SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(Amendment No. 11 )1
ELXSI Corporation
________________________________________________________________________________
(Name of Issuer)
Common Stock, par value $.001 per share (and Associated Common Stock
Purchase Rights)
________________________________________________________________________________
(Title of Class of Securities)
268613-205
________________________________________________________________________________
(CUSIP Number)
Alexander M. Milley, 3600 Rio Vista Avenue, Suite A,
Orlando, Florida 32805 (407) 849-1090
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 8, 1997
________________________________________________________________________________
(Date of Event which Requires 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 [ ]
Note. Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on following pages)
Page 1 of 24 Pages
The Exhibit Index appears on page 16
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 2 of 24 Pages
________________________________________________________________________________
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Alexander M. Milley
________________________________________________________________________________
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
________________________________________________________________________________
3) SEC USE ONLY
________________________________________________________________________________
4) SOURCE OF FUNDS*
N/A
________________________________________________________________________________
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________________
6) CITIZENSHIP OR PLACE OF ORGANIZATION
USA
________________________________________________________________________________
NUMBER 7) SOLE VOTING POWER
OF 1,191,151**
SHARES _________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY -0-
EACH _________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 1,191,151**
WITH _________________________________________________________
10) SHARED DISPOSITIVE POWER
-0-
________________________________________________________________________________
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,191,151**
________________________________________________________________________________
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
CERTAIN SHARES [ ]
________________________________________________________________________________
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.1%
________________________________________________________________________________
14) TYPE OF REPORTING PERSON*
IN
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Includes: (i) shares held by other persons joining in this filing; and
(ii) shares that Mr. Milley and other persons joining in this filing have
the right to acquire. Excludes shares that Mr. Milley has the right to
acquire in more than 60 days.
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 3 of 24 Pages
________________________________________________________________________________
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Milley Management Incorporated
________________________________________________________________________________
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
________________________________________________________________________________
3) SEC USE ONLY
________________________________________________________________________________
4) SOURCE OF FUNDS*
N/A
________________________________________________________________________________
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 7) SOLE VOTING POWER
OF -0-
SHARES _________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 177,342**
EACH _________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON -0-
WITH _________________________________________________________
10) SHARED DISPOSITIVE POWER
177,342**
________________________________________________________________________________
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
177,342**
________________________________________________________________________________
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
________________________________________________________________________________
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.8%
________________________________________________________________________________
14) TYPE OF REPORTING PERSON*
CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Consists entirely of shares held by another person joining in this filing.
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 4 of 24 Pages
________________________________________________________________________________
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ELX Limited Partnership
________________________________________________________________________________
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
________________________________________________________________________________
3) SEC USE ONLY
________________________________________________________________________________
4) SOURCE OF FUNDS*
N/A
________________________________________________________________________________
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 7) SOLE VOTING POWER
OF 590,200
SHARES _________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY -0-
EACH _________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 590,200
WITH _________________________________________________________
10) SHARED DISPOSITIVE POWER
-0-
________________________________________________________________________________
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
590,200
________________________________________________________________________________
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
________________________________________________________________________________
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.7%
________________________________________________________________________________
14) TYPE OF REPORTING PERSON*
PN
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 5 of 24 Pages
________________________________________________________________________________
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cadmus Corporation
________________________________________________________________________________
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3) SEC USE ONLY
________________________________________________________________________________
4) SOURCE OF FUNDS*
WC
________________________________________________________________________________
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________________
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
________________________________________________________________________________
NUMBER 7) SOLE VOTING POWER
OF 177,342
SHARES _________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY -0-
EACH _________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 177,342
WITH _________________________________________________________
10) SHARED DISPOSITIVE POWER
-0-
________________________________________________________________________________
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
177,342
________________________________________________________________________________
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
________________________________________________________________________________
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.8%
________________________________________________________________________________
14) TYPE OF REPORTING PERSON*
CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 6 of 24 Pages
________________________________________________________________________________
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Elliot Kirkland L.L.C.
________________________________________________________________________________
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
________________________________________________________________________________
3) SEC USE ONLY
________________________________________________________________________________
4) SOURCE OF FUNDS*
N/A
________________________________________________________________________________
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 7) SOLE VOTING POWER
OF 231,109**
SHARES _________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY -0-
EACH _________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 231,109**
WITH _________________________________________________________
10) SHARED DISPOSITIVE POWER
-0-
________________________________________________________________________________
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
231,109**
________________________________________________________________________________
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
________________________________________________________________________________
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.8%
________________________________________________________________________________
14) TYPE OF REPORTING PERSON*
OO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Includes shares that Eliot Kirkland L.L.C has the right to acquire.
<PAGE>
7
Alexander M. Milley ("AMM"), Milley Management Incorporated, a
Delaware corporation ("MMI"), ELX Limited Partnership, a Delaware limited
partnership ("ELX"), Cadmus Corporation, a Massachusetts corporation ("Cadmus"),
and Eliot Kirkland L.L.C., a Delaware limited liability company ("Kirkland"),
hereby amend their statement on Schedule 13D dated September 8, 1989 (the
"Original Statement"), as amended by the Amendment No. 1 to the Original
Statement dated October 2, 1989 ("Amendment No. 1"), the Amendment No. 2 to the
Original Statement dated January 29, 1990 ("Amendment No. 2"), the Amendment No.
3 to the Original Statement dated November 6, 1992 ("Amendment No. 3"), the
Amendment No. 4 to the Original Statement dated June 4, 1993 ("Amendment No.
