CONFIDENTIAL SETTLEMENT AGREEMENT AND MUTUAL RELEASE

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

1.  Sea Harrier

2.  GR-4 Tornado

3.  Nimrod

4.  United Kingdom Attack Helicopter (UKAH)

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

6.  STN Atlas Elektronik GmbH, and

7.  8th Army

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

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

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

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

1.                                        DEFINITIONS

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

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

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

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

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

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

2.                                        PAYMENT

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

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

Wells Fargo Bank

180 South Main

Salt Lake City, UT  84101

ABA:  121000248

Acct. No.:  4761055250

3.                                        DISMISSAL OF CLAIMS

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

4.                                        RELEASES

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

4.2                                  With respect to the Lockheed Martin Action and the Tendered Matters released herein, the Parties agree that except as otherwise indic