Exhibit 10.21


 


CONFIDENTIAL SETTLEMENT AGREEMENT AND MUTUAL RELEASE


 


This
Confidential Settlement Agreement and Mutual Release (hereinafter “Agreement”)
is made as of this 28th day of December, 2005, by and between Evans &
Sutherland Computer Corp. (hereinafter collectively “E&S”) on the one hand,
and Federal Insurance Company (hereinafter “Federal”) on the other.  E&S and Federal shall be referred to
collectively as “Parties” and each will be referred to singularly as “Party.”


 


WHEREAS,
Federal issued to E&S General Liability insurance and Electronic and  Information Technology Errors and Omissions
insurance policy, number 3529-82-42, effective April 1, 2000, through April 1,
2001, and a Federal Commercial Umbrella policy, number 7966-15-50, effective
April 1, 2000 through April 1, 2001 (the “Policies”); and


 


WHEREAS,
Lockheed Martin filed suit on May 23, 2000 against E&S in Florida state
court, which case was removed to the U.S. District Court for the Middle
District of Florida and assigned Case No. 6:00-CV-755-ORL-19C (the “Lockheed
Martin Action”); and


 


WHEREAS,
E&S tendered the Lockheed Martin Action to Federal and requested that
Federal defend and indemnify E&S in connection therewith under the
Information and Network Technology Errors or Omissions provisions and other
relevant provisions of the Policies; and


 


WHEREAS
Federal defended E&S in the Lockheed Martin Action; and


 


WHEREAS
E&S settled the Lockheed Martin Action on or about April 26, 2002 and
subsequently made a claim for indemnity to Federal for the value of E&S’
counterclaims that were dismissed  in
settlement of the Lockheed Martin Action as well as a claim for payment of
certain attorneys’ fees and expenses incurred by the law firms of Persons &
Craver and Kirkland & Ellis;


 


WHEREAS,
Federal denied the claim for indemnity and the claim for Kirkland & Ellis
attorneys’ fees and expenses under the Policies, and disputed coverage as to
the claims for both indemnity and fees and expenses on various grounds; and


 


WHEREAS,
E&S filed a Complaint for Breach of Contract, Breach of the Implied
Covenant of Good Faith and Fair Dealing, and Declaratory Relief against Federal
in San Francisco Superior Court, case no. CGC 03419926, seeking an adjudication
that Federal was obligated to indemnify E&S with respect to the Lockheed
Martin Action and pay the Kirkland & Ellis fees and expenses; and


 


CONFIDENTIAL SETTLEMENT AGREEMENT AND MUTUAL RELEASE


Evans & Sutherland Computer Corporation v. Federal Insurance
Company, et al.


San Francisco Superior Court, Case No. CGC 03-419926


 

















 


WHEREAS,
E&S tendered a claim to Federal in connection with a settlement E&S
reached with its customer, CAE, memorialized in a settlement agreement dated
March 11, 2000, and whereas E&S also tendered numerous other matters to
Federal, including, but not limited to, those arising out of the following
contracts and/or projects:


 


1.  Sea
Harrier


2.  GR-4
Tornado


3. 
Nimrod


4. 
United Kingdom Attack Helicopter (UKAH)


5. 
Common Visual System (CVS) (H-60 type helicopters)


6.  STN
Atlas Elektronik GmbH, and


7.  8th
Army


 


All claims
and/or matters tendered by E&S to Federal including, but not limited to,
those listed above are collectively referred to herein as the “Tendered
Matters.”