4"), the Amendment No. 5 to the Original Statement dated October 8, 1993
("Amendment No. 5"), the Amendment No. 6 to the Original Statement dated
November 30, 1993 ("Amendment No. 6"), the Amendment No. 7 to the Original
Statement dated December 20, 1994 ("Amendment No. 7"), the Amendment No. 8 to
the Original Statement dated January 31, 1995 ("Amendment No. 8"), the Amendment
No. 9 to the Original Statement dated September 20, 1995 ("Amendment No. 9") and
the Amendment No. 10 to the Original Statement dated January 7, 1996 (intended
to be January 7, 1997) ("Amendment No. 10"; and the Original Statement as
amended by Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4,
Amendment No. 5, Amendment No. 6, Amendment No. 7, Amendment No. 8, Amendment
No. 9 and Amendment No. 10, the "Amended Statement"), filed with respect to the
Common Stock, par value $.001 per share (the "Common Stock"), of ELXSI
Corporation, a Delaware corporation (the "Issuer").
The Original Statement as amended by Amendment No. 1, Amendment No. 2
and Amendment No. 3 (the "Earlier Filings") were executed and filed by AMM, MMI,
ELX and Cadmus jointly with other persons and entities, in accordance with Rule
13d-1(f)(1) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Each of Amendment No. 4, Amendment No. 5, Amendment No. 6,
Amendment No. 7 and Amendment No. 8 (the "Later Filings") was executed and filed
by AMM, MMI, ELX, Cadmus, Winchester National, Inc., a Delaware corporation,
and/or Winter Pond Partners, L.P., a Delaware limited partnership (liquidated
and dissolved in May 1994). Amendment No. 9 and Amendment No. 10 were, and this
Amendment No. 11 is being, executed and filed by AMM, MMI, Cadmus, ELX and
Kirkland (the "Amended Statement Filers") jointly with each other in accordance
with such Rule, but not with any of the other persons or entities who joined in
the Earlier Filings and/or Later Filings. The information reported in Amendment
No. 4, Amendment No. 5, Amendment No. 6, Amendment No. 7, Amendment No. 8,
Amendment No. 9, Amendment No. 10 and/or this Amendment No. 11 relates solely to
the Amended Statement Filers and other entities who joined in the execution and
filing thereof, and not to any of such other persons or entities who joined in
the Earlier Filings and/or Later Filings. Accordingly, each Amended Statement
Filer hereby disclaims any responsibility for (i) the filing of any reports or
information required under Section 13(d) of the Exchange Act and Regulation
13D-G promulgated thereunder relating to any of such other persons or entities,
(ii) the timeliness of any such filing, and (iii) the completeness and accuracy
of any such report or information.
The Issuer entered into a Rights Agreement, dated as of June 4, 1997
(the "Rights Agreement"), with Continental Stock Transfer & Trust Company, as
Rights Agent.
<PAGE>
8
Pursuant to the Rights Agreement, the Board of Directors declared a dividend of
one Common Stock Purchase Right (each, a "Right") for each share of Common Stock
outstanding at the opening of business on June 16, 1997. All shares of Common
Stock of the Company issued on or after such date will also have one attached
Right. Therefore, each outstanding share of Common Stock carries an associated
Right and, unless otherwise expressly indicated herein or in the Amended
Statement, all references to Common Stock shall include the associated Rights.
This Amendment No. 11 is being filed in order to report that:
1. On each of September 19, 1997 and September 24, 1997 Cadmus purchased
2,000 shares of Common Stock (or 4,000 shares in the aggregate) in the
over-the-counter market (the "September 1997 O-T-C Purchases").
2. On October 1, 1997 Cadmus formally commenced an offer to purchase
shares of Common Stock from a portion of the group of stockholders
that own less than 100 shares of Common Stock (after giving effect to
the Issuer's May 1992 1-for-25 reverse split of outstanding shares
(the "1992 Reverse Split")) (the "1997 Odd-Lot Offer"); and that
pursuant to the 1997 Odd-Lot Offer Cadmus has, to date, purchased an
aggregate of 195 shares of Common Stock (the "Initial 1997 Odd-Lot
Purchases").
3. Effective May 22, 1997 the Issuer granted to AMM nonqualified stock
options to purchase an aggregate of 42,500 shares of Common Stock (the
"1997 Plan Nonqualified Options") pursuant to the Issuer's 1997
Incentive Stock Option Plan (the "1997 Plan"), which 1997 Plan
Nonqualified Options become 100% exercisable on November 22, 1997.
4. Effective October 8, 1997 the Issuer granted to AMM nonqualified stock
options to purchase an aggregate of 40,000 shares of Common Stock (the
"1993 Plan Nonqualified Options"; and together with the 1997 Plan
Nonqualified Options, the "1997 Nonqualified Options") pursuant to the
Issuer's 1993 Incentive Stock Option Plan (the "1993 Plan"), which
1993 Plan Nonqualified Options become 100% exercisable on April 10,
1998.
5. In February 1997 the Board of Directors of the Issuer agreed to: (i)
extend the term of the Series A Warrants to purchase 50,000 shares of
Common Stock at $3.125 per share ("Series A Warrants") held by
Kirkland from September 30, 1996 to September 30, 1998, in
consideration of Kirkland's agreement to increase the exercise price
thereof to $3.75 per share, and (ii) extend the term of the Series C
Warrants to purchase 68,762 shares of Common Stock at $4.36 per share
("Series C Warrants") held by Kirkland from January 31, 1997 to
January 31, 1999, in consideration of Kirkland's agreement to increase
the exercise price thereof to $5.23 per share (the "Warrants
Extension").
6. In June 1997 the subsidiaries of Azimuth Corporation, a Delaware
corporation ("Azimuth"), identified in (and defined as the "Azimuth
Subsidiaries" in) Amendment
<PAGE>
9
No. 10 completed a third-party refinancing of the Azimuth Subsidiary
Loans (as defined in Amendment No. 10) with the result that (among
other things) such Loans were paid-off and satisfied-in-full in
accordance with the terms of the Azimuth Transactions Agreement (as
defined in Amendment No. 10) and the related collateral security
interests and loan documentation were terminated the ("Azimuth
Transactions Termination").
