EXHIBIT 2.3 GOULD/EFI INDUCEMENT AGREEMENT This Gould/EFI Inducement Agreement (this "Agreement") is made and entered into effective as of July 17, 1997 (the "Effective Date") by and between Gould Electronics Inc., an Ohio corporation ("Gould") and...

                                                                    EXHIBIT 2.3

                      XXXXX/EFI INDUCEMENT AGREEMENT


        This Xxxxx/EFI Inducement Agreement (this "Agreement") is made and
entered into effective as of July 17, 1997 (the "Effective Date") by and between
Xxxxx Electronics Inc., an Ohio corporation ("Xxxxx") and EFI International,
Inc., a Delaware corporation ("EFI"), on the one hand, and Sun Microsystems,
Inc., a Delaware corporation ("Purchaser") and Sun Microsystems International,
B.V., a Netherlands corporation ("SMIBV"), on the other hand. Purchaser and
SMIBV are hereinafter sometimes collectively referred to as "Purchaser Parties".
Xxxxx, Japan Energy Corporation, a Japanese corporation ("JEC") and EFI, a
wholly owned subsidiary of JEC, are hereinafter sometimes collectively referred
to as "Seller Parties". The term "Affiliates" shall mean any and all
"Affiliates" (as defined for purposes of U.S. federal securities laws) of any of
Seller Parties, and all successors and assigns of any of the Seller Parties or
any of their respective Affiliates.

                          R E C I T A L S

        A. Purchaser and SMIBV have, concurrently herewith, entered into a
certain Asset Purchase Agreement dated as of July 16, 1997 (the "Asset Purchase
Agreement") with Seller (as that term is defined in the Asset Purchase
Agreement) pursuant to which Seller has agreed to sell to Purchaser Parties, and
Purchaser Parties have agreed to purchase, certain assets associated with
Seller's Storage Products Business. Seller Parties have each reviewed, and
understand, the provisions of the Asset Purchase Agreement. All terms (whether
in upper or lower case text or any combination thereof) defined in the Asset
Purchase Agreement will have the same meanings assigned to such terms in the
Asset Purchase Agreement, except as otherwise expressly defined herein;
provided, however, that for purposes of this Agreement the term "material", when
used herein with reference to any of Seller Parties or any Affiliate, shall mean
any fact, event, action or failure to act, or other circumstance with respect
to, involving or affecting any of Seller Parties or any Affiliate that: (i)
involves in excess of $350,000 or that results or is reasonably likely to result
in a financial loss of at least $350,000, (ii) involves any of the Purchased
Assets or any Encumbrance on any of the Purchased Assets or (iii) is otherwise
material.

        X. Xxxxx and EFI are principal stockholders and/or debt holders of
Seller as of the Effective Date and no other Affiliate is a stockholder or debt
holder of Seller.

        C. As a material inducement and consideration for Purchaser Parties to
enter into the Asset Purchase Agreement and to pay the Purchase Price provided
for therein, and as a material condition precedent to Purchaser Parties'
obligations to consummate the transactions contemplated by the Asset Purchase
Agreement, Xxxxx and EFI have agreed to enter into and to perform their
respective obligations under this Agreement and to be bound by the terms of this
Agreement.

        NOW THEREFORE, as a material inducement to Purchaser Parties to enter
into, to consummate the transactions contemplated by, the Asset Purchase
Agreement, and in consideration of the mutual agreements and promises made
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:

                              ARTICLE I

        1.0 Representations and Warranties. Xxxxx hereby represents and warrants
to Purchaser Parties that all statements in the following subparagraphs of this
Section 1.0 are true and correct:

        1.01 Organization and Good Standing. Xxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio and has the corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted and as proposed to be
conducted. Xxxxx is qualified to transact business as a foreign corporation in
each jurisdiction in which its failure to be so qualified could reasonably be
expected to have a material adverse effect on Xxxxx'x condition (financial or
otherwise), properties, assets, liabilities, business, operations, results of
operations or prospects. Xxxxx is not in default under or in violation of any
provision of its certificate of incorporation or bylaws, both as amended to
date.

        1.02 Authorization and Validity. Seller Parties have all necessary
right, corporate power, legal capacity and authority to enter into, execute and
deliver this Agreement and to perform all of their respective covenants,
agreements and obligations under this Agreement. This Agreement has been duly
executed and delivered by Seller Parties and will constitute a legal, valid and
binding obligation of Seller Parties enforceable against Seller Parties in
accordance with its terms. The execution, delivery and performance by each of
Seller Parties of this Agreement have been duly and validly approved and
authorized by all necessary corporate action on the part of each of Seller
Parties, respectively.

        1.03 No Conflict. The execution and delivery of this Agreement by Seller
Parties and the performance of this Agreement by Seller Parties and the
Affiliates do not and will not (a) breach, violate or conflict with the
respective certificates of incorporation or bylaws or other charter documents of
any of Seller Parties, in each case as amended to date, (b) conflict with or
violate any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to Seller Parties or, to Seller Parties'
knowledge, to any of the Purchased Assets, (c) result in any breach or violation
of, or constitute a default (or event which with the giving of notice or lapse
of time, or both, would become a breach, violation or default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument to which any of Seller Parties or
any Affiliate is a party or is bound or by which any Purchased Assets are bound
or affected or (d) result in the creation of any Encumbrance on any of the
Purchased Assets in favor of any of Seller Parties or their respective
Affiliates or, to Seller Parties' knowledge, in favor of any other party or
person. As of the Effective Date and as of the Closing, no Affiliate, other than
Xxxxx and EFI, is or will be a stockholder and/or debt holder of Seller or has
or will have any other rights against Seller or any of the Purchased Assets.

        1.04 Consents and Approvals. The execution and delivery of this
Agreement by Seller Parties do not, and the performance of this Agreement by
Seller Parties and the Affiliates will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any court
or governmental or regulatory authority or any other third party (except notice
to, and the possible need to obtain the consent of, the United States Defense
Investigative Service with respect to the transfer of the Purchased Assets by
Seller to Purchaser Parties).

        1.05 Financial Statements. Xxxxx has delivered to Purchaser: (i) Xxxxx'x
audited balance sheet as of December 31, 1996 and audited statement of
operations, statement of cash flows and statement of shareholder's equity for
the year ended December 31, 1996; (ii) Xxxxx'x unaudited balance sheet as of
March 31, 1997 (the "Xxxxx Balance Sheet"), and (iii) Xxxxx'x unaudited
statement of operations for the three (3) month period ended March 31, 1997 (all
such financial statements of Xxxxx are hereinafter collectively referred to as
the "Xxxxx Financial Statements"). The Xxxxx Financial Statements (a) are in
accordance with the books and records of Xxxxx, (b) fairly present the financial
condition of Xxxxx at the dates therein indicated and the results of operations
for the periods therein specified and (c) have been prepared in accordance with
GAAP applied on a consistent basis with prior periods. Xxxxx has no material
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, except for: (i) those
reflected in the Xxxxx Financial Statements or described in accordance with GAAP
in the notes thereto; (ii) those that may have been incurred after March 31,
1997, the date of the Xxxxx Balance Sheet (the "Balance Sheet Date") in the
ordinary course of Xxxxx'x business consistent with past practice; and (iii)
those not required by GAAP to be reflected on the Xxxxx Balance Sheet. All
reserves established by Xxxxx and reflected in the Xxxxx Balance Sheet are
reasonably adequate. At the Xxxxx Balance Sheet Date, there were no material
loss contingencies (as such term is used in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975) which are not adequately provided for in the Xxxxx Balance Sheet as
required by said Statement No. 5. Since the Balance Sheet Date, there has been
no material adverse change in Xxxxx'x assets, liabilities, financial condition
or results of operations, except for any write offs by Xxxxx with respect to
Xxxxx'x investment in Seller and Seller payables to Xxxxx and financial
obligations of Seller to Xxxxx on Xxxxx'x books and/or the taking of related
reserves.

        1.06 Solvency. Xxxxx is Solvent and Xxxxx presently believes, based on
recent due inquiry and reasonable assumptions, that it will continue to be
Solvent for at least four (4) years after the Closing Date notwithstanding its
performance of this Agreement and the consummation by Seller of the transactions
contemplated by the Asset Purchase Agreement. During the four (4) year period
ending on the Closing Date, none of Seller, any Seller Subsidiary, any other
affiliate of Seller or any Seller Party has initiated, taken or attempted to
initiate or take, or been the subject of, any Insolvency Action or Insolvency
Proceeding and no assets or properties of Seller, any Seller Subsidiary or any
other affiliate of Seller or of any Seller Party are subject to any Insolvency
Proceeding or Insolvency Action; provided, however, that prior to or after
Closing, EFI may be liquidated (but if EFI is so liquidated, EFI and Xxxxx
covenant that no Insolvency Proceeding will be involved in connection with such
liquidation and that in connection with such liquidation Xxxxx shall succeed to,
assume and be bound by all assets, rights, liabilities and obligations of EFI,
including without limitation those relating to, arising under or created by this
Agreement and any and all Seller stock and debt and related rights and
obligations with respect to Seller held by or binding upon EFI). No writ of
attachment, execution or similar process has been ordered, executed or filed
against any Seller Party or any Seller Party's assets or properties that has not
been satisfied or, to the best knowledge of Seller Parties, against Seller or
any of its assets or properties that has not been satisfied. Xxxxx has no reason
to expect that any of the aforementioned actions, or any similar action, will
take place or be taken, and Xxxxx is not aware of any grounds for any of the
aforementioned actions or any like action. Neither Xxxxx, nor to Xxxxx'x
knowledge (except as noted above regarding EFI's possible liquidation not
involving an Insolvency Proceeding), any of Seller, any other Seller Party, or
any Affiliate, intends to become the subject of any Insolvency Proceeding or
Insolvency Action or otherwise to file for protection under any bankruptcy or
insolvency law. Without limiting the effect of the last sentence of Recital A
above, for purposes of this Article I, the terms "Solvent", "Insolvency
Proceeding" and "Insolvency Action" shall have the same respective meanings
given to such terms in the Asset Purchase Agreement.

        1.07 No Bankruptcy Proceedings. None of Seller Parties is presently the
subject of any Insolvency Action or Insolvency Proceeding; no decree or order
for relief has been entered in respect of any Seller Party, voluntarily or
involuntarily, under any bankruptcy or insolvency law; and, no receiver,
liquidator, sequestrator, trustee, custodian or other officer has been appointed
with respect to any Seller Party or any Seller Party's assets and liabilities
pursuant to any bankruptcy or insolvency law. No Seller Party has made
arrangements for any composition of its indebtedness nor made any assignment for
the benefit of creditors, and Xxxxx has no reason to expect that any of the
aforementioned actions, or any similar action, will take place or be taken.

        1.08 Intracompany Agreements; Absence of Unwaived Breach. The Seller's
Disclosure Letter contains an accurate and complete list and description of each
Seller Contract between, among or involving Seller on the one hand and any
Seller Party or any Affiliate on the other hand, or otherwise involving, or
which may upon default involve, any of the Purchased Assets, including in each
case without limitation, any (oral or written) security agreement, deed of
trust, mortgage, indenture, lien, UCC-1 Financing Statement, guarantee,
indemnity agreement, loan agreement, credit facility, loan commitment, debt
instrument or promissory note between or among any of such parties
(collectively, "Intracompany Agreements"). A true and complete copy of each of
the Intracompany Agreements, as amended to date, has been delivered to Purchaser
by Xxxxx or Seller. The Purchased Assets are, or as of immediately prior to the
Closing the Purchased Assets will be, free of any and all Encumbrances created
by any of the Intracompany Agreements or otherwise arising in favor of any of
Seller Parties or any of their respective Affiliates. Except for any rights
assigned under Section 3.06 hereof, upon Closing no event or right will exist
that gives or would give any Seller Party or any Affiliate any right as to any
of the Purchased Assets (except for rights that will have been either waived,
released or terminated effective as of the Closing). The sale and transfer of
the Purchased Assets and the consummation of the other transactions and actions
contemplated by the Asset Purchase Agreement will not violate, breach or cause
any default, event of default, or event which with the passage of time would
constitute a default, under any of the Intracompany Agreements. Except for
breaches, defaults or events of default that will be waived, released or
terminated effective as of the Closing expressly to permit the sale and transfer
of the Purchased Assets and the consummation of the other transactions and
actions contemplated by the Asset Purchase Agreement, and except as to
continuing rights or claims of any of the Seller Parties or any Affiliates
("Continuing Xxxxx Claims") none of which will in any way cause any Loss to or
result in any Liability or obligation of either of Purchaser Parties or in any
way restrict Purchaser Parties' use of, or apply to, any of the Purchased
Assets, neither Seller nor any Seller Party nor any Affiliate is in breach of
any of the Intracompany Agreements and no event exists which, with the giving of
notice or lapse of time or both, would constitute a material breach, default or
event of default on the part of Seller, any Seller Party or any Affiliate as to,
or of, any of the Intracompany Agreements.

