SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. 6 TO
SCHEDULE 13D
____________________
Under the Securities Exchange Act of 1934
____________________
ENCORE COMPUTER CORPORATION
(Name of Issuer)
____________________
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
____________________
292555109
(CUSIP Number)
____________________
Michael C. Veysey
GA-TEK Inc.
34929 Curtis Blvd.
Eastlake, Ohio 44095
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
Copies to:
David W. Bernstein, Esq.
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Tel.: (212) 878-8000
____________________
November 24, 1997
(Date of Event which Required Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box. <square>
Check the following box if a fee is being paid with this
statement. <square>
PAGE 1 OF 31 PAGES
EXHIBIT INDEX AT PAGE 10
<PAGE>
SCHEDULE 13D
CUSIP No. 292555109
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON: GA-TEK Inc. (formerly named "Gould
Electronics Inc.")
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 13-3483110
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) <checked-box>
(b) <square>
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
OO
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
- -------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
32,673,169
- -------------------------------------------------------------------------------
8. SHARED VOTING POWER
0
- -------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
32,673,169
- -------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
32,673,169
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES <square>
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.5%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP No. 292555109
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON: EFI International, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 13-3688189
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) <checked-box>
(b) <square>
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
0
- -------------------------------------------------------------------------------
8. SHARED VOTING POWER
0
- -------------------------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES <square>
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
<PAGE>
This Schedule 13D, as filed with the Securities and Exchange
Commission (the "Commission") on June 2, 1989, by Gould Inc. ("Gould"), a
Delaware corporation, with respect to Gould's ownership of Common Stock,
par value $.01 per share ("Common Stock"), of Encore Computer Corporation
(the "Company"), a Delaware corporation, and as amended by Amendments No.
1, 2, 3, 4 and 5 dated March 19, 1990, February 7, 1991, April 19, 1991,
September 14, 1992 and January 31, 1994, is further amended to furnish
additional information as follows:
ITEM 2. IDENTITY AND BACKGROUND
- --------------------------------
Paragraphs (a) and (b) of Item 2 are amended to state the following:
(a) This statement is filed by GA-TEK INC. ("Gould
Electronics"), an Ohio corporation, the name of which formerly was
"Gould Electronics Inc." Gould Electronics is a wholly owned
subsidiary of Japan Energy Corporation ("J Energy"), a Japanese
corporation formerly named Nippon Mining Company Limited. Gould
Electronics has also acquired all the assets of EFI International,
Inc., a former wholly owned subsidiary of J. Energy, which has been
liquidated.
(b) The principal business address of Gould Electronics is 34929
Curtis Blvd., Eastlake, Ohio 44095. The principal business address of
J Energy is 10-1, Toranomon 2-chome, Minato-Ku, Tokyo 105-8407 Japan.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
- -----------------------------------------------------------
The following paragraph is added following the tenth paragraph of Item
3 (which was added by Amendment No. 5 to this Schedule) and, among other
things, replaces the eleventh paragraph of Item 3 (which is deleted):
Between March 17, 1995 and March 19, 1997, Gould Electronics
exchanged a total of $180 million of indebtedness owed to it by the
Company for 500,000 shares of Series F Convertible Preferred Stock of
<PAGE>
the Company ("Series F Preferred Stock"), 550,000 shares of Series G
Preferred Stock of the Company ("Series G Preferred Stock"), 350,000
shares of Series H Preferred Stock of the Company ("Series H Preferred
Stock") and 400,000 shares of Series I Preferred Stock of the Company
("Series I Preferred Stock").
Each share of Series E through I Preferred Stock (a) was
convertible at any time at the option of a holder who is a United
States citizen or a corporation at least 50% of the shares of which
are owned by United States citizens, or for the purpose of completing
an underwritten public offering, on 30 days notice into Common Stock
at the rate of $3.25 liquidation value per share of Common Stock, (b)
entitled the holder to receive each year an annual dividend, payable
quarterly, at the rate of $6 per share, which dividend could, under
some circumstances, be paid with shares of the applicable Series of
Preferred Stock, (c) was subject to mandatory conversion at the option
of the Company if the Common Stock was trading at a price higher than
$3.90 per share and a buyer was contractually committed to buy a
specified amount of the Company's Common Stock, and (d) entitles the
holder to receive upon liquidation of the Company a dividend of $100
per share. Holders of Series E through I Preferred Stock were not
entitled to vote as holders of those shares, except (i) with regard to
certain issuances of preferred stock or other events affecting the
Series E through I Preferred Stock, respectively, and (ii) in specific
instances required by the Delaware General Corporation Law. Because
Gould Electronics is wholly owned by an entity which is not a United
States citizen, and therefore Gould Electronics did not have the right
to convert the Series E through I Preferred Stock into Common Stock,
Gould Electronics believes it was not the beneficial owner of the
Common Stock into which the Series E through I Preferred Stock was
convertible.
