-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ug2zfxtR2GPF8yfoGCPpUPh8p1u+xPPMgzFKAfMRmFP3HWM8IcyUVmjogxoMQGbf qIAb80mggIPdzkTFbjTqZw== 0000894579-97-000004.txt : 19970110 0000894579-97-000004.hdr.sgml : 19970110 ACCESSION NUMBER: 0000894579-97-000004 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970109 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ELXSI CORP /DE// CENTRAL INDEX KEY: 0000712843 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 770151523 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-35748 FILM NUMBER: 97503334 BUSINESS ADDRESS: STREET 1: 4209 VINELAND ROAD SUITE J-I STREET 2: C/O ELXSI CITY: ORLANDO STATE: FL ZIP: 32811 BUSINESS PHONE: 4078491090 MAIL ADDRESS: STREET 1: 4209 VINELAND ROAD STREET 2: SUITE J-1 CITY: ORLANDO STATE: FL ZIP: 32811 FORMER COMPANY: FORMER CONFORMED NAME: ELXSI CORP /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ELXSI LTD DATE OF NAME CHANGE: 19870920 FORMER COMPANY: FORMER CONFORMED NAME: TRILOGY LTD DATE OF NAME CHANGE: 19870127 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MILLEY ALEXANDER M CENTRAL INDEX KEY: 0001000247 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 4209 VINELAND RD STREET 2: STE J-1 CITY: ORLANDO STATE: FL ZIP: 32811 BUSINESS PHONE: 4078499800 MAIL ADDRESS: STREET 1: 4209 VINELAND RD STREET 2: STE J-1 CITY: ORLANDO STATE: FL ZIP: 32811 SC 13D/A 1 SEC FILING 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 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. 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. 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! 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! 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 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: 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. 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 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 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 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 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. 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") 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 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") EX-99.D 2 STOCK PURCHASE AND OPTION EXERCISE AGREEMENT 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. 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 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. 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 EX-99.E 3 PROMISSORY NOTE 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; 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 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 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 EX-99.F 4 RECAPITALIZATION AGREEMENT 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 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"). 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 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. 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 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); 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). 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- 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; 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 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- 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. 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. 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 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. 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. 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] 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 43 Exhibit A (to Azimuth Transactions Agreement) Form of Certificate of Designations [intentionally omitted from this filing] 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 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: 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: 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 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ ============================================================================== -----END PRIVACY-ENHANCED MESSAGE-----