GUARANTY AGREEMENT


     THIS GUARANTY AGREEMENT, dated as of September 24, 1997 (this "Agreement"),
by and between ELXSI CORPORATION,  a Delaware corporation ("Guarantor") and BANK
OF  AMERICA  NATIONAL  TRUST  AND  SAVINGS   ASSOCIATION,   a  National  banking
corporation (the "Bank").


                              W I T N E S S E T H:

     WHEREAS,  the  Orange  County  Industrial   Development   Authority,   (the
"Issuer"),  pursuant to authority  granted under  Chapter 159, Part II,  Florida
Statutes,  and other applicable  provisions of law, will issue, sell and deliver
its $2,500,000 aggregate principal amount Industrial  Development Revenue Bonds,
Series 1997 (ELXSI  Project)  (the  "Bonds") to finance the costs of  acquiring,
constructing,   rehabilitating,   equipping  and   furnishing  a  facility  (the
"Project") located within the corporate boundaries of Orange County, Florida;

     WHEREAS,  the Issuer has loaned or will lend the proceeds received from the
sale of the Bonds to ELXSI, a California corporation and wholly-owned subsidiary
of Guarantor  (the "Account  Party"),  pursuant to that certain Loan  Agreement,
dated as of September  24, 1997 (the "Loan  Agreement"),  between the Issuer and
the Account  Party and pursuant to that certain  promissory  note of the Account
Party in favor of the Issuer dated as of September 24, 1997 (the "Note");

     WHEREAS, the Bonds were issued and secured by that certain Trust Indenture,
dated as of September 24, 1997 (as amended, restated,  supplemented or otherwise
modified from time to time,  hereinafter  called the  "Indenture"),  between the
Issuer, Sun Trust Bank, Central Florida,  National Association,  as Trustee (the
"Trustee");

     WHEREAS,  the  Bonds  have been or will be  purchased  by the Bank from the
Issuer  pursuant to a Bond  Purchase  Agreement  dated as of September  24, 1997
between  the  Issuer,  the  Account  Party  and the  Bank  (the  "Bond  Purchase
Agreement");

     WHEREAS,  it is a condition to the Bank's  obligation to purchase the Bonds
under the Bond  Purchase  Agreement  that  Guarantor  enter  into this  Guaranty
Agreement;



<PAGE>



     WHEREAS,  Guarantor will derive substantial benefit from the loaning of the
Bond proceeds to the Account Party to acquire,  construct,  rehabilitate,  equip
and furnish the Project and the purchase by the Bank of the Bonds; and

     WHEREAS,  in order to induce the Bank to purchase the Bonds, the Guarantor,
pursuant to this Agreement, has issued a continuing, absolute, unconditional and
irrevocable  guarantee  of payment of the  Account  Party's  obligations  to the
Issuer under the Loan Agreement, the Note, the Mortgage (as defined herein), the
Security Agreement (as defined herein) and the Environmental Indemnity Agreement
(as defined herein), which obligations have been assigned to the Trustee for the
benefit of the Bank as the purchaser of the Bonds;

     NOW THEREFORE,  in  consideration of the premises and to induce the Bank to
purchase the Bonds, and intending to be legally bound hereby,  the Guarantor and
the Bank hereby agree as follows:


                                    ARTICLE I
                                   DEFINITIONS

     Section  1.01  Certain   Terms.   The  following   terms  (whether  or  not
underscored)  when used in this Agreement,  including its preamble and recitals,
shall have the following  meanings (such definitions to be equally applicable to
the singular and plural:

          "Account Party Agreement" means any of the Loan Agreement,  the Note ,
     the  Mortgage,  the  Security  Agreement  and the  Environmental  Indemnity
     Agreement.

          "Affiliate"  means any Person (other than a Subsidiary) which directly
     or indirectly through one or more intermediaries controls, or is controlled
     by,  or is  under  common  control  with  the  Account  Party  or with  the
     Guarantor. The term "control" means the possession, directly or indirectly,
     of the  power to  direct  or cause  the  direction  of the  management  and
     policies of a Person,  whether through the ownership of voting  securities,
     by contract or otherwise.

          "Agreement" is defined in the preamble.

          "Bank" is defined in the preamble.

          "Bond Purchase Agreement" is defined in the fourth recital.

          "Bonds" is defined in the first recital.


                                      -2-
<PAGE>

          "Capitalized  Lease"  means a lease  of  property,  real or  personal,
     which, in accordance with generally accepted accounting  principles,  would
     be required to be capitalized on a balance sheet of the lessee.

          "Environmental  Indemnity Agreement" means the environmental indemnity
     agreement  dated as of  September  24,  1997,  between  the  Issuer and the
     Account Party.

          "Environmental  Laws" shall mean any  federal,  state,  local or other
     laws, statutes,  rules,  regulations,  orders, consent decrees,  permits or
     licenses,  relating to  prevention,  remediation,  reduction  or control of
     pollution, or protection of the environment, natural resources and/or human
     health and  safety,  including  without  limitation,  such laws,  statutes,
     rules,  regulations,  orders, consent decrees, permits or licenses relating
     to (i) solid waste and/or Hazardous Material treatment,  storage, disposal,
     generation and transportation,  (ii) air, water and noise pollution,  (iii)
     soil,  ground,  water or groundwater  contamination,  (iv) the  generation,
     handling,  storage,  transportation  or  release  into the  environment  of
     Hazardous  Materials,  and (v)  regulation of underground  and  aboveground
     storage tanks.

          "ERISA" is defined in Section 3.11.

          "Event of Default" is defined in Article V.

          "Fiscal  Quarter End" shall mean,  for the first fiscal  quarter,  the
     Saturday next preceding or next following (whichever is closer) March 31 of
     any  calendar  year,  for the second  fiscal  quarter,  the  Saturday  next
     preceding or next  following  (whichever is closer) June 30 of any calendar
     year, and for the third fiscal quarter, the Saturday next preceding or next
     following  (whichever  is closer)  September 30 of any calendar  year.  The
     Fiscal  Quarter  End for the  fourth  quarter  will be the same date as the
     Fiscal Year End, as defined in the definition "Fiscal Year End".