As a result of dividends on the Company's Series B through Series
I Preferred Stock, on October 30, 1997, the ownership by Gould
Electronics and EFI of stock of the Company was as follows:
CLASS OR SERIES SHARES
---------------- -------
Common Stock 3,935,900
Series A Preferred Stock 736,410
Series B Preferred Stock 694,628
Series D Preferred Stock 1,115,074
Series E Preferred Stock 1,139,782
Series F Preferred Stock 533,333
Series G Preferred Stock 572,289
Series H Preferred Stock 350,000
Series I Preferred Stock 400,000
2
<PAGE>
In addition, on October 30, 1997, Gould and EFI were entitled to
dividends totalling $29.5 million, which the Company was not able to
pay in cash or by the issuance of additional Preferred stock because
it had no surplus.
The shares of Series A through Series I Preferred Stock owned by
Gould Electronics and EFI on October 30, 1997, were convertible into
a total of 155,213,513 shares of Common Stock, except that the Series
D through Series I Preferred Stock was convertible only by a holder
which was a citizen of the United States or a corporation or other
entity of which a majority of the outstanding shares or other equity
interests were owned by citizens of the United States, or for the
purpose of completing an underwritten public offering.
On October 30, 1997, Gould Electronics converted all its Series A
Preferred Stock and Series B Preferred Stock into a total of
29,786,315 shares of Common Stock. This increased Gould's total
ownership of Common Stock to 32,673,169 shares, representing 48.5% of
all the Common Stock which was outstanding on that date.
On November 24, 1997, Gould and EFI canceled all the Series D
through Series I Preferred Stock owned by them in exchange for payment
of $25 million and assignment to Gould of the right to receive $35
million which is due to be paid by Sun Microsystems, Inc. ("Sun") on
July 1, 1998 under an Asset Purchase Agreement (the "Sun Agreement")
dated as of July 17, 1997 among the Company and two of its
subsidiaries and Sun and two of its subsidiaries. Sun, however, has
the right to set off against the $35 million payment any amount owed
to Sun by the Company as a result of its indemnification obligations
under the Sun Agreement. If the amount paid to Gould by Sun on July
1, 1998 is less than $35 million, the Company will be required to pay
the amount by which Sun's payment is less than $35 million. If the
full $35 million is not paid to Gould Electronics by July 31, 1998,
Gould Electronics will be entitled to receive from the Company shares
of Series B, D, E, F, G, H and I Preferred Stock in payment of the
accrued but unpaid dividends on the Preferred Stock which was owned by
Gould Electronics on November 24, 1997. That would require the
Company to issue to Gould Electronics approximately 430,000 shares of
Preferred Stock with a liquidation preference of approximately $43
million. If the full $35 million is paid to Gould Electronics by July
31, 1998, Gould Electronics will waive its right to receive those
accrued but unpaid dividends.
In connection with the transactions between the Company and Sun
which were the subject of the Sun Agreement, Gould Electronics and J
Energy entered into agreements with Sun in which, among other things,
3
<PAGE>
they agreed to indemnify Sun against a number of possible occurrences,
including the insolvency of the Company within one year after the
November 24, 1997 closing of the transaction which was the subject of
the Sun Agreement (the "Sun Transaction").
ITEM 4. PURPOSE OF TRANSACTION.
- --------------------------------
The following paragraphs are added following the fourth paragraph of
Item 4:
The purpose of the exchanges of indebtedness for Series F
through I Preferred Stock was to increase the Company's shareholders'
equity.
The purpose of the exchange of Series A and Series B Preferred
Stock for Common Stock was to increase the number of Shares of Common
Stock held by Gould Electronics and EFI so Gould and EFI could vote an
increased number of shares of Common Stock with regard to the Sun
Transaction.
The purpose of Gould Electronics' agreeing to permit the Company
to redeem the Series D through Series I Preferred Stock owned by Gould
Electronics (including the Series D Stock which had been owned by EFI)
for $60 million was to enable Gould Electronics to recover a portion
of the sum it, its predecessor and EFI had loaned to, or otherwise
been owed by, the Company which had been canceled in exchange for
stock of the Company.
The sixth paragraph of Item 4 (which becomes the eighth paragraph) is
amended to state the following:
Prior to November 24, 1997, two representatives of Gould
Electronics served on the Company's Board of Directors. On November
24, 1997, officers of Gould Electronics were elected to four of the
six positions on the Company's Board of Directors.
