**Exhibit10.28**

 

**ASSETPURCHASE AGREEMENT****BETWEEN****EVANS & SUTHERLAND COMPUTER CORP.****AND****VIDEO DISPLAY CORPORATION**

 

 

October 12, 2004

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**TABLE OFCONTENTS**

 
| **Section 1 - Definitions**                                        |
|-------------------------------------------------------------------------|
|                                                                    |
| **Section 2 – Basic Transaction**                             |   |   |
|                                                                    | (a) | Purchase and Sale of  Assets |   |   |
|                                                                    | (b) | No Assumption of  Liabilities |   |   |
|                                                                    | (c) | Purchase Price |   |   |
|                                                                    | (d) | The  Closing |   |   |
|                                                                    | (e) | Deliveries at the Closing |   |   |
|                                                                    | (f) | Allocation |   |   |
|                                                                    |   |   |   |   |
| **Section 3  – Representations and Warranties of the Seller** |
|                                                                    | (a) | Organization of the  Seller |   |   |
|                                                                    | (b) | Authorization of  Transaction |   |   |
|                                                                    | (c) | Noncontravention |   |   |
|                                                                    | (d) | Brokers’  Fees |   |   |
|                                                                    | (e) | Title to Assets |   |   |
|                                                                    | (f) | Tangible Assets |   |   |
|                                                                    | (g) | Product Liability |   |   |
|                                                                    | (h) | Litigation |   |   |
|                                                                    | (i) | Product Warranty |   |   |
|                                                                    | (j) | Material Contracts |   |   |
|                                                                    | (k) | Inventory |   |   |
|                                                                    | (l) | Intellectual Property |   |   |
|                                                                    | (m) | Legal Compliance |   |   |
|                                                                    | (n) | Reformatted  Financial Information |   |   |
|                                                                    | (o) | Disclosure |   |   |
|                                                                    |   |   |   |   |
| **Section 4  – Representations and Warranties of the Buyer**  |
|                                                                    | (a) | Organization of the Buyer |   |   |
|                                                                    | (b) | Authorization of  Transaction |   |   |
|                                                                    | (c) | Noncontravention |   |   |
|                                                                    | (d) | Brokers’  Fees |   |   |
|                                                                    | (e) | Risk of Business |   |   |
|                                                                    | (f) | Disclosure |   |   |
|                                                                    |   |   |   |   |
| **Section 5 – Pre-Closing  Covenants**                        |
|                                                                    | (a) | General |   |   |
|                                                                    | (b) | Notices and Consents |   |   |
|                                                                    | (c) | Operation of Business |   |   |
|                                                                    | (d) | Preservation of Business |   |   |
|                                                                    | (e) | Full  Access |   |   |
|                                                                    | (f) | Publicity |   |   |
|                                                                    | (g) | Confidentiality |   |   |
|                                                                    |   |   |   |   |
| **Section 6 –  Conditions to Obligation to Close**            |
|                                                                    | (a) | Conditions to  Obligation of the Buyer |   |   |
|                                                                    | (b) | Conditions  to Obligation of the Seller |   |   |
|                                                                    |   |   |   |   |
| **Section 7 – Termination**                                   |

 

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| **Section 8 – Post Closing  Covenants**                |
|------------------------------------------------------------------|
|                                                             | (a) | General |   |   |
|                                                             | (b) | Litigation Support |   |   |
|                                                             | (c) | Transition |   |   |
|                                                             | (d) | Covenant Not to Compete |   |   |
|                                                             | (e) | Agreement Not to  Solicit Customers |   |   |
|                                                             | (f) | Agreement Not to  Solicit Employees |   |   |
|                                                             | (g) | Premises  Use |   |   |
|                                                             | (h) | Warranty Service |   |   |
|                                                             | (i) | Spares Pricing |   |   |
|                                                             | (j) | Transition Support |   |   |
|                                                             | (k) | Employees |   |   |
|                                                             |   |   |   |   |
| **Section 9  – Remedies for Breach of this Agreement** |
|                                                             | (a) | Survival  of Representations and Warranties |   |   |
|                                                             | (b) | Indemnification  Provisions |   |   |
|                                                             |   |   |   |   |
| **Section 10 – Disputes  and Arbitration**             |
|                                                             |   |   |   |   |
| **Section 11 – Miscellaneous**                         |
|                                                             | (a) | Survival  of Representations and Warranties |   |   |
|                                                             | (b) | Entire Agreement |   |   |
|                                                             | (c) | Succession and Assignment |   |   |
|                                                             | (d) | Counterparts |   |   |
|                                                             | (e) | Headings |   |   |
|                                                             | (f) | Notices |   |   |
|                                                             | (g) | Amendments and Waivers |   |   |
|                                                             | (h) | Severability |   |   |
|                                                             | (i) | Expenses |   |   |
|                                                             | (j) | Incorporation  of Exhibits and Schedules |   |   |
|                                                             | (k) | Bulk Transfer Laws |   |   |
|                                                             | (l) | Governing Law |   |   |
|                                                             |   |   |   |   |
| **Exhibits**                                                     |   |   |
|                                                             | Supply  Agreement |   |   |
|                                                             | Assignment of  Intellectual Property Transfers Agreement |   |   |
|                                                             | Assumption  Agreement |   |   |
|                                                             | Allocation  Schedule |   |   |
|                                                             | Transition  Plan |   |   |
|                                                             |   |   |
| **Schedules**                                                    |   |   |
|                                                             | Acquired  Assets |   |   |
|                                                             | Excluded  Assets |   |   |
|                                                             | Disclosure Schedule |   |   |
|                                                             | Intellectual Property –  CR- Based Projector (Trademarks, Service Marks, Trade Dress, Logos, Trade  Names) |   |   |
|                                                             | Intellectual Property –  CR- Based Projector (Copyrightable Works, All Copyrights, All Applications,  Registrations, Renewals |   |   |
|                                                             | Computer Software – CR-  Based Projector |   |   |
|                                                             | Exceptions to  Proprietary Rights – CRT- Based Projector |   |   |

 

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**ASSETPURCHASE AGREEMENT**

 

**THIS ASSET PURCHASE AGREEMENT**(the “Agreement”) is made and entered into asof October 11, 2004 by and between **VIDEODISPLAY CORPORATION**, a Georgia corporation (the “Buyer”), and **EVANS & SUTHERLANDCOMPUTER CORP.**, a Utah corporation (the “Seller”).  The Buyer and the Seller are referred tocollectively herein as the “Parties.”

 

This Agreement contemplatesa transaction in which the Buyer will purchase Seller’s cathode ray tube(“CRT”) based projector business and certain of the assets (and assume none ofthe liabilities) of the Seller used in that business in return for cash and aSupply Agreement as per attached Exhibit A.

 

Now, therefore, inconsideration of the premises and the mutual promises herein made, and inconsideration of the representations, warranties, and covenants hereincontained, the Parties agree as follows.

 

**1.****             ****Definitions****.**

 

“**AcquiredAssets**” means all right, title, and interest in and to thefollowing assets of the Seller: (a) all the tangible personal property such asall CRT projector machinery, equipment, inventories of raw materials andsupplies, manufactured and purchased parts, goods in process and finishedgoods, furniture, tools, jigs, and dies used exclusively or primarily by theSeller in its CRT- based projector business including, but not limited to suchpersonal property which is specifically enumerated on Schedule 1attached hereto (b) Intellectual Property, (c) files, documents,correspondence, lists, plats, drawings, and specifications, creative materials,advertising and promotional materials, studies, reports, and other printed orwritten materials used exclusively in the Seller’s CRT- based projectorbusiness, and (d) parts and service customer lists, history and contactinformation used exclusively in the Seller’s CRT- based projector business;provided, however, anything to the contrary in the foregoing notwithstanding,that the Acquired Assets shall not include (i) the corporate charter,qualifications to conduct business as a foreign corporation, arrangements withregistered agents relating to foreign qualifications, taxpayer and otheridentification numbers, seals, minute books, stock transfer books, blank stockcertificates, and other documents relating to the organization, maintenance,and existence of the Seller as a corporation, (ii) any of the rights of theSeller under this Agreement or (iii) any asset of the Seller primarily used inits other businesses, including any asset not specifically set forth above orthat is specifically set forth on Schedule 2 attached hereto.

 

“**Affiliate**”has the meaning set forth in Rule 12b-2 of the regulations promulgated underthe Securities Exchange Act.

 

“**AdverseConsequences**” means all actions, suits, proceedings, hearings,investigations, charges, complaints, claims, demands, injunctions, judgments,orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paidin settlement, Liabilities, obligations, Taxes, liens, losses, expenses, andfees, including court costs and all reasonable fees and expenses of attorneysand experts.

 

“**Buyer**”has the meaning set forth in the preface above.

 

“**Closing**”has the meaning set forth in Section 2(d) below.

 

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“**Closing Date**”has the meaning set forth in Section 2(d) below.

 

“**COBRA**”means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980Band of any similar state law.

 

“**Code**”means the Internal Revenue Code of 1986, as amended.

 

“**DisclosureSchedule**” means a schedule or listing of exceptions to therepresentations made by Seller in Section 3 below or by the Buyer in Section 4below, and in each case reasonably satisfactory to the party to which suchrepresentations and warranties are made.

 

“**EmployeeBenefit Plan**” means any “employee benefit plan” (as such term isdefined in ERISA Section 3(3)) and any other material employee benefitplan, program or arrangement of any kind.

 

“**EmployeePension Benefit Plan**” has the meaning set forth in ERISA Section 3(2).

 

“**EmployeeWelfare Benefit Plan**” has the meaning set forth in ERISA Section 3(1).

 

“**Environmental,Health, and Safety Requirements**” shall mean all federal, state,local and foreign statutes, regulations, ordinances and other provisions havingthe force or effect of law, all judicial and administrative orders anddeterminations, all contractual obligations and all common law concerningpublic health and safety, worker health and safety, and pollution or protectionof the environment, including without limitation all those relating to thepresence, use, production, generation, handling, transportation, treatment,storage, disposal, distribution, labeling, testing, processing, discharge,release, threatened release, control, or cleanup of any hazardous materials,substances or wastes, chemical substances or mixtures, pesticides, pollutants,contaminants, toxic chemicals, petroleum products or byproducts, asbestos,polychlorinated biphenyls, noise or radiation, each as amended and as now orhereafter in effect.

 

“**ERISA**”means the Employee Retirement Income Security Act of 1974, as amended.

