THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN COMPLIANCE
WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF SUCH STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
WARRANT NO. LL-1 December 31, 1999
SIMULA, INC.
WARRANT TO PURCHASE 850,000 SHARES OF COMMON STOCK
FOR VALUE RECEIVED, SIMULA, INC., an Arizona corporation (the
"COMPANY"), hereby certifies that XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P.,
a California limited partnership, or its successors or assigns (the
"HOLDER"), is entitled to purchase, on the terms and subject to the
conditions contained herein, 850,000 shares (the "WARRANT SHARES") of the
Company's common stock, $.01 par value per share ("COMMON STOCK"), at the
exercise price of $5.00 per Warrant Share (the "WARRANT PURCHASE PRICE") at
any time and from time to time during the Exercise Period (as such term is
defined below). The number of Warrant Shares and the Warrant Purchase Price
are subject to adjustment as provided in SECTION 4. This Warrant is being
issued in connection with the consummation of the transactions contemplated
by the Securities Purchase Agreement dated of even date herewith by and
between the Company and the Holder (as it may be amended, supplemented or
otherwise modified and in effect from time to time, the "SECURITIES PURCHASE
AGREEMENT").
This Warrant is subject to the following terms and conditions:
1. DEFINITIONS. Unless otherwise indicated in this Warrant,
capitalized terms used and not otherwise defined in this Warrant have the
meanings set forth in the Securities Purchase Agreement. In addition, the
following capitalized terms have the following meanings:
"COMMON STOCK" has the meaning set forth in the preamble.
"COMPANY" has the meaning set forth in the preamble.
"CONVERTIBLE SECURITIES" means, when used in this Agreement,
any securities or other obligations issued or issuable by the Company
or any other Person that are exercisable or exchangeable for, or
convertible into, any Capital Stock of the Company.
"CURRENT MARKET PRICE" per share of Common Stock means, as of
any specified date on which the Common Stock is publicly traded, the
average of the daily market prices of the Common Stock over the twenty
(20) consecutive trading days immediately preceding (and not including)
such date. The 'daily market price' for each such trading day shall be
(i) the closing sales price on such day on the NYSE or such other
principal securities exchange on which the Common Stock is then listed
or admitted to trading or on Nasdaq, as applicable, (ii) if no sale
takes place on such day on any such securities exchange or system, the
average of the closing bid and asked prices, regular way, on such day
for the Common Stock as officially quoted on any such securities
exchange or system, (iii) if the Common Stock is not then listed or
admitted to trading on any securities exchange or system, the last
reported sale price, regular way, on such day for the Common Stock, or
if no sale takes place on such day, the average of the closing bid and
asked prices for the Common Stock on such day, as reported by Nasdaq or
the National Quotation Bureau, and (iv) if the Common Stock is not then
listed or admitted to trading on any securities exchange and if no such
reported sale price or bid and asked prices are available, the average
of the reported high bid and low asked prices on such day, as reported
by a reputable quotation service, or a newspaper of general circulation
in the City of Los Angeles, State of California, customarily published
on each Business Day. If the daily market price cannot be determined
for the twenty (20) consecutive trading days immediately preceding such
date in the manner specified in the foregoing sentence, then the Common
Stock shall not be deemed to be publicly traded as of such date.
"DESIGNATED OFFICE" has the meaning set forth in SECTION 2.1.
"DOJ" has the meaning set forth in SECTION 3.
"EFFECTIVE DATE" means the issue date of this Warrant.
"EXCLUDED SECURITIES" means, collectively, (i) shares of
capital stock issued pursuant to a stock dividend or a stock split or
other subdivision of shares; (ii) Common Stock issued upon exercise of
this Warrant; (iii) Common Stock issued by the Company in any public
offering registered under the Securities Act, which offering results in
net proceeds to the Company of at least $10,000,000 and a price per
share of Common Stock of not less than the Warrant Purchase Price then
in effect; and (iv) shares of Common Stock issued, issuable or reserved
for issuance to directors, officers and employees of the Company or any
other Company Party in connection with their
2
services as directors, officers or employees pursuant to any Options
issued by the Company pursuant to any Company Stock Plan which has been
duly adopted and approved by the shareholders of the Company and in
existence on the date hereof.
"EXERCISE NOTICE" has the meaning set forth in SECTION 2.1.