        1.09 Accuracy of Seller Representations. To Xxxxx'x knowledge, all of
Seller's representations and warranties contained in Article III (as qualified
by Seller's Disclosure Letter) and in Article VII of the Asset Purchase
Agreement are true and correct as of the date of the Asset Purchase Agreement
and will be true and correct as of the Closing Date. Without limiting the
preceding sentence (and except as qualified by Seller's Disclosure Letter), all
of Seller's representations and warranties contained in Sections 3.05(a) and (d)
(No Conflicts) and Section 3.29 (Fair Consideration) of the Asset Purchase
Agreement, and all of Seller's representations and warranties in the Asset
Purchase Agreement to the extent they relate or apply to any Seller Parties or
any right of or obligation to any Seller Party or to any Intracompany Agreement,
will be true and correct as of immediately preceding the Closing.

                             ARTICLE II

2.0     Indemnification

        2.01 Definitions. Without limiting the last sentence in Recital A, for
purposes of this Article II, the terms "Loss" and "Purchaser Indemnities" shall
have the respective meanings given to such terms in Section 9.01 of the Asset
Purchase Agreement.

        2.02 Indemnification by Xxxxx. Xxxxx agrees, pursuant to the terms and
conditions of this Article II, to indemnify Purchaser, SMIBV and each of the
other Purchaser Indemnitees against, and to hold Purchaser, SMIBV and each of
the other Purchaser Indemnitees harmless from, any and all Loss arising out of:

                (a) the failure of any representation or warranty of Xxxxx
contained in this Agreement to be true and correct, or any fraud or willful
misconduct on the part of Xxxxx;

                (b) any breach, violation of, or other failure by Xxxxx or EFI
to perform any of their respective covenants or obligations under this Agreement
or any breach, violation of, or other failure by JEC to honor the JEC Inducement
Agreement between Purchaser Parties and JEC entered into concurrently herewith;

                (c) the failure of any representation or warranty of Seller in
Article III (as qualified by Seller's Disclosure Letter) or Article VII of the
Asset Purchase Agreement to be true and correct as of the date of the Asset
Purchase Agreement and as of the Closing Date;

                (d) the breach or violation by Seller of any covenant of Seller
under the Asset Purchase Agreement;

                (e) any of the Excluded Assets or any of the Excluded
Liabilities or any other obligation or Liability of Seller not expressly assumed
by Purchaser under the Asset Purchase Agreement;

                (f) the operation or management of the Storage Products Business
or the Purchased Assets by Seller at any time or times on or prior to the
Closing Date (including without limitation any and all Taxes arising out of, or
payable with respect to, Seller's business operations through the Closing Date);

                (g) Liability for (or any Liability applicable to Purchaser,
SMIBV or any other Purchaser Indemnitee as a result of) noncompliance with any
bulk sales, bulk transfer or similar laws applicable to the transactions
contemplated by the Asset Purchase Agreement;

                (h) any demand, claim, debt, suit, cause of action, arbitration,
investigation or other proceeding made or asserted by Seller or by a shareholder
or creditor of Seller or by any of Seller Parties or by any Affiliate or by any
other person or by any receiver or trustee in bankruptcy of Seller or of the
property or assets of Seller, asserting that the transfer of the Purchased
Assets to Purchaser under the Asset Purchase Agreement constitutes a fraudulent
conveyance, fraudulent transfer or a preference under any applicable state or
federal law, including, but not limited to, the United States Bankruptcy Code;

                (i) any (A) Foreign Employee Liabilities; or (B) any amount paid
to or other Liability incurred with respect to any Mandated Employee; or (C) any
demand, claim, debt, suit, cause of action, arbitration, investigation or other
proceeding made or asserted by any Mandated Employee or any other employee or
independent contractor of Seller, any Seller Subsidiary or any affiliate of
Seller or any former employee or independent contractor of Seller, any Seller
Subsidiary or any affiliate of Seller, that relates in any manner to any
alleged, actual or constructive termination by Seller, any Seller Subsidiary or
any affiliate of Seller of such person's employment or the services of such
person, or that involves a claim of adverse employment action, relocation,
promotion, demotion, unequal pay or any other matter relating to the employment
of such person by Seller, any Seller Subsidiary or any affiliate of Seller;

                (j) any Continuing Xxxxx Claims or any pursuit, collection or
enforcement thereof by any of Seller Parties; and/or

                (k) termination by Seller, any Seller Subsidiary or any
affiliate of Seller of the employment of any of the Employees at any time prior
to, on or after the Closing Date, severance benefits related to any Employee's
termination of employment with Seller, any Seller Subsidiary or any Seller
affiliate, and any failure by Seller, any Seller Subsidiary or any Seller
affiliate to pay or withhold any Taxes payable with respect to the employment by
Seller, any Seller Subsidiary or any Seller affiliate of any Employee or any
failure by Purchaser to hire such Employee.

                (l) the failure of the closing condition set forth in Section
8.02(bb) of the Asset Purchase Agreement to have been satisfied (whether or not
such condition was waived by Purchaser), or any failure of Purchaser and SMIBV
to have the Noninfringing Test Software Use Right from and after Closing or any
claim by any party that Purchaser's or SMIBV's use of the Test Software, or
other exercise or attempted exercise of the Noninfringing Test Software Right,
infringes any third party's Intellectual Property Rights or any Loss or
Liabilities associated with acquiring the Noninfringing Test Software Use Right
and related licenses from all parties whose Intellectual Property Rights might
be infringed by Purchaser's use of the Test Software in connection with the
Storage Products Business and, if such rights and licenses cannot be acquired,
all Loss related to developing or having developed new, noninfringing Test
Software for use in connection with the Storage Product Business in replacement
of the Test Software used by Seller or related to hiring third parties to
provide services equivalent to those Purchaser could provide itself if it had a
Noninfringing Test Software Use Right.

                (m) any claim for fees or costs of, or amounts payable pursuant
to indemnification obligations to, Genesis, including without limitation the
$250,000 fee Seller owes to Genesis.

        2.03    Procedures for Indemnification

                (a) As used herein, an "Indemnified Party" means a Purchaser
Indemnitee seeking indemnification pursuant to Section 2.02 hereof. The
Indemnified Party agrees to give Xxxxx prompt written notice of any event, or
any claim, action, suit, demand, assessment, investigation, arbitration or other
proceeding by or in respect of a third party (a "Third Party Claim") of which it
has knowledge, for which such Indemnified Party is entitled to indemnification
under this Article II. No delay on the part of an Indemnified Party in giving
Xxxxx notice of a Third Party Claim shall relieve Xxxxx from any obligation
hereunder unless (and then solely to the extent) that Xxxxx is materially
prejudiced thereby.

                (b) Xxxxx will have the right, at its sole cost and expense, to
defend the Indemnified Party against the Third Party Claim with counsel of
Xxxxx'x choice that is reasonably satisfactory to the Indemnified Party so long
as: (i) Xxxxx notifies the Indemnified Party in writing within ten (10) days
after the Indemnified Party has given notice of the Third Party Claim that Xxxxx
intends to undertake such defense; (ii) Xxxxx provides each Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that Xxxxx will
have the financial resources required to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder; (iii) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief (provided, however, that Xxxxx will have the right, at its sole
cost and expense, to defend the Indemnified Party against any such Third Party
Claim seeking both money damages and an injunction with counsel of Xxxxx'x
choice that is reasonably satisfactory to the Indemnified Party so long as the
Indemnified Party has the right through its own counsel and at Xxxxx'x expense
to participate in the injunction portion of any such proceeding and has the
right, directly or through its counsel, to control all tactical decisions in
opposing any such application for an injunction); (iv) Xxxxx conducts the
defense of the Third Party Claim actively and diligently; and (v) the counsel
chosen by Xxxxx does not have any conflict of interest in representing the
interests of the Indemnified Party.

                (c) So long as Xxxxx is conducting the defense of the Third
Party Claim in accordance with Section 2.03(b) above, (i) the Indemnified Party
may retain separate co-counsel and participate in the defense of the Third Party
Claim at its own cost and expense (except as provided in Section 2.03(d) below)
and shall have the right to receive copies of all pleadings, notices and
communications with respect to the Third Party Claim to the extent no
attorney-client privilege is thereby waived, (ii) the Indemnified Party may
participate in settlement negotiations with respect to the Third Party Claim,
and (iii) Xxxxx will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim unless (A) the affected
Indemnified Party consents thereto in writing (which consent will not
unreasonably be withheld) or (B) the settlement, compromise or consent includes
an unconditional release of the affected Indemnified Party from all liability
with respect to the claim.

                (d) If Xxxxx does not elect to assume control of or otherwise
participate in the defense or settlement of any Third Party Claim, or if Xxxxx
does so elect but any of the conditions in Section 2.03(b) above is or becomes
unsatisfied, or if Xxxxx ceases at any time to actively defend the Third Party
Claim, then, (i) the Indemnified Party may defend against and consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim, provided, however, that Xxxxx (A) shall have the right to receive
copies of all pleadings, notices and communications with respect to the Third
Party Claim so long as the receipt of such documents by Xxxxx does not affect
any attorney-client privilege relating to the Indemnified Party, and (B) may
participate in settlement negotiations with respect to the Third Party Claim and
the Indemnified Party shall not enter into any settlement of the Third-Party
Claim without the prior written consent of Xxxxx (which consent shall not be
unreasonably withheld), (ii) Xxxxx will reimburse the Indemnified Party promptly
and periodically for all costs and expenses incurred in defending against the
Third Party Claim (including without limitation reasonable attorneys' and
experts fees and expenses and court and arbitration costs), and (iii) Xxxxx will
remain responsible for any Loss the Indemnified Party may suffer resulting from,
arising out of, relating to or caused by the Third Party Claim to the fullest
extent provided in this Article II.

        2.04  No Limitation Except Applicable Cap and Xxxxx Basket.  

                (a) Xxxxx'x liability to indemnify Purchaser Parties and other
Indemnified Parties for Loss under this Article II shall not be subject to any
limitation except for the Xxxxx Basket (as defined and described below) and
except for the Applicable Cap limitation (as defined and described below).

                (b) The aggregate Loss recoverable by Indemnified Parties
(considered together as a group) against Xxxxx under this Article II shall not
exceed: (i) $185,000,000 in the aggregate; (ii) $185,000,000 as to claims
arising in the First Contract Year; or (iii) $110,000,000 as to claims arising
in the Second Contract Year (collectively, the "Applicable Cap"). The "First
Contract Year" and the "Second Contract Year" are the two successive annual
periods ending on the first and on the second anniversaries of the Closing Date,
respectively. A claim shall be deemed to arise in a Contract Year if any of the
material facts giving rise to such claim, or any Loss resulting from facts
asserted in such claim, first occurred or were first suffered in that Contract
Year. Xxxxx shall have no liability under this Article II for any claims for
indemnification hereunder first asserted at any time after the fourth (4th)
anniversary of the Closing Date (with respect to claims or Loss relating to or
arising from any fraud or willful misconduct on the part of Xxxxx) or first
asserted at any time after the third (3rd) anniversary of the Closing Date (as
to any claims or Loss not relating to or arising from any fraud or willful
misconduct on the part of Xxxxx) or for any claims not deemed to arise (as
defined above) in the First Contract Year or in the Second Contract Year.

