UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 10)*
ELXSI Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.001 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
268613-205
---------------------------------------------------------------
(CUSIP Number)
Alexander M. Milley
4209 Vineland Road, Suite J-1, Orlando, Florida 32811
(407) 849-1090
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 30, 1996
---------------------------------------------------------------
(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 [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
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.
*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 1 of 47 Pages
The Exhibit Index appears on page 16
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 2 of 47 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*
PF
- -------------------------------------------------------------------------------
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 1,144,456**
SHARES _____________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY -0-
EACH _____________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 1,144,456**
WITH _____________________________________________________________
10) SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,144,456**
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.3%
- -------------------------------------------------------------------------------
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.
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 3 of 47 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 173,147**
EACH _____________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON -0-
WITH _____________________________________________________________
10) SHARED DISPOSITIVE POWER
173,147**
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
173,147**
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.7%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Consists of shares held by another person joining in this filing.
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 4 of 47 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*
SC
- -------------------------------------------------------------------------------
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 47 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 173,147
SHARES _____________________________________________________________
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY -0-
EACH _____________________________________________________________
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 173,147
WITH _____________________________________________________________
10) SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
173,147
- -------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.7%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
CUSIP No. 268613-205 Page 6 of 47 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*
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
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!
** Inludes shares that Kirkland L.L.C
<PAGE>
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"), and the
Amendment No. 9 to the Original Statement dated September 20, 1995 ("Amendment
No. 9"; 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 and Amendment No. 9, 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 was, and this Amendment No. 10 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 and/or
this Amendment No. 10 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.
This Amendment No. 10 is being filed in order to report that:
<PAGE>
8
1. On November 1, 1995, Kirkland purchased 16,000 shares and Cadmus purchased
4,000 shares of Common Stock in the over-the-counter market (the "November
1995 O-T-C Purchases");
2. In April 1993, AMM purchased 5,000 shares of Common Stock in the
over-the- counter market (the "April 1993 O-T-C Purchases"), a
transaction that inadvertently was not reported heretofore;
3. On May 23, 1996 the Issuer granted to AMM nonqualified stock options to
purchase an aggregate of 25,000 shares of Common Stock (the "1996
Nonqualified Options") pursuant to the Issuer's 1996 Incentive Stock
Option Plan (as to 23,000 shares) and 1993 Incentive Stock Option Plan
(as to 2,000 shares; and such plans, collectively, the "Relevant
Plans"), and that such 1996 Nonqualified Options became 100%
exercisable on November 23, 1996;
4. In December 1996: ELX and Continental (as defined in Amendment No. 2)
(now named BankAmerica Capital Corporation; hereinafter "BACC") agreed
to extend the term of the Continental Option Agreement (as defined in,
and filed as Exhibit U to, Amendment No. 2) to December 31, 1996 (the
"BACC Options Extension"), and ELX exercised its right under the
Continental Option Agreement to purchase 110,200 shares of Common
Stock (the "BACC Option Exercise");
5. Also in December 1996, ELX purchased an additional 110,200 shares of Common
Stock from BACC (the "BACC Purchase");
6. The Board of Directors of the Issuer agreed to 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 a date in the future yet to be determined (the "Series A
Warrants Extension"); and
7. In December 1996 the Issuer's wholly owned subsidiary, ELXSI, a
California corporation ("ELXSI"), entered into certain agreements and
completed certain transactions with Azimuth Corporation, a Delaware
corporation ("Azimuth") of which AMM is an officer, director and
stockholder, and Azimuth's subsidiaries Delaware Electro Industries,
Inc. ("DEI"), Contempo Design, Inc. ("Contempo"), Contempo Design
West, Inc. ("Contempo West", and collectively with DEI and Contempo,
the "Azimuth Subsidiaries") (the "Azimuth Transactions").
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.
<PAGE>
9
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
Of the transactions enumerated in the third narrative paragraph of
this Amendment No. 10, only the November 1995 O-T-C Purchases, the April
1993 O-T-C Purchase and the BACC Option Exercise and BACC Purchase
(collectively, the "BACC Transactions") involved the payment or transfer of
funds for the purchase of securities of the Issuer.
The source of the funds of the November 1995 O-T-C Purchases effected
by Kirkland, totalling $96,000 (or $6.00 per share), was Kirkland's own
working capital funds. The source of the funds of the November 1995 O-T-C
Purchases effected by Cadmus, totalling $24,000 (or $6.00 per share), was
Cadmus's own working capital funds.
The source of the funds of the April 1993 O-T-C Purchases,
totalling $24,375 (or $4.875 per share), was AMM's own personal funds.
The source of the funds for the BACC Option Exercise,
totalling $344,375 (or $3.125 per share), and for the BACC Purchase, totalling
$564,775 (or $5.125 per share), was a loan (the "BACC Transactions Loan") in the
aggregate amount of $909,150 made by the Issuer. The terms of the BACC
Transactions Loan are as follows: (A) three-year maturity with all interest and
principal payable at that time; (B) interest accruing from origination at the
Issuer's cost of the funds plus 1/2%; and (C) all payments are permitted to be
made, at the option of ELX: (i) in cash, (ii) by surrender of indebtedness of
the Issuer having an outstanding principal amount equal to the amount of the
payment or prepayment then due; (iii) by surrender of equity securities of the
Issuer with a value equal to the amount of the payment or prepayment then due;
(iv) by surrender of warrants of the Issuer with a value equal to the amount of
the payment or prepayment then due; or (v) by any combination of the foregoing.
Item 4. Purpose of Transaction
----------------------
November 1995 O-T-C Purchases. The purpose the November 1995 O-T-C
Purchases was to increase Kirkland's and Cadmus's respective investments in the
Issuer at a time when shares of Common Stock were available at what they
considered to be a favorable price.
April 1993 O-T-C Purchases. The purpose the April 1993 O-T-C Purchases
was to increase AMM's investment in the Issuer at a time when shares of Common
Stock were available at what he considered to be a favorable price.
1996 Nonqualified Options. The stated purpose of the Relevant Plans 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.
BACC Transactions. The purpose of the BACC Transactions was to
increase ELX's investment in the Issuer at a time when shares of Common Stock
were
<PAGE>
10
available to it at what it considered to be favorable prices. The BACC
Transactions were part of a larger transaction in which BACC divested itself of
all of its equity and debt security interests in the Issuer (consisting of
shares of Common Stock, Series A Warrants and two series of Senior Subordinated
Notes). Such Series A Warrants were purchased by the Issuer, and such Senior
Subordinated Notes were prepaid in full by the Issuer. BACC was unwilling to
engage in the BACC Transactions unless effected as part of such larger
transaction.
Series A Warrants Extension. The purpose of the Series A Warrants
Extension, the details of which remain to be determined and which, accordingly,
have not been documented, 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 be
extended to a future date (presently undetermined, and which will be subject to
the approval of the Board of Directors of the Issuer) in return for the
agreement of Kirkland (and the I Trust) that the exercise price thereof will be
increased over the current $3.125 per share of Common Stock to a higher price
that is presently undetermined and which will be subject to the approval of the
Board of Directors of the Issuer. In approving such request, 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. Reference is hereby made to the discussion of
the purposes of the Azimuth Transactions appearing in the fourth paragraph of
sub-item (b) of this Item 4, which discussion is hereby incorporated herein by
reference in response to this sub-item.
(a) 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.
(b) On December 30, 1996, ELXSI entered into and consummated the
transactions contemplated by a Recapitalization Agreement, dated as of December
30, 1996 (the "Azimuth Transactions Agreement"), among Azimuth, each of the
Azimuth Subsidiaries, ELXSI and the Bank of America Illinois ("BAI"), a form of
which is filed herewith as Exhibit F. BAI is ELXSI's senior bank lender.
Under the Azimuth Transactions Agreement (among other things): (1) (A)
BAI sold to ELXSI all of BAI's rights, title and interest in, to and under the
$6,650,000 outstanding principal amount of the revolving credit loans previously
made by BAI to the Azimuth Subsidiaries (the "Azimuth Subsidiary Loans"), and
all related collateral security interests, loan documentation, claims and
proceeds, and, in consideration thereof: (B) ELXSI assumed the obligations of
BAI under such loan documentation, and (C) the payment by ELXSI to BAI of an
amount equal to (i) $5,850,000 plus (ii) the accrued but unpaid interest on the
Azimuth Subsidiary Loans to such time; (2) the terms and conditions of the
Azimuth Subsidiary Loans were amended as follows: (A) the interest rate
<PAGE>
11
applicable to the Azimuth Subsidiary Loans was increased to 15% per annum, (B)
the maturity date of the Azimuth Subsidiary Loans was extended from December 31,
1996 to June 30, 1998, (C) the Azimuth Subsidiaries were granted the collective
right and option to purchase from ELXSI for cash all (but not less than all) of
the Azimuth Subsidiary Loans, or otherwise pay-off in full the Azimuth
Subsidiary Loans, at a price (or for a payment) equal to (i) the combined
principal amount thereof outstanding on the date of purchase plus (ii) all
accrued but unpaid interest thereon to the date of purchase less (iii) if
purchased during any of the following calendar months, the following amounts:
(a) January 1997: $575,000; (b) February 1997: $475,000; (c) March 1997:
$375,000; (d) April 1997: $275,000; (e) May 1997: $175,000, and (f) and June
1997: $75,000, and plus (iv) if not previously paid, the $225,000 closing fee to
ELXSI hereinafter described, (D) the maximum amount of Azimuth Subsidiary Loans
that may be outstanding at any one time was increased from its then-current
$6,650,000 to $9,650,000, (E) the "lock-box" provisions of the relevant loan
documentation were waived, and (F) the capital expenditure and restricted
payments covenants of the relevant loan documentation were modified so as to put
Azimuth and the Azimuth Subsidiaries in compliance therewith; and (3) Azimuth
and the Azimuth Subsidiaries agreed to pay ELXSI a $225,000 closing fee on the
demand of ELXSI (or such earlier date that the Azimuth Subsidiary Loans are
repurchased or paid- off in full).