"EXERCISE PERIOD" means the period commencing on the Effective
Date and ending on (and including) the Expiration Date.
"EXPIRATION DATE" means December 31, 2006.
"FAIR MARKET VALUE" with respect to the Warrant Shares means,
as of any specified date:
(i) if the Common Stock is publicly traded on
such date, the Current Market Price per share; or
(ii) if the Common Stock is not publicly traded (or
deemed not to be publicly traded) on such date, the fair
market value per share of Common Stock as determined by an
independent valuation of the Company, its Subsidiaries and
their respective businesses conducted by an investment banking
firm of recognized national standing selected by the mutual
written agreement of the Company and the Holder; PROVIDED,
HOWEVER, that if the Company and the Holder are unable to
mutually agree on any such investment banking firm within ten
(10) days after the date upon which the right or obligation to
select an investment banking firm arises, each of the Holder
and the Company shall, within three (3) Business Days
thereafter, select one investment banking firm, and the two
(2) selected firms shall, within three (3) Business Days of
their selection, select a third investment banking firm which
shall make the relevant determination (which determination
shall be final and binding) within ten (10) Business Days of
the submission of this matter to such third firm; and PROVIDED
FURTHER, HOWEVER, that, in determining the fair market value
per share of Common Stock, such investment banking firm shall
not give effect or take into account any "minority discount"
but shall value the Company in its entirety on an enterprise
basis.
"FTC" has the meaning set forth in SECTION 3.
"HOLDER" has the meaning set forth in the preamble.
"HSR ACT" has the meaning set forth in SECTION 3.
3
"OPTIONS" means, when used in this Warrant, any warrants,
options or similar rights to subscribe for or purchase any Capital
Stock of the Company, including, without limitation, any options or
similar rights issued or issuable under any employee stock option plan,
pension plan or other employee benefit plan of the Company.
"OTHER PROPERTY" has the meaning set forth in SECTION 4.5.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder, all as
the same shall be in effect at the time.
"SECURITIES PURCHASE AGREEMENT" has the meaning set forth in
the preamble of this Warrant.
"WARRANT PURCHASE PRICE" has the meaning set forth in the
preamble of this Warrant (as adjusted in accordance with the terms of
this Warrant).
"WARRANT" means this Warrant, any amendment or other
modification of this Warrant, and any warrants issued upon transfer,
division or combination of, or in substitution for, this Warrant or any
other such warrant. All such Warrants shall at all times be identical
as to terms and conditions and date, except as to the number of Warrant
Shares for which they may be exercised.
"WARRANT SHARES" has the meaning set forth in the preamble.
2. EXERCISE.
2.1 EXERCISE; DELIVERY OF CERTIFICATES. Subject to the
provisions of SECTION 3, this Warrant may be exercised at the option of the
Holder, in whole or in part, at any time and from time to time during the
Exercise Period, by (a) delivering to the Company at its principal executive
office (the "DESIGNATED OFFICE") (i) a notice of exercise, in substantially the
form attached hereto (the "EXERCISE NOTICE"), duly completed and signed by the
Holder, and (ii) this Warrant, and (b) paying the Warrant Purchase Price
pursuant to SECTION 2.2 for the number of Warrant Shares being purchased. The
Warrant Shares being purchased under this Warrant will be deemed to have been
issued to the Holder, as the record owner of such Warrant Shares, as of the
close of business on the date on which payment therefor is made by the Holder
pursuant to SECTION 2.2. Stock certificates representing the Warrant Shares so
purchased shall be delivered to the Holder within three (3) Business Days after
this Warrant has been exercised (or, if applicable, after the conditions set
forth in SECTION 3 have been satisfied); PROVIDED, HOWEVER, that in the case of
a purchase of less than all of the Warrant Shares issuable upon exercise of this
Warrant, the Company shall cancel this
4
Warrant and, within three (3) Business Days after this Warrant has been
surrendered, execute and deliver to the Holder a new Warrant of like tenor
representing the number of Warrant Shares that have not been exercised. Each
stock certificate representing the number of Warrant Shares purchased or
purchasable under this Warrant shall be registered in the name of the Holder or,
subject to compliance with Applicable Law, such other name as shall be
designated by the Holder.
