any retroactive workers' compensation premiums attributable to such period and (iii) all other liabilities and obligations arising under the Employee Plans and the Benefit Arrangements to the extent any such liability or obligation relates to the period prior to the Closing Date, including, without limitation, liabilities and obligations in respect of proportional accruals through the Closing Date under any bonus plan or arrangement. (c) With respect to any Hired Employee (including any beneficiary or dependent thereof) who enters a hospital or is on short-term disability under any Benefit Arrangement on or prior to the Closing Date and continues in a hospital or on short-term disability after the Closing Date, Seller shall be responsible for claims and expenses incurred both before and after the Closing Date in connection with such Person, to the extent that such claims and expenses are covered by a Benefit Arrangement until such time, (if any) that, in the case of a Hired Employee, such Person resumes full-time employment with Buyer or one of its Affiliates and, in the case of any beneficiary or dependent of a Hired Employee, such Person's hospitalization has terminated. With respect to any Benefit Arrangements covering medical expenses and other costs relating to pregnancies and maternity leave, Seller shall be responsible for all claims (whether or not reported) and expenses incurred during the period prior to and ending on the Closing Date, and Buyer or one of its Affiliates shall be responsible for such Benefit Arrangements covering such pregnancies and maternity leave for the period subsequent to the Closing Date. (d) Seller shall offer to all Hired Employees who have pre-existing conditions which make them ineligible for coverage under a group health plan (within the meaning of Section 4980B(g)(2) of the Code and Section 607(1) of ERISA) maintained by or contributed to by Buyer ("Buyer Health Plan") or whose pre-existing conditions are not covered under a Buyer Health Plan ("Non-Covered Employees"), COBRA health care continuation coverage in accordance with Section 4980B of the Code and Sections 601 through 608 of ERISA, and shall comply with any related requirements thereunder, in connection with any loss of coverage by -30- any Person under any group health plan sponsored by Seller. Buyer shall pay for up to 18 months after the Closing Date, the COBRA coverage payments required to be made by the Non-Covered Employees and the out-of-pocket costs of Seller in maintaining coverage for such Non-Covered Employees under Seller's group health plan in each case for so long as the Non-Covered Employees are employees of Buyer. 9.05. No Third Party Beneficiaries. No provision of this Article shall ---------------------------- create any third party beneficiary or other rights in any employee or former employee (including any beneficiary or dependent thereof) of Seller in respect of continued employment (or resumed employment) with either Buyer or the Business or any of their Affiliates and no provision of this Article IX shall create any such rights in any such Persons in respect of any benefits that may be provided, directly or indirectly, under any Employee Plan or Benefit Arrangement or any plan or arrangement that may be established by Buyer or any of its Affiliates. No provision of this Agreement shall constitute a limitation on rights to amend, modify or terminate after the Closing Date any such plans or arrangements of Buyer or any of its Affiliates. ARTICLE X CONDITIONS TO CLOSING 10.01. Conditions to the Obligations of Each Party. The obligations of the ------------------------------------------- Parties to consummate the Closing are subject to the satisfaction of the following conditions: (a) Any applicable waiting period under the HSR Act relating to the transactions contemplated hereby shall have expired or been terminated. (b) No provision of any applicable law or regulation and no judgement, injunction, order or decree shall prohibit the consummation of the Closing. (c) No proceeding challenging this Agreement or the transactions contemplated hereby or seeking to prohibit, alter, prevent or materially delay the Closing shall have been instituted by any Person before any court, arbitrator or governmental body, agency or official and be pending. (d) Each of Buyer and Seller shall have executed and delivered to the other each of the Ancillary Agreements, in each case substantially in the form attached as an Exhibit to this Agreement. (e) All actions by or in respect of or filings with any governmental body, agency, official or authority required to permit the consummation of the Closing shall have been obtained. 10.02. Conditions to Obligation of Buyer. The obligation of Buyer to --------------------------------- consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Seller shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date, (ii) except for the representation and warranty of Seller contained in Section 3.26, the representations and -31- warranties of Seller contained in this Agreement as of the date hereof and in any certificate or other writing delivered by Seller pursuant hereto shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such date and (iii) Buyer shall have received a certificate signed by a duly authorized officer of Seller to the foregoing effect. (b) No provision of any applicable law or regulation and no judgment, injunction, order or decree shall restrain, prohibit or otherwise interfere with the effective operation or enjoyment by Buyer of all or any of the Purchased Assets. (c) Buyer shall have received an opinion of Snell & Wilmer, counsel to Seller, dated the Closing Date to the effect specified in Section 3.01 through 3.04 and Section 3.12 as it relates to Seller, in form and substance reasonably satisfactory to Buyer. (d) Seller shall have received (i) all consents, authorizations or approvals from the governmental agencies referred to in Section 3.03, (ii) all Required Consents with respect to the Key Customers, and (iii) consents no later than March 15, 1995, with respect to Items 11 and 12 of Schedule 3.17(e) of the Disclosure Schedule, such consents to be in form and substance reasonably satisfactory to Buyer. (e) All corporate action by Seller required to be taken in connection with the transactions contemplated by this Agreement shall have been validly taken, and Seller shall have furnished Buyer with certified copies of resolutions, minutes and such other instruments and documents as Buyer shall have requested. (f) (i) All individuals reasonably necessary to carry on the Business and without whose continued employment would have a significant adverse effect on Buyers operation of the Business shall have agreed to be Hired Employees or Hired Consultants; provided, that the provisions of this Section 10.02(f)(i) shall apply only if Buyer shall, within seven days after the date of this Agreement, have made offers of employment to all employees listed on Schedule I ---------- thereto and if Buyer shall have used reasonable efforts to keep Seller - ---------------------------------------------------------------------- reasonably informed about the status of Buyer's discussions with such employees; - ------------------------------------------------------------------------------- and - --- (ii) Thomas W. Jensen, Ph.D., shall have entered into an Employment Agreement with Buyer for a term of one year, in a form satisfactory to Buyer. (g) Each of the Subsidiaries shall have executed and delivered to Buyer the Subsidiary Agreements. (h) Without prejudice to Buyer's and Parent's rights under Sections 10.02 and 12.02, Seller shall have delivered to Buyer a revised Disclosure Schedule to this Agreement containing information updated in all material respects to the Closing Date. (i) The Parties shall have executed and delivered to the other a transition and services agreement, in a form mutually acceptable to Buyer and Seller, reflecting the matters described in Section 5.09. (j) The Parties shall have executed and delivered to the other the Lease. -32- 10.03. Conditions to Obligations of Seller. The obligation of ----------------------------------- Seller to consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Buyer shall have performed in all material respects all of their respective obligations hereunder required to be performed by them at or prior to the Closing Date, (ii) the representations and warranties of Buyer contained in this Agreement as of the date hereof shall be true and correct in all material respects at and as of the Closing Date, as if made at and as of such date and (iii) Seller shall have received a certificate signed by the President or duly authorized Vice President of Buyer to the foregoing effect. (b) Seller shall have received an opinion of Testa, Hurwitz & Thibeault dated the Closing Date to the effect specified in Sections 4.01 through 4.04 and 4.06 as it relates to Buyer, in form and substance reasonably satisfactory to Seller. (c) Buyer shall have received all material consents, authorizations or approvals from governmental agencies referred to in Section 4.03, in each case in form and substance reasonably satisfactory to Seller, and no such consent, authorization or approval shall have been removed. ARTICLE XI SURVIVAL; INDEMNIFICATION 11.01. Survival. The covenants, agreements, representations and warranties -------- of the Parties contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing until the close of business one year after the Closing Date. Notwithstanding the preceding sentence, any covenant, agreement, representation or warranty in respect of which indemnity may be sought under Sections 11.02 or 11.03 shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if notice of the inaccuracy or breach thereof giving rise to such right to indemnity shall have been given to the Party against whom such indemnity may be sought prior to such time; provided that any such claim -------- for indemnification shall be made within two years of the Closing Date. 11-02. Indemnification. --------------- (a) Seller agrees to indemnify Parent, Buyer and their respective Affiliates against, and agrees to hold each of them harmless from, any and all damage, loss, liability and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding) (collectively, "Loss") ---- incurred or suffered by Parent, Buyer or any of their respective Affiliates arising out of: (i) any misrepresentation or breach of warranty, covenant or agreement made or to be performed by Seller or its Subsidiaries pursuant to this Agreement; (ii) the failure of Seller or its Subsidiaries to assume full responsibility for any Excluded Liability or any obligation of the Business or any liability of the Business relating to the Excluded Assets; -33- (iii) the incurrence by Buyer of any warranty or indemnification Losses with respect to sales or licenses of Seller's products on or before the Closing Date to the extent such losses exceed the warranty reserve on the Balance Sheet; (iv) in addition to and not in limitation of the provisions of Section 11.02(a)(iii), the incurrence by Buyer of any Losses with respect to software licensed or sold by Seller prior to the Closing Date that fails to conform in any material respect to the written specifications applicable to such software at the time of license or sale; (v) in addition to and not in limitation of the provisions of Section 11.02(a)(iii) and (iv), any Loss arising on or before the Closing Date that is caused solely by Seller's breach of this Agreement or that is caused by Seller's conduct of the Business on or prior to the Closing Date, and such Loss (A) is not the result of a breach of this Agreement by Buyer, and (B) is not an Assumed Liability; or (vi) in addition to and not in limitation of the provisions of Section 11.02(a)(iii) and (iv), the incurrence of any Loss by Buyer with respect to software products to any customer, which Loss would have been avoided had such customer executed and delivered a Base License Agreement. (b) Buyer hereby indemnifies Seller and its Affiliates against and agrees to hold harmless from any and all Loss incurred or suffered by Seller or any of its Affiliates arising out of: (i) any misrepresentation or breach of warranty, covenant or agreement made or to be performed by the Buyer pursuant to this Agreement; (ii) the failure of Buyer to assume full responsibility for any of the Assumed Liabilities; or (iii) any Loss arising after the Closing Date that is caused solely by Buyer's breach of this Agreement or that is caused by Buyer's conduct of the Business after the Closing Date, and such Loss (A) is not the result of a breach of this Agreement by Seller or (B) is not an Excluded Liability. 11.03. Limitations on Liabilities. -------------------------- (a) Claims for Losses caused by or arising out of misrepresentation or breach of any warranty, representation or covenant may be made only pursuant to Article XI hereof and only by written notice provided in accordance with Section 13.01 within the period, if any, provided for survival of such representation, warranty or covenant in Section 11.01. (b) The liabilities of Seller under Section 11.02(a) of this Agreement shall be subject to the following limitations: (i) Seller shall be liable for Losses pursuant to Section 11.02(a)(i) only once the cumulative aggregate amount of all such Losses equals or exceeds $225,000 (the "Basket") -34- (ii) The aggregate amount of Losses for which the Seller shall be liable with respect to the following Sections shall not exceed the following amounts: (A) $20,000,000 pursuant to Sections 11.02(a)(i) and (iv) with respect to matters arising out of any misrepresentation or breach of warranty, covenant or agreement contained in Section 3.17; or (B) $10,000 pursuant to Sections 11.02(a)(i) and (vi) With respect to matters arising out of any misrepresentation or breach of warranty, covenant or agreement and which relate to any one or more Key Customers; or (C) $3,450,000 with respect to all other claims for indemnification pursuant to Section 11.02(a)(i), (a)(iii) and (a)(v). If more than one of the foregoing clauses (A), (B) or (C) applies with respect to any Loss, then only the clause with the highest maximum indemnifiable amount shall apply. (iii) Any Loss paid by Buyer's insurer. (c) The liabilities of Buyer under Section 11.02(b) of this Agreement shall be subject to the following limitations: (i) Buyer shall be liable for Losses pursuant to Section 11.02(b)(i) only to the extent that the cumulative aggregate amount of all such Losses exceeds the Basket. (ii) The aggregate amount of Losses for which Buyer shall be liable pursuant to Section 11.02(b)(i) shall not exceed $3,450,000. (d) Any provision contained in this Article XI to the contrary notwithstanding, neither Party will after the Closing Date, assert against the other or any customer or supplier of any Party, any claim for infringement of any patents entitled to a filing date priority before the second anniversary of the Closing Date. 11.04. Procedures; No Waiver. --------------------- (a) The Party seeking indemnification under Section 11.02 (the "Indemnified Party") agrees to give prompt notice to the Party against whom ----------------- indemnity is sought (the "Indemnifying Party") of the assertion of any claim, ------------------ or the commencement of any suit, action or proceeding in respect of which indemnity may be sought under such Section. The Indemnifying Party may, and at the request of the Indemnified Party shall, participate in and control the defense of any such suit, action of proceeding at its own expense; provided, that if any claim against or affecting Buyer by a Person who is not a Party which seeks damages in excess of Seller's indemnification obligation as described in Section 11.03(b)(ii), Buyer shall have the right to control the defense of any such suit, action or proceeding. The Indemnifying Party shall not be liable hereunder for any settlement or compromise effected without its consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder, which consent shall not be unreasonably withheld or delayed. (b) If Seller used its best efforts to comply with a closing condition but is unable so to comply, and Buyer elects to waive such compliance, such waiver of such closing condition by Buyer shall limit their rights under Section 11.02 solely with respect to the matter waived. (c) If the Indemnifying Party disputes its liability with respect to such claim or demand or the amount thereof (whether or not the Indemnifying Party desires to defend the -35- submitted to mediation in accordance with Section 13.09 hereof. Pending the resolution of any dispute by the Indemnifying Party of its liability with respect to any claim or demand, such claim or demand shall not be settled without the prior written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. ARTICLE XII TERMINATION 12.01. Grounds for Termination. This Agreement may be terminated at any ----------------------- time prior to the Closing: (i) by mutual written agreement of Seller and Parent; (ii) by either Seller or Parent if the Closing shall not have been consummated on or before April 30, 1995 or within thirty (30) days of such date in order to satisfy any of the conditions in Sections 10.01(a) and (e) or Section 10.02(d); or (iii) by either Seller or Parent if there shall be any law or regulation that makes the consummation of the transactions contemplated hereby illegal or otherwise prohibited or if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction. The Party desiring to terminate this Agreement pursuant to clauses (ii) or (iii) shall give notice of such termination to the other Parties. 12.02. Effect of Termination. If this Agreement is terminated as --------------------- permitted by Section 12.01, such termination shall be without liability of either Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to the other Parties to this Agreement; provided that if such termination shall result from the willful failure of - -------- either Party to fulfill a condition to the performance of the obligations of the other Party or to perform a covenant of this Agreement or from a breach by either Party to this Agreement due to substantial or gross negligence, recklessness or willfulness, such Party shall be fully liable for any and all Losses incurred or suffered by the other Party as a result of such failure or breach. The provisions of Sections 6.01 and 13.03 shall survive any termination hereof pursuant to Section 12.01. ARTICLE XIII MISCELLANEOUS 13.01. Notices. All notices, requests and other communications to ------- any Party hereunder shall be in writing (including telex, telecopy or similar writing) and shall be given, -36- if to Buyer, to: Parametric Technology Corporation 128 Technology Drive Waltham, MA O2154 Telecopy: (617) 398-5662 Attention: Chief Financial Officer with a copy to: William B. Asher, Jr., Esq. Testa, Hurwitz & Thibeault 53 State Street Boston, MA 02108 Telecopy: (617) 248-7100 if to Seller, to: Evans & Sutherland Computer Corporation 600 Komas Drive P.O. Box 58700 Salt Lake City, UT 84158 Telecopy: (801) 583-9701 Attention: Gary Meredith with a copy to: William C. Gibbs, Esq. Shell & Wilmer Broadway Centre 111 East Broadway, Suite 900 Salt Lake City, UT 84111 Telecopy: (801) 237-1950 13.02. Amendments: No Waivers. ---------------------- (a) Any provisions of this Agreement may be amended or waived prior to the Closing Date if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by all the Parties, or in the case oF a waiver, by the Party against whom the waiver is to be effective. (a) No failure or delay by either Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. -37- 13.03. Expenses. Except as otherwise provided herein, all costs and -------- expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense. 13.04. Successors and Assigns. The provisions of this Agreement shall ---------------------- be binding upon and inure to the benefit of the Parties and their respective successors and assigns; provided however, that, other than as described in Section 6.04, (i) Seller shall not be entitled to assign or in any way transfer any of its rights hereunder, by operation of law or otherwise, without the prior written consent of Parent, and (ii) prior to the Closing Date, Buyer shall be entitled to assign its rights only to Parent or any subsidiary of Parent. Any attempted assignment of such rights without such prior written consent shall be void and prohibited, and all such rights shall thereupon automatically be terminated and of no further force or effect. For purposes of this Section, any merger or transfer of control of Seller shall be deemed an assignment or attempted assignment. 13.05. Governing Law. This Agreement shall be construed in accordance ------------- with and governed by the law of the State of Delaware, or in the event a court decides that Delaware law may not govern, the law of the Commonwealth of Massachusetts. 13.06. Counterparts; Effectiveness. The Agreement may be signed in --------------------------- any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each Party hereto shall have received a counterpart hereof signed by the other Party hereto. 13.07. Entire Agreement. This Agreement, the Ancillary Agreements and ---------------- the confidentiality agreement dated as of February 13, 1995 between Seller and Buyer constitute the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the Parties with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth herein in the documents referred to in the preceding sentence has been made or relied upon by either Party hereto. None of this Agreement, the Ancillary Agreements and the confidentiality agreement dated as of February 13, 1995 between Seller and Buyer, nor any provision hereof or thereof, is intended to confer upon any Person other than the Parties any rights or remedies hereunder. 13.08. Captions. The captions herein are included for convenience of -------- reference only and shall be ignored in the construction or interpretation hereof. 13.09. Legal Proceedings. ----------------- (a) Mediation. Any claim, dispute, or controversy between the Parties --------- arising in connection with or relating to this Agreement or the making, performance or interpretation thereof shall, if not settled by negotiation, be submitted to non-binding mediation under the Procedure for Mediation of Business Disputes of the Center for Public Resources, Inc. then in effect. Any demand for mediation shall be made in writing and served upon the other Party in the same manner as otherwise provided for notice in this contract. The demand shall set forth with reasonable specificity the basis of the dispute and the performance or relief sought. The Parties shall, within thirty (30) days of receipt of a demand to mediate, confer and select a -38- mediator. The mediation shall take place at a time and location mutually agreeable to the Parties and the mediator, but not later than 60 days after a demand for mediation is received. (b) Jurisdiction. Any claim, dispute or controversy not settled by ------------ mediation shall be resolved in the federal or state courts in the State of Delaware. The Parties hereby irrevocably submit to the exclusive jurisdiction of a court sitting in the State of Delaware over any suit, action or proceeding brought against either Party by any Person or other Party and arising out of or relating to this Agreement or the Ancillary Agreements. Each Party agrees that, during the pendency of any such suit action or proceeding commenced in accordance with the provisions of this Section 13.09(b), it will only bring any counter-claims arising out of or relating to this Agreement or the Ancillary Agreements (whether or not related to the matter currently the subject of litigation) in the court in which each suit, action or proceeding is pending. Each Party hereby irrevocably waives, to the fullest extent permitted by law, any objection that it may now have or hereafter have to the laying of the venue of any such suit, action or proceeding in the court contemplated under this Section 13.09(b), and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 13.10. No Partnership or Joint Venture. Notwithstanding anything to ------------------------------- the contrary contained herein, nothing contained herein shall be construed as creating a partnership or joint venture relationship between the Parties and the Parties shall be deemed to have made any election necessary under applicable law, rule or regulation to prevent their being considered or deemed to be a partnership or joint venture. -39- IN WITNESS WHEREOF, the Parties here caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. PARAMETRIC TECHNOLOGY CORPORATION By: /s/ C. Richard Harrison --------------------------- NAME: C. Richard Harrison Title: President and Chief Operating Officer PTC ACQUISITION CORPORATION By: /s/ C. Richard Harrison --------------------------- NAME: C. Richard Harrison Title: President EVANS & SUTHERLAND COMPUTER CORPORATION By: /s/ James Oyler --------------------------- Name: James Oyler Title: President and Chief Executive Officer -40- EXHIBIT A PURCHASED ASSETS ITEM DESCRIPTION ---- ----------- Assigned Contracts All Contracts, Licenses, Leases and Agreements listed on Schedules 3.08(b), 3.13(a), 3.13(b), 3.13(c), 3.13(d), 3.13(e), 3.17(e), and 3.17(f). Personal Property All personal property listed on Schedules 3.06(a) and 3.08(a). Accounts Receivable All accounts receivable listed on Schedule 3.23. Other Assets All rights under all Assigned Contracts (collectively, the "Contract Rights"); all rights, claims, credits, --------------- causes of action (choate or inchoate), rights of set-off against third parties relating to the Purchased Assets or the Business, including, without limitation, unliquidated rights under any manufacturers' and vendors' warranties; the obligations that Seller is required to perform for customers with respect to the customer deposits deducted from the Purchase Price pursuant to Section 2.06(a); and all goodwill associated with the Business and the Purchased Assets. Proprietary Rights As listed on Schedule 3.17 EXHIBIT B --------- PATENT ASSIGNMENT AND GRANT-BACK LICENSE AGREEMENT This Agreement effective _______________, 1995, is made by and between Panametric Technology Corporation, a Massachusetts corporation (hereinafter, together with all subsidiary and affiliate companies which it now or hereinafter owns or controls, "PTC"), and Evans & Sutherland Computer Corporation, a Utah corporation ("E&S"). WHEREAS, E&S and PTC are Parties to a certain Asset Purchase Agreement (the "Purchase Agreement") relating to the purchase and sale of certain assets of the Design Software Division of E&S, including the sale and assignment of Proprietary Rights (as defined in the Purchase Agreement); WHEREAS, the Parties desire to effect the assignment by E&S to PTC pursuant to the Purchase Agreement of all claims of all United States patents and all patent applications set forth in Appendix A to this Agreement, together ---------- with any division, continuation, continuation-in-part, extension, revival and reissue thereof or any substitution therefor, and all corresponding patents and patent applications in other countries (the "Assigned Patents and Patent Rights"); and WHEREAS, E&S has requested, and PTC desires to grant to E&S, a license under the Assigned Patents and Patent Rights, as well as a license to certain software included in the Proprietary Rights, such licenses to be limited in scope as set forth herein. NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained in this Agreement and in the Purchase Agreement, in which this Agreement is incorporated and made a part, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, PTC and E&S hereby agree as follows: 1. Definitions. The following terms shall have the meaning set ----------- forth below. Terms not otherwise defined herein shall have the meaning ascribed to them in the Purchase Agreement. "Exclusive Field of Use" means the design, development, ---------------------- modification, reproduction, use, distribution, sale, license and support of software products for applications consisting of mechanical (A) computer-aided engineering, design and manufacturing, (B) computer-aided styling and industrial design and (C) kinematics and structural and thermal dynamics. The Exclusive Field of Use shall also include any extensions of the foregoing that may develop after the Closing as a result of general changes in the markets for such products. "Restricted Field of Use" means the design, development, ----------------------- modification, reproduction, use, distribution, sale, license and support of hardware and software products for E&S's current simulation, graphics, entertainment and visualization businesses (other than those in the Exclusive Field of Use). The Restricted Field of Use shall also include any - 2 - extensions of the foregoing that may develop after the Closing as a result of general changes in the markets for such products. "Licensed Software" means the CDRS and 3D Paint software, ----------------- including any and all copyrights therein, included in the Proprietary Rights and conveyed by E&S to PTC pursuant to the Purchase Agreement. For purposes of this Agreement, the Licensed Software includes both source and object code for such software and supporting documentation therefor, such as code listings, flowcharts, schematics and programmer's notes, in each case as the same exist on the Closing Date. 2. Assignment of Patent Rights. E&S hereby assigns, remedies and --------------------------- releases unto PTC all right, title, interest, claim and demand in and to the Assigned Patents and Patent Rights. For a period of two years following the Closing Date, PTC shall not, without the prior written consent of E&S, use or practice the Assigned Patents and Patent Rights within the Restricted Field of Use. Notwithstanding the foregoing, PTC shall not be deemed to be in violation of the preceding sentence if it shall use or practice the Assigned Patents and Patent Rights in products that contain features or functionality that fall within the Restricted Field of Use, provided that the resulting products are not competitive with products of E&S within the Restricted Field of Use existing at the Closing Date (including those products acquired by PTC pursuant to the Purchase Agreement). 3. Grant-Back Patent License. PTC hereby grants E&S a fully paid, ------------------------- non-exclusive, perpetual, irrevocable, worldwide license to make, use, sell and offer to sell devices, methods, processes and products embodying the Assigned Patents and Patent Rights or any claimed elements thereof (or their equivalents), and otherwise to use and practice the Assigned Patents and Patent Rights, provided, however, that E&S shall not use or practice the Assigned Patents and Patent Rights within the Exclusive Field of Use. Notwithstanding the foregoing, E&S shall not be deemed to be in violation of the foregoing sentence if it shall use the assigned Patents and Patent Rights in products that contain features or functionality that fall within the Exclusive Field of Use, provided that the resulting products are not competitive with products of PTC within the Exclusive Field of Use existing at the Closing Date. The license granted herein shall be effective for the life of the subject Assigned Patents and Patent Rights and shall terminate on the expiration date of the last of the subject Assigned Patents and Patent Rights to expire. E&S shall not sublicense any rights granted hereunder for any purpose within the Exclusive Field of Use, but may do so in any other field of use. 4. Software License. PTC hereby grants to E&S a fully paid, ---------------- perpetual, non-exclusive, worldwide right and license, but not within the Exclusive Field of Use, to use, modify, copy, execute, reproduce, sell, distribute, display and perform the Licensed Software or portions thereof, to port, translate and convert the Licensed Software or portions thereof to execute on any operating platform, and to prepare products and works of authorship (including "derivative works" within the meaning of such term in the Copyright Act, 17 U.S.C. Section 101 et seq.) using, based on, derived from or incorporating the Licensed Software or portions thereof. The foregoing grant of rights and licenses includes the right to make and sublicense to end users copies of the Licensed Software (or portions thereof incorporated in any E&S product or work of authorship), in object code form only and on any media or format, provided, however, that E&S shall not sublicense, or develop and release for itself, directly or indirectly, the Licensed Software or any product or work incorporating or reproducing portions of the - 3 - Licensed Software within the Exclusive Field of Use. Notwithstanding anything to the contrary, E&S may use at any time, without restriction, and incorporate in any product or work any application, utility, subroutine, macro, code, library, object module and the like which is generic in nature and not specific to the Licensed Software, and which was not confidential information of E&S (within the meaning of Section 5.01 of the Purchase Agreement) at the date of the Purchase Agreement. In no event shall E&S sublicense or deliver any copy of the source code for the Licensed Software to any Person without the prior written consent of PTC. For purposes of implementing the foregoing license, E&S may retain copies of the Licensed Software following the date of transfer provided for in the Purchase Agreement. Nothing in this Agreement shall be construed to place an olbigation on PTC to deliver or to transfer to E&S any tangible or intangible property following the date of execution of this Agreement. 