When the Company's stockholders were asked to vote upon the Sun
Transaction, they were told that the Company's Board of Directors
would be considering whether the Company should (i) continue, and
attempt to expand, its real-time business, (ii) attempt to develop and
market clustering software for various types of computer hardware, or
(iii) attempt to sell its real-time business and distribute the
proceeds of that sale, together with the remaining proceeds of the Sun
Transaction, to its stockholders as a liquidating distribution.
Subsequently, the Board of Directors decided that the Company should
4
<PAGE>
not attempt to develop and market clustering software for various
types of computer hardware. Then on February 27, 1998, the Board of
Directors approved, subject to negotiation of definitive agreements
and other conditions, a sale of the Company's real-time business,
which would be followed by a liquidation of the Company. Although the
four officers of Gould Electronics on the Company's Board of Directors
voted in favor of that transaction, Gould Electronics has not made a
commitment about how it will vote with regard to the transaction if
the transaction is presented to the Company's stockholders.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
----------------------------------------------
Item 5 is amended to state the following:
(a) In computing the aggregate percentage ownership of Common
Stock for purposes of this Schedule 13D, Gould Electronics and EFI
have relied on the Company's proxy statement dated October 31, 1997.
Item 6. Contracts, Arrangements, Understandings or
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
- -------------------------------------------------------
The new paragraph at the end of Item 6, which was added by Amendment
No. 2, and amended by Amendment No. 4, to this Schedule, is further amended
to state the following:
Reference is made to the response to Item 3 of this Schedule 13D
for a description of the transactions by which Gould Electronics
acquired Common Stock of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
- ------------------------------------------
The following Exhibit is added to the list of Exhibits:
Exhibit 7.15 - Agreement dated July 17, 1997 between Gould Electronics and
the Company.
5
<PAGE>
SIGNATURE
After reasonable inquiry, to the best of their knowledge and belief, the
undersigned corporation certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 26, 1998 GA-TEK INC.
By:/S/ MICHAEL VEYSEY
________________________
Michael Veysey
Senior Vice President
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
- ------- -----
7.1 Purchase Agreement, dated as of March 20, *
1989, among the Company, Gould and certain
Gould subsidiaries.
7.2 Stockholders Agreement, dated April 27, *
1989, among Gould, the Company and Kenneth
G. Fisher.
7.3 Registration Agreement dated April 27, 1989 *
between the Company and Gould.
7.4 Escrow Letter dated April 27, 1989, among *
Kenneth G. Fisher, Rogers & Wells and
Gould.
7.5 Agreement dated August 1, 1989 among the *
Company, Gould and Kenneth G. Fisher.
7.6 Master Purchase Agreement, dated as of *
January 28, 1991 between the Company and
Gould.
7.7 Amended and Restated Stockholders Agreement *
dated as of January 28, 1991 among Kenneth
G. Fisher, the Company and Gould.
7.8 Amended and Restated Registration Agreement *
dated as of January 28, 1991 among Kenneth
G. Fisher, the Company and Gould.
7.9 Master Purchase Agreement, dated as of *
September 10, 1992, among the Company,
Gould and EFI.
7.10 Second Amended and Restated Stockholders *
Agreement, dated as of September 10, 1992,
among Kenneth G. Fisher, the Company and
Gould.
7.11 Second Amended and Restated Registration *
Agreement dated as of September 10, 1992,
among Kenneth G. Fisher, the Company, Gould
and EFI.
<PAGE>
7.12 Master Purchase Agreement, dated as of *
February 3, 1994 between Gould Electronics
and the Company.
7.13 Third Amended and Restated Stockholders *
Agreement, dated as of February 3, 1994,
among Indian Creek Capital, Ltd., the
Company and Gould Electronics.
7.14 Third Amended and Restated Registration *
Agreement, dated as of February 3, 1994,
among Indian Creek Capital, Ltd., the
Company, Gould Electronics and EFI.
7.15 Agreement dated July 17, 1997, between 12
Gould Electronics and the Company.
- ------------------
*Previously filed
<PAGE>
AGREEMENT
This is an agreement dated July 17, 1997 between Gould Electronics
Inc. ("Gould"), an Ohio corporation, and Encore Computer Corporation ("Encore"),
a Delaware corporation, regarding, among other things, satisfaction of
indebtedness of Encore to Gould, and redemption of preferred stock of Encore
held by Gould, out of proceeds of the sale by Encore to Sun Microsystems, Inc.
and Sun Microsystems International B.V. (together "Sun") of Encore's Storage
Products Business.