          "Fiscal Year End" shall mean, as of any fiscal year of the  Guarantor,
     the  Saturday  next  preceding  or next  following  (whichever  is  closer)
     December 31 of any calendar year.

          "Guaranteed Obligations" is defined in Section 2.01.

          "Guarantor" is defined in the preamble.

          "Hazardous Material" is defined in Section 3.10.

          "Indebtedness"  means:  (i) all  items of  indebtedness  for  borrowed
     money,  (ii) all  indebtedness  for borrowed money secured by any mortgage,
     pledge or lien existing on 

                                      -3-
<PAGE>

     property  whether or not the  indebtedness  secured thereby shall have been
     assumed,  (iii)  Capitalized  Lease  obligations  (but not operating  lease
     obligations),  and (iv) all guarantees, letters of credit, and endorsements
     and other agreements or obligations  (other than of notes, bills and checks
     presented  to banks for  collection  or deposit in the  ordinary  course of
     business  or  operating  lease  obligations),   in  each  case  to  support
     Indebtedness  of other Persons,  including any partnership or joint venture
     of which the Guarantor or any of its  Subsidiaries  is a general partner or
     joint   venturer.   For   purposes  of  Sections   3.03,   4.05  and  4.06,
     "Indebtedness" shall not include Intercompany Indebtedness.

          "Indenture" is defined in the third recital.

          "Interim Financials" is defined in Section 3.03.

          "Issuer" is defined in the first recital.

          "Loan Agreement" is defined in the second recital.

          "Material   Subsidiary"   means  (i)  each  of  ELXSI,   a  California
     corporation;  and (ii) any  Subsidiary  which now or  hereafter  has on any
     given date total assets  equal to or greater than ten percent  (10%) of the
     consolidated assets of the Guarantor and its Subsidiaries on such date. For
     the  purposes  of this  Agreement,  a  Subsidiary  which  now or  hereafter
     qualifies  as a Material  Subsidiary  under  clause  (ii) of the  foregoing
     definition  shall  continue  to  be  deemed  to  be a  Material  Subsidiary
     notwithstanding  the fact  that its  total  assets  may at any  given  time
     subsequent to such  qualification  as a Material  Subsidiary be equal to or
     less than ten percent (10%) of the consolidated assets of the Guarantor and
     its Subsidiaries.

          "Mortgage"  means the  mortgage  and  security  agreement  dated as of
     September 24, 1997 between the Account Party and the Issuer.

          "1996 Financials" is defined in Section 3.03.

          "Person" means any individual,  corporation, limited liability company
     partnership,  joint  venture,  association,   joint-stock  company,  trust,
     unincorporated  organization  or  government  or any  agency  or  political
     subdivision thereof.

          "Project" is defined in the first recital.

          "Revolving  Credit  Agreement" means the Amended and Restated Loan and
     Security  Agreement dated as of December 30, 1996 between the Account Party
     and Bank of America  Illinois  as  subsequently  modified,  amended  and/or
     restated.

                                      -4-
<PAGE>

          "Security   Agreement"  means  the  security  agreement  dated  as  of
     September 24, 1997, between the Account Party and the Issuer.

          "Subsidiary"  means  any  Person  of  which  greater  than  50% of the
     outstanding  shares  of  voting  stock  are  owned  or  controlled  by  the
     Guarantor.

          "Trustee" is defined in the third recital.

          "Unmatured  Event of Default"  means an event  which  would  become an
     Event of Default with notice or the passage of time or both.

     Except as and unless otherwise specifically provided herein, all accounting
terms in this  Agreement  shall  have the  meanings  given to them by  generally
accepted  United  States  accounting  principles  and shall be  applied  and all
reports  required by this Agreement  shall be prepared,  in a manner  consistent
with the most  recent  financial  statements  provided  to the Bank  before this
Agreement was signed.

     Section 1.02 Loan Agreement Definitions. Unless otherwise defined herein or
the context  otherwise  requires,  terms used in this  Agreement,  including its
preamble and recitals, shall have the meanings provided in the Loan Agreement.


                                   ARTICLE II
                                  THE GUARANTY

     Section 2.01 Guaranty. The Guarantor hereby absolutely, unconditionally and
irrevocably  (a)  guarantees  the prompt  payment in full when due  (whether  at
stated maturity, by required prepayment,  declaration,  acceleration,  demand or
otherwise) of all  obligations  of the Account  Party now or hereafter  existing
which  arise  out of or in  connection  with the  Loan  Agreement,  whether  for
principal,  interest,  fees,  expenses or otherwise and all other Liabilities of
the Account Party and all other amounts from time to time owing to the Issuer or
any other person under the Loan Agreement or obligations under any other Account
Party  Agreement,  howsoever  created,  arising or evidenced  whether  direct or
indirect,  absolute  or  contingent  or now or  hereafter  existing or due or to
become due  (including  in all cases all such amounts which would become due but
for the  operation  of the  automatic  stay under  Section  362(a) of the United
States  Bankruptcy  Code 11 U.S.C.  ss.  362(a),  and the  operation of Sections
502(b) and 506(b) of the United States  Bankruptcy Code 11 U.S.C. ss. 502(b) and
ss.  506(b),  and (b)  indemnifies  and holds  harmless the Bank for any and all
reasonable costs and expenses (including reasonable attorney fees (including the
allocated  cost of internal  legal  services and all  disbursements  of internal
counsel) and  expenses)  incurred by the Bank in enforcing any rights under this
Guaranty,  in each 


                                      -5-
<PAGE>


case strictly in  accordance  with the terms  thereof  (such  obligations  being
herein collectively called the "Guaranteed Obligations").

     This  Guaranty  constitutes  a  guaranty  of  payment  when  due and not of
collection, and the Guarantor specifically agrees that it shall not be necessary
or  required  that the Bank  exercise  any right,  assert any claim or demand or
enforce any remedy  whatsoever  against the Account  Party (or any other Person)
before or as a condition to the obligations of the Guarantor hereunder.