                (c) Notwithstanding the foregoing provisions of this Section
2.04, the Applicable Cap shall not limit the amount of Xxxxx'x indemnity
liability for, and Purchaser and any other Indemnified Party shall be entitled
to recover from Xxxxx, any and all Loss arising from: (i) fraud or willful
misconduct on the part of Xxxxx; (ii) any Loss resulting from any Seller Parties
and/or any of their respective Affiliates (and/or any successors or assigns of
any thereof to the extent such successors or assigns take any action whatsoever
with respect to or in relation to any claim of any of the Seller Parties against
Seller ("Assigns")), instituting or causing to be instituted any Insolvency
Action or any Insolvency Proceeding relating to Seller or any of Seller's assets
at any time prior to the end of the Second Contract Year; (iii) any rescission
of or injunction against the purchase by Purchaser Parties of the Purchased
Assets pursuant to the Asset Purchase Agreement occurring in the First Contract
Year; or (iv) any Continuing Xxxxx Claims or the pursuit, collection or
enforcement thereof by any Seller Party and/or any of its Affiliates or any
Assigns; provided, however, that in no event will Losses in excess of the
Applicable Cap for which Purchaser Parties may be indemnified hereunder include
special or consequential damages or lost profits (but this proviso will not
apply to limit the types of Loss recoverable by any Purchaser Parties below the
Applicable Cap).

                (d) For purposes of this paragraph (d), the term "Encore Loss"
shall mean any Loss arising solely out of the matters described in Sections
2.02(c), (d), (e), (f), (g), (i), (k), (l) or (m) hereof or solely as a result
of a breach of Section 1.09 hereof. Xxxxx shall not be required to provide
indemnification for any Encore Loss to Purchaser Parties and other Indemnified
Parties under this Article II unless and until the aggregate Encore Loss for
which one or more Indemnified Parties seeks indemnification hereunder exceeds an
aggregate of Five Hundred Thousand Dollars ($500,000) (the "Xxxxx Basket"), in
which event Xxxxx shall be liable to indemnify the Purchaser Parties and the
Indemnified Parties for all Encore Loss, including any Encore Loss within the
Xxxxx Basket. There shall be no Xxxxx Basket or other "basket" of any amount
with respect to any Loss other than an Encore Loss. Notwithstanding the
foregoing, Purchaser and any other Indemnified Party shall be entitled to
recover from Xxxxx any Loss, regardless of the Xxxxx Basket, arising from any of
the matters described in clauses (i), (ii), (iii) or (iv) of Section 2.04(c)
above or arising from the failure of any representation or warranty of Seller
contained in Article VII of the Asset Purchase Agreement to be true and correct
as of the Closing or arising from the fraud or willful misconduct on the part of
Seller.

                              ARTICLE III

3.0     Covenants

        3.01    Covenant Not to Compete.
  
                (a) Non-Competition Covenant. Subject to the following
provisions of this Section 3.01, as a material inducement and consideration for
Purchaser Parties to enter into the Asset Purchase Agreement, for a period of
five (5) years from and after the Closing Date (such five (5) year period of
time being hereinafter called the "Restricted Period"), Xxxxx will not, within
the Restricted Area (as defined below) carry on any business, or own (in whole
or in part), operate, advise, assist or lend funds to or invest funds in, any
person, firm, partnership, limited liability company, business, corporation or
other entity or enterprise that competes, in any material respect, with the
Storage Products Business (the "Restricted Business"). As used herein, the term
"Restricted Area" means any state of the United States of America or any
geographic area within any other country in which Purchaser or SMIBV or their
respective affiliates, directly or indirectly, at any time carries on or engages
in business. During the Restricted Period, Xxxxx further agrees not to interfere
with, disrupt or attempt to disrupt or otherwise adversely affect the
relationship between Purchaser or SMIBV and any third party, including without
limitation any customer, supplier or employee of Purchaser or SMIBV, with
respect to the Restricted Business.

                (b) Non-Solicitation. For a period of three (3) years after the
Closing Date, Xxxxx shall not, directly or indirectly, solicit any Employee
hired by Purchaser or any affiliate of Purchaser to (i) become employed by Xxxxx
or any Affiliate or (ii) terminate such Employee's employment with or services
to Purchaser or any affiliate of Purchaser.

                (c) Injunctive Relief; Interpretation. In the event of a breach
of any of the covenants set forth in this Section 3.01, Purchaser and SMIBV will
each be entitled to an injunction against Xxxxx restraining such breach in
addition to any other remedies available at law or in equity. In the event that
any covenant in this Section 3.01 is held to be invalid, illegal or
unenforceable by any court of competent jurisdiction or any other governmental
authority in any respect, it is agreed and understood that such covenant will
not be voided but rather will be construed to impose limitations upon Xxxxx'x
activities no greater than allowable under then applicable law.

                (d) Xxxxx. As used in this Section 3.01, the term "Xxxxx"
includes, in addition to Xxxxx itself, each person (as defined in the Asset
Purchase Agreement) 50% or more of the equity interests of which is beneficially
owned by Xxxxx (within the meaning of the Securities Act) or that is otherwise
controlled by Xxxxx (each a "Xxxxx Subsidiary") and all directors, officers,
employees, stockholders, agents, subsidiaries and Affiliates of Xxxxx or any
Xxxxx Subsidiary or any other Seller Party acting on behalf of, or at the
direction of or with the direct or indirect assistance of Xxxxx, any Xxxxx
Subsidiary or any other Seller Party.

        3.02    Further Actions to Avoid Breach of Intracompany Agreements.  
Seller Parties will take all actions required on their part or on the part of 
any Affiliate (including without limitation the filing of termination 
statements with respect to all UCC-1 Financing Statements, and the termination 
of any security agreements, describing or with respect to any of the Purchased 
Assets), and will cause Seller to take all actions on its part required, to 
ensure that:  (i) no breach or default under any of the Intracompany 
Agreements will result from execution or performance of the Asset Purchase 
Agreement or any of the transactions contemplated thereby; (ii) as of the 
Closing, none of the Purchased Assets shall be encumbered by any Encumbrance 
arising under any of the Intracompany Agreements or be subject to any other 
interest or right of any Seller Party (or of any Affiliate) created by any of 
the Intracompany Agreements or otherwise; and (iii) title to all the Purchased 
Assets shall, when transferred from Seller to Purchaser Parties at the 
Closing, be free and clear of any right or interest of any Seller Party or of 
any Affiliate or any Xxxxx Subsidiary.  

        3.03  Further Assurances as to Continued Seller Solvency.  Xxxxx shall,
except as otherwise consented to in writing by Purchaser: 

                (i) take all actions (including without limitation making 
continued capital infusions in Seller, defending, discharging or seeking 
dismissal of third party claims or suits against Seller or the Purchased 
Assets, forgiving or restructuring indebtedness owed by Seller to any Seller 
Party or Xxxxx Subsidiary, terminating or modifying (or causing to be 
terminated or modified) any Intracompany Agreements and releasing or 
terminating any Encumbrances on any of the Purchased Assets created by any of 
the Intracompany Agreements or otherwise), and 

                (ii) forbear (and cause EFI to forbear) from causing Seller, any
successors or assigns of Seller, or any of the Purchased Assets from becoming
involved in or subject to any Insolvency Action or Insolvency Proceeding and
from otherwise taking any actions to enforce any rights or remedies of Seller
Parties with respect to any claims any Seller Party or any Affiliate may have
against Seller or against or with respect to the Purchased Assets, in each case
(i) and (ii) as required to ensure that (a) Seller is Solvent as of the
Effective Date and at the Closing Date; and (b) Seller (1) remains Solvent and
(2) does not become the subject of any Insolvency Action or any Insolvency
Proceeding, in each case (b)(1) and (b)(2) for a period of one (1) year after
the Closing Date. Without limiting the foregoing in any way, Xxxxx and EFI shall
not, except as otherwise consented to in writing by Purchaser (which consent
will not unreasonably be withheld), for a period of one (1) year after the
Closing Date, institute or cause Seller to become involved in any Insolvency
Action or any Insolvency Proceeding, including without limitation by institution
of an involuntary proceeding in bankruptcy or by voting as a stockholder, or
causing any representatives of Xxxxx on Seller's Board of Directors to vote as a
director, in favor of any proposal to liquidate, wind up or dissolve Seller.

        3.04.  Fairness of Consideration.  Xxxxx represents, and each of Seller 
Parties hereby acknowledges and stipulates, for itself and its respective 
Affiliates, as follows and agrees never to assert to the contrary at any time 
or in any circumstances: (i) the consideration paid and agreements made by 
Purchaser Parties under the Asset Purchase Agreement for the Purchased Assets 
represent fair and reasonably equivalent consideration for the Purchased 
Assets and all other assignments and agreements made by Seller under the Asset 
Purchase Agreement and the Ancillary Agreements, (ii) Seller is not entering 
into the Asset Purchase Agreement or any Ancillary Agreement with the intent 
to defraud, delay or hinder its creditors and the consummation of the 
transactions contemplated by the Asset Purchase Agreement and the Ancillary 
Agreements will not have any such effect; and (iii) the transactions 
contemplated in the Asset Purchase Agreement or any Ancillary Agreements will 
not give rise to any right or ability of any Seller Party, any Xxxxx 
Subsidiary or any Affiliate, or to Xxxxx'x knowledge, of any other creditor or 
shareholder of Seller, to assert any claim whatsoever against any Purchaser 
Party or any of the Purchased Assets in the hands of any Purchaser Party or 
any Purchaser Party's successors and assigns following the Closing or to in 
any way challenge the sale of the Purchased Assets to Purchaser Parties under 
the Asset Purchase Agreement.

3.05    Opinion of Counsel.  At the Closing, counsel to Seller Parties will 
provide a legal opinion as to the truth of the statements in Sections 1.02, 
1.03 and 1.04 as respects each of the Seller Parties and as to the 
enforceability of all provisions of this Agreement against Xxxxx and EFI 
(except Section 4.02 and Section 4.05 hereof, the enforceability of which can 
be excluded from any such opinion, and except for standard exceptions as to 
statutory or public policy limitations applicable to the extent the scope of 
the Restricted Business exceeds, or the duration of the Non-Competition 
Covenant in Section 3.01(a) is in excess of, such scope or duration as are 
deemed reasonably necessary to protect Purchaser Parties' reasonable 
interests).

3.06    Assignment of Xxxxx License Agreement.  Xxxxx hereby represents and 
warrants to Purchaser Parties that Xxxxx is the permitted successor or assign 
of all rights of Xxxxx, Inc., a Delaware corporation, under that certain 
Intellectual Property License Agreement among Xxxxx, Inc., Seller and Encore 
Computer U.S., Inc. and that certain Escrow, Access and Training Agreement 
among the same parties, each dated as of January 28, 1991, as amended through 
Closing (collectively, the "Xxxxx License Agreements").  Xxxxx further 
represents that no sublicenses have been granted nor have any items, 
derivatives or works protectible by Intellectual Property Rights been created, 
pursuant to any rights granted under the Xxxxx License Agreements.  Xxxxx 
shall, upon receipt of written request from Purchaser, assign to Purchaser 
Parties, effective as of the Closing Date, all right, title and interest of 
Xxxxx (but none of Xxxxx'x obligations or Liabilities, if any) arising under, 
relating to or granted or imposed by the Xxxxx License Agreements, including 
without limitation in or to any of the Purchased Assets.  Xxxxx shall, upon 
receipt of written request from Purchaser, take all further actions required 
to cause Xxxxx'x non-exclusive technology license rights, rights to obtain 
source code, rights to access and training and other rights arising under, 
relating to or granted by the Xxxxx License Agreements to be assigned to 
Purchaser Parties effective as of the Closing Date, such that Purchaser 
Parties shall be able to exercise all rights Xxxxx was entitled to exercise 
under or as a result of its entry into the Xxxxx License Agreements as if 
Purchaser Parties were the original parties thereto.  A true and complete copy 
of the Xxxxx License Agreements are attached hereto as Appendix A.  

