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EXHIBIT 3
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT, dated as of March 16, 1999 (as the same may
be modified, amended, supplemented and/or restated from time to time, this
"Agreement"), is by and among (1) ELXSI Corporation, a Delaware corporation (the
"Company"), (2) Xxxxxxxxx X. Xxxxxx ("AMilley" or the "Xxxxxx Person"), (3) the
Persons whose names appear on the signature page hereto under the terms
"Original Kellogg Persons" (collectively, the "Original Kellogg Persons"), and
(4) the other Persons, if any, who subsequently become party to this Agreement
as "Additional Kellogg Persons" (collectively with the Original Kellogg Persons,
the "Kellogg Persons").
BACKGROUND
In 1997 the Board of Directors of the Company declared a dividend
distribution of one common stock purchase right (collectively, the "Rights") for
each outstanding share of Common Stock, par value $.001 per share (the "Common
Stock"). The terms of the Rights are established under and set forth in that
certain Rights Agreement, dated as of June 4, 1997 (as the same may be modified,
amended, supplemented and/or restated from time to time, the "Rights
Agreement"), between the Company and Continental Stock Transfer & Trust Company,
as Rights Agent (the "Rights Agent"). Capitalized terms used and not defined
herein have the respective meanings ascribed to such terms under the Rights
Agreement.
Prior to the date hereof, Xxxxx X. Xxxxxxx and the other Original
Kellogg Persons became the Beneficial Owners, in the aggregate, of more than 15%
of the outstanding shares of Common Stock, with the result that (but for the
Rights Agreement Amendment (defined below)) such Kellogg Persons may have become
"Acquiring Persons" under the Rights Agreement.
The Board of Directors of the Company has determined that if: (x) as
represented and warranted by the Original Kellogg Persons hereunder: (i) their
becoming "Acquiring Persons" under the Agreement (if in fact the case) was
inadvertent, and (ii) their shares of Common Stock 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, and (y) the other provisions of this
Agreement are complied with, permitting said inadvertent event (if in fact the
case) to result in a Triggering Event or Distribution Date under the Rights
Agreement would be inimical to the interests of, if not injurious to, the
Company and the holders of the Rights.
The Company therefore proposes to supplement and amend the Rights
Agreement in order to avoid such eventualities, pursuant to a Rights Agreement
Amendment in the form of Exhibit A hereto between the Company and the Rights
Agent (the "Rights Agreement Amendment"), but only after the Original Kellogg
Persons shall have executed and delivered this Agreement. The Original Kellogg
Persons have themselves determined that a Triggering Event or Distribution Date
resulting from their acquisition of Common Stock would be inimical to the
interests of, if not injurious to, the Original Kellogg Persons and,
accordingly, wish the Rights Agreement Amendment to become effective.
NOW, THEREFORE, in consideration of the covenants and undertakings
herein contained and intending to be legally bound hereby, the parties hereby
agree as follows:
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ARTICLE 1: REPRESENTATIONS AND WARRANTIES
SECTION 1.1. ALL PARTIES. The Kellogg Persons hereby represent and
warrant to the Company and AMilley, AMilley hereby represents and warrants to
the Kellogg Persons and the Company, and the Company hereby represents and
warrants to the Kellogg Persons and AMilley as follows:
(A) (In the case of the non-natural Persons party hereto) such
party has the full 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;
(B) (In the case of the non-natural Persons party hereto) the
execution, delivery and performance by such Person of this Agreement and the
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,
partnership, trust or foundation action on its part;
(C) This Agreement and other agreement(s) and instrument(s)
contemplated hereby to which it is or is to be a party have been 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, subject to: (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting creditors' rights generally, and (ii) general equitable principles
(regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law);
(D) The execution and delivery by such party of this Agreement
and the other agreement(s) and instrument(s) contemplated hereby to which it is
or is to be a party, the performance by such party of its obligations hereunder
and thereunder, and the consummation by such party of the transactions herein or
therein contemplated to be consummated by such party, do not and 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 material agreement or
instrument to which such party is a party or by which such party is, 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 (or any similar constitutional document), or of 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
(E) No authorization, consent or approval of, or filing with,
or notice to, any public body, court, authority or any other Person is necessary
for the execution and delivery by such party of this Agreement or the other
agreement(s) or instrument(s) contemplated hereby to which it is or is to be a
party, the performance by such party of its obligations hereunder and
thereunder, or the consummation by such party of the transactions contemplated
herein or therein contemplated to be consummated by such party, other than (in
each case) such authorizations, consents, approvals, filings and notices as: (i)
may be required under the Exchange Act and, in the case of the Company, under
the rules and regulations of The Nasdaq Stock Market, Inc., or (ii) have been
obtained, made or given prior to the date hereof.