7. On June 30 1997 Cadmus purchased from Bank of America Illinois (now
named Bank of America National Trust and Savings Association
("BANTSA")) the 6,517 shares of Series AAA 5% Cumulative Redeemable
Preferred Stock, par value $1.00 per share, of Azimuth (the "Series
AAA") issued to BANTSA on December 30, 1996 under the Azimuth
Transactions Agreement. The purchase price to Cadmus was $2,000,000,
and the funds therefor were provided through a loan made to Cadmus by
the Issuer's wholly-owned subsidiary, ELXSI, a California corporation
("ELXSI") (the "ELXSI-to-Cadmus Loan").
Except as set forth herein, there has been no material change in the
facts set forth in the Amended Statement with respect to any of the Amended
Statement Filers. Items and sub-items not expressly addressed herein are
inapplicable with respect to the Amended Statement Filers, or the responses to
them with respect to the Amended Statement Filers either are negative or have
not changed from those of the Amended Statement.
Item 2. Identity and Background
(b) The business address of each Amended Statement Filer has been moved to
3600 Rio Vista Avenue, Suite A, Orlando, Florida 32805. (Their telephone number
remains unchanged.)
Item 3. Source and Amount of Funds or Other Consideration
Of the transactions enumerated in the fourth narrative paragraph of
this Amendment No. 11, only the September 1997 O-T-C Purchases, the Initial 1997
Odd-Lot Purchases and the 1997 Odd-Lot Offer involved or will involve the
payment or transfer of funds for the purchase of securities of the Issuer.
The source of the funds of the September 1997 O-T-C Purchases,
totalling $40,750 (or $9.875 per share for the first 2,000 shares and $10.25 per
share for the second 2,000 shares, plus in each case a $0.125 per share
commission/mark-up), was Cadmus's own working capital funds.
The source of the funds of the Initial 1997 Odd-Lot Purchases,
totalling $2,028.75 (or $10.255 per share for 135 shares and $10.75 per share
for the remaining 60 shares), was Cadmus's own working capital funds.
The source of the funds for other purchases that may be made pursuant
to the 1997 Odd-Lot Offer will be Cadmus's own working capital funds.
<PAGE>
10
Item 4. Purpose of Transaction
September 1997 O-T-C Purchases. The purpose the September 1997 O-T-C
Purchases was to increase Cadmus's investment in the Issuer at a time when
shares of Common Stock were available at what it considered to be a favorable
price.
1997 Odd Lot-Offer. Cadmus's 1997 Odd-Lot Offer was made pursuant to a
letter, dated September 24, 1997, a form of which is filed herewith as Exhibit
B, addressed to each of those holders of so-called "odd-lots" of Common Stock
(i.e., less than 100 shares, after giving effect to the 1992 Reverse Split)
("Odd-Lot Holders") as are described in the following sentence. To date, such
letter has been mailed to only those Odd-Lot Holders who (the Issuer's records
reflect): (i) exchanged their pre-1992 Reverse Split Common Stock certificates
for post-1992 Reverse Split Common Stock certificates and (ii) hold 51-75 shares
of Common Stock (such Odd-Lot Holders, the "Initial Odd-Lot Offerees"). The
terms of the 1997 Odd-Lot Offer are that Cadmus will purchase shares tendered
pursuant thereto at the closing sale price per share of Common Stock on the
trading day immediately preceding the post-mark or other forwarding date of the
tendering Odd-Lot Holders' respective return of materials. In addition, in no
event will Cadmus purchase pursuant to the 1997 Odd-Lot Offer a number of shares
of Common Stock that, together with all other shares of Common Stock purchased
by Cadmus in the preceding 12 months, would constitute more than 2% of the
outstanding shares of Common Stock. Including the shares purchased in the
September 1997 O-T-C Purchases for this purpose, Cadmus will not purchase more
than approximately 89,000 shares of Common Stock pursuant to the 1997 Odd-Lot
Offer. At present, to the Issuer's knowledge: (A) approximately 127,281 shares
of Common Stock are held by Odd-Lot Holders, and (B) approximately 6,917 shares
of Common Stock are held by Initial Odd-Lot Offerees.
The purpose the 1997 Odd-Lot Offer is to: (i) help to increase
Cadmus's investment in the Issuer at a time when shares of Common Stock may be
available at what it considers to be favorable prices, and (ii) in a way that is
not coercive and may be advantageous to Odd-Lot Holders (i.e., by allowing them
an opportunity to sell Common Stock on a commission-free basis), help the Issuer
to reduce the burden and expense of communicating with Odd-Lot Holders who may
(in any event) wish to sell their shares.
1997 Nonqualified Options. The stated purpose of both the 1997 Plan
and 1993 Plan is to establish as close an identity as feasible between the
interests of the Issuer and those of selected directors, officers and key
employees of the Issuer, and also to attract, retain, motivate and reward
persons of superior ability, training and experience.
Warrants Extension. The purpose of the Warrants Extension was to
accept the request of AMM, on behalf of Kirkland (and the I Trust (as defined in
Amendment No. 7), which holds 150,500 Series A Warrants) that the expiration
date of the Series A Warrants and Series C Warrants be extended in return for
the agreement of Kirkland (and the I Trust) that the exercise price thereof will
be increased over the then-current $3.125 and $4.36 per share of Common Stock
(respectively) to a higher price. In approving such request and extending the
terms of the Series A Warrants and Series C Warrants
<PAGE>
11
(as set forth in item 5 of the fourth narrative paragraph of this Amendment No.
11), the Board of Directors wished to help to maintain the pre-existing identity
of interests between the Issuer and AMM (the Chairman, President and Chief
Executive Officer of the Issuer) and to continue to motivate AMM in the Issuer's
behalf.