                                ARTICLE IV

4.0     General Release; Covenant Not to Xxx; Waiver of Defenses.

                4.01 General Release by Seller Parties. Each of Seller Parties
does hereby, for itself and its respective Affiliates, officers, directors,
stockholders, employees, agents, legal successors and assigns (collectively, the
"Releasing Parties"), release and absolutely and forever discharge each of
Purchaser Parties and all affiliates (as defined under the Securities Act but
excluding shareholders of Purchaser) thereof and each of the respective
shareholders, officers, directors, employees, agents, attorneys, legal
successors and assigns of any of Purchaser Parties or any affiliate (as defined
immediately above) thereof (collectively, the "Released Parties"), of and from
any and all claims, demands, damages, debts, liabilities, accounts, reckonings,
obligations, costs, expenses, liens, actions and causes of action of every kind
and nature whatsoever, whether now known or unknown, suspected or unsuspected,
which the Releasing Parties now have, own or hold or at any time heretofore ever
had, owned or held or could, shall or may hereafter have, own or hold against
the Released Parties (or any of them) based upon or arising out of any matter,
cause, fact, thing, act or omission whatsoever occurring or existing at any time
to and including the date hereof, or arising on or after the date hereof, in
connection with the facts, circumstances and events relating to the Purchased
Assets or to any of the transactions contemplated by the Asset Purchase
Agreement or any of the Ancillary Agreements or any of the Intracompany
Agreements or any Liability or obligation thereunder or any of the Continuing
Xxxxx Claims or any pursuit, collection or enforcement thereof by any of Seller
Parties (collectively, together with the enumerated examples below, the
"Released Matters"), including without limitation any claim or allegation by any
of the Releasing Parties or any other party that: (i) any of the Released
Parties is on any theory liable for any of the debts or obligations or
Liabilities of Seller not expressly assumed by Purchaser under the Asset
Purchase Agreement (including without limitation any Liability arising under any
of the Intracompany Agreements or any of the Continuing Xxxxx Claims); (ii) any
of the Released Parties is on any theory liable to any of the Releasing Parties
for any claim, cause of action, loss, damages or other amount whatsoever, as a
result of Purchaser Parties' purchase of the Purchased Assets; (iii) any of the
Releasing Parties has any right in, claim as to or Encumbrance on or with
respect to, any of the Purchased Assets; or (iv) the purchase of the Purchased
Assets under the Asset Purchase Agreement constituted a fraudulent conveyance, a
fraudulent transfer, or a preference or was otherwise improper, unlawful or
violative of any rights of any of the Releasing Parties under the Intracompany
Agreements or otherwise (all of which foregoing matters are hereinafter referred
to as and included within the "Released Matters"). It is the intention of Seller
Parties that the release set forth above in this Section 4.01 shall be effective
as a full and final accord and satisfaction and general release by each of the
Releasing Parties of and from all claims now existing or hereafter arising
against any of the Released Parties relating to any of the Released Matters.

        4.02 Waiver of Unknown Claims. In furtherance of the intentions set
forth herein, each of Seller Parties acknowledges, for itself and each of the
other Releasing Parties, that it is familiar with Section 1542 of the Civil Code
of the State of California (and similar laws of the States of Ohio and Florida
and of Japan), which provides as follows:

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

Each of Seller Parties, for itself and each of the other Releasing Parties, 
hereby waives and relinquishes any right or benefit which it has or may have 
under Section 1542 of the Civil Code of the State of California or any similar 
provision of the statutory or nonstatutory law of any other jurisdiction 
(including without limitation the States of Ohio and Florida and of Japan), to 
the full extent that it may lawfully waive all such rights and benefits 
pertaining to the subject matter of this Agreement.  In connection with such 
waiver and relinquishment, each of Seller Parties acknowledges that it is 
aware that it or its attorneys or accountants may hereafter discover claims or 
facts in addition to or different from those which it now knows or believes to 
exist with respect to the subject matter of this Agreement or of the Asset 
Purchase Agreement or the Released Parties, but that it is its intention 
hereby fully, finally and forever to settle and release, for itself and each 
of the other Releasing Parties, all of the Released Matters which now exist, 
may exist or heretofore have existed or which arise on or after the date 
hereof as to all of the Released Parties.  In furtherance of this intention, 
the release herein given by Seller Parties for themselves and each of the 
other Releasing Parties shall be and remain in full force and effect as a full 
and complete release, and operate as a full release of claims hereafter 
arising, notwithstanding the discovery or existence of any such additional or 
different claims or facts.

        4.03 Authorized Release. Each of Seller Parties warrants and represents
that it is the sole and lawful owner of all right, title and interest in and to
all of the respective Released Matters as to which it is the Releasing Party and
that it has not heretofore voluntarily, by operation of law or otherwise,
assigned or transferred (or purported to assign or transfer) to any person
whomsoever any Released Matter or any part or portion thereof of any claim,
demand or right against any Released Party. Seller Parties shall indemnify and
hold harmless the Released Parties from and against any Loss based on, or
arising in connection with or out of any such assignment or transfer (or
purported or claimed assignment or transfer).

        4.04 Covenant Not to Xxx. Each of Seller Parties hereby agrees not to
xxx or otherwise bring any claim against any of the Released Parties on or with
respect to any of the Released Matters or against or with respect to any of the
Purchased Assets, in each case whether by way of complaint, cross-complaint,
cross claim, set off, defense or by any other means or manner in any court,
other tribunal or otherwise. Each of Seller Parties hereby further agrees not to
take any action against or with respect to any of the Purchased Assets utilizing
any of Seller Parties' rights as a creditor, secured creditor or stockholder,
including without limitation any foreclosure action or any action permitted to
be taken by a secured party under the Uniform Commercial Code as adopted in any
jurisdiction or any action permitted to be taken by a lienholder or judgment
creditor under applicable state laws (including without limitation, attachment
and garnishment actions and imposition of or execution upon any lien).

        4.05 KNOWING AND EXPLICIT WAIVERS. THE SELLER PARTIES ACKNOWLEDGE THAT
PURCHASER PARTIES ARE RELYING ON THIS AGREEMENT IN ENTERING INTO THE ASSET
PURCHASE AGREEMENT AND THE ANCILLARY AGREEMENTS AND THE TRANSACTIONS
CONTEMPLATED THEREBY. SELLER PARTIES AND/OR THEIR RESPECTIVE AFFILIATES ARE
PRINCIPAL STOCKHOLDERS AND/OR DEBT HOLDERS OF SELLER AND ACCORDINGLY SELLER
PARTIES REPRESENT THAT THEY FULLY UNDERSTAND THE BUSINESS, PROSPECTS, CASH
POSITION, LIABILITIES, OPERATING RESULTS AND FINANCIAL CONDITION OF SELLER AND
THE PROVISIONS OF THE ASSET PURCHASE AGREEMENT AND THE ANCILLARY AGREEMENTS.
SELLER PARTIES HAVE ENTERED INTO THIS AGREEMENT BASED SOLELY ON THEIR
INDEPENDENT KNOWLEDGE OF THESE FACTS RELATING TO SELLER AND SELLER PARTIES
ACCORDINGLY ASSUME FULL RESPONSIBILITY FOR OBTAINING ANY FURTHER INFORMATION
WITH RESPECT TO SELLER OR THE CONDUCT OF SELLER'S BUSINESS. SELLER PARTIES
REPRESENT THAT, AS BETWEEN SELLER PARTIES AND PURCHASER PARTIES, SELLER PARTIES
ARE NOW AND WILL FOREVER REMAIN RESPONSIBLE FOR ASCERTAINING THE FINANCIAL
CONDITION OF SELLER. EACH OF SELLER PARTIES WAIVES ANY DUTY ON THE PART OF ANY
OF THE RELEASED PARTIES TO DISCLOSE TO IT, AND AGREES THAT IT IS NOT RELYING ON
OR EXPECTING ANY OF THE RELEASED PARTIES TO DISCLOSE TO IT, ANY FACT NOW OR
HEREAFTER KNOWN BY ANY OF THE RELEASED PARTIES RELATING TO THE OPERATION OR
CONDITION OF SELLER. SELLER PARTIES WAIVE ANY RIGHT TO ASSERT AGAINST ANY
PURCHASER PARTIES ANY DEFENSES OR SET-OFF RIGHTS SELLER HAS OR MAY ACQUIRE
AGAINST ANY OF PURCHASER PARTIES. SELLER PARTIES HEREBY WAIVE, FOR THEMSELVES
AND EACH AFFILIATE, ANY AND ALL DEFENSES BASED UPON OR ARISING BY REASON OF (A)
ANY DISABILITY OR OTHER DEFENSE OF SELLER OR ANY OTHER PERSON, (B) THE
CESSATION, OR ANY LIMITATION, FROM ANY CAUSE WHATSOEVER, OF ANY LIABILITY OF
SELLER OR ANY PORTION THEREOF, (C) ANY LACK OF AUTHORITY OF ANY AGENT OR OTHER
PERSON ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER, (D) ANY DEFECT IN THE
FORMATION OR OTHER CORPORATE FORMALITIES OF SELLER, (E) THE APPLICATION BY
SELLER OF THE PURCHASE PRICE OR ANY PORTION THEREOF FOR PURPOSES OTHER THAN THE
PURPOSES REPRESENTED TO, OR INTENDED OR UNDERSTOOD BY SELLER PARTIES OR ANY
AFFILIATE, INCLUDING WITHOUT LIMITATION THE DISTRIBUTION BY SELLER OF ANY
PORTION OF THE PURCHASE PRICE TO ANY CREDITOR OR SHAREHOLDER OTHER THAN SELLER
PARTIES; (F) ANY ACT OR OMISSION BY SELLER OR PURCHASER PARTIES THAT DIRECTLY OR
INDIRECTLY, BY OPERATION OF LAW OR OTHERWISE, RESULTS IN OR AIDS THE DISCHARGE
OF SELLER, ANY LIABILITIES OF SELLER OR ANY CLAIM OR ENCUMBRANCE ON OR WITH
RESPECT TO ANY OF THE PURCHASED ASSETS; (G) ANY MODIFICATION OF SELLER'S
OBLIGATIONS TO ANY PURCHASER PARTY OR ANY PURCHASER INDEMNITEE IN ANY FORM
WHATSOEVER, INCLUDING BY AMENDMENT TO THE ASSET PURCHASE AGREEMENT OR ANY
ANCILLARY AGREEMENT OR ASSERTION, PAYMENT OR SETTLEMENT OF ANY CLAIM FOR
INDEMNIFICATION BROUGHT THEREUNDER OR ANY OTHER RENEWAL, EXTENSION,
ACCELERATION, INCREASE, MODIFICATION, OR OTHER CHANGE IN TIME FOR PAYMENT OF
SELLER'S OBLIGATIONS OR LIABILITIES TO EITHER OF THE PURCHASER PARTIES UNDER THE
ASSET PURCHASE AGREEMENT OR OTHERWISE OR (H) AN ELECTION OF REMEDIES BY ANY OF
THE RELEASED PARTIES, EVEN THOUGH THAT ELECTION OF REMEDIES HAS TERMINATED
SELLER PARTIES' SECURITY INTEREST IN OR OTHER RIGHTS WITH RESPECT TO THE
PURCHASED ASSETS OR OTHER RIGHTS. EACH OF SELLER PARTIES REPRESENTS AND WARRANTS
THAT IT IS FULLY AWARE OF THE SPECIFIC PROVISIONS OF DIVISION THREE, PART 4,
TITLE 13 OF THE CALIFORNIA CIVIL CODE ("CCC"), INCLUDING SECTIONS 2787 THROUGH
2856 THEREOF, AND OF SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF
CIVIL PROCEDURE ("CCP") AND SIMILAR PROVISIONS UNDER FLORIDA, OHIO AND OTHER
STATES' LAWS; EACH OF SELLER PARTIES NEVERTHELESS WAIVES, FOR ITSELF AND EACH
AFFILIATE, AND ANY ALL DEFENSES ARISING UNDER ANY OF SUCH STATUES OR ANY OTHER
DEFENSES THAT ARE OR MAY BE AVAILABLE TO GUARANTORS OR SECURED PARTIES UNDER ANY
APPLICABLE LAW, INCLUDING WITHOUT LIMITATION THOSE ARISING BY VIRTUE OF ANY ACT
OR OMISSION OF SELLER OR ANY RELEASED PARTY OR OTHER PERSON INCLUDING WITHOUT
LIMITATION THOSE LISTED IN THE ABOVE SECTIONS OF THE CCC AND CCP. EACH OF SELLER
PARTIES FURTHER REPRESENTS AND WARRANTS THAT (A) ITS WAIVERS HEREIN OF ALL
RIGHTS, BENEFITS, PROTECTIONS AND DEFENSES THAT MAY BE AVAILABLE UNDER OR BY
VIRTUE OF THE ABOVE LISTED SECTIONS OF THE CCC AND CCP AND ALL OTHER WAIVERS
HEREIN ARE EXPLICIT, KNOWING WAIVERS, (B) IT HAS EITHER OBTAINED THE ADVICE OF
COUNSEL OR HAS HAD THE OPPORTUNITY TO OBTAIN SUCH ADVICE IN CONNECTION WITH THE
TERMS AND PROVISIONS OF THIS AGREEMENT, (C) BY EXECUTING THIS AGREEMENT, IT IS
WAIVING CERTAIN RIGHTS AS OTHERWISE SET FORTH HEREIN TO WHICH IT MAY OTHERWISE
BE ENTITLED BY LAW, AND (D) IT IS NOT RELYING UPON ANY STATEMENTS OR
REPRESENTATIONS OF ANY OF THE RELEASED PARTIES OR OF SELLER AND THAT SUCH
STATEMENTS OR REPRESENTATIONS, IF ANY, ARE OF NO FORCE OR EFFECT AND ARE FULLY
SUPERSEDED BY THIS AGREEMENT. EACH OF THE RELEASING PARTIES FURTHER WAIVES ALL
RIGHTS AND DEFENSES THAT SUCH RELEASING PARTY MAY HAVE BECAUSE THE SELLER'S
OBLIGATIONS ARE SECURED BY REAL PROPERTY. THIS MEANS, AMONG OTHER THINGS: (A)
PURCHASER PARTIES MAY COLLECT FROM ANY OF SELLER PARTIES ANY AMOUNTS DUE UNDER
OR WHICH ARE RECOVERABLE BECAUSE OF A BREACH OF THIS AGREEMENT WITHOUT FIRST
FORECLOSING ON ANY REAL OR PERSONAL PROPERTY COLLATERAL OF SELLER; (B) IF THE
PURCHASER PARTIES FORECLOSE ON ANY REAL PROPERTY COLLATERAL PLEDGED BY THE
SELLER: (i) THE AMOUNT OF THE OBLIGATIONS MAY BE REDUCED ONLY BY THE PRICE FOR
WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE SALE, EVEN IF THE COLLATERAL IS
WORTH MORE THAN THE SALE PRICE; (ii) PURCHASER PARTIES MAY COLLECT SUCH AMOUNTS
FROM THE SELLER PARTIES EVEN IF PURCHASER PARTIES, BY FORECLOSING ON REAL
PROPERTY COLLATERAL, HAVE DESTROYED ANY RIGHT SELLER PARTIES MAY HAVE TO COLLECT
FROM PURCHASER PARTIES OR SELLER. THIS IS AN UNCONDITIONAL AND IRREVOCABLE
WAIVER OF ANY RIGHTS AND DEFENSES SELLER PARTIES MAY HAVE BECAUSE SELLER'S
OBLIGATIONS ARE SECURED BY REAL PROPERTY, INCLUDING WITHOUT LIMITATION ANY
RIGHTS OR DEFENSES BASED UPON SECTION 580a, 580b, 580d, OR 726 OF THE CCP.