At the date of this Agreement, Encore is indebted to Gould in the
total amount of $74,229,806, consisting of principal of $59,485,205 and accrued
but unpaid interest of $14,744,601, for borrowings by Encore from Gould under a
Third Amended and Restated Credit Agreement dated as of April 16, 1996, as
amended (the "Credit Agreement"), which indebtedness is secured by security
interests and mortgages granted under the Security Agreement and other Security
Documents described in the Credit Agreement (the "Security Documents"). In
addition, at the date of this Agreement, Gould holds the shares of Encore
Common Stock and Encore Series A, B, and D through I Preferred Stock listed on
Exhibit A and it is entitled to receive as dividends the additional shares of
Encore Series B through I Preferred Stock listed on Exhibit B (the "Unpaid
Dividend Shares") when Encore has sufficient earnings or surplus to be able
lawfully to issue them.
EXHIBIT 7.15
<PAGE>
On July 17, 1997, Encore and Sun are executing an Asset Purchase
Agreement (the "Sun Agreement"), which contemplates that Encore will sell
Encore's Storage Products Business (as that term is defined in the Sun
Agreement) to Sun for (i) a cash purchase price of $185 million, of which
$150 million is to be paid at the closing under the Sun Agreement (the "Sun
Closing") and the remaining $35 million (the "Second Payment") is to be paid on
July 1, 1998, plus (ii) assumption by Sun of certain obligations of Encore.
In order to facilitate the transactions which are the subject of
the Sun Agreement, Gould and Encore agree as follows:
ARTICLE I
SATISFACTION OF ENCORE INDEBTEDNESS TO GOULD
1.1 PAYMENT OF INDEBTEDNESS. At the Closing described in Paragraph
-----------------------
3.1, (i) Encore will pay to Gould the full amount of all principal and accrued
but unpaid interest owed by Encore with regard to the indebtedness which is the
subject of the Credit Agreement, and with regard to any other indebtedness for
borrowed money owed by Encore to Gould, and (ii) Gould will release all
security interests and mortgages on assets of Encore created under the Security
Documents or otherwise which secure borrowings by Encore from Gould under the
Credit Agreement.
1.2 NO EFFECT ON INTELLECTUAL PROPERTY LICENSE. Neither the payment
-------------------------------------------
of indebtedness from Encore to Gould, nor the release of security interests and
mortgages, contemplated by Paragraph 1.1 will in any way
2
<PAGE>
affect the continuing validity of, or any rights of Gould (as successor to
Gould Inc.) under, an Intellectual Property License Agreement dated as of
January 28, 1991 among Encore, Encore Computer U.S., Inc. and Gould Inc. (the
"Intellectual Property Agreement") or under an Escrow, Access and Training
Agreement entered as of January 28, 1991, among Encore, Encore Computer U.S.
Inc. and Gould Inc. (the "Escrow Agreement"). Encore is aware that at the Sun
Closing, Gould will be assigning to Sun all Gould's rights under the
Intellectual Property Agreement and under the Escrow Agreement. Encore consents
to that assignment and agrees to recognize the rights of Sun, as assignee from
Gould, under the Intellectual Property Agreement and the Escrow Agreement as
fully as though Sun were expressly named as the Licensee under each of those
agreements.
3
<PAGE>
ARTICLE II
REDEMPTION OF PREFERRED STOCK
2.1 REDEMPTION TERMS. At the Closing, Encore will redeem all the
-----------------
Series D through Series I Preferred Stock held by Gould (the "Redeemed
Preferred Stock") for a total of $60 million, of which $25 million will be paid
in cash at the Closing and the balance will be paid by assigning to Gould the
right to receive all payments made by Sun with regard to the Second Payment.
If because of any inaccuracy in any representation or warranty by Encore in the
Sun Agreement, any failure of Encore to fulfill any obligation under the Sun
Agreement, or any other act or omission of Encore or any of its subsidiaries,
the Second Payment is less than $35 million, on July 1, 1998, Encore will pay
Gould the amount by which the Second Payment is less than $35 million.
2.2 CONVERSION OF SERIES A AND B PREFERRED STOCK. (a) Subject to
---------------------------------------------
fulfillment of the conditions in subparagraph (b), prior to the date for
determining the stockholders of Encore who are entitled to vote with regard
to the Sun transaction, Gould will convert all the Encore Series A Preferred
Stock and all the Encore Series B Preferred Stock which Gould owns into Encore
Common Stock.