 

“**ERISA Affiliate**”means each entity that is treated as a single employer with the Seller forpurposes of Code Section 414.

 

“**EstoppelCertificates**” has the meaning set forth in Section 6(a)below.

 

“**Export Control**”means the U. S. Government Export Control Laws, including the Office of DefenseTrade Controls (ODTC) and the International Traffic in Arms Regulations (ITAR)

 

“**FinancialStatement**” has the meaning set forth in Section 3(g) below.

 

“**GAAP**”means United States Generally Accepted Accounting Principles as in effect fromtime to time.

 

**“Independent Requests For SparesAnd/Or Repairs”**means any customer request received by Seller for ESCP or TargetView spareparts, and/or related repairs, independent of and not involving a Seller’sSystem or Warranty Obligations thereunder, or a Seller’s Service Agreement.

 

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“**IntellectualProperty**” means the following, (a) the trademarks, servicemarks, trade dress, logos, trade names, and together with all translations,adaptations, derivations, and combinations thereof used exclusively in theSeller’s CRT- based projector operations and which are specifically set forthon Schedule 3 attached hereto, (b) all copyrightable works, allcopyrights, and all applications, registrations, and renewals in connectiontherewith used exclusively in the Seller’s CRT- based projector operations andwhich are specifically set forth on Schedule 4 attached hereto, (c)all mask works and all applications, registrations, and renewals in connectiontherewith used exclusively in the Seller’s CRT- based projector operations, (d)all trade secrets and confidential business information (including ideas,research and development, know-how, formulas, compositions, manufacturing andproduction processes and techniques, technical data, designs, drawings, specifications,customer and supplier lists, pricing and cost information, and business andmarketing plans and proposals) used exclusively in the Seller’s CRT- basedprojector operations, (e) all computer software (including data and relateddocumentation) used exclusively in the Seller’s CRT- based projector operationsand which are specifically set forth on Schedule 5 attached hereto,(f) all other proprietary rights of the Seller used exclusively in the Seller’sCRT- based projector operations, except as specifically set forth on Schedule 6attached hereto, and (g) all copies and tangible embodiments thereof (inwhatever form or medium).

 

“**Knowledge**”means actual knowledge after reasonable investigation.

 

“**Liability**”means any liability (whether known or unknown, whether asserted or unasserted,whether absolute or contingent, whether accrued or unaccrued, whetherliquidated or unliquidated, and whether due or to become due), including anyliability for Taxes.

 

“**OrdinaryCourse of Business**” means the ordinary course of businessconsistent with past custom and practice (including with respect to quantityand frequency).

 

“**Party**”has the meaning set forth in the preface above.

 

“**Person**”means an individual, a partnership, a corporation, an association, a jointstock company, a trust, a joint venture, an unincorporated organization, or agovernmental entity (or any department, agency, or political subdivisionthereof).

 

“**Purchase Price**”has the meaning set forth in Section 2(c) below.

 

“**Securities Act**”means the Securities Act of 1933, as amended.

 

“**SecuritiesExchange Act**” means the Securities Exchange Act of 1934, asamended.

 

“**SecurityInterest**” means any mortgage, pledge, lien, encumbrance, charge,or other security interest, other than (a) mechanic’s, materialmen’s,and similar liens, (b) liens for Taxes not yet due and payable, (c) purchasemoney liens and liens securing rental payments under capital leasearrangements, and (d) other liens arising in the Ordinary Course of Businessand not incurred in connection with the borrowing of money.

 

“**Service Agreement**” means a contractualagreement between Seller and a customer of Seller for the installation ormaintenance of Seller’s systems, software or equipment over a specified periodof time.  A Service Agreement may requireSeller to provide installation, training, examination, parts, repairs,alignment, calibration, testing, updates, software, or any

 

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other goods or services associated with ensuring the operational capabilityof a supplied product.

 

“**Subsidiary**”means any corporation with respect to which a specified Person (or a Subsidiarythereof) owns a majority of the common stock or has the power to vote or directthe voting of sufficient securities to elect a majority of the directors.

 

“**Seller**”has the meaning set forth in the preface above.

 

**“****System****”******means an image generator and other componentsdesigned to create images and/or simulations desired by the end user.

 

“**Tax**”means any federal, state, local, or foreign income, gross receipts, license,payroll, employment, excise, severance, stamp, occupation, premium, windfallprofits, environmental (including taxes under Code Section 59A), customsduties, capital stock, franchise, profits, withholding, social security (orsimilar), unemployment, disability, real property, personal property, sales,use, transfer, registration, value added, alternative or add-on minimum,estimated, or other tax of any kind whatsoever, including any interest,penalty, or addition thereto, whether disputed or not.

 

“**Tax Return**”means any return, declaration, report, claim for refund, or information returnor statement relating to Taxes, including any schedule or attachmentthereto, and including any amendment thereof.

 

“**WarrantyObligations**” means a contractual agreement or obligation wherebySeller undertakes to repair or replace defective parts or workmanship in anySeller-supplied System.

 

**2.****             ****Basic Transaction****.**

 

(a)          Purchase and Sale of Assets.  On and subject to the terms and conditions ofthis Agreement, the Buyer agrees to purchase and to accept from the Seller, andthe Seller agrees to sell, transfer, convey, and deliver to the Buyer, theAcquired Assets at the Closing for the consideration specified below in this Section 2.

 

(b)         No Assumption of Liabilities.  On and subject to the terms andconditions of this Agreement, the Buyer neither agrees to assume nor becomeresponsible for any of the Seller’s Liabilities at the Closing.

 

(c)          Purchase Price.  TheBuyer agrees to pay to the Seller, at the Closing, the Purchase Price bydelivering payment by bank wire transfer to an account designated by the Sellerin immediately available funds in the amount of Five Million Two Hundred FiftyThousand Dollars ($5,250,000) and delivery of an executed Supply Agreement inthe form as attached as Exhibit A.

 

(d)         The Closing.  Theclosing of the transactions contemplated by this Agreement (the “Closing”) shalltake place on or before October 11,2004 at the offices of Gambrell & Stolz, L.L.P., 3414 PeachtreeRoad, Suite 1600, Atlanta, Georgia, 30326, commencing at 9:00 a.m. local timeor at such other place and at such other date and time as the Parties maymutually agree upon (the “Closing Date”);

 

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(e)          Deliveries at the Closing.  At the Closing, (i) the Seller will deliverto the Buyer the various certificates, instruments, agreements and documentsreferred to in Section 6(a) below; (ii) the Buyer will deliver to theSeller the various certificates, instruments, agreements and documents referredto in Section 6(b) below; (iii) the Seller will execute, acknowledge (ifappropriate), and deliver to the Buyer (A) assignments (including IntellectualProperty transfer and license documents) in the forms attached hereto as ExhibitB (B) such other instruments of sale, transfer, conveyance, and assignmentas the Buyer and its counsel reasonably may request; (iv) the Buyer willexecute, acknowledge (if appropriate), and deliver to the Seller (A) anassumption in the form attached hereto as Exhibit C; (B) such otherinstruments of assumption as the Seller and its counsel reasonably may request;and (v) the Buyer will deliver to the Seller the consideration specified in Section 2(c)above.

 

(f)            Allocation.  TheParties agree to allocate the Purchase Price (and all other capitalizablecosts) among the Acquired Assets for all purposes (including financialaccounting and tax purposes) in accordance with the allocation schedule attachedhereto as Exhibit D.  Buyer andSeller acknowledge that such allocation shall be binding upon the parties forall applicable federal, state, local and foreign tax purposes.  Purchaser and Seller covenant to report gainor loss or cost basis, as the case may be, in a manner consistent with suchallocation in all tax returns filed by either of them subsequent to the ClosingDate and not to take voluntarily any inconsistent position therewith in anyadministrative or judicial proceeding relating to such returns.  Purchaser and Seller shall exchange mutuallyacceptable and completed IRS Forms 8594, which they shall use to report thetransaction contemplated hereunder to the Internal Revenue Service inaccordance with such allocation.

 

3.               **Representations andWarranties of the Seller**.  TheSeller   represents and warrants to theBuyer that to Seller’s Knowledge, and, except as set forth in the DisclosureSchedule, the statements contained in this Section 3 are correct andcomplete as of the date of this Agreement and will be correct and complete tothe best of Seller’s knowledge, as of the Closing Date.  The Seller’s Disclosure Schedule will bearranged in paragraphs corresponding to the lettered and numbered paragraphscontained in this Section 3.

 

(a)          Organization of the Seller  The Seller is a corporation duly organized, validly existing, and in goodstanding under the laws of the State of Utah.

 

(b)         Authorization of Transaction.  TheSeller has full power and authority (including full corporate power andauthority) to execute and deliver this Agreement and to perform its obligationshereunder.  Without limiting thegenerality of the foregoing, the board of directors of the Seller has dulyauthorized the execution, delivery, and performance of this Agreement by theSeller. This Agreement constitutes the valid and legally binding obligation ofthe Seller, enforceable in accordance with its terms and conditions.

 

(c)          Noncontravention. Neither the execution and the delivery of this Agreement, nor theconsummation of the transactions contemplated hereby (including the assignmentsand assumptions referred to in Section 2 above), will (i) violate anyconstitution, statute, regulation, rule, injunction, judgment, order, decree,ruling, charge, or other restriction of any government, governmental agency, orcourt to which the Seller is subject or any provision of the articles ofincorporation or bylaws of the Seller or (ii) conflict with, result in a breachof, constitute a default under, result in the acceleration of, create in anyparty the right to accelerate, terminate, modify, or cancel, or require anynotice under any agreement, contract, lease, license, instrument, or otherarrangement to which the Seller is a party or by which it is bound or to whichany of its assets is subject (or result in the imposition of any SecurityInterest upon any of its assets).  The

 

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Seller does not need to give any notice to, make anyfiling with, or obtain any authorization, consent, or approval of anygovernment or governmental agency in order for the Parties to consummate thetransactions contemplated by this Agreement (including the assignments and assumptionsreferred to in Section 2 above).

 

(d)         Brokers’ Fees.  TheSeller has no Liability or obligation to pay any fees or commissions to anybroker, finder, or agent with respect to the transactions contemplated by thisAgreement for which the Buyer could become liable or obligated.

 

(e)          Title to Assets.  TheSeller has good and marketable title to all of the Acquired Assets, free andclear of any Security Interest or restriction on transfer.