2.2 PAYMENT OF WARRANT PRICE. Payment of the Warrant
Purchase Price may be made, at the option of the Holder, by (i) certified or
cashier's check, (ii) wire transfer, (iii) instructing the Company to
withhold and cancel a number of Warrant Shares then issuable upon exercise of
this Warrant with respect to which the excess of the Fair Market Value over
the Warrant Purchase Price for such canceled Warrant Shares is at least equal
to the Warrant Purchase Price for the shares being purchased, (iv) surrender
to the Company of shares of Common Stock previously acquired by the Holder
with a Fair Market Value equal to the Warrant Purchase Price for the shares
then being purchased or (v) any combination of the foregoing. The Company
shall issue fractional shares of Common Stock upon the exercise of this
Warrant.
3. ANTI-TRUST NOTIFICATION. If the Company or the Holder
determines, in its sole judgment upon the advice of counsel, that an exercise
of this Warrant pursuant to the terms hereof would be subject to the
provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), the Company shall, within seven (7) Business Days
after (a) receiving a notice from the Holder of the applicability of the HSR
Act or (b) after such a determination by the Company, file with the United
States Federal Trade Commission (the "FTC") and the United States Department
of Justice (the "DOJ") the notification and report form and any supplemental
information required to be filed by it pursuant to the HSR Act in connection
with the exercise of this Warrant. Any such notification and report form and
supplemental information will be in full compliance with the requirements of
the HSR Act. The Company will furnish to the Holder promptly (but in no event
more than three (3) Business Days) such information and assistance as the
Holder may reasonably request in connection with the preparation of any
filing or submission required to be filed by the Holder under the HSR Act.
The Company shall respond promptly after receiving any inquiries or requests
for additional information from the FTC or the DOJ (and in no event more than
five (5) Business Days after receipt of such inquiry or request). The Company
shall keep the Holder apprised periodically and at the Holder's request of
the status of any communications with, and any inquiries or requests for
additional information from, the FTC or the DOJ. The Company shall bear all
filing or other fees required to be paid by the Company and the Holder (or
the "ultimate parent entity" of the Holder, if any) under the HSR Act or any
other Applicable Law in connection with such filings and all costs and
expenses (including, without limitation, attorneys' fees and expenses)
incurred by the Company and the Holder in connection with the preparation of
such filings and responses to inquiries or
5
requests. In the event that this SECTION 3 is applicable to any exercise of this
Warrant, the purchase by the Holder of the Warrant Shares subject to the
Exercise Notice, and the payment by the Holder of the Warrant Purchase Price,
shall be subject to the expiration or earlier termination of the waiting period
under the HSR Act.
4. ADJUSTMENTS TO THE NUMBER OF WARRANT SHARES AND TO THE
WARRANT PURCHASE PRICE. The number of Warrant Shares for which this Warrant
is exercisable and the Warrant Purchase Price shall be subject to adjustment
from time to time as set forth in this SECTION 4.
4.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If
at any time the Company:
(a) pays a dividend or makes any other
distribution with respect to its Common Stock in shares of Common Stock or
shares of any other class or series of Capital Stock,
(b) subdivides its outstanding shares of Common
Stock into a larger number of shares of Common Stock, or
(c) combines its outstanding shares of Common
Stock into a smaller number of shares of Common Stock,
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior to the record date for such dividend or distribution or the
effective date of such subdivision or combination, as the case may be, shall be
adjusted so that the Holder shall thereafter be entitled to receive upon
exercise of this Warrant the kind and number of shares of Common Stock that the
Holder would have owned or have been entitled to receive immediately after such
record date or effective date, as the case may be, had this Warrant been
exercised immediately prior to such record date or effective date. Any
adjustment made pursuant to this SECTION 4.1 shall become effective immediately
after the effective date of such event, but be retroactive to the record date,
if any, for such event.
Upon any adjustment to the number of Warrant Shares
purchasable upon the exercise of this Warrant as herein provided, the Warrant
Purchase Price per share shall be adjusted by multiplying the Warrant Purchase
Price immediately prior to such adjustment by a fraction, the numerator of which
shall be the number of Warrant Shares purchasable upon the exercise of this
Warrant immediately prior to such adjustment and the denominator of which shall
be the number of Warrant Shares so purchasable immediately thereafter.
