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EXHIBIT 2
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RIGHTS AGREEMENT AMENDMENT
THIS RIGHTS AGREEMENT AMENDMENT, dated as of March 16, 1999 (as the
same may be modified, amended, supplemented and/or restated from time to time,
this "Amendment"), relates to that certain Rights Agreement, dated as of June 4,
1997 (as the same may be further modified, amended, supplemented and/or restated
from time to time, the "Agreement"), between ELXSI CORPORATION, a Delaware
corporation (the "Company"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a
New York corporation, as Rights Agent (the "Rights Agent"). Capitalized terms
used and not defined herein have the respective meanings ascribed to such terms
under the Agreement.
BACKGROUND
Prior to the date hereof, Xxxxx X. Xxxxxxx and certain other Kellogg
Group Members (as such term is defined hereinbelow) became the Beneficial
Owners, in the aggregate, of more than 15% of the outstanding shares of Common
Stock of the Company, with the result that (but for the amendments to the
Agreement set forth in Section 1(A) hereof (the "Kellogg Amendments")) such
Persons may have become "Acquiring Persons" under the Agreement. Under the
Kellogg Standstill Agreement (as such term is defined hereinbelow), Xxxxx X.
Xxxxxxx and the other Kellogg Persons (as such term is defined therein) have
represented and warranted to the Company that: (i) their becoming "Acquiring
Persons" under the Agreement (if in fact the case) was inadvertent, and (ii)
said shares were not acquired and are not held for the purpose of or with the
effect of changing or influencing the control of the Company, or in connection
with or as a participant in any transaction having that purpose or effect.
The Board of Directors of the Company, all of whom are Continuing
Directors within the meaning of the Agreement: (x) having taken into
consideration the foregoing representations and warranties of the Kellogg
Persons and the other provisions of the Kellogg Standstill Agreement, and (y)
having determined that, in light of such representations, warranties and other
provisions, permitting said inadvertent acquisition of Common Stock to result in
a Triggering Event or Distribution Date under the Agreement would be inimical to
the interests of, if not injurious to, the Company and the holders of the
Rights, wish to supplement and amend the Agreement in order to (among other
things, as set forth hereinbelow) permit the present Common Stock holdings of
the Kellogg Group Members without resulting in such a Triggering Event or
Distribution Date.
This Amendment is being executed and delivered by the Company and, at
the direction of the Company, the Rights Agent in compliance with, and in
accordance with the authority granted under, Section 27 (AMENDMENTS AND
SUPPLEMENTS) and Section 29 (DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS) of the Agreement. The Board of Directors of the Company has
determined that the amendments to the Agreement effected hereunder are for the
purpose of protecting, enhancing or clarifying the rights of, and/or, the
benefits to, the holders of Rights.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, and intending to be legally bound hereby, the parties hereby
agree as follows:
AGREEMENTS
SECTION 1. AMENDMENT AND ADDITION OF CERTAIN DEFINITIONS.
(A) AMENDED AND RESTATED "ACQUIRING PERSON". Section 1(a) of the
Agreement is hereby amended and restated to read in its entirety as follows:
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(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, but shall not include (i) any Exempt Person (as
hereinafter defined) or (ii) any Xxxxxx Group Member, if and so long as
all Xxxxxx Group Members, together with their Affiliates and
Associates, are not the Beneficial Owners of 35% or more of the shares
of Common Stock then outstanding or (iii) any Kellogg Group Member, if
and so long as all Kellogg Group Members, together with their
Affiliates and Associates, are not the Beneficial Owners of a number
shares of Common Stock equal to or in excess of the Kellogg Group
Member Limit. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of beneficial
ownership of shares of Common Stock by the Company that, by reducing
the number of shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) outstanding, increases the
percentage of shares of Common Stock beneficially owned by such Person
(together with all Affiliates and Associates of such Person) to 15% or
more (or, in the case of the Xxxxxx Group Members, 35% or more) of the
shares of Common Stock then outstanding; PROVIDED, HOWEVER, that if any
Person (other than Exempt Persons) (together with all Affiliates and
Associates of such Person) shall become the Beneficial Owner of 15% or
more (or, in the case of the Xxxxxx Group Members, 35% or more, or, in
the case of the Kellogg Group Members, the Kellogg Group Member Limit)
of the shares of Common Stock then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional shares of Common
Stock of the Company, then such Person shall be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
"Acquiring Person" as defined pursuant to the first sentence of this
paragraph (a), has become such inadvertently, and such Person divests
as promptly as practicable a sufficient number of shares of Common
Stock so that such Person would no longer be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not, solely as a result of such inadvertent
acquisition, be deemed to be an "Acquiring Person" for any purpose of
this Agreement.
(B) AMENDMENT TO "BENEFICIAL OWNERSHIP". The proviso at the end of
Section 1(c) of the Agreement is hereby amended and restated to read in its
entirety as follows:
PROVIDED, HOWEVER, that nothing in this subsection (c) shall cause (i)
a Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities
acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the
date of such acquisition, or (ii) a Xxxxxx Group Member, or an
Affiliate or Associate of a Xxxxxx Group Member, to be the "Beneficial
Owner" of, or to "beneficially own," any Xxxxxxx Group Member Shares.