 


WHEREAS,
E&S and Federal have maintained and provided support for their respective
positions on the disputed questions of insurance coverage pertaining to the
Lockheed Martin  Action, Kirkland &
Ellis fees and expenses and the Tendered Matters, and to their respective
rights and duties, if any, under and because of the Policies; and


 


WHEREAS,
E&S and Federal wish fully and finally to resolve, without admission or
adjudication of any issue of fact or law, all disputes that now exist or which
in the future may arise with respect to their respective rights and duties, if
any, under the Policies with respect to the Lockheed Martin Action, Kirkland
& Ellis fees and expenses and the Tendered Matters, and any other claims
that allege the same facts, circumstances and theories alleged to date;


 


NOW,
THEREFORE, in consideration of and in reliance upon the definitions, recitals,
mutual promises, covenants and obligations, which are hereby incorporated into
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, E&S and Federal agree as follows:


 


1.                                       DEFINITIONS


 


As used in
this Agreement and for the purpose of this Agreement only, the following terms
have the following meanings:


 


1.1                                 “E&S”
means Evans & Sutherland Computer Corp. and its predecessors, successors,
assigns, parent company(ies), subsidiaries, affiliates, agents, servants,
employees,


 

















 


managers,
representatives, attorneys, officers, directors and shareholders, and any and
all other Persons who qualify as an (as herein defined) “insured” under the
Policies.


 


1.2                                 “Federal”
means Federal Insurance Company, its predecessors, successors, assigns, parent
company(ies), subsidiaries, affiliates, agents, servants, employees, managers,
representatives, attorneys, officers, directors and shareholders, and Chubb and
Son, a division of Federal Insurance Company.


 


1.3                                 “Person”
means an individual, a corporation, a partnership, an association, a
proprietorship, a trust or any other entity or organization, any federal, state
or local governmental or quasi-governmental body or political subdivision or
any agency or instrumentality thereof.


 


1.4                                 Each
term defined herein stated in a singular form shall include the plural form,
and each defined term stated in a plural form shall include the singular form.


 


2.                                       PAYMENT


 


2.1                                 On
or before December 30, 2005, or within two (2) business days of the date
E&S and its counsel execute this Agreement, whichever is later, Federal
shall pay to E&S the amount of EIGHT MILLION DOLLARS ($8,000,000.00), which
payment shall constitute full and complete settlement of all known, unknown and
potential claims which E&S has or may have against Federal with respect to
the Lockheed Martin Action, Kirkland & Ellis fees and expenses and the
Tendered Matters, and any other claims alleging the same facts, circumstances
and theories alleged to date.


 


2.2                                 Such
payment shall be made by wire transfer to the following account:


 


Wells Fargo
Bank


180 South Main


Salt Lake
City, UT  84101


ABA:  121000248


Acct.
No.:  4761055250


 


3.                                       DISMISSAL
OF CLAIMS


 


E&S shall
execute all documents necessary to effect the dismissal, with prejudice, of its
Action filed in the San Francisco Superior Court, Case No. CGC 03419926, which
the Parties shall file promptly after payment of the settlement specified in
Paragraph 2 above.


 

















 


4.                                       RELEASES


 


4.1                                 Upon
the condition precedent that Federal makes the payment set forth in Paragraph 2
above, the Parties hereby forever release, acquit, and discharge each other
from any and all claims, demands, duties, obligations, liabilities, damages,
actions, and causes of action of any kind or nature whatsoever, whether in
contract, tort, or otherwise including any claims of “bad faith” or breach of
the implied covenant of good faith and fair dealing, that each Party now has,
had, or may have against the other Party with respect to the Lockheed Martin
Action, including, without limitation, any and all claims between the Parties
concerning Federal’s alleged but disputed obligation to indemnify E&S for
its settlement of the Lockheed Martin Action, to pay the Kirkland & Ellis
fees and expenses, and/or to contribute to any settlement, or any make any
other payments in connection with the Tendered Matters


 


4.2                                 With
respect to the Lockheed Martin Action and the Tendered Matters released herein,
the Parties agree that except as otherwise indicated in this Agreement, this
Agreement includes all claims of every kind and nature, past and present, known
or unknown, suspected or unsuspected. 
The Parties expressly waive the provisions of section 1542 of the
California Civil Code, which provides:


 


A general
release does not extend to claims which the creditor does not know or suspect
to exist in his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the debtor.