(b) The obligation of Gould to convert its Encore Series A
Stock and its Encore Series B Stock into Encore Common Stock is subject to
fulfillment prior to the time Gould converts its stock of the following
conditions (any or all of which may be waived by Gould):
4
<PAGE>
(i) All consents of governmental agencies (including,
but not limited to, the Defense Intelligence Service of the
Department of Defense) to the conversion, if any, which
Gould believes are necessary or appropriate will have been
obtained;
(ii) Kenneth G. Fisher ("Fisher"), Indian Creek
Capital, Ltd. ("Indian Creek") and Encore will have executed
and delivered to Gould a Voting Agreement (the "Fisher
Voting Agreement"), which will be in a form which is
satisfactory to Gould, and which provides that Fisher and
Indian Creek will (x) until the earlier of (x) the third
anniversary of the day on which the Closing occurs, or (y)
such time as Gould ceases to own at least 35% of the
outstanding Common Stock of Encore, vote all shares of
Encore owned by Fisher or Indian Creek in favor of election
of persons designated by Gould to two-thirds (and in no
event fewer than four) of the places on Encore's Board of
Directors, (y) vote all shares of stock of Encore owned by
them in favor of the transactions which are the subject of
the Sun Agreement, and (z) vote all shares of stock of
Encore owned by them in favor of the transactions which are
the subject of this Agreement.
5
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(iii) Encore will have executed and delivered to
Gould a Registration Agreement which will give Gould
substantially the same rights with regard to the Encore
Common Stock Gould owns after the conversion of its Encore
Series A and B Preferred Stock that Gould has under the
Registration Agreement which is in effect on the date of
this Agreement with regard to the Encore shares owned by
Gould on the date of this Agreement.
(iv) Fisher and Indian Creek will have converted all
the Encore Series B Stock owned by them (and any other
Encore preferred stock owned by them) into Encore Common
Stock.
(v) The By-Laws of Encore will have been amended as
described in Paragraph 4.2(g) and those amendments will not
have been amended or repealed.
(vi) Gould will have received an opinion from Choate
Hall & Stewart, counsel to Encore, and from counsel for
Fisher and Indian Creek who is reasonably acceptable to
Gould, regarding the Fisher Voting Agreement, the
Registration Agreement and the amendments to Encore's By-
Laws substantially in the form of Exhibit 2.2-B.
2.3 WAIVER OF RIGHT TO ADDITIONAL DIVIDEND. Effective upon receipt
---------------------------------------
by Gould of the entire Second Payment plus any additional amount
6
<PAGE>
Encore is required to pay Gould under Paragraph 2.1 and subject to the entire
Second Payment and the additional payment from Encore, if any is due, being
received by Gould not later than July 31, 1998, Gould waives any right it
may have to receive the Unpaid Dividend Shares or any other sums or shares
as dividends with regard to Encore's Series B through I Preferred Stock.
ARTICLE III
THE CLOSING
3.1 DATE OF CLOSING. The closing of the transactions which are
----------------
subject of this Agreement (the "Closing") will take place
simultaneously with, and at the same location as, and will be contingent
upon completion of, the Sun Closing.
3.2 ENCORE OBLIGATIONS AT THE CLOSING. At the Closing, Encore
----------------------------------
will deliver to Gould the following:
(a) Evidence of a wire transfer of immediately available funds
to an account specified at least 24 hours prior to the Closing by Gould (the
"Gould Account") in an amount equal to the entire outstanding principal balance
of, and all accrued but unpaid interest with regard to, all indebtedness of
Encore to Gould for borrowed money, including, but not limited to, all
indebtedness of Encore to Gould with regard to loans made to Encore under the
Credit Agreement.
(b) Evidence of a wire transfer of immediately available funds
to the Gould Account in the amount of $25 million in payment of the
7
<PAGE>
sum required to be paid at the Closing with regard to the redemption of the
Redeemed Preferred Stock.
(c) Documents in form reasonably acceptable to Gould by which
Encore assigns to Gould the right to receive all amounts paid by Sun with
regard to the Second Payment.
(d) Evidence reasonably satisfactory to Gould that payment of
all Encore's accounts have been paid or provided for as provided in Section
2.03 of the Sun Agreement and that the escrow agent referred to in that Section
holds all additional sums required by the Sun Agreement to be held by the
escrow agent after the Sun Closing.
(e) Copies, executed by Fisher, Indian Creek and Encore, of
a document by which Indian Creek and Encore agree to terminate the Second
Amended and Restated Stockholders Agreement among Indian Creek, Gould and
Encore and the Escrow Agreement relating to shares of Encore stock owned by
Indian Creek (the "Agreement Termination Agreement").
3.3 GOULD OBLIGATIONS AT THE CLOSING. At the Closing, Gould will
--------------------------------
deliver to Encore the following:
(a) A document executed by Gould confirming that the
indebtedness of Encore to Gould under the Credit Agreement, and any other
indebtedness of Encore to Gould for borrowed money, has been satisfied in
full.