(C) ADDITIONAL DEFINITIONS. Section 1 of the Agreement is hereby
further amended by adding to the following new definitions after subsection (r)
at the end thereof, to read in their entirety as follows:
(s) "Amendment Base Date" shall mean March 16, 1999.
(t) "Kellogg Group Member" shall mean (i) Xxxxx X. Xxxxxxx,
(ii) the spouse of Xxxxx X. Xxxxxxx, (iii) any guardian,
representative, executor, estate, administrator or agent of Xxxxx X.
Xxxxxxx or his spouse, but only with respect to any shares of Common
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Stock beneficially owned by any such guardian, representative,
executor, estate, administrator or agent in its capacity as such, (iv)
any trust for the benefit of Xxxxx X. Xxxxxxx or his spouse, and (v)
any corporation, partnership, limited liability company, foundation or
other entity which Xxxxx X. Xxxxxxx or his spouse may control (within
the meaning of Rule 12b-2 of the General Rules and Regulations
promulgated under the Exchange Act). For purposes of clarification, at
the Amendment Base Date the Xxxxxxx Group Members and the Affiliates
and Associates thereof that beneficially own Common Stock are: Xxxxx X.
Xxxxxxx (individually); Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx'x spouse;
I.A.T. Reinsurance Syndicate Ltd., a Bermuda corporation and its
subsidiaries; the Xxxxx X. Xxxxxxx & Xxxxxxx X. Xxxxxxx Foundation, a
New Jersey corporation; and the NOM Trust U/W/O Xxxxx X. Xxxxxxx, III,
a New Jersey-domiciled trust. The foregoing listing of Kellogg Group
Members and the Affiliates and Associates thereof: (a) is based upon
the representations and warranties of the Kellogg Persons under (and as
defined in) the Kellogg Standstill Agreement, (b) may not be an
exhaustive listing of such Persons, and (c) accordingly, shall not be
construed to exclude any other Person within the definition thereof who
is not, in fact, included in such listing.
(u) "Xxxxxxx Group Member Limit" shall mean, at any time, the
greater of: (i) 1,000,000 shares of Common Stock (PROVIDED that if at
any time after the Amendment Base Date the Company shall effect any
stock split (forward or reverse), stock dividend or similar
transaction, then the foregoing share numbers shall be proportionately
increased or decreased, as appropriate) LESS the number of shares of
Common Stock then beneficially owned by all Kellogg Related Persons and
all of their respective Affiliates and Associates, and (ii) 15% of the
shares of Common Stock then outstanding; PROVIDED, HOWEVER, if at any
time any Kellogg Group Member of any Affiliate or Associate of any
Kellogg Group Member that beneficially owns Common Stock either (x) is
not eligible to report such ownership on a short-form statement on
Schedule 13G under the Exchange Act (or any comparable or successor
report) due to a failure to meet the condition to such eligibility set
forth in Rule 13d-1(c)(1) of the General Rules and Regulations under
the Exchange Act (or any comparable or successor rule), or (y) having
previously been so eligible, ceases to be so eligible by operation of
Rule 13d-1(e)(i) of the General Rules and Regulations under the
Exchange Act (or any comparable or successor rule), then the foregoing
clause (i) shall no longer be effective and the "Kellogg Group Member
Limit" at such time shall be 15% of the shares of Common Stock then
outstanding.
(v) "Kellogg Group Member Shares" shall mean, at any time any
shares of Common Stock: (i)(x) beneficially owned (within the meaning
of Rule 13d-3 or Rule 16a-1(a)(2) of the General Rules and Regulations
under the Exchange Act) by any Xxxxxxx Group Member, any Kellogg
Related Person or any Affiliate or Associate of any Xxxxxxx Group
Member or Kellogg Related Person and (y) the power to vote of which, in
accordance with the Kellogg Standstill Agreement, shall have been
granted to a Xxxxxx Group Member (or any designee thereof); or (ii)
otherwise acquired by any Xxxxxx Group Member (or any designee thereof)
pursuant to the Kellogg Standstill Agreement.
(w) "Kellogg Related Person" shall mean (i) any descendant of
Xxxxx X. Xxxxxxx, (ii) the spouse of any descendant of Xxxxx X.
Xxxxxxx, (iii) any guardian, representative, executor, estate,
administrator or agent of any descendant of Xxxxx X. Xxxxxxx or the
spouse of any descendant of Xxxxx X. Xxxxxxx, but only with respect to
any shares of Common Stock beneficially owned by any such guardian,
representative, executor, estate, administrator or agent in its
capacity as such, (iv) any trust for the benefit of any descendant of
Xxxxx X. Xxxxxxx or any spouse of such descendant, and (v) any
corporation, partnership, limited liability company, foundation or
other entity which
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any descendant of Xxxxx X. Xxxxxxx or any spouse of such descendant may
control (within the meaning of Rule 12b-2 of the General Rules and
Regulations promulgated under the Exchange Act). If any Person may be
deemed to be both a Kellogg Group Member or an Affiliate or Associate
of a Xxxxxxx Group Member, on the one hand, as well as a Kellogg
Related Person or any Affiliate or Associate of a Kellogg Related
Person, on the other hand, then such Person shall for all purposes be
deemed to be a Kellogg Group Member or an Affiliate or Associate of a
Xxxxxxx Group Member, as the case may be.