5. Ownership of Improvements, etc. As between PTC and E&S, each ------------------------------ Party owns and will retain, to the maximum extent permitted by law, all rights, including worldwide intellectual property rights, in (y) all modifications that such Party may make to the Licensed Software following the Closing Date and (z) all inventions, products and works of authorship made by such Party following the Closing Date using, based on, derived from or incorporating any portion of the Licensed Software; and nothing herein shall be construed to mean that either Party licenses, conveys or transfers, or has any obligation to license, convey or transfer to the other Party, any right or interest in such modifications, inventions, products or works, provided, however, that all rights, including intellectual property rights, in portions of the Licensed Software code incorporated or reproduced in any product or work of authorship by E&S pursuant to the license granted in Section 4 hereof are retained by PTC, and no rights are granted to E&S other than the rights and licenses expressly granted hereunder. 6. Other Terms and Provisions. -------------------------- (a) Ownership. E&S retains no ownership or intellectual --------- property rights in the Assigned Patents and Patent Rights under this Agreement except for such license rights as are expressly set forth herein. (b) Disclaimer of Warranties. The Assigned Patents and ------------------------ Patent Rights are assigned to PTC hereunder subject to the representations, warranties and undertakings of the parties contained in the Purchase Agreement, including without limitation Sections 3.17 and Article XI thereof. The Assigned Patents and Patent Rights and the Licensed Software are licensed to E&S hereunder "AS IS", WITHOUT WARRANTY OF ANY KIND. PTC DISCLAIMS ALL WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTIES OF NON-INFRINGEMENT. (c) No Obligation to Defend Infringement Claims. PTC shall ------------------------------------------- have no obligation to defend any claim that the Assigned Patents and Patent Rights or Licensed Software infringe any patent or other intellectual property right or to assert any claim of Infringement against another Person. In the event that PTC elects not to defend or assert any such claim, E&S may, at its cost and expense, assume the defense or prosecution of such claim. (d) Entire Agreement. This Agreement, together with the ---------------- Purchase Agreement, constitutes the full and complete understanding of the Parties with respect to the -4- subject matter hereof and these documents together supersede and terminate all other prior or contemporaneous agreements between the Parties, whether oral or written, with respect to the subject matter therein. (e) Successors and Assigns. Except as may otherwise be provided in ---------------------- Section 2, this Agreement and any rights granted hereby may be assigned by PTC, in whole or in part, to any person or entity without the consent of E&S. In no event shall E&S assign this Agreement or any rights granted hereby without the prior written consent of PTC, which consent shall not be unreasonably withheld. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. PARAMETRIC TECHNOLOGY EVANS & SUTHERLAND COMPUTER CORPORATION: CORPORATION: By: By: -------------------- -------------------- Name: Name: Title: Title: EXHIBIT A --------- SCHEDULE OF PATENTS AND PATENT APPLICATIONS ------------------------------------------- U.S. Patents: Other Corresponding Filing/Issue Patent No. Issue Date Patents/Application Date - ---------- ---------- ------------------- ------------ 5,251,160 5,361,386 Pat. Pending Docket No. 853-260 (Paint) Pat. Pending Docket No. 853-260 C1 (Continuation of Paint) Pat. Pending Docket No. 853-278 (Modeling) U.S. Patent Applications: Filing Docket Serial Other Title Date No. No. Corresponding - ----- ------ ------ ------ ------------- Texture Operations EXHIBIT C --------- PATENT LICENSE AGREEMENT ------------------------ This Agreement effective _______________, 1995, is made by and between Parametric Technology Corporation, a Massachusetts corporation (hereinafter, together with all subsidiary and affiliate companies which it now or hereafter owns or controls, "PTC"), and Evans & Sutherland Computer Corporation, a Utah, corporation ("E&S"). WHEREAS, E&S and PTC are parties to a certain Asset Purchase Agreement (the "Purchase Agreement") relating to the purchase and sale of certain assets of the Design Software Division of E&S, including the sale and assignment of Proprietary Rights (as defined in the Purchase Agreement); WHEREAS, E&S will retain ownership of all claims of all United States patents and any and all patent applications set forth in Appendix A to this ---------- Agreement, together with any division, continuation, continuation-in-part, extension, revival and reissue thereof or any substitution therefor, and all corresponding patents and patent applications in other countries (the "Retained Patents and Patent Rights"); and WHEREAS, PTC has requested, and E&S desires to grant to PTC, a license under the Retained Patents and Patent Rights, such license to be limited in scope as set forth herein. NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained in this Agreement and in the Purchase Agreement, in which this Agreement is incorporated and made a part, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, PTC and E&S hereby agree as follows: 1. Definitions. The following terms shall have the meaning set ----------- forth below. Terms not otherwise defined herein shall have the meaning ascribed to them in the Purchase Agreement. "Exclusive Field of Use" means the design, development, ---------------------- modification, reproduction, use, distribution, sale, license and support of software products for applications consisting of mechanical (A) computer-aided engineering, design and manufacturing, (B) computer-aided styling and industrial design and (C) kinematics and structural and thermal dynamics. The Exclusive Field of Use shall also include any extensions of the foregoing that may develop after the Closing as a result of general changes in the markets for such products. "Restricted Field of Use" means the design, development, ----------------------- modification, reproduction, use, distribution, sales, license and support of hardware and software products for E&S's current simulation, graphics, entertainment and visualization businesses (other than those in the Exclusive Field of Use). The Restricted Field of Use shall also include any extensions of the foregoing that may develop after the Closing as a result of general changes in the markets for such products. - 2 - 2. Patent License Grant to PTC. E&S hereby grants PTC a fully --------------------------- paid, non-exclusive, perpetual irrevocable, worldwide license to make use, sell and offer to sell devices, methods, processes and products embodying the Retained Patents and Patent Rights or any claimed elements thereof (or their equivalents), and otherwise to use and practice the Retained Patents and Patent Rights; provided, however, that for a period of two years following the Closing Date. E&S shall grant no further licenses within the Exclusive Field of Use; and provided further, that, for a period of two years following the Closing Date, PTC shall not use or practice the Retained Patents and Patent Rights pursuant to the foregoing license within the Restricted Field of Use. Notwithstanding the foregoing, PTC shall not be deemed to be in violation of the final proviso in the preceding sentence if it shall use or practice the Retained Patents and Patent Rights in products that contain features or functionality which fall within the Restricted Field of Use, provided that the resulting products are not competitive with products of E&S within the Restricted Field of Use existing at the Closing Date. The license granted herein is, at all times, subject to E&S right, title, interest, claim and demand which E&S has in and to the Retained Patents and Patent Rights. The license granted herein shall be effective for the life of the subject Retained Patents and Patent Rights and shall terminate on the expiration date of the last of the subject Retained Patents and Patent Rights to expire. For the term of this Agreement, PTC will not sublicense the rights granted herein to another Person without the written permission of E&S, which consent shall not be unreasonably withheld. 3. Restrictions on Practice. For a period of two years following ------------------------ the Closing, E&S shall not use or practice the Retained Patents and Patent Rights within the Exclusive Field of Use. Notwithstanding the foregoing, E&S shall not be deemed to be in violation of the foregoing sentence if it shall use or practice the Retained Patents and Patent Rights in products within the Restricted Field of Use that contain features or functionality which fall within the Exclusive Field of Use, provided that the resulting products are not competitive with products of PTC within the Exclusive Field of Use existing at the Closing Date (including those products acquired by PTC pursuant to the Purchase Agreement). During the term of this Agreement, E&S shall not sublicense any rights to use and practice the Retained Patents and Patent Rights to another Person within the Exclusive Field of Use. 4. Other Terms and Provisions. -------------------------- (a) Ownership. PTC receives no ownership or intellectual --------- property rights in the Retained Patents and Patent Rights under this Agreement except for such license rights as are expressly set forth herein. (b) Disclaimer of Warranties. The Retained Patents and ------------------------ Patent Rights are licensed hereunder "AS IS", WITHOUT WARRANTY OF ANY KIND, EXCEPT AS SET FORTH IN SECTION 3.17 OF THE PURCHASE AGREEMENT. EXCEPT AS SO SET FORTH IN THE PURCHASE AGREEMENT, E&S DISCLAIMS ALL WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTIES OF NON- INFRINGEMENT. (c) No Obligation to Defend Infringement Claims. Except as ------------------------------------------- set forth in the Purchase Agreement, E&S shall have no obligation to defend any claim that the Retained Patents and Patent Rights infringe any patent or other intellectual property right or to assert -3- any claim of infringement against another Person, In the event that E&S elects not to defend or assert any such claim, PTC may, at its cost and expense, assume the defense or prosecution of such claim. (d) Entire Agreement. This Agreement, together with the Purchase ---------------- Agreement, constitutes the full and complete understanding of the parties with respect to the subject matter hereof and these documents together supersede and terminate all other prior or contemporaneous agreements between the parties, whether oral or written, with respect to the subject matter therein. (e) Successors and Assigns. Except as may otherwise be provided in ---------------------- Section 2, this Agreement and any rights granted hereby may be assigned by PTC, in whole or in part, to any person or entity without the consent of E&S. In no event shall E&S assign this Agreement or any rights granted hereby without the prior written consent of PTC, which consent shall not be unreasonably withheld. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. PARAMETRIC TECHNOLOGY EVANS & SUTHERLAND COMPUTER CORPORATION: CORPORATION: By: By: --------------------- --------------------- Name: Name: Title: Title: EXHIBIT A --------- PATENTS AND PATENT APPLICATIONS ------------------------------- U.S. Patent: Other Corresponding Filing/Issue Patent No. Issue Date Patents/Application Date - ---------- ---------- ------------------- ------------ 4,646,251 4,918,626 U.S. Patent Applications: Filing Docket Serial Other Title Date No. No. Corresponding - ----- ------ ------ ------ ------------- EXHIBIT D --------- ASSUMPTION AGREEMENT This ASSUMPTION AGREEMENT is made and entered into as of the __ day of ________, 1995 BETWEEN Parametric Technology Corporation, a Massachusetts corporation ("Buyer"), and Evans & Sutherland Computer Corporation, a Utah corporation ("Seller"), pursuant to a certain Asset Purchase Agreement dated as of March 1, 1995, between Buyer and Seller (the "Agreement"). Pursuant to the Agreement, Buyer purchased certain of the assets, property and business of Seller (the "Purchased Assets"), and Buyer agreed to assume certain liabilities of Seller in connection with its acquisition of the Purchased Assets. Capitalized terms used as defined terms herein and not otherwise defined shall have the meanings set forth in the Agreement. 1. Assumption of Liabilities. ------------------------- (a) As part of the consideration for the sale of the Purchased Assets by Seller to Buyer, Buyer hereby assumes and agrees to pay, perform and discharge, and shall have a continuing obligation to discharge, when and as they become due, all liabilities and obligations of Seller described in the Agreement and Disclosure Schedule as being Assumed Liabilities. (b) Notwithstanding the foregoing, Buyer shall not be obligated to pay, perform or discharge any obligation except to the extent that such obligation or liability constitutes a valid and legally enforceable claim against Seller with respect to the Assumed Liabilities and nothing herein shall prevent Buyer from contesting in good faith any such obligation or liability. (c) Notwithstanding anything to the contrary set forth above, Buyer does not assume and will not assume or be deemed to have assumed any debts, liabilities, obligations, contracts, loans, commitments or undertakings of Seller with respect to the Purchased Assets, whether fixed, unliquidated, contingent or otherwise, except as described above. All such non-assumed debts, liabilities, obligations, contracts, loans, commitments or undertakings shall be retained by Seller. 2. Agreement. This Assumption Agreement is subject to and has the --------- benefit of the representations, warranties, covenants, indemnities, terms, conditions and other provisions of the Agreement. The provisions contained herein shall not confer any rights upon any person not a party to the Agreement. WITNESS the due executed hereof as instrument under seal as of the day and the year first above written. PARAMETRIC TECHNOLOGY CORPORATION By: ---------------------- Name: Title: EVANS & SUTHERLAND COMPUTER CORPORATION By: ---------------------- Name: Title: -2- EXHIBIT E --------- BILL OF SALE THIS BILL OF SALE is made, executed and delivered as of the ___th day of ________________, 1995, by Evans & Sutherland Computer Corporation, a Utah corporation ("Seller"), to Farametric Technology Corporation ("Buyer"), a Massachusetts corporation. WITNESSETH: WHEREAS, the Buyer has acquired the entire right, title and interest in and to the Purchased Assets pursuant to an Asset Purchase Agreement by and between the Seller and the Buyer as of March 1, 1995 (the "Purchase Agreement"); and WHEREAS, pursuant to the Purchase Agreement the Seller has agreed to execute such additional instruments as may be necessary or desirable to confirm said acquisition of the Purchased Assets by the Buyer. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged: Capitalized terms not otherwise defined herein shall have the meanings given them in the Purchase Agreement. Seller does hereby sell, transfer and assign unto the Buyer, its successors and assigns forever, all of its right, title and interest in and to the Purchased Assets. Seller, for itself and its successors and assigns, covenants and agrees that in the event any of the Purchased Assets cannot be transferred or assigned by it without the consent of or notice to a third party and in respect of which any necessary consent or notice has not at the date of delivery of this Bill of Sale been given or obtained, the beneficial interest in and to the same shall in any event pass hereby to the Buyer and Seller, for itself and its successors and assigns, consents and agrees to: (a) hold the Purchased Assets in trust for the benefit of Buyer, its successors and assigns, (b) use its best efforts to obtain and secure a valid transfer of the Purchased Assets, and (c) use its best efforts to make or complete such transfer as soon as reasonably possible. Seller, for itself and its successors and assigns, further covenants and agrees without further expense to the Buyer that it will, from time to time at the request of the Buyer, execute, acknowledge, seal and deliver all such other instruments and documents, pay all legal and other fees, and do all such other things necessary to effectuate the transfer and assignment of the Purchased Assets to the Buyer. This Bill of Sale and the covenants and agreements contained herein shall be binding upon Seller, its successors and assigns and shall inure to the benefit of the Buyer, its successors and assigns. The covenants, representations and warranties of Seller set forth in the Purchase -2- Agreement will be incorporated in and survive the execution and delivery of this Bill of Sale and are subject to the limitations and restrictions set forth in the Purchase Agreement. IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed and delivered under seal by a duly authorized officer as of the date first above written. EVANS & SUTHERLAND COMPUTER CORPORATION By: ---------------------------- Title: ------------------------- EX-10.13 4 SETTLEMENT AGREEMENT EXHIBIT 10.13 [LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM] September 13, 1995 BY FEDERAL EXPRESS - ------------------ David F. Evans, Esq. Snell & Wilmer, L.L.P. 111 East Broadway, Suite 900 Salt Lake City, UT 84111-1004 Re: Settlement Among Evans & Sutherland, Thomson And Hughes ------------------------------------ Dear David: Enclosed please find for Evans & Sutherland's files original file- stamped counterparts of the documents dismissing proceedings pursuant to the above-referenced settlement, which I faxed to you with a cover letter confirming filing earlier today. Very Truly Yours, /s/ Daniel J. Fish Daniel J. Fish Enclosures September 12, 1995 ---- Mr. Philip A. Rothman Executive Administrator American Arbitration Association 140 West 51st Street New York, New York 10020-1203 Re: 13 T 181 00690 94 EVANS & SUTHERLAND COMPUTER CORPORATION and THOMSON TRAINING & SIMULATION LIMITED and THOMSON-CSF, S.A. --------------------------------------- Dear Mr. Rothman: The undersigned attorneys for all of the parties to the above- referenced matter hereby advise the Association that this matter has been settled and that all claims asserted herein are voluntarily withdrawn and dismissed with prejudice, effective immediately. Each party shall bear its own costs and attorney's fees. Accordingly, we request that the Association close its file on this matter. Very truly yours, SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: /s/ Dana H. Freyer By: /s/ Fredrick E. Sherman (SB) --------------------------- ---------------------------- Dana H. Freyer Fredrick E. Sherman 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Claimant Attorneys for Respondents Evans & Sutherland Thomson Training & Computer Corporation Simulation Limited and Thomson-CSF, S.A. American Arbitration Association 140 West 51st Street New York, N.Y. 10020 /s/ UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - --------------------------------------x THOMSON-CSF, S.A., : : Plaintiff, : : : -against- : : EVANS & SUTHERLAND COMPUTER : CORPORATION and AMERICAN ARBITRA- : TION ASSOC., : : Defendants. : : - --------------------------------------x STIPULATION FOR DISMISSAL ------------------------- It is hereby stipulated and agreed by and between the parties hereto by their undersigned attorneys that the above-captioned proceeding be dismissed with prejudice and without costs, pursuant to Rule 41(a)(1) of the Federal Rules of Civil Procedure. Dated: New York, New York September 12, 1995 SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: /s/ Dana H. Frey By: /s/ Fredrick E. Sherman (SB-2746) ----------------------------- ---------------------------------- Dana H. Frey Fredrick E. Sherman (DF 0238) (FS 5442) 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Defendant Attorneys for Plaintiff Evans & Sutherland Thomson-CSF, S.A. Computer Corporation UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - --------------------------------------x EVANS & SUTHERLAND COMPUTER COR- : PORATION, : : Petitioner, : 94 Civ. 6795 (JFK) -against- : THOMSON TRAINING & SIMULATION : LIMITED, : : Respondent. : : - --------------------------------------x STIPULATION FOR DISMISSAL ------------------------- It is hereby stipulated and agreed by and between the parties hereto by their undersigned attorneys that the above-captioned proceeding be dismissed with prejudice and without costs, pursuant to Rule 41(a) (1) of the Federal Rules of Civil Procedure. Dated: New York, New York September 12, 1995 SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: /s/ Dana H. Freyer By: /s/ Fredrick E. Sherman (SB-2746) --------------------------- ------------------------- Dana H. Freyer Fredrick E. Sherman (DF 0238) (FS 5442) 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Petitioner Attorneys for Respondent Evans & Sutherland Thomson Training & Computer Corporation Simulation Limited CONFIDENTIAL SETTLEMENT AGREEMENT THIS CONFIDENTIAL SETTLEMENT AGREEMENT ("Agreement") is entered into this 13th day of September, 1995 by and between THOMSON TRAINING AND SIMULATION LIMITED ("TTSL"), Gatwick Road, Crawley, West Sussex RH10 2RL, United Kingdom and THOMSON-CSF. S.A. ("TCSF"), 173, Boulevard Haussmann - 75415 Paris Cedex 08, France (collectively "Thomson"), HUGHES AIRCRAFT COMPANY ("HAC"), 7200 Hughes Terrace, Los Angeles, California 90045 and HUGHES TRAINING, INC. ("HTI"), 2200 Arlington Downs Road, Arlington, Texas 76011 (collectively, "HUGHES") and EVANS & SUTHERLAND COMPUTER CORPORATION ("E&S"), 600 Korans Drive, Salt Lake City, Utah 84108. WHEREAS. on or about October 11, 1986, E&S entered into a working agreement (the "Working Agreement") with Rediffusion Simulation Limited ("Rediffusion"), a corporation existing under the laws of the United Kingdom; and WHEREAS, Rediffusion was subsequently acquired by HAC, which changed Rediffusion's name to Hughes Rediffusion Simulation Limited; and WHEREAS, as of January 15, 1991, E&S and Rediffusion amended the Working Agreement; and WHEREAS, Rediffusion was acquired from HAC by a subsidiary of TCSF on or about December 31, 1993, and TCSF subsequently changed Rediffusion's name to TTSL; and WHEREAS, certain disputes have arisen between E&S, Thomson and HAC with regard to said Working Agreement, and other matters. NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Hughes Payment to E&S. On the effective date of this Agreement, --------------------- HAC shall pay to E&S the sum of Three Million Seven Hundred Fifty Thousand ($3,750,000) by wire transfer to the account and financial institution designated by E&S. 2. Agreement between E&S and HTI. On the effective date of this ----------------------------- Agreement, E&S and HTI shall enter into a separate agreement pursuant to which E&S and HTI will agree (a) to team on certain projects for U.S. and foreign (other than the U.K. MOD or other U.K. platform) military sales, (b) to continue with discussions regarding the implementation of a technology exchange program in connection with such projects, (c) to otherwise work together and (d) to continue to be bound by the confidentiality restrictions in paragraph 4.1 of the Working Agreement, notwithstanding termination of such Working Agreement, such separate agreement to be subject to such other terms and conditions as may be separately negotiated by E&S and HTI. Such separate agreement shall be an independent obligation of E&S and of HTI and shall not, after its execution and delivery on the effective date of this Agreement, be considered part of this Agreement. In no event shall Thomson have any liability or obligation to either E&S or Hughes in the event of any breach by either E&S or HTI of any obligation under such separate agreement between E&S and HTI. 3. Agreement between E&S and TTSL. On the effective date of ------------------------------ this Agreement, E&S and TTSL shall enter into a separate agreement pursuant to which E&S and TTSL will 2 agree (a) that the Working Agreement, as amended and supplemented, and the Rediffusion Simulation Limited OEM Volume Purchase Agreement (Oct. 1, 1986), Rediffusion Simulation Limited Basic Ordering Agreement (Oct. 1, 1986), Evans & Sutherland Computer Corporation OEM Volume Purchase Agreement (Oct. 1, 1986), and Evans & Sutherland Computer Corporation Basic Ordering Agreement (Oct. 1, 1986) has each been effectively terminated and is no longer effective, except for the provisions of paragraph 4.1 of the Working Agreement which shall continue to be binding upon E&S and TTSL, (b) to work in good faith to resolve all support claims and other issues raised by customers of TTSL or of E&S ("Current Customers") that purchased E&S "cgi equipment" (as defined in the Working Agreement) or to whom E&S sold TTSL display systems under the terms of the Working Agreement, (c) to meet to jointly explore in good faith the possibility of establishing a new business relationship in an effort to reach agreement to provide needed products and services to civil customers on a mutually acceptable pricing basis and (d) to meet and negotiate in good faith a new working arrangement with regard to addressing a method for E&S and TTSL to jointly market their products and services to the "civil market" as defined in the Working Agreement, as well as other markets, and (e) to jointly prepare and issue a press release regarding the relationship between E&S and TTSL, such separate agreement to be subject to such other terms and conditions as may be separately negotiated by E&S and TTSL. Such separate agreement shall be an independent obligation of E&S and of TTSL and shall not, after its execution and delivery on the effective date of this Agreement, be considered part of this Agreement. In no event shall Hughes have any 3 liability or obligation to either E&S or TTSL in the event of any breach by either such party of any obligation under such separate agreement between E&S and TTSL. 4. Mutual Release Provision. Except as otherwise herein ------------------------ provided, for and in consideration of the mutual promises and releases contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, on the effective date of this Agreement, each of E&S, TTSL, TCSF, HAC and HTI, on its own behalf and on behalf of its parents, subsidiaries, predecessors, successors, assigns, representatives, agents, attorneys, officers and directors, hereby releases, remises, waives, resigns and forever discharges each other party to this Agreement, its parents, subsidiaries, predecessors, successors, assigns, representatives, agents, attorneys, officers and directors, of and from any and all manner of actions, arbitrations, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever, in law or in equity, of every kind which such party or its predecessors ever had or ever claimed to have had, now has or claims to have, or which such party or its successors or assigns hereafter can, shall or may have, or claim to have, against each other party hereto and the said individuals and/or entities hereinabove mentioned, arising out of or in any way connected with the facts or circumstances existing at the date of this Agreement from the beginning of the world to the date hereof, and relating to or in any way connected with the Working Agreement, including, without limitation of the foregoing, all claims which are, could be, or could have been asserted in, or are in any way based upon, the arbitration proceeding now pending between E&S, TTSL and TCSF before 4 the American Arbitration Association ("AAA") in New York City, New York, No. 13 T 181 00690 94; the civil case entitled Thomson-CSF, S.A., Plaintiff v. ------------------------------- Evans & Sutherland Computer Corporation and American Arbitration Association, - ------------------------------------------------------------------------------ Defendants, No. 94 Civ. 6181 (JFK), in the United States District Court for the - ----------- Southern District of New York; the civil case entitled Evans & Sutherland ------------------ Computer Corporation, Petitioner, v. Thomson Training & Simulation Limited, - --------------------------------------------------------------------------- Respondent, No. 94 Civ. 6795 (JFK), in the United States District Court for the - ---------- Southern District of New York; the appeal pending before the United States Court of Appeals for the Second Circuit, entitled Thomson-CSF, S.A. Plaintiff- ---------------------------- Appellant, v. American Arbitration Association, Defendant, Evans & Sutherland - ----------------------------------------------------------------------------- Computer Corporation, Defendant-Appellee. Docket No. 94-9118; and the litigation - ---------------------------------------- between E&S and Thomson in the United Kingdom entitled Thomson Training & ------------------ Simulation Limited v. Evans & Sutherland Computer Corporation, 1994 T. No. - --------------------------------------------------------------- 1490 (English High Court of Justice, Queen's Bench Division). 5. Limitation on Release. Each party hereto hereby acknowledges --------------------- and agrees that the releases set forth in paragraph 4 do not constitute a release of any of its respective rights or obligations under this Agreement or under the separate agreements provided for in paragraphs 2 and 3 above. 6. Dismissal of Arbitration Proceeding and Civil Litigation. Upon -------------------------------------------------------- the effective date of this Agreement, the respective attorneys of the parties shall have executed the dismissal stipulations and the dismissal instructions to the AAA, requiring the dismissal of such proceedings with prejudice, all of which are attached hereto as Exhibit "A", and the 5 respective parties shall instruct their attorneys to promptly file them with the appropriate court and the AAA. 7. Confidentiality Provision; Press Release. ----------------------------------------- A. Confidentiality. Except as provided in this paragraph 7, the terms of --------------- this Agreement shall remain confidential and shall not, without the consent of all parties, be disclosed by any party to any person, nor shall this Agreement be filed with, or otherwise made available by any party to, any governmental authority, except as required by applicable law, regulation or legal process and only after compliance with paragraph B below. B. Required Disclosure. If any party is requested pursuant to, or ------------------- determines in good faith that it is required by, applicable law, regulation or legal process to disclose the terms of this Agreement to any person, or to file with or otherwise make this Agreement available to any governmental authority, such party shall (i) promptly notify each other party so that such other party or parties may seek a protective order or other appropriate remedy or, in such other party's sole discretion, waive compliance with this paragraph 7, and (ii) consult in good faith with such other party or parties as to the advisability of taking legally available steps to resist or narrow such request or as to the determination that such disclosure, filing or availability is legally required. In this connection, each party confirms that it is not aware of any currently effective requirement to file this Agreement with, or otherwise make it available to, any governmental authority. C. Press Release. Notwithstanding anything in paragraph 7A to the ------------- contrary, the parties agree to jointly issue the press release in the form attached as Exhibit B promptly on or after the effective date of this Agreement. 6 D. Independent Obligations. The respective obligations of the parties ----------------------- under this paragraph 7 are independent of the other obligations of the parties under this Agreement, so that a failure to comply with this paragraph 7 by any party shall not affect the respective rights and obligations of the parties under the other provisions of this Agreement. Without limiting the generality of the foregoing, no party shall have any liability or obligation to any other party for any breach by any other party of any obligation under this paragraph 7 and the payment obligation of HAC under paragraph 1, and the mutual release under paragraph 4, shall not be affected by any breach by any party of this paragraph 7. 