As part of the implementation of the Azimuth Transactions, each
Azimuth Subsidiary executed and delivered to ELXSI revolving credit notes in the
form attached to the Azimuth Transactions Agreement. The Azimuth Transactions
Agreement, filed herewith as Exhibit F, more particularly describes the Azimuth
Transactions, and the terms and provisions thereof are hereby incorporated
herein by reference in response to this sub-item.
As a result of the Azimuth Transactions hereinabove described, ELXSI
has become the senior revolving credit lender to the Azimuth Subsidiaries. (In
order to provide ELXSI with the resources to act as such, BAI and ELXSI amended
and restated their existing credit agreement in order to, among other things,
provide ELXSI with a line of credit for such purpose.) AMM is an officer,
director and significant stockholder of Azimuth and an officer and/or director
of each Azimuth Subsidiary.
The purpose of the Azimuth Transactions was to provide a temporary
"bridge" of revolving credit to the Azimuth Subsidiaries -- "temporary" in that
alternative, permanent "take-out" financing is being sought -- on terms that are
intended to earn ELXSI (in the form of net interest, the vanishing "take-out"
discounts and the closing fee described hereinabove) a return on its investment
not generally available in the market place.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) AMM. The aggregate number of shares of Common Stock beneficially
owned by AMM is 1,144,456. Of these shares: (i) 25,000 are outstanding shares
held by AMM; (ii) 125,000 are purchasable upon exercise of presently exercisable
options granted by the Issuer to AMM; (iii) 112,347 are outstanding shares held
by Kirkland; (iv) 50,000 are purchasable upon exercise of presently exercisable,
Series A Warrants held by
<PAGE>
12
Kirkland; (v) 68,762 are purchasable upon exercise of presently exercisable,
Series C Warrants held by Kirkland; (vi) 590,200 are outstanding shares held by
ELX; and (vii) 173,147 are outstanding shares held by Cadmus. On a percentage
basis these shares represent approximately 23.3% 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 173,147, all of which are outstanding shares held by Cadmus. On a
percentage basis these shares represent approximately 3.7% 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 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 173,147, consisting entirely of outstanding shares held by
Cadmus. On a percentage basis these shares represent approximately 3.7% 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).
(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
<PAGE>
13
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 description and discussion of the
BACC Transactions appearing elsewhere in this Amendment No. 10, 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
--------------------------------------------------------------------
1996 Nonqualified Options. The 1996 Nonqualified Options are governed
by the terms of the relevant Incentive Stock Option Plan Option Grant documents
(the "1996 Nonqualified Options Agreements") from the Issuer to AMM. The
following is a brief description of the terms of the 1996 Nonqualified Options
Agreements.
The 1996 Nonqualified Options Agreements permit AMM to purchase (in
the aggregate) up to 25,000 shares of Common Stock at a price of $6.50 per
share. The 1996 Nonqualified Options became exercisable on November 23, 1996 and
expire on May 23, 2006. AMM may exercise the 1996 Nonqualified Options by
delivery of a written notice to a designated 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 1996 Nonqualified Options is subject
to AMM's satisfaction of all applicable Federal, state and local tax withholding
obligations. The 1996 Nonqualified Options may not be transferred by AMM except
by will or the laws of descent and distribution. If AMM ceases to be eligible to
exercise the 1996 Nonqualified Options, they may nevertheless be exercised
within ninety days of his becoming ineligible if the Issuer consents thereto in
writing or if AMM became ineligible through retirement. In the event of AMM's
death or disability, the 1996 Nonqualified Options may be exercised by AMM's
executor or heir within the one-year period following his death or disability.
<PAGE>
14
The 1996 Nonqualified Options Agreements are subject to the terms and
conditions of the Relevant Plans, which are incorporated by reference into this
Amendment No. 10 as Exhibits B and C.
BACC Transactions. The BACC Transactions and BACC Option Extension
were effected pursuant to a Stock Purchase and Option Exercise Agreement, dated
as of December 30, 1996, in the form filed herewith as Exhibit D. In addition,
under such Agreement BASS assigned to ELX all of its rights with respect to the
shares of Common Stock acquired by ELX in the BACC Transactions under the
Amended Registration Rights Agreement (as defined in, and filed as Exhibit U to,
Amendment No. 2).
The terms of the BACC Transactions Loan are memorialized in a
Promissory Note made and executed by ELX in the form filed herewith as Exhibit
E. Reference is hereby made to the terms of such Loan and Note as described in
Item 3 hereinabove and in such Exhibit E, which descriptions are hereby
incorporated herein by reference in response to this Item.
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 - ELXSI Corporation 1996 Incentive Stock Option Plan
(incorporated by reference to Annex A to ELXSI Corporation's definitive Proxy
Statement, dated April 9, 1996, filed with the Securities and Exchange
Commission (File No. 0-11877)).
Exhibit C - ELXSI Corporation 1993 Incentive Stock Option Plan
(incorporated by reference to Annex B to ELXSI Corporation's definitive Proxy
Statement, dated April 16, 1993, filed with the Securities and Exchange
Commission (File No. 0-11877)).
Exhibit D - Form of Stock Purchase and Option Exercise Agreement,
dated as of December 30, 1996, between BankAmerica Capital Corporation and ELX
Limited Partnership
Exhibit E - Form of Promissory Note made by ELX payable to the Issuer,
dated December 30, 1996
Exhibit F - Form of Recapitalization Agreement, dated as of December
30, 1996, among Azimuth Corporation, Delaware Electro Industries, Inc., Contempo
Design, Inc., Contempo Design West, Inc., ELXSI and Bank of America Illinois
(the "Azimuth Transactions Agreement")
<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: January 7, 1996
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 ELXSI Corporation 1996 Incentive Stock Option Plan
(incorporated by reference to Annex A to ELXSI
Corporation's definitive Proxy Statement, dated
April 9, 1996, filed with the Securities and Exchange
Commission (File No. 0-11877))
C ELXSI Corporation 1993 Incentive Stock Option Plan
(incorporated by reference to Annex B to ELXSI
Corporation's definitive Proxy Statement, dated
April 16, 1993, filed with the Securities and
Exchange Commission (File No. 0-11877))
D Form of Stock Purchase and Option Exercise Agreement, 17
dated as of December 30, 1996, between BankAmerica
Capital Corporation and ELX Limited Partnership
E Form of Promissory Note made by ELX payable to the 21
Issuer, dated December 30, 1996
F Form of Recapitalization Agreement, dated as of 25
December 30, 1996, among Azimuth Corporation,
Delaware Electro Industries, Inc., Contempo
Design, Inc., Contempo Design West, Inc., ELXSI
and Bank of America Illinois (the "Azimuth
Transactions Agreement")
<PAGE>
17
EXHIBIT D
STOCK PURCHASE AND
OPTION EXERCISE AGREEMENT
-------------------------
This Stock Purchase and Option Exercise Agreement (this "Agreement")
is dated as of December 30, 1996 and is made by and between BankAmerica Capital
Corporation, a Delaware corporation and successor to Continental Illinois Equity
Corporation ("BACC"), and ELX Limited Partnership, a Delaware limited
partnership (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Stock and Note Purchase
Agreement dated as of January 23, 1990 (the "Stock and Note Purchase Agreement")
by and among The Airlie Group L.P., a Delaware limited partnership ("Airlie"),
Milley & Company, a Delaware corporation ("Milley"), ELXSI Corporation, a
Delaware corporation ("ELXSI"), and BACC, BACC purchased from Airlie 5,510,000
shares of ELXSI's Common Stock, $.001 par value per share (the "Shares");
WHEREAS, ELXSI affected a 25 to 1 reverse stock split in May, 1992,
thereby reducing the Shares to 220,400;
WHEREAS, pursuant to the terms of that certain Option Agreement dated
as of January 23, 1990 (the "Option Agreement") between BACC and the Company,
BACC granted to the Company an option to purchase from BACC 110,200 shares
(after giving effect to the reverse stock split mentioned above) of ELXSI's
Common Stock, $.001 par value per share (the "Option Shares"), at a purchase
price of $3.125 per share (after giving effect to the reverse stock split
mentioned above);
WHEREAS, the Company desires to exercise the Option and purchase from
BACC the Option Shares on the terms and conditions set forth herein; and
WHEREAS, the Company desires to purchase from BACC and BACC desires to
sell to the Company the remaining 110,200 Shares owned by BACC on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
have the respective meanings given to such terms in the Option Agreement.
<PAGE>
18
2. Extension of Option Period. The Company and BACC hereby agree
that the termination date of the Option as set forth in Section 1 of the Option
Agreement is hereby amended to be "December 31, 1996".
3. Option Exercise; Purchase of Option Shares. The Company hereby
exercises the Option and agrees to pay to BACC on the date of this Agreement in
immediately available funds by wire transfer to an account specified by BACC in
writing the aggregate exercise price of Three Hundred Forty-Four Thousand Three
Hundred Seventy- Five Dollars ($344,375.00) (the "Option Exercise Price"). BACC
agrees to deliver the certificate evidencing the Option Shares to the Company
within 5 business days from the date hereof, together with such instruments of
transfer as the Company may reasonably request.