 

(f)            Tangible Assets.  TheSeller owns or leases all machinery, equipment, and other tangible assets,including parts inventory, necessary for the conduct of the Seller’s CRT- basedprojector businesses as presently conducted and as presently proposed to beconducted.  Seller owns some of the rawmaterials and supplies needed for operation of the CRT-based projectorbusinesses, and contracts for the balance of such materials and supplies.  The Seller makes no representation orwarranty as to the condition on usability of any tangible asset transferredunder this Agreement and each such tangible asset is **SOLD AS IS WITHOUT ANY IMPLIED OR EXPRESS WARRANTY FOR A PARTICULARPURPOSE**.

 

(g)         Product Liability.  TheSeller does not have any Liability to its Knowledge (and to Seller’s Knowledge,there is no reasonable basis for any present or future action, suit,proceeding, hearing, investigation, charge, complaint, claim, or demand againstthe Seller giving rise to any Liability) arising out of any injury toindividuals or property as a result of the ownership, possession, or use of anyCRT projector product manufactured, sold, leased, or delivered by the Seller.

 

(h)         Litigation.  TheDisclosure Schedule sets forth each instance that relates to the AcquiredAssets in which the Seller (i) is subject to any outstanding injunction, judgment,order, decree, ruling, or charge or (ii) is a party or is threatened to be madea party to any action, suit, proceeding, hearing, or investigation of, in, orbefore any court or quasi-judicial or administrative agency of any federal,state, local, or foreign jurisdiction or before any arbitrator.

 

(i)             Product Warranty.  Tothe Seller’s Knowledge, each product manufactured, sold, leased, or deliveredby the Seller pursuant to CRT projector business has been in conformity withall applicable contractual commitments and all express and implied warranties,and the Seller has no Knowledge of any existing claim of Liability (and to theSeller’s Knowledge there is no  basis forany present or future action, suit, proceeding, hearing, investigation, charge,complaint, claim, or demand against the Seller giving rise to any Liability)for replacement or repair thereof or other damages in connection therewith.

 

(j)             Material Contracts.  There exists no term or condition in any material contract that relatesto the Acquired Assets that would in any way or matter adversely affect Buyer’sutilization of the Acquired Assets post Closing.

 

(k)          Inventory  The inventory portion of theAcquired Assets consists of raw materials and supplies, manufactured andpurchased parts, goods in process, and finished goods, all of which ismerchantable and fit for the purpose for which it was procured or manufactured,and none of which is, obsolete, damaged, or defective.

 

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(l)             Intellectual Property.   TheSeller owns or has the right to use pursuant to license, sublicense, agreement,or permission all Intellectual Property being sold to Buyer as part of theAcquired Assets.  Each item ofIntellectual Property owned or used by the Seller immediately prior to theClosing hereunder will be owned or available for use by the Buyer on identicalterms and conditions immediately subsequent to the Closing hereunder.

 

(m)       Legal Compliance.  Tothe Seller’s Knowledge, the Seller has complied with all applicable laws(including rules, regulations, codes, plans, injunctions, judgments, orders,decrees, rulings, and charges thereunder) of federal, state, local, and foreigngovernments (and all agencies thereof), as they may relate directly to theAcquired Assets, and to Seller’s Knowledge no action, suit, proceeding,hearing, investigation, charge, complaint, claim, demand, or notice has beenfiled or commenced against the Seller alleging any failure so to comply.

 

(n)         Reformatted Financial Information.  Tothe Seller’s Knowledge, the reformatted financial information concerning theSeller’s CRT- based projector business (as referenced in Section 4(e)hereof) provided to Buyer at Buyer’s request is substantially accurate.

 

(o)         Disclosure.  Tothe Knowledge of Seller, the representations and warranties contained in this Section 3do not contain any untrue statement of a material fact or omit to state anymaterial fact necessary in order to make the statements and informationcontained in this Section 3 not misleading.

 

4.               **Representations andWarranties of the Buyer****.**  TheBuyer represents and warrants to the Seller that the statements contained inthis Section 4 are correct and complete as of the date of this Agreementand will be correct and complete as of the Closing Date (as though made thenand as though the Closing Date were substituted for the date of this Agreementthroughout this Section 4), except as set forth in the DisclosureSchedule.  The Buyer’s Disclosure Schedule willbe arranged in paragraphs corresponding to the lettered and numbered paragraphscontained in this Section 4.

 

(a)          Organization of the Buyer.  The Buyer is a corporation duly organized,validly existing, and in good standing under the laws of the jurisdiction ofits incorporation.

 

(b)         Authorization of Transaction.  TheBuyer has full power and authority (including full corporate power andauthority) to execute and deliver this Agreement and to perform its obligationshereunder.  Without limiting thegenerality of the foregoing, the board of directors of the Buyer has duly authorizedthe execution, delivery, and performance of this Agreement by the Buyer. ThisAgreement constitutes the valid and legally binding obligation of the Buyer,enforceable in accordance with its terms and conditions.

 

(c)          Noncontravention. Neither the execution and the delivery of this Agreement, nor theconsummation of the transactions contemplated hereby (including the assignmentsand assumptions referred to in Section 2 above), will (i) violate anyconstitution, statute, regulation, rule, injunction, judgment, order, decree,ruling, charge, or other restriction of any government, governmental agency, orcourt to which the Buyer is subject or any provision of its charter or bylawsor (ii) conflict with, result in a breach of, constitute a default under, resultin the acceleration of, create in any party the right to accelerate, terminate,modify, or cancel, or require any notice under any agreement, contract, lease,license, instrument, or other arrangement to which the Buyer is a party or bywhich it is bound or to which any of its assets is subject.  The Buyer does not need to give any noticeto, make any filing with, or obtain any

 

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authorization, consent, or approval of any government orgovernmental agency in order for the Parties to consummate the transactionscontemplated by this Agreement (including the assignments and assumptionsreferred to in Section 2 above).

 

(d)         Brokers’ Fees.  TheBuyer has no Liability or obligation to pay any fees or commissions to anybroker, finder, or agent with respect to the transactions contemplated by thisAgreement for which the Seller could become liable or obligated.

 

(e)          Risk of Business. The Buyer has aconducted what it believes to be an appropriate “due diligence” investigationof the Seller and the Seller’s CRT- based projector business, and hassatisfactorily received from Seller all information that Buyer deems materialand necessary to an independent and informed valuation by Buyer of the AcquiredAssets, and for Buyer otherwise to make a decision to enter into thisAgreement.   The Buyer has been informedby the Seller that annual total revenues of Seller have been declining andabsolutely no representations, assurances and/or guarantees have been providedfor the growth or performance of financial or business results from theutilization of the Acquired Assets or otherwise.  Buyer and Seller both acknowledge that theyhave made best efforts to provide, review, and conduct their own analysis ofdata related to the assets and business being transacted in this contract, andthat the valuation of the Acquired Assets is based on these best efforts as ofthe date of this contract.  Buyeracknowledges that much of the aforementioned Seller’s data requiredreformatting by Seller to meet Buyer’s requests for information, and thatSeller undertook substantial efforts to improve the accuracy of the data overthe course of the Parties’ negotiations.

 

(f)            Disclosure.  Tothe Knowledge of Buyer, the representations and warranties contained in this Section 4do not contain any untrue statement of a material fact or omit to state anymaterial fact necessary in order to make the statements and informationcontained in this Section 4 not misleading.

 

**5.****             ****Pre-Closing Covenants****. **The Parties agree as follows with respect to the period between theexecution of this Agreement and the Closing.

 

(a)          General.  Each of the Parties will useits reasonable best efforts to take all action and to do all things necessary,proper, or advisable in order to consummate and make effective the transactionscontemplated by this Agreement (including satisfaction, but not waiver, of theclosing conditions set forth in Section 6 below).

 

(b)         Notices and Consents  TheSeller will give any notices to third parties, and the Seller will use its bestefforts to obtain any third party consents, that the Buyer may reasonablyrequest in connection with the matters referred to in Section 3(c)above.  Each of the Parties will give anynotices to, make any filings with, and use its reasonable best efforts to obtainany authorizations, consents, and approvals of governments and governmentalagencies in connection with the matters referred to in Section 3(c) and Section 4(c)above.

 

(c)          Operation of Business.  TheSeller will not engage in any practice, take any action, or enter into anytransaction in the CRT- based projector field or with respect to its CRT- basedprojector business outside the Ordinary Course of Business, except asenvisioned by this Agreement.

 

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(d)         Preservation of Business.  The Seller will undertake best efforts tokeep its business and properties substantially intact, including its presentoperations, physical facilities, working conditions, and relationships withlessors, licensors, suppliers, customers, and employees.

 

(e)          Full Access.  The Sellerwill permit representatives of the Buyer to have full access at all reasonabletimes, and in a manner so as not to interfere with the normal businessoperations of the Seller, to all premises, properties, personnel, books,records, contracts, and documents of or pertaining to the Acquired Assets.

 

(f)            Publicity.  Prior to the Closing, anywritten news releases by the Buyer or the Seller pertaining to this Agreementor the sale contemplated by the Agreement shall be reviewed and approved by theother Party hereto prior to release.

 

(g)         Confidentiality. Buyer shall hold in strict confidence, all documents and informationobtained with respect to Seller (“Confidential Information”). Buyer shall notpermit any Confidential Information to be utilized or to be disclosed orconveyed to any other person or entity other than its legal and accountingrepresentatives in furtherance of this Agreement. This Section 5(g) shallterminate if and when the Closing occurs in accordance with Section 1 ofthis Agreement, or within one year of the date of execution of this Agreement,whichever occurs first.

 

6.               **Conditions to Obligation toClose****.**

 

(a)          Conditions to Obligation of the Buyer.  Theobligation of the Buyer to consummate the transactions to be performed by it inconnection with the Closing is subject to satisfaction of the followingconditions:

 

(i)                                     the representations and warranties set forth in Section 3above shall be true and correct in all material respects at and as of theClosing Date;

 

(ii)                                  the Seller shall have performed and compliedwith all of its covenants hereunder in all material respects through theClosing;

 

(iii)                               the Seller shall have procured all of the thirdparty consents specified in Section 5(b) above;

 

(iv)                              no action, suit, or proceeding shall bepending or threatened before any court or quasi-judicial or administrativeagency of any federal, state, local, or foreign jurisdiction or before anyarbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,or charge would (A) prevent consummation of any of the transactionscontemplated by this Agreement, (B) cause any of the transactions contemplatedby this Agreement to be rescinded following consummation, or (C) affectadversely the right of the Buyer to own the Acquired Assets and to operate theformer businesses of the Seller (and no such injunction, judgment, order,decree, ruling, or charge shall be in effect);

 

(v)                                 the Buyer shall have received all otherauthorizations, consents, and approvals of governments and governmentalagencies referred to in Section 5 (b) above;

 

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(vi)                              the Seller shall have delivered to the Buyer acertificate to the effect that each of the conditions specified above in Section 6(a)(i)-(v)is satisfied in all respects.