8. Notices. Any notice required or permitted to be served -------- hereunder shall be in writing and shall be delivered personally, by overnight courier or sent by facsimile transmission addressed as follows, or to such other address as any party hereto may for itself designate by written notice in accordance herewith: If to E&S: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attention: Gary E. Meredith Fax No.: (801) 588-4500 If to HAC or HTI: Hughes Aircraft Company 7200 Hughes Terrace Los Angeles, California 90045 Attention: Larry D. Hunter Fax No.: (310) 568-7834 or (310) 568-7212 7 If to TTSL or TCSF: Thomson-CSF 173, Boulevard Haussmann 75415 Paris, France Attention: J.F. Pernotte Fax No.: 33-1-53 77 85 04 Copy to: Lambert & Associates 11, avenue Myron T. Herrick 75008 Paris, France Attention: Yannick Chalme Fax No.: 33-1-49 53 93 42 or 44 Notice shall be deemed properly given on the date of facsimile transmission or on the date of delivery, whichever applies. 9. MISCELLANEOUS. ------------- A. Exhibits. Exhibits A, B and C referred to herein are intended to -------- be and hereby are specifically made a part of this Agreement. B. Entire Agreement. This Agreement contains the entire ---------------- understanding between the parties hereto with respect to the transactions contemplated hereby, and may not be amended, modified, altered or waived except by an instrument in writing 8 signed by the party against whom such amendment, modification, alteration or waiver is sought to be enforced. C. Governing Law. This Agreement shall be construed and interpreted ------------- in accordance with the laws of the State of New York without regard to its choice of law provisions. D. Binding Effect. This Agreement shall bind and inure to the -------------- benefit of the parties hereto and their respective successors and assigns. E. Construction. The captions and headings contained herein are ------------ inserted for convenient reference only, are not a part hereof and the same shall not limit or construe the provisions to which they apply. References in this Agreement to "paragraphs" are to the paragraphs in this Agreement, unless otherwise noted. F. Expenses. Each party shall pay and be responsible for the costs -------- and expenses, including, without limitation, attorneys' and accountants' fees, incurred by such party in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby. E&S shall be solely responsible for the fees and costs of the Escrow Agent. G. Assignment. No party hereto may assign any of its rights or ---------- delegate any of its obligations under this Agreement without the express written consent of the other parties hereto. H. No Rights to Others. Except as otherwise provided in paragraph ------------------- 4, nothing herein contained or implied is intended or shall be construed to confer upon or give to any person, firm or corporation, other than the parties hereto and their 9 respective successors and permitted assigns or personal representatives, any rights or remedies under or by reason of this Agreement. I. Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement, binding upon all parties hereto, notwithstanding that the parties are not signatories to the original or the same counterpart. J. No Admission. Nothing in this Agreement shall be deemed an ------------ admission by any party of any liability to any other party in respect of the matters subject to the mutual release in paragraph 4. The parties mutually acknowledge that the press release attached as Exhibit B contains an appropriate description of the basis for and terms of this settlement. K. Effective Date; Escrow. This Agreement shall become effective on ---------------------- the date on which all of the following shall have occurred: (i) five counterparts of this Agreement shall have been executed by each party and delivered to Snell & Wilmer L.L.P. ("Escrow Agent"); (ii) E&S and HTI shall have confirmed in writing to the Escrow Agent that the agreement provided for in paragraph 2 has been signed or that the requirement for such agreement has been waived by such parties; (iii) E&S and TTSL shall have confirmed in writing to the Escrow Agent that the agreement provided for in paragraph 3 has been signed or that the requirement for such agreement has been waived by such parties; (iv) the respective attorneys of the parties shall have executed the dismissal stipulations and dismissal instructions provided for 10 in paragraph 6 and such documents shall have been delivered to the Escrow Agent; and (v) E&S shall have received the wire transfer of funds provided for in paragraph 1. Hughes agrees to initiate such wire transfer promptly after receipt by it of written confirmation by the Escrow Agent that the conditions in clauses (i), (ii), (iii) and (iv) have been satisfied. The Escrow Agent shall deliver to each party a signed copy of this Agreement promptly after the effective date. Attached as Exhibit C is the form of Escrow Agreement which the Escrow Agent shall have executed and delivered to each of the parties prior to execution of this Agreement by each such party. L. Governing Law and Settlement of Disputes. All disputes arising ---------------------------------------- from the validity, interpretation, implementation or performance of this Agreement shall be finally settled by arbitration. The arbitration shall be held in New York City and conducted in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with those rules. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. THOMSON TRAINING AND THOMSON-CSF, S.A. SIMULATION LIMTED By: /s/ Louis Le Porte By: /s/ Louis Le Porte --------------------------- -------------------------- Its: Louis Le Porte Its: Louis Le Porte -------------------------- ------------------------- 6 September 1995 6 September 1995 11 EVANS & SUTHERLAND COMPUTER HUGHES AIRCRAFT COMPANY CORPORATION By: By: ------------------------------ ----------------------------- Its: Its: ----------------------------- ---------------------------- HUGHES TRAINING, INC. By: ----------------------------- Its: ---------------------------- 12 EXHIBIT A Arbitration and Civil Action Dismissal Documentation 13 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - -----------------------------------x : THOMSON-CSF, S.A., : : Plaintiff, : : 94 Civ. 6181 (JFK) -against- : : EVANS & SUTHERLAND COMPUTER : CORPORATION and AMERICAN : ARBITRATION ASSOC., : : Defendants. : : - -----------------------------------x STIPULATION FOR DISMISSAL ------------------------- It is hereby stipulated and agreed by and between the parties hereto by their undersigned attorneys that the above-captioned proceeding be dismissed with prejudice and without costs, pursuant to Rule 41(a)(1) of the Federal Rules of Civil Procedure. Dated: New York, New York August __, 1995 SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: By: Dana K. Freyer Fredrick E. Sherman (DF 0238) (FS 5442) 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Defendant Attorneys for Plaintiff Evans & Sutherland Thomson-CSF, S.A. Computer Corporation UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - --------------------------------------x EVANS & SUTHERLAND COMPUTER : CORPORATION, : : Petitioner, : 94 Civ. 6795 (JFK) : -against- : : THOMSON TRAINING & SIMULATION : LIMITED, : : Respondent. : : - --------------------------------------: STIPULATION FOR DISMISSAL ------------------------- It is hereby stipulated and agreed by and between the parties hereto by their undersigned attorneys that the above-captioned proceeding be dismissed with prejudice and without costs, pursuant to Rule 41(a)(1) of the Federal Rules of Civil Procedure. Dated: New York, New York August __, 1995 SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: By: -------------------------- ----------------------------- Dana K. Freyer Fredrick E. Sherman (DF 0238) (FS 5442) 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Petitioner Attorneys for Respondent Evans & Sutherland Thomson Training & Computer Corporation Simulation Limited August __, 1995 Mr. Philip A. Rothman Executive Administrator American Arbitration Association 140 West 51st Street New York, New York 10020-1203 Re: 13 T 181 00690 94 EVANS & SUTHERLAND COMPUTER CORPORATION and THOMSON TRAINING & SIMULATION LIMITED and THOMSON-CSF. S.A. ---------------------------------------- Dear Mr. Rothman: The undersigned attorneys for all of the parties to the above-referenced matter hereby advise the Association that this matter has been settled and that all claims asserted herein are voluntarily withdrawn and dismissed with prejudice, effective immediately. Each party shall bear its own costs and attorney's fees. Accordingly, we request that the Association close its file on this matter. Very truly yours, SKADDEN. ARPS. SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: _____________________________ By: ____________________________ Dana K. Freyer Fredrick E. Sherman 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Claimant Attorneys for Respondents Evans & Sutherland Thomson Training & Computer Corporation Simulation Limited and Thomson-CSF, S.A. EXHIBIT B Form of Press Release 14 PRESS RELEASE - ------------- Major Simulation Companies Reach Accord - --------------------------------------- Hughes, Thomson, and Evans & Sutherland Settle Disputes (City and Date) Hughes Training, Inc., ( ) Thomson Training & Simulation Ltd. ( ), and Evans & Sutherland Computer Corporation (Nasdaq ESCC), three of the major suppliers of products to the simulation training market, today announced the resolution of differences among them and their parent companies and the dismissal of any and all legal actions resulting from contractual disputes related to prior distribution agreements to which they had been parties. The settlement will allow all three companies to proceed to supply their products to the market, and will make it possible for each party to work with one or more of the other parties in serving the market. According to James R. Oyler, President and Chief Executive Officer of E&S, "E&S has had a long and successful history with both Hughes and Thomson to jointly provide outstanding equipment and services to the pilot training market. Each company brings special products and expertise to the market and each company provides outstanding customer service. This settlement allows us to get on with business." Hughes Training's president, Mr. Smart I. Moore, Said "The agreement enables Hughes Training, the industry's leading training systems integrator, to continue to provide its customers with the best value visual system solutions that meet specific program requirements. It will enhance our ability to provide systems that maximize image generator and display performance." For additional information contact: Hughes Training Rick Oyler (817) 695-3536 Thomson Training & Simulation Ltd. Eric Le Mer (44) 1.293.563.700 Evans & Sutherland Gary E. Meredith (801) 588-1711 EXHIBIT C Form of Escrow Agreement 15 ESCROW AGREEMENT THIS ESCROW AGREEMENT ("Agreement") is made as of September 13, 1995, by SNELL & WILMER LLP, as Escrow Agent under the Settlement Agreement referred to below ("Escrow Agent"), in favor of THOMSON TRAINING AND SIMULATION LIMITED ("TTSL") and THOMSON-CSF, S.A. ("TCSF") (collectively "Thomson"), HUGHES AIRCRAFT COMPANY ("HAC") and HUGHES TRAINING, INC. ("HTI") (collectively "Hughes"), and EVANS & SUTHERLAND COMPUTER CORPORATION ("E&S"), Capitalized terms not otherwise defined in this Agreement have the meanings given them in the Settlement Agreement (as defined below). WHEREAS, TTSL, TCSF. HAC, HTI and E&S have negotiated a certain Confidential Settlement Agreement in the attached form ("Settlement Agreement"); and WHEREAS, such Settlement Agreement provides for the establishment of an escrow arrangement with Escrow Agent and this Agreement establishes the terms of such escrow arrangement. NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, Escrow Agent, and TTSL, TCSF, HAC, HTI and E&S (each of TTSL, TCSF, HAC, HTI and E&S being referred to as a "Party" and all of which together are referred to as the "Parties") agree as follows: 1. Escrow Agent. The Parties hereby appoint and designate Snell & Wilmer ------------ LLP as Escrow Agent for the purposes set forth herein and the Escrow agent accepts such appointment and designation, subject to the terms and conditions of this Agreement. Escrow Agent shall exercise the same degree of care toward the items deposited pursuant to this Agreement as it exercises toward its own similar property, and Escrow Agent shall not be held liable to any higher standard of care under this Agreement nor deemed to owe any fiduciary duty to the Parties. Escrow Agent shall be obligated to perform only such duties as are expressly set forth herein, and no implied covenants or obligations shall be inferred from this Agreement. Escrow Agent's obligations hereunder shall cease when Escrow Agent has distributed the Escrowed Documents and funds as provided in this Agreement. 2. Delivery of Signed Copies of Settlement Agreement. Promptly upon ------------------------------------------------- receipt by Escrow agent of five copies of the Settlement Agreement from any Party, signed by an Authorized Signatory of such Party (as defined in paragraph 6 of this Agreement) and of the dismissal stipulations and dismissal instructions provided for in paragraph 6 of the Settlement Agreement (the "Dismissal Instruments"), Escrow Agent shall acknowledge receipt by written notice to all the Parties given in accordance with paragraph 8 of the Settlement Agreement. Escrow Agent shall hold all such signed copies in escrow in accordance with this Agreement until the first to occur of (a) the release of the Escrowed Documents in accordance with paragraph 4 of this Agreement, or (b) the termination of this Agreement in accordance with paragraph 5 of this Agreement. Any copies of the Settlement Agreement and the Dismissal Instruments received by Escrow Agent as provided above are referred to below as the "Escrowed Documents." 3. Payment. The payment required under paragraph 1 of the Settlement ------- Agreement shall be made by HAC to the trust account of Escrow Agent, which is as follows: First Interstate Bank of Utah, N.A., Main Office Salt Lake City, Utah 84142-0002 ABA Routing No. 124000025 Snell & Wilmer Trust Account Account No. 02087161 Reference: Evans & Sutherland Escrow, Account No. 21988.0033 Escrow Agent shall confirm receipt of such payment by written notice to each Party, delivered in accordance with paragraph 8 of the Settlement Agreement. Upon satisfaction of the conditions in paragraph 4 of this Agreement for release of the Escrowed Documents, Escrow Agent shall transit the payment received by Escrow Agent under this paragraph 3 to E&S in accordance with its separate instructions to Escrow Agent. If this Agreement is terminated pursuant to paragraph 5 of this Agreement, the deposited funds shall be returned to the Party depositing the funds. Escrow Agent shall not be obligated to deposit the funds in an interest-bearing account and no Party will be entitled to any interest on the funds. 4. Release of Escrowed Documents. The Escrowed Documents shall be ----------------------------- released from the escrow arrangement provided for in his Agreement on the effective date of the Settlement Agreement. As contemplated by paragraph 9K of the Settlement Agreement, such effective date shall occur on such date as all of the following conditions shall have been satisfied: (a) Escrow Agent shall have received five copies of the Settlement Agreement signed by an Authorized Signatory of each Party; (b) Escrow Agent shall have received written confirmation from an Authorized Signatory of each of E&S and HTI that the agreement provided for in paragraph 2 of the Settlement Agreement has been signed; (c) Escrow Agent shall have received written confirmation from an Authorized Signatory of each of E&S and TTSL that the agreement provided for in paragraph 3 of the Settlement Agreement has been signed; (d) the respective attorneys of the Parties shall have executed and delivered to the Escrow Agent the Dismissal Instruments; and (e) Escrow Agent shall have received in its escrow account the payment required under paragraph 1 of the Settlement Agreement. Promptly after the occurrence of all such conditions to the effective date of the Settlement Agreement, Escrow Agent shall deliver one fully signed copy of the Settlement Agreement to each Party, to its address shown in paragraph 8 of the Settlement Agreement and shall deliver the Dismissal Instruments to the respective attorneys of the Parties for filing with the appropriate court and the AAA in accordance with paragraph 6 of the Settlement Agreement. 2 5. Termination of Escrow. If the effective date of the Settlement --------------------- Agreement shall not have occurred within 30 days after the date first above written, then any Party which has deposited signed copies of the Settlement Agreement with Escrow Agent may, upon written notice by an Authorized Signatory of such Party to Escrow Agent (delivered as provided in paragraph 7 of this Agreement) and to each other Party (delivered in accordance with paragraph 8 of the Settlement Agreement) delivered at any time after such 30-day period, terminate this Agreement and require Escrow Agent to return to such Party all of the copies of the Settlement Agreement signed by such Party. Promptly after receipt of such notice, Escrow Agent shall return all the signed copies of the Settlement Agreement then held by it to the applicable Party which submitted such signed copy and shall destroy any signed copies of the Dismissal Instruments then held by it, all such signed copies shall be null and void and of no further force or effect, and this Agreement shall be terminated. 6. Authorized Signatories. The "Authorized Signatories" of each Party ---------------------- for purposes of this Agreement. and their signature(s), are set forth on the attached certificates signed by the Secretary or an Assistant Secretary of each Party. 7. Notices to Escrow Agent. Any notice required or permitted to be served hereunder shall be in writing and shall be delivered personally, by overnight courier or sent by facsimile transmission addressed as follows: Snell & Wilmer L.L.P., 111 East Broadway, Suite 900, Broadway Centre, Salt Lake City, Utah 84111; Attention: Greg Nielsen; Facsimile Number: (801) 237-1950. Notice shall be deemed properly given on the date of facsimile transmission or on the date of delivery, whichever applies. 8. Waiver of Conflict. Each Party acknowledges and agrees that it is ------------------ aware that Snell & Wilmer L.L.P. acts as counsel to E&S in connection with various matters, including, without limitation, the negotiation and preparation of the Settlement Agreement as well as this Agreement. Any conflict of interest which might exist in this regard is waived by each Party. The Parties further agree that Escrow Agent is free to assume full legal representation of E&S in any dispute, including, but not limited to. any dispute arising between E&S and any or all of the other Parties relating to this Agreement, notwithstanding Escrow Agent's position as escrow agent in this Agreement. Each party hereby expressly waives any conflict of interest created by this Agreement and consents to such representation of E&S by Escrow Agent. 9. Amendment. This Agreement may be amended, and the requirements set --------- forth herein may be waived, only by an instrument in writing signed by the Escrow Agent and by an Authorized Signatory of each of the Parties. 10. Escrow Agent's Compensation and Expenses. For its services hereunder, ---------------------------------------- Escrow Agent shall be entitled to be reimbursed for all out of pocket expenses incurred by it in connection with the performance of its duties under this Agreement. The expenses of Escrow Agent shall be paid by E&S. 3 11. Escrow Agent's Liability; Indemnification. Escrow Agent shall not be ----------------------------------------- liable for any error of judgment or for any act done or omitted by it in good faith, or for anything which Escrow Agent may in good faith do or refrain from doing in connection herewith, or for any negligence other than its gross negligence; no liability shall be incurred by Escrow Agent. if. in the event of any dispute or question as to its duties or obligations hereunder, it acts in accordance with paragraph 12. Escrow Agent is authorized to act upon any document believed by it to be genuine and to be signed by the proper parties and shall incur no liability in so acting. HAC, HTI and E&S, jointly and severally indemnify, defend and hold Escrow Agent harmless from any and all loss, damage, or liability, and all expenses (including without limitation, reasonable legal costs and fees) except to the extent arising out of the gross negligence or bad faith of the Escrow Agent. incurred. arising out of, or in connection with, Escrow Agent entering into or performing its duties pursuant to this Agreement. including without limitation, expenses incurred by Escrow Agent pursuant to paragraph 12. 12. Disputes. In the event of a dispute concerning the subject matter of -------- this Agreement such that Escrow Agent deems it necessary for its protection, Escrow Agent may (i) deposit the Escrowed Documents and any payment received pursuant to paragraph 3, together with any notices received by it, into a court of competent jurisdiction until such time as a civil action shall have been finally concluded determining any rights hereunder, (ii) Escrow Agent may resign and appoint a new escrow agent, or (iii) at its discretion at any time, commence a civil action to interplead any conflicting demands to a court of competent jurisdiction to determine its rights and the rights of the Parties. 13. Counterparts. This Agreement may be executed in one or more ------------ counterparts, which together shall constitute one instrument. 14. Binding Effect: Governing Law. This Agreement shall be governed by ----------------------------- and construed in accordance with the laws of the State of Utah, and shall be binding upon and inure to the benefit of the parties and their successors and assigns. 15. Miscellaneous. The provisions in subparagraphs D, E, F, G, H, I, J ------------- and L of paragraph 9 of the Settlement Agreement shall apply to this Agreement and are incorporated herein by this reference. IN WITNESS WHEREOF this Agreement has been signed by Escrow Agent and each of the Parties, as of the day and year first above written. ESCROW AGENT: SNELL & WILMER L.L.P. By ------------------------------- Its ------------------------------- 4 THOMSON: THOMSON TRAINING AND SIMULATION LIMITED By /s/ Louis L. Portz ------------------------------- Its Louis L. Portz ------------------------------- 6 September 1995 THOMSON-CSF By /s/ Louis L. Portz ------------------------------- Louis L. Portz ------------------------------- 6 September 1995 HUGHES: HUGHES AIRCRAFT COMPANY By ------------------------------- Its ------------------------------- HUGHES TRAINING INC. By ------------------------------- Its ------------------------------- E&S: EVANS & SUTHERLAND COMPUTER CORPORATION By ------------------------------- Its ------------------------------- 5 ESCROW AGREEMENT THIS ESCROW AGREEMENT ("Agreement") is made as of September 13, 1995, by SNELL & WILMER L.L.P., as Escrow Agent under the Settlement Agreement referred to below ("Escrow Agent"), in favor of THOMSON TRAINING AND SIMULATION LIMITED ("TTSL") and THOMSON-CSF, S.A. ("TCSF") (collectively "Thomson"). HUGHES AIRCRAFT COMPANY ("HAC") and HUGHES TRAINING, INC, ("HTI) (collectively "Hughes"), and EVANS & SUTHERLAND COMPUTER CORPORATION ("E&S"). Capitalized terms not otherwise defined in this Agreement have the meanings given them in the Settlement Agreement (as defined below). WHEREAS, TTSL, TCSF, HAC, HTI and E&S have negotiated a certain Confidential Settlement Agreement in the attached form ("Settlement Agreement"); and WHEREAS, such Settlement Agreement provides for the establishment of an escrow arrangement with Escrow Agent and this Agreement establishes the terms of such escrow arrangement. NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, Escrow Agent, and TTSL, TCSF, HAC, HTI and E&S (each of TTSL, TCSF, HAC, HTI and E&S being referred to as a "Party" and all of which together are referred to as the "Parties") agree as follows: 1. Escrow Agent. The Parties hereby appoint and designate Snell & ------------ Wilmer L.L.P. as Escrow Agent for the purposes set forth herein and the Escrow Agent accepts such appointment and designation, subject to the terms and conditions of this Agreement. Escrow Agent shall exercise the same degree of care toward the items deposited pursuant to this Agreement as it exercises toward its own similar property, and Escrow Agent shall not be held liable to any higher standard of care under this Agreement nor deemed to owe any fiduciary duty to the Parties. Escrow Agent shall be obligated to perform only such duties as are expressly set forth herein, and no implied covenants or obligations shall be inferred from this Agreement. Escrow Agent's obligations hereunder shall cease when Escrow Agent has distributed the Escrowed Documents and funds as provided in this Agreement. 2. Delivery of SiTed Copies of Settlement Agreement. Promptly upon ------------------------------------------------ receipt by Escrow Agent of five copies of the Settlement Agreement from any Party signed by an Authorized Signatory of such Party (as defined in paragraph 6 of this Agreement) and of the dismissal stipulations and dismissal instructions provided for in paragraph 6 of the Settlement Agreement (the "Dismissal Instruments"). Escrow Agent shall acknowledge receipt by written notice to all the Parties given in accordance with paragraph 8 of the Settlement Agreement. Escrow Agent shall hold all such signed copies in escrow in accordance with this Agreement until the first to occur of (a) the release of the Escrowed Documents in accordance with paragraph 4 of this Agreement, or (b) the termination of this Agreement in accordance with paragraph 5 of this Agreement. Any copies of the Settlement Agreement and the Dismissal Instruments received by Escrow Agent as provided above are referred to below as the "Escrowed Documents." 3. Payment. The payment required under paragraph 1 of the Settlement ------- Agreement shall be made by HAC to the trust account of Escrow Agent, which is as follows: First Interstate Bank of Utah, N.A., Main Office Salt Lake City, Utah 84142-0002 ABA Routing No. 124000025 Snell & Wilmer Trust Account Account No. 02087161 Reference: Evans & Sutherland Escrow, Account No. 21988.0033 Escrow Agent shall confirm receipt of such payment by written notice to each Party, delivered in accordance with paragraph 8 of the Settlement Agreement. Upon satisfaction of the conditions in paragraph 4 of this Agreement for release of the Escrowed Documents, Escrow Agent shall transmit the payment received by Escrow Agent under this paragraph 3 to E&S in accordance with its separate instructions to Escrow Agent. If this Agreement is terminated pursuant to paragraph 5 of this Agreement, the deposited funds shall be returned to the Party depositing the funds. Escrow Agent shall not be obligated to deposit the funds in an interest-bearing account and no Party will be entitled to any interest on the funds. 4. Release of Escrowed Documents. The Escrowed Documents shall be ----------------------------- released from the escrow arrangement provided for in this Agreement on the effective date of the Settlement Agreement. As contemplated by paragraph 9K of the Settlement Agreement, such effective date shall occur on such date as all of the following conditions shall have been satisfied: (a) Escrow Agent shall have received five copies of the Settlement Agreement signed by an Authorized Signatory of each Party; (b) Escrow Agent shall have received written confirmation from an Authorized Signatory of each of E&S and HTI that the agreement provided for in paragraph 2 of the Settlement Agreement has been signed; (c) Escrow Agent shall have received written confirmation from an Authorized Signatory of each of E&S and TTSL that the agreement provided for in paragraph 3 of the Settlement Agreement has been signed; (d) the respective attorneys of the Parties shall have executed and delivered to the Escrow Agent the Dismissal Instruments; and (e) Escrow Agent shall have received in its escrow account the payment required under paragraph 1 of the Settlement Agreement. Promptly after the occurrence of all such conditions to the effective date of the Settlement Agreement, Escrow Agent shall deliver one fully signed copy of the Settlement Agreement to each Party, to its address shown in paragraph 8 of the Settlement Agreement and shall deliver the Dismissal Instruments to the respective attorneys of the Parties for filing with the appropriate court and the AAA in accordance with paragraph 6 of the Settlement Agreement. 5. Termination of Escrow. If the effective date of the Settlement --------------------- Agreement shall not have occurred within 30 days after the date first above written, then any Party which has deposited signed copies of the Settlement Agreement with Escrow Agent may, upon written notice by an Authorized Signatory of such Party to Escrow Agent (delivered as provided in paragraph 7 of this Agreement) and to each other Party (delivered in accordance with paragraph 8 of the Settlement Agreement) delivered at any time after such 30-day period, terminate this Agreement and require Escrow Agent to return to such Party all of the copies of the Settlement Agreement signed by such Party. Promptly after receipt of such notice, Escrow Agent shall return all the signed copies of the Settlement Agreement then held by it to the applicable Party which submitted such signed copy and shall destroy any signed copies of the Dismissal Instruments then held by it, all such signed copies shall be null and void and of no further force or effect, and this Agreement shall be terminated. 6. Authorized Signatories. The "Authorized Signatories" of each Party ---------------------- for purposes of this Agreement, and their signature(s), are set forth on the attached certificates signed by the Secretary or an Assistant Secretary of each Party. 7. Notices to Escrow Agent. Any notice required or permitted to be ----------------------- served hereunder shall be in writing and shall be delivered personally, by overnight courier or sent by facsimile transmission addressed as follows: Snell & Wilmer L.L.P., 111 East Broadway, Suite 900, Broadway Centre, Salt Lake City, Utah 84111; Attention: Greg Nielsen; Facsimile Number: (801) 237-1950. Notice shall be deemed properly given on the date of facsimile transmission or on the date of delivery, whichever applies. 8. Waiver of Conflict. Each Party acknowledges and agrees that it is ------------------ aware that Snell & Wilmer L.L.P. acts as counsel to E&S in connection with various matters, including, without limitation, the negotiation and preparation of the Settlement Agreement as well as this Agreement. Any conflict of interest which might exist in this regard is waived by each Party. The Parties further agree that Escrow Agent is free to assume full legal representation of E&S in any dispute, including, but not limited to, any dispute arising between E&S and any or all of the other Parties relating to this Agreement, notwithstanding Escrow Agent's position as escrow agent in this Agreement. Each party hereby expressly waives any conflict of interest created by this Agreement and consents to such representation of E&S by Escrow Agent. 9. Amendment. This Agreement may be amended, and the requirements set --------- forth herein may be waived, only by any instrument in writing signed by the Escrow Agent and by an Authorized Signatory of each of the Parties. 10. Escrow Agent's Compensation and Expenses. For its services hereunder, ---------------------------------------- Escrow Agent shall be entitled to be reimbursed for all out of pocket expenses incurred by it in connection with the performance of its duties under this Agreement. The expenses of Escrow Agent shall be paid by E&S. 3 11. Escrow Agent's Liability; Indemnification. Escrow Agent shall not be ---------------------------------------- liable for any error of judgment or for any act done or omitted by it in good faith, or for anything which Escrow Agent may in good faith do or refrain from doing in connection herewith, or for any negligence other than its gross negligence; no liability shall be incurred by Escrow Agent, if, in the event of any dispute of question as to its duties or obligations hereunder, it acts in accordance with paragraph 12. Escrow Agent is authorized to act upon any document believed by it to be genuine and to be signed by the proper parties and shall incur no liability in so acting. HAC, HTI and E&S, jointly and severally indemnify, defend and hold Escrow Agent harmless from any and all loss, damage, or liability, and all expenses (including without limitation, reasonable legal costs and fees) except to the extent arising out of the gross negligence or bad faith of the Escrow Agent, incurred, arising out of, or in connection with, Escrow Agent entering into or performing its duties pursuant to this Agreement, including without limitation, expenses incurred by Escrow Agent pursuant to paragraph 12. 