     Section 2.02  Obligations  Unconditional.  The obligations of the Guarantor
under   Section  2.01  shall  in  all  respects  be  a   continuing,   absolute,
unconditional  and  irrevocable  guaranty of payment,  and shall  remain in full
force and effect until all Guaranteed Obligations have been paid in full and all
obligations of the Guarantor hereunder shall have been paid in full.

     The  Guarantor  guarantees  that the  Guaranteed  Obligations  will be paid
strictly in accordance with the terms of the Account Party Agreement under which
they arise,  regardless  of any law,  regulation  or order now or  hereafter  in
effect in any jurisdiction affecting any of such terms or the rights of the Bank
with respect  thereto.  The liability of the Guarantor under this Guaranty shall
be absolute, unconditional and irrevocable irrespective of:

          (a) any  lack of  validity,  legality  or  enforceability  of the Loan
     Agreement or any other  Account Party  Agreement or any other  agreement or
     instrument evidencing Guaranteed Obligations;

          (b) the failure of the Bank

               (i) to assert  any claim or  demand  or to  enforce  any right or
          remedy  against the Account Party or any other Person  (including  any
          other  guarantor)  under the  provisions of the Loan  Agreement or any
          other  Account  Party  Agreement or any other  agreement or instrument
          evidencing Guaranteed Obligations or otherwise, or

               (ii) to exercise any right or remedy against any other  guarantor
          of, or collateral securing, any Guaranteed Obligations;

          (c) any change in the time,  manner or place of payment  of, or in any
     other  term of,  all or any of the  Guaranteed  Obligations,  or any  other
     extension, compromise or renewal of any Guaranteed Obligation;

          (d)  any  reduction,  limitation,  impairment  or  termination  of any
     Guaranteed  Obligations  for any  reason  including  any  claim of  waiver,
     release, surrender, alteration or compromise, and the Guaranty shall not be
     subject to (and the  Guarantor  hereby waives any right to or claim of) any
     defense or setoff,  counterclaim,  recoupment or termination  


                                      -6-
<PAGE>

     whatsoever  by  reason  of  the  invalidity,  illegality,   nongenuineness,
     irregularity,  compromise,  unenforceability  of,  or any  other  event  or
     occurrence  affecting,   any  Guaranteed  Obligations  other  than  payment
     thereon;

          (e) any amendment to, rescission, waiver, or other modification of, or
     any consent to departure  from,  any of the terms of the Loan  Agreement or
     any other Account Party Agreement;

          (f) any addition, exchange, release, surrender or nonperfection of any
     collateral,  or any  amendment  to or waiver or release or addition  of, or
     consent to departure  from, any other  guaranty,  held by the Bank securing
     any of the Guaranteed Obligations; or

          (g) any other circumstance which might otherwise  constitute a defense
     available to, or a legal or equitable  discharge of, the Account Party, any
     surety or any of the Guaranteed Obligations.

     Section.   2.03  Waiver,   etc.  The  Guarantor   hereby  expressly  waives
promptness,  diligence,  presentment,  demand of payment upon the Account Party,
protest  and all  notices  whatsoever  (other  than  demand of payment  upon the
Guarantor), and any requirement that the Bank protect, secure, perfect or insure
any security interest or lien upon any property subject thereto,  or exhaust any
right,  power or remedy or proceed  against (i) the Account Party under the Loan
Agreement,  the  other  Account  Party  Agreements  or any  other  agreement  or
instrument  referred to herein or therein or (ii) against any other Person under
any other guarantee of, or security for, any of the Guaranteed Obligations.

     Section 2.04  Reinstatement.  The  obligations of the Guarantor  under this
Article II shall be  automatically  reinstated if and to the extent that for any
reason any payment by or on behalf of the Account Party in respect of any of the
Guaranteed  Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations,  whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Guarantor agrees that it will
indemnify the Bank on demand for all reasonable  costs and expenses  (including,
without  limitation,  reasonable  fees  of  counsel)  incurred  by the  Bank  in
connection with such rescission or restoration.

     Section 2.05  Subrogation,  etc. The Guarantor will not exercise any rights
which it may acquire by reason of any payment made hereunder,  whether by way of
subrogation, reimbursement or otherwise, until the prior payment, in full and in
cash, of all Guaranteed Obligations. Any amount paid to the Guarantor on account
of any payment  made  hereunder  prior to the payment in full of all  Guaranteed
Obligations  shall  be held in trust  for the  benefit  of the  Bank  and  shall
immediately be paid to the Bank and credited and applied  against the Guaranteed


                                      -7-
<PAGE>

Obligations,  whether matured or unmatured,  in accordance with the terms of the
Agreement (or the Pledge Agreement); provided, however, that if

          (a) the  Guarantor  has made payment to the Bank of all or any part of
     the Guaranteed Obligations, and

          (b) all Guaranteed Obligations have been paid in full,

the Bank agrees  that,  at the  Guarantor's  request,  the Bank will execute and
deliver to the Guarantor  appropriate  documents  (without  recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the Guarantor of an interest in the Guaranteed  Obligations  resulting from such
payment by the Guarantor.  In  furtherance of the foregoing,  for so long as any
Guaranteed  Obligations  remain  outstanding,  the Guarantor  shall refrain from
taking any action or  commencing  any  proceeding  against the Guarantor (or its
successors  or assigns,  whether in connection  with a bankruptcy  proceeding or
otherwise)  to  recover  any  amounts in  respect  of  payments  made under this
Agreement to the Bank.

     Section 2.06 Remedies.  The Guarantor agrees that, as between the Guarantor
and the Bank, the  Liabilities of the Account Party under the Loan Agreement may
be  declared to be  forthwith  due and payable as provided in Section 9.2 of the
Loan Agreement (and shall be deemed to have become automatically due and payable
in the circumstances provided in said Section 9.2) for purposes of Section 2.01,
notwithstanding  any  stay,  injunction  or other  prohibition  preventing  such
declaration (or such obligations from becoming automatically due and payable) as
against the Account  Party and that, in the event of such  declaration  (or such
obligations  being deemed to have become  automatically  due and payable),  such
obligations  (whether  or not  due  and  payable  by the  Account  Party)  shall
forthwith become due and payable by the Guarantor for purposes of Section 2.01.