SECTION 1.2. KELLOGG PERSONS. The Kellogg Persons hereby represent and
warrant to the Company as follows:
(A) The Kellogg Persons have previously disclosed to the
Company, through filings made under the Exchange Act and/or other means: (i) the
names of all Xxxxxxx Group Members, all Kellogg Related Persons and all
Affiliates and Associates of any Kellogg Group Member or Kellogg
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Related Person who beneficially own any Common Stock (within the meaning of Rule
13d-3 or Rule 16a-1(a)(2) of promulgated under the Exchange Act), (ii) the
number of shares of Common Stock so beneficially owned by such Persons, and
(iii) for any such shares so beneficially owned that are held of record in a
different name (such as "Cede & Co." or another "street name"), the name of such
record holder;
(B) All schedules, statements or other reports previously
filed by any one or more of the Kellogg Persons in respect of the Company and/or
Common Stock under Section 13 or 16 of the Exchange Act contain all of the
disclosures and information required under the applicable rules and regulations
of the U.S. Securities and Exchange Commission ("SEC"), and such disclosures and
information was, as of the date of the filing thereof with the SEC and the
delivery thereof to the Company, true, correct and complete in all material
respects;
(C) Their becoming "Acquiring Persons" under the Agreement (if
in fact the case) was inadvertent on their part; and their shares of Common
Stock 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; and
(D) The Kellogg Persons acknowledge and agree that: (i) the
representations, warranties, covenants and agreements of the Kellogg Persons
hereunder are a material inducement to the Company's entering into of the Rights
Agreement Amendment; and (ii) in the event of a breach of or default under any
such representations, warranties, covenants or agreements by any of the Kellogg
Persons, the Company may (by the terms of the Rights Agreement Amendment or
otherwise, and without limiting any of the rights or remedies that may be
available to the parties under this Agreement at law or in equity), suspend or
terminate the Kellogg Amendments (as defined in the Rights Agreement Amendment),
terminate the Rights Agreement Amendment or take other actions having the
purpose or effect of modifying or altering the Kellogg Amendments.
ARTICLE 2: KELLOGG PERSONS COVENANTS AND AGREEMENTS
SECTION 2.1. CHANGES IN BENEFICIAL OWNERSHIP. The Kellogg Persons
hereby covenant and agree as follows:
(A) The number of shares beneficially owned by the Kellogg
Group Members and their respective Affiliates and Associates shall at no time
exceed the Xxxxxxx Group Member Limit;
(B) They shall prepare and file with the SEC and deliver to
the Company, in each case on a timely basis, all schedules, statements and other
reports in respect of the Company and/or Common Stock required under Section 13
or 16 of the Exchange Act; such schedules, statements or other reports (as the
case may be) shall contain all of the disclosures and information required under
the applicable rules and regulations of the SEC; and such disclosures and
information shall, as of the date of the filing thereof with the SEC and the
delivery thereof to the Company, be true, correct and complete in all material
respects;
(C) In addition to, and not in limitation of, the obligations
of the Kellogg Persons under the foregoing Section 2.1(B), and without intending
to limit the obligations of the Kellogg Persons under Sections 2.1(D), 2.2(D)
and 2.3, if after the date hereof any Xxxxxxx Group Member, Kellogg Related
Person or any Affiliate or Associate of any Xxxxxxx Group Member or Kellogg
Related Person shall purchase or otherwise acquire, or sell, transfer, assign or
otherwise dispose of, the beneficial ownership of any shares of Common Stock or
other voting securities of the Company ("Other Voting Securities"), one or more
of the Kellogg Persons shall promptly thereafter (but in any event by the
earliest of (x) five business days prior the next ensuing record date for any
vote of, or consent solicitation
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with respect to, the Common Stock or such Other Voting Securities, (y) the date
that such purchase, other acquisition, sale, transfer, assignment or other
disposition (as the case may be) shall have first been reported, or shall be
required to be reported, under Section 13 or 16 of the Exchange Act, and (z) the
thirtieth (30th) following such purchase, other acquisition, sale, transfer,
assignment or other disposition (as the case may be)), advise the Company and
AMilley of: (i) the name of the Xxxxxxx Group Member, Kellogg Related Person or
Affiliate or Associate thereof (as the case may be) who effected such
transaction and specifying whether such Person is a Xxxxxxx Group Member, an
Affiliate or Associate of a Xxxxxxx Group Member, a Kellogg Related Person or an
Affiliate or Associate of a Xxxxxxx Group Member, (ii) the nature of such
transaction and the number of shares of Common Stock or Other Voting Securities
(as the case may be) that were the subject thereof, and (iii) the name of the
record holder of such shares of Common Stock or Other Voting Securities (as the
case may be); and
(D) If after the date hereof any Xxxxxxx Group Member, or any
Affiliate or Associate of any Xxxxxxx Group Member, who (in each case) is not
already a "Kellogg Person" party to this Agreement shall purchase or otherwise
acquire the beneficial ownership of any shares of Common Stock or Other Voting
Securities, such Person shall promptly thereafter (but in any event by the
earliest of (x) five business days prior the next ensuing record date for any
vote of, or consent solicitation with respect to, the Common Stock or such Other
Voting Securities, (y) the date that such purchase or other acquisition (as the
case may be) shall have first been reported, or shall be required to be
reported, under Section 13 or 16 of the Exchange Act, and (z) the thirtieth
(30th) following such purchase or other acquisition (as the case may be)) become
a "Kellogg Person" party to this Agreement by executing and delivering to the
Company a Supplement instrument in the form of SCHEDULE A hereto.
