CORPORATE GOVERNANCE AGREEMENT
By this Corporate Governance Agreement, entered into as of this 30th
day of September, 2000 ("Agreement"), the parties identified below state,
confirm, represent, warrant and agree as follows:
1. RECITALS
1.1. SIMULA. Simula, Inc. ("Simula" or the "Company") is a corporation
organized and existing under and by virtue of the laws of the State of
Arizona, with its principal place of business in Phoenix, Arizona.
1.2. DESJARDINS. Xxxxxxx X. Xxxxxxxxxx ("Xxxxxxxxxx") is, and was at all
times material hereto, a resident of Maricopa County, Arizona.
Desjardins is the founder of Simula and currently serves as its
Chairman of the Board and owns approximately 28% of the outstanding
Common Stock of the Company.
1.3. PURPOSE OF THIS AGREEMENT. Simula and Desjardins desire to enter into
this Agreement to resolve certain issues that have arisen with respect
to Desjardins' relationship with the Company in order to provide
certainty to the Company, its employees, customers and shareholders
regarding the manner in which the business and corporate governance of
Simula will be conducted for the benefit of Simula and its
shareholders.
1.4. RECITALS PART OF AGREEMENT. The matters set forth in Article 1 of this
Agreement are and shall be deemed to be material and operative
provisions of this Agreement and not mere recitals.
2. TERMS OF AGREEMENT
2.1. CHANGES IN THE MANAGEMENT OF SIMULA. Effective immediately, Simula,
acting through its Board of Directors, shall act to replace Xxxxxx
Xxxxxxxx as the Company's President and Chief Executive Officer with
Xxxxxxx Xxxxx, who shall serve in that capacity pursuant to a written
employment agreement to be approved by the Board of Directors. The
Board shall work with the Company's new President and Chief Executive
Officer to effect additional management changes as soon as practicable
and to obtain any necessary approvals for such changes from the
Company's lenders. Without repudiating any existing agreement with the
Company's management, the Company shall review and seek to renegotiate
such agreements to modify the change in control and severance
provisions contained in such agreements in a manner acceptable to the
Board of Directors.
2.2. PUBLIC COMMUNICATIONS. Within 10 days of the execution hereof, the
Company and Desjardins will issue the press release attached hereto as
EXHIBIT A and incorporated herein. During the Standstill Period,
Desjardins agrees to publicly communicate his support for the Company
and the decisions and actions undertaken by the Company at the
direction of its management or its Board of Directors and to refrain
from any actions or communications that would reasonably be regarded
as expressing a lack of support therefor, unless advised in writing by
legal counsel that he would more likely than not violate his fiduciary
duty to the Company by doing so.
2.3. ACTIVITIES AS CHAIRMAN. In his capacity as Chairman of the Board of
Directors, Desjardins shall undertake only those duties expressly set
forth in the Company's Bylaws or expressly required by law. Desjardins
acknowledges that the Chairman of the Board is not an officer position
and does not carry with it any day-to-day operational duties,
responsibilities or authority. Nothing in this Agreement shall be
deemed to modify the Consulting Agreement between Simula and
Desjardins, in the form attached hereto as EXHIBIT B and incorporated
herein by reference. In his capacity as a Consultant, Desjardins shall
undertake only those duties and activities authorized by the
Consulting Agreement.
2.4. AVAILABILITY OF EQUITABLE RELIEF. The Company and Desjardins mutually
acknowledge and agree that the obligations undertaken by each of them
under this Agreement are special, unique and of an extraordinary
character, and that Simula and it shareholders, officers and directors
on the one hand, and Desjardins on the other hand, could not be
adequately compensated by money damages for a breach of any of the
provisions of this Agreement by the other party. In the event that any
provision of this Agreement is breached by either party hereto, the
non-breaching party shall be entitled to obtain (i) an injunction
restraining such breach or threatened breach; and (ii) specific
performance of any provision of this Agreement, in addition to any
other right or remedy available to such non-breaching party. The
parties hereto agree that a bond or other security shall not be a
condition to the issuance of such injunction and/or for the ordering
of such specific performance.
2.5. CHAIRMAN'S STATUS. For a period of two (2) years from the date hereof,
Desjardins will continue to serve as Chairman of the Board of
Directors of Simula until his successor is duly elected and qualified
in accordance with the Company's Articles of Incorporation and Bylaws.