Azimuth Transactions Termination. The purpose of the Azimuth
Transactions (as defined in Amendment No. 10) was to provide a temporary
"bridge" of revolving credit to the Azimuth Subsidiaries on terms that were
intended to earn ELXSI a return on investment not generally available in the
market place. The cost to the Azimuth Subsidiaries of the financing provided by
ELXSI under the Azimuth Transactions Agreement was relatively high compared to
those that would eventually become available to them from third-parties, and
since the time of the closing of the Azimuth Transactions (on December 30, 1996)
the Azimuth Subsidiaries were continuously seeking to replace such financing
with lower-cost, permanent financing. With the payment and satisfaction of the
indebtedness owed to ELXSI by the Azimuth Subsidiaries in the Azimuth
Transactions Termination, and ELXSI's realization of the other values provided
under the Azimuth Transactions Agreement, ELXSI did in fact realize a return
from the Azimuth Transactions not generally available in the market place. The
Azimuth Transactions Termination transactions are memorialized in a letter
agreement executed by ELXSI, Azimuth and the Azimuth Subsidiaries in the form
filed herewith as Exhibit C.
ELXSI-to-Cadmus Loan. The purpose of the ELXSI-to-Cadmus Loan was to
provide an additional opportunity to earn ELXSI a return on investment not
generally available in the market place. The terms of the ELXSI-to-Cadmus Loan
are as follows: (A) June 30, 1999 maturity date, with all principal payable at
that time; (B) interest accruing from origination at 15% per annum, payable
quarterly; and (C) secured by a pledge of the Azimuth Series AAA shares. In
addition, in connection with the ELXSI-to-Cadmus Loan Cadmus agreed to pay to
ELXSI a $100,000 closing fee and all of its fees and expenses in connection with
ELXSI's borrowing of funds for on-lending to Cadmus. (Such funds were obtained
by ELXSI under its existing amended and restated credit agreement with BANTSA, a
waiver under which BANTSA granted for such purpose.) The terms of the
ELXSI-to-Cadmus Loan are memorialized in a Secured Promissory Note made and
executed by Cadmus in the form filed herewith as Exhibit D.
(a) Depending on the level of responses it receives to the Odd-Lot Offer
made to the Initial Odd-Lot Offerees, Cadmus may or may not determine to
formally extend the Odd-Lot Offer to other Odd-Lot Holders.
In addition, from time to time after the date hereof, any one or more
of AMM, MMI, ELX, Cadmus or Kirkland may purchase or acquire additional shares
of Common Stock (or options or warrants to purchase additional shares of Common
Stock); however, there are currently no definitive plans or proposals to do so.
Item 5. Interest in Securities of the Issuer
(a) AMM. The aggregate number of shares of Common Stock beneficially owned
by AMM is 1,191,151. Of these shares: (i) 25,000 are outstanding shares held by
<PAGE>
12
AMM; (ii) 125,000 are purchasable upon exercise of presently exercisable options
granted by the Issuer to AMM; (iii) 42,500 are purchasable upon exercise of
options (the 1997 Plan Nonqualified Options) granted by the Issuer to AMM and
exercisable within 60 days; (iv) 112,347 are outstanding shares held by
Kirkland; (v) 50,000 are purchasable upon exercise of presently exercisable,
Series A Warrants held by Kirkland; (vi) 68,762 are purchasable upon exercise of
presently exercisable, Series C Warrants held by Kirkland; (vii) 590,200 are
outstanding shares held by ELX; and (viii) 177,342 are outstanding shares held
by Cadmus. On a percentage basis these shares represent approximately 24.1% of
the outstanding shares of the Common Stock (calculated and determined in
accordance with Rule 13d-3(d)(1) under the Exchange Act). The foregoing excludes
(in accordance with Rule 13d-3(d)(1) under the Exchange Act) the 40,000 shares
of Common Stock purchasable upon exercise of the 1993 Plan Nonqualified Options.
If these 40,000 shares were included in the foregoing: (a) the aggregate number
of shares of Common Stock beneficially owned by AMM would be 1,231,151, and (b)
on a percentage basis that number of shares would represent approximately 24.7%
of the outstanding shares of the Common Stock (calculated and determined in
accordance with Rule 13d-3(d)(1) under the Exchange Act). See sub-item 5(b)
below for disclosure of the relationship between AMM and each of MMI, ELX,
Cadmus and Kirkland.
MMI. The aggregate number of shares of Common Stock beneficially owned
by MMI is 177,342, all of which are outstanding shares held by Cadmus. On a
percentage basis these shares represent approximately 3.8% of the outstanding
shares of the Common Stock (calculated and determined in accordance with Rule
13d-3(d)(1) under the Exchange Act). See sub-item 5(b) below for disclosure of
the relationship between MMI and Cadmus.
ELX. The aggregate number of shares of Common Stock beneficially owned
by ELX is 590,200, all of which are outstanding shares held by ELX. On a
percentage basis these shares represent approximately 12.7% of the outstanding
shares of the Common Stock (calculated and determined in accordance with Rule
13d-3(d)(1) under the Exchange Act).
Cadmus. The aggregate number of shares of Common Stock beneficially
owned by Cadmus is 177,342, consisting entirely of outstanding shares held by
Cadmus. On a percentage basis these shares represent approximately 3.8% of the
outstanding shares of the Common Stock (calculated and determined in accordance
with Rule 13d- 3(d)(1) under the Exchange Act).
Kirkland. The aggregate number of shares of Common Stock beneficially
owned by Kirkland is 231,109. Of these shares: (i) 112,347 are outstanding
shares held by Kirkland; (ii) 50,000 are purchasable upon exercise of presently
exercisable, Series A Warrants held by Kirkland; and (iii) 68,762 are
purchasable upon exercise of presently exercisable, Series C Warrants held by
Kirkland. On a percentage basis these shares represent approximately 4.8% of the
outstanding shares of the Common Stock (calculated and determined in accordance
with Rule 13d-3(d)(1) under the Exchange Act).