SECTION 2.2. IRREVOCABLE PROXY. (A) Each Kellogg Person does hereby
irrevocably constitute and appoint AMilley the attorney-in-fact and proxy of
such Kellogg Person, with full power of substitution, to vote all shares of
Common Stock and Other Voting Securities which such Kellogg Person is entitled
to vote at any annual or special meeting of the stockholders of the Company, and
to express consent or dissent to any corporate action in writing without a
meeting of the stockholders of the Company, in such manner as such AMilley or
the substitute for AMilley (as the case may be, the "Proxyholder") shall in his
discretion determine. The proxy and power of attorney granted pursuant to the
foregoing sentence are hereinafter collectively referred to as the "Instant
Proxy". THE INSTANT PROXY IS COUPLED WITH AN INTEREST, SHALL BE IRREVOCABLE AND
SHALL REVOKE ANY AND ALL PRIOR PROXIES AND POWERS OF ATTORNEY GRANTED BY ANY OF
THE KELLOGG PERSONS IN CONNECTION WITH ANY COMMON STOCK OR OTHER VOTING
SECURITIES. NO KELLOGG PERSON SHALL GRANT ANY PROXY OR POWER OF ATTORNEY TO ANY
PERSON WHICH CONFLICTS WITH THE INSTANT PROXY OR THE VOTING RIGHTS GRANTED
THEREUNDER. ANY ATTEMPT TO DO SO SHALL BE VOID.
(B) FURTHER ACTIONS. In order to further implement and
evidence the Instant Proxy: (i) substantially simultaneously with the execution
and delivery of this Agreement, the Original Kellogg Persons have executed and
delivered to AMilley counterparts of an Irrevocable Proxy instrument in the form
of Schedule B hereto; and (ii) in connection with any particular annual or
special meeting of the stockholders of the Company, or solicitation of written
consents in lieu of any meeting of the stockholders of the Company, the Kellogg
Persons shall execute and deliver in favor of the Proxyholder such other or
additional form of proxy or power of attorney as shall be reasonably required or
requested by the Proxyholder in order to permit the exercise of the voting
rights granted by the Kellogg Persons under this Section at such meeting or in
such solicitation (as the case may be).
(C) ADDITIONAL SHARES. The Instant Proxy covers, in addition
to any and all shares of Common Stock beneficially owned at the date hereof by
the Kellogg Persons (there being no Other Voting Securities presently
outstanding), any and all shares of Common Stock and Other Voting Securities the
beneficial ownership of which are hereafter purchased or otherwise acquired by
any Kellogg Person. The
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Instant Proxy in respect of any such subsequently-acquired shares shall not be
diminished or otherwise affected by the fact that such purchase or other
acquisition may be in violation of this Agreement.
(D) KELLOGG RELATED PERSONS. If after the date hereof any
Kellogg Related Person or any Affiliate or Associate of any Kellogg Related
Person that (in each case) is not a "Kellogg Person" party to this Agreement
shall purchase or otherwise acquire the beneficial ownership of any shares of
Common Stock or Other Voting Securities, such Person shall promptly thereafter
(but in any event by the earliest of (x) five business days prior the next
ensuing record date for any vote of, or consent solicitation with respect to,
the Common Stock or such Other Voting Securities, (y) the date that such
purchase or other acquisition (as the case may be) shall have first been
reported, or shall be required to be reported, under Section 13 or 16 of the
Exchange Act, and (z) the thirtieth (30th) following such purchase or other
acquisition (as the case may be)) execute and deliver an instrument reasonably
satisfactory to the Company and AMilley by which the Instant Proxy, the other
provisions of Section 2.2(A)-(C) and Sections 2.3, 2.4 and 4 may be made
applicable to such Kellogg Related Person, Affiliate or Associate (as the case
may be) and any such subsequently-acquired shares of Common Stock or Other
Voting Securities MUTATIS MUTANDIS. For the avoidance of doubt, the foregoing
shall not apply to any shares of Common Stock beneficially owned at the date
hereof by Kellogg Related Persons and their respective Affiliates and Associates
(there being no Other Voting Securities presently outstanding).