(b) Copies of termination statements on Form UCC-3,
satisfactions of mortgages and other documents sufficient to enable Encore
to record in the appropriate offices evidence of the termination of the
8
<PAGE>
security interests and mortgages created under the Security Documents which
secure the indebtedness of Encore to Gould under the Credit Agreement.
(c) Certificates representing the Redeemed Preferred Stock,
to the extent those certificates have been issued by Encore to Gould.
(d) A copy, executed by Gould, of the Agreement Termination
Agreement.
ARTICLE IV
ACTIONS PRIOR TO THE CLOSING
4.1 ENCORE ACTIONS.
--------------- Encore agrees that from the date of this
Agreement to the date of the Closing, it will, and will cause its
subsidiaries to, except with the written consent of Gould:
(a) Use its best efforts to cause the transactions which
are the subject of the Sun Agreement to be completed as promptly as
practicable.
(b) Use its best efforts to cause all the conditions set forth
in Paragraph 2.2(b) to be fulfilled prior to the time for determining the
stockholders of Encore who are entitled to vote on proposals to approve the
transactions which are the subject of the Sun Agreement and this Agreement and
to cause the conditions set forth in Paragraph 5.1 to be fulfilled prior to or
at the Closing.
(c) Without limiting what is stated in subparagraphs (a) and
(b), Encore will (i) cause a meeting of its stockholders to be held as
9
<PAGE>
promptly as practicable for the purpose of voting upon a proposal to approve
the transactions which are the subject of the Sun Agreement, (ii) cause a proxy
statement relating to that meeting of stockholders (the "Proxy Statement") to
be prepared and filed with the Securities and Exchange Commission as promptly
as practicable, and in any event no later than August 15, 1997, (iii) include
in the Proxy Statement recommendations of its Board of Directors that Encore's
stockholders approve the transactions which are the subject of the Sun
Agreement, (iv) comply as promptly as practicable with all comments of the
staff of the Securities and Exchange Commission regarding the Proxy Statement
and use its best efforts to be able to send the Proxy Statement to Encore's
stockholders as promptly as practicable and (v) do all other things in its
power to cause its stockholders to approve the transactions which are the
subject of the Sun Agreement.
4.2 GOULD ACTION. Gould will use its best efforts to cause all
-------------
the conditions set forth in Paragraph 5.2 to be fulfilled prior to or at
the Closing.
4.3 HSR ACT FILING. Encore and Gould will each make as
---------------
promptly as practicable any filings it is required to make under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") with regard
to the transactions which are the subject of this Agreement, and each of
them will take all reasonable steps within its control (including providing
any requested information to the Federal Trade Commission and the
Department of Justice) to cause the waiting periods required by the HSR
10
<PAGE>
Act, if any, to be terminated or to expire as promptly as practicable.
Encore and Gould will each provide information and cooperate in all other
respects to assist the other of them in making its filings under the HSR
Act.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO GOULD'S OBLIGATIONS. The obligations of Gould
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at the Closing are subject to the following conditions (any or all of which
may be waived by Gould):
(a) The Sun Closing will have taken place.
(b) The Sun Agreement will not have been modified after the
date of this Agreement, and Sun will not have waived in any material respect
any of Encore's obligations under the Sun Agreement or any conditions to
Sun's obligations under the Sun Agreement, except as consented to by Gould.
(c) Encore will have fulfilled all its obligations under
this Agreement required to have been fulfilled prior to or at the Closing.
(d) Fisher will have fulfilled all his obligations under the
Fisher Voting Agreement required to have been fulfilled prior to or at the
Closing.
(e) Encore will have fulfilled all the obligations under the
Sun Agreement required to have been fulfilled by it prior to or at the Sun
Closing, other than obligations which have been waived by Sun with the
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consent of Gould, and Encore will have delivered to Gould a certificate
signed by an officer of Sun stating that that is the case.
(f) All required approvals of governmental agencies
(including, but not limited to, the Defense Investigative Service of the
Department of Defense), if any, to the transactions contemplated by this
Agreement will have been obtained.
(g) The filings under the HSR Act, if any, required to have
been made by Encore with regard to the transactions which are the subject
of this Agreement will have been made, and all waiting periods under the
HSR Act with regard to those transactions will have been terminated or
expired.