     Section  2.07  Continuing  Guaranty.  The  guaranty in this Article II is a
continuing  guaranty,  and shall apply to all  Guaranteed  Obligations  whenever
arising.


                                   ARTICLE III
                           GUARANTOR'S REPRESENTATIONS

     The Guarantor represents to the Bank that:

     Section 3.01 Organization.  The Guarantor is a corporation  existing and in
good standing under the laws of the State of Delaware;  each Material Subsidiary
is a corporation  duly existing and in good standing under the laws of the state
of its  incorporation;  the  Guarantor  and each  Material  Subsidiary  are duly
qualified,  in good standing and authorized to do business in 


                                      -8-
<PAGE>

each  jurisdiction  where  failure to so qualify  would have a material  adverse
effect on their  business  or  properties  and  because  of the  nature of their
activities or properties,  such qualification is required; and the Guarantor and
each Material  Subsidiary  have the  corporate  power and authority to own their
properties and to carry on their businesses in a manner  substantially  the same
as now being conducted.

     Section 3.02 Authorization;  No Conflict; Binding Effect. The execution and
delivery  of  this  Agreement  and  the  performance  by  the  Guarantor  of its
obligations  under this Agreement are within the Guarantor's  corporate  powers,
have been  authorized  by all  necessary  corporate  action,  have  received all
necessary  governmental  approval (if any shall be required) and do not and will
not  contravene  or  conflict  with any  provision  of law or of the  charter or
by-laws of the Guarantor or any Subsidiary or of any agreement  binding upon the
Guarantor or any Subsidiary. This Agreement has been duly executed and delivered
by  Guarantor  and is the  legal,  valid and  binding  obligation  of  Guarantor
enforceable against Guarantor in accordance with its terms.

     Section 3.03 Financial Statements;  Contingent  Liabilities;  Indebtedness.
The Guarantor's audited consolidated and consolidating (as applicable) financial
statements  as of and for the fiscal  year ended  December  31,  1996 (the "1996
Financials"), as certified by Price Waterhouse L.L.P., the Guarantor's certified
public  accountants for such period,  copies of which have been furnished to the
Bank,  have been  prepared in  conformity  with  generally  accepted  accounting
principles applied on a basis consistent with that of the preceding fiscal year,
and fairly present the financial condition of the Guarantor and its Subsidiaries
as of such dates and the results of their operations for the periods then ended.
To the best of the Guarantor's knowledge, the Guarantor's unaudited consolidated
and consolidating (as applicable)  financial  statement as of June 30, 1997 (the
"Interim  Financials")  a copy of which has been  furnished to the Bank,  fairly
presents the financial  condition of the Guarantor  and its  Subsidiaries  as of
such date and the results of their  operations for the period then ended.  Since
the date of the 1996  Financials,  no material  adverse  change in the business,
properties, assets, operations, conditions or prospects of the Guarantor and its
Subsidiaries  taken  as a whole  has  occurred  of  which  the Bank has not been
advised  in  writing  before  this  Agreement  was  signed.  There  is no  known
contingent  liability of the Guarantor or any Subsidiary which is known to be in
an amount in excess of $50,000 which is not reflected in the 1996  Financials or
which is not set forth in Schedule 3.03.

     Section 3.04 Taxes.  No  examination of any Federal income tax return filed
by or on behalf of the  Guarantor or any Material  Subsidiary  is pending or, to
the  best  knowledge  of  the  Guarantor,  threatened.  The  Guarantor  and  its
Subsidiaries  have filed or caused to be filed all federal,  state and local tax
returns  which,  to the  knowledge  of the  Guarantor or its  Subsidiaries,  are
required to be filed, and have paid or have caused to be paid all taxes as shown
on such returns or on any  assessment  received by them, to the extent that such
taxes have become due (except for current taxes not  delinquent  and taxes being
contested  in good  faith and by  appropriate  proceedings  for  which  adequate
reserves  have been  provided on the books of the


                                      -9-
<PAGE>


Guarantor  or the  appropriate  Subsidiary,  and  as to  which  no  foreclosure,
distraint, sale or similar proceedings have been commenced).

     Section  3.05 Liens.  None of the material  assets of the  Guarantor or its
Subsidiaries are subject to any mortgage, pledge, title retention lien, or other
lien,  encumbrance  or  security  interest,  except for:  (a) current  taxes not
delinquent  or  taxes  being   contested  in  good  faith  and  by   appropriate
proceedings;  (b) liens arising in the ordinary  course of business for sums not
due or sums being  contested in good faith and by appropriate  proceedings,  but
not  involving  any  deposits  or advances  or  borrowed  money or the  deferred
purchase price of property or services;  (c) to the extent specifically shown in
the financial statements referred to above; and (d) as shown on Schedule 3.05.

     Section  3.06  Adverse  Contracts.  Neither  the  Guarantor  nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any charter
or other  corporate  restriction,  nor is any of them  subject to any  judgment,
decree or order of any court or  governmental  body,  which may have a material,
adverse  effect  on the  business,  assets,  liabilities,  financial  condition,
operations or business  prospects of the Guarantor and its Subsidiaries taken as
a whole or on the ability of the Guarantor to perform its obligations under this
Agreement.  Neither the Guarantor nor its Subsidiaries  has, nor with reasonable
diligence  should have had,  knowledge of or notice that it is in default in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions contained in any such agreement, instrument,  restriction,  judgment,
decree or order.

     Section 3.07 Regulation U. The Guarantor is not engaged principally in, nor
is one of the Guarantor's important activities, the business of extending credit
for the purpose of purchasing or carrying  "margin  stock" within the meaning of
Regulation U of the Board of Governors of the Federal  Reserve System as now and
from time to time hereinafter in effect.