SECTION 2.3. RIGHT OF FIRST REFUSAL. (A) If at any time any Kellogg
Person (the "Seller") shall wish to sell, transfer, assign or otherwise dispose
of ("Sell"; and such a sale, transfer, assignment or other disposition, a
"Sale"), any shares of Common Stock or Other Voting Securities beneficially
owned by such Seller (the "Subject Shares"), such Seller shall deliver to the
Xxxxxx Person written notice thereof, which notice (a "Pre-Sale Notice") shall
(at a minimum) specify: (i) the identity the Seller and (if different from the
Seller) the record holder of the Subject Shares, (ii) the number of Subject
Shares, (iii) if the Sale is to be effected other than through an open-market
trade, the material terms and conditions of such Sale, and (iv) the price at
which the Seller intends to or is willing to effect such Sale. Such price
specification may be expressed in terms of a minimum price or "at market". If
the Xxxxxx Person wishes to purchase such Subject Shares, or to have his
designee effect such purchase, he shall advise the Seller by the next business
day following receipt of the Pre-Sale Notice that he (or his designee) agrees to
purchase the Subject Shares at the price specified in the Pre-Sale Notice. In
the event that the Xxxxxx Person (or his designee) shall fail to so advise the
Seller within such one-business-day period, or shall so advise within such time
but shall fail (other than as a result of a default or failure on the part of
the Seller) to settle his purchase of the Subject Shares within ten business
days after his receipt of the Pre-Sale Notice, the Seller shall be free to Sell
the Subject Shares during the 30-day period following its delivery of the
Pre-Sale Notice at a price no less favorable to the Seller than that specified
therein. Any Subject Shares not Sold within such 30-day period shall remain
subject to this Section 2.3.
(B) PERMITTED SALES. The right of first refusal granted under
the foregoing Section 2.3(A) shall not apply in respect of any actual or
proposed Sale: (i) to any Xxxxxxx Group Member, any Kellogg Related Person or
any Affiliate or Associate of any Xxxxxxx Group Member or Kellogg Related
Person, PROVIDED that (x) such Sale shall not result in a violation of this
Agreement or a Distribution Date or Triggering Event under the Rights Agreement,
and (y) without limiting the generality of the foregoing clause (x), the
transferee party to such Sale shall have complied with the Section 2.1(D) or
2.2(D) hereinabove (if and to the extent applicable); (ii) to any Xxxxxx Group
Member (as defined in the Rights Agreement) or any Affiliate or Associate of a
Xxxxxx Group Member; (iii) to the Company or any subsidiary thereof; (iv) that
is a pledge or hypothecation made or to be made for the benefit of a BONA FIDE
financial institution to secure a bona fide loan or other financial
accommodation; and (v) as a result of any corporate action on the part of the
Company (such as a merger in which the Company does not survive, a
consolidation, or recapitalization or reclassification of shares) beyond the
control of the Kellogg Persons.
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SECTION 2.4. OTHER ACTIONS. Each Kellogg Person hereby covenants and
agrees that, unless and to the extent otherwise consented to in writing by the
Company, such Kellogg Person shall not, directly or indirectly (including
through any intermediary):
(A) Solicit proxies with respect to any Common Stock or Other
Voting Securities, actively oppose any action approved by a majority of the
Continuing Directors of the Company, or become a "participant" in any "election
contest" relating to the election of directors of the Company (as such terms are
used in rule 14a-11 of Regulation 14A promulgated under the Exchange Act (or any
comparable or successor rule));
(B) Propose, make or initiate, or solicit stockholders of the
Company for the approval of, one or more stockholder proposals;
(C) Propose, or make, initiate or solicit any proposals from,
or provide any information or participate in any discussions or negotiations
with, or otherwise cooperate in any way with or assist, any Person concerning
any merger, consolidation, other business combination, tender or exchange offer,
recapitalization, liquidation or dissolution or any purchase or other
acquisition or sale or other disposition of assets (other than in the ordinary
course of business) or shares of capital stock of the Company or any of its
subsidiaries or divisions or any similar transaction involving the Company or
any subsidiary or division of the Company or any subsidiary;
(D) Take any other action 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;
(E) Form, join or in any way participate in any "group"
(within the meaning of Section 13(d)(3) of the Exchange Act or Rule 13d-5(b)(i)
promulgated under the Exchange Act) with respect to any securities of the
Company (except a group consisting entirely of Xxxxxxx Group Members, Kellogg
Related Persons, Xxxxxx Group Members and/or Affiliates or Associates of any of
the foregoing); or
(F) Induce, attempt to induce, encourage or solicit, or
cooperate with, any other Person to do any of the foregoing.
ARTICLE 3: COMPANY COVENANTS AND AGREEMENTS
The Company hereby covenants and agrees: (i) to execute and deliver,
and to cause the Rights Agent to execute and deliver, the Rights Agreement
Amendment as soon as practicable on or after the date of the execution and
delivery of this Agreement, and (ii) for so long as (x) there shall not be any
breach of or default under this Agreement on the part of any Kellogg Person and
(y) the Kellogg Amendments shall not have been terminated by operation of
Section 2(B) of the Rights Agreement Amendment, and subject to Section 6.8
hereof, to not suspend or terminate any of the Kellogg Amendments, terminate the
Rights Agreement Amendment or take any other action having the purpose or effect
of modifying or altering such the Kellogg Amendments.