6
4.2 ISSUANCE OF OPTIONS. If at any time the Company
issues (without payment of any consideration) to all holders of outstanding
Common Stock any Options, the Company shall also distribute such Options to
the Holder as if this Warrant had been exercised immediately prior to the
effective date of such issuance.
4.3 DISTRIBUTION OF ASSETS OR SECURITIES. If at any
time the Company makes a distribution to its stockholders (other than in
connection with the liquidation, dissolution or winding up of the Company) of
any asset or security other than those referred to in SECTIONS 4.1, 4.2 OR
4.5, the Warrant Purchase Price shall be adjusted and shall be equal to the
Warrant Purchase Price in effect immediately prior to the close of business
on the date fixed for the determination of stockholders entitled to receive
such distribution, MULTIPLIED BY a fraction (which shall not be less than
zero), the numerator of which shall be the Fair Market Value per share of
Common Stock on the date fixed for such determination, LESS the then fair
market value of the portion of the assets, or the fair market value of the
portion of the securities, as the case may be, so distributed applicable to
one share of Common Stock, and the denominator of which shall be the Fair
Market Value per share of Common Stock. Such adjustment to the Warrant
Purchase Price shall become effective immediately prior to the opening of
business on the day immediately following the date fixed for the
determination of stockholders entitled to receive such distribution. Upon any
adjustment in the Warrant Purchase Price as provided in this SECTION 4.3, the
number of shares of Common Stock issuable upon the exercise of this Warrant
shall also be adjusted and shall be equal to the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to such adjustment
MULTIPLIED BY a fraction, the numerator of which is the Warrant Purchase
Price in effect immediately prior to such adjustment and the denominator of
which is the Warrant Purchase Price as so adjusted.
4.4 ISSUANCE OF EQUITY SECURITIES AT LESS THAN FAIR
MARKET VALUE.
(a) If, at any time after the date hereof, the
Company shall issue or sell (or, in accordance with SECTION 4.4(b), shall be
deemed to have issued or sold) any shares of Common Stock without consideration
or for a consideration per share that is less than either the Fair Market Value
per share of Common Stock determined as of the date of such issuance or sale or
the Warrant Purchase Price in effect immediately prior to such issuance or sale,
then, effective immediately upon such issuance or sale, the Warrant Purchase
Price shall be reduced (calculated to the nearest $.001 and without regard to
any other provisions hereof) to an amount equal to the product obtained by
multiplying (i) the Warrant Purchase Price in effect immediately prior to such
issuance or sale, by (ii) a fraction, the numerator of which shall be the sum of
(A) the product obtained by multiplying (1) the number of shares of Common Stock
outstanding (on a Fully Diluted Basis) immediately prior to such issuance or
sale by (2) the lesser of the Fair Market Value per share of Common Stock as of
the date of such issuance or sale and the Warrant Purchase Price in effect
immediately prior to such issuance or sale, PLUS (B) the cash consideration, if
any, received by the Company upon such issuance or sale, and
7
the denominator of which shall be the product obtained by multiplying (C) the
number of shares of Common Stock outstanding (on a Fully Diluted Basis)
immediately after such sale or issuance, by (D) the lesser of the Fair Market
Value per share of Common Stock as of the date of such issuance or sale and the
Warrant Purchase Price in effect immediately prior to such issuance or sale.
Upon each such adjustment of the Warrant Purchase Price hereunder, the number of
Warrant Shares which may be obtained upon exercise of this Warrant shall be
increased to the number of shares determined by multiplying (x) the number of
Warrant Shares which could be obtained upon exercise of such Warrant immediately
prior to such adjustment by (y) a fraction, the numerator of which shall be the
Warrant Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Warrant Purchase Price in effect immediately
after such adjustment. Adjustments shall be made successively whenever such an
issuance or sale is made.