 

(vii)                           the Seller and Buyer shall have entered intoside agreements in form and substance as set forth in Exhibits A through Eattached hereto and the same shall be in full force and effect;

 

(viii)                        all actions to be taken by the Seller inconnection with consummation of the transactions contemplated hereby and allcertificates, opinions, instruments, and other documents required to effect thetransactions contemplated hereby will be reasonably satisfactory in form andsubstance to the Buyer and its counsel.

 

(ix)                                Seller agrees with Buyer that the inventoryto be transferred to the Buyer at the Closing date shall consist of no lessthan One Million Ninety-One Thousand Dollars ($1,091,000) of ESCP relatedinventory (of which no more than $0.00 of such inventory shall be considered,obsolete, damaged or defective) and no less than One Million Three HundredFifteen Thousand Dollars ($1,315,000) of Targetview related inventory (of whichno more than Eight Hundred Forty-Eight Thousand Dollars ($848,000) of suchinventory shall be considered, obsolete, damaged or defective).

 

TheBuyer may waive any condition specified in this Section 6(a) if itexecutes a writing so stating at or prior to the Closing.

 

(b)         Conditions to Obligation of the Seller  The obligation of the Seller to consummate thetransactions to be performed by it in connection with the Closing is subject tosatisfaction of the following conditions:

 

(i)                                     the representations and warranties set forth in Section 4above shall be true and correct in all material respects at and as of the ClosingDate;

 

(ii)                                  the Buyer shall have performed and complied withall of its covenants hereunder in all material respects through the Closing;

 

(iii)                               the Seller shall have received all otherauthorizations, consents, and approvals of governments and governmentalagencies referred to in Section 5(b) above;

 

(iv)                              no action, suit, or proceeding shall bepending or threatened before any court or quasi-judicial or administrativeagency of any federal, state, local, or foreign jurisdiction or before anyarbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,or charge would (A) prevent consummation of any of the transactionscontemplated by this Agreement or (B) cause any of the transactionscontemplated by this Agreement to be rescinded following consummation (and nosuch injunction, judgment, order, decree, ruling, or charge shall be ineffect);

 

(v)                                 the Buyer shall have delivered to the Sellera certificate to the effect that each of the conditions specified above in Section 6(b)(i)-(iv)is satisfied in all respects;

 

(vi)                              all actions to be taken by the Buyer inconnection with consummation of the transactions contemplated hereby and allcertificates, opinions, instruments, and other documents required to effect thetransactions contemplated hereby will be reasonably satisfactory in form andsubstance to the Seller.

 

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TheSeller may waive any condition specified in this Section 6(b) if itexecutes a writing so stating at or prior to the Closing.

 

**7.****             ****Termination****. **The Buyer and the Seller may terminate thisAgreement by written consent of both Parties at any time prior to the Closing.In the event of any such termination, none of the Parties shall be liable toany of the other parties for any cost, expenses or damages in connection with thisAgreement.

 

**8.****             ****Post-Closing Covenants****.**  TheParties agree as follows with respect to the period following the Closing.

 

(a)          General  In case at any time after the Closing any further action is necessary ordesirable to carry out the purposes of this Agreement, each of the Parties willtake such further action (including the execution and delivery of such furtherinstruments and documents) as any other Party reasonably may request, all atthe sole cost and expense of the requesting Party (unless the requesting Partyis entitled to indemnification therefore under Section 9 below

 

(b)         Litigation Support.  Inthe event and for so long as any Party actively is contesting or defendingagainst any action, suit, proceeding, hearing, investigation, charge, complaint,claim, or demand in connection with (i) any transaction contemplated under thisAgreement or (ii) any fact, situation, circumstance, status, condition,activity, practice, plan, occurrence, event, incident, action, failure to act,or transaction on or prior to the Closing Date involving the Seller, each ofthe other Parties will cooperate with the contesting or defending Party and itscounsel in the contest or defense, make available its personnel, and providesuch testimony and access to his or its books and records as shall be necessaryin connection with the contest or defense, all at the sole cost and expense ofthe contesting or defending Party (unless the contesting or defending Party isentitled to indemnification therefore under Section 9 below).

 

(c)          Transition. Except as provided in Exhibit A (“Supply Agreement”), the Seller willnot take any action that is designed or intended to have the effect ofdiscouraging any lessor, licensor, customer, supplier, or other businessassociate of the Seller from maintaining the same business relationships withthe Buyer after the Closing as it maintained with the Seller prior to theClosing.  Except as provided in Exhibit A(“Supply Agreement”), the Seller will refer all customer inquiries relating tothe CRT- based projector manufacturing, sales, replacement parts and repairparts businesses of the Seller to the Buyer from and after the Closing.

 

(d)         Covenant Not to Compete.  The Parties agree that this covenant not tocompete is necessary in order to protect the value and goodwill of the assetspurchased pursuant to this Agreement and without this covenant not to compete,the Buyer would not have entered into this Agreement.  Except as provided in Exhibit A (“Supply Agreement”),for a period of Five (5) years from and after the Closing Date, the Seller willnot engage directly or indirectly in the CRT- based projector and projectorparts replacement or parts repair business that the Seller conducts as of theClosing Date in any geographic area in which the Seller conducts that businessas of the Closing Date; provided, however, that the ownership of less than 10%of the outstanding stock of any publicly traded corporation engaged in suchbusiness shall not be deemed to be engaging in any such business.  If the final judgment of a court of competentjurisdiction declares that any term or provision of this Section 8(d) isinvalid or unenforceable, the Parties agree that the court making thedetermination of invalidity or unenforceability shall have the power to reducethe scope, duration, or area of the term or provision, to delete specific wordsor phrases, or to replace any invalid or unenforceable term or provision with aterm or

 

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provision that is valid and enforceable and that comesclosest to expressing the intention of the invalid or unenforceable term orprovision, and this Agreement shall be enforceable as so modified after theexpiration of the time within which the judgment may be appealed.

 

(e)          Agreement Not to Solicit Customers. Except as provided in Exhibit A (“Supply Agreement”), for a period offive (5) years from and after the Closing Date, the Seller will not, directlyor indirectly, on Seller’s own behalf or on behalf of others, (1) solicit,divert, appropriate to or accept on behalf of any Competing Business, or (2)attempt to solicit, divert, appropriate to or accept on behalf of a CompetingBusiness, for the purpose of providing services or products substantiallysimilar to the current business of the Seller, that being any business from anycustomer or actively sought prospective customer of the Seller at or prior tothe Closing Date.  For purposes of thisAgreement, “Competing Business” means manufacturing and sale of CRT projectors,parts replacement or the repair of parts thereof.

 

(f)            Agreement Not to Solicit Employees. After the Buyer has hired such employees of the Seller as envisioned by Section 8(k)below, the Buyer shall, for a period of two (2) years from and after theClosing Date, neither directly nor indirectly, on the Buyer’s own behalf or onbehalf of others, solicit, divert or hire, or attempt to solicit, divert orhire, any person employed by Seller

 

(g)         Premises Use.   TheSeller shall continue to carry on business at its present location for a periodof up to ninety (90) days after Closing, which shall allow the Buyer sufficientand reasonable time to train the Buyer’s personnel in the Seller’s operationsand to transfer the technology and Acquired Assets.

 

(h)         Warranty Service.  TheParties acknowledge that the Seller has been selling CRT- based projectorproducts with a “repair or replace” warranty and that the transfer of theAcquired Assets to the Buyer as contemplated by this Agreement will make itimpracticable for the Seller to meet its obligations to customers under suchwarranties.  Accordingly, the Buyeragrees to provide the warranted service requirement projectors and parts to theSeller on a “Most Favored Customer” basis for the duration of the warrantyperiod following the Closing Date on all CRT- based projector products sold bySeller that meet the warranty eligibility requirements solely on the terms andconditions as set forth in the Supply Agreement between Seller and Buyerattached hereto as Exhibit A.

 

(i)             Spares Pricing. Buyer shall provide Seller spare parts, board repair and other repairservices as required for its on-going Service commitments as provided in theSupply Agreement attached hereto as Exhibit “A”.

 

(j)             Transition Support.  The Seller shall assist and support Buyer inthe transition of the Export Control requirements, licensing, categorization,etc. for the assets being acquired.  Theprocedures and process for this is set forth in Exhibit A (the “SupplyAgreement”).  A Schedule for thetransition of the Acquired Assets to Buyer, and for training of Buyer’spersonnel, is set forth as        .

 

(k)          Employees.

 

(i)                                     Nothing in this Agreement obligates the Buyeror Seller to transfer any employee of the Seller to the Buyer.  However, Buyer shall have the option to offeremployment to any, all or none of the current employees of the Seller engagedin the CRT- based projector business to the employment of Buyer.

 

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(ii)                                  Seller will meet the continuation of coveragerequirements of COBRA as to any such employee hired by the Buyer with respectto each Employee Benefit Plan, which is an Employee Welfare Benefit Plansubject to COBRA.

 

(iii)                               Any such employee hired by Buyer shall betreated as a terminated employee under the Seller’s Pension Plan and theSeller’s 401-K Deferred Savings Plan.

 

(iv)                              Any such employee hired by the Buyer shall be treated as a terminatedemployee under the long-term disability and life insurance programs of theSeller and subject to the termination provisions and conversion privileges ofthose insurance programs.

 

(v)                                 Any such employee hired by the buyer shall beconsidered as voluntarily terminating employment from the Seller and shall notbe eligible for benefits under the Seller’s Reduction in Force Pay Plan.

 

(vi)                              Any such employee hired by Buyer shall continue to be bound, except forIntellectual Property transferred under this Agreement, by the Seller’sConfidentiality and Invention Agreement signed by the employee.