ARTICLE 4: REGULATION 13D-G FILINGS
SECTION 4.1. SEPARATE FILINGS. As a result of certain terms of this
Agreement, the Kellogg Persons, any other Person who after the date hereof
grants an Instant Proxy hereunder, the Xxxxxx Person and other Xxxxxx Group
Members may be deemed to constitute a "group" within the meaning of Section
13(d)(3) of the Exchange Act and Rule 13d-5(b)(i) promulgated under the Exchange
Act. The Kellogg Persons and Xxxxxx Person desire that: (i) the Xxxxxx Person
satisfy his obligations to prepare and file
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schedules in respect of the Company and Common Stock under Regulation 13D-G
under the Exchange Act by filing schedules thereunder that set forth the
disclosures and information required thereunder in respect of the Xxxxxx Person
and/or other Xxxxxx Group Members and their respective Affiliates and Associates
and not any Xxxxxxx Group Member, Kellogg Related Person or any of their
respective the Affiliates or Associates (each, a "Xxxxxx Schedule 13"); and (ii)
the Kellogg Persons satisfy their obligations to prepare and file schedules in
respect of the Company and Common Stock under such Regulation 13D-G by filing
schedules thereunder that set forth the disclosures and information required
thereunder in respect of the Kellogg Persons and/or other Xxxxxxx Group Members
and their respective Affiliates and Associates and not any Xxxxxx Group Member
or any Affiliate or Associate thereof (each, a "Kellogg Schedule 13").
SECTION 4.2. CERTAIN DISCLAIMERS. In order to help assure that the
Xxxxxx Schedules 13 and Kellogg Schedules 13 do not contain conflicting
disclosures and information with respect to the interrelationship among the
Persons who join in such Xxxxxx Schedules 13 (the "Xxxxxx Filers"), on the one
hand, and the Persons who join in such Kellogg Schedules 13 (the "Kellogg
Filers"), on the other, the Kellogg Persons and Xxxxxx Person hereby covenant
and agree with each other that, unless and to the extent otherwise agreed to by
such parties:
(A) As permitted under Rule 13d-4 promulgated under the
Exchange Act: (i) in any Xxxxxx Schedule 13 the Xxxxxx Filers shall disclaim
beneficial ownership of any and all equity securities of the Company held by the
Kellogg Filers or any "group" that includes Kellogg Filers, and (ii) in any
Kellogg Schedule 13 the Kellogg Filers shall disclaim beneficial ownership of
any and all equity securities of the Company held by the Xxxxxx Filers or any
"group" that includes Xxxxxx Filers; and
(B) As permitted under item "(2)" of the "Instructions for
Cover Page" of each of Schedule 13D (Rule 13d-101) and Schedule 13G (Rule
13d-102) promulgated under the Exchange Act: (i) in any Xxxxxx Schedule 13 the
Xxxxxx Filers shall disclaim membership in any "group" that includes Kellogg
Filers, (ii) in any Kellogg Schedule 13 the Kellogg Filers shall disclaim
membership in any "group" that includes Xxxxxx Filers, and (iii) in any Xxxxxx
Schedule 13 the Xxxxxx Filers, and in any Kellogg Schedule 13 the Kellogg
Filers, shall disclaim that the relationship of the Xxxxxx Person and any other
Proxyholder, on the one hand, and the Kellogg Persons, on the other hand, is one
that constitutes or forms a "group" within the meaning of Section 13(d)(3) of
the Exchange Act or Rule 13d-5(b)(1) promulgated thereunder.
The Kellogg Persons hereby make and confirm the foregoing disclaimers
required to be made by the Kellogg Filers, and the Xxxxxx Person hereby makes
and confirms the foregoing disclaimers required to be made by the Xxxxxx Filers.
ARTICLE 5: INDEMNIFICATION
SECTION 5.1. RIGHT TO INDEMNIFICATION. Xxxxx X. Xxxxxxx (the
"Indemnitor") hereby agrees to indemnify, defend and hold harmless the Company,
AMilley, the other Xxxxxx Group Members and their respective officers,
directors, employees, agents, professional advisors and controlling persons (the
"Indemnitees") from and against any and all Losses (as hereinafter defined)
directly or indirectly incurred, suffered, sustained or required to be paid by,
or sought to be imposed upon, any of the Indemnitees as a result of or arising
out of or in connection with: (i) the entering into by the Company of the Rights
Agreement Amendment; (ii) the entering into by the Company and/or AMilley of
this Agreement; and/or (ii) any term or provision of the Rights Agreement
Amendment and/or this Agreement.