 


The Parties
acknowledge that they have discussed with their legal counsel the significance
and effect of waiving Civil Code section 1542 and warrant that this waiver is
informed, knowing, and voluntary.  The
Parties acknowledge and understand that this waiver is an essential and
material term of this Agreement and that, without such waiver, the Parties
would not have entered into this Agreement.


 


5.                                       NO
ADMISSION OF LIABILITY OR RESPONSIBILITY


 


5.1                                 E&S
and Federal agree that the payment and acceptance of the settlement sum
provided in Paragraph 2 and the additional terms as set forth herein, and the
execution of this Settlement Agreement, are the result of a compromise of
disputed claims, and shall never for any purpose be considered an admission of
liability or responsibility by E&S or Federal concerning any of the claims
referred to herein.  This Agreement  is entered into without prejudice or
precedential value and is not intended to be, nor shall it be construed as, an
interpretation of any insurance policy and shall not be used as evidence or in
any other manner in any court or dispute resolution proceeding to create, prove
or interpret the obligations and rights of any party under or because of the
Policies, other than in a proceeding to enforce the terms of this
Agreement.  Accordingly, neither this
Agreement nor its substance may be used between the Parties with respect to any
other claim or dispute that may exist between the Parties.  Furthermore, E&S and


 

















 


Federal deny
all liability and intend merely to avoid further litigation, and no past or
present wrongdoing shall be implied by virtue of this Agreement or the payment
of the settlement sum and the fact of this settlement cannot be used as a
precedent in any other matter.


 


5.2                                 This
Agreement shall not be admissible in any legal proceeding except to enforce its
terms.


 


6.                                       NO
OTHER CLAIMS


 


Other than the
Lockheed Martin Action, the Kirkland & Ellis fees and expenses and the
Tendered Matters, E&S warrants and represents that it is not aware of any
other claim(s) or potential claim(s) against E&S that give rise or may give
rise to any claim(s) by E&S for benefits under the Policies.  Further, E&S hereby agrees that it will
make no further claim of any kind to Federal for benefits under the Policies.


 


7.                                       MERGER
OF AGREEMENT


 


This Agreement is an integrated agreement and contains the entire
agreement regarding the matters herein between the signatories hereto.  No representations, warranties or promises
have been made or relied on by any signatory hereto other than as set forth
herein.  This Agreement supersedes and
controls any and all prior communications between the Parties or their
representatives relative to the matters contained herein.


 


8.                                       NO
RIGHTS CONFERRED UPON NONPARTIES


 


This Agreement is intended to confer rights and benefits on the
signatories hereto only and is not intended to confer any right or benefit upon
any other Person.  No Person other than
the signatories hereto shall have any legally enforceable right under this
agreement.  All rights of action for any
breach of this Agreement are hereby reserved to the signatories hereto.


 


9.                                       CONFIDENTIALITY


 


9.1                                 The
amount of consideration paid by Federal under this Agreement and the conditions
of this Agreement shall remain strictly confidential.  The Parties, their respective counsel and
representatives shall not disclose to any person in any context any of the
terms or conditions of this  Agreement,
except as specifically follows:  In case
of any subpoena or other application for a court order to request the
disclosure of any of the terms or conditions of this Agreement, the Party
shall, no less than fifteen (15) days prior to any disclosure pursuant thereto,
provide actual written notice to the other as provided in Paragraph 14, in a
manner so that it either may seek to quash the subpoena or otherwise object to
the disclosure order.  Further, the
Parties agree not to oppose any motion by one another requesting that any such
documents or


 

















 


information be
produced only under seal of the court and pursuant only to a reasonable
protective order.


 


9.2                                 Nothing
in these paragraphs shall preclude E&S or Federal from sharing with their
respective accountants or their other paid tax preparers the amount of monies received
pursuant to this Agreement for the sole purpose of complying with duties and
obligations owed to the United States Internal Revenue Service and/or any and
all state or local tax authorities.