12. Disputes. In the event of a dispute concerning the subject matter -------- of this Agreement such that Escrow Agent deems it necessary for its protection, Escrow Agent may (i) deposit the Escrowed Documents and any payment received pursuant to paragraph 3, together with any notices received by it, into a court of competent jurisdiction until such time as a civil action shall have been finally concluded determining any rights hereunder, (ii) Escrow Agent may resign and appoint a new escrow agent, or (iii) at its discretion at any time, commence a civil action to interplead any conflicting demands to a court of competent jurisdiction to determine its rights and the rights of the Parties. 13. Counterparts. This Agreement may be executed in one or more ------------ counterparts, which together shall constitute one instrument. 14. Binding Effect: Governing Law. This Agreement shall be governed by ----------------------------- and construed in accordance with the laws of the State of Utah, and shall be binding upon and inure to the benefit of the parties and their successors and assigns. 15. Miscellaneous. The provisions in subparagraphs D, E, F, G, H, I, ------------- J and L of paragraph 9 of the Settlement Agreement shall apply to this Agreement and are incorporated herein by this reference. IN WITNESS WHEREOF, this Agreement has been signed by Escrow Agent and each of the Parties, as of the day and year first above written. ESCROW AGENT: SNELL & WILMER L.L.P. By /s/ Greg K. Kieler -------------------------------- Its Partner -------------------------------- 4 THOMSON: THOMSON TRAINING AND SIMULATION LIMITED By --------------------------------- Its -------------------------------- THOMSON-CSF By --------------------------------- Its -------------------------------- HUGHES: HUGHES AIRCRAFT COMPANY By /s/ R. S. Austin --------------------------------- Its V.P. & Controller -------------------------------- HUGHES TRAINING INC. By /s/ R. Chris Puffer --------------------------------- Its V.P., Contracts & Legal Affairs -------------------------------- E&S: EVANS & SUTHERLAND COMPUTER CORPORATION By /s/ Gary E. Meredith --------------------------------- Its Vice President -------------------------------- 5 CONFIDENTIAL SETTLEMENT AGREEMENT THIS CONFIDENTIAL SETTLEMENT AGREEMENT ("Agreement") is entered into this 13th day of September, 1995 by and between THOMSON TRAINING AND SIMULATION LIMITED ("TTSL"), Gatwick Road, Crawley, West Sussex RH10 2RL, United Kingdom and THOMSON-CSF, S.A. ("TCSF"), 173, Boulevard Haussmann - 75415 Paris Cedex 08, France (collectively "Thomson"), HUGHES AIRCRAFT COMPANY ("HAC"), 7200 Hughes Terrace, Los Angeles, California 90045 and HUGHES TRAINING, INC. ("HTI"), 2200 Arlington Downs Road, Arlington, Texas 76011 (collectively, "Hughes") and EVANS & SUTHERLAND COMPUTER CORPORATION ("E&S"), 600 Komas Drive, Salt Lake City, Utah 84108. WHEREAS, on or about October 11, 1986, E&S entered into a working agreement (the "Working Agreement") with Rediffusion Simulation Limited ("REDIFFUSION"), a corporation existing under the laws of the United Kingdom; and WHEREAS, Rediffusion was subsequently acquired by HAC, which changed Rediffusion's name to Hughes Rediffusion Simulation Limited; and WHEREAS, as of January 15, 1991, E&S and Rediffusion amended the Working Agreement; and WHEREAS, Rediffusion was acquired from HAC by a subsidiary of TCSF on or about December 31, 1993, and TCSF subsequently changed Rediffusion's name to TTSL; and WHEREAS, certain disputes have arisen between E&S, Thomson and HAC with regard to said Working Agreement, and other matters. NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Hughes Payment to E&S. On the effective date of this Agreement, HAC shall --------------------- pay to E&S the sum of Three Million Seven Hundred Fifty Thousand ($3,750,000) by wire transfer to the account and financial institution designated by E&S. 2. Agreement between E&S and HTI. On the effective date of this Agreement, ----------------------------- E&S and HTI shall enter into a separate agreement pursuant to which E&S and HTI will agree (a) to team on certain projects for U.S. and foreign (other than the U.K. MOD or other U.K. platform) military sales, (b) to continue with discussions regarding the implementation of a technology exchange program in connection with such projects, (c) to otherwise work together and (d) to continue to be bound by the confidentiality restrictions in paragraph 4.1 of the Working Agreement, notwithstanding termination of such Working Agreement, such separate agreement to be subject to such other terms and conditions as may be separately negotiated by E&S and HTI. Such separate agreement shall be an independent obligation of E&S and of HTI and shall not, after its execution and delivery on the effective date of this Agreement, be considered part of this Agreement. In no event shall Thomson have any liability or obligation to either E&S or Hughes in the event of any breach by either E&S or HTI of any obligation under such separate agreement between E&S and HTI. 3. Agreement between E&S and TTSL. On the effective date of this Agreement, ------------------------------ E&S and TTSL shall enter into a separate agreement pursuant to which E&S and TTSL will 2 agree (a) that the Working Agreement, as amended and supplemented, and the Rediffusion Simulation Limited OEM Volume Purchase Agreement (Oct. 1, 1986), Rediffusion Simulation Limited Basic Ordering Agreement (Oct. 1, 1986), Evans & Sutherland Computer Corporation OEM Volume Purchase Agreement (Oct. 1, 1986), and Evans & Sutherland Computer Corporation Basic Ordering Agreement (Oct. 1, 1986) has each been effectively terminated and is no longer effective, except for the provisions of paragraph 4.1 of the Working Agreement which shall continue to be binding upon E&S and TTSL, (b) to work in good faith to resolve all support claims and other issues raised by customers of TTSL or of E&S ("Current Customers") that purchased E&S "cgi equipment" (as defined in the Working Agreement) or to whom E&S sold TTSL display systems under the terms of the Working Agreement, (c) to meet to jointly explore in good faith the possibility of establishing a new business relationship in an effort to reach agreement to provide needed products and services to civil customers on a mutually acceptable pricing basis and (d) to meet and negotiate in good faith a new working arrangement with regard to addressing a method for E&S and TTSL to jointly market their products and services to the "civil market" as defined in the Working Agreement, as well as other markets, and (e) to jointly prepare and issue a press release regarding the relationship between E&S and TTSL, such separate agreement to be subject to such other terms and conditions as may be separately negotiated by E&S and TTSL. Such separate agreement shall be an independent obligation of E&S and of TTSL and shall not, after its execution and delivery on the effective date of this Agreement, be considered part of this Agreement. In no event shall Hughes have any 3 liability or obligation to either E&S or TTSL in the event of any breach by either such party of any obligation under such separate agreement between E&S and TTSL. 4. Mutual Release Provision. Except as otherwise herein provided, for and in -------------------------- consideration of the mutual promises and releases contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, on the effective date of this Agreement, each of E&S, TTSL, TCSF, HAC and HTI, on its own behalf and on behalf of its parents, subsidiaries, predecessors, successors, assigns, representatives, agents, attorneys, officers and directors, hereby releases, remises, waives, resigns and forever discharges each other party to this Agreement, its parents, subsidiaries, predecessors, successors, assigns, representatives, agents, attorneys, officers and directors, of and from any and all manner of actions, arbitrations, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever, in law or in equity, of every kind which such party or its predecessors ever had or ever claimed to have had, now has or claims to have, or which such party or its successors or assigns hereafter can, shall or may have, or claim to have, against each other party hereto and the said individuals and/or entities hereinabove mentioned, arising out of or in any way connected with the facts or circumstances existing at the date of this Agreement from the beginning of the world to the date hereof, and relating to or in any way connected with the Working Agreement, including, without limitation of the foregoing, all claims which are, could be, or could have been asserted in, or are in any way based upon, the arbitration proceeding now pending between E&S, TTSL and TCSF before 4 the American Arbitration Association ("AAA") in New York City, New York, No. 13 T 181 00690 94; the civil case entitled Thomson-CSF, S.A., Plaintiff v. Evans ------------------------------------- & Sutherland Computer Corporation and American Arbitration Association, - ----------------------------------------------------------------------- Defendants, No. 94 Civ. 6181 (JFK), in the United States District Court for the - ---------- Southern District of New York; the civil case entitled Evans & Sutherland ------------------ Computer Corporation, Petitioner, v. Thomson Training & Simulation Limited, - --------------------------------------------------------------------------- Respondent, No. 94 Civ. 6795 (JFK), in the United States District Court for the - ------------ Southern District of New York; the appeal pending before the United States Court of Appeals for the Second Circuit, entitled Thomson-CSF, S.A., Plaintiff- ---------------------------- Appellant, v. American Arbitration Association, Defendant, Evans & Sutherland - ----------------------------------------------------------------------------- Computer Corporation, Defendant-Appellee, Docket No. 94-9118; and the litigation - ---------------------------------------- between E&S and Thomson in the United Kingdom entitled Thomson Training & ------------------ Simulation Limited v. Evans & Sutherland Computer Corporation, 1994 T. No. 1490 - ------------------------------------------------------------- (English High Court of Justice, Queen's Bench Division). 5. Limitation on Release. Each party hereto hereby acknowledges and agrees --------------------- that the releases set forth in paragraph 4 do not constitute a release of any of its respective rights or obligations under this Agreement or under the separate agreements provided for in paragraphs 2 and 3 above. 6. Dismissal of Arbitration Proceeding and Civil Litigation. Upon the -------------------------------------------------------- effective date of this Agreement, the respective attorneys of the parties shall have executed the dismissal stipulations and the dismissal instructions to the AAA, requiring the dismissal of such proceedings with prejudice, all of which are attached hereto as Exhibit "A", and the 5 respective parties shall instruct their attorneys to promptly file them with the appropriate court and the AAA. 7. Confidentiality Provision; Press Release. ----------------------------------------- A. Confidentiality. Except as provided in this paragraph 7, the terms of --------------- this Agreement shall remain confidential and shall not, without the consent of all parties, be disclosed by any party to any person, nor shall this Agreement be filed with, or otherwise made available by any party to, any governmental authority, except as required by applicable law, regulation or legal process and only after compliance with paragraph B below. B. Required Disclosure. If any party is requested pursuant to, or ------------------- determines in good faith that it is required by, applicable law, regulation or legal process to disclose the terms of this Agreement to any person, or to file with or otherwise make this Agreement available to any governmental authority, such party shall (i) promptly notify each other party so that such other party or parties may seek a protective order or other appropriate remedy or, in such other party's sole discretion, waive compliance with this paragraph 7, and (ii) consult in good faith with such other party or parties as to the advisability of taking legally available steps to resist or narrow such request or as to the determination that such disclosure, filing or availability is legally required. In this connection, each party confirms that it is not aware of any currently effective requirement to file this Agreement with, or otherwise make it available to, any governmental authority. C. Press Release. Notwithstanding anything in paragraph 7A to the ------------- contrary, the parties agree to jointly issue the press release in the form attached as Exhibit B promptly on or after the effective date of this Agreement. 6 D. Independent Obligations. The respective obligations of the parties ----------------------- under this paragraph 7 are independent of the other obligations of the parties under this Agreement, so that a failure to comply with this paragraph 7 by any party shall not affect the respective rights and obligations of the parties under the other provisions of this Agreement. Without limiting the generality of the foregoing, no party shall have any liability or obligation to any other party for any breach by any other party of any obligation under this paragraph 7 and the payment obligation of HAC under paragraph 1, and the mutual release under paragraph 4, shall not be affected by any breach by any party of this paragraph 7. 8. Notices. Any notice required or permitted to be served hereunder shall be ------- in writing and shall be delivered personally, by overnight courier or sent by facsimile transmission addressed as follows, or to such other address as any party hereto may for itself designate by written notice in accordance herewith: If to E&S: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attention: Gary E. Meredith Fax No.: (801) 588-4500 If to HAC or HTI: Hughes Aircraft Company 7200 Hughes Terrace Los Angeles, California 90045 Attention: Larry D. Hunter Fax No.: (310) 568-7834 or (310) 568-7212 7 If to TTSL or TCSF: Thomson-CSF 173, Boulevard Haussmann 75415 Paris, France Attention: J.F. Penotte Fax No.: 33-1-53 77 85 04 Copy to: Lambert & Associes 11, avenue Myron T. Herrick 75008 Paris, France Attention: Yannick Chalme Fax No.: 33-1-49 53 93 42 or 44 Notice shall be deemed properly given on the date of facsimile transmission or on the date of delivery, whichever applies. 9. MISCELLANEOUS. -------------- A. Exhibits. Exhibits A, B and C referred to herein are intended to be and hereby are specifically made a part of this Agreement. B. Entire Agreement. This Agreement contains the entire ---------------- understanding between the parties hereto with respect to the transactions contemplated hereby, and may not be amended, modified, altered or waived except by an instrument in writing 8 signed by the party against whom such amendment, modification, alteration or waiver is sought to be enforced. C. Governing Law. This Agreement shall be construed and interpreted in ------------- accordance with the laws of the State of New York without regard to its choice of law provisions. D. Binding Effect. This Agreement shall bind and inure to the benefit of -------------- the parties hereto and their respective successors and assigns. E. Construction. The captions and headings contained herein are inserted ------------ for convenient reference only, are not a part hereof and the same shall not limit or construe the provisions to which they apply. References in this Agreement to "paragraphs" are to the paragraphs in this Agreement, unless otherwise noted. F. Expenses. Each party shall pay and be responsible for the costs and -------- expenses, including, without limitation, attorneys' and accountants' fees, incurred by such party in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby. E&S shall be solely responsible for the fees and costs of the Escrow Agent. G. Assignment. No party hereto may assign any of its rights or delegate ---------- any of its obligations under this Agreement without the express written consent of the other parties hereto. H. No Rights to Others. Except as otherwise provided in paragraph 4, ------------------- nothing herein contained or implied is intended or shall be construed to confer upon or give to any person, firm or corporation, other than the parties hereto and their 9 respective successors and permitted assigns or personal representatives, any rights or remedies under or by reason of this Agreement. I. Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement, binding upon all parties hereto, notwithstanding that the parties are not signatories to the original or the same counterpart. J. No Admission. Nothing in this Agreement shall be deemed an ------------ admission by any party of any liability to any other party in respect of the matters subject to the mutual release in paragraph 4. The parties mutually acknowledge that the press release attached as Exhibit B contains an appropriate description of the basis for and terms of this settlement. K. Effective Date; Escrow. This Agreement shall become effective on the ---------------------- date on which all of the following shall have occurred: (i) five counterparts of this Agreement shall have been executed by each party and delivered to Snell & Wilmer L.L.P. ("Escrow Agent"); (ii) E&S and HTI shall have confirmed in writing to the Escrow Agent that the agreement provided for in paragraph 2 has been signed or that the requirement for such agreement has been waived by such parties; (iii) E&S and TTSL shall have confirmed in writing to the Escrow Agent that the agreement provided for in paragraph 3 has been signed or that the requirement for such agreement has been waived by such parties; (iv) the respective attorneys of the parties shall have executed the dismissal stipulations and dismissal instructions provided for 10 in paragraph 6 and such documents shall have been delivered to the Escrow Agent; and (v) E&S shall have received the wire transfer of funds provided for in paragraph 1. Hughes agrees to initiate such wire transfer promptly after receipt by it of written confirmation by the Escrow Agent that the conditions in clauses (i), (ii), (iii) and (iv) have been satisfied. The Escrow Agent shall deliver to each party a signed copy of this Agreement promptly after the effective date. Attached as Exhibit C is the form of Escrow Agreement which the Escrow Agent shall have executed and delivered to each of the parties prior to execution of this Agreement by each such party. L. Governing Law and Settlement of Disputes. All disputes arising from ---------------------------------------- the validity, interpretation, implementation or performance of this Agreement shall be finally settled by arbitration. The arbitration shall be held in New York City and conducted in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with those rules. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. THOMSON TRAINING AND THOMSON-CSF, S.A. SIMULATION LIMITED By: _________________________ By: ____________________________ Its:_________________________ Its:____________________________ 11 EVANS & SUTHERLAND COMPUTER HUGHES AIRCRAFT COMPANY CORPORATION /s/ Gary E. Meredith /s/ R. S. Austin By: ____________________________ By: ______________________________ Vice President V.P. & Controller Its:____________________________ Its:______________________________ HUGHES TRAINING, INC. /s/ R. Chris Puffer By: ______________________________ VP, Contracts & Legal Affairs Its:______________________________ 12 EXHIBIT A Arbitration and Civil Action Dismissal Documentation 13 August , 1995 -- Mr. Philip A. Rothman Executive Administrator American Arbitration Association 140 West 51st Street New York, New York 10020-1203 Re: 13 T 181 00690 94 EVANS & SUTHERLAND COMPUTER CORPORATION and THOMSON TRAINING & SIMULATION LIMITED and THOMSON-CSF, S.A. --------------------------------------- Dear Mr. Rothman: The undersigned attorneys for all of the parties to the above- referenced matter hereby advise the Association that this matter has been settled and that all claims asserted herein are voluntarily withdrawn and dismissed with prejudice, effective immediately. Each party shall bear its own costs and attorney's fees. Accordingly, we request that the Association close its file on this matter. Very truly yours, SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: /s/ By: /s/ --------------------------- ---------------------------- Dana K. Freyer Fredrick E. Sherman 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Claimant Attorneys for Respondents Evans & Sutherland Thomson Training & Computer Corporation Simulation Limited and Thomson-CSF, S.A. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - -----------------------------------x : THOMSON-CSF, S.A., : : Plaintiff, : : 94 Civ. 6181 (JFK) -against- : : EVANS & SUTHERLAND COMPUTER : CORPORATION and AMERICAN : ARBITRATION ASSOC., : : Defendants. : : - -----------------------------------x STIPULATION FOR DISMISSAL ------------------------- It is hereby stipulated and agreed by and between the parties hereto by their undersigned attorneys that the above-captioned proceeding be dismissed with prejudice and without costs, pursuant to Rule 41(a)(1) of the Federal Rules of Civil Procedure. Dated: New York, New York August __, 1995 SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By:_______________________ By:_______________________ Dana K. Freyer Fredrick E. Sherman (DF 0238) (FS 5442) 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Defendant Attorneys for Plaintiff Evans & Sutherland Thomson-CSF, S.A. Computer Corporation UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - --------------------------------------x EVANS & SUTHERLAND COMPUTER COR- : PORATION, : : Petitioner, : 94 Civ. 6795 (JFK) -against- : THOMSON TRAINING & SIMULATION : LIMITED, : : Respondent. : : - --------------------------------------x STIPULATION FOR DISMISSAL ------------------------- It is hereby stipulated and agreed by and between the parties hereto by their undersigned attorneys that the above-captioned proceeding be dismissed with prejudice and without costs, pursuant to Rule 41(a) (1) of the Federal Rules of Civil Procedure. Dated: New York, New York August __, 1995 SKADDEN, ARPS, SLATE, JONES, DAY, REAVIS MEAGHER & FLOM & POGUE By: By: --------------------------- ------------------------- Dana K. Freyer Fredrick E. Sherman (DF 0238) (FS 5442) 919 Third Avenue 599 Lexington Avenue New York, New York 10022 New York, New York 10022 (212) 735-3000 (212) 326-3905 Attorneys for Petitioner Attorneys for Respondent Evans & Sutherland Thomson Training & Computer Corporation Simulation Limited EXHIBIT B Form of Press Release 14 PRESS RELEASE - ------------- Major Simulation Companies Reach Accord - --------------------------------------- Hughes, Thomson, and Evans & Sutherland Settle Disputes (City and Date) Hughes Training, Inc., ( ) Thomson Training & Simulation Ltd. ( ), and Evans & Sutherland Computer Corporation (Nasdaq ESCC), three of the major supplies of products to the simulation training market, today announced the resolution of differences among them and their parent companies and the dismissal of any and all legal actions resulting from contractual disputes related to prior distribution agreements to which they had been parties. The settlement will allow all three companies to proceed to supply their products to the market, and will make it possible for each party to work with one or more of the other parties in serving the market. According to James R. Oyler, President and Chief Executive Officer of E&S, "E&S has had a long and successful history with both Hughes and Thomson to jointly provide outstanding equipment and services to the pilot training market. Each company brings special products and expertise to the market and each company provides outstanding customer service. This settlement allows us to get on with business." Hughes Training's president, Mr. Stuart I. Moore, Said "The agreement enables Hughes Training, the industry's leading training systems integrator, to continue to provide its customers with the best value visual system solutions that meet specific program requirements. It will enhance our ability to provide systems that maximize image generator and display performance." For additional information contact: Hughes Training Rick Oyler (817) 695-3536 Thomson Training & Simulation Ltd. Eric Le Mer (44) 1.293.563.700 Evans & Sutherland Gary E. Meredith (801) 588-1711 EXHIBIT C Form of Escrow Agreement 15 ESCROW AGREEMENT THIS ESCROW AGREEMENT ("Agreement") is made as of August __, 1995, by SNELL & WILMER L.L.P., as Escrow Agent under the Settlement Agreement referred to below ("Escrow Agent"), in favor of THOMSON TRAINING AND SIMULATION LIMITED ("TTSL") and THOMSON-CSF, S.A. ("TCSF") (collectively "Thomson"), HUGHES AIRCRAFT COMPANY ("HAC") and HUGHES TRAINING, INC. ("HTI") (collectively "Hughes"), and EVANS & SUTHERLAND COMPUTER CORPORATION ("E&S"). Capitalized terms not otherwise defined in this Agreement have the meanings given them in the Settlement Agreement (as defined below). WHEREAS, TTSL, TCSF, HAC, HTI and E&S have negotiated a certain Confidential Settlement Agreement in the attached form ("Settlement Agreement"); and WHEREAS, such Settlement Agreement provides for the establishment of an escrow arrangement with Escrow Agent and this Agreement establishes the terms of such escrow arrangement. NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, Escrow Agent, and TTSL, TCSF, HAC, HTI and E&S (each of TTSL, TCSF, HAC, HTI and E&S being referred to as a "Party" and all of which together are referred to as the "Parties") agree as follows: 1. Escrow Agent. The Parties hereby appoint and designate Snell & Wilmer ------------ L.L.P. as Escrow Agent for the purposes set forth herein and the Escrow Agent accepts such appointment and designation, subject to the terms and conditions of this Agreement. Escrow Agent shall exercise the same degree of care toward the items deposited pursuant to this Agreement as it exercises toward its own similar property, and Escrow Agent shall not be held liable to any higher standard of care under this Agreement nor deemed to owe any fiduciary duty to the Parties. Escrow Agent shall be obligated to perform only such duties as are expressly set forth herein, and no implied covenants or obligations shall be inferred from this Agreement. Escrow Agent's obligations hereunder shall cease when Escrow Agent has distributed the Escrowed Documents and funds as provided in this Agreement. 2. Delivery of Signed Copies of Settlement Agreement. Promptly upon ------------------------------------------------- receipt by Escrow agent of five copies of the Settlement Agreement from any Party, signed by an Authorized Signatory of such Party (as defined in paragraph 6 of this Agreement) and of the dismissal stipulations and dismissal instructions provided for in paragraph 6 of the Settlement Agreement (the "Dismissal Instruments"), Escrow Agent shall ackowledge receipt by written notice to all the Parties given in accordance with paragraph 8 of the Settlement Agreement. Escrow Agent shall hold all such signed copies in escrow in accordance with this Agreement until the first to occur of (a) the release of the Escrowed Documents in accordance with paragraph 4 of this Agreement, or (b) the termination of this Agreement in accordance with paragraph 5 of this Agreement. Any copies of the Settlement Agreement and the Dismissal Instruments received by Escrow Agent as provided above are referred to below as the "Escrowed Documents." 3. Payment. The payment required under paragraph 1 of the Settlement ------- Agreement shall be made by HAC to the trust account of Escrow Agent, which is as follows: First Interstate Bank of Utah, N.A., Main Office Salt Lake City, Utah 84142-0002 ABA Routing No. 124000025 Snell & Wilmer Trust Account Account No. 02087161 Reference: Evans & Sutherland Escrow, Account No. 21988.0033 Escrow Agent shall confirm receipt of such payment by written notice to each Party, delivered in accordance with paragraph 8 of the Settlement Agreement. Upon satisfaction of the conditions in paragraph 4 of this Agreement for release of the Escrowed Documents, Escrow Agent shall transmit the payment received by Escrow Agent under this paragraph 3 to E&S in accordance with its separate instructions to Escrow Agent. If this Agreement is terminated pursuant to paragraph 5 of this Agreement, the deposited funds shall be returned to the Party depositing the funds. Escrow Agent shall not be obligated to deposit the funds in an interest-bearing account and no Party will be entitled to any interest on the funds. 4. Release of Escrowed Documents. The Escrowed Documents shall be ----------------------------- released from the escrow arrangement provided for in this Agreement on the effective date of the Settlement Agreement. As contemplated by paragraph 9K of the Settlement Agreement, such effective date shall occur on such date as all of the following conditions shall have been satisfied: (a) Escrow Agent shall have received five copies of the Settlement Agreement signed by an Authorized Signatory of each Party; (b) Escrow Agent shall have received written confirmation from an Authorized Signatory of each of E&S and HTI that the agreement provided for in paragraph 2 of the Settlement Agreement has been signed; (c) Escrow Agent shall have received written confirmation from an Authorized Signatory of each of E&S and TTSL that the agreement provided for in paragraph 3 of the Settlement Agreement has been signed; (d) the respective attorneys of the Parties shall have executed and delivered to the Escrow Agent the Dismissal Instruments; and (e) Escrow Agent shall have received in its escrow account the payment required under paragraph 1 of the Settlement Agreement. Promptly after the occurrence of all such conditions to the effective date of the Settlement Agreement, Escrow Agent shall deliver one fully signed copy of the Settlement Agreement to each Party, to its address shown in paragraph 8 of the Settlement Agreement and shall deliver the Dismissal Instruments to the respective attorneys of the Parties for filing with the appropriate court and the AAA in accordance with paragraph 6 of the Settlement Agreement. 2 5. Termination of Escrow. If the effective date of the Settlement --------------------- Agreement shall not have occurred within 30 days after the date first above written, then any Party which has deposited signed copies of the Settlement Agreement with Escrow Agent may, upon written notice by an Authorized Signatory of such Party to Escrow Agent (delivered as provided in paragraph 7 of this Agreement) and to each other Party (delivered in accordance with paragraph 8 of the Settlement Agreement) delivered at any time after such 30-day period, terminate this Agreement and require Escrow Agent to return to such Party all of the copies of the Settlement Agreement signed by such Party. Promptly after receipt of such notice, Escrow Agent shall return all the signed copies of the Settlement Agreement then held by it to the applicable Party which submitted such signed copy and shall destroy any signed copies of the Dismissal Instruments then held by it, all such signed copies shall be null and void and of no further force or effect, and this Agreement shall be terminated. 6. Authorized Signatories. The "Authorized Signatories" of each Party ---------------------- for purposes of this Agreement. and their signature(s), are set forth on the attached certificates signed by the Secretary or an Assistant Secretary of each Party. 7. Notices to Escrow Agent. Any notice required or permitted to be ----------------------- served hereunder ,shall be in writing and shall be delivered personally, by overnight courier or sent by facsimile transmission addressed as follows: Snell & Wilmer L.L.P., 111 East Broadway, Suite 900, Broadway Centre, Salt Lake City, Utah 84111; Attention: Greg Nielsen; Facsimile Number: (801) 237-1950. Notice shall be deemed properly given on the date of facsimile transmission or on the date or delivery, whichever applies. 8. Waiver of Conflict. Each Party acknowledges and agrees that it is ------------------ aware that Snell & Wilmer L.L.P. acts as counsel to E&S in connection with various matters, including, without limitation, the negotiation and preparation of the Settlement Agreement as well as this Agreement. Any conflict of interest which might exist in this regard is waived by each Party. The Parties further agree that Escrow Agent is free to assume full legal representation of E&S in any dispute, including, but not limited to, any dispute arising between E&S and any or all of the other Parties relating to this Agreement, notwithstanding Escrow Agent's position as escrow agent in this Agreement. Each party hereby expressly waives any conflict of interest created by this Agreement and consents to such representation of E&S by Escrow Agent. 9. Amendment. This Agreement may be amended, and the requirements set --------- forth herein may be waived, only by an instrument in writing signed by the Escrow Agent and by an Authorized Signatory of each of the Parties. 