     Section 3.08 Litigation.  No litigation  (including  derivative actions but
excluding  product liability claims as to which the amount claimed is completely
covered  by  satisfactory  insurance  other  than  self-insurance),  arbitration
proceedings or governmental proceedings or investigations are pending or, to the
best knowledge of the Guarantor,  threatened  against the Guarantor  which would
(singly or in the aggregate) if adversely determined,  have a material,  adverse
effect on the  financial  condition,  continued  operations  or prospects of the
Guarantor and its Subsidiaries taken as a whole,  except as set forth (including
estimates of the dollar amounts involved) on Schedule 3.08.

     Section 3.09 Subsidiaries.  Schedule 3.09 sets forth a correct and complete
list of all Subsidiaries and Affiliates of the Guarantor.


                                      -10-
<PAGE>


     Section 3.10 Environmental  Matters.  Except as disclosed on Schedule 3.10,
(i) the  Guarantor and its Material  Subsidiaries  and all  properties  owned or
operated by the  Guarantor or its Material  Subsidiaries  comply in all material
respects  with all  Environmental  Laws;  (ii)  neither  the  Guarantor  nor any
Material  Subsidiary  is  subject  to  any  actual  or  threatened  judicial  or
administrative  proceeding,  investigation  or inquiry into the  possibility  of
violation  of any  Environmental  Laws;  (iii)  neither  the  Guarantor  nor any
Material Subsidiary is the subject of an actual or threatened federal,  state or
local  investigation or inquiry evaluating whether any remedial action is needed
under any Environmental Laws to respond to a release of any material  classified
as  "hazardous"  by any  Environmental  Laws  ("Hazardous  Material")  into  the
environment;  (iv)  neither  the  Guarantor  nor  any  Material  Subsidiary  has
knowledge  or notice of the presence of any  Hazardous  Material on or under any
property  owned or operated by the  Guarantor  or any Material  Subsidiary;  (v)
there is no claim  pending or  threatened  against the Guarantor or any Material
Subsidiary relating to damage, contribution,  cost recovery compensation,  loss,
or injury resulting from the release of, or exposure to, any Hazardous Material;
(vi) neither the Guarantor nor any Material  Subsidiary has any known contingent
liability  in  connection  with  any  release  of  Hazardous  Material  into the
environment;  and (vii) neither the Guarantor  nor any Material  Subsidiary  has
received notice,  nor has reasons to expect notice,  of any potential  liability
under federal, state or local laws, arising from or relating to any release into
the environment of any Hazardous Material.

     Section  3.11 ERISA.  The  Guarantor  and each  Material  Subsidiary  is in
compliance  with all material  requirements  of the Employee  Retirement  Income
Security  Act of 1974,  as amended  ("ERISA")  and the  regulations  promulgated
thereunder as to any employee benefit plan defined in Section 3(3) of ERISA, and
there  exists  no  event  described  in  Section  4043(b)  of  ERISA,  excluding
subsections  4043(b)(2)  and  4043(b)(3)  thereof,  with  respect  to which  the
Guarantor or any Material  Subsidiary has any obligation,  which could result in
such Person  incurring any  liability,  fine or penalty,  other than a liability
reflected  in the  funding  schedule  for  such  plan  which  is not yet due and
payable.  Within the past five years,  neither the  Guarantor  nor any  Material
Subsidiary has terminated or withdrawn  from, nor is the Guarantor  aware of any
withdrawal  liability assessed against the Guarantor or any Material  Subsidiary
with respect to, any multi-employer employee benefit plan.

     Section  3.12 True and  Complete  Disclosure.  (i) All factual  information
relating to the Guarantor furnished to the Bank heretofore or  contemporaneously
herewith by or on behalf of the Guarantor for purposes of or in connection  with
this Agreement or any  transaction  contemplated  hereby is true and complete in
every  material  respect  on the date as of which such  information  is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time provided,  however,  the dated
date of the  Schedules  shall be the date hereof and (ii) there is no fact known
to the  Guarantor on the date hereof  that,  in the  reasonable  judgment of the
Guarantor,  materially  adversely affects the business or financial prospects of
the Guarantor that has not been disclosed in writing to the Bank.


                                      -11-
<PAGE>

     Section 3.13 Solvency. Guarantor is solvent and will continue to be solvent
following the consummation of the transactions contemplated by this Agreement.

     Section 3.14 Survival. All representations and warranties contained in this
Agreement shall survive the execution and delivery of this Agreement.


                                   ARTICLE IV
                              GUARANTORS' COVENANTS

     Section 4.01  Corporate  Existence,  Mergers Etc. The Guarantor and each of
its Material  Subsidiaries shall preserve and maintain its corporate  existence,
rights, franchises,  licenses and privileges, and will not liquidate,  dissolve,
or merge, or consolidate  with or into any other  corporation,  or sell,  lease,
transfer or otherwise dispose of all or a substantial part of its assets, except
that:

          (ii) Any Subsidiary  may merge or consolidate  with or into any one or
     more wholly-owned subsidiaries;

          (iii) Any Subsidiary which is not a Material  Subsidiary may liquidate
     or dissolve upon the prior written consent of the Bank (which consent shall
     not be unreasonably withheld); and

          (iv) In any given fiscal year of the Guarantor,  the Guarantor and its
     Material Subsidiaries may sell, transfer, or otherwise dispose of a portion
     of their respective  assets and those  Subsidiaries  which are not Material
     Subsidiaries may sell, transfer or otherwise dispose of all or a portion of
     their respective  assets;  provided,  however,  that the aggregate net book
     value of assets so sold,  transferred  or disposed of by the  Guarantor and
     its  subsidiaries  (including both Material  Subsidiaries  and Subsidiaries
     which are not Material  Subsidiaries)  in such fiscal year shall not exceed
     ten percent (10%) of the net book value of the total consolidated assets of
     the Guarantor and its  Subsidiaries  in the  immediately  preceding  fiscal
     year. The restrictions of this subsection  4.01(iii) shall not apply to the
     lease (as lessor) of any assets of the Guarantor and its Subsidiaries.