 


9.3                                 Nothing
in these paragraphs shall preclude E&S from making any disclosure of the
settlement required by the Securities and Exchange Commission and the laws and
regulations pertaining to disclosures required of publicly traded companies.  Notwithstanding any provision to the contrary
in this Settlement Agreement, Federal has relied on E&S’ Form 8-K report
dated December 30, 2005 regarding this settlement and the Parties agree that it
does not violate the confidentiality provisions of Paragraph 9 and its subparts.


 


9.4                                 Nothing
in these paragraphs shall preclude Federal from making any disclosure of the
settlement required by auditors, reinsurers or regulators.


 


9.5                                 
In the event that a Party, or any of its attorneys or representatives, violates
these confidentiality provisions, a sanction may be imposed by the court upon
the violator in breach of the provision(s) for each and every instance of
breach.


 


10.                                 CORPORATE REPRESENTATIONS OF THE PARTIES


 


The parties each represent and warrant to the extent applicable:


 


a.                                       That
they are each corporations duly organized and each validly existing in good
standing under the laws of one of the states of the United States;


 


b.                                      That
they have taken all necessary corporate and legal actions duly to approve the
making and performance of this Agreement and that no further corporate or other
approval is necessary;


 


c.                                       That
the making and performance of this Agreement will not violate any provisions of
law or of their respective articles of incorporation or by-laws; and


 


d.                                      That they have read this Agreement and know
the contents hereof, that the terms hereof are contractual and not by way of
recital, and that they have signed this Agreement of their own free act.


 

















 


11.                                 BINDING NATURE OF TERMS


 


11.1                           Each of
the terms of this Agreement is binding upon each of the signatories hereto,
their respective predecessors, successors, transferees, assigns,
representatives, principals, agents, officers, directors and employees.


 


11.2                           If any
provision of this Agreement or any portion of any provision of this Agreement
is declared null and void or unenforceable by any court or tribunal having
jurisdiction, then such provision or such portion of such provision shall be
considered separate and apart from the remainder of this Agreement which shall
remain in full force and effect.


 


12.                                 AUTHORIZATION OF SIGNATORIES


 


The signatories to this Agreement represent and warrant that they are
duly authorized to execute this Agreement on behalf of the corporation on whose
behalf they are signing, and to bind said corporations, to the terms,
conditions, provisions, duties, and obligations set forth in this Agreement.


 


13.                                 DISPUTE RESOLUTION AND CONSTRUCTION OF
CONTRACT


 


13.1                           Any
dispute with respect to the enforcement of this Agreement shall first be
submitted to mediation pursuant to any method mutually agreeable to the
Parties.  Any Party requesting such
mediation shall provide to the other Party written notice of such request for
mediation.  The disputing Party shall
make a good faith effort to try to resolve the dispute by way of
mediation.  Any Party has the right to
institute legal proceedings, such as filing a lawsuit, with respect to any such
dispute, provided that at least sixty (60) calendar days have expired since the
date the written request for mediation was received by the other Party.


 


13.2                           This Agreement shall be deemed to have
been entered into, and shall be construed and interpreted in accordance with
the laws of the State of California.  Any
legal proceeding shall be filed in any court of competent jurisdiction in the
State of California.


 


14.                                 NOTICE


 


Any statements, communications or notices to be provided pursuant to
this Agreement shall be sent in writing to the attention of the persons
indicated below, via certified mail, electronic mail or facsimile, until such
time as notice of any change of person to be notified or change of address is
forwarded to all Parties:


 

















 


	
  a.

  	
  Notice to
  Federal Insurance Company:

  
	
   

  	
   

  
	
   

  	
  Ms. Cynthia Hagedorn

  
	
   

  	
  Chubb Group of Insurance Companies

  
	
   

  	
  3090 Bristol St., Ste. 600

  
	
   

  	
  Costa Mesa, CA 92626

  
	
   

  	
  Fax: (714) 913-4991

  
	
   

  	
  E-mail: chagedorn@chubb.com

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Marjie D. Barrows, Esq.