10. Escrow Agent's Compensation and Expenses. For its services hereunder, ---------------------------------------- Escrow Agent shall be entitled to be reimbursed for all out of pocket expenses incurred by it in connection with the performance of its duties under this Agreement. The expenses of Escrow Agent shall be paid by E&S. 3 11. Escrow Agent's Liability; Indemnification. Escrow Agent shall not be ----------------------------------------- liable for any error of judgment or for any act done or omitted by it in good faith, or for anything which Escrow Agent may in good faith do or refrain from doing in connection herewith, or for any negligence other than its gross negligence; no liability shall be incurred by Escrow Agent, if, in the event of any dispute or question as to its duties or obligations hereunder, it acts in accordance with paragraph 12. Escrow Agent is authorized to act upon any document believed by it to be genuine and to be signed by the proper parties and shall incur no liability in so acting. HAC, HTI and E&S, jointly and severally indemnify, defend and hold Escrow Agent harmless from any and all loss, damage, or liability, and all expenses (including without limitation, reasonable legal costs and fees) except to the extent arising out of the gross negligence or bad faith of the Escrow Agent, incurred, arising out of, or in connection with, Escrow Agent entering into or performing its duties pursuant to this Agreement, including without limitation, expenses incurred by Escrow Agent pursuant to paragraph 12. 12. Disputes. In the event of a dispute concerning the subject matter of -------- this Agreement such that Escrow Agent deems it necessary for its protection, Escrow Agent may (i) deposit the Escrowed Documents and any payment received pursuant to paragraph 3, together with any notices received by it, into a court of competent jurisdiction until such time as a civil action shall have been finally concluded determining any rights hereunder, (ii) Escrow Agent may resign and appoint a new escrow agent, or (iii) at its discretion at any time, commence a civil action to interplead any conflicting demands to a court of competent jurisdiction to determine its fights and the rights of the Parties. 13. Counterparts. This Agreement may be executed in one or more ------------ counterparts, which together shall constitute one instrument. 14. Binding Effect; Governing Law. This Agreement shall be governed by ----------------------------- and construed in accordance with the laws of the State of Utah, and shall be binding upon and inure to the benefit of the parties and their successors and assigns. 15. Miscellaneous. The provisions in subparagraphs D, E, F, G, H, I, J ------------- and L of paragraph 9 of the Settlement Agreement shall apply to this Agreement and are incorporated herein by this reference. IN WITNESS WHEREOF this Agreement has been signed by Escrow Agent and each of the Parties, as of the day and year first above written. ESCROW AGENT: SNELL & WILMER L.L.P. By /s/ ------------------------------- Its ------------------------------- 4 THOMSON: THOMSON TRAINING AND SIMULATION LIMITED By - ------------------------------- Its - ------------------------------- THOMSON-CSF By - ------------------------------- Its - ------------------------------- HUGHES: HUGHES AIRCRAFT COMPANY By /s/ R. S. Austin - ------------------------------- Its V.P. & Controller - ------------------------------- HUGHES TRAINING INC. By /s/ R. Chris Puffer - ------------------------------- Its VP, Contracts & Legal Affairs - ------------------------------- E&S: EVANS & SUTHERLAND COMPUTER CORPORATION By Gary E. Meredith - ------------------------------- Its Vice President - ------------------------------- 5 [LETTERHEAD OF SNELL & WILMER] September 13, 1995 Gary E. Meredith Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Re: Thomson and Hughes Side Agreements Dear Gary: Enclosed please find a Memorandum of Understanding executed by Thomson and E&S, together with a Memorandum of Agreement between E&S and Hughes Training. Sincerely, SNELL & WILMER L.L.P. /s/David F. Evans David F. Evans DFE/jmb Enclosure MEMORANDUM OF UNDERSTANDING This Memorandum constitutes the "separate agreement" contemplated in paragraph 3 of the Confidential Settlement Agreement between Evans & Sutherland Computer Corporation (E&S), Thomson Training & Simulation Ltd. (TTSL), Thomson-CSF, S.A., Hughes Aircraft Company, and Hughes Training, Inc. ("Confidential Settlement Agreement"). This Memorandum addresses (i) certain outstanding issues relating to their current commitments to each other in the supply of visual systems and associated technology to civil market end user customers and (ii) their willingness to jointly explore in good faith the possibility of establishing a new business relationship in an effort to reach agreement to provide needed products and services to civil customers on a mutually acceptable pricing basis and to addressing a method to jointly market their products and services to the civil market as well as other markets. 1. Both parties recognize that it is their mutual interest to re-establish a positive business relationship in order to optimise meeting the existing requirements of the parties' visual civil market customers. To this end both parties are willing to negotiate and conclude appropriate licenses and supply agreements with each other for the respective commitments set out in 2 below for the customers shown in Attachment A. 2. E&S and TTSL Commitments for current requirements as shown in Attachment A. a) E&S will deliver the following software (and all future updates needed to satisfy current contractual customer requirements for the customers listed in Attachment A) to TTSL and grant to TTSL royalty free, non exclusive and non transferable licenses for appropriate use thereof by TTSL and its visual civil market customers to whom it currently owes contractual obligations in respect of such software. If TTSL is able to obtain priced change orders covering such future updates of the deliverables then TTSL agrees to reimburse E&S with an appropriate portion of the obtained price. It is understood that references to software and hardware include all necessary documentation. Formatter software version 1.7 -Delivered 18 July 1995 1 . Formatter software version 1.7 - Delivered 18 July 1995 . ESIG software versions 14.0 (available end of May 1995); 14.2 (now known as 14.0.1.1, available end of June 1995) and 14.3 (now known as 14.2, available end of August 1995). . SPX real time software version 2.1 - available by 7 August 1995. b) E&S will agree to supply to TTSL at no charge "Real Fog" hardware and software to enable TTSL to meet existing contractual obligations it has to civil market customers. c) E&S will review with TTSL within 14 days of the date of this agreement all current Visual Enquiry Forms (VEF's) visual clearance requirements of TTSL's civil market customers, and work jointly to resolve these as soon as possible with each party bearing its own cost. d) E&S will accept TTSL's amended purchase order (reference #2040200P dated 17th November 1994) for an image generator and spares for the JAS MD90 program based on Quotation SDT 90 024 dated 27 May 1994 and spares as listed in fax SDT 94 020 dated 11th May 1994 and updated in fax JAS003F dated 27th January 1995. The total price for the IG and Spares is $1 million. E&S will attempt to expedite delivery of these Spares to ship with the system if possible, that shall in any case be delivered not later than 1st March 1996 on site in Japan. e) E&S and TTSL will jointly give engineering support for resolution of outstanding VEF's and installation of the required hardware and software at customer sites with each party bearing its own cost. f) Where required by TTSL or E&S to clear VEF's, VME 147 cards will be exchanged for VME 167 cards by E&S at no charge. g) Where TTSL require GDF developers toolkit, files and data for use with GMS for database development and to the extent needed to format models for the customers in Attachment A, E&S will provide the required licenses and necessary support at no charge. 2 h) E&S and TTSL agree to work in good faith to resolve all support claims and other issues raised by customers of TTSL or of E&S as shown on Attachment A. 3. Agreement between E&S and TTSL to explore the possibility of any future commitments. This Memorandum of Understanding records the mutual intention of E&S and TTSL to meet and jointly explore in good faith the possibility of cooperation between themselves relative to needed products and services to civil customers on a mutually acceptable pricing basis and to a method for E&S and TTSL to mutually provide marketing support for their products and services to the civil market. The area of the contemplated cooperation will include (but not necessarily be limited to) the following: . Formatter licenses . GDF licenses and support . Loaner spares and TTSL spares holdings . GMS licenses and support . Database library access, including licenses and support . Revised OEM agreements . Workshare agreements . Shared developments . Joint marketing strategies 4. E&S and TTSL agree to explore possibilities for all other business aspects including joint development and new markets. 5. Both parties confirm their intent to negotiate in good faith and conclude the necessary license agreements, supply agreements and change orders in respect of the matters referred to in paragraph 2 above as soon as possible but not later than 30 September 1995. However, the deliverable items will be provided as soon as available, if necessary in advance of the licenses, and this Memorandum will serve as an interim license until the necessary agreements have been executed. 3 6. The terms of this Memorandum do not constitute and are not to be construed as constituting or implying any admission of liability of E&S or TTSL. Nothing in this Memorandum of Understanding shall be deemed to constitute, create, give effect, or to otherwise recognize a joint venture, partnership of formal business entity of any kind and the rights and obligations of the parties hereunder shall be limited to those expressly set forth herein. Likewise, nothing in this Memorandum of Understanding shall oblige either of the parties hereto to enter into the cooperation contemplated in articles 3 and 4 herein. In such case, neither party shall incur any liability whatsoever to the other. 7. The terms of this Memorandum and its implementation shall be kept strictly confidential. 8. This Memorandum shall be gonverned by the laws of the State of New York without regard to its choice of law provisions. All disputes between the Parties in connection with or arising out of the existence, validity, construction, performance and termination of this Memorandum of Understanding (or any terms thereof, which the parties are unable to resolve between themselves, shall be finally settled by arbitration. The arbitration shall be held in New York City in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. 9. In case of contradiction, discrepancy or divergence of interpretations between this Memorandum of Understanding and the Confidential Settlement Agreement, the terms of this Memorandum of Understanding shall prevail. 10. The obligations under this Memorandum of Understanding shall be carried out within one (1) year from its effective date which shall be the date of the last signature by a party hereof. 4 11. The Working Agreement between Evans & Sutherland Computer Corporation and Rediffusion Simulation Limited of October 11, 1986, as amended and supplemented (except for the provisions of paragraph 4.1 thereof, which shall continue to be binding upon E&S and TTSL), the Rediffusion Simulation Limited OEM Volume Purchase Agreement of October 1, 1986, the Rediffusion Simulation Limited Basic Ordering Agreement of October 1, 1986, the Evans & Sutherland Computer Corporation OEM Volume Purchase Agreement of October 1, 1986, and the Evans & Sutherland Computer Corporation Basic Ordering Agreement of October 1, 1986 have been terminated and are no longer effective. However, during the time the parties are working to develop new agreements, they recognize the desirability of doing business together and will continue to sell product to each other under terms and conditions essentially the same as those provided to other customers for like products and for like volumes in like circumstances. 12. To the extent that the obligations in paragraph 3 (a) through 3 (d) of the Confidential Settlement Agreement are not satisfied in this Memorandum, such obligations are hereby waived. Signed:/s/ Gary E. Meredith Date: Aug 24, 1995 -------------------- ------------- For and on behalf of Evans & Sutherland Computer Corporation Signed:/s/ Louis LePortz Date: Sep 6, 1995 ------------------ ------------- For and on behalf of Thomson Training & Simulation Ltd. 5 ATTACHMENT A Customer List - ------------- EVA Britannia Dana Dornier Swissair JPTN KHI JAS MD90 RNZAF MB339 Boeing B777 This Memorandum of Agreement (MOA) is made between Evans & Sutherland Computer Corporation (E&S) and Hughes Training Inc. (HTI). WHEREAS, E&S and HTI desire to further define their business relationship through this Memorandum of Agreement (MOA). NOW, THEREFORE, in consideration of the following undertakings on behalf of each of the parties, E&S and HTI agree as follows: 1.0 SPECIAL CONDITIONS ------------------ Each Party to this MOA agrees that it will bear its own costs associated with the obligations contained herein. 2.0 DEFINITIONS ----------- The following terms wherever used in this Memorandum and/or associated documents have the following respective meanings: A) The term "visual system product" shall mean any product for use in visual system programs which (1) is developed for sale of more than one customer and (2) for which the developing party has at least two purchase agreements and (3) for which the developing party has produced a demonstrable prototype unit. B) The term "visual system program" shall mean applications where (1) the simulator is a vehicle (air, land, or water) or weapon system simulator and (2) the simulator is used for the purpose of training and (3) the images computed by the system depict terrain, natural and cultural featured, vehicles or other objects which are viewed in out-the-window scenes, electro-optical sensor scenes, Infrared sensor scenes, or other out-the- vehicle scenes. C) The terms "services" and/or "associated services" shall mean those items required to operate and maintain the products. Such items shall include maintenance services, field engineering, documentation, manual, training and spare parts. D) The term "support" shall mean those items required to provide a deliverable product or service that best meets the intended use. Such support would include, but not limited to: engineering effort, models and modeling tools, software changes, microcode changes, documentation, and off-site installation support. 1 3.0 TEAMED PROGRAMS --------------- Except as provided hereunder, HTI will consider only E&S visual systems for the listed Team Programs and market accordingly to the end customer. Except as provided hereunder, E&S will not respond to requests from other systems/simulator suppliers and will market accordingly. In the event the end customer indicates its desire for a different visual system or a different simulator system supplier before release of initial bid package, then HTI and E&S will meet to discuss an alternate pursuit strategy and, by mutual agreement, dissolve the teaming arrangement on that specific program. The agreement to separate must be in writing, signed by authorized agents of each company and be on a program by program basis. Teamed Programs: F16 Egypt WTT F16 Taiwan WTT S3B C141B WST T45 LCAC 4.0 PARTIES INTENT -------------- 4.1 BEST EFFORT PROGRAMS -------------------- With regard to the following programs, HTI will make every effort to use E&S visual system products and services wherever E&S has a competitive and suitable product which is acceptable to the end customer. Similarly, E&S will make every effort to team with HTI wherever HTI has a competitive and suitable product which is acceptable to the end customer. The intent is to allow both parties the flexibility of conducting business on a non- exclusive basis, other than for the specified Teamed Programs delineated in Paragraph 3.0. UH60 Korea AH1 Korea AH64 Greece UH60 Kuwait AH64 Kuwait AH64 UAE F16 Turkey WTT UH60/AH1 Turkey 2 4.2 PARTIES BUSINESS ROLE --------------------- HTI shall conduct business as the PRIME CONTRACTOR and E&S shall provide product and services in accordance with the subcontract role. In the event that the customer demands a reversal of the parties business roles, then E&S will become the PRIME CONTRACTOR and HTI shall provide product and services as a subcontractor to E&S. 4.3 DURATION OF MOA --------------- This MOA shall remain in effect until 1 July 1998 and will continue thereafter on a year-to-year basis unless terminated by either party upon at least one (1) years prior written notice. Such termination shall occur only on an anniversary date of this MOA. 5.0 E&S/HTI BUSINESS DEVELOPMENT FOCUS MEETINGS ------------------------------------------- A) E&S and HTI will meet at least every four (4) months during the term of the MOA (or upon reasonable notice to the other party, at such other time as either party may reasonably request) to discuss market business issues with respect to selling of visual systems. Such discussions shall address recent successes and failures in the market, future potential opportunities, new markets to be jointly pursued, as well as the consideration of new products to be jointly developed in pursuit of new markets, and any other areas of general concern regarding the markets served. B) The parties hereto recognize the importance of the sharing of information for the marketing of visual systems and their integration into total training systems solutions. To that end, each party shall use its best efforts to provide accurate information to the other with respect to activities within the scope of the MOA and to protect the proprietary information of the other. 6.0 SUPPORT ------- It is the intent of E&S within its available resources to provide visual system technical support to HTI for new business proposal activities in pursuit of visual system programs. In addition, HTI shall have the right to purchase from E&S, such associated technical support as required for the successful execution of a contract. 7.0 EXCLUSIVITY ----------- Nothing herein shall be considered as an exclusive sales or service agreement. Exclusivity, if mutually agreeable in any specific instance, shall be treated on a case by case basis or as defined in Paragraph 3.0 3 8.0 DISPUTE RESOLUTION PROVISION ---------------------------- A) In the event of any dispute, controversy or claim rising out of or relating to this Agreement, including the breach, termination or invalidity thereof ("Dispute"), the parties shall attempt in good faith to resolve the Dispute by negotiation between executives of the parties. If the Dispute has not been resolved within forty-five (45) days of a party's written request for negotiation, then either party may initiate arbitration as provided hereinafter. B) Any Dispute which is not resolved by the parties shall be finally settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA") then in effect (the "Rules"), as modified in this Paragraph 8. The governing laws shall be laws of the State of Texas. C) There shall be three arbitrators. If there are two parties to the arbitration, each party shall select one arbitrator within fifteen (15) days following respondent's receipt of claimant's notice of arbitration and statement of claim. The two party-appointed arbitrators shall select a third arbitrator to serve as presiding arbitrator within fifteen (15) days of the appointment of the second arbitrator. If there are more than two parties to the arbitration, the arbitrators shall be selected from lists prepared by the AAA in accordance with the Rules. D) Unless otherwise ordered by the arbitrators, each party shall bear its own costs and fees, including but not limited to, attorneys' fees and expenses. E) Any award shall be final and BINDING finding upon the parties and shall state the reasons upon which it is based. Judgment upon the award may be entered in any court having jurisdiction thereof. The arbitration shall be governed by the Federal Arbitration Ace. 9 U.S.C. Sec.Sec.1-16, 201-208. F) For purposes of the dispute resolution procedures set forth in this paragraph, the parties hereby submit to the non-exclusive jurisdiction of the state and federal courts located in the State of Texas with respect to the enforcement of this arbitration agreement and any arbitration award. Each of the parties hereby consents to the service of process, pleadings and notice by overnight courier or registered mail at its address set forth. 9.0 MISCELLANEOUS ------------- A) Governing Law. This Agreement shall be construed and interpreted in ------------- accordance with the laws of the State of Texas without regard to its choice of law provisions. B) Assignment. No party hereto may assign any of its rights or delegate ---------- any of its obligations under this Agreement without the express written consent of the other party hereto. 4 C) No Rights to Others. Except as otherwise provided, nothing herein contained or implied is intended or shall be construed to confer upon or give to any person, firm, or corporation, other than the parties hereto and their respective successors and permitted assigns or personal representatives, any rights or remedies under or by reason of this Agreement. D) HTI and E&S agree that they will jointly develop and issue a press release announcing the signing of the MOA and both parties intent. 10.0 CONFIDENTIALITY TREATMENT OF INFORMATION ---------------------------------------- The parties agree to (1) disclose the Data received pursuant to this Memorandum of Agreement only to those persons within and without their respective organizations who require such Data to effectuate the purpose of the Memorandum of Agreement; and (2) notwithstanding that the Memorandum of Agreement shall have expired or herein terminated, keep in confidence and prevent disclosure of such Data to any unauthorized person or persons; provided, however, that neither party shall be liable for disclosure of any such Data if the same: (a) was in the public domain at the time it was disclosed or falls within the public domain, except through fault of the receiving party; (b) was known to the party receiving it at the time of disclosure; (c) is disclosed by the receiving party despite the exercise of the same degree of care as the receiving party takes to preserve and safeguard its own Data: (d) is disclosed after written approval of the disclosing party; and (e) becomes known to the receiving party from a source other than the disclosing party. 11.0 CONSEQUENTIAL DAMAGES --------------------- To the fullest extent allowed by law, neither party shall be liable to the other party for indirect, incidental, special or consequential damages (including lost profits or punitive damages) arising out of this MOA or the transactions provided for in this MOA. 5 Accepted by: Hughes Training, Inc. Evans & Sutherland Computer Corp. By:/s/ R. CHRIS PUFFER By:/s/ GARY E. MEREDITH --------------------- ---------------------- Name: R. Chris Puffer Name: Gary E. Meredith ------------------ -------------------- Title: VP, ???? & Legal Affair Title:Vice President ------------------------ ------------------- Date: August 31, 1995 Date: August 23, 1995 ------------------------ ------------------- 6 EX-10.14 5 EXECUTIVE SAVINGS PLAN Exhibit 10.14 THE EVANS & SUTHERLAND COMPUTER CORPORATION EXECUTIVE SAVINGS PLAN TABLE OF CONTENTS Continued PAGE TABLE OF CONTENTS PREAMBLE ................................................... 1 ARTICLE ONE ................................................ 1 EFFECTIVE DATE................................... 1 -------------- 1.1. EFFECTIVE DATE................................... 1 ARTICLE TWO DEFINITIONS AND CONSTRUCTION..................... 1 ---------------------------- 2.1. DEFINITIONS...................................... 1 2.2. CONSTRUCTION..................................... 4 ARTICLE THREE ELIGIBILITY AND PARTICIPATION.................... 5 ----------------------------- 3.1. GENERAL.......................................... 5 3.2. APPLICATION TO PARTICIPATE....................... 5 3.3. TIMING OF PARTICIPATION.......................... 5 3.4. DISCONTINUANCE OF PARTICIPATION.................. 6 ARTICLE FOUR PARTICIPANT DEFERRALS............................ 6 --------------------- 4.1. PARTICIPANT DEFERRALS............................ 6 4.2. DESIGNATION AND CHANGE OF DESIGNATION OF PARTICIPANT DEFERRALS............................ 6 ARTICLE FIVE EMPLOYER CONTRIBUTIONS........................... 7 ---------------------- 5.1. MATCHING CONTRIBUTIONS........................... 7 5.2. ELIGIBLE PARTICIPANTS............................ 7 ARTICLE SIX ACCOUNTING....................................... 7 ---------- 6.1. SEPARATE ACCOUNTS................................ 7 6.2. ALLOCATION OF DEFERRALS AND CONTRIBUTIONS........ 7 6.3. INTEREST......................................... 8 TABLE OF CONTENTS Continued PAGE 6.4. CHANGE OF CONTROL................................ 8 ARTICLE SEVEN VESTING.......................................... 8 ------- 7.1. FULL VESTING..................................... 8 ARTICLE EIGHT DISTRIBUTION OF BENEFITS......................... 9 ------------------------ 8.1. NORMAL AND LATE RETIREMENT....................... 9 8.2. DISABILITY RETIREMENT............................ 9 8.3. DEATH............................................ 10 8.4. OTHER SEPARATIONS FROM EMPLOYMENT................ 10 8.5. HARDSHIP DISTRIBUTIONS........................... 10 8.6. TIME OF DISTRIBUTION OF BENEFITS................. 12 8.7. METHOD OF DISTRIBUTION........................... 13 8.8. DESIGNATION OF BENEFICIARY....................... 13 8.9. PAYMENTS TO DISABLED............................. 13 8.10. UNDERPAYMENT OR OVERPAYMENT OF BENEFITS.......... 14 ARTICLE NINE INALIENABILITY OF BENEFITS....................... 14 -------------------------- 9.1. NO ASSIGNMENT PERMITTED.......................... 14 9.2. QUALIFIED DOMESTIC RELATIONS ORDERS.............. 14 9.3. PROCESSING QUALIFIED DOMESTIC RELATIONS ORDERS... 15 ARTICLE TEN ADMINISTRATION................................... 15 -------------- 10.1. PLAN ADMINISTRATOR............................... 15 10.2. ALLOCATION OF FIDUCIARY RESPONSIBILITY........... 16 10.3. POWERS OF THE PLAN ADMINISTRATOR................. 16 10.4. CLAIMS........................................... 16 10.5. CREATION OF COMMITTEE............................ 17 10.6. CHAIRMAN AND SECRETARY........................... 18 10.7. APPOINTMENT OF AGENTS............................ 18 10.8. MAJORITY VOTE AND EXECUTION OF INSTRUMENTS....... 18 10.9. ALLOCATION OF RESPONSIBILITIES AMONG COMMITTEE MEMBERS.......................................... 18 10.10. CONFLICT OF INTEREST............................. 18 10.11. OTHER FIDUCIARY CAPACITIES....................... 19 TABLE OF CONTENTS Continued PAGE ARTICLE ELEVEN SCOPE OF RESPONSIBILITY.......................... 19 ----------------------- 11.1. SCOPE OF RESPONSIBILITY.......................... 19 ARTICLE TWELVE AMENDMENT, MERGER AND TERMINATION................ 20 --------------------------------- 12.1. AMENDMENT........................................ 20 12.2. MERGER OR CONSOLIDATION OF EMPLOYER.............. 20 12.3. TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTIONS.................................... 20 12.4. LIMITATION OF EMPLOYER LIABILITY................. 20 ARTICLE THIRTEEN GENERAL PROVISIONS............................... 21 ------------------ 13.1. LIMITATION ON PARTICIPANTS' RIGHTS............... 21 13.2. STATUS OF PARTICIPANTS AS UNSECURED CREDITORS.... 21 13.3. STATUS OF TRUST FUND............................. 21 13.4. UNIFORM ADMINISTRATION........................... 21 13.5. HEIRS AND SUCCESSORS............................. 21 13.6. EMPLOYER-OWNED LIFE INSURANCE.................... 22 EVANS & SUTHERLAND COMPUTER CORPORATION EXECUTIVE SAVINGS PLAN PREAMBLE -------- Evans & Sutherland Computer Corporation (the "Employer") hereby establishes the "Evans & Sutherland Computer Corporation Executive Savings Plan" (the "Plan"). The provisions of the Plan, as set forth herein, shall apply only to a Participant whose termination from employment occurs on or after the Effective Date noted in Section 1.1. ARTICLE ONE ------------ EFFECTIVE DATE -------------- 1.1. EFFECTIVE DATE. --------------- Except as otherwise specifically provided with respect to particular provisions of the Plan, the provisions of this Plan shall be effective as of July 1, 1995 (the "Effective Date"). ARTICLE TWO ----------- DEFINITIONS AND CONSTRUCTION ---------------------------- 2.1. DEFINITIONS. ------------ When a word or phrase shall appear in this Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be a term defined in this Section 2.1. The following words and phrases utilized in the Plan with the initial letter capitalized shall have the meanings set forth in this Section 2.1, unless a clearly different meaning is required by the context in which the word or phrase is used: (a) "ACT" - The Employee Retirement Income Security Act of 1974, as it ------ may be amended from time to time. (b) "AFFILIATE" - Any organization other than the Employer that is ------------ related to the Employer through stock ownership or otherwise that elects, with the consent of the Employer, to adopt this Plan for the benefit of one or more of its Employees. (c) "BENEFICIARY" - The person or persons designated to receive benefits -------------- under this Plan in the event of death of the Participant. (d) "BOARD" - The Board of Directors of the Employer. -------- (e) "CAUSE" - The termination of the Participant's employment for any -------- one or more of the following reasons: (a) embezzlement or theft from the Employer, or other acts of dishonesty in dealing with the Employer; (b) use by the Participant of alcohol, drugs, narcotics, or other controlled substances to such an extent that the Participant's ability to perform his duties as an employee of the Employer is materially impaired; (c) conviction of a crime amounting to a felony under the laws of the United States of America or any of the states; (d) when the seriousness of an initial infraction is of such gravity that termination is warranted; or (e) when prior attempts through corrective counseling have failed to improve performance, attendance, conduct, or any combination thereof. The determination of whether or not there is Cause shall be made by the Plan Administrator. (f) "CHANGE OF CONTROL"-means any of the following: (i) the Employer ------------------ executes a definitive agreement to merge or consolidate with or into another corporation in which the Employer is not the surviving corporation and the Employer's common stock is converted into or exchanged for stock or securities of any other corporation, cash, or any other thing of value; (ii) the Employer executes a definitive agreement to sell or otherwise dispose of substantially all its assets; (iii) the Employer undergoes a change of control of the nature required to be reported in response to item 6(e) of Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended; (iv) a public announcement that more than thirty percent (30%) of the Company's then outstanding voting stock has been acquired by any person or group; or (v) a change is made in the membership of the Board of Directors of the Employer resulting in a membership of which less than a majority were also members of the Board on the date two years prior to such change, unless the election, or the nomination for election by the stockholders of the Employer, of each new director was approved by the vote of at least two-thirds of the directors then still in office who were directors on the date two years prior to such change. (g) "CODE" - The Internal Revenue Code of 1986, as amended. ------- (h) "DISABILITY" - The injury or sickness of the Participant, such that ------------- he is unable to perform the substantial and material duties of his regular occupation with the Employer (determined at the time of such Disability), and which requires the Participant to be under the care of a licensed physician (unless the Plan Administrator determines that a physician's care would be of no further benefit to the Participant). A Participant shall be presumed to be Disabled if the injury or sickness causes the Participant to totally and irrevocably lose speech, hearing in both ears, sight in both eyes, use of both hands, both feet, or one hand and one foot even if the Participant is able to continue work for the Employer. The Plan Administrator's determination of Disability shall be conclusive and binding on all parties. (i) "EARNINGS" - All salary, bonuses and incentive compensation paid to ----------- the Employee by the Employer in cash, including amounts deferred under the Evans & Sutherland Computer Corporation 401(k) Deferred Savings Plan and under this Plan, but shall exclude bonuses paid to the Participant on account of insurance premiums paid with respect to the Evans & Sutherland Computer Corporation Executive Life Insurance Plan. All other forms of compensation shall be disregarded for purposes of this Plan. 2 (j) "EFFECTIVE DATE"-July 1, 1995, except as otherwise specifically --------------- provided with respect to particular provisions of this Plan. (k) "EMPLOYEE" - Each person receiving remuneration, or who is entitled -------- to remuneration, for services rendered to the Employer in the legal relationship of employer and employee and not in the relationship of a private contractor (or who would be receiving or be entitled to remuneration were such person not on an authorized leave of absence). (l) "EMPLOYER" - Evans & Sutherland Computer Corporation, and each ----------- successor in interest to the Employer resulting from merger, consolidation, or transfer of substantially all of its assets that elects to continue this Plan. Except as otherwise clearly indicated by the context (such as in Sections 2.1(b)), the term "Employer" as used herein shall include each Affiliate which has elected by action of its board of directors, with the consent of the Board, to adopt this Plan. Each Affiliate adopting this Plan shall be deemed to have delegated to the Board all authority to amend or terminate the Plan and to appoint and remove the Plan Administrator and the Trustee. (m) "INTEREST RATE" - The rate of interest credited to the accounts of ---------------- the Participants for a particular Plan Year as announced by the Plan Administrator from time to time. The initial Interest Rate shall be eight percent (8%). If the Plan Administrator changes the Interest Rate, the Plan Administrator shall announce such change in the Interest Rate for the succeeding Plan Year prior to the beginning of such Plan Year. (n) "MATCHING CONTRIBUTIONS" - The amounts contributed to the Trust Fund ------------------------- by the Employer pursuant to Section 5.1 in order to match a portion of the Participant Deferrals. (o) "MATCHING CONTRIBUTIONS ACCOUNT" - The bookkeeping account ------------------------------- established pursuant to Section 6.1 to which the Matching Contributions of the Employer are credited. (p) "NORMAL RETIREMENT AGE" or "NORMAL RETIREMENT DATE" -The date on --------------------- ---------------------- which a Participant attains the age of sixty-five (65) years. (q) "PARTICIPANT" - An Employee who has satisfied the eligibility ------------ requirements specified in Section 3.1, who has elected to participate pursuant to Section 3.2 and whose participation in the Plan has not been terminated. If so indicated by the context, the term Participant shall also include former Participants whose active participation in the Plan has terminated but who have not received all amounts to which they are entitled pursuant to the terms and provisions of this Plan. Whether former Participants are allowed to exercise an option or election extended to "Participants" will be determined by the Plan Administrator in the exercise of its discretion, but in making such determinations the Plan Administrator shall act in a uniform, nondiscriminatory manner. (r) "PARTICIPANT DEFERRALS" - The deferrals directed by a Participant ------------------------ pursuant to Section 4.1. 