<PAGE>
13
(b) Each of AMM, ELX, Cadmus and Kirkland has the sole power to vote and
to direct the vote, and the sole power to dispose of and to direct the
disposition of, the shares of Common Stock reported hereinabove as being held by
such Amended Statement Filer. MMI does not directly hold any of the Issuer's
securities reported herein but, inasmuch as MMI is a controlling stockholder of
Cadmus, MMI may be deemed to share (with Cadmus and/or AMM) the power to vote
and to direct the vote, and to share (with Cadmus and/or AMM) the power to
dispose of and to direct the disposition of, the shares of Common Stock reported
hereinabove as being held Cadmus. AMM's beneficial ownership of shares held (or
subject to warrants held) by: (i) Kirkland arises solely from his capacity as
sole manager, President and a member thereof, (ii) ELX arises solely from his
capacity as sole general partner thereof, and (iii) MMI and Cadmus arises solely
from his capacity as sole director, President and a stockholder of MMI and his
capacity as a director, President and (indirectly, through MMI) a controlling
shareholder of Cadmus; and this filing shall not be construed as an admission
that AMM is otherwise, for purposes of Section 13 of the Exchange Act or
otherwise, the beneficial owner of any of the shares of Common Stock of the
Issuer reported herein as being held by MMI, ELX, Cadmus or Kirkland. MMI's
beneficial ownership of shares held by Cadmus arises solely from its capacity as
a controlling shareholder thereof. This filing shall not be construed as an
admission that any of MMI, ELX, Cadmus or Kirkland is otherwise, for purposes of
Section 13 of the Act or otherwise, the beneficial owner of the shares of Common
Stock of the Issuer reported herein as being held by any other Amended Statement
Filer, and each of MMI, ELX, Cadmus and Kirkland hereby disclaims beneficial
ownership of such shares.
(c) Reference is hereby made to the descriptions and discussions of the
September 1997 O-T-C Purchases, the Initial 1997 Odd-Lot Purchases and the 1997
Nonqualified Options appearing elsewhere in this Amendment No. 11, which
descriptions and discussions are hereby incorporated herein by reference in
response to this sub-item.
Item 6. Contracts, Arrangements, Understanding or Relationships With Respect
to Securities of the Issuer
1997 Nonqualified Options. The 1997 Plan Nonqualified Options and 1993
Plan Nonqualified Options are each governed by the terms of the relevant
Nonqualified Stock Option Plan Option Grant document (the "1997 Nonqualified
Options Agreements") from the Issuer to AMM. The following is a brief
description of the terms of the 1997 Nonqualified Options Agreements.
The 1997 Nonqualified Options Agreements relating to: (i) the 1997
Plan Nonqualified Options permit AMM to purchase (in the aggregate) up to 42,500
shares of Common Stock at a price of $6.00 per share, and (ii) the 1993 Plan
Nonqualified Options permit AMM to purchase (in the aggregate) up to 40,000
shares of Common Stock at a price of $9.25 per share. The 1997 Plan Nonqualified
Options become exercisable on November 22, 1997 and expire on May 22, 2007. The
1993 Plan Nonqualified Options become exercisable on April 10, 1998 and expire
on May October 10, 2007. AMM may exercise the 1997 Nonqualified Options by
delivery of a written notice to a designated
<PAGE>
14
officer of the Issuer. Unless the shares acquired upon exercise have been
registered under the Securities Act of 1933, AMM must provide the Issuer with a
letter to the effect that the shares are being purchased for his own account for
investment and not with a view to distribution or resale, and to such other
effects as the Issuer deems necessary to comply with Federal and state
securities laws. The exercise price may be paid in cash, by delivery and
assignment to the Issuer of securities of the Issuer owned by AMM or by a
combination of these; alternatively, AMM may purchase the shares through a
"cashless" exercise. The Issuer's obligation to deliver the shares of Common
Stock upon exercise of the 1997 Nonqualified Options is subject to AMM's
satisfaction of all applicable Federal, state and local tax withholding
obligations. The 1997 Nonqualified Options may not be transferred by AMM except
by will or the laws of descent and distribution. In the case of the 1993 Plan
Nonqualified Options: (a) if AMM ceases to be eligible to exercise such Options
they may nevertheless be exercised within 90 days of his becoming ineligible if
the Issuer consents thereto in writing or if AMM became ineligible through
retirement, and (b) in the event of AMM's death or disability, the option may be
exercised by AMM's executor or heir within the one-year period following his
death or disability.
The 1997 Plan Nonqualified Options Agreement is subject to the terms
and conditions of the 1997 Plan, which is incorporated by reference into this
Amendment No. 11 as Exhibit E.
Item 7. Material to be Filed as Exhibits
Exhibit A -- Joint Filing Agreement, dated September 20, 1995, among
Alexander M. Milley, Milley Management Incorporated, ELX Limited Partnership,
Cadmus Corporation and Eliot Kirkland L.L.C. (incorporated by reference to
Exhibit A to Amendment No. 9)
Exhibit B -- Form of letter, dated September 24, 1997, addressed to
Odd-Lot Holders with respect to the 1997 Odd-Lot Offer
Exhibit C -- Form of letter (captioned "Satisfaction and Termination
of Loan Agreements"), dated June ___, 1997, from ELXSI to Azimuth Corporation,
Delaware Electro Industries, Inc., Contempo Design, Inc. and Contempo Design
West, Inc. regarding the Azimuth Transactions Termination
Exhibit D -- Form of Secured Promissory Note made by Cadmus
Corporation payable to the order of ELXSI
Exhibit E -- ELXSI Corporation 1997 Incentive Stock Option Plan
(incorporated by reference to Annex A to ELXSI Corporation's definitive Proxy
Statement, dated April 14, 1997, filed with the Securities and Exchange
Commission (File No. 0- 11877))
<PAGE>
15
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 22, 1997
MILLEY MANAGEMENT INCORPORATED
/s/ Alexander M. Milley By:/s/ Alexander M. Milley
- ----------------------------------- -----------------------------------
Alexander M. Milley, Alexander M. Milley
individually President
ELX LIMITED PARTNERSHIP CADMUS CORPORATION
By:/s/ Alexander M. Milley By:/s/ Alexander M. Milley
- ----------------------------------- -----------------------------------
Alexander M. Milley Alexander M. Milley
Sole General Partner President
ELIOT KIRKLAND L.L.C.