(b) For the purpose of determining the adjusted
Warrant Purchase Price under SECTION 4.4(a), the following shall be applicable:
(i) ISSUANCE OF OPTIONS. If the Company
in any manner issues or grants any Options or Convertible Securities and
the price per share for which Common Stock is issuable upon the exercise of
such Options or upon conversion or exchange of such Convertible Securities
is less than either the Fair Market Value per share of Common Stock
determined as of the date of such issuance or grant of such Options or the
Warrant Purchase Price in effect immediately prior to such issuance or
grant of Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options (or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options) shall be deemed to be outstanding and to have
been issued and sold by the Company for such lower price per share. For
purposes of this paragraph, the price per share for which Common Stock is
issuable upon exercise of Options or upon conversion or exchange of
Convertible Securities issuable upon exercise of Options shall be
determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the issuing or granting of such
Options, PLUS the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, PLUS in the
case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (B) the total maximum number of shares
of Common Stock issuable upon exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
If the Company in any manner issues or grants any Convertible Securities
having an exercise or conversion or
8
exchange price per share of Common Stock which is less than either the
Fair Market Value per share of Common Stock determined as of the date
of such issuance or sale or the Warrant Purchase Price in effect
immediately prior to such issuance or sale, then the maximum number of
shares of Common Stock issuable upon the conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have
been issued and sold by the Company for such lower price per share. For
purposes of this paragraph, the price per share for which Common Stock
is issuable upon conversion or exchange of Convertible Securities is
determined by dividing (A) the total amount received by the Company as
consideration for the issuance or sale of such Convertible Securities,
PLUS the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof, by (B)
the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities.
(iii) CHANGE IN EQUITY PRICE OR CONVERSION
RATE. If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the issuance, conversion or exchange of
any Convertible Securities or the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock changes at any
time, then the Warrant Purchase Price in effect at the time of such
change shall be readjusted to the Warrant Purchase Price which would
have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may
be, at the time initially granted, issued or sold and the number of
Warrant Shares shall be correspondingly readjusted.
(iv) CALCULATION OF CONSIDERATION
RECEIVED. If any Common Stock, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for cash, then the
consideration received therefor shall be deemed to be the net amount
received by the Company therefor. If any Common Stock, Options or
Convertible Securities are issued or sold for consideration other than
cash, then the amount of consideration received by the Company shall be
the fair value of such consideration determined in good faith by the Board
of Directors of the Company, subject to the Holder's rights under
SECTION 4.8(e).
(v) TREASURY SHARES. The number of
shares of Common Stock outstanding at any time does not include shares
owned or held by or for the account of the Company or any Subsidiary of
the Company, and the disposition of any shares so owned or held shall be
considered an issue or sale of Common Stock.
9
(vi) RECORD DATE. If the Company takes a
record of the holders of Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Common Stock,
Options or Convertible Securities or (B) to subscribe for or purchase
Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issuance or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of
such dividend or the making of such distribution or the date of the
granting or such right of subscription or purchase, as the case may be.
(c) No adjustment shall be made pursuant to this
SECTION 4.4 with respect to the issuance of Excluded Securities.
4.5 REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION OR DISPOSITION OF ASSETS. If at any time the Company
reorganizes its capital, reclassifies its capital stock, consolidates, merges
or combines with or into another Person (where the Company is not the
surviving corporation or where there is any change whatsoever in, or
distribution with respect to, the outstanding Common Stock), or the Company
sells, transfers or otherwise disposes of all or substantially all of its
property, assets or business to another Person, other than in a transaction
provided for in SECTIONS 4.1, 4.2, 4.3, 4.4 OR 4.6, and, pursuant to the
terms of such reorganization, reclassification, consolidation, merger,
combination, sale, transfer or other disposition of assets, (i) shares of
capital stock of the successor or acquiring Person or the Company (if it is
the surviving corporation) or (ii) any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring Person or the Company ("OTHER PROPERTY") are to be
received by or distributed to the holders of Common Stock who are holders
immediately prior to such transaction, then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the number of shares of
Common Stock, common stock of the successor or acquiring Person, and/or Other
Property which holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event would have owned or
received immediately after and as a result of such event. In such event, the
aggregate Warrant Purchase Price otherwise payable for the Warrant Shares
issuable upon exercise of this Warrant shall be allocated among such
securities and Other Property in proportion to the respective fair market
values of such securities and Other Property as determined in good faith by
the Board of Directors of the Company, subject to the Holder's rights under
SECTION 4.8(e).