                                ARTICLE V

5.0     General Provisions

        5.01 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

        5.02 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

        5.03 Entire Agreement. This Agreement, along with the defined terms in
the Asset Purchase Agreement used herein, constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings with respect to the subject
matter hereof, both written and oral.

        5.04 Assignment. This Agreement shall not be assigned or delegated by
Seller Parties without the prior written consent of Purchaser Parties. Purchaser
Parties shall be free to assign their rights hereunder and such rights will
inure to all of the Released Parties and to the respective successors, assigns
and affiliates of any of the Released Parties.

        5.05 Amendment; Waiver. This Agreement may not be amended or modified
except by an instrument in writing signed by Xxxxx and Purchaser (which
instrument will bind EFI and SMIBV). Waiver of any term or condition of this
Agreement shall only be effective if in writing and shall not be construed as a
waiver of any subsequent breach or waiver of the same term or condition, or a
waiver of any other term or condition of this Agreement.

        5.06 Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
California applicable to contracts executed in and to be performed by residents
of California within that State, without reference to the conflict of laws
provisions thereof. As to matters arising out of or relating to this Agreement,
Xxxxx and EFI consent to submit to the jurisdiction of any federal or state
court located in the State of California and agree not to object to venue in the
federal or state courts located in Santa Xxxxx County, California.

        5.07 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

        5.08 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to each
party at the addresses indicated for such party on the signature page hereof (or
at such other address for a party as shall be specified by like notice).

        5.09 Termination. In the event that the Asset Purchase Agreement is
terminated by Purchaser in accordance with its terms, this Agreement shall then
terminate concurrently.

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed 
as of the date first written above by their respective officers thereunto duly 
authorized.

XXXXX ELECTRONICS INC.                   SUN MICROSYSTEMS, INC.

By:                                      By:
Name:                                    Name:
Title:                                   Title:

Address for Notice:                      Address for Notice:
___________________________              __________________________
___________________________              __________________________
___________________________              __________________________
 

EFI INTERNATIONAL, INC.                  SUN MICROSYSTEMS INTERNATIONAL, B.V.
By:                                      By:
Name:                                    Name:
Title:                                   Title:
Address for Notice:                      Address for Notice:
___________________________              __________________________
___________________________              __________________________
___________________________              __________________________


[XXXXX/EFI INDUCEMENT AGREEMENT SIGNATURE PAGE]

APPENDIX A

Copy of 
Xxxxx License Agreements
dated January 28, 1991

Exhibit A


                       JEC INDUCEMENT AGREEMENT


This JEC Inducement Agreement (this "Agreement") is made and entered into 
effective as of August __, 1997 (the "Effective Date") by and between Japan 
Energy Corporation, a Japanese corporation ("JEC"), on the one hand, and Sun 
Microsystems, Inc., a Delaware corporation ("Purchaser") and Sun Microsystems 
International, B.V., a Netherlands corporation ("SMIBV"), on the other hand.  
Purchaser and SMIBV are hereinafter sometimes collectively referred to as 
"Purchaser Parties".  JEC, EFI International, Inc., a Delaware corporation 
("EFI"), and Xxxxx Electronics Inc., an Ohio corporation ("Xxxxx") are 
hereinafter sometimes collectively referred to as "Seller Parties".  The term 
"Affiliates" shall mean any and all "Affiliates" (as defined for purposes of 
U.S. federal securities laws) of any of Seller Parties, and all successors and 
assigns of any of the Seller Parties or any of their respective Affiliates.

                          R E C I T A L S

A.      Purchaser, SMIBV and Encore Computer Corporation, a Delaware corporation
("Seller") have, concurrently herewith, entered into a certain Asset Purchase 
Agreement dated as of July 16, 1997 (the "Asset Purchase Agreement") pursuant 
to which Seller has agreed to sell to Purchaser Parties, and Purchaser Parties 
have agreed to purchase, certain assets associated with Seller's Storage 
Products Business.  JEC has reviewed, and understands, the provisions of the 
Asset Purchase Agreement.  All terms (whether in upper or lower case text or 
any combination thereof) defined in the Asset Purchase Agreement will have the 
same meanings assigned to such terms in the Asset Purchase Agreement, except 
as otherwise expressly defined herein; provided, however, that for purposes of 
this Agreement the term "material", when used herein with reference to any of 
Seller Parties or any Affiliate, shall mean any fact, event, action or failure 
to act, or other circumstance with respect to, involving or affecting any of 
Seller Parties or any Affiliate that: (i) involves in excess of $350,000 or 
that results or is reasonably likely to result in a financial loss of at least 
$350,000, (ii) involves any of the Purchased Assets or any Encumbrance on any 
of the Purchased Assets or (iii) is otherwise material.

B.      JEC's subsidiaries, Xxxxx and EFI, are principal stockholders and/or 
debt holders of Seller as of the Effective Date and no other Affiliate is a 
stockholder or debt holder of Seller.

C.      As a material inducement and consideration for Purchaser Parties to 
enter into the Asset Purchase Agreement and to pay the Purchase Price provided 
for therein, and as a material condition precedent to Purchaser Parties' 
obligations to consummate the transactions contemplated by the Asset Purchase 
Agreement, JEC has agreed to enter into and to perform its obligations under 
this Agreement and to be bound by the terms of this Agreement.

NOW THEREFORE, as a material inducement to Purchaser Parties to enter into, to 
consummate the transactions contemplated by, the Asset Purchase Agreement, and 
in consideration of the mutual agreements and promises made herein, the 
parties hereto, intending to be legally bound, hereby agree as follows:

                              ARTICLE I

1.0     Representations and Warranties.  JEC hereby represents and warrants to 
purchaser Parties that all statements in the following subparagraphs of this 
Section 1.0 are true and correct:

        1.01 Organization and Good Standing. JEC is a corporation duly
organized, validly existing and in good standing under the laws of Japan and has
the corporate power and authority to own, operate and lease its properties and
to carry on its business as now conducted and as proposed to be conducted.

        1.02 Authorization and Validity. JEC has all necessary right, corporate
power, legal capacity and authority to enter into, execute and deliver this
Agreement and to perform all of its covenants, agreements and obligations under
this Agreement. This Agreement has been duly executed and delivered by JEC and
will constitute a legal, valid and binding obligation of JEC enforceable against
it in accordance with its terms. The execution, delivery and performance by JEC
of this Agreement has been duly and validly approved and authorized by all
necessary corporate action on the part of JEC.

        1.03 No Conflict. The execution and delivery of this Agreement by JEC
and the performance of this Agreement by JEC do not and will not (a) breach,
violate or conflict with the certificate of incorporation or bylaws or other
applicable charter documents of JEC, in each case as amended to date, (b)
conflict with or violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to JEC, (c) result in any
breach or violation of, or constitute a default (or event which with the giving
of notice or lapse of time, or both, would become a breach, violation or
default) under, or give to JEC or others any rights of termination, amendment,
acceleration or cancellation of, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument to
which JEC is a party or is bound or by which any Purchased Assets are bound or
affected or (d) result in the creation of any Encumbrance on any of the
Purchased Assets in favor of JEC. As of the Effective Date and as of the
Closing, no Affiliate, other than Xxxxx and EFI, is or will be a stockholder
and/or debt holder of Seller or has or will have any other rights against Seller
or any of the Purchased Assets.

        1.04 Consents and Approvals. The execution and delivery of this
agreement by JEC do not, and the performance of this Agreement by JEC will not,
require any consent, approval, authorization or other action by, or filing with
or notification to, any court or governmental or regulatory authority or any
other third party.

        1.05 Intracompany Agreements; Absence of Unwaived Breach. The Purchased
Assets are, or as of immediately prior to the Closing the Purchased Assets will
be, free of any and all Encumbrances or other rights in favor of JEC. No event
or right exists that gives or would give JEC any right as to any of the
Purchased Assets (except for rights that were either waived, released or
terminated effective as of the Closing) or any right to pursue any claim against
Purchaser Parties after the Closing. The sale and transfer of the Purchased
Assets and the consummation of the other transactions and actions contemplated
by the Asset Purchase Agreement will not violate, breach or cause any default,
event of default, or event which with the passage of time would constitute a
default, under any agreement or understanding to which JEC and Seller are
parties.

                            ARTICLE II

2.0     Covenants

        2.01    Covenant Not to Compete.  

                (a) Non-Competition Covenant. Subject to the following
provisions of this Section 2.01, as a material inducement and consideration for
Purchaser Parties to enter into the Asset Purchase Agreement, for a period of
five (5) years from and after the Closing Date (such five (5) year period of
time being hereinafter called the "Restricted Period"), JEC will not, within the
Restricted Area (as defined below) carry on any business, or own (in whole or in
part), operate, advise, assist or lend funds to or invest funds in, any person,
firm, partnership, limited liability company, business, corporation or other
entity or enterprise that competes, in any material respect, with the Storage
Products Business (the "Restricted Business"). As used herein, the term
"Restricted Area" means any state of the United States of America or any
geographic area within any other country in which Purchaser or SMIBV or their
respective affiliates, directly or indirectly, at any time carries on or engages
in business. During the Restricted Period, JEC further agrees not to interfere
with, disrupt or attempt to disrupt or otherwise adversely affect the
relationship between Purchaser or SMIBV and any third party, including without
limitation any customer, supplier or employee of Purchaser or SMIBV, with
respect to the Restricted Business.

                (b) Non-Solicitation. For a period of three (3) years after the
Closing Date, JEC shall not, directly or indirectly, solicit any Employee hired
by Purchaser or any affiliate of Purchaser to (i) become employed by JEC or any
Affiliate or (ii) terminate such Employee's employment with or services to
Purchaser or any affiliate of Purchaser.

                (c) Injunctive Relief; Interpretation. In the event of a breach
of any of the covenants set forth in this Section 2.01, Purchaser and SMIBV will
each be entitled to an injunction against JEC restraining such breach in
addition to any other remedies available at law or in equity. In the event that
any covenant in this Section 2.01 is held to be invalid, illegal or
unenforceable by any court of competent jurisdiction or any other governmental
authority in any respect, it is agreed and understood that such covenant will
not be voided but rather will be construed to impose limitations upon JEC's
activities no greater than allowable under then applicable law.