By:/s/ Alexander M. Milley
- ----------------------------------
Alexander M. Milley
President
<PAGE>
16
EXHIBIT INDEX
Exhibit Document Page
- ------- ------------------------------------------------ ----
A Joint Filing Agreement, dated September 20, 1995,
among Alexander M. Milley, Milley Management Incor-
porated, ELX Limited Partnership, Cadmus Corporation
and Eliot Kirkland L.L.C.
B Form of letter, dated September 24, 1997, addressed 17
to Odd-Lot Holders with respect to the 1997 Odd-Lot
Offer
C Form of letter (captioned "Satisfaction and Termination 19
of Loan Agreements"), dated June ___, 1997, from
ELXSI to Azimuth Corporation, Delaware Electro Indus-
tries, Inc., Contempo Design, Inc. and Contempo
Design West, Inc. regarding the Azimuth Transactions
Termination
D Form of Secured Promissory Note made by Cadmus 21
Corporation payable to the order of ELXSI
E ELXSI Corporation 1997 Incentive Stock Option Plan
(incorporated by reference to Annex A to ELXSI
Corporation's definitive Proxy Statement, dated April
14, 1997, filed with the Securities and Exchange
Commission (File No. 0-11877))
<PAGE>
17
EXHIBIT B
ELXSI Corporation
3600 Rio Vista Avenue, Suite A
Orlando, Florida 32805
(407) 849-1090
(407) 849-0625 Fax
September 24, 1997
[Name of Odd-Lot Holder]
[Address of Odd-Lot Holder]
Dear _____________:
Our shareholder records indicate that you are the holder of ___ shares of ELXSI
Corporation ("Company") common stock, par value $.001 per share ("Common
Stock"), plus a corresponding number of Rights1 (collectively with the Common
Stock, "Shares"). The Common Stock is currently trading in the $9 1/2-$11 1/2
range, and if you were to sell your Shares through a broker, their minimum or
odd-lot commission may very well be quite substantial in relation to the
aggregate sale price.
This is to advise you that the Company has arranged for Cadmus Corporation, a
Massachusetts corporation ("Cadmus")2, to offer you the opportunity to sell your
Shares to them in a private transaction, free of any commissions, at the market
price indicated in item 3 on the next page. This offer is being made to all
holders Common Stock with less than 100 post-split shares of Common Stock
("Odd-Lot Holders").
Because of regulatory constraints, Cadmus will not purchase more than
approximately 93,000 Shares (approximately 2%) pursuant to this offer. At
present, Odd-Lot Holders hold approximately 127,281 shares of Common Stock. The
offer will be held open indefinitely, until such time as the regulatory maximum
is reached or termination for any other reason by Cadmus (which it reserves the
right to do for at any time, without notice).
If you would like to sell your shares of Common Stock to Cadmus (free of
commissions), please:
- --------
1 Issued under that certain Rights Agreement, dated as of June 4, 1997, between
the Company and Continental Stock Transfer & Trust Company, as Rights Agent.
2 Alexander M. Milley, the Company's Chairman, President and Chief Executive
officer, is the Chairman, President and a controlling shareholder of Cadmus.
Cadmus currently owns 173,147 Shares, or approximately 3.7% of those
outstanding. Including those Shares, Mr. Milley beneficially owns, directly or
indirectly, 1,144,456 Shares, or approximately 23.3% of those outstanding (as
determined and calculated in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended).
<PAGE>
18
1. Sign the back of your Common Stock certificate in the space provided for
that purpose. That signature must correspond exactly as your name
appears on the face of such certificate.
2. Have your signature on the back guaranteed by a bank or broker with a
"Medallion Program Signature Guarantee" stamp.
3. Send your endorsed Common Stock certificate to Cadmus, address: 3600 Rio
Vista Avenue, Suite A, Orlando, Florida 32805. The method of delivery of
your Shares certificate is at the option and risk of the sender. If
delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended.
4. Include with your endorsed Common Stock certificate your address (if
different from above) and phone number. Within two weeks of its receipt
the certificate, Cadmus will forward you a check for your Shares, in an
amount equal to the closing sale price per share of Common Stock (as
reported by NASDAQ) on the trading day immediately preceding the
post-mark or other forwarding date of your return materials.
If you are unable to locate your Shares certificate, please contact our transfer
agent at the address and number below. They will send you the paperwork
necessary to receive a replacement certificate. If you wish to accept the offer,
once you receive your replacement certificate you should follow the instructions
above. The transfer agent is: Continental Stock Transfer & Trust Company, Lost
Securities Department, 2 Broadway, New York, NY 10004; Tel. (212-509-4000).
If you have any questions, please feel free to call me directly, at (407)
849-1090.
Sincerely
Carol J. Crawford
Investor Relations
<PAGE>
19
EXHIBIT C
ELXSI
4209 Vineland Road
Suite J-1
Orlando, Florida 32811
June ___, 1997
Azimuth Corporation
Delaware Electro Industries, Inc.
Contempo Design, Inc.