(h) Gould will have received a letter from Choate Hall &
Stewart, counsel to Encore, stating that in its opinion (i) Encore is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, (ii) Encore has all requisite corporate
power or authority to execute and deliver this Agreement and to perform its
obligations under this Agreement, (iii) the execution, delivery and
performance of this Agreement by Encore and the consummation by Encore of
the transactions contemplated by it have been duly authorized by all
necessary corporate acts on the part of Encore, and this Agreement has been
duly and validly executed and delivered by Encore, (iv) this Agreement
constitutes the legal, valid and binding obligation of Encore, enforceable
against Encore in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
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and similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity), (v) the Sun Closing has taken place and at the Sun Closing Encore
transferred Encore's Storage Products Business to Sun as contemplated by
the Sun Agreement, (vi) the By-law provisions described in Paragraph 4.1(i)
have been duly adopted by Encore's Board of Directors and are valid and
enforceable.
(i) Encore's By-laws will have been amended to provide
that, at least until the second anniversary of the Closing:
(i) The Chairman of Encore's Audit Committee will be a
director who was nominated for election by Gould.
(ii) A majority of the members of Encore's Audit
Committee will be directors who were nominated for election
by Gould.
(iii) Not later than thirty days before the beginning
of each calendar quarter, the Chief Executive Officer of Encore
will present to Encore's Audit Committee for its approval an
expense and capital expenditure budget (a "Quarterly Budget")
for the forthcoming calendar quarter. If Encore's Audit
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Committee requests changes in a Quarterly Budget from that
presented by the Chief Executive Officer, the Chief Executive
Officer will make those changes to the Quarterly Budget and
present a revised Quarterly Budget to the Audit Committee in
time for the Quarterly Budget, as revised, to be approved by
the Audit Committee before the beginning of the calendar
quarter to which it relates.
(iv) Encore may not, without the prior approval of the
Chairman of Encore's Audit Committee or Encore's entire
Audit Committee, make any expenditures or commitments which
will cause its expenditures in any calendar quarter in any
category shown in the Quarterly Budget for that calendar
quarter approved by the Audit Committee to exceed by more
than 5% the amount shown in the Quarterly Budget.
(v) The person who is the Chief Financial Officer of
Encore cannot be dismissed from that position without the
approval of Encore's Audit Committee and if the position of
Chief Financial Officer of Encore becomes vacant, the person
who fills that position will be a person approved by
Encore's Audit Committee.
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(vi) Encore's Board of Directors will not consider any
proposal that Encore commence a proceeding for relief as a
debtor under the Bankruptcy Code or under any state
insolvency law, or approve such an action, unless the
proposal has been recommended by Encore's Audit Committee.
(vii) The By-law provisions described above may not
be repealed or modified without the unanimous approval of
all the members of Encore's Board of Directors.
(k) The Closing will take place not later than December 31, 1997.
5.2 CONDITIONS TO ENCORE'S OBLIGATIONS. The obligations of
-----------------------------------
Encore at the Closing are subject to the following conditions (any or all
of which may be waived by Encore).
(a) The Sun Closing will have taken place.
(b) Gould will have fulfilled all the obligations under
this Agreement which it is required to fulfill prior to or at the Closing.
(c) The transactions which are the subject of this
Agreement will have been approved by the holders of Encore's Common Stock.
(d) The waiting periods under the HSR Act with regard to
the transactions which are the subject of this Agreement, if any, will have
been terminated or expired.
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(e) The Closing will take place not later than December 31,
1997.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION AGAINST PAYMENTS UNDER INDUCEMENT
-------------------------------------------------
AGREEMENTS. (a) Encore indemnifies Gould against, and agrees to hold
- -----------
Gould harmless from, any obligation Gould or Japan Energy Corporation
("JEC") may have to make payments to Sun under a Gould/EFI Inducement
Agreement dated July 17, 1997 among Gould, EFI International, Inc. and Sun
or a JEC Inducement Agreement to be dated on or about August 15, 1997 among
JEC and Sun as a result of any act or omission of Encore, including, but
not limited to, the commencement by Encore of any Insolvency Proceeding (as
that term is defined in the Sun Agreement) or because Encore is or at any
time becomes Insolvent (as that term is defined in the Sun Agreement).
(b) If Encore becomes required under subparagraph (a) to
indemnify Gould or JEC with regard to any payment Gould or JEC becomes
obligated to make to Sun, promptly upon demand by Gould or JEC, Encore will
pay Gould or JEC a sum equal to any payment either of them has made to Sun
or, if Gould or JEC has not yet made the payment, a sum equal to the amount
Gould or JEC is required to pay to Sun.