                (d) JEC. As used in this Section 2.01, the term "JEC" includes
in addition to JEC itself, each person (as defined in the Asset Purchase
Agreement) 50% or more of the equity interests of which is beneficially owned by
JEC (within the meaning of the Securities Act) or that is otherwise controlled
by JEC (each a "JEC Subsidiary") and all directors, officers, employees,
stockholders, agents, subsidiaries and Affiliates of JEC or any JEC Subsidiary
acting on behalf of, or at the direction of or with the direct or indirect
assistance of JEC or any JEC Subsidiary.

        2.02 Further Actions to Avoid Breach of Intracompany Agreements. JEC
will take all actions required on its part (including without limitation the
filing of termination statements with respect to all UCC-1 Financing Statements,
and the termination of any security agreements, describing or with respect to
any of the Purchased Assets) to ensure that (i) no breach or default under any
agreement between JEC and Seller will result from execution or performance of
the Asset Purchase Agreement or any of the transactions contemplated thereby;
(ii) as of the Closing, none of the Purchased Assets shall be encumbered by any
Encumbrance arising under any agreement between JEC and Seller or be subject to
any other interest or right of JEC created by any agreement between JEC and
Seller; and (iii) title to all the Purchased Assets shall, when transferred from
Seller to Purchaser Parties at Closing, be free and clear of any right or
interest of JEC or any JEC Subsidiary.

        2.03 Fairness of Consideration. JEC hereby acknowledges and stipulates
as follows and agrees never to assert to the contrary at any time or in any
circumstances: (i) the consideration paid and agreements made by Purchaser
Parties under the Asset Purchase Agreement for the Purchased Assets represent
fair and reasonably equivalent consideration for the Purchased Assets, (ii)
Seller is not entering into the Asset Purchase Agreement or any Ancillary
Agreement with the intent to defraud, delay or hinder its creditors and the
consummation of the transactions contemplated by the Asset Purchase Agreement
and the Ancillary Agreements will not have any such effect; and (iii) the
transactions contemplated in the Asset Purchase Agreement or any Ancillary
Agreements will not give rise to any right or ability of JEC or any JEC
Subsidiary to assert any claim whatsoever against any Purchaser Party or any of
the Purchased Assets in the hands of any Purchaser Party or any Purchaser
Party's successors and assigns following the Closing or to in any way challenge
the sale of the Purchased Assets to Purchaser Parties under the Asset Purchase
Agreement.

        2.04 Opinion of Counsel. At the Closing, counsel to JEC will provide a
legal opinion from its Japanese counsel as to the truth of the statements in
Sections 1.01, 1.02, 1.03 and 1.04 and as to the enforceability of all
provisions of this Agreement (except Section 3.02 hereof, which can be excluded
from any such opinion) against JEC.

        2.05 Guaranty of Xxxxx Performance; Knowing Waiver of Surety Defenses.

                (a) Guaranty. JEC unconditionally guarantees to Purchaser
Parties all the obligations of Xxxxx under the Xxxxx/EFI Inducement Agreement
dated July 17, 1997 (the "Xxxxx Agreement") among Xxxxx, EFI, Purchaser and
SMIBV. This guaranty is a guaranty of performance and not a guaranty of
collection. If Xxxxx fails to fulfill, or violates any of its obligations under
the Xxxxx Agreement, (a) if JEC is able to fulfill the obligation or cause the
obligation to be fulfilled, JEC will do so immediately on demand by Purchaser,
and (b) if JEC is not able to fulfill the obligation or cause the obligation to
be fulfilled, JEC will be liable to each of Purchaser Parties for any damages it
suffers because of the failure of Xxxxx to fulfill its obligations under the
Xxxxx Agreement as fully as though JEC were the party to the Xxxxx Agreement
which had failed to fulfill the obligations.

                (b) Waivers. JEC waives any requirement of notice, presentment
or other diligence by Purchaser Parties with regard to this guaranty. JEC agrees
that Purchaser Parties may enforce this guaranty against JEC without making any
effort to obtain remedies against Xxxxx because of Xxxxx'x failure to fulfill or
violation of its obligations under the Xxxxx Agreement. JEC agrees that this
guaranty will remain in force despite any amendments to the Xxxxx Agreement,
whether or not those amendments increase the obligations of Xxxxx, and this
guaranty will not be affected by any agreement by Purchaser Parties to waive any
obligation of Xxxxx, or to defer the time by which Xxxxx is required to fulfill
any obligation under the Xxxxx Agreement, except to the extent that because of a
waiver or extension, Xxxxx is not, or is not yet, required to fulfill particular
obligations under the Xxxxx Agreement. The obligations under this guaranty shall
remain in full force and effect and JEC shall not be exonerated or discharged by
reason of any action or circumstance that might constitute a defense available
to, or a legal or equitable discharge of, any surety, pledgor or guarantor. JEC
hereby affirms and acknowledges the knowing and explicit waivers made on its
behalf for the benefit of Purchaser Parties in Section 4.05 of the Xxxxx
Agreement.

                         ARTICLE III

3.0     General Release; Covenant Not to Xxx; Waiver of Defenses.

                3.01 General Release by JEC. JEC does hereby, for itself and its
respective Affiliates, officers, directors, stockholders, employees, agents,
legal successors and assigns (collectively, the "Releasing Parties"), release
and absolutely and forever discharge each of Purchaser Parties and all
affiliates (as defined under the Securities Act but excluding shareholders of
Purchaser) thereof and each of the respective shareholders, officers, directors,
employees, agents, attorneys, legal successors and assigns of any of Purchaser
Parties or any affiliate (as defined immediately above) thereof (collectively,
the "Released Parties"), of and from any and all claims, demands, damages,
debts, liabilities, accounts, reckonings, obligations, costs, expenses, liens,
actions and causes of action of every kind and nature whatsoever, whether now
known or unknown, suspected or unsuspected, which the Releasing Parties now
have, own or hold or at any time heretofore ever had, owned or held or could,
shall or may hereafter have, own or hold against the Released Parties (or any of
them) based upon or arising out of any matter, cause, fact, thing, act or
omission whatsoever occurring or existing at any time to and including the date
hereof, or arising on or after the date hereof, in connection with the facts,
circumstances and events relating to the Purchased Assets or to any of the
transactions contemplated by the Asset Purchase Agreement or any of the
Ancillary Agreements or any of the Intracompany Agreements (as defined in the
Xxxxx/EFI Inducement Agreement of even date herewith) or any agreement between
JEC and Seller or any Liability or obligation thereunder (collectively, together
with the enumerated examples below, the "Released Matters"), including without
limitation any claim or allegation by any of the Releasing Parties or any other
party that: (i) any of the Released Parties is on any theory liable for any of
the debts or obligations or Liabilities of Seller not expressly assumed by
Purchaser under the Asset Purchase Agreement (including without limitation any
Liability arising under any of the Intracompany Agreements or any agreement
between JEC and Seller); (ii) any of the Released Parties is on any theory
liable to any of the Releasing Parties for any claim, cause of action, loss,
damages or other amount whatsoever, as a result of Purchaser Parties' purchase
of the Purchased Assets; (iii) any of the Releasing Parties has any right in,
claim as to or Encumbrance on or with respect to, any of the Purchased Assets;
or (iv) the purchase of the Purchased Assets under the Asset Purchase Agreement
constituted a fraudulent conveyance, a fraudulent transfer, or a preference or
was otherwise improper, unlawful or violative of any rights of any of the
Releasing Parties under the Intracompany Agreements or any agreement between JEC
and Seller or otherwise (all of which foregoing matters are hereinafter referred
to as and included within the "Released Matters"). It is the intention of JEC
that the release set forth above in this Section 3.01 shall be effective as a
full and final accord and satisfaction and general release by each of the
Releasing Parties of and from all claims now existing or hereafter arising
against any of the Released Parties relating to any of the Released Matters.

                3.02 Waiver of Unknown Claims. In furtherance of the intentions
set forth herein, JEC acknowledges, for itself and each of the other Releasing
Parties, that it is familiar with Section 1542 of the Civil Code of the State of
California (and similar laws of Japan), which provides as follows:

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

JEC, for itself and each of the other Releasing Parties, hereby waives and 
relinquishes any right or benefit which it has or may have under Section 1542 
of the Civil Code of the State of California or any similar provision of the 
statutory or nonstatutory law of any other jurisdiction (including without 
limitation Japan), to the full extent that it may lawfully waive all such 
rights and benefits pertaining to the subject matter of this Agreement.  In 
connection with such waiver and relinquishment, JEC acknowledges that it is 
aware that it or its attorneys or accountants may hereafter discover claims or 
facts in addition to or different from those which it now knows or believes to 
exist with respect to the subject matter of this Agreement or of the Asset 
Purchase Agreement or the Released Parties, but that it is its intention 
hereby fully, finally and forever to settle and release, for itself and each 
of the other Releasing Parties, all of the Released Matters which now exist, 
may exist or heretofore have existed or which arise on or after the date 
hereof as to all of the Released Parties.  In furtherance of this intention, 
the release herein given by JEC, for itself and each of the other Releasing 
Parties, shall be and remain in full force and effect as a full and complete 
release, and operate as a full release of claims hereafter arising, 
notwithstanding the discovery or existence of any such additional or different 
claims or facts.

        3.03 Authorized Release. JEC warrants and represents that it is the sole
and lawful owner of all right, title and interest in and to all of the
respective Released Matters as to which it is the Releasing Party and that it
has not heretofore voluntarily, by operation of law or otherwise, assigned or
transferred (or purported to assign or transfer) to any person whomsoever any
Released Matter or any part or portion thereof of any claim, demand or right
against any Released Party.

        3.04 Covenant Not to Xxx. JEC hereby agrees not to xxx or otherwise
bring any claim against any of the Released Parties on or with respect to any of
the Released Matters or against or with respect to any of the Purchased Assets,
in each case whether by way of complaint, cross-complaint, cross claim, set off,
defense or by any other means or manner in any court, other tribunal or
otherwise. JEC hereby further agrees not to take any action against or with
respect to any of the Purchased Assets utilizing any rights JEC may have or
hereafter acquire as a creditor, secured creditor or stockholder of Seller,
including without limitation any foreclosure action or any action permitted to
be taken by a secured party under the Uniform Commercial Code as adopted in any
jurisdiction or any action permitted to be taken by a lienholder or judgment
creditor under applicable state laws (including without limitation, attachment
and garnishment actions and imposition of or execution upon any lien).

                            ARTICLE IV

4.0     General Provisions

        4.01 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

        4.02 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.

        4.03 Entire Agreement. This Agreement, along with the defined terms in
the Asset Purchase Agreement used herein, constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings with respect to the subject
matter hereof, both written and oral.

        4.04 Assignment. This Agreement shall not be assigned or delegated by
JEC without the prior written consent of Purchaser Parties. Purchaser Parties
shall be free to assign their rights hereunder and such rights will inure to all
of the Released Parties and to the respective successors, assigns and affiliates
of the Released Parties.

        4.05 Amendment; Waiver. This Agreement may not be amended or modified
except by an instrument in writing signed by JEC and Purchaser (which instrument
will be binding on SMIBV). Waiver of any term or condition of this Agreement
shall only be effective if in writing and shall not be construed as a waiver of
any subsequent breach or waiver of the same term or condition, or a waiver of
any other term or condition of this Agreement.

        4.06 Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
California applicable to contracts executed in and to be performed by residents
of California within that State, without reference to the conflict of laws
provisions thereof. As to matters arising out of or relating to this Agreement,
JEC consents to submit to the jurisdiction of any federal or state court located
in the State of California and agrees not to object to venue in the federal or
state courts located in Santa Xxxxx County, California.

        4.07 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

        4.08 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to each
party at the addresses indicated for such party on the signature page hereof (or
at such other address for a party as shall be specified by like notice).

        4.09 Termination. In the event that the Asset Purchase Agreement is
terminated by Purchaser in accordance with its terms, this Agreement shall then
terminate concurrently.


[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed 
as of the date first written above by their respective officers thereunto duly 
authorized.