He shall be included in the Company's slate of director nominees at
the 2001 Annual Meeting of Shareholders to serve on the Board of
Directors for a term of not less than two (2) years.
2.6. BOARD NOMINATIONS. Effective immediately, for a period of not less
than two years, the Board will implement a policy of nominating
persons to serve as directors who are not employees of the Company,
except that the Board will continue to be permitted to nominate, in
its discretion, the Company's Chief Executive Officer.
3. GENERAL
3.1. NOTICES. Any notice or other communication relating to this Agreement
and any and all communications which might become necessary to
effectuate the purposes of this Agreement, shall be delivered to the
parties by certified mail, facsimile, a recognized overnight national
delivery service, at the following addresses:
If to Desjardins: Xxxxxxx X. Xxxxxxxxxx
0000 Xxxxx Xxxxxxxxx Xxxxx
#000
Xxxxx, Xxxxxxx 00000
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If to Simula: Simula, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with copies to: Xxxxx Xxxx LLP
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
3.2. MODIFICATIONS. No modification or amendment to this Agreement shall be
valid, unless in writing and signed by the parties to this Agreement.
3.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and inure
to the benefit of the heirs, personal representatives, predecessors,
successors and assigns of the parties hereto.
3.4. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Arizona
applicable to agreements made or to be performed entirely within such
state, without regard to the conflict of law principles of such state.
3.5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall together be considered one and the
same agreement, and shall become effective when one or more of such
counterparts have been signed by each of the parties.
3.6. SEVERABILITY. In the event that any provision of this Agreement is
declared to be invalid or illegal, for any reason, this Agreement
shall remain in full force and effect and the same shall be
interpreted as though such invalid or illegal provision was not a part
hereof.
3.7. ATTORNEYS' FEES. In the event that any party hereto is required to
commence or otherwise participate in an action or other proceeding to
enforce any right arising under this Agreement, the party prevailing
in such action or other proceeding shall be entitled to recover all
costs and attorneys' fees, such fees to be set by the court or other
tribunal, and not by the jury.
3.8. ADDITIONAL INSTRUMENTS AND ACTIONS. The parties hereto expressly agree
to execute any or further additional instruments as may be required,
or to perform any other act necessary to effectuate and carry out the
purposes of this Agreement, without the payment of additional
consideration.
3.9. HEADINGS; INTERPRETATION. The headings used herein are used for
convenience of reference only and are not intended to define, limit or
describe the scope or intent of any provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly and delivered as of the date hereof.
SIMULA, INC.
By: /s/ Xxxx Xxxxx
--------------------------------------
Its EVP - GENERAL COUNSEL
---------------------------------
XXXXXXX X. XXXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------------
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EXHIBIT A
PRESS RELEASE
SIMULA INC. NAMES NEW PRESIDENT AND CEO
PHOENIX, Arizona - October 2, 2000 - Simula, Inc. (NYSE: SMU) today announced
that Xxxxxxx X. Xxxxx, who has been an Executive Vice President of the Company
since 1998, has been named the Company's new President and Chief Executive
Officer. He succeeds Xxxxxx X. Xxxxxxxx, who has retired and will no longer
serve on the Company's Board of Directors.
"While wishing Don luck in his retirement, I speak for the entire Board when I
say that we are delighted to announce Brad's promotion," said Xxxxxxx X.
Xxxxxxxxxx, Chairman of Simula, Inc. "Few people have a better grasp of the
Company than Xxxx, and as President and CEO he will be instrumental in seeing
that we fully capitalize on Simula's many resources, thereby ensuring that
top-line growth matches the Company's potential. Likewise, he will have the
Board's full and unanimous support in taking steps to reduce the leverage on the
balance sheet -- for only in this way can we achieve bottom-line performance
that fully reflects the operational strengths of the Company."
"I appreciate the confidence placed in me by Xxxx and the other members of the
Board," said Xxxxx. "Given its wealth of technologies and products and its
dedicated employees, Simula is clearly a company with tremendous potential.
Having made great progress in recent months in bringing discipline to the P&L,
we will now focus our attention on improving cash flow and reducing debt."