4. Purchase of 110,200 Shares. The Company agrees to pay BACC on the
date of this Agreement in immediately available funds by wire transfer to an
account specified in writing by BACC the amount of Five Hundred Sixty-Four
Thousand Seven Hundred Seventy-Five Dollars ($564,775.00) (the "Purchase
Price"). BACC agrees to deliver the certificate evidencing the 110,200 Shares to
the Company within 5 business days from the date hereof, together with such
instruments of transfer as the Company may reasonably request.
5. (a) Representations and Warranties of the Company. As a material
inducement to the execution by BACC of this Agreement, the Company hereby
represents and warrants to BACC as follows:
(i) The Company has all requisite power and authority
(partnership and otherwise) to execute, deliver and perform its
obligations under this Agreement.
(ii) The execution, delivery and performance by the
Company of this Agreement does not and will not (i) violate any
provisions of any law, rule, regulation, order, writ, judgment, decree,
determination or award having applicability to the Company or (ii)
conflict with or result in a breach of or constitute a default under
the partnership agreement of the Company or any indenture, loan
agreement or any other agreement or instrument to which the Company is
a party or by which the Company or any of its properties may be bound
or affected.
(iii) The execution and delivery of this Agreement
have been duly authorized by the Company and no other proceedings on
the part of the Company are necessary to authorize this Agreement. This
Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles.
(iv) The Company: (A) has sufficient knowledge, experience
and sophistication to enable it to properly and fully evaluate and
understand the merits and risks associated with its purchase of the
Shares hereunder, and (B) has, prior to
<PAGE>
19
the date hereof, received all information concerning ELXSI requested by
it, and had the opportunity to ask questions and receive answers
concerning the same. The Company is acquiring the Shares for investment
only and with no present intention of distributing or reselling such
Shares or any part thereof in any transaction that would constitute a
"distribution" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). The Company understands that the Shares
have not been registered under the Securities Act or any state
securities laws and may not be sold or transferred except in compliance
therewith or pursuant to an exemption thereunder and is being
transferred to the Company, in part, in reliance on the foregoing
representations and warranties.
(b) Representations and Warranties of BACC. As an
inducement to the execution by the Company of the Agreement, BACC
hereby represents and warrants to the Company as follows:
(i) BACC has all requisite power and authority
(corporate and otherwise) to execute, deliver and perform its
obligations under this Agreement.
(ii) The execution and delivery of this Agreement
have been duly authorized by BACC. This Agreement constitutes the
legal, valid and binding obligation of BACC, enforceable against BACC
in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other similar laws effecting
the enforcement of creditors' rights generally and to general equitable
principles.
(iii) BACC: (A) has sufficient knowledge, experience
and sophistication to enable it to properly and fully evaluate and
understand the merits and risks associated with its sale of the Shares
hereunder, (B) is an "accredited investor" (as such term is defined in
Rule 5.01(a) of Regulation D of the Securities Act), and (C) has, prior
to the date hereof, received all information concerning ELXSI requested
by it, and had the opportunity to ask questions and receive answers
concerning the same.
6. Assignment of Registration Rights. In consideration the sale by
BACC of the Shares to the Company, BACC hereby assigns to the Company all of its
rights with respect to the Shares under that certain Amended and Restated
Registration Rights Agreement, dated as of January 23, 1990, by and among the
ELXSI, Airlie, Milley and BACC.
7. Waiver of Exercise Conditions. In consideration of the sale by
BACC of the Shares to the Company, BACC and the Company hereby waive the
requirements of Section 3 of the Option Agreement, including, without
limitation, notice to BACC of the exercise of the Option and the simultaneous
exercise of the Airlie Option.
8. Survival of Representations and Warranties. All representations
and warranties contained in this Agreement shall survive the execution and
delivery of this Agreement.
<PAGE>
20
9. Notices. All notices and other communications shall be in writing
and shall be delivered by reputable overnight courier or first-class mail,
postage prepaid, to the Company or BACC at the respective addresses set forth on
the signature page hereto or to such other address as one party may have
furnished to the others in writing.
10. Assignment. This Agreement may not be assigned without the prior
written consent of the parties hereto.
11. Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws (excluding choice or conflicts of laws
rules) of the State of Illinois.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which taken together
constitute one instrument.
ELX LIMITED PARTNERSHIP
By: _______________________________
Name:______________________________
Title:_____________________________
Address:
4209 Vineland Road
Suite J-1
Orlando, Florida 32811
Attention: Alexander M. Milley
BANKAMERICA CAPITAL CORPORATION
By: _______________________________
Name:______________________________
Title:_____________________________
Address:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Middle Market I
<PAGE>
21
EXHIBIT E
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.
ELX LIMITED PARTNERSHIP
PROMISSORY NOTE
---------------
$909,150 December 30, 1996
FOR VALUE RECEIVED, the undersigned, ELX Limited Partnership, a
Delaware limited partnership ("Payor"), hereby unconditionally promises to pay
to ELXSI Corporation, a Delaware corporation ("Payee"), the principal sum of
NINE HUNDRED NINE THOUSAND ONE HUNDRED FIFTY 00/100 DOLLARS ($909,150) on the
third anniversary of the date hereof (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 $909,150 loan (the "Loan") made on December 30, 1996 by the
Payee to the Payor.
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 (i) the rate of interest per annum charged on the
funds borrowed by the Payee (or its subsidiary) in order to make the Loan
(including any refinancing, refunding or renewal of such borrowing) (the "Cost
of Funds") plus (ii) one half percent (0.5%). The interest rate payable
hereunder shall change automatically on the effective date of any change in
the Cost of Funds.
1.2 All interest hereunder shall be due payable on the Maturity Date
(or such earlier date as may otherwise be provided for herein).
1.3 Payments and prepayments of principal and interest on this Note
shall be made, at the option of Payor:
(a) 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
(b) by surrender of indebtedness of the Payee (other than the
indebtedness hereunder) having an outstanding principal amount equal to the
amount of the payment or prepayment then due;
(c) by surrender of equity securities of the Payee with a value
equal to the amount of the payment or prepayment then due;
(d) by surrender of warrants of the Payee with a value equal to
the amount of the payment or prepayment then due; or
(e) by any combination of the foregoing.
1.4 In the event that a payment or prepayment under this Note is made,
in whole or in part, in the manner set forth in Section 1.3(c) above, the value
of the applicable equity securities shall be an amount equal to the product of:
(A) the number of shares of such equity securities being surrendered for such
payment or prepayment; and (B)(i) the average of the daily market prices of one
shares of such equity security for the thirty (30) consecutive trading days
preceding the date of such surrender or (ii) if such equity security is a
preferred stock with no public trading market, the liquidation preference of
each share of such equity security. In the event that a payment or prepayment
under this Note is made, in whole or in part, in the manner set forth in Section
1.3(d) above, the value of the applicable warrants shall be an amount equal to
the product of: (A) the number of such warrants being surrendered for such
payment or prepayment; and (B) the difference between (i) the value of each
share or other unit of the securities for which such warrants are exercisable,
determined in the manner set forth above, and (ii) the exercise price per share
or other unit of such warrants.
1.5 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.
1.6 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.
1.7 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
<PAGE>
23
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. Events of Default.
------------------
In the event that:
2.1 Payor defaults in making any payment required to be made under
this Note; or
2.2 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 $10,000; or
2.3 (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 2.3, 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 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 3. Miscellaneous.
--------------
3.1 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
<PAGE>
24
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.
3.2 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.
3.3 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.
3.4 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.
3.5 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 Payee without the
prior written consent of Payor or by Payor without the prior written consent of
Payee.
3.6 This Note shall be interpreted, construed and enforced in
accordance with the laws of the State of New York.
ELX LIMITED PARTNERSHIP
By:________________________
Alexander M. Milley
General Partner
<PAGE>
25
EXHIBIT F
THIS RECAPITALIZATION AGREEMENT, dated as of December 30, 1996 (this
"Agreement"), is made by and among:
(1) Azimuth Corporation, a Delaware corporation ("Azimuth");
(2) Delaware Electro Industries, Inc., a Delaware corporation
("DEI") and wholly-owned subsidiary of Azimuth;
(3) Contempo Design, Inc., an Illinois corporation ("Contempo")
and wholly-owned subsidiary of Azimuth;
(4) Contempo Design West, Inc., a Delaware corporation ("Contempo West";
and collectively with DEI and Contempo, the "Subsidiaries"; and the
Subsidiaries and Azimuth collectively, the "Group Members") and
wholly-owned subsidiary of Azimuth;
(5) ELXSI, a California corporation ("ELXSI"); and
(6) Bank of America Illinois (formerly Continental Bank N.A.) (the
"Bank").
BACKGROUND
Azimuth and the Bank are party to a Second and Amended Loan and
Security Agreement, dated as of October 9, 1995, as amended (the "Azimuth Loan
Agreement"); DEI and the Bank are party to a Loan and Security Agreement, dated
as of October 9, 1995, as amended (the "DEI Loan Agreement"); Contempo and the
Bank are party to a Loan and Security Agreement, dated as of October 9, 1995, as
amended (the "Contempo Loan Agreement"); and Contempo West and the Bank are
party to a Loan and Security Agreement, dated as of October 9, 1995, as amended
(the "Contempo West Loan Agreement"; and collectively with the DEI Loan
Agreement and Contempo Loan Agreement, the "Subsidiary Loan Agreements"; and the
Subsidiary Loan Agreements and Azimuth Loan Agreements collectively, the "Group
Loan Agreements").