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ARTICLE VII
WAIVER OF RIGHT TO RECEIVE SUM ON LIQUIDATION
7.1 GOULD WAIVER. Gould waives any right it may have as a
-------------
holder of Common Stock of Encore to participate in the first $30 million
which Encore distributes to its stockholders as a liquidating distribution
made within two years after the date of this Agreement as a result of a
liquidation of Encore, if any. The waiver in this Paragraph will not
affect any right of Gould to receive its pro rata share of (i) any amount
in excess of $30 million distributed by Encore to its stockholders within
two years after the date of this Agreement as a result of a liquidation of
Encore, or (ii) any amount which Encore distributes to its stockholders
more than two years after the date of this Agreement.
ARTICLE VIII
ABSENCE OF BROKERS
8.1 REPRESENTATIONS AND WARRANTIES REGARDING BROKERS. Each
-------------------------------------------------
party to this Agreement represents and warrants to the other party that
nobody act as a broker, a finder or in any similar capacity in connection
with the transactions which are the subject of this Agreement, except that
The Blackstone Group and Genesis Merchant Group Securities LLC acted as
advisors to Encore and will, to the extent they are entitled to
compensation, be paid by Encore, and McDonald & Company and Nikko
Securities Ltd. acted as advisors to Gould and its affiliates and will, to
the extent they are entitled to compensation, be paid by Gould or its
affiliates. Each party to this Agreement indemnifies the other party
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against, and agrees to hold the other party harmless from, all liabilities
and expenses (including reasonable attorneys fees) incurred in connection
with, or as a result of, any claim by anyone for compensation as a broker,
a finder or in any similar capacity by reason of services allegedly
rendered to, or at the request of, the indemnifying party in connection
with the transactions which are the subject of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 REIMBURSEMENT FOR EXPENSES OF TRANSACTION. Except as
------------------------------------------
provided in Paragraph 7.1, Encore will reimburse Gould for all out-of-
pocket expenses incurred by Gould in connection with the transactions which
are the subject of this Agreement and in connection with the preparation,
negotiation, execution and delivery of this Agreement and the documents
referred to in this Agreement. Encore will bear its own expenses in
connection with the transactions which are the subject of this Agreement
and in connection with the preparation, negotiation, execution and delivery
of this Agreement and the documents referred to in this Agreement.
9.2 ENTIRE AGREEMENT. This document, together with the
-----------------
documents and agreements to be delivered as provided in this Agreement,
and, to the extent applicable, together with the Sun Agreement, contain the
entire agreement between Encore and Gould regarding the transactions which
are the subject of this Agreement and those other documents. All prior
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negotiations, understandings and agreements between Encore and Gould with
regard to that subject matter are superseded by this Agreement and those
other documents, and there are no representations, warranties,
understandings or agreements concerning the transactions which are the
subject of this Agreement and those other documents, other than those
expressly set forth in this Agreement and those other documents.
9.3 HEADINGS. The Article and Paragraph headings of this
---------
Agreement are for convenience only, and do not affect the meaning or
interpretation of this Agreement.
9.4 PROHIBITION AGAINST ASSIGNMENT. Neither this Agreement nor
-------------------------------
any right of either party under it may be assigned by either party without
the consent of the other party and any purported assignment in violation of
this Paragraph will be null and void.
9.5 NOTICES. Any notice or other communication required or
--------
permitted to be given under this Agreement must be in writing and will be
deemed effective when delivered in person or sent by facsimile, if promptly
confirmed in writing, or on the third day after the day on which mailed by
first class mail from within the United States of America, to the following
addresses:
If to Encore:
Encore Computer Corporation
6901 West Sunrise Boulevard
Fort Lauderdale, Florida 33313
Attention: Kenneth G. Fisher
Facsimile No.: (954) 797-5719
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with a copy to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Cameron Read, Esq.
Facsimile No.: (617) 248-4000
If to Gould:
Gould Electronics Inc.
34929 Curtis Boulevard
Eastlake, Ohio 44095
Attention: General Counsel
Facsimile No.: (216) 953-5120
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: David W. Bernstein, Esq.
Facsimile No.: (212) 878-8375
9.6 GOVERNING LAW. This Agreement will be governed by, and
--------------
construed under, the laws of the State of Delaware relating to contracts
made and to be performed in that state.
9.7 AMENDMENTS. This Agreement may be amended only by a
-----------
document in writing signed by both Gould and Encore.
9.8 COUNTERPARTS. This Agreement may be executed in two or more
-------------
counterparts, some of which may be executed by fewer than all the parties.
Each of those executed copies will be deemed an original, but all of them
together will constitute one and the same agreement.
This Agreement has been executed on the day set forth on the
first page and is intended to constitute a binding agreement between the
parties to it.
ENCORE COMPUTER CORPORATION GOULD ELECTRONICS INC.
By:________________________ By:____________________
Name: Name
Title: Title:
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