SECTION 5.2. DEFENSE OF ACTIONS. The Indemnitor shall have the right to
assume and control the defense of any claim, action, suit, proceeding or
investigation alleged, brought or asserted by any Person (including by or in the
right of the Company) as to which any Indemnitee is entitled to indemnification
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hereunder (an "Action") and the right to retain counsel of his choice
(reasonably satisfactory to the Indemnitees) in connection therewith; PROVIDED,
HOWEVER, that if the defendants in any Action include both the Indemnitor and
one or more of the Indemnitees and there exists a conflict of interest which
would prevent counsel retained by the Indemnitor from also representing such
Indemnitee(s), then such Indemnitee(s) shall have the right to select separate
counsel to participate in the defense of such Action on behalf of such
Indemnitee(s). The Indemnitor shall not be liable to the Indemnitees pursuant to
Section 5.1 for any legal fees or disbursements incurred by them in connection
with the defense of any Action subsequent to the time of the Indemnitor's
assumption of the defense thereof. The Indemnitor shall not be entitled to
settle or compromise any Action without the prior written consent of the
Indemnitees (which consent shall not be unreasonably withheld, delayed or
conditioned), unless such settlement or compromise includes the unconditional
general release of all Indemnitees without any liability or other further
obligation on their part. No Indemnitee shall be entitled to settle or
compromise any Action the defense of which (having previously received notice
thereof) the Indemnitor shall have assumed without the prior written consent of
the Indemnitor (which consent shall not be unreasonably withheld, delayed or
conditioned).
SECTION 5.3. "LOSSES" DEFINED. For purposes of this Agreement, the term
"Losses" means and includes all losses, claims, liabilities, judgments, damages
(including without limitation punitive, consequential and special damages
awarded to any third-party claimant), payments, obligations, costs and expenses
(including without limitation any costs of investigation, and any reasonable
legal fees and disbursements incurred in defense of any Action or otherwise in
connection with any alleged or asserted liability, payment or obligation as to
which indemnification may apply hereunder), regardless of whether or not any
liability, payment, obligation or judgment is ultimately imposed against any
Indemnitee and whether or not any Indemnitee is made or becomes party to an
Action in respect thereof, voluntarily or involuntarily.
SECTION 5.4. SURVIVAL. The rights of the Indemnitees under this Section
5 shall survive any termination or expiration of this Agreement; PROVIDED,
HOWEVER, that the right to indemnification under this Section 5 shall not apply
to any Losses suffered, sustained or required to be paid by, or sought to be
imposed upon, any of the Indemnitees as a result of or arising out of or in
connection with any Action (x) that is first brought after the second
anniversary of the date hereof and (y) as to which a separate but substantially
similar or related Actions (whether or not in the same jurisdiction) arising out
of the same general allegations or circumstances shall have not have been
brought on or prior to such second anniversary.
SECTION 5.5. BREACHES AND DEFAULTS. Nothing in this Section 5 shall be
deemed to limit or otherwise affect the rights or remedies of any party hereto
available at law or in equity as a result of or in connection with any breach of
or this Agreement by any other party hereto.
ARTICLE 6: MISCELLANEOUS
SECTION 6.1. TERM AND TERMINATION. This Agreement (including, without
limitation, the Instant Proxy) shall remain in full force and effect for so long
as any Rights are outstanding under the Rights Agreement (before or after any
Distribution Date thereunder); PROVIDED, HOWEVER, that if the Kellogg Amendments
(as defined in the Rights Agreement Amendment) shall terminate by operation of
the Section 2(B) of the Rights Agreement Amendment, then this Agreement
(including the Instant Proxy) shall automatically terminate thereupon. This
Agreement may not otherwise be terminated except in a writing executed by all
the Kellogg Persons then party to this Agreement, AMilley and the Company
(acting with the approval of a majority of the Continuing Directors then in
office).
SECTION 6.2. REMEDIES. The parties hereto acknowledge and agree that
the remedy at law for any breach of their respective obligations hereunder is
and will be insufficient and inadequate and that
25
the other parties hereto will be entitled to equitable relief (including
specific performance), in addition to remedies at law. Each party hereto hereby
waives the defense that there in an adequate remedy at law in the event of any
action to enforce the provisions of this Agreement, and consents to the remedy
of specific performance.
SECTION 6.3. FURTHER ACTIONS. From time to time after the date hereof,
as and when requested by any party hereto, the other parties hereto shall
execute and deliver, or cause to be executed and delivered, such other and
further agreements, documents and instruments and shall take, or cause to be
taken, such other and further actions, as such party may reasonably request in
order to further effect or evidence the transactions contemplated hereby and/or
to otherwise carry out the intent and purposes of this Agreement.
SECTION 6.4. ENTIRE AGREEMENT. This Agreement (which includes the
Exhibit and 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 such parties (or any of them) with
respect to such subject matter.