Pursuant to the Azimuth Loan Agreement (among other things): (i) the
Bank has made and maintained a term loan to Azimuth (the "Azimuth Term Loan");
(ii) in order to evidence the Azimuth Term Loan, Azimuth issued and delivered to
the Bank a $5,468,200.02 original principal amount Term Note (Replacement),
dated October 9, 1995 (the "Azimuth Term Note"), executed by Azimuth made
payable to the order of the Bank; (iii) in order to secure the payment and
performance of all Liabilities (as defined therein, which term encompasses
(among other things) the liabilities and obligations of the Subsidiaries under
the Subsidiary Loan Agreements and Subsidiary Notes (as hereinafter defined)),
Azimuth (x) granted to the Bank a security interest in the Collateral (as
defined therein, which term encompasses substantially all of Azimuth's assets)
(the "Azimuth Security Interest"), and (y) executed and delivered to the Bank a
Second Amended and Restated Pledge Agreement, dated as of October 9, 1995 (the
"Group Pledge Agreement"), among Azimuth, each of the Subsidiaries and the Bank,
pursuant to which (among other things) Azimuth pledged and delivered to the Bank
the shares of capital stock (and certificates therefor) of the Subsidiaries and
Promissory Notes of the Subsidiaries identified therein (the "Azimuth Pledge");
and (iv) Azimuth guaranteed the Guaranteed Obligations (as defined therein,
which
<PAGE>
26
term encompasses (among other things) the liabilities and obligations of the
Subsidiaries under the Subsidiary Loan Agreements and Subsidiary Notes) and
agreed to reimburse the Bank for certain costs and expenses in connection
therewith (the "Azimuth Guaranty").
Pursuant to the DEI Loan Agreement (among other things): (i) the Bank
has made and committed to make revolving credit loans to DEI ("DEI Loans"); (ii)
in order to evidence the DEI Loans, DEI issued and delivered to the Bank a
$6,650,000 maximum principal amount Revolving Note (Replacement), dated November
27, 1996 (the "DEI Note") executed by DEI made payable to the order of the Bank;
(iii) in order to secure the payment and performance of all Liabilities (as
defined therein, which term encompasses (among other things) the liabilities and
obligations of Azimuth under the Azimuth Loan Agreement and Azimuth Term Note
and of the other Subsidiaries under the other Subsidiary Loan Agreements and
other Subsidiary Notes), DEI (x) granted to the Bank a security interest in the
Collateral (as defined therein, which term encompasses substantially all of
DEI's assets) (the "DEI Security Interest"), and (y) executed and delivered to
the Bank the Group Pledge Agreement, pursuant to which (among other things) DEI
pledged and delivered to the Bank the Promissory Notes of Azimuth and the other
Subsidiaries identified therein (the "DEI Pledge"); and (iv) DEI executed and
delivered a Second Amended and Restated Guaranty Agreement, dated as of October
9, 1995 (the "Subsidiary Guaranty Agreement"), executed by each Subsidiary in
favor of the Bank, pursuant to which (among other things) DEI guaranteed the
Liabilities (as defined in each of the Azimuth Loan Agreement and the Subsidiary
Loan Agreements) (the "DEI Guaranty").
Pursuant to the Contempo Loan Agreement (among other things): (i) the
Bank has made and committed to make revolving credit loans to Contempo
("Contempo Loans"); (ii) in order to evidence the Contempo Loans, Contempo
issued and delivered to the Bank a $6,650,000 maximum principal amount Revolving
Note (Replacement), dated November 27, 1996 (the "Contempo Note") executed by
Contempo made payable to the order of the Bank; (iii) in order to secure the
payment and performance of all Liabilities (as defined therein, which term
encompasses (among other things) the liabilities and obligations of Azimuth
under the Azimuth Loan Agreement and Azimuth Term Note and of the other
Subsidiaries under the other Subsidiary Loan Agreements and other Subsidiary
Notes), Contempo (x) granted to the Bank a security interest in the Collateral
(as defined therein, which term encompasses substantially all of Contempo's
assets) (the "Contempo Security Interest"), and (y) executed and delivered to
the Bank the Group Pledge Agreement, pursuant to which (among other things)
Contempo pledged and delivered to the Bank the Promissory Notes of Azimuth and
the other Subsidiaries identified therein (the "Contempo Pledge"); and (iv)
Contempo executed and delivered the Subsidiary Guaranty Agreement, pursuant to
which (among other things) Contempo guaranteed the Liabilities (as defined in
each of the Azimuth Loan Agreement and the Subsidiary Loan Agreements) (the
"Contempo Guaranty").
<PAGE>
27
Pursuant to the Contempo West Loan Agreement (among other things): (i)
the Bank has made and committed to make revolving credit loans to Contempo West
("Contempo West Loans"; and collectively with the DEI Loans and Contempo Loans,
"Subsidiary Loans"); (ii) in order to evidence the Contempo West Loans, Contempo
West issued and delivered to the Bank a $6,650,000 maximum principal amount
Revolving Note (Replacement), dated November 27, 1996 (the "Contempo West Note";
and collectively with the DEI Note and Contempo Note, the "Subsidiary Notes")
executed by Contempo West made payable to the order of the Bank; (iii) in order
to secure the payment and performance of all Liabilities (as defined therein,
which term encompasses (among other things) the liabilities and obligations of
Azimuth under the Azimuth Loan Agreement and Azimuth Term Note and of the other
Subsidiaries under the other Subsidiary Loan Agreements and other Subsidiary
Notes), Contempo West (x) granted to the Bank a security interest in the
Collateral (as defined therein, which term encompasses substantially all of
Contempo West's assets) (the "Contempo West Security Interest"; and collectively
with the Azimuth Security Interest, DEI Security Interest and Contempo Security
Interest, the "Group Security Interest"), and (y) executed and delivered to the
Bank the Group Pledge Agreement, pursuant to which (among other things) Contempo
West pledged and delivered to the Bank the Promissory Notes of Azimuth and the
other Subsidiaries identified therein (the "Contempo West Pledge"; and
collectively with the Azimuth Pledge, DEI Pledge and Contempo Pledge, the "Group
Pledges"); and (iv) Contempo West executed and delivered the Subsidiary Guaranty
Agreement, pursuant to which (among other things) Contempo West guaranteed the
Liabilities (as defined in each of the Azimuth Loan Agreement and the Subsidiary
Loan Agreements) (the "Contempo West Guaranty"; and collectively with the
Azimuth Guaranty, DEI Guaranty and Contempo Guaranty, the "Group Guaranty").
The commitment of the Bank to make and maintain the Azimuth Term Loan
and Subsidiary Loans expires on December 31, 1996. In connection therewith, the
parties hereto have agreed to effect the following transactions (collectively,
and as more particularly described in Article I hereof, the "Recapitalization
Transactions"), effective on and as of December 30, 1996 (the "Effective Date"):
(A) the issuance by Azimuth to the Bank of 6,517 shares of its Series AAA
5% Cumulative Redeemable Preferred Stock, par value $1.00 per share
(the "Series AAA Preferred"), the terms of which shall be as set forth
in a Certificate of Designations therefor in the form of Exhibit A
hereto (the "Certificate of Designations") filed in the Office of the
Secretary of State of the State of Delaware;
(B) the sale and assignment by the Bank to ELXSI of all of the Bank's
rights, title and interest in, to and under: (i) the Subsidiary Loans,
(ii) the Group Security Interest and Collateral (as defined in each of
the Group Loan Agreements; hereinafter, the "Group Collateral"), the
Group Pledges and Pledged Property (as defined in the Pledge Agreement)
and the Group Guaranty (collectively, the "Group Security"), (iii) the
<PAGE>
28
Group Loan Agreements, the Subsidiary Notes, the Group Pledge
Agreement, the Subsidiary Guaranty Agreement, all Uniform Commercial
Code financing statements and other record or notice documentation
executed by any Group Member in connection with any of the Group
Security (collectively, "Group Security Evidences") and any other
Related Agreement or Supplemental Documentation (as defined in each of
the Group Loans Agreements) executed or delivered by any Group Member
pursuant to or in connection with any of the foregoing (collectively,
the "Group Loan Documentation"), (iv) all claims, causes of action and
other rights against any person or entity (including the Group Members)
now existing or hereafter arising under or in connection with any of
the Group Collateral, Group Security and/or Group Loan Documentation
("Related Claims"), and (v) all cash, securities, claims, interest,
dividends and other property and assets that may distributed on account
of any of the foregoing after the Effective Date ("Related Proceeds");
(C) the related (1) cancellation of the Azimuth Term Note (including the
right to receive accrued interest thereunder and fees related thereto), and
(2) termination of (i) the Azimuth Term Loan and Azimuth Term Loan
commitments under Azimuth Loan Agreement, (ii) all other provisions of the
Azimuth Loan Agreement and other Group Loan Documentation (other than those
provisions that by their terms expressly survive such termina- tion) to the
extent (and only to the extent) that the same relate to the Azimuth Term
Loan and/or Azimuth Term Note, and (iii) the Group Security Interest, Group
Pledge and Group Guaranty to the extent (and only to the extent) that the
same secure the payment of the Azimuth Term Loan; and
(D) the related amendment of the terms of the Subsidiary Loans and Group Loan
Loan Documentation, as hereinafter provided.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and commitments set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each of the parties hereto, it is hereby agreed as follows:
ARTICLE I
RECAPITALIZATION TRANSACTIONS
-----------------------------
Section 1.1. Term Loan/Series AAA Preferred Stock Exchange. (a)
Subject to the terms and conditions of this Agreement, on the Effective Date:
(i) Azimuth shall issue and deliver to the Bank 6,517 shares of its Series AAA
Preferred (the "Shares"), evidenced by a certificate therefore registered in the
name of the Bank (or its nominee designated in writing), and (ii) in
consideration therefor the Bank shall deliver to Azimuth for cancellation the
Azimuth Term Note.