In case of any such event, the successor or acquiring Person
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as the Holder may approve
in writing (and memorialized by resolutions of the Board of Directors of
10
the Company) in order to provide for adjustments of any shares of common stock
of such successor or acquiring Person for which this Warrant thus becomes
exercisable, which modifications shall be as equivalent as practicable to the
adjustments provided for in this SECTION 4.5. For purposes of this SECTION 4,
"common stock of the successor or acquiring Person" shall include stock or other
equity securities, or securities that are exercisable or exchangeable for or
convertible into equity securities, of such corporation, or other securities if
such Person is not a corporation, of any class that is not preferred as to
dividends or assets over any other class of stock of such corporation or Person
and that is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities that are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this SECTION 4.5 shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers and other
dispositions of assets.
4.6 DISSOLUTION, TOTAL LIQUIDATION OR WINDING-UP. If at
any time there is a voluntary or involuntary dissolution, total liquidation
or winding-up of the Company, other than as contemplated by SECTION 4.5, then
the Company shall cause to be mailed (by registered or certified mail, return
receipt requested, postage prepaid) to the Holder at the Holder's address as
shown on the Warrant register, at the earliest practicable time (and, in any
event, not less than thirty (30) calendar days before any date set for
definitive action) written notice of the date on which such dissolution,
liquidation or winding-up shall take place, as the case may be. Such notice
shall also specify the date as of which the record holders of shares of
Common Stock shall be entitled to exchange their shares for securities, money
or other property deliverable upon such dissolution, liquidation or
winding-up, as the case may be. On such date, the Holder shall be entitled to
receive upon surrender of this Warrant the cash or other property, LESS the
Warrant Purchase Price for this Warrant then in effect, that the Holder would
have been entitled to receive had this Warrant been exercised immediately
prior to such dissolution, liquidation or winding-up. Upon receipt of the
cash or other property, any and all rights of the Holder to exercise this
Warrant shall terminate in their entirety. If the cash or other property
distributable in the dissolution, liquidation or winding-up has a fair market
value which is less than the Warrant Purchase Price for this Warrant then in
effect, this Warrant shall terminate and be of no further force or effect
upon the dissolution, liquidation or winding-up.
4.7 OTHER DILUTIVE EVENTS. If any event occurs as to
which the other provisions of this SECTION 4 are not strictly applicable but
as to which the failure to make any adjustment would not protect the purchase
rights represented by this Warrant in accordance with the intent and
principles hereof, then, in each such case, the Holder may appoint on behalf
of the Company an investment banking or accounting firm of recognized
national standing which shall give its opinion as to the adjustment, if any,
on a basis consistent with the
11
intent and principles established herein, necessary to preserve the purchase
rights represented by this Warrant. Upon receipt of such opinion, the Company
will mail (by registered or certified mail, return receipt requested, postage
prepaid) a copy thereof to the Holder within three (3) Business Days and shall
make the adjustments described therein. If an adjustment is made pursuant to
this SECTION 4.7, the fees and expenses of such investment banking or accounting
firm shall be borne by the Company. If, however, no adjustment is made, the
Holder shall bear such fees and expenses.
4.8 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the adjustments
provided for pursuant to this SECTION 4:
(a) WHEN ADJUSTMENTS TO BE MADE. The
adjustments required by this SECTION 4 shall be made whenever and as often as
any specified event requiring such an adjustment shall occur. For the purpose
of any such adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.
(b) RECORD DATE. If the Company fixes a record
date of the holders of Common Stock for the purpose of entitling them to (i)
receive a dividend or other distribution payable in shares of Common Stock or
in shares of any other class or series of capital stock or securities
convertible into or exchangeable for Common Stock or shares of any other
class or series of capital stock or (ii) subscribe for or purchase shares of
Common Stock or such other shares or securities, then all references in this
SECTION 4 to the date of the issuance or sale of such shares of Common Stock
or such other shares or securities shall be deemed to be references to that
record date.
(c) WHEN ADJUSTMENT NOT REQUIRED. If the
Company fixes a record date of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or distribution or
subscription or purchase rights to which the provisions of SECTION 4.1 would
apply, but shall, thereafter and before the distribution to stockholders,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(d) NOTICE OF ADJUSTMENTS. Whenever the number
of shares of Common Stock for which this Warrant is exercisable or the
Warrant Purchase Price shall be adjusted or recalculated pursuant to this
SECTION 4, the Company shall, as soon as practicable but in no event more
than five (5) Business Days thereafter, prepare a certificate to be executed
by the chief financial officer of the Company setting forth, in reasonable
detail, the event requiring the adjustment or recalculation and the method by
which such adjustment or recalculation was calculated, specifying the number
of shares of Common Stock for which this
12
Warrant is exercisable and (if such adjustment was made pursuant to SECTION 4.5)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any related change in the Warrant
Purchase Price, after giving effect to such adjustment, recalculation or change.