3 (s) "PARTICIPANT DEFERRALS ACCOUNT"-The bookkeeping account established ------------------------------ pursuant to Section 6.1 to which are credited the Participant Deferrals directed by a Participant and the interest thereon. (t) "PLAN" - The Evans & Sutherland Computer Corporation Executive ---- Savings Plan, as set forth in this instrument, and as it may hereafter be amended. (u) "PLAN ADMINISTRATOR" - The individual, entity, or committee -------------------- appointed to act as such pursuant to Section 10.1. (v) "PLAN ENTRY DATE" - The Effective Date and the first day of each Plan ------------------ Year. (w) "PLAN YEAR"-A twelve (12) month period, commencing on each January 1 ---------- and ending on each following December 31. (x) "TRUST AGREEMENT"-The agreement entered into between the Employer --------------- and the Trustee. (y) "TRUST FUND" - The fund established by the Employer pursuant to the ------------- terms of the Trust Agreement as may be established under this Plan. (z) "TRUSTEE" - The individual, individuals, or entity selected by the ------- Employer to act as such. The Trustee shall acknowledge acceptance of its appointment by the execution of the Trust Agreement or, in the case of a successor Trustee, by the execution of an appropriate written instrument. If the Employer appoints two or more individuals or entities to act jointly as the Trustee, the term "Trustee" shall refer collectively to all such individuals or entities. (aa) "VALUATION DATE"-The date as of which the accounts of the ---------------- Participants are adjusted to reflect the crediting of interest at the Interest Rate, the addition of Participant Deferrals and Matching Contributions and the subtraction of distributions. The last day of the Plan Year shall be a Valuation Date. The Plan Administrator also may designate additional Valuation Dates. (ab) "YEAR OF SERVICE" - The Years of Service credited to the Participant ------------------ pursuant to the Evans & Sutherland Computer Corporation 401 (k) Deferred Savings Plan and Trust, as it may be amended from time to time. 2.2. CONSTRUCTION. ------------- The masculine gender, where appearing in the Plan, shall include the feminine gender (and vice versa), and the singular shall include the plural, unless the context clearly indicates to the contrary. The term "delivered to the Plan Administrator," as used in the Plan, shall include delivery to a person or persons designated by the Plan Administrator for the disbursement and receipt of administrative forms. Headings and subheadings are for the 4 purpose of reference only and are not to be considered in the construction of this Plan. If any provision of this Plan is determined to be for any reason invalid or unenforceable, the remaining provisions shall continue in full force and effect. All of the provisions of this Plan shall be construed and enforced according to the laws of the State of Utah and shall be administered according to the laws of such state, except as otherwise required by the Act, the Code or other Federal law. ARTICLE THREE ------------- ELIGIBILITY AND PARTICIPATION ----------------------------- 3.1. GENERAL. -------- This Plan is intended to be a "top hat plan" for purposes of the Act and, as a result, the Plan will be unfunded and participation in the Plan shall be limited to a "select group of management or highly compensated employees". From this "select group", the compensation committee of the Board (the "Compensation Committee") shall designate the Employees who are eligible to participate in this Plan. All such designations shall be in the Compensation Committee's unfettered discretion and no Employee shall have the right to participate in this Plan until the Employee has been designated as an eligible Employee by the Compensation Committee. 3.2. APPLICATION TO PARTICIPATE. --------------------------- Each Employee who is designated as eligible to participate in the Plan by the Compensation Committee may become a Participant by completing and signing an enrollment form provided by, or acceptable to, the Plan Administrator and delivering the form to the Plan Administrator. The Employee shall designate on the form the amount of his Participant Deferrals and shall authorize the reduction of his Earnings in an amount equal to his Participant Deferrals. 3.3. TIMING OF PARTICIPATION. ------------------------ After an Employee has been selected by the Compensation Committee to participate in the Plan, the Employee will have 30 days to notify the Plan Administrator whether he will participate in the Plan. If the Employee timely notifies the Plan Administrator of his intent to participate in the Plan, the Employee's participation will commence the first day of the calendar month after the Plan Administrator is so notified. If the Employee does not timely notify the Plan Administrator of his intent to participate in the Plan, the Employee may commence participation as of the first day of any later Plan Year by notifying the Plan Administrator prior to the first day of such Plan Year. 5 3.4. DISCONTINUANCE OF PARTICIPATION. -------------------------------- Once an Employee is designated as eligible to participate, he will remain eligible for all future Plan Years unless the Compensation Committee specifically discontinues his eligibility. In the exercise of its discretion, the Compensation Committee may elect to discontinue an Employee's participation in the Plan at any time and for any or no reason. If an Employee's participation in the Plan is discontinued, the Employee will no longer be eligible to make Participant Deferrals or to receive Matching Contributions. The Employee will not be entitled to receive a distribution from his accounts, however, until the occurrence of one of the events listed in Sections 8.1 through 8.5. Notwithstanding the preceding sentence, the Plan Administrator, in its discretion, may allow for the earlier distribution of the Participant's accounts pursuant to Section 8.4. ARTICLE FOUR ------------ PARTICIPANT DEFERRALS --------------------- 4.1. PARTICIPANT DEFERRALS. ---------------------- (a) ELECTION. Each Participant may elect to make Participant Deferrals -------- during each Plan Year while he is a Participant. The amount payable to the Participant as his current salary or wages shall then be reduced by an amount equal to the Participant Deferrals. On the election form, the Participant may designate different deferral percentages or amounts for different forms of Earnings (e.g., base salary as opposed to bonuses). Participant Deferrals shall be directed in a specified dollar amount or in whole percentage increments of the type of Earnings to which the election relates. (b) LIMITATIONS. A Participant shall not be permitted to make annual ----------- Participant Deferrals during in Plan Year in excess of ten percent (10%) of his Earnings during such Plan Year. The Plan Administrator may adopt other limits on the amount of Participant Deferrals in accordance with such uniform rules as it may adopt from time to time. 4.2. DESIGNATION AND CHANGE OF DESIGNATION OF PARTICIPANT ---------------------------------------------------- DEFERRALS. --------- All designations or changes of designation of the amount of Participant Deferrals to be elected shall be made on forms supplied by, or acceptable to, the Plan Administrator, signed by the Participant and delivered to the Plan Administrator. A designation shall be effective as of the first day of the next Plan Year. A payroll deduction designation form shall be effective until it is succeeded by another valid payroll deduction designation form or until the Participant's right to make Participant Deferrals is otherwise suspended or terminated. 6 ARTICLE FIVE ------------ EMPLOYER CONTRIBUTIONS ---------------------- 5.1. MATCHING CONTRIBUTIONS. ----------------------- Subject to its right to amend or terminate this Plan, for Plan Years beginning on and after January 1, 1996, the Employer will make a Matching Contribution on behalf of each eligible Participant in an amount equal to fifty percent (50%) of the Participant's Participant Deferrals for the Plan Year; provided, however, that Participant Deferrals in excess of 6% of the Participant's Earnings shall be disregarded for this purpose. For the Plan Year ended December 31, 1995, the Employer will make a Matching Contribution for each eligible Participant in any amount it so determines. 5.2. ELIGIBLE PARTICIPANTS. ---------------------- A Participant will be entitled to receive a Matching Contribution for a Plan Year if the Participant made any Participant Deferrals for the Plan Year, regardless of whether the Participant is employed by the Employer on the last day of the Plan Year. ARTICLE SIX ------------ ACCOUNTING ---------- 6.1. SEPARATE ACCOUNTS. ------------------ A separate Participant Deferral Account and a separate Matching Contribution Account will be maintained for each Participant. Each account will be adjusted as provided in this Article Six to reflect the crediting of interest at the Interest Rate applicable for the Plan Year, the addition of Participant Deferrals or Matching Contributions, and any distributions. The accounts are bookkeeping accounts only. 6.2. ALLOCATION OF DEFERRALS AND CONTRIBUTIONS. ------------------------------------------ (a) PARTICIPANT DEFERRALS. Participant Deferrals shall be credited to ----------------------- the Participant Deferral Accounts as of the Valuation Date coinciding with or next following the end of the payroll period for which the Participant Deferrals are made. (b) MATCHING CONTRIBUTIONS. Matching Contributions shall be credited to ------------------------ the Matching Contributions Accounts as of the Valuation Date coinciding with or next following the end of the Plan Year to which such Matching Contributions relate. 7 6.3. INTEREST. --------- As of each Valuation Date, the Plan Administrator shall credit interest at the Interest Rate applicable for that Plan Year to the Matching Contributions Accounts and the Participant Deferral Accounts. Interest will be credited on the "adjusted account balance". For this purpose, the "adjusted account balance" is the account balance as of the immediately preceding Valuation Date, plus (in the case of the Participant Deferral Account) 50% of the Participant Deferrals made since such Valuation Date, minus any withdrawals or distributions charged to the account since the prior Valuation Date. The amount of interest to be credited shall be prorated in a uniform manner if the period of time since the last Valuation Date is less than one year. 6.4. CHANGE OF CONTROL. ------------------ Notwithstanding anything in this Plan to the contrary, in the event of a Change of Control, the Employer shall immediately transfer to the Trust Fund an amount of cash equal to the balance credited to each Participant's Matching Contribution Account and Participant Deferrals Account as of the Change of Control. Thereafter, the Employer shall contribute to the Trust Fund any Participant Deferrals and Matching Contributions made by Participants and the Employer after the Change of Control and such amounts shall be credited with the applicable Interest Rate. ARTICLE SEVEN -------------- VESTING -------- 7.1. FULL VESTING. ------------- (a) VESTING IN THE PARTICIPANT DEFERRALS ACCOUNTS. Each Participant ----------------------------------------------- shall at all times be fully vested in all amounts credited to or allocable to his Participant Deferrals Account and his rights and interest therein shall not be forfeitable for any reason. (b) VESTING IN THE MATCHING CONTRIBUTIONS ACCOUNT. Each Participant ----------------------------------------------- shall be fully vested in the amounts credited to or allocable to his Matching Contributions Account on and after the first to occur of the following events: (1) Attainment by the Participant of the age of sixty-five (65) years; (2) The date of separation from employment due to Disability, as determined by the Plan Administrator; (3) The date of death of the Participant; 8 (4) In the event of a Change of Control; or (5) The completion of three (3) Years of Service. (c) VESTING SCHEDULE FOR MATCHING CONTRIBUTIONS ACCOUNT. ----------------------------------------------------- If a Participant separates from employment with the Employer at a time when the Participant is not fully vested in the amounts credited to or allocable to his Matching Contributions Account, the Participant's vested interest shall be determined in accordance with the following schedule: Vested Percentage in Years of Service Matching Contributions Account ---------------- ------------------------------ Less than 1 0% 1 but less than 2 33.33% 2 but less than 3 66.66% 3 or more 100.00% The balance of the Participant's Matching Contributions Account will be forfeited effective as of the date of the Participant's termination of employment. In addition, if a Participant's employment is terminated for Cause, the Participant shall forfeit all amounts credited to his Matching Contributions Account as of the date of the Participant's termination of employment. ARTICLE EIGHT ------------- DISTRIBUTION OF BENEFITS ------------------------ 8.1. NORMAL AND LATE RETIREMENT. --------------------------- A Participant shall be entitled to full distribution of his accounts, as provided in Sections 8.6 and 8.7, upon actual retirement as of or after his Normal Retirement Date. A Participant may remain in the employment of the Employer after his Normal Retirement Date, if he desires, and shall retire at such later time as he may desire, unless the Employer lawfully directs earlier retirement. 8.2. DISABILITY RETIREMENT. ---------------------- A Participant who separates from employment due to Disability shall be entitled to a full distribution of his accounts as provided in Sections 8.6 and 8.7. Subject to Section 8.6, the payments may commence as of his date of separation of employment due to Disability. 9 8.3. DEATH. ------ (a) BENEFIT. In the event that a Participant (which term for purposes of --------- this Section includes former Participants) shall die prior to the day on which his benefit payments commence, the Participant's designated Beneficiary shall be entitled to full distribution of the Participant's accounts at the time and in the manner provided in Sections 8.6 and 8.7. (b) DEATH AFTER COMMENCEMENT OF BENEFITS. In the event that a former -------------------------------------- Participant shall die after the day on which his benefit payments commence, but prior to the complete distribution of all amounts to which such Participant is entitled under the provisions of this ARTICLE EIGHT, the Participant's designated Beneficiary shall be entitled to receive any remaining amounts to which the Participant would have been entitled had the Participant survived. The Plan Administrator may require and rely upon such proofs of death and the right of any Beneficiary to receive benefits pursuant to this Section 8.3 as the Plan Administrator may reasonably determine, and its determination of death and the right of such Beneficiary to receive payment shall be binding and conclusive upon all persons whomsoever. 8.4. OTHER SEPARATIONS FROM EMPLOYMENT. ---------------------------------- A Participant who separates from employment for any reason, including termination of employment following a Change in Control, but other than for retirement, death, or Disability shall be entitled to distribution of his vested interest in his accounts at the time and in the manner provided in Sections 8.6 and 8.7. In the exercise of its discretion, the Plan Administrator may also elect to commence distributions while the Participant is employed if the Participant's participation has been discontinued pursuant to Section 3.4. 8.5. HARDSHIP DISTRIBUTIONS. ----------------------- (a) GENERAL RULE. A Participant or former Participant may request that a -------------- distribution of amounts credited to his Participant Deferrals Accounts be made on the basis of hardship. (b) LIMITATION ON DISTRIBUTIONS. In no event shall a hardship ----------------------------- distribution exceed the balance of the Participant's or former Participant's Participant Deferrals Account, determined as of the Valuation Date immediately preceding the date of the distribution, less any amounts distributed from or charged to the Participant Deferrals Account since such Valuation Date. The Plan Administrator may promulgate uniform rules regarding the effective date of any distribution, minimum amounts to be distributed and the frequency of distributions. (c) HARDSHIP DEFINED. A distribution may be made pursuant to this ------------------ Section due to a "hardship" only if the Participant satisfies the Plan Administrator that the 10 Participant has an immediate and heavy financial need and that the distribution is necessary in order to satisfy that need. (d) IMMEDIATE AND HEAVY FINANCIAL NEED. The existence of an immediate ------------------------------------ and heavy financial need shall be determined on the basis of all of the relevant facts and circumstances. As a general rule, a financial need shall not be deemed to be immediate unless the expenses involved must be paid within sixty (60) days from the date on which the request for the hardship distribution is being considered. Also, as a general rule, a financial need shall not be considered to be "heavy" unless the expenses exceed five percent (5%) of the Participant's Earnings for the Plan Year prior to the P[an Year in which the request for the hardship distribution is made. In addition, a hardship distribution may be made only if the "need" that gives rise to the distribution request is for funeral expenses of a spouse or lineal ascendant or descendant of the Participant, the educational expenses of the Participant, the Participant's spouse, children or descendants, or one of the reasons listed in subparagraphs (1) through (5) of this paragraph (d), or some of the reasons periodically authorized in written procedures or rules adopted by the Plan Administrator and communicated to the Participants. A financial need shall not fail to qualify as immediate and heavy merely because such need was reasonably foreseeable or voluntarily incurred by the Participant. The following expenses or circumstances will be deemed to give rise to an immediate and heavy financial need for purposes of this Section regardless of whether the general standards set out above are satisfied: (1) Medical expenses described in Section 213(d) of the Code incurred by the Participant, the Participant's spouse, or any dependents (as defined in Section 152 of the Code) of the Participant; or (2) The purchase (excluding mortgage payments) of a principal residence for the Participant; or (3) Payment of tuition, related educational fees and room and board expenses for the next year of post-secondary education for the Participant or the Participant's spouse, children or dependents; or (4) The need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage on the Participant's principal residence; or (5) Any other circumstance or expense designated by the Commissioner of Internal Revenue as a deemed immediate and heavy financial need in any published revenue ruling, notice, or other document of general applicability. The Plan Administrator may rely on any representations made by the Participant concerning the Participant's intended use of funds distributed to the Participant pursuant to this Section, the urgency of any intended expenditures or any other relevant matters. 11 (e) NECESSITY. A distribution will be considered to be necessary to ----------- satisfy an immediate and heavy financial need of a Participant only if the need may not be satisfied from other resources that are reasonably available to the Participant and the distribution does not exceed the amount needed to satisfy the need. The Plan Administrator shall consider all relevant facts and circumstances in determining whether a hardship distribution is necessary in order to satisfy an immediate and heavy financial need. Generally, a distribution shall be deemed necessary if the Participant represents to the Plan Administrator that the need cannot be relieved through reimbursement or compensation by insurance or otherwise, by the reasonable liquidation of the Participant's assets (to the extent that such liquidation would not itself cause an immediate and heavy financial need), by cessation of elective pre-tax contributions or after-tax contributions under any plan sponsored by the Employer, or by other distributions or nontaxable loans under any Plan sponsored by the Employer. A distribution will be deemed to be necessary to satisfy an immediate and heavy financial need of a Participant if all of the following requirements are satisfied, regardless of whether the general standards set forth above are met: (1) The distribution is not in excess of the amount of the immediate and heavy financial need of the Participant; and (2) The Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Employer. The Plan Administrator may rely upon any representations made by the Participant pursuant to this paragraph. 8.6. TIME OF DISTRIBUTION OF BENEFITS. --------------------------------- (a) RETIREMENT. Payment to a Participant who is entitled to benefits ------------ under Section 8.1 normally shall commence within a reasonable time following the year-end Valuation Date next following the Participant's termination of employment. (b) TERMINATION AND DISABILITY. Payment to a Participant who is entitled ---------------------------- to benefits under Section 8.2 or Section 8.4 shall commence as soon as possible after the year-end Valuation Date next following the Participant's termination of employment. (c) DEATH AFTER COMMENCEMENT OF PAYMENTS. In the event of the death of a -------------------------------------- Participant after the day on which his benefit payments commence but prior to the complete distribution to such Participant of the benefits payable to him under the Plan, any remaining benefits shall be distributed over a period that does not exceed the period over which distribution was to be made prior to the date of death of the Participant. Payments to the Beneficiaries entitled to payments pursuant to Section 8.3 shall commence as soon as possible following the death of the Participant. 12 (d) DEATH PRIOR TO COMMENCEMENT OF BENEFITS. In the event of the death ----------------------------------------- of the Participant prior to the day on which his benefit payments commence, payments to the Participant's Beneficiary shall commence as soon as possible following the Participant's death. 8.7. METHOD OF DISTRIBUTION. ----------------------- Unless a Participant requests a different distribution schedule and the Plan Administrator, in its discretion, agrees to such proposed distribution, distributions shall be made in one lump sum. If distributions are made in installments, the remaining balance of the Participant's accounts will be credited with interest in accordance with Section 6.3. The Plan Administrator, in the exercise of its discretion, may elect to accelerate the distributions if an installment payment option has been elected. The election made by the Participant shall apply to all payments to the Participant or his Beneficiary. 8.8. DESIGNATION OF BENEFICIARY. --------------------------- Each Participant shall have the right to designate, on forms supplied by, or acceptable to, and delivered to the Plan Administrator, a Beneficiary or Beneficiaries to receive his benefits hereunder in the event of the Participant's death. For each Participant who is married, his Beneficiary shall be deemed to be his spouse, unless the Participant's spouse consents to the Participant's Beneficiary designation to the contrary. Such consent must be in writing, must acknowledge the effect of the beneficiary designation and the spouse's consent thereto. Subject to the foregoing, each Participant may change his Beneficiary designation from time to time in the manner described above. Upon receipt of such designation by the Plan Administrator, such designation or change of designation shall become effective as of the date of the notice, whether or not the Participant is living at the time the notice is received. There shall be no liability on the part of the Employer, the Plan Administrator or the Trustee with respect to any payment authorized by the Plan Administrator in accordance with the most recent valid Beneficiary designation of the Participant in its possession before receipt of a more recent and valid Beneficiary designation. If no designated Beneficiary is living when benefits become payable, or if there is no designated Beneficiary, the Beneficiary shall be the Participant's spouse; or if no spouse is then living, such Participant's issue, including any legally adopted child or children, in equal shares by right of representation; or if no such designated Beneficiary and no such spouse or issue, including any legally adopted child or children, is living upon the death of a Participant, or if all such persons die prior to the full distribution of such Participant's benefits, then the Beneficiary shall be the estate of the Participant. 8.9. PAYMENTS TO DISABLED. --------------------- If a person entitled to any payment hereunder shall be under a legal disability, or in the sole judgment of the Plan Administrator shall otherwise be unable to apply such payment to his own interest and advantage, the Plan Administrator in the exercise of its discretion may make any such payment in any one (1) or more of the following ways: (a) directly to such person, (b) to his legal guardian or conservator, or (c) to his spouse or to any 13 person charged with the legal duty of his support, to be expended for his benefit. The decision of the Plan Administrator shall in each case be final and binding upon all persons in interest. 8.10. UNDERPAYMENT OR OVERPAYMENT OF BENEFITS. ---------------------------------------- In the event that, through misstatement or computation error, benefits are underpaid or overpaid, there shall be no liability for any more than the correct benefit sums under the Plan. Overpayments may be deducted from future payments under the Plan, and underpayments may be added to future payments under the Plan. In lieu of receiving reduced benefits under the Plan, a Participant or beneficiary may elect to make a lump sum repayment of any overpayment. ARTICLE NINE ------------ INALIENABILITY OF BENEFITS -------------------------- 9.1. NO ASSIGNMENT PERMITTED. ------------------------ (a) GENERAL PROHIBITION. No Participant or Beneficiary, and no creditor --------------------- of a Participant or Beneficiary, shall have any right to assign, pledge, hypothecate, anticipate, or in any way create a lien upon the Plan or the Trust Fund. All payments to be made to Participants or their Beneficiaries shall be made only upon their personal receipt or endorsement, except as provided in Section 8.8, and no interest in the Plan or the Trust Fund shall be subject to assignment or transfer or otherwise be alienable, either by voluntary or involuntary act or by operation of law or equity, or subject to attachment, execution, garnishment, sequestration, levy, or other seizure under any legal, equitable or other process, or be liable in any way for the debts or defaults of Participants and Beneficiaries. (b) PERMITTED ARRANGEMENTS. This Section shall not preclude arrangements ------------------------ for the withholding of taxes from benefit payments, arrangements for the recovery of benefit overpayments, arrangements for the transfer of benefit rights to another plan, or arrangements for direct deposit of benefit payments to an account in a bank, savings and loan association or credit union (provided that such arrangement is not part of an arrangement constituting an assignment or alienation). Additionally, this Section shall not preclude arrangements for the distribution of the benefits of a Participant or Beneficiary pursuant to the terms and provisions of a "qualified domestic relations order" in accordance with the following provisions of this ARTICLE NINE. 9.2. QUALIFIED DOMESTIC RELATIONS ORDERS. ------------------------------------ A "qualified domestic relations order" is an order described in Section 206(d)(3) of the Act that permits distribution of benefits in a distribution mode provided under the Plan, does not require payment of increased benefits and does not require payment of benefits allocated to a different alternate payee under a prior qualified domestic relations order. 14 9.3. PROCESSING QUALIFIED DOMESTIC RELATIONS ORDERS. ----------------------------------------------- (a) NOTICE. All decisions and determinations with respect to a domestic -------- relations order, including whether such order is a qualified domestic relations order within the meaning of Section 206(d)(3) of the Act, shall be made by the Plan Administrator within a reasonable time following its receipt of such order and in accordance with such uniform and nondiscriminatory rules and procedures as may be adopted by the Plan Administrator. Upon receipt of a domestic relations order, the Plan Administrator shall notify the Participant or Beneficiary whose benefits may be affected by such order of its receipt of such order. The Plan Administrator shall also advise the Participant or Beneficiary and the alternate payee named in the order of its rules and procedures relating to the determination of the qualified status of such order. (b) RETENTION OF PAYMENTS. If payment of benefits to the Participant or ----------------------- Beneficiary has commenced at the time a domestic relations order is received by the Plan Administrator or benefits become payable after receipt of such order, the Plan Administrator shall segregate and hold the amounts which would be payable to the alternate payee under the order if such order is ultimately determined to be a qualified domestic relations order. If the Plan Administrator determines that the order is a qualified domestic relations order within eighteen (18) months of the segregation of benefits payable to the alternate payee under such order, the Plan Administrator shall pay the segregated amounts (plus any earnings thereon) as well as such future amounts as may be specified in such order to the alternate payee. If the Plan Administrator determines that the order is not a qualified domestic relations order or is unable to determine whether such order is a qualified domestic relations order within the eighteen (18) month period following the segregation of benefits, the Plan Administrator shall pay the segregated amounts (plus any earnings thereon) to the Participant or Beneficiary. A determination by the Plan Administrator after the close of such eighteen (18) month period that the order is a qualified domestic relations order shall be applied prospectively. All determinations of the Plan Administrator hereunder with respect to the status of an order as a qualified domestic relations order shall be binding and conclusive on all interested parties, subject to the provisions of Section 10.4. ARTICLE TEN ----------- ADMINISTRATION -------------- 10.1. PLAN ADMINISTRATOR. ------------------- The Employer shall be the Plan Administrator, but it may delegate its duties as such to a committee appointed in accordance with Section 10.5. 