(b) Azimuth hereby agrees that upon the issuance of the Shares
as aforesaid, the Shares shall be legally issued, fully paid and nonassessable
shares of the capital stock of Azimuth.
<PAGE>
29
(c) The transactions to be effected under this Section 1.1 are
hereinafter sometimes referred to as the "Exchange".
Section 1.2. Subsidiary Loans Sale. (a) Subject to the terms and
conditions of this Agreement, on the Effective Date the Bank shall execute and
deliver to ELXSI a Bill of Sale and Assignment in the form of Exhibit B hereto
(the "Bill of Sale") and thereby (among other things) sell, transfer, grant,
convey, assign and set over (without recourse, representation or warranty,
except as expressly set forth herein) to ELXSI, and its successors and assigns
forever, and ELXSI shall execute and deliver to the Bank the Bill of Sale and
thereby (among other things) purchase and receive from the Bank, all of the
Bank's rights, title and interest in, to and under the Subsidiary Loans, the
Group Security, the Group Loan Documentation, all Related Claims and all Related
Proceeds (collectively, the "Assigned Rights"). By executing and delivering the
Bill of Sale ELXSI will also assume and agree to satisfy and discharge in
accordance with their respective terms, the obligations of the Bank under the
Group Loan Documentation (except to the extent terminated under Section 1.3
hereof) (the "Assumed Obligations").
(b) Purchase Price. (i) The purchase price for the Assigned
Rights is: (1) the combined principal balance of the Subsidiary Loans at the
opening of business on the Effective Date less $800,000 plus (2) the accrued but
unpaid interest on the Subsidiary Loans to (but excluding) such time (the
"Purchase Price").
(ii) The Bank is the senior lending bank to ELXSI, and the
Purchase Price funds will be provided for the account of ELXSI from a borrowing
made on the Effective Date by ELXSI under its Amended and Restated Loan and
Security Agreement, dated as of June 27, 1996, as amended (and as the same is
intended to be amended on or before the Effective Date in connection with the
Recapitalization Transactions and other matters) (the "ELXSI Loan Agreement").
ELXSI hereby authorizes and directs the Bank: (x) when and as permitted under
the ELXSI Loan Agreement, to debit the loan account of ELXSI thereunder an
amount equal to the Purchase Price, and (ii) to credit the amount so debited the
appropriate account of the Bank for the Azimuth Term Loan. ELXSI agrees that the
Purchase Price so debited and credited will constitute a borrowing by under (and
subject to the terms and conditions of) the ELXSI Loan Agreement.
(c) The transactions to be effected under this Section 1.2 are
hereinafter sometimes referred to as the "Subsidiary Loans Sale".
Section 1.3. Term Loan Terminations. (a) Effective automatically on
the Effective Date immediately upon the effectua- tion of the Exchange and
Subsidiaries Loan Sale: (1) the Azimuth Term Note shall be cancelled and shall
no longer have any force or effect thereafter; and (2) the following shall also
be terminated, cancelled and shall no longer have any force or effect
thereafter: (i) the Azimuth Term Loan and the Azimuth Term Loan commitments
<PAGE>
30
under the Azimuth Loan Agreement, (ii) all other provisions of the Azimuth Loan
Agreement (other than those provisions that by their terms expressly survive
such termination) and other Group Loan Documentation to the extent (and only to
the extent) that the same relate to the Azimuth Term Loan and/or Azimuth Term
Note (and not any other provision of the Group Loan Documentation), (iii) the
right to receive the interest accrued on the Azimuth Term Loan to the Effective
Date, (iv) the right to receive the 1.25% refinancing fee provided for under
Section 2.9 of the Azimuth Loan Agreement and 2.13 of each of the Subsidiary
Loan Agreements, (v) the right to receive the $300,000 fee payable to the Bank
on December 31, 1996 under Section 2.3.2 of the Azimuth Loan Agreement, and (vi)
the Group Security Interest, Group Pledge and Group Guaranty to the extent (and
only to the extent) that the same secure the payment of the Azimuth Term Loan
(and not any other liability or obligation under the Group Loan Documentation).
(b) The transactions to be effected by this Section 1.3 are
hereinafter sometimes referred to as the "Term Loan Terminations".
Section 1.4. Subsidiary Loan Amendments. (a) Effective automatically
on the Effective Date immediately upon the effectuation of the Exchange and
Subsidiaries Loan Sale, the terms and conditions of the Subsidiary Loans shall
be amended so as to be as follows (notwithstanding anything to the contrary set
forth in the Group Loan Documentation, including, without limitation, the
Supplements A to the Subsidiary Loan Agreements):
1. The interest rate applicable to the Subsidiary
Loans shall be increased to 15% per annum (subject to Section
1.4(c)), and interest payments (prior to maturity) shall be
payable on the first (1st) and sixteenth (16th) day of each
calendar month;
2. The maturity date of the Subsidiary Loans (i.e.,
the "Termination Date" under the Subsidiary Loan Agreements)
shall be extended to June 30, 1998;
3. The Subsidiaries shall have the collective
right and option to purchase from ELXSI for cash all (but
not less than all) of the Subsidiary Loans (and all
related Assigned Rights), or otherwise pay-off in full
the Subsidiary Loans, at a price (or for a payment) equal
to (i) the combined principal amount thereof outstanding
on the date of purchase, plus (ii) all accrued but unpaid
interest thereon to (but excluding) the date of purchase,
less (iii) if purchased during any of the following
calendar months, the following amounts: (A) January 1997:
$575,000; (B) February 1997: $475,000; (C) March 1997:
$375,000; (D) April 1997: $275,000; (E) May 1997:
$175,000, and (F) and June 1997: $75,000, and plus (iv)
if not previously paid, the Closing Fee (as hereinafter
defined);
<PAGE>
31
4. The maximum amount of Subsidiary Loans
that may be outstanding at any one time shall be in-
creased from its current $6,650,000 to $9,650,000;
5. The Subsidiaries shall not be required to
comply with any "lock-box" provisions of the Subsidiary
Loan Agreements unless and until specifically required by
ELXSI;
6. Section 5.13 of the Azimuth Loan Agreement
shall no longer be of any force or effect; and
7. The Group Members shall be permitted to make fixed
asset purchases and other acquisitions (within the meaning of Section
3.5 ("Capital Expenditures") of Supplement A of the Azimuth Loan
Agreement), and commitments therefor, on a consolidated basis of up to
$1,350,- 000 in Fiscal Year 1996 and $750,000 in Fiscal Year 1997.
(b) Closing Fee. The Group Members hereby to pay a closing fee
("Closing Fee") in the amount of $225,000 to ELXSI. Such Closing Fee shall be
payable upon demand by ELXSI, provided that the Closing Fee shall be due and
payable (without demand) on the date that the Subsidiaries purchase from ELXSI
the Subsidiary Loans or otherwise pay-off in full the Subsidiary Loans.
(c) Notwithstanding the interest rate, Closing Fee and other
provisions of this Section 1.4, in no event shall any Subsidiary be required to
pay, and ELXSI may not accept, interest, fees or other amounts in excess of the
maximum amount of interest (including deemed interest) permitted to be paid or
accepted under applicable law.
(d) The amendments and agreements set forth in this Section 1.4 are
hereinafter sometimes referred to as the "Subsid- iary Loan Amendments".
Section 1.5. Consents. Each of the parties hereto hereby irrevocably
consents to the consummation and effectuation of each of Recapitalization
Transactions and other transactions contemplated hereby. Without limiting the
generality of the foregoing: (i) each of the Subsidiaries hereby irrevocably
consents to the Subsidiary Loans Sale and Subsidiary Loans Amendments, and (ii)
Azimuth hereby irrevocably consents to the Term Loan Terminations. In addition:
(1) each of the Subsidiaries hereby reaffirms in all respects its obligations
under the Group Loan Documentation to which it is a party (from and after the
Effective Date, as amended by the Subsidiary Loan Amendments), (2) Azimuth
hereby reaffirms in all respects its obligations under the Group Loan
Documentation to which it is a party (from and after the Effective Date, as
amended by the Term Loan Terminations), and (3) each Group Member hereby agrees
to recognize ELXSI in all respects (from and after the Effective Date) as (x)
the "Lender" or "Bank" (as the case may be) under the Group Loan Documentation
and (y) otherwise, as the holder of the Assigned Rights (as so amended).