"With this change in leadership," said Desjardins, "the Board effectively
reaffirms its commitment to two complementary goals: maintaining Simula's
position as a world leader in saving human lives, and working to see that our
shareholders participate in the Company's success."
Prior to joining Simula in 1995 as Vice President and General Counsel,
Secretary, and Director, Xxxxx, with a private law practice in Phoenix, for
several years provided corporate, finance, and securities legal services to the
Company -- notably with regard to an initial public offering completed in April
1992 that facilitated Simula's transition from a small Phoenix-based defense
contractor into a multi-sector corporation with operations in six states and the
United Kingdom.
Desjardins noted that since joining the Company, Xxxxx has been instrumental in
the completion of several rounds of public and private debt and equity
offerings; overseen the acquisition and integration of four new businesses;
worked on the management team in the design and implementation of programs and
procedures to develop niche markets and reduce operational expenses throughout
the Company; built and managed Simula Polymer Systems Inc., a Company
subsidiary; led teams for the transfer and licensing of multiple technologies
developed or acquired by the Company; and supervised the creation of a
comprehensive approach to human resources programs covering all Company
divisions. Xxxxx received his X.X. in 1978 and his LL.M. in 1981 from Columbia
University School of Law.
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Simula, Inc. is a diversified technology company that designs and manufactures
occupant safety systems and devices engineered to safeguard human life in a wide
range of air, ground, and sea transportation vehicles. The Company operates in
two principal markets (government and defense contracting, and automotive safety
systems) which encompass six core product and technology areas: advanced polymer
materials; inflatable restraints; seating systems; transparent and opaque armor;
personnel protective equipment and parachutes; and sensors. Additional
information about Simula can be found at its newly launched web site,
xxx.xxxxxx.xxx.
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995: This press release contains forward-looking statements that involve risks
and uncertainties that may cause actual results to differ materially from that
which are anticipated. These forward-looking statements include statements about
the future growth in revenues, the status of the Company's balance sheet, and
future profitability. Actual results and trends may differ materially from those
projected. Additional risks include those described herein and in the Company's
registration statements and periodic reports filed with the U.S. Securities and
Exchange Commission.
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EXHIBIT B
AMENDED AND RESTATED
CONSULTING AGREEMENT
THIS AGREEMENT amends and restates the Consulting Agreement dated January
1, 2000, made and entered into by and between Simula Safety Systems, Inc.
("SSSI"), whose address is 0000 Xxxxx Xxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, Simula
Inc. ("Simula"), whose address is 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000, and Xxxxxxx X. Xxxxxxxxxx ("Consultant"), whose address
is 0000 Xxxxx Xxxxxxxxx Xxxxx, #000, Xxxxx, Xxxxxxx 00000.
AGREEMENT
In consideration of the mutual covenants hereinafter contained, the Parties
agree as follows:
1. CONSULTING SERVICES. Consultant agrees to provide consulting services
("Services") to SSSI in the following areas:
o Supporting and advising the management of SSSI.
o Helping to install (hiring and/or transferring) new support staff
for SSSI.
o Advising on the new facility for SSSI.
o Performing customer interface services where and when requested.
o Providing other support services when requested by SSSI.
o Providing support services when requested by Simula Inc.
o Teaching in the CSIS as required.
2. PERFORMANCE AND PAYMENT. Consultant will perform the Services in a
manner and at such times as reasonably requested to carry-out the scope of
services. For the first year covered by this agreement, Consultant will be paid
$130,000, and SSSI will pay Consultant biweekly for services rendered. Any
Services performed for Simula will be paid by SSSI and apportioned between SSSI
and Simula as agreed by these entities. Normal and customary expenses related to
the job and approved by SSSI/Simula will be paid by SSSI upon receipt of
customary expense statements. Consultant shall be responsible for all other
expenses incurred by him in the performance of Services.
2.1 Unless otherwise negotiated, Services provided to SSSI/Simula by
the Consultant in subsequent years will be billed and paid on a
daily rate basis negotiated between the parties. Services will be
itemized and invoiced biweekly and will be paid within 15 days.
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2.2 The office furniture now in Consultant's Simula office shall
become the personal property of Consultant effective on the date
of this Agreement. SSSI will provide the current office space
occupied by Consultant until December 31, 2000.