15 10.2. ALLOCATION OF FIDUCIARY RESPONSIBILITY. --------------------------------------- The Plan Administrator is the named fiduciary with respect to the administration of the Plan. It shall not be responsible for any fiduciary functions or other duties assigned to the Trustee pursuant to this Plan or the Trust Agreement. 10.3. POWERS OF THE PLAN ADMINISTRATOR. --------------------------------- (a) GENERAL POWERS. The Plan Administrator shall have the power and ---------------- discretion to perform the administrative duties described in this Plan or required for proper administration of the Plan and shall have all powers necessary to enable it to properly carry out such duties. Without limiting the generality of the foregoing, the Plan Administrator shall have the power and discretion to construe and interpret this Plan, to hear and resolve claims relating to this Plan, and to decide all questions and disputes arising under this Plan. The Plan Administrator shall determine, in its discretion, the service credited to the Employees, the status and rights of a Participant, and the identity of the Beneficiary or Beneficiaries entitled to receive any benefits payable hereunder on account of the death of a Participant. (b) BENEFIT PAYMENTS. Except as is otherwise provided hereunder, the ------------------ Plan Administrator shall determine the manner and time of payment of benefits under this Plan. All benefit disbursements by the Trustee shall be made upon the instructions of the Plan Administrator. (c) DECISIONS FINAL. The decision of the Plan Administrator upon all ----------------- matters within the scope of its authority shall be binding and conclusive upon all persons. (d) REPORTING AND DISCLOSURE. The Plan Administrator shall file all -------------------------- reports and forms lawfully required to be filed by the Plan Administrator with any governmental agency or department, federal or state, and shall distribute any forms, reports, statements or plan descriptions lawfully required to be distributed to Participants and others by any governmental agency or department, federal or state. 10.4. CLAIMS. ------- (a) FILING OF CLAIM. A Participant or Beneficiary entitled to benefits ----------------- need not file a written claim to receive benefits. If an Employee, Participant, Beneficiary, or any other person is dissatisfied with the determination of his benefits, eligibility, participation, or any other right or interest under this Plan, such person may file a written statement setting forth the basis of the claim with the Plan Administrator in a manner prescribed by the Plan Administrator. In connection with the determination of a claim, or in connection with review of a denied claim, the claimant may examine this Plan and any other pertinent documents generally available to Participants relating to the claim and may submit comments in writing. 16 (b) NOTICE OF DECISION. A written notice of the disposition of any such -------------------- claim shall be furnished to the claimant within thirty (30) days after the claim is filed with the Plan Administrator, provided that the Plan Administrator may have an additional period to decide the claim if it advises the claimant in writing of the need for an extension and the date on which it expects to decide the claim. The notice of disposition of a claim shall refer, if appropriate, to pertinent provisions of this Plan, shall set forth in writing the reasons for denial of the claim if the claim is denied (including references to any pertinent provisions of this Plan), and where appropriate shall explain how the claimant can perfect the claim. (c) REVIEW. If the claim is denied, in whole or in part, the claimant -------- shall also be notified in writing that a review procedure is available. Thereafter, within ninety (90) days after receiving the written notice of the Plan Administrator's disposition of the claim, the claimant may request in writing, and shall be entitled to, a review meeting with the Plan Administrator to present reasons why the claim should be allowed. The claimant shall be entitled to be represented by counsel at the review meeting. The claimant also may submit a written statement of his claim and the reasons for granting the claim. Such statement may be submitted in addition to, or in lieu of, the review meeting with the Plan Administrator. The Plan Administrator shall have the right to request of and receive from a claimant such additional information, documents, or other evidence as the Plan Administrator may reasonably require. If the claimant does not request a review meeting within ninety (90) days after receiving written notice of the Plan Administrator's disposition of the claim, the claimant shall be deemed to have accepted the Plan Administrator's written disposition, unless the claimant shall have been physically or mentally incapacitated so as to be unable to request review within the ninety (90) day period. (d) DECISION FOLLOWING REVIEW. A decision on review shall be rendered in --------------------------- writing by the Plan Administrator ordinarily not later than sixty (60) days after review, and a written copy of such decision shall be delivered to the claimant. If special circumstances require an extension of the ordinary period, the Plan Administrator shall so notify the claimant. In any event, if a claim is not determined within one hundred twenty (120) days after submission for review, it shall be deemed to be denied. (e) DECISIONS FINAL; PROCEDURES MANDATORY. To the extent permitted by --------------------------------------- law, a decision on review by the Plan Administrator shall be binding and conclusive upon all persons whomsoever. To the extent permitted by law, completion of the claims procedures described in this Section shall be a mandatory precondition that must be complied with prior to commencement of a legal or equitable action in connection with the Plan by a person claiming rights under the Plan or by another person claiming rights through such a person. The Plan Administrator may, in its sole discretion, waive these procedures as a mandatory precondition to such an action. 10.5. CREATION OF COMMITTEE. ---------------------- The Employer may appoint a committee to perform its duties as Plan Administrator by the adoption of appropriate Board resolutions. The committee shall consist of at least two (2) members, and they shall hold office during the pleasure of the Board. The 17 committee members shall serve without compensation but shall be reimbursed for all expenses by the Employer. The committee shall conduct itself in accordance with the provisions of this ARTICLE TEN. The members of the committee may resign with thirty (30) days notice in writing to the Employer and may be removed immediately at any time by written notice from the Employer. 10.6. CHAIRMAN AND SECRETARY. ----------------------- The committee shall elect a chairman from among its members and shall select a secretary who is not required to be a member of the committee and who may be authorized to execute any document or documents on behalf of the committee. The secretary of the committee or his designee shall record all acts and determinations of the committee and shall preserve and retain custody of all such records, together with such other documents as may be necessary for the administration of this Plan or as may be required by law. 10.7. APPOINTMENT OF AGENTS. ---------------------- The committee may appoint such other agents, who need not be members of the committee, as it may deem necessary for the effective performance of its duties, whether ministerial or discretionary, as the committee may deem expedient or appropriate. The compensation of any agents who are not Employees of the Employer shall be fixed by the committee within any limitations set by the Board. 10.8. MAJORITY VOTE AND EXECUTION OF INSTRUMENTS. ------------------------------------------- In all matters, questions, and decisions, the action of the committee shall be determined by a majority vote of its members. They may meet informally or take any ordinary action without the necessity of meeting as a group. All instruments executed by the committee shall be executed by a majority of its members or by any member of the committee designated to act on its behalf. 10.9. ALLOCATION OF RESPONSIBILITIES AMONG COMMITTEE MEMBERS. ------------------------------------------------------- The committee may allocate responsibilities among its members or designate other persons to act on its behalf. Any allocation or designation, however, must be set forth in writing and must be retained in the permanent records of the committee. 10.10. CONFLICT OF INTEREST. --------------------- No member of the committee who is a Participant shall take any part in any action in connection with his participation as an individual. Such action shall be voted or decided by the remaining members of the committee. 18 10.11. OTHER FIDUCIARY CAPACITIES. --------------------------- The members of the committee may also serve in any other fiduciary capacity, and, specifically, all or some members of the committee may serve as Trustee. Notwithstanding any other provision of this Plan, if and so long as any two (2) members of the committee also serve as Trustee, any provision of this Plan or the Trust Agreement which requires a direction, certification, notification, or other communication from the Plan Administrator to the Trustee shall be inapplicable. If and so long as any two (2) members of the committee also serve as Trustee, any action taken by either the committee or the Trustee shall be deemed to be taken by the appropriate party. ARTICLE ELEVEN -------------- SCOPE OF RESPONSIBILITY ----------------------- 11.1. SCOPE OF RESPONSIBILITY. ------------------------ (a) GENERAL. The Employer, the Plan Administrator and the Trustee shall --------- perform the duties respectively assigned to them under this Plan and the Trust Agreement and shall not be responsible for performing duties assigned to others under the terms and provisions of this Plan or the Trust Agreement. No inference of approval or disapproval is to be made from the inaction of any party described above or the employee or agent of any of them with regard to the action of any other such party. Persons, organizations, or corporations acting in a position of any fiduciary responsibility with respect to the Plan or the Trust Fund may serve in more than one fiduciary capacity. (b) ADVISORS. The Employer, the Plan Administrator, and the Trustee ---------- shall have authority to employ advisors, legal counsel, and accountants in connection with the administration of the Plan and the Trust Fund, as set forth in the Trust Agreement. To the extent permitted by applicable law, the Employer, the Plan Administrator, and the Trustee shall not be liable for complying with the directions of any advisors, legal counsel, or accountants appointed pursuant to this Plan or the Trust Agreement. (c) INDEMNIFICATION. To the extent permitted by law, the Employer shall ----------------- and does hereby jointly and severally indemnify and agree to hold harmless its employees, officers, and directors who serve in fiduciary capacities with respect to the Plan and the Trust Agreement from all loss, damage, or liability, joint or several, including payment of expenses in connection with defense against any such claim, for their acts, omissions, and conduct, and for the acts, omissions, and conduct of their duly appointed agents, which acts, omissions, or conduct constitute or are alleged to constitute a breach of such individual's fiduciary or other responsibilities under the Act or any other law, except for those acts, omissions, or conduct resulting from his own willful misconduct, willful failure to act, or gross negligence; provided, however, that if any party would otherwise be entitled to indemnification hereunder in respect of any liability and such party shall be insured against loss as a result of such liability by any insurance contract or contracts, such party shall be 19 entitled to indemnification hereunder only to the extent by which the amount of such liability shall exceed the amount thereof payable under such insurance contract or contracts. ARTICLE TWELVE -------------- AMENDMENT, MERGER AND TERMINATION --------------------------------- 12.1. AMENDMENT. ---------- The Employer shall have the right at any time, by an instrument in writing duly executed, acknowledged and delivered to the Plan Administrator and the Trustee, to modify, alter or amend this Plan, in whole or in part, prospectively or retroactively; provided, however, that the duties and liabilities of the Plan Administrator and the Trustee hereunder shall not be substantially increased without their written consent; and provided further that the amendment shall not reduce any Participant's interest in the Plan, calculated as of the date on which the amendment is adopted. If the Plan is amended by the Board after it is adopted by an Affiliate, unless otherwise expressly provided, it shall be treated as so amended by such Affiliate without the necessity of any action on the part of the Affiliate. 12.2. MERGER OR CONSOLIDATION OF EMPLOYER. ------------------------------------ The Plan shall not be automatically terminated by the Employer's acquisition by or merger into any other employer, but the Plan shall be continued after such acquisition or merger if the successor employer elects and agrees to continue the Plan and to become a party to the Trust Agreement. All rights to amend, modify, suspend, or terminate the Plan shall be transferred to the successor employer, effective as of the date of the merger and provided specifically that the successor employer shall not have the right to amend the Plan to reduce any Participant's interest in the Plan, calculated as of the date on which any amendment is adopted. 12.3. TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTIONS. ------------------------------------------------------- It is the expectation of the Employer that this Plan and the payment of contributions hereunder will be continued indefinitely. However, continuance of the Plan is not assumed as a contractual obligation of the Employer, and the right is reserved at any time to terminate this Plan or to reduce, temporarily suspend, or discontinue contributions hereunder, provided that any such termination, reduction, suspension, or discontinuance of contributions shall not reduce any Participant's interest in the Plan, calculated as of the date such action is taken. 12.4. LIMITATION OF EMPLOYER LIABILITY. --------------------------------- The adoption of this Plan is strictly a voluntary undertaking on the part of the Employer and shall not be deemed to constitute a contract between the Employer and any Employee or Participant or to be consideration for, an inducement to, or a condition of the 20 employment of any Employee. A Participant, Employee, or Beneficiary shall not have any right to retirement or other benefits except to the extent provided herein. ARTICLE THIRTEEN ---------------- GENERAL PROVISIONS ------------------ 13.1. LIMITATION ON PARTICIPANTS' RIGHTS. ----------------------------------- Participation in the Plan shall not give any Employee the right to be retained in the Employer's employ or any right or interest under the Plan or in the Trust Fund other than as herein provided. The Employer reserves the right to dismiss any Employee without any liability for any claim either under the Plan or against the Trust Fund, except to the extent herein provided, or against the Employer. 13.2. STATUS OF PARTICIPANTS AS UNSECURED CREDITORS. ---------------------------------------------- All benefits under the Plan shall be unsecured obligations of the Employer and, except for the assets placed in the Trust Fund as provided in this Plan, no assets of the Employer will be segregated from the general assets of the Employer for the payment of benefits under this Plan. To the extent that any person acquires the right to receive payments under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. 13.3. STATUS OF TRUST FUND. --------------------- The Trust Fund is being established to assist the Employer in meeting its obligations to the Participants and to provide the Participants with a measure of protection in certain limited instances. In certain circumstances described in the Trust Agreement, the assets of the Trust Fund will be used for the benefit of the Employer's creditors. Benefit payments due under this Plan shall either be paid from the Trust Fund or from the Employer's general assets as directed by the Employer. 13.4. UNIFORM ADMINISTRATION. ----------------------- Whenever in the administration of the Plan any action is required by the Plan Administrator, such action shall be uniform in nature as applied to all persons similarly situated. 13.5. HEIRS AND SUCCESSORS. --------------------- All of the provisions of this Plan shall be binding upon all persons who shall be entitled to any benefits hereunder, and their heirs and legal representatives. 21 13.6. EMPLOYER-OWNED LIFE INSURANCE. ------------------------------ (a) EMPLOYER OWNS ALL RIGHTS. In the event that, in its discretion, the -------------------------- Employer purchases a life insurance policy or policies insuring the life of any Participant to allow the Employer to informally finance and/or recover, in whole or in part, the cost of providing benefits under this Plan, neither the Participant nor any Beneficiary shall have any rights whatsoever in such policy or policies. The Employer shall be the sole owner and beneficiary of any such policy or policies and shall possess and may exercise all incidents of ownership, except in the event that the Employer establishes and transfers such policy or policies to the Trust Fund. (b) PARTICIPANT COOPERATION. If the Employer decides to purchase a life ------------------------- insurance policy or policies on any Participant, the Employer will so notify each Participant. Each Participant shall consent to being insured for the benefit of the Employer and shall take whatever actions may be necessary to enable the Employer to timely apply for and acquire such life insurance and to fulfil the requirements of the insurance carrier relative to the issuance thereof as a condition of eligibility to participate in the Plan. IN WITNESS WHEREOF, the Employer has caused this Plan to be executed by its duly authorized representative on this __ day of _____________, 1995. EVANS & SUTHERLAND COMPUTER CORPORATION By___________________________ Its________________________ "Employer" 22 EX-10.15 6 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN EVANS & SUTHERLAND COMPUTER CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE OF CONTENTS ----------------- ARTICLE 1 - --------- STATEMENT OF PURPOSE ............................... 1 -------------------- ARTICLE 2 - --------- DEFINITIONS......................................... 1 ----------- ARTICLE 3 - --------- ELIGIBILITY AND PARTICIPATION ...................... 4 ----------------------------- 3.1 ELIGIBILITY ........................................ 4 3.2 PARTICIPATION ...................................... 4 3.3 SUICIDE............................................. 4 ARTICLE 4 - --------- RETIREMENT BENEFIT.................................. 4 ------------------ 4.1 NORMAL RETIREMENT BENEFIT........................... 4 4.2 EARLY RETIREMENT BENEFIT............................ 5 4.3 DEATH AFTER COMMENCEMENT OF RETIREMENT BENEFIT...... 5 4.4 ALTERNATE FORM OF PAYMENT........................... 5 4.5 FORFEITURE OF BENEFITS.............................. 5 ARTICLE 5 - --------- SURVIVOR BENEFIT.................................... 6 ---------------- 5.1 SURVIVOR BENEFIT.................................... 6 ARTICLE 6 - --------- SEVERANCE BENEFIT................................... 6 ----------------- 6.1 SEVERANCE BENEFIT................................... 6 ARTICLE 7 - --------- CHANGE OF CONTROL................................... 6 ----------------- 7.1 FUNDING OF TRUST ON CHANGE OF CONTROL............... 6 7.2 TERMINATION ON CHANGE OF CONTROL.................... 7 i TABLE OF CONTENTS Continued PAGE ARTICLE 8 - --------- DISABILITY BENEFIT AND AUTHORIZED LEAVE OF ABSENCE.. 7 -------------------------------------------------- 8.1 DISABILITY BENEFIT.................................. 7 8.2 AUTHORIZED LEAVE OF ABSENCE......................... 7 ARTICLE 9 - --------- RESTRICTIVE COVENANT................................ 7 -------------------- 9.1 RESTRICTIVE COVENANT................................ 7 ARTICLE 10 - ---------- ADMINISTRATION...................................... 8 -------------- 10.1 PLAN ADMINISTRATOR.................................. 8 10.2 ALLOCATION OF FIDUCIARY RESPONSIBILITY.............. 8 10.3 POWERS OF THE PLAN ADMINISTRATOR.................... 8 10.4 CLAIMS.............................................. 8 10.5 CREATION OF COMMITTEE............................... 10 10.6 CHAIRMAN AND SECRETARY.............................. 10 10.7 APPOINTMENT OF AGENTS............................... 10 10.8 MAJORITY VOTE AND EXECUTION OF INSTRUMENTS.......... 10 10.9 ALLOCATION OF RESPONSIBILITIES AMONG COMMITTEE MEMBERS............................................. 10 10.10 CONFLICT OF INTEREST................................ 10 10.11 OTHER FIDUCIARY CAPACITIES.......................... 11 10.12 AUTHORITY TO ESTABLISH A TRUST...................... 11 10.13 PREPAYMENT.......................................... 11 ARTICLE 11 - ---------- SCOPE OF RESPONSIBILITY............................. 11 ----------------------- 11.1 SCOPE OF RESPONSIBILITY............................. 11 ii TABLE OF CONTENTS Continued PAGE ARTICLE 12 - ----------- AMENDMENT, MERGER, AND TERMINATION.................. 12 ---------------------------------- 12.1 AMENDMENT........................................... 12 12.2 MERGER OR CONSOLIDATION OF COMPANY.................. 12 12.3 TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTIONS....................................... 13 12.4 LIMITATION OF COMPANY LIABILITY..................... 13 ARTICLE 13 - ---------- COMPANY OWNED LIFE INSURANCE........................ 13 ---------------------------- 13.1 COMPANY OWNS ALL RIGHTS............................. 13 13.2 PARTICIPANT COOPERATION............................. 13 13.3 PARTICIPANT MISREPRESENTATION....................... 13 ARTICLE 14 - ---------- MISCELLANEOUS....................................... 14 ------------- 14.1 NONALIENATION OF BENEFITS........................... 14 14.2 UNSECURED COMPANY LIABILITY......................... 14 14.3 NO EMPLOYMENT AGREEMENT............................. 14 14.4 DESIGNATION OF BENEFICIARY.......................... 14 14.5 PAYMENT TO INCOMPETENTS............................. 14 14.6 BINDING EFFECT...................................... 15 14.7 ENTIRE PLAN......................................... 15 14.8 ENFORCEABILITY...................................... 15 ARTICLE 15 - ---------- CONSTRUCTION........................................ 15 ------------ 15.1 GOVERNING LAW....................................... 15 15.2 GENDER.............................................. 15 15.3 HEADINGS, ETC....................................... 15 iii ARTICLE 1 --------- STATEMENT OF PURPOSE -------------------- EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation, has adopted the Evans & Sutherland Computer Corporation Supplemental Executive Retirement Plan in order to provide its key executives a retirement benefit that supplements the benefit to which they may be entitled under the Evans & Sutherland Computer Corporation Defined Benefit Pension Plan. ARTICLE 2 --------- DEFINITIONS ----------- DEFINITIONS. When a word or phrase shall appear in this Plan with the ----------- initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be a term defined in this ARTICLE 2. The following words and phrases utilized in the Plan with the initial letter capitalized shall have the meanings set forth in this ARTICLE 2, unless a clearly different meaning is required by the context in which the word or phrase is used: 2.1 "ACTUARIAL EQUIVALENT" means of equal current value when computed -------------------- on the basis of actuarial procedures, assumptions, factors, and tables adopted by the Plan Administrator from time to time or as used by an independent actuary hired by the Plan Administrator. Actuarial Equivalent factors are the appropriate numerical ratios which enable a benefit that is Actuarially Equivalent to another benefit to be calculated. 2.2 "AVERAGE BASE COMPENSATION" means the Participant's base ------------------------- compensation for each of the three (3) consecutive calendar years of his employment with the Company that produces the highest annual average. If a Participant has been employed by the Company for more than one (1) but less than three (3) calendar years, the Participant's Average Base Compensation shall be based upon that Participant's actual calendar years of employment. If a Participant has been employed by the Company for less than one (1) year, the Participant's Average Base Compensation shall be equal to the Participant's base salary for that year. For purposes of this definition, the term "base compensation" means the Participant's base compensation for the applicable calendar year, but shall also include amounts deferred by the Participant during such calendar year under the Evans & Sutherland Computer Corporation 401(k) Deferred Savings Plan and the Evans & Sutherland Computer Corporation Executive Savings Plan (all other forms of compensation shall be disregarded for purposes of this Plan). 1 2.3 "BENEFICIARY" means any person or persons designated by a ----------- Participant in writing on a form satisfactory to the Plan Administrator. In the absence of any living designated beneficiary, a Participant's Beneficiary shall be the Participant's surviving spouse. If there is no surviving spouse, the Participant's Beneficiary shall be the Participant's estate. 2.4 "BOARD" means the Board of Directors of the Evans & Sutherland Computer ----- Corporation. 2.5 "CAUSE" means the termination of a Participant's employment with ----- the Company for any one or more of the following reasons: (a) embezzlement or theft from the Company, or other acts of dishonesty in dealing with the Company; (b) use by the Participant of alcohol, drugs, narcotics, or other controlled substances to such an extent that the Participant's ability to perform his duties as an employee of the Company is materially impaired; (c) conviction of a crime amounting to a felony under the laws of the United States of America or any of the states; (d) when the seriousness of an initial infraction is of such gravity that termination is warranted; or (e) when prior attempts through corrective counseling have failed to improve performance, attendance, conduct, or any combination thereof. The determination of whether or not Cause exists shall be made by the Plan Administrator. 2.6 "CHANGE OF CONTROL" means any of the following: (i) the Company ----------------- executes a definitive agreement to merge or consolidate with or into another corporation in which the Company is not the surviving corporation and the Company's common stock is converted into or exchanged for stock or securities of any other corporation, cash, or any other thing of value; (ii) the Company executes a definitive agreement to sell or otherwise dispose of substantially all its assets; (iii) the Company undergoes a change of control of the nature required to be reported in response to item 6(e) of Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended; (iv) a public announcement that more than thirty percent (30%) of the Company's then outstanding voting stock has been acquired by any person or group; or (v) a change is made in the membership of the Board resulting in a membership of which less than a majority were also members of the Board on the date two years prior to such change, unless the election, or the nomination for election by the stockholders of the Company, of each new director was approved by the vote of at last two-thirds of the directors then still in office who were directors on the date two years prior to such change. 2.7 "COMPANY" means Evans & Sutherland. Computer Corporation, a Utah ------- corporation, including any subsidiaries, successors, and assigns thereto. 2.8 "DISABILITY" means the injury or sickness of the Participant, such ---------- that he is unable to perform the substantial and material duties of his regular occupation with the Company (determined at the time of such Disability), and which requires the Participant to be under the care of a licensed physician (unless the Plan Administrator determines that a physician's care would be of no further benefit to the Participant). A Participant shall be 2 presumed to be Disabled if the injury or sickness causes the Participant to totally and irrevocably lose speech, hearing in both ears, sight in both eyes, use of both hands, both feet, or one hand and one foot even if the Participant is able to continue work for the Company. The Plan Administrator's determination of Disability shall be conclusive and binding on all parties. 2.9 "EARLY RETIREMENT DATE" means a date on which a Participant retires --------------------- from the Company on or after attaining age fifty-five (55) and at least one (1) Year of Participation in the Plan after having completed at least five (5) Years of Service with the Company. 2.10 "EFFECTIVE DATE" means July 1, 1995. -------------- 2.11 "NORMAL RETIREMENT DATE" means the date on which a Participant ---------------------- retires from the Company on or after attaining age sixty-five (65) after having completed at least one (1) Year of Participation in the Plan. 2.12 "PARTICIPANT" means an employee of the Company selected by the ----------- Compensation Committee of the Board for participation in the Plan in accordance with Section 3 hereof, and who has not for any reason become ineligible to participate further in this Plan. An individual shall be deemed to continue as a Participant until all benefits payable to the Participant under this Plan have been distributed. 2.13 "PLAN" means the Evans & Sutherland Computer Corporation ---- Supplemental Executive Retirement Plan, as amended. 2.14 "PLAN YEAR" means the twelve month period commencing on July 1 of --------- each year and ending the following June 30. 2.15 "SERP AGREEMENT" means a written agreement between a Participant -------------- and the Plan Administrator. 2.16 "TRUST AGREEMENT" means the agreement entered into between the --------------- Company and the Trustee. 2.17 "TRUST FUND" means the fund established by the Company pursuant to ---------- the terms of the Trust Agreement as may be established under this Plan. 2.18 "TRUSTEE" means the individual, individuals, or entity selected by ------- the Company to act as such. The Trustee shall acknowledge acceptance and appointment by the execution of the Trust Agreement or, in the case of a successor Trustee, by the execution of an appropriate written instrument. If the Company appoints two or more individuals or entities to act jointly as the Trustee, the term "Trustee" shall refer collectively to all such individuals or entities. 3 2.19 "YEAR OF PARTICIPATION" means a period of twelve (12) consecutive --------------------- months during which a Participant has participated in the Plan. 2.20 "YEAR OF SERVICE" means a Plan Year during which a Participant is --------------- employed by the Company and has completed 1,000 or more "hours of service" as such term is defined in DOL Reg. Sec.2530.200b-2. In determining a Participant's Years of Service for purposes of determining the Participant's benefit under ARTICLES 4, 7, and 8, Years of Service prior to the Effective Date of the Plan (up to a maximum of ten) shall be counted. In determining a Participant's Years of Service for purposes of determining the Participant's vested Severance Benefit under Section 6.2, Years of Service prior to the Effective Date of the Plan shall not be counted. ARTICLE 3 --------- ELIGIBILITY AND PARTICIPATION ----------------------------- 3.1 ELIGIBILITY. Participation in the Plan shall be limited to those ------------- individuals who are members of a "select group of management or highly compensated employees" for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). From among these individuals, the Compensation Committee of the Board (the "Compensation Committee"), in its sole discretion, shall select employees of the Company who are eligible to become Participants. 