<PAGE>
32
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1. All Parties. Each of the parties hereto hereby
represents and warrants (with respect to itself only) to the other
parties that:
(i) such party has the full corporate power and authority to
enter into this Agreement and the other agreement(s) and instrument(s)
contemplated hereby to which it is or is to be a party and to carry out
its obligations hereunder and thereunder;
(ii) the execution and delivery by such party of this
Agreement and other agreement(s) and instrument(s) contemplated hereby
to which it is or is to be a party and the consummation by such party
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on its part;
(iii) this Agreement and other agreement(s) and instrument(s)
contemplated hereby to which it is a party have been, and (upon the
execution and delivery thereof) the other agreement(s) and
instrument(s) contemplated hereby to which it is to be a party will be,
duly executed and delivered by such party and constitute the legal,
valid and binding obligations of such party, enforceable against such
party in accordance with their respective terms;
(iv) the compliance by such party with all of the provisions
of this Agreement and other agreement(s) and instrument(s) contemplated
hereby to which it is or is to be a party, and the consummation by such
party of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default (or an event which, with notice
or lapse of time or both would constitute a default) under, or result
in the termination or amendment of, or accelerate the performance
required by, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such party is a party or by
which such party is bound, or to which any of the property or assets of
such party are subject, nor result in any violation of the provisions
of the certificate or articles of incorporation or the bylaws of such
party (if it be a corporation), or any statute, order, judgment, rule
or regulation of any court or governmental agency or body having
jurisdiction over such party or the property or assets of such party;
and
(v) no authorization, consent or approval of, or filing with,
or notice to, any public body, court, authority or any other person or
entity is necessary for the execution and delivery by such party of
this Agree-
<PAGE>
33
ment or the other agreement(s) or instrument(s) contemplated hereby to
which it is or is to be a party or for the consummation by such party
of the transactions contemplated herein or therein, other than, in each
case, such authorizations, consents, approvals, filings and notices as
have been or will be obtained, made or given on or prior to the
Effective Date.
Section 2.2. Azimuth. Azimuth hereby additionally represents and
warrants to the Bank that:
(i) upon the issuance and delivery to the Bank of the Shares
as provided in Section 1.1: (A) the Shares shall constitute legally
issued, fully paid and nonas- sessable shares of the capital stock of
Azimuth, and (B) the Bank will receive good and (subject to Section 10
of the Certificate of Designations) marketable title to the Shares,
free and clear of all pledges, liens, charges, claims, encumbrances,
security interests, preemptive rights and other similar rights of other
persons or entities arising under or through Azimuth;
(ii) on the Effective Date, after giving effect to the
transactions contemplated by this Agreement, the authorized shares of
capital stock of Azimuth shall consist of: (A) 5,706,837 shares of
Class A Common Stock, par value $.10 per share, of which 4,297,238
shares shall be issued and outstanding, (B) 6,006,837 shares of Class B
Common Stock, par value $.10 per share, of which 4,297,238 shares shall
be issued and outstanding, (C) 30,500 shares of Class A Preferred
Stock, par value $100 per share ("Class A Preferred Stock"), of which
30,500 shares shall be issued and outstanding, (D) 5,000 of Class X
Preferred Stock, par value $100 per share ("Class X Preferred Stock"),
of which 5,000 shares shall be issued and outstanding, (E) 6,112 shares
of Class Y Preferred Stock, par value $100 per share ("Class Y
Preferred Stock"), of which 3,333.32 shares shall be issued and
outstanding, and (F) 1,000,000 shares of New Preferred Stock, par value
$1.00 per share ("New Preferred Stock"), of which only the Series AAA
Preferred shall be designated and only the Shares shall be issued and
outstanding;
(iii) other than the Class A Preferred Stock, the Class X
Preferred Stock, the Class Y Preferred Stock and the Series AAA
Preferred, no other shares of preferred stock or preference stock of
Azimuth has been designated for issuance as part of a series or class;
(iv) the issuance of the Series AAA is not subject to any
statutory or contractual preemptive or other similar rights of any
person or entity and do not conflict with any provision of any
agreement to which any Group Member is a party or by which it is bound;
<PAGE>
34
(v) assuming for this purpose the truth and accuracy of the
Bank's representations and warranties set forth in Section 2.3(b), the
Shares are being offered and sold to the Bank in a transaction exempt
from the registration and qualification requirements of such the
Securities Act and applicable Blue Sky Laws (as such terms are defined
in Section 2.3(b));
(vi) there are no outstanding subscriptions, options,
conversion rights, warrants or other agreements or commitments of any
nature whatsoever (contingent or otherwise) obligating Azimuth to
issue, deliver or sell, or cause to be issued, delivered or sold, any
additional preferred or preference stock of Azimuth, or obligating
Azimuth to grant, extend or enter into any such agreement or commitment
(except that Azimuth intends to (and may have committed to) issue
shares of New Preferred Stock, junior to the Series AAA, to the holders
of Azimuth's subordinated indebtedness); and
(vii) as of the Effective Date, no Group Member shall be
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any
warrants, options or other rights to acquire its capital stock, except
pursuant to the Certificate of Designations and the other provisions of
Azimuth's certificate of incorporation.
Section 2.3. Bank. (a) The Bank hereby additionally represents and
warrants to ELXSI that it has good title to the Assigned Rights, free and clear
of all pledges, liens, charges, claims, encumbrances, security interests and
other similar rights of other persons or entities created by or assented to by
the Bank, except those arising under the Group Loan Documentation.
(b) The Bank hereby acknowledges its understanding that the
Shares are not registered under the Securities Act of 1933, as amended (the
"Securities Act") or registered or qualified under the blue sky or securities
laws of any state ("Blue Sky Laws"), on the grounds that the offering, issuance
and sale of the Shares is exempt from the registration and/or qualification
requirements of such Act and Laws, and that Azimuth's reliance on such
exemption is predicated in part on the below representations, warranties,
covenants, agreements and acknowledgements of the Bank. The Bank hereby
represents and warrants, and covenants and agrees, that it (i) is acquiring the
Shares for its own account for investment purposes with no present intention of
offering, selling, transferring or otherwise disposing of the same,
any part thereof, or any interest therein, unless such offer, sale, transfer or
other disposition would not result in a violation of the Securities Act and all
applicable Blue Sky Laws, (ii) has no reason to anticipate any particular
occasion or event which would cause, necessitate or require it to offer, sell,
transfer or otherwise dispose of the Shares or any interest therein, (iii) is an
"accredited investor" (as such term is defined in Rule 5.01(a) of Regulation D
of the Securities Act), (iv) has, prior to the date hereof, received all
<PAGE>
35
the information concerning Azimuth, the terms and conditions of the Exchange and
the other Recapitalization Transactions requested by it, and had the opportunity
to ask questions and receive answers concerning the same, (v) consents to the
placing of substantially the legend called for under the Certificate of
Designations on the certificate representing the Shares, (vi) agrees that
neither any of the Shares nor any interest therein may be offered, sold,
transferred or otherwise disposed of in contravention of the provisions of such
legend, and (vii) understands that Azimuth is under no obligation to register
the Shares under the Securities Act or to register or qualify the Shares under
any Blue Sky Laws at any time.
ARTICLE III
CONDITIONS TO CLOSING
---------------------
Section 3.1. Bank's Conditions. The obligation of the Bank to
consummate the Exchange and Subsidiary Loans Sale is subject to the satisfaction
of the following conditions, each of which may be waived by the Bank (in whole
or in part):
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the other parties hereto set forth in Article
II shall be true and correct in all material respects on the Effective Date as
though made on and as of the Effective Date. Each of the other parties hereto
shall have performed the agreements and obligations required to be respectively
performed by it under this Agreement on or prior to the Effective Date.
(b) Legal Restraints. There shall not have been proposed or enacted
any law, statute, rule or regulation of any governmental authority, court or
arbitrator ("Law"), or any change in any existing Law, which prohibits or
delays, or threatens to prohibit or delay, the consummation of any of the
Recapitalization Transactions. No order, decree, judgment or ruling by any court
or governmental authority ("Court Order") shall have been rendered or issued,
and no action, suit, claim or proceeding ("Action") shall have been commenced or
threatened by any governmental authority or private party, to restrain, enjoin
or hinder, or to seek damages from the Bank or any affiliate thereof on account
of any of the Recapitalization Transactions.
(c) Shares. Azimuth shall have delivered to the Bank a certificate or
certificates representing the Shares, registered in the name of the Bank (or its
nominee designated in writing).
(d) Purchase Price. The Bank shall have received the Purchase Price
for the Subsidiary Loan Sale, paid in the manner contemplated by Section
1.2(b)(ii).
(e) Bill of Sale. ELXSI shall have executed and delivered to the Bank
one or more counterparts of the Bill of Sale.
(f) Opinion of Counsel. The Bank shall have received an opinion of
Dechert Price & Rhoads, counsel to Azimuth, substan-
<PAGE>
36
tially to the effect of the matters set forth in Section 2.1(i)- (iii) (as they
relate to the Group Members) and Section 2.2(i) hereof.
(g) Officer's Certificate. The Bank shall have received an officer's
certificate, dated the Effective Date, stating that the conditions specified in
Section 3.1(a) have been satisfied.
(h) Resolutions. The Bank shall have received certified copies of (1)
the resolutions duly adopted by Azimuth's Board of Directors authorizing (i) the
execution, delivery and performance of this Agreement and each of the other
agreements contemplated hereby, (ii) the filing of an amendment to (and/or
restatement of) Azimuth's certificate of incorporation expressly vesting in
Azimuth's Board of Directors authority to adopt resolutions expressing
designations, preferences and relative, participating, optional and other
special rights, qualifications and restrictions of New Preferred Stock, (iii)
the filing of the Certificate of Designations, (iv) the issuance and sale of the
Series AAA Preferred, and (v) the consummation of all other transactions
contemplated by this Agreement, and (2) the resolutions duly adopted by
Azimuth's stockholders and all holders of any class or series of stock entitled
to vote as a class thereon (if any) adopting the amendment to (and/or
restatement of) Azimuth's certificate of incorporation referred to in clause
(1)(ii) above.
(i) Charters; Bylaws. The Bank shall have received certified copies
of Azimuth's certificate of incorporation, the Certificate of Designation and
Azimuth's Bylaws, each as in effect on the Effective Date.