     Section 4.02 Reports,  Certificates  and Other  Information.  The Guarantor
shall furnish to the Bank:

          (i) Interim Reports.  Within forty-five (45) days after the end of the
     first,  second, and third quarters of each fiscal year of the Guarantor,  a
     copy  of  an  unaudited  financial  statement  of  the  Guarantor  and  its
     Subsidiaries  prepared on a 


                                      -12-
<PAGE>

     consolidated and  consolidating  (as applicable)  basis consistent with the
     unaudited   consolidated  and  consolidating   (as  applicable)   financial
     statement  of the  Guarantor  and  its  Subsidiaries  as at June  30,  1997
     referred to above,  signed by an  authorized  officer of the  Guarantor and
     consisting of at least (i) a balance  sheet as at such Fiscal  Quarter End,
     and (ii) a  consolidated  cash  flow  statement  of the  Guarantor  and its
     Subsidiaries for such quarter and for the period from the beginning of such
     fiscal year to such Fiscal Quarter End.

          (ii)  Annual  Report.  As soon as  available  and in any event  within
     ninety (90) days after each Fiscal Year End of the  Guarantor,  a copy of a
     consolidated and consolidating (as applicable) balance sheet and profit and
     loss statement of the Guarantor and its Subsidiaries as of such Fiscal Year
     End and the related  consolidated  statement  of cash flows for such fiscal
     year,  in each case  setting  forth in  comparative  form  figures  for the
     preceding  fiscal year,  all in reasonable  detail,  prepared in accordance
     with  generally  accepted  accounting   principles   consistently   applied
     throughout the period involved (including disclosure required by Accounting
     Principles Board Statement 28) (except for such changes as are disclosed in
     such  financial  statements  or in the notes  thereto and  concurred  in by
     independent  certified  public  accountants)  and  accompanied  by an audit
     report of any firm of independent public accountants of recognized national
     standing  selected by the  Guarantor;  provided,  however,  that such audit
     report shall not be required  with respect to the  consolidating  financial
     statements.

          (iii) Notice of Default,  Litigation  and ERISA  Matters.  Immediately
     upon learning of the  occurrence of any of the  following,  written  notice
     describing  the same and the steps being taken by the  Guarantor or any one
     of its Subsidiaries  affected in respect thereof to remedy or cure: (i) the
     occurrence  of an "Event of  Default"  or an  "Unmatured  Event of Default"
     (each as defined in the Loan Agreement) or an Event of Default or Unmatured
     Event of Default; or (ii) the institution of, or any adverse  determination
     in,  any  litigation,  arbitration  or  governmental  proceeding  which  is
     material to the Guarantor or any one of its  Subsidiaries on a consolidated
     basis;  or  (iii)  the  occurrence  of a  reportable  event  under,  or the
     institution  of steps by the  Guarantor or any one of its  Subsidiaries  to
     withdraw from, or the  institution of any steps to terminate,  any employee
     benefit plans as to which the Guarantor or any of its Subsidiaries may have
     any liability.

          (v)  Subsidiaries.  Promptly from time to time a written report of any
     changes in Schedule 3.09 hereto.

          (vi)  Other  Information.  From time to time such  other  information,
     financial or otherwise, concerning the Guarantor or any of its Subsidiaries
     as the Bank may reasonably request.


                                      -13-
<PAGE>

     Section 4.03 Inspection. Upon reasonable prior notice from the Bank and its
agents,  the Guarantor and its Subsidiaries shall permit the Bank and its agents
at any time during normal business hours to inspect their respective  properties
and to inspect and make copies of their  respective books and records so long as
no  unnecessary  interruption  is caused to the operation of the business of the
Guarantor and its Subsidiaries by any such inspection.


                                    ARTICLE V
                                EVENT OF DEFAULT

     Section 5.01 Events of Default.  Each of the following shall  constitute an
Event of Default under this Agreement:

          b. Nonpayment of Guaranteed  Obligations.  Default by the Guarantor in
     the payment when due of any Guaranteed Obligation.

          c. Noncompliance With this Agreement.  (i) Failure by the Guarantor to
     comply with or to perform any  provision of Section  4.01,  Section 4.02 or
     Section 4.03 or (ii) failure by the  Guarantor to comply with or to perform
     any other  provision of this Agreement (if such failure does not constitute
     an Event of Default under any of the other  subsections and clauses of this
     Section, including, without limitation,  clause (i) of this subsection) and
     continuance  of  such  failure  for 30 days  after  notice  thereof  to the
     Guarantors from the Bank.

          c.  Cross-Default.  The  occurrence  of a default  or event of default
     under  Section 9.1 of the Loan  Agreement  or a default or event of default
     shall occur under any other Account Party  Agreement,  the  occurrence of a
     default or event of  default  under  Section  6.1 of the  Revolving  Credit
     Agreement  or there shall  occur any  default or event of  default,  or any
     event which  might  become such with notice or the passage of time or both,
     or any  similar  event,  or any event  which  requires  the  prepayment  of
     borrowed money (other than  prepayment of loans under the Revolving  Credit
     Agreement) in a principal  amount in excess of $200,000 in the aggregate or
     the  acceleration of maturity  thereof,  under the terms of any evidence of
     Indebtedness  or other  agreement  issued or assumed or entered into by the
     Guarantor or any of its  Subsidiaries  or under the terms of any indenture,
     agreement or instrument  under which any such evidence of  Indebtedness  or
     other agreement is issued,  assumed,  secured or guaranteed (and such event
     shall continue beyond any applicable period of grace; or