3.2 PARTICIPATION. The Plan Administrator shall notify those employees --------------- selected for participation of the benefits available under the Plan. An eligible employee becomes a Participant in the Plan after he is selected to participate and has signed and delivered to the Plan Administrator a SERP Agreement. Thereafter, a Participant shall remain a Participant as long as he is continuously employed by the Company, or until his participation is terminated by the Compensation Committee. 3.3 SUICIDE. Notwithstanding anything in this Plan or any SERP --------- Agreement to the contrary, a Participant who commits suicide within two (2) years after the effective date of his participation in the Plan, shall not be entitled to any benefit under the Plan. Likewise, no Beneficiary claiming under any such Participant shall be entitled to any benefit under the Plan. ARTICLE 4 --------- RETIREMENT BENEFIT ------------------ 4.1 NORMAL RETIREMENT BENEFIT. If a Participant is continually employed --------------------------- by the Company until his Normal Retirement Date, he shall be entitled to receive annual normal retirement benefit equal to the amount determined under the following formula: 4 (X-Y) x A/B X = 66.7% of the Participant's Average Base Compensation. Y = The annual benefit payable to the Participant under the Evans & Sutherland Computer Corporation Defined Benefit Pension Plan. A = The Participant's total number of Years of Service with the Company at the time of determination (up to a maximum number of ten). B = Ten. This annual normal retirement benefit shall be payable in equal monthly installments commencing on the first day of the month following the Participant's Normal Retirement Date and shall continue for the remainder of the Participant's life. 4.2 EARLY RETIREMENT BENEFIT. If a Participant is continually employed -------------------------- by the Company until his Early Retirement Date, he shall be entitled to receive an annual early retirement benefit equal to the Actuarial Equivalent of his normal retirement benefit as determined in Section 4.1. This annual early retirement benefit shall be payable in equal monthly installments commencing on the first day of the month following the Participant's Early Retirement Date and shall continue for the remainder of the Participant's life. 4.3 DEATH AFTER COMMENCEMENT OF RETIREMENT BENEFIT. If a Participant ------------------------------------------------ dies after normal or early retirement benefits have commenced, but prior to receiving twelve (12) monthly payments, such monthly payments shall be continued to the Participant's Beneficiary until the total number of monthly payments made to the Participant and the Beneficiary equals twelve (12). If the Participant dies after having received twelve (12) or more monthly payments, no further benefits shall be paid to the Participant or to the Participant's Beneficiary. 4.4 ALTERNATE FORM OF PAYMENT. The Plan Administrator may, in its sole --------------------------- and absolute discretion, approve a retiring Participant's request of an alternate form of payment of the benefit, in which case such payments shall equal the Actuarial Equivalent of the normal form of benefit hereunder, which is straight life annuity. Such a request must be made before the Participant terminates employment. 4.5 FORFEITURE OF BENEFITS. Notwithstanding any provision in this Plan ------------------------ to the contrary, a Participant shall forfeit all benefits under the Plan if his employment with the Company is terminated for Cause or if he violates the restrictive covenant set forth in ARTICLE 9. 5 ARTICLE 5 --------- SURVIVOR BENEFIT ---------------- 5.1 SURVIVOR BENEFIT. If a Participant dies while employed by the ------------------ Company, the Company shall pay to the Participant's Beneficiary an annual benefit equal to 44.44% of the Participant's Average Base Compensation, determined as of the date of the Participant's death. This annual benefit shall be payable in equal monthly installments commencing on the first day of the month following the Participant's death and shall continue for the lesser of twenty (20) years or the life of the Beneficiary. ARTICLE 6 ---------- SEVERANCE BENEFIT ----------------- 6.1 SEVERANCE BENEFIT. If a Participant terminates employment with the ------------------- Company prior to his Early Retirement Date, other than by reason of death, Disability, or for Cause, the Participant shall be entitle to receive an annual severance benefit equal to the vested percentage of the Actuarial Equivalent of his normal retirement benefit as determined in Section 4.1. The annual severance benefit shall be payable in equal monthly installments over a ten year period commencing on the first day of the month following the month the participant reaches age 65. 6.2 VESTED PERCENTAGE. A Participant's vested percentage shall be ------------------- determined in accordance with the following schedule: Years of Service Vested Percentage ---------------- ----------------- Less than 1 0% 1 but less than 2 33 1/3% 2 but less than 3 66 2/3% 3 or more 100% If a Participant terminates employment prior to attaining his Early Retirement Date, other than by reason of death or Disability, before completing at least one Year of Service, the Participant shall not be entitled to any benefits under the Plan. Likewise, no Beneficiary claiming under any such Participant shall be entitled to any benefit under the Plan. ARTICLE 7 --------- CHANGE OF CONTROL ----------------- 7.1 FUNDING OF TRUST ON CHANGE OF CONTROL. In the event of a Change of --------------------------------------- Control, the Company shall immediately transfer to the Trust Fund an amount of cash or 6 other property equal to the Actuarial Equivalent of each Participant's normal retirement benefit, as determined under Section 4.1, determined as of the date of the Change of Control. 7.2 TERMINATION ON CHANGE OF CONTROL. Notwithstanding anything in this ---------------------------------- Plan to the contrary, if a Participant's employment with the Company is terminated for any reason other than for Cause within two (2) years after the actual events that gave rise to a Change of Control have occurred, the Participant shall be entitled to a benefit equal to the Actuarial Equivalent of his normal retirement benefit, as determined under Section 4.1, determined as of the date of the Participant's termination of employment. For purposes of calculating a Participant's normal retirement benefit under this Section 7.2, a Participant shall be deemed to have ten (10) Years of Service with the Company and at least one (1) Year of Participation in the Plan and shall be automatically 100% vested in his benefit. Such benefit shall be paid in a lump sum within sixty (60) days of the Participant's termination of employment with the Company. ARTICLE 8 --------- DISABILITY BENEFIT AND AUTHORIZED LEAVE OF ABSENCE -------------------------------------------------- 8.1 DISABILITY BENEFIT. Notwithstanding anything to the contrary -------------------- herein, if a Participant's employment with the Company is terminated prior to attaining age 55 as a result of the Participant's Disability, the Participant shall be entitled to an annual benefit equal to the Actuarial Equivalent of his normal retirement benefit as determined under Section 4.1. For purposes of calculating the Participant's normal retirement benefit under this Section 8.1, a Participant shall be deemed to have ten (10) Years of Service with the Company and at least one (1) Year of Participation in the Plan. A Participant's Disability benefit shall commence as of the first day of the month after the Participant attains age 55. 8.2 AUTHORIZED LEAVE OF ABSENCE. A Participant's employment with the ----------------------------- Company shall not be deemed to have terminated for purposes of this Plan during any authorized leave of absence. ARTICLE 9 --------- RESTRICTIVE COVENANT -------------------- 9.1 RESTRICTIVE COVENANT. If, during the three-year period following a ---------------------- Participant's termination of employment with, or retirement from, the Company, the Participant owns (other than a less than one percent (1%) ownership interest in a publicly-traded entity), manages, operates, joins, controls, is employed by, or participates in the ownership, management, operation, or control of, or is connected in any manner with, any business that competes with the Company, the Participant shall forfeit his benefits under this Plan. 7 ARTICLE 10 ----------- ADMINISTRATION -------------- 10.1 PLAN ADMINISTRATOR. The Employer shall be the Plan Administrator, -------------------- but it may delegate its duties as such to a committee appointed in accordance with Section 10.5. 10.2 ALLOCATION OF FIDUCIARY RESPONSIBILITY. The Plan Administrator is ---------------------------------------- the named fiduciary with respect to the administration of the Plan. It shall not be responsible for any fiduciary functions or other duties assigned to the Trustee pursuant to this Plan or the Trust Agreement. 10.3 POWERS OF THE PLAN ADMINISTRATOR. -------------------------------- (a) GENERAL POWERS. The Plan Administrator shall have the power and ---------------- discretion to perform the administrative duties described in this Plan or required for proper administration of the Plan and shall have all powers necessary to enable it to properly carry out such duties. Without limiting the generality of the foregoing, the Plan Administrator shall have the power and discretion to construe and interpret this Plan, to hear and resolve claims relating to this Plan, and to decide all questions and disputes arising under this Plan. The Plan Administrator shall determine, in its discretion, the service credited to the Participants, the status and rights of a Participant, and the identity of the Beneficiary or Beneficiaries entitled to receive any benefits payable hereunder on account of the death of a Participant. (b) BENEFIT PAYMENTS. Except as is otherwise provided hereunder, the ------------------ Plan Administrator shall determine the manner and time of payment of benefits under this Plan. Any benefit disbursements by the Trustee shall be made upon the instructions of the Plan Administrator. (c) DECISIONS FINAL. The decision of the Plan Administrator upon all ----------------- matters within the scope of its authority shall be binding and conclusive upon all persons. (d) REPORTING AND DISCLOSURE. The Plan Administrator shall file all -------------------------- reports and forms lawfully required to be filed by the Plan Administrator with any governmental agency or department, federal, or state, and shall distribute any forms, reports, statements or plan descriptions lawfully required to be distributed to Participants and others by any governmental agency or department, federal or state. 10.4 CLAIMS. ------- (a) FILING OF CLAIM. A Participant or Beneficiary entitled to benefits ----------------- need not file a written claim to receive benefits. If an employee, Participant, Beneficiary, or any other 8 person is dissatisfied with the determination of his benefits, eligibility, participation, or any other right or interest under this Plan, such person may file a written statement setting forth the basis of the claim with the Plan Administrator in a manner prescribed by the Plan Administrator. In connection with the determination of a claim, or in connection with review of a denied claim, the claimant may examine this Plan and any other pertinent documents generally available to Participants relating to the claim and may submit comments in writing. (b) NOTICE OF DECISION. A written notice of the disposition of any such -------------------- claim shall be furnished to the claimant within thirty (30) days after the claim is filed with the Plan Administrator, provided that the Plan Administrator may have an additional period to decide the claim if it advises the claimant in writing of the need for an extension and the date on which it expects to decide the claim. The notice of disposition of a claim shall refer, if appropriate, to pertinent provisions of this Plan, shall set forth in writing the reasons for denial of the claim if the claim is denied (including references to any pertinent provisions of this Plan), and where appropriate shall explain how the claimant can perfect the claim. (c) REVIEW. If the claim is denied, in whole or in part, the claimant -------- shall also be notified in writing that a review procedure is available. Thereafter, within ninety (90) days after receiving the written notice of the Plan Administrator's disposition of the claim, the claimant may request in writing, and shall be entitled to, a review meeting with the Plan Administrator to present reasons why the claim should be allowed. The claimant shall be entitled to be represented by counsel at the review meeting. The claimant also may submit a written statement of his claim and the reasons for granting the claim. Such statement may be submitted in addition to, or in lieu of, the review meeting with the Plan Administrator. The Plan Administrator shall have the right to request of and receive from a claimant such additional information, documents, or other evidence as the Plan Administrator may reasonably require. If the claimant does not request a review meeting within ninety (90) days after receiving written notice of the Plan Administrator's disposition of the claim, the claimant shall be deemed to have accepted the Plan Administrator's written disposition, unless the claimant shall have been physically or mentally incapacitated so as to be unable to request review within the ninety (90) day period. (d) DECISION FOLLOWING REVIEW. A decision on review shall be rendered --------------------------- in writing by the Plan Administrator ordinarily not later than sixty (60) days after review, and a written copy of such decision shall be delivered to the claimant. If special circumstances require an extension of the ordinary period, the Plan Administrator shall so notify the claimant. In any event, if a claim is not determined within one hundred twenty (120) days after submission for review, it shall be deemed to be denied. (e) DECISIONS FINAL; PROCEDURES MANDATORY. To the extent permitted by --------------------------------------- law, a decision on review by the Plan Administrator shall be binding and conclusive upon all persons whomsoever. To the extent permitted by law, completion of the claims procedures described in this Section shall be a mandatory precondition that must be 9 complied with prior to commencement of a legal or equitable action in connection with the Plan by a person claiming rights under the Plan or by another person claiming rights through such a person. The Plan Administrator may, in its sole discretion, waive these procedures as a mandatory precondition to such an action. 10.5 CREATION OF COMMITTEE. The Company may appoint a committee to ----------------------- perform its duties as Plan Administrator by the adoption of appropriate Board resolutions. The committee shall consist of at least two (2) members, and they shall hold office during the pleasure of the Board. The committee members shall serve without compensation but shall be reimbursed for all expenses by the Company. The committee shall conduct itself in accordance with the provisions of this ARTICLE TEN. The members of the committee may resign with thirty (30) days notice in writing to the Company and may be removed immediately at any time by written notice from the Company. 10.6 CHAIRMAN AND SECRETARY. The committee shall elect a chairman from ------------------------ among its members and shall select a secretary who is not required to be a member of the committee and who may be authorized to execute any document or documents on behalf of the committee. The secretary of the committee or his designee shall record all acts and determinations of the committee and shall preserve and retain custody of all such records, together with such other documents as may be necessary for the administration of this Plan or as may be required by law. 10.7 APPOINTMENT OF AGENTS. The committee may appoint such other agents, ----------------------- who need not be members of the committee, as it may deem necessary for the effective performance of its duties, whether ministerial or discretionary, as the committee may deem expedient or appropriate. The compensation of any agents who are not employees of the Company shall be fixed by the committee within any limitations set by the Board. 10.8 MAJORITY VOTE AND EXECUTION OF INSTRUMENTS. In all matters, -------------------------------------------- questions, and decisions, the action of the committee shall be determined by a majority vote of its members. They may meet informally or take any ordinary action without the necessity of meeting as a group. All instruments executed by the committee shall be executed by a majority of its members or by any member of the committee designated to act on its behalf. 10.9 ALLOCATION OF RESPONSIBILITIES AMONG COMMITTEE MEMBERS. The -------------------------------------------------------- committee may allocate responsibilities among its members or designate other persons to act on its behalf. Any allocation or designation, however, must be set forth in writing and must be retained in the permanent records of the committee. 10.10 CONFLICT OF INTEREST. No member of the committee who is a Participant ---------------------- shall take any part in any action in connection with his participation as an individual. Such action shall be voted or decided by the remaining members of the committee. 10 10.11 OTHER FIDUCIARY CAPACITIES. The members of the committee may also ---------------------------- serve in any other fiduciary capacity, and, specifically, all or some members of the committee may serve as Trustee. Notwithstanding any other provision of this Plan, if and so long as any two (2) members of the committee also serve as Trustee, any provision of this Plan or the Trust Agreement which requires a direction, certification, notification, or other communication from the Plan Administrator to the Trustee shall be inapplicable. If and so long as any two (2) members of the committee also serve as Trustee, any action taken by either the committee or the Trustee shall be deemed to be taken by the appropriate party. 10.12 AUTHORITY TO ESTABLISH A TRUST. The Company shall have the right at -------------------------------- any time to establish a trust to which the Company may transfer from time to time certain assets to be used by the Trustee to satisfy some or all of the Company's obligations and liabilities under the Plan. All assets held by the Trust Fund shall be subject to the claims of the Company's creditors in the event of the Company's Insolvency (as defined in the Trust Agreement). 10.13 PREPAYMENT. The Plan Administrator may, in its sole and absolute ------------ discretion, prepay all or any part of the monthly installments remaining to be paid to the Participant or the Beneficiary under this Plan. The amount of such prepayment shall equal the Actuarial Equivalent of the remaining monthly installments being prepaid, as determined by the Plan Administrator using an independent actuary, and receipt thereof by the Participant or Beneficiary shall be in full satisfaction of all remaining obligations of the Company under the Plan. ARTICLE 11 ----------- SCOPE OF RESPONSIBILITY ----------------------- 11.1 SCOPE OF RESPONSIBILITY. ------------------------ (a) GENERAL. The Company, the Plan Administrator and the Trustee shall --------- perform the duties respectively assigned to them under this Plan and the Trust Agreement and shall not be responsible for performing duties assigned to others under the terms and provisions of this Plan or the Trust Agreement. No inference of approval or disapproval is to be made from the inaction of any party described above or the employee or agent of any of them with regard to the action of any other such party. Persons, organizations, or corporations acting in a position of any fiduciary responsibility with respect to the Plan or the Trust Fund may serve in more than one fiduciary capacity. (b) ADVISORS. The Company, the Plan Administrator, and the Trustee ---------- shall have authority to employ advisors, legal counsel, accountants, and actuaries in connection with the administration of the Plan and the Trust Fund, as set forth in the Trust Agreement. To the extent permitted by applicable law, the Company, the Plan Administrator, and the 11 Trustee shall not be liable for complying with the directions of any advisors, legal counsel, or accountants appointed pursuant to this Plan or the Trust Agreement. (c) INDEMNIFICATION. To the extent permitted by law, the Company shall ----------------- and does hereby jointly and severally indemnify and agree to hold harmless its employees, officers, and directors who serve in fiduciary capacities with respect to the Plan and the Trust Agreement from all loss, damage, or liability, joint or several, including payment of expenses in connection with defense against any such claim, for their acts, omissions, and conduct, and for the acts, omissions, and conduct of their duly appointed agents, which acts, omissions, or conduct constitute or are alleged to constitute a breach of such individual's fiduciary or other responsibilities under ERISA or any other law, except for those acts, omissions, or conduct resulting from his own willful misconduct, willful failure to act, or gross negligence; provided, however, that if any party would otherwise be entitled to indemnification hereunder in respect of any liability and such party shall be insured against loss as a result of such liability by any insurance contract or contracts, such party shall be entitled to indemnification hereunder only to the extent by which the amount of such liability shall exceed the amount thereof payable under such insurance contract or contracts. ARTICLE 12 ----------- AMENDMENT, MERGER AND TERMINATION --------------------------------- 12.1 AMENDMENT. --------- The Company shall have the right at any time, by an instrument in writing duly executed, acknowledged and delivered to the Plan Administrator and the Trustee, to modify, alter or amend this Plan; provided, however, that the duties and liabilities of the Plan Administrator and the Trustee hereunder shall not be substantially increased without their written consent; and provided further that the amendment shall not reduce any Participant's interest in the Plan, calculated as of the date on which the amendment is adopted. 12.2 MERGER OR CONSOLIDATION OF COMPANY. ----------------------------------- The Plan shall not be automatically terminated by the Company's acquisition by or merger into any other employer, but the Plan shall be continued after such acquisition or merger if the successor employer elects and agrees to continue the Plan and to become a party to the Trust Agreement. All rights to amend, modify, suspend, or terminate the Plan shall be transferred to the successor employer, effective as of the date of the merger and provided specifically that the successor employer shall not have the right to amend the Plan to reduce any Participant's interest in the Plan, calculated as of the date on which any amendment is adopted. 12 12.3 TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTIONS. ------------------------------------------------------- It is the expectation of the Company that this Plan will be continued indefinitely. However, continuance of the Plan is not assumed as a contractual obligation of the Company, and the right is reserved at any time to terminate this Plan or to reduce, temporarily suspend, or discontinue contributions hereunder, provided that any such termination, reduction, suspension, or discontinuance of contributions shall not reduce any Participant's interest in the Plan, calculated as of the date such action is taken. 12.4 LIMITATION OF COMPANY LIABILITY. -------------------------------- The adoption of this Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Employee or Participant or to be consideration for, an inducement to, or a condition of the employment of any employee. A Participant, employee, or Beneficiary shall not have any right to retirement or other benefits except to the extent provided herein. ARTICLE 13 ----------- COMPANY-OWNED LIFE INSURANCE ---------------------------- 13.1 COMPANY OWNS ALL RIGHTS. In the event that, in its discretion, the ------------------------- Company purchases a life insurance policy or policies insuring the life of any Participant to allow the Company to informally finance and/or recover, in whole or in part, the cost of providing the benefits hereunder, neither the Participant nor any Beneficiary shall have any rights whatsoever therein. The Company shall be the sole owner and beneficiary of any such policy or policies and shall possess and may exercise all incidents of ownership therein, except that the Company may transfer such policies to the Trust Fund in the event of a Change of Control. 13.2 PARTICIPANT COOPERATION. If the Company decides to purchase a life ------------------------- insurance policy or policies on any Participant, the Company will so notify each Participant. Each Participant shall consent to being insured for the benefit of the Company and shall take whatever actions may be necessary to enable the Company to timely apply for and acquire such life insurance and to fulfill the requirements of the insurance carrier relative to the issuance thereof as a condition of eligibility to participate in the Plan. 13.3 PARTICIPANT MISREPRESENTATION. If: (a) any Participant is required ------------------------------- by this Plan to submit information to any insurance carrier; and (b) the Participant makes a material misrepresentation in any application for such insurance; and (c) as a result of that material misrepresentation the insurance carrier is not required to pay all or any part of the proceeds provided under that insurance, then the Participant's (or the Participant's Beneficiary's) rights 13 to any benefits under this Plan may be, at the sole discretion of the Board, reduced or forfeited. ARTICLE 14 ----------- MISCELLANEOUS ------------- 14.1 NONALIENATION OF BENEFITS. No right or benefit under this Plan --------------------------- shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any right or benefit under this Plan shall be void. No such right or benefit shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled thereto. 14.2 UNSECURED COMPANY LIABILITY. The obligation of the Company to make ----------------------------- payments to a Participant under this Plan shall constitute an unsecured liability of the Company. Such payments shall be made from the general funds of the Company, and the Company shall not be required to establish or maintain any special or separate fund, to purchase or acquire life insurance on a Participant's life, or otherwise to segregate assets to assure that such payments shall be made. Neither a Participant nor any other person shall have any interest in any particular asset of the Company by reason of its obligation hereunder, and the right of any of them to receive payments under this Plan shall be no greater than the right of any other unsecured general creditor of the Company. 14.3 NO EMPLOYMENT AGREEMENT. Neither the execution of this Plan or any ------------------------- SERP Agreement nor any other action taken by the Company pursuant to this Plan shall beheld or construed to confer on a Participant any legal right to be continued as an employee of the Company or to restrict the right of the Company to terminate his employment. 14.4 DESIGNATION OF BENEFICIARY. Each Participant shall file with the ---------------------------- Company a notice in writing, in a form acceptable to the Board, designating one or more Beneficiaries to whom payments becoming due by reason of or after his death shall be made. Participants shall have the right to change the Beneficiary or Beneficiaries so designated from time to time; provided, however, that no such change shall become effective until received in writing and acknowledged by the Company. 14.5 PAYMENT TO INCOMPETENTS. The Company shall make the payments ------------------------- provided herein directly to the Participant or Beneficiary entitled thereto or, if such Participant or Beneficiary has been determined by a court of competent jurisdiction to be mentally or physically incompetent, then payment shall be made to the duly appointed guardian, committee, or other authorized representative of such Participant or Beneficiary. The Company shall have the right to make payment directly to a Participant or Beneficiary until it has received actual notice of the physical or mental incapacity of such Participant 14 or Beneficiary and actual notice of the appointment of a duly authorized representative of his estate. 14.6 BINDING EFFECT. Obligations incurred by the Company pursuant to ---------------- this Plan shall be binding upon and inure to the benefit of the Company, its successors, and assigns, and the Participant, his Beneficiaries, personal representatives, heirs, and legatees. 14.7 ENTIRE PLAN. This document and any amendments hereto contain all ------------- the terms and provisions of the Plan and shall constitute the entire Plan, nay other alleged terms or provisions being of no effect. 14.8 ENFORCEABILITY. If any term or condition of this Plan shall be invalid ---------------- or unenforceable to any extent or in any application, then the remainder of the Plan, and such term or condition except to such extent or in such application, shall to be affected thereby, and each and every term and condition of the Plan shall be valid and enforced to the fullest extent and in the broadest application permitted by law. ARTICLE 15 ------------ CONSTRUCTION ------------ 15.1 GOVERNING LAW. This Plan shall be construed and governed in --------------- accordance with the laws of the State of Utah to the extent not preempted by Federal law. 15.2 GENDER. The masculine gender, where appearing in the Plan, shall be -------- deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. 15.3 HEADINGS, ETC. All headings used in this Plan are for convenience --------------- of reference only and are not part of the substance of this Plan. IN WITNESS WHEREOF, this Plan, having been duly approved and adopted by the Board of Directors of the Company, is executed, by the duly authorized officers of the Company as of the Effective Date. EVANS & SUTHERLAND COMPUTER CORPORATION By:___________________________ Name:________________________ Title:_______________________ 15 EX-23.1 7 ACCOUNTANTS' CONSENT Exhibit 23.1 ------------ Accountants' Consent -------------------- The Board of Directors Evans & Sutherland Computer Corporation We consent to incorporation by reference in the Registration Statements No. 33- 39632 and No. 2-76027 on Forms S-8 of Evans & Sutherland Computer Corporation of our report dated February 13, 1996 relating to the consolidated balance sheets of Evans & Sutherland Computer Corporation and subsidiaries as of December 29, 1995 and December 30, 1994, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended December 29, 1995, which report appears in the December 29, 1995 Annual Report on Form 10-K of Evans & Sutherland Computer Corporation. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Salt Lake City, Utah March 28, 1996 EX-24.1 8 POWER OF ATTORNEY Exhibit 24.1 ------------ POWER OF ATTORNEY ----------------- KNOW ALL PERSONS BY THESE PRESENTS, that each officer and/or director of Evans & Sutherland Computer Corporation whose signature appears below constitutes and appoints James R. Oyler, John T. Lemley, and Gary E. Meredith, or any of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign in the name and on behalf of the undersigned, as a director and/or officer of said corporation, the Annual Report on Form 10K of Evans & Sutherland Computer Corporation for the year ended December 29, 1995, and any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney's-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney's-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney this 20th day of February, 1996.
Signature Title Date --------- ----- ---- /s/ Stewart Carrell Chairman of the Board of February 20, 1996 - ------------------- Directors Stewart Carrell /s/ James R. Oyler President and Chief February 20, 1996 - ------------------- Executive Officer James R. Oyler (Principal Executive Officer) and Director /s/ John T. Lemley Vice President and Chief February 20, 1996 - ------------------- Financial Officer John T. Lemley (Principal Financial and Accounting Officer)
Signature Title Date --------- ----- ---- /s/Gary E. Meredith Senior Vice President and February 20, 1996 - -------------------- Secretary Gary E. Meredith /s/Henry N. Christiansen Director February 20, 1996 - ------------------------ Henry N. Christiansen /s/Peter O. Crisp Director February 20, 1996 - -------------------- Peter O. Crisp /s/Ivan E. Sutherland Director February 20, 1996 - --------------------- Ivan E. Sutherland /s/John E. Warnock Director February 20, 1996 - --------------------- John E. Warnock
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