Section 3.2. ELXSI's Conditions. The obligation of ELXSI to consummate
the Subsidiary Loans Sale is subject to the satisfaction of the following
conditions, each of which may be waived by ELXSI (in whole or in part):
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the other parties hereto set forth in Article
II shall be true and correct in all material respects on the Effective Date as
though made on and as of the Effective Date. Each of the other parties hereto
shall have performed the agreements and obligations required to be respectively
performed by it under this Agreement on or prior to the Effective Date.
(b) Legal Restraints. There shall not have been proposed or enacted
any Law, or any change in any existing Law, which prohibits or delays, or
threatens to prohibit or delay, the consummation of any of the Recapitalization
Transactions. No Court Order shall have been rendered or issued, and no Action
shall have been commenced or threatened by any governmental authority or private
party, to restrain, enjoin or hinder, or to seek damages from the Bank or any
affiliate thereof on account of any of the Recapitalization Transactions.
<PAGE>
37
(c) Bill of Sale. The Bank shall have executed and delivered to the
Bank one or more counterparts of the Bill of Sale.
(d) Assignment of Group Security Evidences. The Bank shall have
executed and delivered to ELXSI, in the appropriate recordable or fileable form,
assignments of all Group Security Evidences naming ELXSI as the assignee of the
Group Security.
(e) Pledged Instruments. The Bank shall have delivered to ELXSI stock
certificates, promissory notes and other instruments representing any Pledged
Property and held by the Bank in connection with the Group Security.
(f) Purchase Price Receipt. The Bank shall have executed and
delivered to ELXSI an acknowledgement of receipt of the Purchase Price for the
Subsidiary Loan Sale.
(g) Surrender of Subsidiary Loan Notes. The Bank shall have
surrendered for cancellation each of the Subsidiary Notes.
(h) New Subsidiary Notes. Each of the Subsidiaries shall have
executed and delivered to ELXSI, in substitution for the Subsidiary Notes
(and in order to further evidence the Subsidiary Loan Amendments), new
Revolving Notes made payable to the order of ELXSI substantially in the form
of Exhibit C hereto.
Section 3.3. Azimuth's Conditions. The obligation of Azimuth to
consummate the Exchange is subject to the satisfaction of the following
conditions, each of which may be waived by Azimuth (in whole or in part):
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the other parties hereto set forth in Article
II shall be true and correct in all material respects on the Effective Date as
though made on and as of the Effective Date. Each of the other parties hereto
shall have performed the agreements and obligations required to be respectively
performed by it under this Agreement on or prior to the Effective Date.
(b) Legal Restraints. There shall not have been proposed or enacted
any Law, or any change in any existing Law, which prohibits or delays, or
threatens to prohibit or delay, the consummation of any of the Recapitalization
Transactions. No Court Order shall have been rendered or issued, and no Action
shall have been commenced or threatened by any governmental authority or private
party, to restrain, enjoin or hinder, or to seek damages from the Bank or any
affiliate thereof on account of any of the Recapitalization Transactions.
(c) Surrender of Azimuth Term Note. The Bank shall have surrendered
for cancellation the Azimuth Term Note.
<PAGE>
38
ARTICLE IV
MISCELLANEOUS
-------------
Section 4.1. Remedies. The parties hereto hereby acknowledge that the
benefits to be obtained by them under this Agreement are unique and cannot be
obtained in the open market, and that, consequently, the remedies at law for any
breach of the obligations established hereunder is and will be insufficient and
inadequate Therefore, each party hereto hereby (i) agrees that the parties
hereto shall, in the event of such a breach, be entitled to equitable relief, in
addition to remedies at law, (ii) waives the defense that there is an adequate
remedy at law in the event that there is brought any action to enforce the
provisions of this Agreement, and (iii) agrees that, without limiting and in
addition to any other remedies at law or in equity that any party may otherwise
have in the event of such a breach, the other parties hereto shall be entitled
to the remedy of specific performance.
Section 4.2. Further Actions. 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.
Section 4.3. Expenses. Each party hereto (other than the Bank and
ELXSI) shall bear its own legal, accounting and other costs and expenses with
respect to the negotiation, execution and the delivery of this Agreement and the
consummation of the Recapitalization Transactions hereunder. The Group Members
shall bear the expenses of the Bank and ELXSI and their respective counsel
hereunder and in connection with the Recapitalization Transactions.
Section 4.4. Complete Agreement. This Agreement (which includes the
Schedules hereto) contains the entire agreement among the parties hereto with
respect to subject matter hereof and supersedes all prior written or oral
agreements and understandings among the parties with respect to such matters.
Section 4.5. Assignment; Successors. Neither this Agreement nor any of
the rights hereunder may be assigned by any party hereto (other than the Bank
and other than any assignment by operation of law) without the prior written
consent of the other parties hereto (which consent shall not be unreasonably
withheld or delayed), and any purported assignment thereof by any such party
without such consent shall be void ab initio; provided, however, that this
Agreement and the respective rights of the parties to receive performance of any
obligations hereunder and to make claims in respect of breaches of this
Agreement may be assigned as security to any person or entity directly or
indirectly extending credit to such party. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. In addition, and whether or not any express
<PAGE>
39
assignment has been made, the provisions of this Agreement which are for the
Bank's benefit as a purchaser or holder of Series AAA Preferred are also for the
benefit of, and enforceable by, any subsequent holder of the Series AAA
Preferred.
Section 4.6. 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).
Section 4.7. Notices. All notices, consents, requests, demands and
other communications provided for herein or permitted hereunder shall be in
writing and shall be deemed validly given, made, served and received when
delivered (if delivered personally), when telecopied (if telecopied), one
business day after being sent (if sent by overnight delivery service) or three
business days after being deposited in the mails (if sent by registered or
certified mail, postage prepaid) to the following address or Fax number:
If to any Group Member: c/o Azimuth Corporation
4209 Vineland Road, Suite J-1
Orlando, Florida 32811
Attention: President
FAX: (407) 849-0625
If to ELXSI: 4209 Vineland Road, Suite J-1
Orlando, Florida 32811
Attention: President
FAX: (407) 849-0625
If to the Bank: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Andrew J. Sutherland
FAX: (312) 828-3889
Any party may, by notice as aforesaid, change the address or FAX number to which
notices or other communications to it are to be delivered, telecopied or sent.
Section 4.8. Invalid Provision. In the event that any provision of
this Agreement shall be determined to be invalid or unen- forceable, this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
Section 4.9. Headings. The Article, Section and Schedule headings in
this Agreement are for convenience of reference purposes only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
Section 4.10. Gender; Singular and Plural. Words of gender or neuter
may be read as masculine, feminine or neuter, as required or permitted by the
context. Singular and plural forms of defined and other terms herein may be read
as singular or plural, as required or permitted by the context.
<PAGE>
40
Section 4.11. Waivers and Amendments. This Agreement may not be
modified or amended, nor may compliance with any of its terms and conditions be
waived, except in a writing executed by each of the parties hereto.
Notwithstanding the immediately preceding sentence, the provisions of this
sentence and Sections 4.12, 4.16 and 4.17 hereof are for the benefit of the
holders of the Series AAA Preferred only, and may be waived by the holders of a
majority of the outstanding Series AAA Preferred or amended by Azimuth and the
holders of a majority of the outstanding Series AAA Preferred.
Section 4.12. Financial Information. Notwithstanding the Subsidiary
Loans Assignment, Azimuth agrees to comply with the financial reporting
requirements of Sections 5.1.1(a)-(c) and 5.1.2(a) of the Azimuth Loan
Agreement, and with the access-to- books-and-records provisions of Section 5.5
of the Azimuth Loan Agreement (as in effect on the date hereof, and
notwithstanding any termination of the Azimuth Loan Agreement), from and after
the Effective Date for so long as the Bank holds any of the Shares, as if the
Bank were then the "Lender" under the Azimuth Loan Agreement.
Section 4.14. Limitation on Bank Liability. The Bank shall not be
responsible to any party for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of any Group Loan
Agreement or any other item of the Group Loan Documentation, including, without
limitation, any document granting any lien on or security interest in assets of
any Group Member, (ii) any representation, warranty or statement made in or in
connection with any Group Loan Agreement or any other of the Group Loan
Documentation, (iii) the solvency, financial condition or creditworthiness of
any Group Member, (iv) the performance of or compliance with any of the terms or
provisions of any Group Loan Agreement or any of the other Group Loan
Documentation, (v) inspecting any of the property, books or records of any Group
Member, or (vi) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Liabilities (as defined in each Group Loan Agreement). ELXSI acknowledges and
agrees that it has made and shall continue to make its own credit determination
and analysis based upon such information as it deems sufficient to enter into
the transactions contemplated hereby and not based on any statements or
representations by the Bank. ELXSI confirms that it has received a copy of each
Group Loan Agreement and the other Group Loan Documentation, together with
copies of Azimuth's audited consolidated financial statements for the fiscal
year ended December 31, 1995, and unaudited financial statements for the fiscal
quarter ended September 30, 1996.
Section 4.15. Survival of Representations and Warranties. All
representations and warranties of the parties contained herein or made in
writing by any party in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, regardless of any investigation made by any other party hereto or on its
behalf.