JAPAN ENERGY CORPORATION           SUN MICROSYSTEMS, INC.
By:                                By:
Name:                              Name:
Title:                             Title:

Address for Notice:                Address for Notice:
___________________________        ___________________________
___________________________        ___________________________
___________________________        ___________________________



[SIGNATURE PAGE TO JEC INDUCEMENT AGREEMENT]






Exhibit B


                          July 14, 1997



The Board of Directors
Encore Computer Corporation
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000


Dear Members of the Board:


          We understand that Encore Computer Corporation (the "Company"), Sun
Microsystems, Inc. ("Sun") and Sun Microsystems International, B.V. ("SMIBV") 
propose to enter into an asset purchase agreement ("Agreement") pursuant to 
which Sun and SMIBV will acquire certain assets associated with, and assume 
certain liabilities of, the storage business of the Company (the "Storage 
Business") for (i) $150 million in cash (the "Closing Payment"), payable at 
the closing of the Acquisition Transaction (as defined below) (the "Closing"), 
and (ii) $35 million in cash (the "Second Payment" and, together with the 
Closing Payment, the "Cash Payment"), payable on July 1, 1998 (the 
"Acquisition Transaction").  The terms of the Acquisition Transaction are more 
fully described in the Agreement.

          You have requested our opinion as to the fairness to the Company, 
from a financial point of view, of the Cash Payment to be paid for the Storage 
Business in the Acquisition Transaction.  In connection with this opinion, we 
have:  

     (i)       reviewed the financial terms and conditions of a draft dated 
               July 10, 1997 of the Agreement;

     (ii)      analyzed certain historical business and financial information
               relating to the Company and the Storage Business;

     (iii)     reviewed certain financial forecasts and other data provided to 
               us by the Company relating to its business and the Storage 
               business;

     (iv)      conducted discussions with members of the senior management of
               the Company and Xxxxx Electronics, Inc. ("Xxxxx"), the 
               principal stockholder of the Company, with respect to (A) each 
               of the Company's and the Storage Business' business and 
               prospects, (B) recent efforts undertaken by the Company and 
               Xxxxx to solicit third party indications of interest in either 
               entering into an OEM relationship with the Company or acquiring 
               the Company or the Storage Business, (C) the unwillingness of 
               Xxxxx to continue to provide financial support to the Company 
               and (D) the strategic rationale for the Acquisition Transaction 
               and alternatives thereto reasonably available to the Company;

     (v)       reviewed public information with respect to certain other 
               companies in lines of businesses we believe to be generally 
               comparable to the business of the Storage Business;

     (vi)      reviewed the financial terms of certain business combinations 
               and acquisitions involving companies in lines of business we 
               believe to be generally comparable to the Storage Business;

     (vii)     reviewed the historical stock prices and trading volumes of the
               shares of common stock of the Company; and

     (viii)    conducted such other financial studies, analyses and 
               investigations as we deemed appropriate.

          We have relied upon the accuracy and completeness of the foregoing
financial and other information, and have not assumed any responsibility for 
any independent verification of such information or any independent valuation 
or appraisal of any of the assets, or technology of the Company or the Storage 
Business.  With respect to the financial forecasts referred to above, we have 
assumed that they have beenreasonably prepared on bases reflecting the best 
currently available estimates and judgments of management of the Company as to 
the future financial performance of the Company and the Storage Business.  We 
assume no responsibility for and express no view as to such forecasts or the 
assumptions on which they are based.  In addition, we express no 
recommendation or opinion as to how stockholders of the Company should vote at 
the stockholders' meeting held in connection with the Acquisition Transaction.

          For the purposes of this opinion, we have assumed that (i) the full 
amount of the Closing Payment shall be paid to the Company at the Closing and 
(ii) the full amount of Second Payment shall be paid to the Company on July 1, 
1998.

          Further, our opinion is necessarily based on economic, monetary, 
market and other conditions as in effect on, and the information made 
available to us as of, the date hereof.

          In rendering our opinion, we have assumed that the Acquisition
Transaction will be consummated on the terms described in the draft of the 
Agreement that we reviewed, without any waiver of any material terms or 
conditions by the Company.  We were not requested to, and did not, solicit 
third party indications of interest in acquiring the Company or the Storage 
Business.  In addition, we did not participate in the negotiation of the 
Agreement or the Memorandum of Understanding dated May 27, 1997 among the 
Company, Sun and SMIBV.

          Genesis Merchant Group Securities LLC is acting as financial advisor 
to the Company in connection with the Acquisition Transaction and will receive 
a fee for our services.

          Our engagement and the opinion expressed herein were prepared for the
use of the Company's Board of Directors and do not constitute a recommendation
to Encore's stockholders as to how they should vote at the stockholders'
meeting in connection with the Acquisition Transaction.  It is understood that
this letter may not be disclosed or otherwise referred to without our prior
consent, which consent will not be unreasonably withheld.

          Based on and subject to the foregoing, we are of the opinion that, 
as of the date hereof, the Cash Payment to be paid for the Storage Business in 
the Acquisition Transaction is fair to the Company from a financial point of 
view.

                         Very truly yours,




                         GENESIS MERCHANT GROUP SECURITIES LLC

Exhibit C                                                      Memorandum
                                                                            
                                                                            
                                                                            
To             Xx Xxxxx, Encore Computer                         Private
From/Location  Xxxx Xxxxxxxx, Price Waterhouse
Date           August 19, 1997
Re             Liquidation Analysis Assumptions



The  following are the major assumptions associated with the Encore Computer
Liquidation Analysis:

Accounts  Receivable:   60.5% of receivables are for equipment  and  have  a
recovery  rate of 75% and 39.5% of receivables are for service  and  have  a
recovery  rate of 25%.  The split between equipment and service is based  on
YTD revenues.

Proceeds  From Foreign Liquidations:  Includes residual equity  amounts  and
intercompany  receivables paid from the liquidation of foreign  subsidiaries
pursuant to regulations and procedures in respective countries.

Inventories:   Different  recovery rates were used for  different  inventory
groups.   Typically, the less proprietary the item, the higher the  recovery
rate.   15% was applied to gross raw materials, 12% was applied to purchased
sub-assemblies, and 10% was applied to work in process and finished goods.

Fixed  Assets:  Includes land, buildings, machinery and equipment, furniture
and  fixtures and spares inventory.  The recovery for land and  building  is
based  on 90% of low end of appraisals net of a 6% cost for commissions  and
fees.   Recovery  rates for other fixed assets are based on  estimates  from
liquidators of like assets.

Other  Assets:   Other assets include:  pre-paid expenses and deposits,  the
net value of capitalized software used to support the business (e.g. payroll
and  accounting systems) and patents and licenses.  A 40% recovery rate  was
applied to all "other assets" not including patents and licenses which  were
valued at $2,600,000.

Administrative Claims:  Includes Trustee's fees based on formula  stipulated
in  Bankruptcy  Code and professional/liquidation fees based  on  experience
with liquidation of similar organizations.

Secured  Claims:   It is assumed that the holder of the mortgage  will  have
sufficient  collateral  to  recover  100%  of  the  value  of  the   balance
outstanding.  The balance of proceeds available to secured creditors will be
paid  towards  the outstanding principal and accrued interest of  the  notes
held by Xxxxx.


Priority  Claims:   It  is assumed that priority claims  per  employee  will
amount  to  $2,500  which  approximately equals  one  pay  period  including
benefits and accrued vacation.  The amount of pre-petition taxes is equal to
the amount of accrued tax expense.

Unsecured  Claims:   Includes  accounts payable,  accrued  expenses  net  of
accrued  taxes  and  accrued interest payable to Xxxxx,  and  lease/purchase
obligations.   Lease  obligations are based on the  maximum  of  one  year's
payment or 15% of future payments (capped at three years).



Encore Computer Corporation
Summary of U.S. Chapter 7 Liquidation Analysis
Assuming Contemporaneous Liquidation of Foreign Subsidiaries
As of June 29, 1997
(In US Dollars)

                                             Amount             Estimated
                                         As of 6/29/97      Liquidation Value
 
Assets and Proceeds

Total Cash & Equivalents                       330,807         330,807    100%

Accounts Receivable                          2,210,046       1,221,050     55%

Proceeds from Foreign Liquidations                   0         708,929

Inventory                                    6,288,051       4,232,431     67%

Fixed Assets                                28,883,328      14,825,338     51%

Other Assets                                 1,118,786       3,047,114    272%

Total Proceeds                              38,831,018      24,365,669     63%


Liabilities & Claims

Administrative Claims                        1,755,000       1,755,000    100%

Secured Claims
  Notes Payable Xxxxx (incl. Acc. Interest) 71,438,717      22,044,978     31%
  Morgage Payable                              565,690         565,690    100%

                                            72,004,407      22,610,668     31%

Priority Claims                              2,406,500               0      0%

Unsecured Claims                            25,019,747               0      0%



                          XXXXX MODIFICATION AGREEMENT

         This Xxxxx Modification Agreement (this "AGREEMENT") is made and
entered into as of November 24, 1997 (the "EFFECTIVE DATE") among Xxxxx
Electronics Inc., an Ohio corporation ("XXXXX") and Sun Microsystems, Inc., a
Delaware corporation ("PURCHASER").

                                 R E C I T A L S

         A. The parties hereto have entered into a certain Xxxxx/EFI Inducement
Agreement effective as of July 17, 1997 (the "INDUCEMENT AGREEMENT"). Other
parties to the Inducement Agreement are EFI International, Inc., a Delaware
corporation ("EFI") and Sun Microsystems International, B.V., a Netherlands
corporation ("SMIBV"). Section 5.05 of the Inducement Agreement provides that it
may be amended by an instrument in writing signed by Purchaser and Xxxxx, and
that such instrument will bind EFI and SMIBV.

         B. Prior to November 24, 1997 various lawsuits, including those
identified on EXHIBIT A hereto, were filed in the Delaware Chancery Court
against Xxxxx, Seller and Seller's directors relating to the transaction
contemplated by the Asset Purchaser Agreement (the "FILED LITIGATION"). For
purposes of this Agreement, the term "LITIGATION" shall mean and include any of
the following, whether filed prior to or after the Closing: (i) the Filed
Litigation, (ii) any additional lawsuits filed against Xxxxx, Seller and/or
Seller's officers or directors (including by or on behalf of stockholders of
Encore or Encore itself) challenging or otherwise relating to (A) the
transaction contemplated by the Asset Purchase Agreement ("TRANSACTION"), (B)
the use or distribution of Transaction proceeds, (C) the agreement between Xxxxx
and Encore dated July 17, 1997 relating to the use and distribution of
Transaction proceeds, (D) the process of soliciting stockholder approval of the
Transaction, or (E) the Encore directors' exercise of fiduciary duties in
connection with the Transaction and/or such Xxxxx/Encore agreement, (iii) any
actions seeking full or partial rescission of the Transaction, and (iv) any
lawsuits filed against any of the Purchaser Parties by or on behalf of
stockholders of Encore or derivatively on behalf of Encore itself relating to
the Transaction, including without limitation those seeking full or partial
rescission of the Transaction, rescissory damages or other damages, in each
case, as such lawsuits are originally filed, later amended, or later
consolidated with each other or with other suits constituting Litigation.

         C. The filing and pendency of the Litigation could preclude the closing
condition set forth in Section 8.02(e) of the Asset Purchase Agreement from
being satisfied. To induce Purchaser and SMIBV to waive this Closing condition
and close the Transaction contemplated by the Asset Purchase Agreement despite
the pendency of any Litigation at the time scheduled for Closing, Xxxxx is
willing to agree to the modifications of the Inducement Agreement provided for
below.

         D. Accordingly, pursuant to the provisions of Section 5.05 of the
Inducement Agreement, Xxxxx and Purchaser agree, and EFI and SMIBV are deemed to
agree, to enter into this Agreement to modify and amend the Inducement Agreement
as provided herein.



         NOW THEREFORE, in consideration of the mutual agreements set forth
herein, the parties hereby agree as follows:

         1. CERTAIN TERMS. Any capitalized terms not defined in this Agreement
shall have the same meanings defined for such terms in the Inducement Agreement.