Contempo Design West, Inc.
c/o Azimuth Corporation
4209 Vineland Road
Suite J-1
Orlando, Florida 32811
Satisfaction and Termination of Loan Agreements
Dear Sirs:
Reference is hereby made to: (i) that certain Recapitalization Agreement,
dated as of December 30, 1996 (the "Recapitalization Agreement"), by and among
Azimuth Corporation, a Delaware corporation ("Azimuth"), Delaware Electro
Industries, Inc., a Delaware corporation ("DEI"), Contempo Design, Inc., an
Illinois corporation ("CDI"), Contempo Design West, Inc., a Delaware corporation
("CDW"; and, collectively with Azimuth, DEI and CDI, the "Group Members"),
ELXSI, a California corporation ("ELXSI"), and Bank of America Illinois; (ii)
the Group Loan Documentation (as defined in the Recapitalization Agreement); and
(iii) the three $9,650,000 maximum principal amount New Revolving Notes, each
dated December 30, 1996 (the "New Subsidiary Notes") made by (respectively) DEI,
CDI and CDW (the "Subsidiaries") payable to the order of ELXSI. Capitalized
terms used and not defined herein have the respective meanings ascribed to such
terms under the Recapitalization Agreement.
1. Acknowledgement of Payment. ELXSI hereby acknowledges receipt this day
of $5,550,000, constituting payment in full of the outstanding principal amount
of the Subsidiary Loans plus the accrued but unpaid interest thereon. Promptly
after the date hereof, the Subsidiaries will pay or cause to be paid to ELXSI
the full amount of the accrued but unpaid interest on such Subsidiary Loans.
2. Termination of Group Loan Documentation. Effective as of the date
hereof: (i) each of the Credit (as defined in each Subsidiary Loan Agreement),
each of the Group Loan Documentation and each New Subsidiary Note are hereby
terminated by mutual consent, and (ii) the Group Loan Documentation and New
Subsidiary Notes shall no longer be of any force or effect; provided, however,
that the foregoing shall not effect a termination of: (a) any provision of any
of the Group Loan Documentation that, by the terms thereof, is intended to
survive a termination of such Group Loan Documentation,
<PAGE>
20
or (b) the obligations of the Subsidiaries under the second sentence of the
foregoing paragraph 1.
3. Security Interests. In connection with the foregoing terminations, ELXSI
hereby: (i) releases the Group Security, and (ii) assigns, transfers and
delivers to the appropriate Group Member, without recourse, representation or
warranty, all of ELXSI's right, title and interest in and to the Collateral and
Pledged Property.
4. Further Assurances. From time to time after the date hereof, as and when
requested by any party hereto, each other party hereto shall execute and
deliver, or cause to be executed and delivered, such documents and instruments
and shall take, or cause to be taken, such further or other actions as such
requesting party may reasonably deem necessary or desirable in order to further
effect or evidence the transactions contemplated hereby and to otherwise carry
out the intent and purposes of this agreement.
5. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Illinois (without regard to the choice
of law principles thereof).
Kindly indicate your acceptance of and agreement with the foregoing by
executing a counterpart of this letter in the space provided below, whereupon it
shall become a binding agreement among us.
Very truly yours,
ELXSI
By:
--------------------------------
Title:
Accepted and Agreed to, as of the date first above written:
AZIMUTH CORPORATION DELAWARE ELECTRO INDUSTRIES, INC.
By: By:
------------------------------- --------------------------------
Title: Title:
CONTEMPO DESIGN, INC. CONTEMPO DESIGN WEST, INC.
By: By:
------------------------------- --------------------------------
Title: Title:
<PAGE>
21
EXHIBIT D
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED PURSUANT TO SUCH ACT
OR UNLESS IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
CADMUS CORPORATION
SECURED PROMISSORY NOTE
$2,000,000 June 30, 1997
FOR VALUE RECEIVED, the undersigned, Cadmus Corporation, a Massachusetts
corporation ("Payor"), hereby unconditionally promises to pay to the order of
ELXSI, a California corporation ("Payee"), the principal sum of TWO MILLION AND
00/100 DOLLARS ($2,000,000) on June 30, 1999 (the "Maturity Date"), or such
earlier date as may otherwise be provided for herein, plus interest at the rate
and on the date provided for herein.
This Promissory Note (this "Note") has been issued to evidence and set
forth the terms of a $2,000,000 loan (the "Loan") made on June 30, 1997 by the
Payee to the Payor. The Loan was made in order to finance the purchase by the
Payor of 6,517 shares of Series AAA 5% Cumulative Redeemable Preferred Stock,
par value $1.00 per share, of Azimuth Corporation (the "Stock"). As part of the
terms of the Loan, the Payor has agreed: (i) to pay to the Payee a 5% (or
$100,000) closing fee (the "Loan Fee") ; and (ii) to pay or reimburse the Payee
for all of its fees and expenses in connection with its borrowing of such Loan
funds for on-lending to the Payor (the "Loan Expenses").
Section 1. Interest, Payments and Prepayments.
1.1. The unpaid principal balance of this Note shall bear interest at a
rate per annum equal to fifteen percent (15%).
1.2. Interest hereunder shall be due payable quarterly in arrears, on the
last day of March, June, September and December, commencing with September 30,
1997.
1.3. Payments and prepayments of principal and interest on this Note shall
be made in lawful money of the United States of America by wire or bank
transfer, or as otherwise designated by Payee, in immediately available funds to
an account designated in writing by Payee.
<PAGE>
22
1.4. If the date on which any payment is required to be made pursuant to
the provisions of this Note occurs on a Saturday, Sunday or legal holiday
observed in the State of New York, such payment shall be due and payable on the
immediately succeeding date which is not a Saturday, Sunday or legal holiday so
observed.
1.5. The principal and interest on this Note may be voluntarily prepaid,
in whole or in part, at any time and from time to time, provided that any
principal amount so prepaid shall be accompanied by payment of the accrued but
unpaid interest thereon. Prepayments shall be applied first to interest and then
to principal.