<PAGE>
41
Section 4.16. Capital and Surplus; Special Reserves; Nonre- deemable
Stock. Azimuth agrees that, for so long as shares of the Series AAA Preferred
remain outstanding, unless otherwise consented to by the holders of a majority
of the outstanding Series AAA Preferred: (i) Azimuth's capital (as such term is
used in Section 154 of the General Corporation Law of Delaware) in respect of
the Series AAA Preferred issued pursuant to this Agreement shall be equal to the
aggregate par value of such shares; (ii) Azimuth shall not increase its capital
with respect to any shares of Azimuth's capital stock at any time on or after
the date of this Agreement; (iii) Azimuth shall not create any special reserves
under Section 171 of the General Corporation Law of Delaware; and (iv) Azimuth
will not amend its certificate of incorporation in such a manner that will
result in Azimuth not having outstanding a class or series of stock with full
voting rights which is not subject to redemption.
Section 4.17. Limitation on Restriction of Subsidiary Dividends and
Distributions. Azimuth will not, and will not permit any Subsidiary to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to (i) pay
dividends or make other distributions on its capital stock owned by Azimuth or
any other Subsidiary, or pay any indebtedness owed to Azimuth or any other
Subsidiary, (ii) make loans or advances to Azimuth, or (iii) transfer any of its
assets or properties to Azimuth.
Section 4.18. Limitation on Assigned Rights. Notwithstanding anything
herein to the contrary, the term "Assigned Rights", as used herein and in the
Bill of Sale, shall not include any claims or potential claims by the Bank
against any Group Member for indemnification pursuant to Section 9 of any Group
Loan Agreement.
Section 4.19. Counterparts. This Agreement may be executed in one or
more counterparts, which, taken together, shall constitute one and the same
agreement.
[the remainder of this page is intentionally blank]
<PAGE>
42
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Azimuth: ELXSI:
- -------- ------
AZIMUTH CORPORATION ELXSI
By:________________________ By:_______________________
Thomas R. Druggish Alexander M. Milley
Vice President-Finance President
Subsidiaries: The Bank:
- ------------- ---------
DELAWARE ELECTRO INDUSTRIES, BANK OF AMERICA ILLINOIS
INC.
By:________________________ By:_______________________
Steven D. Hollopeter Name:
President Title:
CONTEMPO DESIGN, INC.
By:________________________
Thomas R. Druggish
Vice President (Finance)
CONTEMPO DESIGN WEST, INC.
By:______________________
Thomas R. Druggish
Vice President-Finance
<PAGE>
43
Exhibit A
(to Azimuth Transactions Agreement)
Form of Certificate of Designations
[intentionally omitted from this filing]
<PAGE>
44
Exhibit B
(to Azimuth Transactions Agreement)
Form of Bill of Sale
--------------------
THIS BILL OF SALE AND ASSUMPTION, dated December ___, 1996 (this "Bill
of Sale"), is by and between Bank of America Illinois (formerly Continental Bank
N.A.) ("Assignor"), and ELXSI, a California corporation ("Assignee").
BACKGROUND
Assignor and Assignee are party to that certain Recapitalization
Agreement, dated as of December 30, 1996 (the "Recapitalization Agreement"), by
and among (1) Azimuth Corporation, a Delaware corporation, (2) Delaware Electro
Industries, Inc., a Delaware corporation and wholly-owned subsidiary of Azimuth,
(3) Contempo Design, Inc., an Illinois corporation and wholly-owned subsidiary
of Azimuth, (4) Contempo Design West, Inc., a Delaware corporation and
wholly-owned subsidiary of Azimuth, (5) Assignee, and (6) Assignor, pursuant to
which (among other things) Assignor has agreed to sell to Assignee the Assigned
Rights and Assignee has agreed to assume the Assumed Obligations, as defined in
and more particularly described in the Recapitalization Agreement.
The purpose of this Bill of Sale is to evidence and effect such sale
and assumption and to provide for certain related matters. All capitalized terms
used and not defined herein shall have the respective meanings ascribed to such
terms in the Recapitalization Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Assignor and Assignee:
1. Assigned Rights. Assignor does hereby sell, transfer, grant,
convey, assign and set over (without recourse, representation or warranty,
except as expressly set forth in the Recapitalization Agreement) to Assignee,
and its successors and assigns forever, and Assignee does hereby purchase and
receive from Assignor, free and clear of all pledges, liens, charges, claims,
encumbrances, security interests and other similar rights of other persons or
entities created by or assented to by the Assignor, the Assigned Rights.
2. Assumed Obligations. (a) Assignor does hereby transfer, assign
and delegate to Assignee, and Assignee does hereby assume and agree to satisfy
and discharge in accordance with their respective terms, the Assumed
Obligations.
(b) Notwithstanding anything to the contrary set forth herein,
Assignee is not assuming and shall not assume (and the definition of "Assumed
Obligations" hereunder excludes), any obligations, claims or liabilities
resulting from or relating to (i) any breach of any of the Bank's
representations, warranties, covenants or agreements under the Group Loan
Documentation, or (b) the Bank's gross negligence or wilful misconduct.
3. Further Assurances. Assignor will, at any time and from time to
time after the date hereof, on the request Assignee, do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged or delivered, all such
further acts, deeds, assignments, transfers, conveyances or assurances as may be
reasonably required for the better transferring, assigning, conveying, granting,
assuring and confirming to Assignee, or for the
<PAGE>
45
Exhibit B
(to Azimuth Transactions Agreement)
aiding and assisting in the collection of or reducing to possession by Assignee,
of any of the Assigned Rights, to vest in Assignee all of Assignor's right,
title and interest in and to the Assigned Rights, or to otherwise enable
Assignee to realize upon or otherwise enjoy the Assigned Rights.
4. Successors and Assigns. This Bill of Sale shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
5. Governing Law. This Bill of Sale shall be construed and enforced
in accordance with the laws of the State of Illinois (without regard to the
conflict-of-law laws and principles thereof).
6. Counterparts. This Bill of Sale may be executed in any number of
counterparts, each of which shall be deemed to be an original document but all
of which together shall constitute a single document.
IN WITNESS WHEREOF, the undersigned have executed this Bill of Sale on
the date first above written.
Assignor: Assignee:
BANK OF AMERICA ILLINOIS ELXSI
By:___________________________ By:_________________________
Name: Name:
Title: Title:
<PAGE>
46
Exhibit C
(to Azimuth Transactions Agreement)
Form of New Revolving Notes
---------------------------
NEW REVOLVING NOTE
$9,650,000 December ___, 1996
FOR VALUE RECEIVED, the undersigned, [NAME OF SUBSIDIARY], a
corporation (the "Borrower"), promises to pay to the order of ELXSI ("ELXSI") on
the Termination Date the maximum principal sum of NINE MILLION SIX HUNDRED FIFTY
THOUSAND DOLLARS ($9,650,000) or, if less, the unpaid principal amount of all
Revolving Loans made by the "Lender" (as defined in the Loan Agreement (as
defined below)) to the Borrower from time to time pursuant to that certain Loan
and Security Agreement, dated as of October 9, 1995, between the Borrower and
(originally) Bank of America Illinois ("BAI"), as amended prior the date hereof
and assigned by BAI to ELXSI on the date hereof (the "Original Loan Agreement"),
and as further amended under Section 1.4 of that certain Recapitalization
Agreement, dated as of December 30, 1996, by and among Azimuth Corporation,
Delaware Electro Industries, Inc., Contempo Design, Inc., Contempo Design West,
Inc., ELXSI and BAI (as the same may be further amended from time to time, the
"Loan Agreement"). A notation indicating all Revolving Loans made or maintained
by ELXSI pursuant to the Loan Agreement and all payments on account of principal
of such Revolving Loans may, from time to time, be made by the holder hereof on
the grid attached to this Note.
The unpaid principal amount of this Note from time to time outstanding
shall bear interest at an annual rate of 15%. All payments of principal of and
interest on this Note shall be payable in lawful currency of the Untied States
of America at the office of ELXSI designated for such purpose, in same day
funds.
This Note is (x) the Note referred to in, and evidences indebtedness
incurred and maintained prior to the date hereof under, the Original Loan
Agreement, and subsequently incurred and maintained under, the Loan Agreement,
and (y) a Subsidiary Note referred to in the Recapitalization Agreement, to
which reference is made for a description of the security for this Note and for
a statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments of principal of the indebtedness evidenced by this
Note and on which such indebtedness may be declared to be immediately due and
payable. This Note is in replacement and substitution of, and evidences
indebtedness formerly evidenced by, that certain Revolving Note (Replacement)
made by the Borrower in favor of BAI on August 6, 1996. Reference is hereby made
to the Section 2.6 and 2.7 of the Original Loan Agreement for a statement of the
terms and provisions whereby the indebtedness evidenced hereby may exceed the
face amount of this Note. Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in the Original
Loan Agreement or (if not provided therein) the Recapitalization Agreement.
[NAME OF SUBSIDIARY]
By:______________________________
Title:
<PAGE>
Exhibit C
(to Azimuth Transactions Agreement)
GRID
Revolving Loans made or maintained by ELXSI to [NAME OF
BORROWER under that certain Loan and Security Agreement, dated as of October 9,
1995, between the Borrower and (originally) Bank of America Illinois ("BAI"), as
amended prior to December 30, 1996 and assigned by BAI to ELXSI on December __,
1996, and as further amended under Section 1.4 of that certain Recapitalization
Agreement, dated as of December 30, 1996 by and among Azimuth Corporation,
Delaware Electro Industries, Inc., Contempo Design, Inc., Contempo Design West,
Inc., ELXSI and BAI (as the same may be further amended from time to time) and
payments of principal of such Revolving Loans.
===============================================================================
Amount Amount of Outstanding Notation
of Principal Principal Made
Date Loan Payment Balance By
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
==============================================================================
<PAGE>