2.3 Consultant will communicate periodically with the CEO of Simula,
Inc. and the President of SSSI to coordinate activities and agree
on Consultant's role, access to SSSI personnel, and timeframe for
completion of tasks.
2.4 Consultant will not represent SSSI or Simula, Inc. in any public
forum without prior consultation with the CEO of Simula, Inc.
(except in his role of Chairman of the Board of Simula, Inc.
consistent with the authority granted to him by the Board of
Directors).
3. INDEPENDENT CONTRACTOR STATUS. Consultant is retained as an independent
contractor and not as an employee. Consultant has total responsibility for
payment of all federal, state, and local taxes, and/or special levies required
under unemployment insurance, worker's compensation, social security, income
tax, or other laws, with respect to performance of his obligations under the
terms and conditions of the Agreement. SSSI shall not be responsible for
withholding portions of these amounts from fees or any amounts normally paid by
an employer, nor for payments or deposits of portions, or amounts normally paid
or deposited by Consultant.
4. NONDISCLOSURE AND NONCOMPETITION. Consultant and SSSI have executed a
Nondisclosure Agreement. Consistent with the Nondisclosure Agreement, Consultant
may work with, consult with, or participate in, any third party company of his
choice as long as the activity for which Consultant is engaged is not
competitive with and will not, to the best knowledge of the parties, become
competitive with the current or prospective business of SSSI or Simula.
5. TRADE SECRETS AND PATENTABLE ITEMS. Items and ideas/concepts that may
evolve into trade secrets, patentable items related to the Services, or
proprietary business data conceived or developed by Consultant during the
contractual period and related to the Services are the property of SSSI or
Simula and shall be disclosed exclusively to SSSI or Simula, as the case may be.
As appropriate, Consultant will assist Simula, at Simula's expense, in the
development, filing, and securing of patents in the name of Simula as necessary
and requested by Simula. All rights, title, and interest directly related to the
design, engineering, development, performance, fabrication, or test of any of
the internal characteristics of items related to the Services, or any of their
components, are reserved and are specifically included in this Agreement with
the resulting property rights in Simula.
6. DISCONTINUED BUSINESS OR PRODUCT; DIVISION SALES. Consultant will be
granted the first right of refusal to acquire any SSSI division, product line,
product, technology, concept, or idea that SSSI/Simula proposes to discontinue
by sale, license, dissolution, or otherwise not pursue. Further, Consultant will
be granted the first right of refusal to acquire any SSSI division for which a
planned consolidation would require shut-down or the relocation or termination
of personnel. Consultant will be given notice of any such plans and will have a
first right of refusal to match the terms of any bona fide third party offer
that SSSI or Simula proposes to accept. If there is no third party offer,
SSSI/Simula and Consultant will negotiate an arms-length transaction.
Notwithstanding anything in this paragraph, Consultant shall not make any
contact, directly or indirectly, with any third party to sell, offer to sell, or
negotiate another disposition of Simula, Inc. or any subsidiary or division,
without the prior consent of the CEO of Simula, Inc.
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7. TERM. The term of this Agreement shall be from January 1, 2000, to
December 31, 2000. Either party may terminate the Agreement on or after December
31, 2000, by giving the other party thirty (30) days prior written notice.
Termination shall not affect Consultant's rights to compensation earned through
the termination date, nor affect the provisions of Paragraphs 4, 5, and 6 of
this Agreement or the Nondisclosure Agreement attached hereto as Appendix A.
8. ENTIRETY AND AMENDMENT. This Agreement represents the entire and
integrated Agreement between the parties, supersedes any and all prior
negotiations, representations, and Agreements, either written or oral, and may
be amended only by a written instrument, signed by both SSSI and Consultant.
9. GOVERNING LAW. The existence, validity, construction, operation, and
effect of this Agreement shall be determined in accordance with and governed by
the laws of the State of Arizona. Any dispute arising under this Agreement shall
be brought in a court of competent jurisdiction located in the State of Arizona.
IN WITNESS WHEREOF, this Agreement is executed effective as of January 1,
2000.
SIMULA SAFETY SYSTEMS, INC.
By:
Its:_________________________________________
SIMULA INC.
By:__________________________________________
Xxxxxxx X. Xxxxx
Its:_________________________________________
CONSULTANT:
By:__________________________________________
Xxxxxxx X. Xxxxxxxxxx
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