         2. AMENDMENT OF INDEMNITY AND INDEMNITY CAP PROVISIONS.

         (a) The reference in Section 2.01 of the Inducement Agreement to
"Purchaser Indemnities" shall be revised to read "Purchaser Indemnitees" and
Section 2.02 of the Inducement Agreement shall be amended to add the following
clauses (n) and (o) at the end thereof (WITH MODIFIED TEXT BEING HIGHLIGHTED IN
BOLD TEXT FORMAT):

                  (N) THE LITIGATION (AS DEFINED IN THAT CERTAIN XXXXX
         MODIFICATION AGREEMENT DATED AS OF NOVEMBER 24, 1997 AMONG XXXXX AND
         PURCHASER (THE "XXXXX MODIFICATION AGREEMENT")) (INCLUDING WITHOUT
         LIMITATION ANY DAMAGES, ANY LEGAL FEES OR OTHER COSTS TO THE EXTENT
         PROVIDED BELOW, OR OTHER LOSS INCURRED BY ANY OF PURCHASER INDEMNITEES
         IN CONNECTION WITH THE LITIGATION AND ALL LOSS AT ANY TIME ARISING AS A
         RESULT OF THE LITIGATION DUE TO ANY FULL OR PARTIAL RESCISSION OF, OR
         INJUNCTION AGAINST, OR AWARD OF RESCISSORY DAMAGES IN LIEU OF
         RESCISSION OF, OR OTHER AWARD OF DAMAGES IN CONNECTION WITH, ANY OF THE
         FOLLOWING: (X) THE PURCHASE BY PURCHASER PARTIES OF THE PURCHASED
         ASSETS OR ANY PORTION THEREOF PURSUANT TO THE ASSET PURCHASE AGREEMENT
         OR (Y) THE DISTRIBUTION OF THE PROCEEDS THEREFROM TO OR BY SELLER,
         XXXXX, ANY CREDITOR OR EMPLOYEE OR SHAREHOLDER OF ENCORE OR THE ESCROW
         AGENT APPOINTED PURSUANT TO THE ESCROW AGREEMENT CALLED FOR BY THE
         MODIFICATION AGREEMENT DATED AS OF NOVEMBER 24, 1997 BETWEEN SELLER,
         PURCHASER AND SMIBV (THE "MODIFICATION AGREEMENT"). UNLESS PURCHASER
         INDEMNITEES ARE NAMED AS PARTIES TO THE LITIGATION, THEY WILL NOT BE
         ENTITLED TO INDEMNIFICATION FOR LEGAL FEES OR OTHER COSTS INCURRED BY
         THEM IN CONNECTION WITH THE LITIGATION, EXCEPT THAT IF PURCHASER
         INDEMNITEES REASONABLY BELIEVE THERE IS A REALISTIC RISK THAT THE
         PURCHASE BY PURCHASER PARTIES OF THE PURCHASED ASSETS OR A PORTION
         THEREOF WILL BE RESCINDED OR THAT PURCHASER INDEMNITEES WILL BE
         REQUIRED TO PAY RESCISSORY OR OTHER DAMAGES AS A RESULT OF THE
         LITIGATION, THEY WILL BE INDEMNIFIED FOR LEGAL FEES AND OTHER COSTS
         THEY REASONABLY INCUR WITH REGARD TO THE LITIGATION UP TO $50,000. IF
         PURCHASER PARTIES ARE NAMED AS PARTIES TO THE LITIGATION, THEY WILL BE
         ENTITLED TO BE INDEMNIFIED FOR ALL THE LEGAL FEES AND OTHER COSTS THEY
         REASONABLY INCUR WITH REGARD TO THE LITIGATION, INCLUDING LEGAL FEES
         AND OTHER COSTS THEY INCUR BEFORE THEY ARE MADE PARTIES TO THE
         LITIGATION.

                  (O) WITH RESPECT TO THE PROXY STATEMENT OF ENCORE COMPUTER
         CORPORATION MAILED TO ITS STOCKHOLDERS SEEKING APPROVAL OF THE
         TRANSACTION (AS DEFINED IN THE XXXXX MODIFICATION AGREEMENT), THE
         INCLUSION OF ANY UNTRUE STATEMENT OF A MATERIAL FACT OR THE OMISSION TO
         STATE ANY MATERIAL FACT 


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         REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
         THEREIN, IN LIGHT OF THE CIRCUMSTANCES IN WHICH THEY ARE MADE, NOT
         MISLEADING, OR THE FAILURE OF SUCH PROXY STATEMENT (OR OF THE TIMING OR
         MANNER OF DISTRIBUTION OF SUCH PROXY STATEMENT) TO COMPLY WITH THE
         REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND
         ALL RULES AND REGULATIONS PROMULGATED THEREUNDER AND THE GENERAL
         CORPORATION LAW OF THE STATE OF DELAWARE.

         (b) Section 2.04(b) of the Inducement Agreement shall be amended to
read in full as follows (WITH MODIFIED TEXT BEING HIGHLIGHTED IN BOLD TEXT
FORMAT):

                  (b) The aggregate loss recoverable by Indemnified Parties
         (considered together as a group) against Xxxxx under this Article II
         shall not exceed: (i) $185,000,000 in the aggregate; (ii) $185,000,000
         as to claims arising PRIOR TO OR in the First Contract Year; or (iii)
         $110,000,000 as to claims arising in the Second Contract Year
         (collectively, the "APPLICABLE CAP"). The "FIRST CONTRACT YEAR" and the
         "SECOND CONTRACT YEAR" are the two successive annual periods ending on
         the first and second anniversaries of the Closing Date, respectively. A
         claim shall be deemed to arise in a Contract Year if any of the
         material facts giving rise to such claim or any Loss resulting from
         facts asserted in such claim, first occurred or were first suffered in
         that Contract Year. Xxxxx shall have no liability under this Article II
         for any claims for indemnification hereunder first asserted at any time
         after the fourth (4th) anniversary of the Closing Date (with respect to
         claims or Loss relating to or arising from fraud or willful misconduct
         on the part of Xxxxx) or first asserted at any time after the third
         (3rd) anniversary of the Closing Date (as to any claims or Loss not
         relating to or arising from any fraud or willful misconduct on the part
         of Xxxxx) or for any claims not deemed to arise (as defined above)
         PRIOR TO OR in the First Contract Year or in the Second Contract Year.

         (c) Sections 2.04(c) and 2.04(d) of the Inducement Agreement shall be
amended to read in full as follows (WITH MODIFIED TEXT BEING HIGHLIGHTED IN BOLD
TEXT FORMAT):

                  (c) Notwithstanding the foregoing provisions of this Section
         2.04, the Applicable Cap shall not limit the amount of Xxxxx'x
         indemnity liability for, and Purchaser and any other Indemnified Party
         shall be entitled to recover from Xxxxx, any and all Loss arising from:
         (i) fraud or willful misconduct on the part of Xxxxx; (ii) any Loss
         resulting from any Seller Parties and/or any of their respective
         Affiliates (and/or any successors or assigns of any thereof to the
         extent such successors or assigns take any action whatsoever with
         respect to or in relation to any claim of any of the Seller Parties
         against Seller ("ASSIGNS"), instituting or causing to be instituted any
         Insolvency Action or any Insolvency Proceeding relating to Seller or
         any of Seller's assets at any time prior to the end of the Second
         Contract Year; (iii) any rescission of or injunction against the
         purchase by Purchaser Parties of the Purchased Assets pursuant to the
         Asset 


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         Purchase Agreement occurring PRIOR TO OR in the First Contract Year; or
         (iv) any Continuing Xxxxx Claims or the pursuit, collection or
         enforcement thereof by any Seller Party and/or any of its Affiliates or
         any Assigns; PROVIDED, HOWEVER, that in no event will Losses in excess
         of the Applicable Cap for which Purchaser Parties may be indemnified
         hereunder include special or consequential damages or lost profits (but
         this proviso will not apply to limit the types of Loss recoverable by
         any Purchaser Parties below the Applicable Cap).

                           (d) For purposes of this paragraph (d), the term
         "ENCORE LOSS" shall mean any Loss arising solely out of the matters
         described in Sections 2.02(c), (d), (e), (f), (g), (i), (k), (l) or (m)
         hereof or solely as a result of a breach of Section 1.09 hereof. Xxxxx
         shall not be required to provide indemnification for any Encore Loss to
         Purchaser Parties and other Indemnified Parties under this Article II
         unless and until the aggregate Encore Loss for which one or more
         Indemnified Parties seeks indemnification hereunder exceeds an
         aggregate of Five Hundred Thousand Dollars ($500,000) (the "XXXXX
         BASKET"), in which event Xxxxx shall be liable to indemnify the
         Purchaser Parties and the Indemnified Parties for all Encore Loss,
         including any Encore Loss within the Xxxxx Basket. There shall be no
         Xxxxx Basket or other "basket" of any amount with respect to any Loss
         other than an Encore Loss. Notwithstanding the foregoing, Purchaser and
         any other Indemnified Party shall be entitled to recover from Xxxxx any
         Loss, regardless of the Xxxxx Basket, arising from any of the matters
         described in clauses (i), (ii), (iii), or (iv) of Section 2.04(c) above
         or arising from the failure of any representation or warranty of Seller
         contained in Article VII of the Asset Purchase Agreement to be true and
         correct as of the Closing or arising from the fraud or willful
         misconduct on the part of Seller OR ARISING FROM THE MATTERS DESCRIBED
         IN SECTION 2.02(N) HEREOF OR ARISING FROM THE MATTERS DESCRIBED IN
         SECTION 2.02(O) HEREOF.

          (d) The following new Section 2.05 shall be added to the Inducement
Agreement:

                  2.05 AGREEMENT NOT TO DELAY. THE SELLER PARTIES WILL NOT SEEK
         OR MOVE TO DELAY ANY LITIGATION-RELATED ACTION TO RESCIND THE PURCHASE
         OF THE PURCHASED ASSETS FOR THE SOLE PURPOSE OF DEFERRING THE CONTRACT
         YEAR IN WHICH THE RESCISSION TAKES PLACE.

         3. TECHNOLOGY TRANSFER AND BONUS. Purchaser believes that it may be
critical to Purchaser's ability to utilize and further develop and integrate the
Storage Products that a certain employee of Seller or one of its subsidiaries
(the "NAMED EMPLOYEE") exercise best efforts to transfer to Purchaser, and to
train and cooperate with Purchaser technical personnel and management with
respect to, all technical information and know-how relating to the Storage
Products or to the manufacture, installation, use or integration thereof that is
requested by Purchaser or known to the Named Employee, all in accordance with
technology transfer requirements and procedures specified by Purchaser
(collectively, the "TECHNOLOGY TRANSFER"). Accordingly, Xxxxx, jointly and
severally with Encore, agrees to fund, immediately upon 


                                       4


demand by Purchaser, the payment of a bonus in the amount of (pound)120,000 to
the Named Employee, which bonus shall be payable only if Purchaser determines
that the Named Employee has exercised best efforts to effect and has
successfully completed the Technology Transfer by the 90th day after the Closing
Date. If this bonus is not so paid upon such demand, Purchaser may offset
(pound)120,000 plus interest at the highest legally permissible rate from the
Second Payment in accordance with the procedures specified in Section 9.05 of
the Asset Purchase Agreement and without reference to the Basket limitations of
Section 9.04(a) thereof (and this offset sum shall not be credited against the
Basket). The Named Employee is Xxxx Xxxxxxxx.

         4. EFFECT OF THIS AGREEMENT. Except as expressly modified by this
Agreement, the Inducement Agreement shall remain in full force and effect. To
the extent that there is any conflict with or inconsistency between this
Agreement and the Inducement Agreement, the provisions of this Agreement will
prevail and govern.

         5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

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         IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.

XXXXX ELECTRONICS INC.                  SUN MICROSYSTEMS, INC.

By:                                     By:
   ------------------------                ------------------------

Name:                                   Name:
     ----------------------                  ----------------------

Title:                                  Title:
      ---------------------                   ---------------------




                [SIGNATURE PAGE TO XXXXX MODIFICATION AGREEMENT]





                                    EXHIBIT A

           COMPLAINTS FILED PRE-CLOSING IN THE DELAWARE CHANCERY COURT
                  AGAINST XXXXX, SELLER AND SELLER'S DIRECTORS
                          BY THE PLAINTIFFS BELOW NAMED
                    RELATING TO THE ASSET PURCHASE AGREEMENT

1.       Case No. 16044; Plaintiffs Collings, Helfgott, Kiley, Rosenblum, 
         Xxxxxxx and Xxxxxxxx

2.       Case No. 16045; Plaintiff Croyden Associates

3.       Case No. 16046; Plaintiff Xxxxxxx XxXxxxxxx

4.       Case No. 16049; Plaintiff Xxxxxx Xxxxxx