 

**9.****             ****Remedies for Breach of thisAgreement****.**

 

(a)          Survival of Representations and Warranties.   Allof the representations and warranties of the Seller contained in Section 3of this Agreement shall survive the Closing (even if the Buyer knew or hadreason to know of any misrepresentation or breach of warranty at the time ofClosing) and continue in full force and effect for a period of fourteen (14)months after Closing and expire and terminate in its entirety thereafter.  All of the representations and warranties ofthe Buyer contained in Section 4 of this Agreement shall survive theClosing (even if the Seller knew or had reason to know of any misrepresentationor breach of warranty at the time of Closing) and continue in full force for aperiod of fourteen (14) months after Closing and expire and terminate in itsentirety thereafter.  All covenants ofthe Parties contained in this Agreement shall survive the Closing in accordancewith their terms.

 

(b)         Indemnification Provisions.

 

(i)                                     In the event either Party claims the otherParty has breached any of its representations, warranties and covenantscontained in the Agreement and if there is an applicable survival periodpursuant to Section 9 (a) above and provided the purportedly damaged Partyhas made a written claim for indemnification against the other Party withinsuch survival period and the other Party is found to have breached theAgreement, then the other Party agrees to indemnify the damaged Party from andagainst the entirety of any Adverse Consequences the damaged Party may sufferthrough and after the date of the breach as specified in the claim for indemnificationresulting from, arising out of, relating to, in the nature of, or caused by thebreach (or the alleged breach).

 

(ii)                                  The Seller specifically indemnifies Buyerfrom any and all Adverse Consequences to Buyer arising out of, arising from, orrelated to, directly or indirectly, from or caused by the Buyer’s use of any patent or patent related technologypurchased by Buyer from seller pursuant to this Agreement post Closing.  This specific indemnification protectiongiven to Buyer by Seller shall be an “evergreen” protection.

 

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**10.****      ****Disputes AndArbitration****. **If any dispute should arise after Closingconcerning performance under or interpretation of this Agreement, then, priorto, and as a condition to either Seller’s or Buyer’s right to initiate anyarbitration action, the Parties will take the following steps in an attempt toinformally resolve any such dispute:

 

(a)          The initiating party to the dispute shall provide the other party thirty (30) dayswritten notice of the dispute and opportunity to cure.

 

(b)         If the dispute remains after the thirty (30) days written notice andcure period, then within thirty (30) days of the request of either party, theparties shall participate in non-binding mediation with a mutually agreeablemediator at a mutually agreeable date, time and location.

 

(c)          If any such disputeremains unresolved after the parties have attended mediation pursuant to Section 10(b),then either party may initiate an arbitration proceeding.

 

(d)         The Parties agree that if they are unable to resolve any  controversy that arises under thisAgreement post-Closing as contemplated by this Section 10, then suchcontroversy and any ancillary claims not so resolved will be submitted tomandatory and binding arbitration to be held in a mutually agreeable locationin the United States of America  inaccordance with the rules of the American Arbitration Association. Any awardrendered therein shall be final and binding on each and all of the Parties, andjudgment may be entered thereon in a court of competent jurisdiction in theState of Georgia.  Seller and Buyer shallappoint a maximum of three arbitrators. Seller shall appoint one arbitrator andBuyer shall appoint one arbitrator. Each of these arbitrators shall appoint thethird. If any Party fails to appoint an arbitrator, the President or Chairmanof the American Arbitration Association, or his authorized subordinate, shallappoint such arbitrator or arbitrators.

 
|   |   |   |   |   |
|--------|--------|--------|--------|--------|
|   | Seller |   | Buyer  |

 

**11.****      ****Miscellaneous****.**

 

(a)          Survival of Representations and Warranties.  Allof the representations, warranties and covenants of the Parties contained inthis Agreement shall survive the Closing hereunder as and to the extentprovided in Section 9(a) above.

 

(b)         Entire Agreement  ThisAgreement (including the documents referred to herein) constitutes the entireagreement between the Parties and supersedes any and all prior understandings,agreements, discussions or representations by or between the Parties, writtenor oral, to the extent they relate in any way to the subject matterhereof.  The Parties  acknowledge that they have each beenrepresented by counsel in preparing this Agreement.

 

(c)          Succession and Assignment.  This Agreement shall be binding upon andinure to the benefit of the Parties named herein and their respectivesuccessors and permitted assigns.  NoParty may assign either this Agreement or any of its rights, interests, orobligations hereunder without the prior written approval of the other Party;provided, however, that the Buyer may (i) assign any or all of its rights andinterests hereunder to one or more of its Affiliates and (ii) designate one ormore of its Affiliates to perform its obligations hereunder (in any or all ofwhich cases the Buyer nonetheless shall remain responsible for the performanceof all of its obligations hereunder).

 

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(d)         Counterparts  This Agreement may be executed in one or more counterparts, each of whichshall be deemed an original but all of which together will constitute one andthe same instrument.

 

(e)          Headings.  The section headingscontained in this Agreement are inserted for convenience only and shall notaffect in any way the meaning or interpretation of this Agreement.

 

(f)            Notices.  All notices, requests,demands, claims, and other communications hereunder will be in writing.  Any notice, request, demand, claim, or othercommunication hereunder shall be deemed duly given if (and then two businessdays after) it is sent by registered or certified mail, return receipt requested,postage prepaid, and addressed to the intended recipient as set forth below:

 
| If to the Seller: |   | Evans & Sutherland Computer Corp. |
|-------------------|--------|---------------------------------------|
|              |   | 600 Komas Drive                       |
|              |   | Salt Lake City, Utah                  |
|              |   | Fax: (801-588-4510)                   |
|              |   | Attn.: James R. Oyler, CEO            |
|              |   |                                  |
| If to the Buyer:  |   | Video Display Corporation             |
|              |   | 1868 Tucker Industrial Drive          |
|              |   | Tucker, Georgia 30084                 |
|              |   | Fax: 770.493.3903                     |
|              |   | Attn.: Ronald D. Ordway, CEO          |
|              |   |                                  |
| With a copy to:   |   | Gambrell & Stolz, L.L.P.          |
|              |   | 3414 Peachtree Road, Suite 1600       |
|              |   | Atlanta, Georgia 30326                |
|              |   | Fax: 404.221.6501                     |
|              |   | Attn.: David S. Cooper, Esq.          |

 

AnyParty may send any notice, request, demand, claim, or other communicationhereunder to the intended recipient at the address set forth above using anyother means (including personal delivery, expedited courier, messenger service,telecopy, telex, ordinary mail, or electronic mail), but no such notice,request, demand, claim, or other communication shall be deemed to have beenduly given unless and until it actually is received by the intendedrecipient.  Any Party may change theaddress to which notices, requests, demands, claims, and other communicationshereunder are to be delivered by giving the other Party notice in the mannerherein set forth.

 

(g)         Amendments and Waivers.  Noamendment of any provision of this Agreement shall be valid unless the sameshall be in writing and signed by the Buyer, the Seller and the SellerStockholder.  The Seller may consent toany such amendment at any time prior to the Closing with the priorauthorization of its board of directors. No waiver by any Party of any default, misrepresentation, or breach ofwarranty or covenant hereunder, whether intentional or not, shall be deemed toextend to any prior or subsequent default, misrepresentation, or breach ofwarranty or covenant hereunder or affect in any way any rights arising byvirtue of any prior or subsequent such occurrence.

 

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(h)         Severability.  Anyterm or provision of this Agreement that is invalid or unenforceable in anysituation in any jurisdiction shall not affect the validity or enforceabilityof the remaining terms and provisions hereof or the validity or enforceabilityof the offending term or provision in any other situation or in any otherjurisdiction.

 

(i)             Expenses.  Each of the Buyer and theSeller will bear its own costs and expenses (including legal fees and expenses)incurred in connection with this Agreement and the transactions contemplatedhereby.

 

(j)             Incorporation of Exhibits and Schedules.  TheExhibits and Schedules identified in this Agreement are incorporated herein byreference and made a part hereof.

 

(k)          Bulk Transfer Laws.  TheBuyer acknowledges that the Seller will not comply with the provisions of anybulk transfer laws of any jurisdiction in connection with the transactionscontemplated by this Agreement.

 

(l)             Governing Law. This Agreement shall be construed inaccordance with and governed by the laws of the State of Georgia  as it applies to contracts to beperformed entirely within the State of Georgia.

 

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**IN WITNESS WHEREOF**, the Parties hereto have executed thisAgreement as of the date first above written.

 
|   | **VIDEO DISPLAY CORPORATION**             |
|--------|-------------------------------------------|
|   |                                      |
|   |                                      |
|   | By:                                       | /s/Ronald D. Ordway |   |
|   | Title:                                    |   CEO |   |
|   |                                      |
|   |                                      |
|   | **EVANS & SUTHERLAND COMPUTER CORP.** |
|   |                                      |
|   |                                      |
|   | By:                                       | /s/ David H. Bateman |   |
|   | Title:                                    |   Vice President |   |
|        |                                           |  |  |  |

 

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[PORTIONSOF THIS EXHIBIT HAVE BEEN REDACTED PURSUANT TO A REQUEST FOR CONFIDENTIALTREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

 

**EXHIBIT A**

 

**SUPPLY AGREEMENT**

 

**THIS SUPPLY AGREEMENT** is executed as of this 11th day of October, 2004 by andbetween **EVANS & SUTHERLAND COMPUTER CORPORATION**,a Utah corporation having its headquarters at 600 Komas Drive, Salt Lake City,UT  84108 (“E&S”), and **VIDEO DISPLAY CORPORATION**, a Georgia corporation having itsheadquarters at 1868 Tucker Industrial Drive, Tucker, GA  30084 (“VDC”).  E&S and VDC arecollectively referred to herein as the “Parties”.

 

**W I TN E S S E T H :**

 

**WHEREAS**,E&S and VDC are, concurrently with the execution of this Supply Agreement,consummating certain transactions contemplated by that certain Asset PurchaseAgreement dated as of October 11, 2004 (the “Asset Purchase Agreement”),whereby VDC is purchasing from E&S certain assets of E&S used inE&S’s cathode ray tube based projector business; and

 

**WHEREAS**,E&S and VDC desire that subsequent to the Closing as defined in the AssetPurchase Agreement,  E&Scontinue to offer the sale of new complete visual systems to potentialcustomers that include ESCP and TargetView products (the “Systems”) and thatVDC supply  E&S with all of itsrequirements for ESCP and TargetView products pursuant to this SupplyAgreement;

 

**NOW,THEREFORE**, for good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, E&S and VDC enter into thisSupply Agreement.