The Company shall mail to the Holder (by registered or certified mail, return
receipt requested, postage prepaid) a signed copy of such certificate prior to
the end of the five (5) Business Day period referenced above. The Company shall
keep at the Designated Office copies of all such certificates and cause them to
be available for inspection at the Designated Office during normal business
hours by the Holder or any prospective transferee of this Warrant designated by
the Holder.
(e) CHALLENGE TO GOOD FAITH DETERMINATION.
Whenever the Board of Directors of the Company is required to make a
determination in good faith of the fair market value of this Warrant or the
Warrant Shares under this SECTION 4, such determination may be challenged or
disputed by the Holder. If the Holder wishes to challenge or dispute any such
fair market value determination, it shall furnish written notice to the
Company of its intention to challenge the same. If the Company and the Holder
cannot resolve the dispute between or among themselves, then such dispute
shall be submitted for final determination to an investment banking or
accounting firm pursuant to the valuation procedures set forth in clause (ii)
under the definition of Fair Market Value. The Company shall bear all fees,
costs and expenses incurred by the Company and the Holder in connection with
the determination of the Fair Market Value of this Warrant or the Warrant
Shares, and any challenge or dispute thereof, including, without limitation,
all fees and expenses of any investment banking, valuation or accounting
firm(s) engaged by the Company or the Holder and of attorneys in connection
with such calculation; PROVIDED, HOWEVER, that the Holder shall bear all such
fees, costs and expenses if, after the Holder challenges or disputes any fair
market value determination by the Board of Directors of the Company, the
difference between (a) the fair market value determined pursuant to the
valuation procedures set forth in clause (ii) under the definition of Fair
Market Value and (b) the fair market value determined by the Holder, is less
than five percent (5.0%) of the fair market value determined by the Board of
Directors of the Company.
(f) INDEPENDENT APPLICATION. Except as
otherwise provided herein, all subsections of this SECTION 4 are intended to
operate independently of one another (but without duplication). If an event
occurs that requires the application of more than one subsection, all
applicable subsections shall be given independent effect without duplication.
(g) OTHER ANTI-DILUTION PROVISIONS. To the
extent that the initial Holder continues to hold this Warrant, in whole or in
part, at any time at which the Company takes any action which would have
resulted in an adjustment to the exercise price of, and the number of shares
of Common Stock issuable pursuant to, this Warrant (a "DILUTIVE ISSUANCE"),
then, to the extent that the initial Holder has exercised all or any portion
of this Warrant prior
13
to such time, the Company shall immediately issue to the initial Holder upon
such Dilutive Issuance, without the payment of any further consideration of any
kind, such number of additional shares of Common Stock as shall equal the
difference between (i) the number of shares of Common Stock issuable upon the
exercise of this Warrant to the extent held unexercised by the initial Holder at
such time after giving effect to the adjustment thereto resulting from such
Dilutive Issuance and (ii) the number of shares of Common Stock which would have
been issuable upon exercise of this Warrant after giving effect to such Dilutive
Issuance if this Warrant had not been exercised in any part.
4.9 FIDUCIARY DUTIES OF COMPANY. The Company and its
directors shall owe the Holder the same fiduciary duties that the Company and
its directors would owe to the Warrant Shares underlying the Warrant.
5. MISCELLANEOUS.
5.1 RESTRICTIVE LEGEND. This Warrant and, unless
registered under the Securities Act, any Warrant Shares issued upon exercise
hereof shall be stamped or imprinted with a legend in substantially the
following form (in addition to any legends required under applicable state
securities laws):
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT IN COMPLIANCE WITH
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND THE REGISTRATION
OR QUALIFICATION REQUIREMENTS OF SUCH STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION.
The legend shall be appropriately modified upon issuance of
certificates for shares of Common Stock.
Upon request of the holder of a Common Stock certificate, the
Company shall issue to that holder a new certificate free of the foregoing
legend, if, with such request, such holder provides the Company with an opinion
of counsel that is reasonably acceptable to the Company (PROVIDED that Xxxxxxx &
XxXxxxxx, A Professional Law Corporation, shall be deemed to be acceptable to
the Company) to the effect that the securities evidenced by such
14
certificate may be sold without restriction under Rule 144 (or any other rule
permitting resales of securities without restriction) promulgated under the
Securities Act.