                                      -14-
<PAGE>

          d.  Dissolutions,  etc.  The  Guarantor  shall fail to comply with any
     provision  concerning  its  existence  or  that  of  any  of  its  Material
     Subsidiaries or any prohibition against dissolution,  liquidation,  merger,
     consolidation or sale of assets; or

          e.  Warranties.  Any  material  representation,   warranty,  schedule,
     certificate, financial statement, report, notice or other writing furnished
     by or on behalf of the  Guarantor to the Bank is false or misleading in any
     material  respect on the date as of which the facts  therein  set forth are
     stated or certified; or

          f. Change in Control.  A majority of the  outstanding  voting stock of
     the Guarantor  shall be acquired,  directly or  indirectly,  by a Person or
     group of Persons acting in concert, who own on the date hereof less than 5%
     of such voting stock; or

          g. ERISA.  The Pension  Benefit  Guaranty  Corporation,  or any entity
     succeeding to any or all of its functions under ERISA,  applies to a United
     States  District  Court for the  appointment of a trustee to administer any
     Plan or for a decree adjudicating that any such Plan must be terminated;  a
     trustee is appointed to  administer  any such Plan;  any action is taken to
     terminate  any such  Plan or any such  Plan is  permitted  or  caused to be
     terminated if, at the time such action is taken or such  termination of any
     such Plan occurs,  the Plan's "vested  liabilities",  as defined in Section
     3(25) of ERISA,  exceed  the then  value of its  assets at the time of such
     termination  (for purposes of this Section  5.01(g),  "Plan" shall have the
     meaning  given to such term in  Section  3(3) of ERISA and  established  or
     maintained  by  the  Guarantor  or any of  its  Material  Subsidiaries  and
     includes  any  Plan  as to  which  the  Guarantor  or any  of its  Material
     Subsidiaries may have any liability); or

          h.  Litigation.  Any suit,  action or other  proceeding  (judicial  or
     administrative)  shall be  commenced  against the  Guarantor  or any of its
     Subsidiaries,  or with respect to any assets of the Guarantor or any of its
     Subsidiaries,  and such proceeding shall, in the reasonable  opinion of the
     Bank and its counsel,  threaten to have a material,  adverse  effect on the
     future  operations of the Guarantor and its Subsidiaries  taken as a whole,
     or a final  judgment in excess of $250,000 shall be entered or a settlement
     in  excess  of  $250,000  shall be  reached  in any such  suit,  action  or
     proceeding;  provided, however, that such occurrence shall not be deemed an
     Event of Default if as to the amount  involved,  claimed,  awarded in final
     judgment or agreed to in  settlement,  one hundred  percent  (100%) of that
     portion  (if  any)  of  such  amount  which  exceeds  $250,000  is,  in the
     reasonable  opinion  of the Bank and its  counsel,  completely  covered  by
     satisfactory insurance (other than self-insurance); or

          i. Bankruptcy - Filing of Petition.


                                      -15-
<PAGE>

               (i) The Guarantor or any of its Material  Subsidiaries shall file
          a petition or answer or otherwise  commence  any action or  proceeding
          seeking  reorganization,  arrangement or  readjustment of its debts or
          for any other relief under the federal Bankruptcy Code, as amended, or
          under any other bankruptcy or insolvency act or law, federal, state or
          foreign,  now or hereafter existing,  or the Guarantor or any Material
          Subsidiary  shall  consent to,  approve of, or acquiesce  in, any such
          petition,  action  or  proceeding;  or  the  Guarantor  or  any of its
          Material  Subsidiaries  shall  consent  to  the  institution  of  such
          proceedings  or the filing of any such petition or to the  appointment
          of a receiver, liquidator, assignee, trustee, custodian,  sequestrator
          or  similar  official  for  all or any  part  of the  property  of the
          Guarantor or any of its Material Subsidiaries; or

               (ii) an  involuntary  petition  shall be filed  or an  action  or
          proceeding otherwise commenced seeking reorganization,  arrangement or
          readjustment of the debts of the Guarantor or any Material  Subsidiary
          or for any other relief under the federal Bankruptcy Code, as amended,
          or under any other bankruptcy or insolvency act or law, federal, state
          or foreign,  now or hereafter  existing,  and such action has not been
          stayed within thirty (30) days of the filing or  commencement,  as the
          case may be; or

          j.  Bankruptcy  - Entry of Order for Relief.  There shall be entered a
     decree or order by a court (i)  constituting an order for relief in respect
     of the  Guarantor  or any of its  Material  Subsidiaries  under the federal
     Bankruptcy  Code, as amended,  or under any other  bankruptcy or insolvency
     act or law, federal,  state or foreign, now or hereafter existing;  or (ii)
     appointing   a  receiver,   liquidator,   assignee,   trustee,   custodian,
     sequestrator or similar official for all or any part of the property of the
     Guarantor  or any of its  Material  Subsidiaries,  or  (iii)  ordering  the
     winding-up of or  liquidation of the affairs of the Guarantor or any of its
     Material Subsidiaries; and any such decree or order shall continue unstayed
     and in effect for a period of thirty (30) consecutive days; or

          k. Insolvency. The Guarantor or any of its Material Subsidiaries shall
     become  insolvent  or  shall  fail or be  unable  to pay its  debts as they
     mature,  or shall admit in writing its  inability  to pay its debts as they
     mature,  or  shall  make  a  general  assignment  for  the  benefit  of its
     creditors,  or shall enter into any  composition or similar  agreement,  or
     shall suspend the transaction of all or a substantial  portion of its usual
     business.

     Section 5.02 Effect of Events of Default.  The Guarantor  acknowledges  and
agrees that the  occurrence  of an Event of Default  under  Section  5.01 hereof
shall also  constitute  an event of default  for  purposes of Section 9.1 of the
Loan Agreement.


                                      -16-
<PAGE>


                                   ARTICLE VI
                                  MISCELLANEOUS

     Section 6.1 Binding on Successors,  Transferees and Assigns;  Assignment of
Guaranty. This Agreement shall be binding upon the Guarantor and its successors,
transferees  and assigns and shall inure to the benefit of and be enforceable by
the Bank and its successors,  transferees and assigns;  provided,  however, that
the Guarantor may not assign any of its obligations  hereunder without the prior
written consent of the Bank.

     Section 6.2 Amendments,  etc. No amendment to or waiver of any provision of
this Agreement,  nor consent to any departure by the Guarantor therefrom,  shall
in any event be effective  unless the same shall be in writing and signed by the
Bank,  and then such waiver or consent  shall be effective  only in the specific
instance and for the specific purpose for which given.