1.6. Nothing contained in this Note shall be deemed to establish or
require the payment of a rate of interest in excess of the maximum rate legally
enforceable. If the rate of interest called for under this Note at any time
exceeds the maximum rate legally enforceable, or if any charges payable pursuant
hereto are, according to applicable laws, construed to be interest which has the
effect of causing the interest hereunder to exceed the maximum rate legally
enforceable, the rate of interest and/or charges required to be paid hereunder
shall be automatically reduced so that the interest hereunder does not exceed
the maximum rate legally enforceable. If such interest rate and/or charges are
so reduced and thereafter the maximum rate legally enforceable is increased, the
rate of interest and/or fees required to be paid hereunder shall be
automatically increased to the maximum rate legally enforceable, which in no
event shall exceed the rate otherwise provided for in this Note.
Section 2. Pledge of Stock.
2.1. In order to secure the prompt and complete payment and performance
when due of all of the obligations of the Payor hereunder, the Payor DOES HEREBY
pledge to the Payee, and grant to the Payee and continuing first priority
security interest in, all of Payor's right, title and interest in, to and under
the following (collectively, the "Collateral"): (i) the Stock; (ii) any and all
dividends and distributions, sinking fund and redemption payments and
liquidation payments (in each case, whether in the form of cash, securities or
other property) paid on, under or with respect to any of the Stock or other
Collateral; (iii) any consideration received from the sale, exchange, lease or
other disposition of Stock or other Collateral; (iv) any and all other or
additional stock or other securities or property (including cash) paid or
distributed in respect of any Stock or other Collateral by way of stock-split,
spin-off, split-up, reclassification, combination of shares or similar
rearrangement; and (v) any other item constituting products or proceeds of the
Stock or other Collateral within the meaning of the Uniform Commercial Code of
the State of New York.
2.2. The Payor covenants and agrees that it will, at his own cost and
expense, defend its title to the Collateral and the Payee's right, title and
interest therein granted hereunder, against the claims and demands of all
persons and entities whomsoever.
2.3. Following, and during the continuance of, any Event of Default (as
hereinafter defined), the Payee irrevocably makes, constitutes, and appoints the
Payee (and all officers, employees, or agents designated by Payee) as the
Payor's true and lawful agent, proxy and attorney-in-fact, with full power of
substitution, for the purpose of
<PAGE>
23
taking any action and to executing any document or instrument which the Payee
may deem necessary or advisable to accomplish the purposes of this Note,
including without limitation, to: (i) transfer record title to the Stock and
other Collateral to the Payee (or its nominee or assignee); and (ii) vote the
Stock and other Collateral.
Section 3. Events of Default.
In the event that:
3.1. Payor defaults in making any payment required to be made under this
Note; or, after Payee's demand therefor, defaults in the payment of the Loan Fee
or Loan Expenses; or
3.2. Payor fails to pay any principal of or interest on any indebtedness
for borrowed money, or any guarantee thereof, beyond the period of grace, if
any, provided with respect thereto, or Payor defaults in the observance or
performance of any other term, covenant, agreement, condition, undertaking or
provision contained in any agreement or instrument evidencing or securing or
related to any such indebtedness for borrowed money or guarantee, if the effect
thereof is to cause, or permit the holder or holders thereof (or a trustee or
trustees on behalf of such holder or holders) to cause, and such holder or
holders have caused, such indebtedness for money borrowed or guarantee to become
due prior to its stated maturity; provided that the aggregate amount of all
indebtedness affected as aforesaid shall equal or exceed $2,000; or
3.3. (i) Payor shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or shall make a formal or informal general assignment for the benefit of
its creditors; or (ii) there shall be commenced against Payor any case,
proceeding, or other action of a nature referred to in clause (i) above which
(A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
90 days; or (iii) Payor takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i) or (ii) above; or (iv) Payor shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
then, upon the occurrence and during the continuance of any such event (an
"Event of Default"), Payee (unless there shall have occurred an Event of Default
under Section 3.3, in which case the unpaid balance of this Note shall
automatically become due and payable) may, by written notice to Payor, declare
this Note due and payable, whereupon
<PAGE>
24
the same shall become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived.
Section 4. Miscellaneous.
4.1. All notices, requests, demands or other communications to or upon
Payor or Payee shall be deemed to have been given or made when deposited in the
mails, postage prepaid, addressed to Payor at 4209 Vineland Road, Suite J-1,
Orlando, Florida 32811, and to Payee at the same address. No other method of
giving notice is hereby precluded.
4.2. No failure or delay on the part of the Payee in exercising any right,
power or privilege hereunder, and no course of dealing between Payor and Payee
shall operate as a waiver thereof nor shall any single or partial exercise of
any right, power or privilege hereunder preclude the simultaneous or later
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which the Payee would otherwise have. No notice to or demand on Payor in any
case shall entitle the Payee to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the Payee to take
any other or further action in any circumstances without notice or demand.
4.3. The Payor agrees to pay and save the Payee harmless against liability
for the payment of all out-of-pocket expenses arising in connection with the
enforcement of this Note, including without limitation the reasonable fees and
expenses of counsel selected by the Payee.
4.4. Upon receipt of evidence reasonably satisfactory to Payor of the
loss, theft, destruction or mutilation of this Note and of a letter of indemnity
reasonably satisfactory to Payor from the Payee, and upon reimbursement to Payor
of all reasonable expenses incident thereto, and upon surrender or cancellation
of this Note, if mutilated, Payor will make and deliver a new Note of like tenor
in lieu of such lost, stolen, destroyed or mutilated Note.
4.5. This Note shall be binding upon Payor and Payee and their respective
successors and permitted assigns. This Note, and the rights and obligations
hereunder, may not be assigned or delegated by Payor without the prior written
consent of Payee.
4.6. This Note shall be interpreted, construed and enforced in accordance
with the laws of the State of New York.
CADMUS CORPORATION
By:
--------------------------------
Name:
Title:
<PAGE>
