<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
EXHIBITS
TO THE
ANNUAL REPORT OF FORM 10-K
FOR THE
FISCAL YEAR ENDED DECEMBER 29, 1995
OF
EVANS & SUTHERLAND COMPUTER CORPORATION
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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.
<PAGE>
"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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
(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 -
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
"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 -
<PAGE>
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-
<PAGE>
"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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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
<PAGE>
- 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
<PAGE>
- 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
<PAGE>
-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:
<PAGE>
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
<PAGE>
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.
<PAGE>
- 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
<PAGE>
-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:
<PAGE>
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
- ----- ------ ------ ------ -------------
<PAGE>
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.
<PAGE>
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-
<PAGE>
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
<PAGE>
-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:
-------------------------
<PAGE>
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
<PAGE>
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/
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EVANS & SUTHERLAND COMPUTER HUGHES AIRCRAFT COMPANY
CORPORATION
By: By:
------------------------------ -----------------------------
Its: Its:
----------------------------- ----------------------------
HUGHES TRAINING, INC.
By:
-----------------------------
Its:
----------------------------
12
<PAGE>
EXHIBIT A
Arbitration and Civil Action Dismissal Documentation
13
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
EXHIBIT B
Form of Press Release
14
<PAGE>
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
<PAGE>
EXHIBIT C
Form of Escrow Agreement
15
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT A
Arbitration and Civil Action Dismissal Documentation
13
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT B
Form of Press Release
14
<PAGE>
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
<PAGE>
EXHIBIT C
Form of Escrow Agreement
15
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
[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
<PAGE>
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
<PAGE>
. 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
ATTACHMENT A
Customer List
- -------------
EVA
Britannia
Dana Dornier
Swissair
JPTN
KHI
JAS MD90
RNZAF MB339
Boeing B777
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Exhibit 10.14
THE
EVANS & SUTHERLAND COMPUTER CORPORATION
EXECUTIVE SAVINGS PLAN
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
--------
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EVANS & SUTHERLAND COMPUTER CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/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)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/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
</TABLE>
-2-