 

**1.****                                     ****SCOPE OF AGREEMENT.**

 

1.1                                 From and after theClosing under the Asset Purchase Agreement, the Parties agree to coordinate andcooperate with respect to the “ESCP” and “TargetView” business developed byE&S and purchased by VDC pursuant to the Asset Purchase Agreement.Specifically, E&S will continue to sell Systems and Service Agreements tocustomers that may include ESCP and TargetView products, and  E&S may also receive fromcustomers Independent Requests For Spares And/Or Repairs.

 

1.2                                 The Partiesacknowledge that VDC is buying the Assets primarily to obtain the E&Sspares and repairs business, and that E&S will not supply spares andrepairs as separately invoiced items except as provided in section 4.5

 

1.3**                                **With respect to post-Closing sales of E&SSystems, E&S agrees to purchase, and VDC agrees to supply, all of E&S’srequirements for ESCP and TargetView products used in those Systems.  With respect to any E&S ServiceAgreements, or E&S’s Warranty Obligations arising from pre- Closing Systemsales, E&S agrees to purchase, and VDC agrees to use reasonable bestefforts to supply, all of E&S’s requirements for spares and/or repairsinvolving ESCP and TargetView products.

 

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1.4**                                **E&S shall be the customer point ofcontact for, and shall fulfill, all customer requests involving Systems and/orWarranty Obligations thereunder, or Seller’s Service Agreements, even if suchrequests include ESCP or TargetView products. With respect to any Independent Request For SparesAnd/Or Repairs received by E&S, E&S shall refer all suchrequests to VDC for fulfillment by VDC, and all invoicing for such IndependentRequests will be handled directly between VDC and the customer.

 

**2.****                                     ****DEFINITIONS.**  Capitalized terms used in this Supply Agreement shall have the samemeaning as defined in the Asset Purchase Agreement unless otherwise definedherein. “ESCP” and “TargetView” products are those cathode ray tube (“CRT”)-based projector products acquired by VDC fromE&S pursuant to the Asset Purchase Agreement.

 

**3.****                                     ****SUPPLY OF PRODUCTS AND SERVICES.**

 

3.1                                 With respect to post-Closing sales of E&SSystems, E&S agrees to purchase, and VDC agrees to supply, all of E&S’srequirements for ESCP and TargetView products as set forth on periodicforecasts in the manner stated in Exhibit A.

 

3.2                                 With respect to any E&S ServiceAgreements, or E&S’s Warranty Obligations arising from pre-Closing Systems,E&S agrees to purchase, and VDC agrees to use reasonable best efforts tosupply all of E&S’s requirements for spares and/or repairs involving ESCPand TargetView products.

 

3.3                                 E&S will offer other VDC CRT projectorproducts as E&S deems appropriate as a preferred solution to potentialcustomers who desire CRT products. The Parties acknowledge and agree thatspecific programs or customers may prefer CRT products other than thosemanufactured by VDC, in which case E&S may choose to offer those otherproducts in any System proposal.

 

**4.****                                     ****PRICING.**

 

4.1                                 During the first three years of this SupplyAgreement E&S shall have the right to purchase from VDC, in the aggregate,up to XXXXXXXX (XX) standard ESCP projectors at either: i) $XXXXXX perprojector, or ii) E&S’s standard cost less $XXXXXXX for non-standardprojectors.

 

4.2                                 Other than as provided in subparagraph 4.1and 4.3 hereof, all E&S purchases from VDC under this Supply Agreementshall be made at Most Favored Customer (“MFC”) prices. MFC prices shall meanthose prices that are not higher than the lowest prices quoted to any VDC customer orpotential customer by VDC for the applicable product or service.

 

4.3                                 For warranty service on ESCP and TargetViewproducts manufactured and sold by E&S prior to Closing and still havingwarranty commitments from E&S after Closing, VDC shall provide the warrantyservices as follows:

 

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[XXXXX – REDACTED PURSUANT TO REQUEST FOR CONFIDENTIALTREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.]

 

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4.3.1                        VDC shall supply warranty labor and partswhich shall be charged to E&S by VDC at VDC’s then current “StandardWarranty Service and Parts” pricing XXXXX.

 

4.3.2                        All freight and shipping charges associatedwith returns of warranty products to VDC shall be borne by E&S or theapplicable customer and not by VDC.

 

4.4                                 The VDC price to E&S for any Systemspare, or for spares or repairs to support existing or future E&S Service Agreementsshall be the then applicable VDC MFC prices.

 

4.5                                 In theevent either VDC or a customer makes a request of E&S for additional,customer-site service, E&S may provide such services.  These services may be provided on a Time andMaterial (“T&M”) basis which could require separate invoicing for sparesand repair items.  Under this condition,E&S and VDC will agree in advance on reasonable rates and prices for theprovision of required items.

 

**5.****                                     ****PRODUCT IMPROVEMENTS.**

 

5.1                                 E&S shall complete the design and product implementation of theimprovements to the ESCPdeflection amplifier that are currently in process, including higher resolutioninterlaced capability, redesigned heat sink assembly, and improved reliabilityand constructability. When completed, all documentation, drawings, and productstructures shall be transferred and assigned by E&S  to VDC at no charge to VDC.  Completion of this work is estimated to 1,200man-hours of engineering labor at a cost of $100 per hour.  The cost of this improvement is included inthe agreed purchase price and shall be accomplished at no cost to VDC.

 

5.2                                 The Parties have reviewed and discussed other potential ESCP productimprovements. The implementation of any of these improvements shall be at thesole discretion of VDC.

 

5.3                                 Engineering assistance, if any, required by VDC from E&S for any futureESCP improvements shall be negotiated between VDC and E&S on a T&Mbasis or on other mutually acceptable commercial terms and conditions.

 

**6.****                                     ****WARRANTY SERVICE.**

 

6.1                                 VDC shallprovide prompt warranty service for any ESCP and TargetView products manufactured and sold by E&S prior to the Closingfor the duration of the applicable warranties. Prices to be charged by VDC forthis warranty service shall be as provided in subparagraph 4.3 herein.

 

6.2                                 VDC shallprovide warranty service at its own expense for any products manufactured byVDC in accordance with this Supply Agreement. Such warranty service shallcomply with the warranty terms extended to VDC’s customers, or, in the case ofproducts manufactured by VDC for inclusion in a System sold by E&S, or soldby E&S under a service support or Encore contract, then in accordance onlywith the written warranty terms as in effect between VDC and E&S.

 

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[XXXXX – REDACTED PURSUANT TO REQUESTFOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.]

 

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6.3                                 E&S and VDC shall negotiate in good faith with respect  to any items returned by customersthat are alleged by the customer to be covered by an applicable warranty,regardless of whether the affected item was manufactured by E&S or VDC.

 

**7.****                                     ****SERVICE AND SUPPORT.**

 

7.1                                 VDC will supply the spares and make the repairs as provided herein. Thefollowing process and procedures shall be followed in such instances:

 

7.1.1                        Except as provided in Para. 1.3, 7.2 and 7.3,VDC shall be designated as the customer point of contact for spares and repairson ESCP and TargetView products sold by E&S, including without limitationquotations, status tracking, and exception management.

 

7.1.2                        For all spares supplied by VDC under thisAgreement, VDC shall maintain a thirty (30) day Turn Around Time (“TAT”),measured from customer or E&S request to shipment date, for E&Smanufactured items, and a ninety (90) day TAT for any third-party vendor item

 

7.1.3                        For all repairs provided by VDC under thisAgreement, VDC shall maintain a thirty (30) day TAT, measured from receipt ofthe customer’s item to return shipment date.

 

7.1.4                        VDC shallbe responsible for any harm, damage or degradation occurring to customer’sproperty while in VDC’s  possession andVDC shall indemnify and hold harmlessE&S for loss, costs, damage, claim, action or liability, including withoutlimitation attorney’s fees, incurred or suffered by E&S as a result or inconnection with harm, damage or degradation to the customer’s propertyoccurring while in VDC’s possession.

 

7.2                                 Fulfillment Cycle for Spares.

 

7.2.1                        Other than System original spares sold with Systems, or spares requestedunder existing or future E&S Service Agreements, customers will request additional  sparesfrom VDC.

 

7.2.2                        VDC shall be the Party providing the customer with price and availabilityterms on all  sparesrequested by customers other than System original spares sold with Systems byE&S, or spares requested under existing or future E&S ServiceAgreements.

 

7.3                                 Fulfillment Cycle for Repairs.

 

7.3.1                        Other than with respect to repairs of ESCP and TargetView products soldwith Systems, or repairs requested under existing or future E&S ServiceAgreements,  allrepair requests will be sent to VDC.

 

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7.3.2                        For repairs requested of VDC, VDC will provide to customers requestingrepairs price, availability, terms, and Request for Material Action (“RMA”)number.

 

**8.****                                     ****VISUAL SYSTEMS SALES.**

 

8.1                                 The Parties acknowledge and agree that E&S shall continue in its normalcourse of business to offer Systems with CRT-based projectors to current andpotential customers.

 

8.2                                 System sales include both Military and Civil Aviation programs andopportunities.

 

8.3                                 For any such sales opportunities, VDC shall support E&S in any proposalpreparation and shall provide E&S with price and delivery schedules underMFC terms.

 

8.4                                 E&S shall coordinate with VDC and refer any customers to VDC for anystand-alone projector sales opportunities.

 

8.5                                 VDC shallcoordinate with and refer any VDC customers to E&S for any System sale opportunities with VDC customer approval.

 

8.6                                 The Parties hereby agree that neither the E&S activities described inthis Section 8 nor any other E&S activities properly performed underthis Supply Agreement shall be construed as violating Section 8 (c) (d) or(e) of the Asset Purchase Agreement.

 

**9.****                                     ****EXPORT LICENSE CONTROL.**

 

9.1                                 The Parties acknowledge that TargetView projectors are U.S. StateDepartment Munitions Control List (MCL) items under Category 9.

 

9.2                                 Any export outside of the United States requires a program specific ExportLicense.

 

9.3                                 E&S shall amend any applicable active Licenses to include VDC as themanufacturer.

 

9.4                                 E&S shall assist and support VDC in its initial License applicationsfor any new programs including these products.

 

9.5                                 VDC shall identify their point of contact for Export Control andAdministration and coordinate with their E&S counterpart.

 

**10,****                              ****PRODUCT CHANGES AND IMPROVEMENTS.****  **VDC shall use its best efforts to establish and maintain coordination withE&S for any future product changes to ensure that E&S can assess anyimpacts to their customers.