(x) "Kellogg Standstill Agreement" shall mean that certain
Standstill Agreement, dated as of March 16, 1999, among the Company,
Xxxxxxxxx X. Xxxxxx, the Persons whose names appear on the signature
page thereto under the terms "Original Kellogg Persons", and the other
Persons, if any, who subsequently become party to such Agreement as
"Additional Kellogg Persons", as the same may be modified, amended,
supplemented and/or restated from time to time.
SECTION 2. EFFECTIVENESS. (A) The Kellogg Amendments are being
implemented based upon: (i) the considerations and determinations of the Board
of Directors of the Company described in the "Background" section of this
Amendment, and (ii) the presumption that (x) the representations and warranties
of the Kellogg Persons under the Kellogg Standstill Agreement are true, correct
and complete in all material respects and (y) the Kellogg Persons thereunder
will at all relevant times fully comply with all of their covenants and
agreements thereunder. Accordingly, in the event that at any time any Kellogg
Person shall be in breach of or default under the Kellogg Standstill Agreement
(which for this purpose shall include (x) any failure on the part of any Kellogg
Related Person or any Affiliate or Associate thereof to execute and deliver an
instrument contemplated by Section 2.2(D) of the Kellogg Standstill Agreement
under the circumstances provided for thereunder and (y) any breach of or default
under such an instrument by any such Person), then (without limiting any of the
rights or remedies that may be available to the parties under the Kellogg
Standstill Agreement at law or in equity), the effectiveness of the Kellogg
Amendments shall, at the election of the Company (upon approval of a majority of
the Continuing Directors then in office), be suspended or terminated, without
the approval of or notice to: (a) any holders of certificates representing
shares of Common Stock and associated Rights or of any Rights Certificates, (b)
the Rights Agent, or (c) any other Person. In the event that any such suspension
or termination of the Kellogg Amendment results in any Person who would have
been an Acquiring Person (but for the Kellogg Amendments) becoming an Acquiring
Person, the time period for measuring the occurrence of any resulting
Distribution Date and/or a Triggering Event under the Agreement shall commence
on the effective date of such suspension or termination (as the case may be),
unless and to the extent otherwise determined by a majority of the Continuing
Directors in approving such suspension or termination (as the case may be).
(B) If at any time after the date hereof the beneficial ownership
of shares of Common Stock of the Kellogg Group Members, Kellogg Related Persons
and the Affiliates and Associates of any Kellogg Group Member or Kellogg Related
Person shall be less than 3% of the Common Stock then outstanding (in the
aggregate for all such Persons), then the Kellogg Amendments shall automatically
and forthwith terminate thereupon.
SECTION 3. NOTICES. The address for notices or demands authorized by
the Agreement to or on the Company is hereby amended and restated to read in its
entirety as follows:
ELXSI Corporation
0000 Xxx Xxxxx Xxxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attention: President
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SECTION 4. SUPPLEMENTS AND AMENDMENTS. This Amendment may be
supplemented and amended if such supplement or amendment (as the case may be) is
in compliance with Section 27 of the Agreement.
SECTION 5. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder
and under the Rights Agreement.
SECTION 6. BENEFITS OF THIS AMENDMENT. Nothing in this Amendment shall
be construed to give to any Person (including any Kellogg Group Member, any
Kellogg Related Person or any Affiliate or Associate of any Xxxxxxx Group Member
or Kellogg Related Person) other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the shares of Common Stock) any legal or equitable right, remedy or claim
under this Amendment; but this Amendment shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
shares of Common Stock).
SECTION 7. SEVERABILITY. If any term, provision, covenant or
restriction of this Amendment is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language of this Amendment would adversely affect the purpose or effect
of this Amendment, the right of redemption set forth in Section 23 of the
Agreement shall be reinstated and shall not expire until the close of business
on the tenth day following the date of such determination by the Board of
Directors.
SECTION 8. GOVERNING LAW. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State;
PROVIDED, HOWEVER, that the rights and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 9. COUNTERPARTS. This Amendment may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
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SECTION 10. DESCRIPTIVE HEADINGS. The Section 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 references in this Agreement are to the referenced Sections of this
Agreement, unless the context otherwise requires.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
ELXSI CORPORATION
Attest: By:_______________________________
Name: Xxxxxxxxx X. Xxxxxx
Title: President
By:______________________________
[Assistant] Secretary
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY, as Rights Agent
Attest: By:_______________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
By:______________________________
[Assistant] Secretary