SECTION 6.5. SUCCESSORS; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective the
heirs, executors, administrators, personal representatives, successors and
permitted assigns. Neither the Company nor any Kellogg Person may assign any of
its rights or delegate any of his duties under this Agreement without the prior
written consent of the other parties hereto. AMilley may, without the consent of
(but with notice to) the Company and the Kellogg Persons, assign his rights and
delegate its duties under this Agreement to any other Xxxxxx Group Member or any
Affiliate or Associate of any Xxxxxx Group Member (who shall thereupon become
the "Xxxxxx Person" hereunder). Any Proxyholder may exercise its rights of
substitution under the Instant Proxy without the consent of or notice to any
party hereunder.
SECTION 6.6. GOVERNING LAW. This Agreement 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.
SECTION 6.7. 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 on a
business day and such notice, consent, request, demand or other communication
(as the case may be) shall have been received by the intended recipient's
telecopier machine), on the next succeeding business day (if telecopied on a
non-business day and such notice, consent, request, demand or other
communication (as the case may be) shall have been received by the intended
recipient's telecopier machine)), 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, return receipt requested,
postage prepaid) to the following address or telecopier number:
If to the Company
or Xxxxxx Person: 0000 Xxx Xxxxx Xxxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
If to any Kellogg Person: 000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
26
No other method of delivering notices, consents, requests, demands and other
communications shall be precluded. Any party may, by notice to the other parties
hereto, change the address or telecopier number to which notices or other
communications to it are to be delivered, telecopied or sent.
SECTION 6.8. INVALID PROVISIONS. If any covenant, agreement or other
term or provision of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
covenants, agreements and other terms and provisions of this Agreement 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 the Instant Proxy and/or any covenant, agreement or other
term or provision of Section 2.4 hereof is held by such a court or other
authority to be invalid, void or unenforceable and the Board of Directors of the
Company determines in its good faith judgment that severing the Instant Proxy or
such covenant, agreement or other term or provision (as the case may be) would
adversely affect the purpose or effect of the Kellogg Amendments, the Board of
Directors of Company may suspend or terminate the Kellogg Amendments to the
extent determined in its good faith judgment.
SECTION 6.9. DESCRIPTIVE HEADINGS; REFERENCES. The Article, Section,
Exhibit 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. Article, Section, Exhibit and Schedule references
in this Agreement are to the referenced Articles and Sections of, and Exhibits
and Schedules to, this Agreement, unless the context otherwise requires.
SECTION 6.10. 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.
SECTION 6.11. 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 all the Kellogg Persons then party to
this Agreement, AMilley and the Company (acting with the approval of a majority
of the Continuing Directors then in office).
[the remainder of this page is intentionally left blank]
27
SIGNATURE PAGE
SECTION 6.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, which, taken together, shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: ORIGINAL KELLOGG PERSONS:
ELXSI CORPORATION
By:___________________________ __________________________________
Title: XXXXX X. XXXXXXX
XXXXXX PERSON:
______________________________ __________________________________
XXXXXXXXX X. XXXXXX XXXXXXX X. XXXXXXX
ORIGINAL KELLOGG PERSONS:
I.A.T. REINSURANCE SYNDICATE LTD. XXXXX X. XXXXXXX & XXXXXXX
(for itself and on behalf of each of X. XXXXXXX FOUNDATION
its subsidiaries holding Common Stock)
By:___________________________ By:__________________________________
Title: Title:
NOM TRUST U/W/O XXXXX X.
XXXXXXX, III
By:___________________________
Trustee
28
SCHEDULE A
SUPPLEMENT TO STANDSTILL AGREEMENT
ADDITIONAL KELLOGG PERSON'S AGREEMENT TO BE BOUND
-------------------------------------------------
THIS SUPPLEMENT TO THE STANDSTILL AGREEMENT, dated as of March 16, 1999
(as the same may have been, or from time to time may be, modified, amended,
supplemented and/or restated, the "Agreement"), by and between (1) ELXSI
Corporation, a Delaware corporation (the "Company"), (2) Xxxxxxxxx X. Xxxxxx,
(3) the Persons whose names appear on the signature page thereto under the terms
"Original Kellogg Persons", and (4) the other Persons, if any, who subsequently
became party to thereto as "Additional Kellogg Persons". Capitalized terms used
and not defined herein have the respective meanings ascribed to such terms
under, or as provided in, the Agreement.
The Kellogg Persons have executed the Agreement, or by a Supplement
instrument in the form hereof agreed to be bound thereby. The Agreement requires
that if any Kellogg Group Member, or any Affiliate or Associate of any Kellogg
Group Member, who is not already a "Kellogg Person" party to the Agreement shall
purchase or otherwise acquire the beneficial ownership of any shares of Common
Stock or Other Voting Securities, such Person shall promptly, but in any event
within five days, thereafter become a party to the Agreement by executing and
delivering to the Company a Supplement instrument in the form hereof, and
thereby become a "Kellogg Person" party to the Agreement. The undersigned: (A)
is a Kellogg Group Member or an Affiliate or Associate of a Xxxxxxx Group Member
who (prior to the execution and delivery of this Supplement) is not already a
"Kellogg Person" party to the Agreement, and (B) has purchased or otherwise
acquired the beneficial ownership of shares of Common Stock or Other Voting
Securities the details of which (in accordance with Section 2.2(A) of the
Agreement) have been disclosed to the Company.