     Section 6.3 Addresses for Notices to the  Guarantor.  All notices and other
communications provided for hereunder shall be in writing and shall be given (i)
by  first  class  or  certified  mail,   postage  prepaid;   (ii)  by  facsimile
transmission  and confirmed by the sender's  telephone call to the recipient and
by mailing or  delivering  a copy as  provided  in clause (i) , clause  (iii) or
clause (iv) hereof; (iii) by hand delivery or (iv) by courier service (including
overnight  courier  service).  Notices to the  Guarantor  shall be  directed  as
follows:

ELXSI Corporation
4209 Vineland Road
Suite J-1
Orlando, Florida 32811
Attention:        Controller
Facsimile:        (407) 425-1569

with a copy to:

Kenneth R. Artin, Esq.
Lowndes Drosdick Doster Kantor & Reed, P.A.
215 North Eola Drive
Orlando, Florida 32802
Telephone:        (407) 843-4600
Facsimile:        (407) 423-4495


                                      -17-
<PAGE>

Notices to the Bank shall be directed as follows:

Bank of America National Trust
 and Savings Association
231 South LaSalle Street
Chicago, Illinois 60697

Attention:        Marc J. Crady
Telephone:        (312) 828-6686
Facsimile:        (312)828-1974

Notice given as provided in clause (i) hereof shall be effective  five days from
the date of mailing.  Notice  given as provided in clauses (ii) and (iii) hereof
shall be effective on the day sent if sent by 4:00 p.m.  (local time at Chicago,
Illinois) on a Business Day and otherwise on the next Business Day following the
day of  sending.  Notice  given as  provided  in  clause  (iv)  hereof  shall be
effective on the Business Day following the day of sending.

     Section 6.04 No Waiver; Remedies. In addition to, and not in limitation of,
Section 2.3 and Section 2.6, no failure on the part of the Bank to exercise, and
no delay in exercising,  any right  hereunder shall operate as a waiver thereof;
nor shall any single or partial  exercise of any right  hereunder  preclude  any
other or  further  exercise  thereof or the  exercise  of any other  right.  The
remedies  herein  provided  are  cumulative  and not  exclusive  of any remedies
provided by law.

     Section 6.05 Section Captions.  Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.

     Section 6.06 Right of Set-off. For so long as any amount is due or owing to
the Bank under the Loan  Agreement,  so long as an Event of Default has occurred
and is  continuing,  the Bank shall have the right to  immediately  and  without
notice  set-off  against  any of the  Guarantor's  obligations  to it under this
Agreement  any sum owed by the Bank in any capacity to the  Guarantor.  The Bank
shall be deemed  to have  exercised  such  right of  set-off  and to have made a
charge  against any such sum  immediately  upon the  occurrence  of any Event of
Default,  even though the actual book entries may be made at the time subsequent
thereto.  

     Section  6.07  Severability.  Wherever  possible  each  provision  of  this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such  provision  shall be  ineffective  to the extent of
such  prohibition  or  invalidity,  without  invalidating  the remainder of such
provision or the remaining provisions of this Agreement.



                                      -18-
<PAGE>

     Section 6.08 Governing Law; Jury Trial Waiver;  Venue. This Agreement shall
be  governed  by, and  construed  in  accordance  with,  the law of the State of
Illinois without giving effect to Illinois choice of law principles.

     THE GUARANTOR HEREBY  IRREVOCABLY  WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING  (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION
WITH  THIS  AGREEMENT,  OR ANY  AMENDMENT,  INSTRUMENT,  DOCUMENT  OR  AGREEMENT
DELIVERED  OR WHICH MAY IN THE FUTURE BE DELIVERED IN  CONNECTION  HEREWITH,  OR
(II) ARISING FROM ANY DISPUTE OR  CONTROVERSY  IN CONNECTION  WITH OR RELATED TO
THIS AGREEMENT, OR ANY SUCH AMENDMENT,  INSTRUMENT,  DOCUMENT OR AGREEMENT,  AND
AGREES THAT ANY SUCH ACTION OR  COUNTERCLAIM  SHALL BE TRIED  BEFORE A COURT AND
NOT BEFORE A JURY.

     THE  GUARANTOR  IRREVOCABLY  AGREES  THAT,  SUBJECT TO THE BANK'S  SOLE AND
ABSOLUTE  ELECTION,  ANY  ACTION OR  PROCEEDING  IN ANY WAY,  MANNER OR  RESPECT
ARISING  OUT OF  THIS  AGREEMENT,  OR ANY  AMENDMENT,  INSTRUMENT,  DOCUMENT  OR
AGREEMENT  DELIVERED  OR WHICH MAY IN THE  FUTURE  BE  DELIVERED  IN  CONNECTION
HEREWITH,  OR ARISING FROM ANY DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH
OR RELATED TO THIS  AGREEMENT,  OR ANY SUCH AMENDMENT,  INSTRUMENT,  DOCUMENT OR
AGREEMENT  SHALL BE LITIGATED ONLY IN THE COURTS HAVING SITUS WITHIN THE CITY OF
CHICAGO,  ILLINOIS,  AND  THE  GUARANTOR  HEREBY  CONSENTS  AND  SUBMITS  TO THE
JURISDICTION  OF ANY LOCAL,  STATE OR FEDERAL COURT LOCATED WITHIN SUCH CITY AND
STATE.  THE GUARANTOR  HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE
THE VENUE OF ANY LITIGATION  BROUGHT AGAINST THE GUARANTOR AND/OR BY THE BANK IN
ACCORDANCE WITH THIS SECTION 6.08.


                                      -19-
<PAGE>



     IN WITNESS  WHEREOF,  the  Guarantor  has caused this  Agreement to be duly
executed and delivered by its officer  thereunto duly  authorized as of the date
first above written.


                                             ELXSI CORPORATION



                                             By:____________________________

                                             Its:___________________________




                                      -20-
<PAGE>