  
	
   

  	
  Rudloff Wood & Barrows LLP

  
	
   

  	
  2000 Powell Street, Suite 900

  
	
   

  	
  Emeryville, California 94608

  
	
   

  	
  Fax: (510) 740-1501

  
	
   

  	
  E-mail: mbarrows@rwblaw.com

  
	
   

  	
   

  
	
  b.

  	
  Notice to
  E&S:

  
	
   

  	
   

  
	
   

  	
  Mr. David Bateman

  
	
   

  	
  V.P., Business Operations

  
	
   

  	
  Evans & Sutherland Computer Corporation

  
	
   

  	
  600 Komas Drive

  
	
   

  	
  Salt Lake City, UT 84108

  
	
   

  	
  E-mail: dbateman@es.com

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Philip
  L. Pillsbury, Jr., Esq.

  
	
   

  	
  Pillsbury
  & Levinson, LLP

  
	
   

  	
  The
  Transamerica Pyramid

  
	
   

  	
  600
  Montgomery Street, 31st Floor

  
	
   

  	
  San
  Francisco, CA 94111

  
	
   

  	
  Fax:
  (415) 433-4816

  
	
   

  	
  E-mail:
  ppillsbury@pillsburylevinson.com

  
	
   

  	
   

  



 


15.                                 NO
FURTHER PAYMENT


 


Except as
otherwise indicated in this agreement, apart from the payment made under this
Agreement, each Party will bear its own costs, expenses, damages, and attorneys’
fees incurred in or arising out of or in any way related to the matters
released herein.


 

















 


16.                                 INFORMED
NEGOTIATIONS


 


This Agreement
is the product of informed negotiations between the Parties and their
representatives, including counsel.  It
is agreed that all Parties shared equally in drafting the same and that no
Party shall be considered the sole drafting party.  It is further agreed that the rule of
interpreting ambiguities against the drafting party shall not apply to the
interpretation of this Settlement Agreement.


 


17.                                 WAIVER AND
AGREEMENT


 


No provision of this Agreement, or breach of any provision, can be
waived except in writing.  Waiver of any
provision or breach shall not be deemed to be a waiver of any other provision
or of any subsequent breach of the same or other provision.  This Agreement may be amended, modified, or
rescinded only in writing signed by the Party to be charged.


 


18.                                 MISCELLANEOUS


 


18.1                           All
headings contained herein are only for convenience and ease of reference and
are not to be considered in the construction or interpretation of any provision
of this Agreement.


 


18.2                           This
Agreement may be executed in counterparts, all of which together shall constitute
a single instrument.


 


In Witness Whereof, the Parties have signed this Agreement below by
their duly authorized representative.


 


THE UNDERSIGNED HAVE READ THE FOREGOING
SETTLEMENT AGREEMENT AND RELEASE, FULLY UNDERSTAND ITS TERMS AND AGREE TO IT.


 


 


	
  DATED: December 28, 2005

  	
  Evans & Sutherland Computer Corp.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/David
  H. Bateman

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  David H.
  Bateman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  V.P.,
  Business Operations

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED: December 28, 2005

  	
  Pillsbury
  & Levinson, LLP

  	
   

  
						



 

















 


	
   

  	
  Attorneys
  for Evans & Sutherland Computer Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Philip L. Pillsbury, Jr.

  	
   

  
	
   

  	
   

  	
  Philip L.
  Pillsbury, Jr.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED: December 29, 2005

  	
  Federal
  Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Donna Lombardi 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
    Donna
  Lombardi

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
    VP
  & Claim Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED: December 29, 2005

  	
  Rudloff Wood
  & Barrows LLP

  	
   

  
	
   

  	
  Attorneys
  for Federal Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Marjie D. Barrows

  	
   

  
	
   

  	
   

  	
  Marjie D.
  Barrows