 

**11.****                              ****DURATION AND TERMINATION.**

 

11.1                           The initial term of this Supply Agreement shall be for a period of fiveyears beginning October 11, 2004 (the “Initial Term”), and will beautomatically renewed for an additional five year period unless terminated byeither VDC or E&S by written notice to the other ninety (90) days prior tothe expiration of the Initial Term.

 

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11.2                           This Agreement may be terminated by written agreement between the Parties.This termination provision is without prejudice to such other rights andremedies as either Party may have at law with respect of a breach of thisAgreement.

 

**12.****                              ****DISPUTES, MEDIATION ANDARBITRATION.**

 

12.1                           If anydispute should arise concerning performance under or interpretation of thisAgreement, then, prior to, and as a condition to either E&S’s or VDC’sright to initiate any arbitration action, the Parties will take the followingsteps in an attempt to resolve any such dispute:

 

12.1.1                  The initiating party to the dispute shall provide the other party thirty(30) days’ written notice of the dispute and opportunity to cure.

 

12.1.2                  If the dispute remains after the thirty (30) days written notice and cureperiod, then within thirty (30) days of the request the parties shallparticipate in non-binding mediation with a mutually agreeable mediator at amutually agreeable date, time and location.

 

12.1.3                  If any such dispute remains unresolved after the parties have attendedmediation, then either party may initiate an arbitration proceeding.

 

12.1.4                  The Parties agree that if they are unable to resolve any controversy thatarises under this Supply Agreement as contemplated by this Section 13,then such controversy and any ancillary claims not so resolved will besubmitted to mandatory and binding arbitration to be held in a city located inthe United States of America to be mutually agreed upon.  Arbitration shall be in accordance with therules of the American Arbitration Association. Any award rendered therein shall be final and binding on each and all ofthe Parties, and judgment may be entered thereon in a court of competentjurisdiction.  The Parties shall appointa maximum of three arbitrators.  E&Sshall appoint one arbitrator and VDC shall appoint one arbitrator.  Each of these arbitrators shall appoint thethird.  If any Party fails to appoint anarbitrator, the President or Chairman of the American Arbitration Association,or his authorized subordinate, shall appoint such arbitrator or arbitrators.

 

**13.****                              ****FORCE MAJEURE.**   TheParties to this Supply Agreement shall be excused from performance of theirobligations under this Supply Agreement where they are prevented from soperforming by revolutions or other disorders, wars, acts of enemies orterrorism, fires, floods, acts of God or, without limiting the foregoing, byany cause not within the control of the

 

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party whose performance is interfered with and, which by the exercise ofreasonable diligence, the Party is unable to prevent.

 

**14.****                              ****MISCELLANEOUS.**

 

14.1                           In the event of a conflict between the terms of this Supply Agreement andthe Asset Purchase Agreement, the Asset Purchase Agreement shall govern.

 

14.2                           A Party shall not assign to any third party any or all of its rights orobligations under this Supply Agreement without the prior written consent ofthe other Party except that VDC shall be permitted to assign this SupplyAgreement to any affiliated company.

 

14.3                           Neither any provision of this Supply Agreement nor any acts of theparties to this Supply Agreement shall be construed to create a partnership,joint venture or agency relationship between the Parties hereto.

 

14.4                           No waiver by either Party of any breach of this Supply Agreement by theother Party or the granting of an extension for performance hereunder shall bedeemed to be a waiver of any other or subsequent breach.

 

14.5                           This Supply Agreement represents the entire agreement between E&Sand VDC for sale and purchase of ESCP and TargetView products and performanceof related sales and services.

 

14.6                           Each Party acknowledges that there are no representations, covenants orunderstandings of any kind relating to the subject matter of this Supply Agreementmade by either Party to the other except those expressly set forth herein.

 

14.7                           If any of the provisions of this Supply Agreement shall contravene orbe invalid under the law, such contravention or invalidity shall not invalidatethe whole Supply Agreement, but it shall be construed as if not containing theparticular provision or provisions held to be invalid. The rights andobligations of the Parties shall be construed and enforced accordingly and theParties shall endeavor to agree on a mutually acceptable alternative provision.

 

14.8                           This Agreement shall be construed in accordance with and governed bythe laws of the State of Georgia as it applies to contracts to be performedentirely within the State of Georgia.

 

This Supply Agreement may be executed in two or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

**IN WITNESS WHEREOF**, the Parties hereto have executed this Supply Agreement as of this  11thday of October, 2004.

 

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|   | **VIDEO DISPLAY CORPORATION**                    |
|--------|--------------------------------------------------|
|   | ** **                                       |
|   | ** **                                       |
|   | By:                                              | /s/Ronald D. Ordway |   |
|   | Title:                                           |   CEO |   |
|   |                                             |
|   |                                             |
|   | **EVANS & SUTHERLAND COMPUTER  CORPORATION** |
|   |                                             |
|   |                                             |
|   | By:                                              | /s/David H. Bateman |   |
|   | Title:                                           |   Vice President |   |
|        |                                                  |  |  |  |

 

----

 

**EXHIBITA TO SUPPLY AGREEMENT**

** **

VDC’s obligation to supply E&S’s requirementsfor ESCP and TargetView products for use in post-Closing Systems shall belimited by and administered through use of a twelve-month written forecast ofE&S’s anticipated requirements for such products, as provided herein.

 

Prior to the Closing, E&S shall submit to VDC awritten twelve-month forecast setting forth E&S’s anticipated productrequirements for Systems in the first twelve-month period of  the Supply Agreement (the“Agreement”).

 

Thereafter, E&S shall issue to VDC a rolling twelve-monthforecast on a monthly basis setting forth the anticipated product requirementsfor the next twelve-month period.  Therequirements set forth on each subsequent forecast for the first two monthsshall be identical to the second and third month of the prior month’s forecast.

 

Immediately upon executing this Agreement, E&Sshall provide VDC with a written Purchase Order, pursuant to this Agreement,for a minimum of the first three months of requirements. Thereafter, on amonthly basis , E&S shall provide a Purchase Orderto VDC pursuant to this Agreement covering the next month in the thenapplicable forecast that is not already subject to a Purchase Order.

 

E&S’s liability for submitted Purchase Ordersand forecasts shall be as follows:

 

E&S shall place theinitial Purchase Order as provided above and be irrevocably obligated to purchase theproducts reflected on the forecast for the three months period covered thereby, and be irrevocably obligatedto  purchase any long lead material thatis non-cancelable and non-returnable that was purchased by VDC for forecastedproducts reflected on the forecast for the fourth and fifth months period.

 

For all subsequentPurchase Orders, E&S shall be irrevocably obligated to purchase theproducts ordered thereby, and also shall be irrevocably obligated to purchaseany long lead material that is non-cancelable and non-returnable that waspurchased by VDC for products reflected in the forecast that is the basis ofthe Purchase Order for the two months period following the month covered by thePurchase Order.

 

Unplanned purchase orderscan be placed at any time and scheduled for delivery at full lead time.  These orders once placed are not cancelable.

 

E&S will have theoption to reschedule to later delivery dates in all purchase orders by amaximum of 30 days but not to cancel deliveries once a Purchase Order issubmitted to VDC.

 

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**EXHIBIT B**

 

**GENERALASSIGNMENT OF INTELLECTUAL RIGHTS**

 

**THIS GENERAL ASSIGNMENT  OF INTELLECTUAL RIGHTS** is executed as of this 11th dayof October, 2004 by and between **EVANS & SUTHERLANDCOMPUTER CORP**., a Utah corporation (“Seller”), and **VIDEO DISPLAY CORPORATION**, a Georgia corporation(“Buyer”).  All capitalized terms usedherein but not defined herein shall have the meaning set forth in the AssetPurchase Agreement (defined below).

 

**W I T N E S S E T H :**

 

**WHEREAS**,Seller and Buyer are, concurrently with the execution of this GeneralAssignment of Intellectual Rights, consummating certain transactionscontemplated by that certain Asset Purchase Agreement dated as of October 11,2004 (the “Asset Purchase Agreement”), whereby Buyer is purchasing from Sellercertain assets of the Seller used in Seller’s cathode ray tube based projectorbusiness; and

 

**WHEREAS**,Seller now delivers this General Assignment of Intellectual Rightstransferring, conveying, and assigning the Intellectual Property to Buyer ascontemplated by Section 2(a) of the Asset Purchase Agreement, whichIntellectual Property is specifically enumerated in Schedules 3 through 6 inclusiveof the Asset Purchase Agreement;

 

**NOW, THEREFORE**,for good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, and pursuant to the terms of the Asset Purchase Agreement,Seller does hereby irrevocably, exclusively and unconditionally convey, grant,transfer, relinquish and assign all its right, title and interest whatsoeverthroughout the world in the Intellectual Property to Buyer and its successorsand assigns, in perpetuity or such lesser time as law permits such rights to beeffective, as of October 11, 2004 pursuant to the terms of the AssetPurchase Agreement.

 

This assignment of rights is intended to encompassall of the Seller’s rights in the Intellectual Property, including, but notlimited to: inventions, discoveries, concepts, ideas, proprietary businessmethods and technical know-how, whether patentable or not; trade secrets;letters patent, both United States and foreign; applications for letterspatent, both United States and foreign; trademarks and service marks including,without limitation, the following trademarks: “ESCP 2000” (US) (RegistrationNumber 2432687), “ESCP 2000” (Canada) (Registration Number 565568), “ESCP 2000”(Japan) (Registration Number 4432843), “ESCP 3000” (US) (Registration Number2468759), “ESCP 3000” (Canada) (Registration Number 565562), and  “ESCP 3000” (Japan) (Registration Number4432844), whether registered or not, together with the goodwill associated withsuch marks; copyrights and the right to secure copyrights and renewals andextensions thereof throughout the world; internet domain name registrations;and all contracts and receivables relating to the foregoing.

 

Seller represents and warrants that it has the fullpower and right to make this Assignment; that, there exists no claim in orto  the Intellectual Property rightsbeing assigned adverse to Buyer; and that, the Intellectual Property does notinfringe any rights of any person or business entity anywhere in the world.  Seller hereby agrees to indemnify Buyer andhold Buyer harmless from any claims by third parties that are inconsistent withany of the foregoing representations and warranties of Seller.

 

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Seller agrees to execute such other documents, andto provide such further assistance, as Buyer may reasonably require to protect or enforce its rights to the assignedIntellectual Property in the United States or elsewhere.

 

This General Assignment of Intellectual Rights maybe executed in two or more counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and the sameinstrument.