Accordingly, in consideration of the benefits to be derived and the
conditions and promises contained in the Agreement, the undersigned hereby
adopts and approves the Agreement and acknowledges, covenants and agrees as
follows:
1. The undersigned has read the Agreement and understands its provisions.
2. The undersigned agrees that the undersigned is a "Kellogg Person" party
to, and as such shall hereafter be bound by, the Agreement as though
the undersigned were an original "Kellogg Person" party thereto, and
agrees to observe and comply with all of the terms and provisions
thereof.
3. Without limiting the generality of the foregoing, the undersigned does
hereby:
(A) Make, as of the date hereof, the representations and
warranties made by the Kellogg Persons set forth in Sections
1.1 and 1.2 of the Agreement;
(B) Agree to abide by and comply with the covenants and agreements
of the Kellogg Persons set forth in Articles 2 and 4 of the
Agreement; and
(C) Grant the Instant Proxy and, in connection therewith, has
substantially simultaneously with the execution and delivery
of this Supplement executed and delivered to AMilley
counterparts of an Irrevocable Proxy instrument in the form of
SCHEDULE B to the Agreement.
29
4. This Supplement 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.
IN WITNESS WHEREOF, this Supplement has been executed by the
undersigned as of the date first above written.
Dated:_________________ ADDITIONAL KELLOGG PERSON:
[By:]________________________________
Name/Title:
Accepted:
COMPANY:
ELXSI CORPORATION
By:__________________________
Title:
XXXXXX PERSON:
_____________________________
Name:
30
SCHEDULE B
ELXSI CORPORATION
IRREVOCABLE PROXY
-----------------
THE UNDERSIGNED does hereby irrevocably constitute and appoint
[XXXXXXXXX X. XXXXXX or name of other then "Xxxxxx Person"] the attorney-in-fact
and proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock and other voting securities of ELXSI Corporation, a
Delaware corporation (the "Company"), which the undersigned is entitled to vote
at any annual or special meeting of the stockholders of the Company, and to
express consent or dissent to any corporate action in writing without a meeting
of the stockholders of the Company, in such manner as such attorney-in-fact and
proxy, or the substitute for such attorney-in-fact and proxy, shall in his
discretion determine. The proxy and power of attorney granted pursuant to the
foregoing sentence is hereinafter collectively referred to as the "Instant
Proxy".
THE INSTANT PROXY IS COUPLED WITH AN INTEREST, SHALL BE IRREVOCABLE AND
SHALL REVOKE ANY AND ALL PRIOR PROXIES AND POWERS OF ATTORNEY GRANTED BY THE
UNDERSIGNED IN CONNECTION WITH ANY COMMON STOCK OR OTHER VOTING SECURITIES OF
THE COMPANY.
THE UNDERSIGNED SHALL NOT GRANT ANY PROXY OR POWER OF ATTORNEY TO ANY
PERSON OR ENTITY WHICH CONFLICTS WITH THE INSTANT PROXY OR THE VOTING RIGHTS
GRANTED THEREUNDER. ANY ATTEMPT TO DO SO SHALL BE VOID.
The Instant Proxy shall remain in full force and effect for so long as
any common stock purchase rights (collectively, the "Rights") established under
that certain Rights Agreement, dated as of June 4, 1997 (as the same may have
been, or from time to time may be, modified, amended, supplemented and/or
restated, the "Rights Agreement"), between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent"), are outstanding
under the Rights Agreement (before or after any Distribution Date thereunder).
The original Final Expiration Date of the Rights under the Rights Agreement is
June 15, 2007. Such Final Expiration Date may have been extended prior to the
date hereof, and/or such Final Expiration may be extended from time to time
after the date hereof. Certain events may occur that result in the Rights being
no longer outstanding prior to any such Final Expiration. In any event, by
operation of the first sentence of this paragraph THE INSTANT PROXY MAY BE VOTED
OR ACTED UPON MORE THAN THREE YEARS FROM THE DATE HEREOF.
Dated:________________________________________
Signatory:____________________________________
______________________________________________
Signature
______________________________________________
Signature
This Irrevocable Proxy should be signed
exactly as the name(s) appear(s) on the
certificates representing the shares covered
hereby. If stock is held in the names of joint
owners, each should sign. Persons signing as
an attorney, executor, administrator,
guardian, trustee, corporate officer or in any
other fiduciary or representative capacity
should give full title.
31
EXHIBIT A
[See Exhibit 2]