 

**IN WITNESS WHEREOF**, the parties hereto have caused their duly authorized representativesto execute and deliver this General Assignment of Intellectual Rights to beeffective as of date first written above.

 
|   | **EVANS & SUTHERLAND COMPUTER CORP.** |
|--------|-------------------------------------------|
|   |                                      |
|   |                                      |
|   | By:                                       | /s/David H. Bateman |   |
|   | Name:                                     | David H. Bateman |   |
|   | Title:                                    | Vice President |   |

 

 
| **VIDEO DISPLAY CORPORATION** |                 |
|-------------------------------|----------------------|
|                          |                 |
|                          |                 |
| By:                           | /s/ Ronald D. Ordway |   |   |
| Name:                         | Ronald D. Ordway     |   |   |
| Title:                        | CEO                  |   |   |

 

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**EXHIBIT C**

 

**ASSUMPTION AGREEMENT**

 

**THIS ASSUMPTION AGREEMENT** is executed as of this 11th day of October, 2004 by andbetween **EVANS & SUTHERLAND COMPUTER CORP**.,a Utah corporation (“Seller”), and **VIDEO DISPLAY CORPORATION**,a Georgia corporation (“Buyer”).  Allcapitalized terms used herein but not defined herein shall have the meaning setforth in the Asset Purchase Agreement (defined below).

 

**W I T N E S S E T H :**

 

**WHEREAS**,Seller and Buyer are, concurrently with the execution of this AssumptionAgreement, consummating certain transactions contemplated by that certain AssetPurchase Agreement dated as of October 11, 2004 (the “Asset PurchaseAgreement”), whereby Buyer is purchasing from Seller certain assets of theSeller used in Seller’s cathode ray tube based projector business; and

 

**WHEREAS**,Seller now delivers this Assumption Agreement as contemplated by Section 2(b)of the Asset Purchase Agreement which provides that the Buyer neither agrees toassume nor become responsible for any of the Seller’s Liabilities;

 

**NOW, THEREFORE**,for and in consideration of the mutual covenants contained herein and in theAsset Purchase Agreement and other good and valuable consideration, the receiptand sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.                                       Seller and Buyer hereby acknowledge and agreethat Buyer does not assume nor agree to become responsible for any of Seller’sLiabilities of any nature whatsoever.

 

2.                                       Other than as specifically stated in thisAssumption Agreement or in the Asset Purchase Agreement, Buyer is not assuming,becoming subject to, or in any way becoming liable or responsible for anyliability or obligation of Seller, whether accrued, absolute or contingent, orchoate or inchoate.

 

This Assumption Agreement may be executed in two ormore counterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

**IN WITNESS WHEREOF**, the undersigned have executed this Assumption Agreement effective asof the day and year first above written.

 
| **BUYER:**                           | ** **                | **SELLER:**                        |
|--------------------------------------|---------------------------|------------------------------------|
|                                 |                      |                               |
| **VIDEO DISPLAY CORPORATION  CORP.** | ** **                | **EVANS & SUTHERLAND COMPUER** |
|                                 |                      |                               |
|                                 |                      |                               |
| By:                                  |  /s/Ronald D. Ordway |                               |   | By: | /s/ David H. Bateman |   |
| Name:                                |  Ronald D. Ordway    |                               |   | Name: |  David H. Bateman |   |
| Title:                               |  CEO                 |                               |   | Title: |  Vice President |   |

 

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**EXHIBIT D**

 

**ALLOCATION SCHEDULE**

 

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**EXHIBIT E**

 

**TRANSITION PLAN**

** **

***Major Tasks and Duration of time estimated forcompletion after Closing:***

 
| **Major Task**                         | ** **   | **Duration** | ** **   |
|----------------------------------------|--------------|--------------|--------------|
|                                   |         |         |         |
| **In House  Activities at E&S**    | *** *** | ***90***     | *** *** |
| Data  Transfer                         |         | 5            |         |
| Knowledge  Transfer (Training)         |         | 15           |         |
| *Information  Support*                 | * *     | *90*         | * *     |
| Inventory  Transfer                    |         | 25           |         |
| Equipment  Transfer                    |         | 21           |         |
|                                   |         |         |         |
| **On Site  Activities at VDC**         | *** *** | ***94***     | *** *** |
| Production  Process Installation       |         | 17           |         |
| Training                               |         | 4            |         |
| Produce ESCP  for Q4 2004              |         | 90           |         |
| Supplier  Qualification                |         | 2            |         |
|                                   |         |         |         |
| **Spares  Responsibility Transition**  | ** **   | **15**       | ** **   |
|                                   |         |         |         |
| **Repairs  Responsibility Transition** | ** **   | **15**       | ** **   |

 

**Note:  Times shown may run inparallel.  Total transition time is**days after Closing.  The Parties shall cooperate in good faith topromptly transition the Acquired Assets to VDC under the above schedule.  ESCP products manufactured by E&S priorto Closing remain undelivered at VDC’s request, and will be completed atE&S jointly by E&S and VDC personnel in furtherance of E&S’straining obligations herein.**

 

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**SCHEDULE 1ACQUIRED ASSETS**

 

1.                                       ESCP and TargetView manufacturing furniture,assembly and test fixtures, test equipment, tooling, and documentation.

 

2.                                       ESCP inventories located on the 1stFloor at the E&S Manufacturing Facility located at 560 Arapeen Dr., SaltLake City, UT 84108 , as disclosed to Buyer, includingmaterials, supplies, purchased parts, assemblies, sub-assemblies and goods inprocess.

 

3.                                       ESCP projector software including all C++source files and the source file for the sequencer firmware including assemblerand associated hardware and firmware development tools.

 

4.**                                      **ESCP and TargetViewrelated CAD design files and specifications.

 

5.                                       ESCP DigitalController PC (DCPC) software including C++ source code and the Matrox MILlibrary file including associated hardware and firmware development tools.

 

6.                                       Target View inventories located on the 1stand 2nd Floors at the E&S Manufacturing Facility located at 560Arapeen Dr., Salt Lake City, UT 84108, as disclosed to Buyer, includingmaterials, supplies, purchased parts assemblies, sub-assemblies, and good in process.

 

7.                                       ESCP and TargetView marketing and salesmaterials.

 

8.                                       ESCP andTargetView manuals including Operations & Maintenance and Service manuals.

 

9.                                       ESCP and TargetView Training coursework.

 

10.                                 Current active submitted Bids & Proposalsfor ESCP and TargetView sales opportunities.

 

11.                                 Rolling 12 month forecast for ESCP andTargetView projectors.

 

12.                                 ESCP and TargetView Customers and contactslists.

 

13.                                 ESCP and TargetView Service and Encorecontract status.

 

14.                                 ESCP and TargetView spares and repairspricing lists.

 

15.                                 ESCP and TargetView projector catalogpricing.

 

16.                                 As shipped configurations and Request forMaterial Action (RMA) history for ESCP.

 

17.                                 ESCP and TargetView bills of material.

 

18.                                 ESCP and TargetView assembly drawings andschematics.

 

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**SCHEDULE 2EXCLUDED ASSETS**

 

1.                                       Seller’s ESCP and TargetView-relatedinventories located in the U.S. Depot on the 2nd Floor of 560Arapeen Dr., Salt Lake City, UT 84108 in a room named U.S. Depot and UK Depot;these inventories are necessary to support on-going existing customer support requirements.

 

2.                                       All accounts receivable, accounts payable andcash.

 

3.                                       Rights andobligations existing under any contract, agreement, or supply arrangement betweenSeller and any third party.

 

4.                                       Rights thataccrue or will accrue to Seller under this Asset Purchase Agreement.

 

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**SCHEDULE 3LIST OF TRADEMARKS**

 
| **Trademark**         | ** ** | **Country** | ** ** | **Registration No.** | ** ** | **Registration Date** |
|-----------------------|------------|-------------|------------|----------------------|------------|-----------------------|
|                  |       |        |       |                 |       |                  |
| “ESCP 2000” |       | U.S.        |       | 2432687              |       | 3/6/01                |
|                  |       |        |       |                 |       |                  |
| “ESCP 2000” |       | Canada      |       | 565568               |       | 8/7/02                |
|                  |       |        |       |                 |       |                  |
| “ESCP 2000” |       | Japan       |       | 4432843              |       | 11/17/00              |
|                  |       |        |       |                 |       |                  |
| “ESCP 3000” |       | U.S.        |       | 2468759              |       | 7/17/01               |
|                  |       |        |       |                 |       |                  |
| “ESCP 3000” |       | Canada      |       | 565562               |       | 8/7/02                |
|                  |       |        |       |                 |       |                  |
| “ESCP 3000” |       | Japan       |       | 4432844              |       | 11/17/00              |

 

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**SCHEDULE 4LIST OF COPYRIGHTS AND PATENTS**

 

Aspreviously disclosed to Buyer, there are no copyrights or patents, orcopyrightable or patentable works, associated with or related to the AcquiredAssets.

 

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**SCHEDULE 5OTHER INTELLECTUAL PROPERTY**

 

1.                                       Trade secrets andmanufacturing know-how related to ESCP and TargetView.

 

2.                                       ESCP projector software including all C++source files and the source file for the sequencer firmware including assemblerand associated tools.

 

3.                                       ESCP-related CADdesign

 

4.                                       Digital Controller PC (DCPC) softwareincluding C++ source code and the Matrox MIL library file.

 

5.                                       ESCP and TargetView marketing and salesmaterials.

 

6.                                       ESCP and TargetView manuals includingOperations & Maintenance and Service manuals.

 

7.                                       ESCP and TargetView Training coursework.

 

8.                                       Open/unsubmitted Bids & Proposals forESCP and TargetView sales contracts.

 

9.                                       Rolling 12 month forecast for ESCP andTargetView projectors.

 

10.                                 ESCP and TargetView Customers and contactslists.

 

11.                                 ESCP and TargetView Service contract status.

 

12.                                 ESCP and TargetView spares and repairspricing lists.

 

13.                                 ESCP and TargetView projector catalogpricing.

 

14.                                 ESCP and TargetView bills of material.

 

15.                                 ESCP and TargetView assembly drawings andschematics.

 

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**SCHEDULE 6EXCEPTIONS TO PROPRIETARY RIGHTS**

 

1.               Any proprietaryrights or intellectual property not used exclusively in Seller’s ESCP orTargetView business.

 

2.               Any proprietaryrights or intellectual property not specifically enumerated on Schedules 1 or 3through 5 of the Asset Purchase Agreement.

 

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