5.2 HOLDER ENTITLED TO BENEFITS UNDER OTHER AGREEMENTS.
The Holder of this Warrant is entitled to certain rights, benefits and
privileges with respect to this Warrant and the Warrant Shares pursuant to
the terms of the Securities Purchase Agreement, the Registration Rights
Agreement (it being understood that the Warrant Shares constitute
"Registrable Securities" thereunder), the Investor Rights Agreement and
certain other Investment Documents.
5.3 OTHER COVENANTS. Without limiting the generality of
SECTION 5.2, the Company covenants and agrees that, as long as this Warrant
remains outstanding or any Warrant Shares are issuable with respect to this
Warrant, the Company will perform all of the following covenants for the
express benefit of the Holder: (a) the Warrant Shares shall, upon issuance,
be duly authorized, validly issued, fully paid and non-assessable shares of
Common Stock; (b) each Holder shall, upon the exercise thereof in accordance
with the terms hereof, receive good and marketable title to the Warrant
Shares, free and clear of all voting and other trust arrangements to which
the Company is a party or by which it is bound, preemptive rights of any
stockholder, liens, encumbrances, equities and claims whatsoever, including,
but not limited to, all Taxes, Liens and other charges with respect to the
issuance thereof; (c) at all times prior to the Expiration Date, the Company
shall have reserved for issuance a sufficient number of authorized but
unissued shares of Common Stock, or other securities or property for which
this Warrant may then be exercisable, to permit this Warrant (or if this
Warrant has been divided, all outstanding Warrants) to be exercised in full;
(d) the Company shall deliver to the initial Holder, and each subsequent
private placement Holder who executes a confidentiality agreement in
substantially the form of Section 13.10 of the Securities Purchase Agreement,
the information and reports described in SECTION 9.3 of the Securities
Purchase Agreement as contemplated therein; (e) the Company shall extend to
the Holder the investment monitoring and other rights set forth in the
Investor Rights Agreement; and (f) the Company shall provide each Holder with
notice of all corporate actions in the same manner and to the same extent as
the shareholders of the Company; provided, however, that the information to
be provided by the Company under clauses (d) through (f) above is expressly
subject to the provisions of Section 13.10 of the Securities Purchase
Agreement.
5.4 ISSUE TAX. The issuance of shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder
for any issue tax in respect thereof.
5.5 CLOSING OF BOOKS. The Company will at no time close
its transfer books against the transfer of this Warrant or of any Warrant
Shares in any manner which interferes with the timely exercise hereof.
15
5.6 NO VOTING RIGHTS; LIMITATION OF LIABILITY. Except as
expressly set forth in this Warrant, nothing contained in this Warrant shall be
construed as conferring upon the Holder (a) the right to vote or consent as a
stockholder in respect of meetings of stockholders for the election of directors
of the Company or any other matter, (b) the right to receive dividends, except
as set forth in SECTION 4, or (c) any other rights as a stockholder of the
Company, except as set forth in SECTION 4 and in the Investor Rights Agreement.
No provisions hereof, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no mere enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
Warrant Purchase Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by its creditors.
5.7 MODIFICATION AND WAIVER. This Warrant and any
provision hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement is sought.
5.8 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Warrant shall be
in writing and shall be deemed to have been duly given if transmitted by
telecopier with receipt acknowledged, or upon delivery, if delivered personally
or by recognized commercial courier with receipt acknowledged, or upon the
expiration of seventy-two (72) hours after mailing, if mailed by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to the Holder, at:
x/x Xxxxxx Xxxxxxxxx Capital Partners, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
16
(b) If to any other Holder, at:
such Holder's address as shown on the books
of the Company.
(c) If to the Company, at:
Simula, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
WITH A COPY TO:
Xxxxxxxxx Xxxxx
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or at such other address or addresses as the Holder or the Company, as the case
may be, may specify by written notice given in accordance with this SECTION 5.8.
5.9 SUCCESSORS AND ASSIGNS. The Company may not assign
any of its rights, or delegate any of its obligations, under this Warrant
without the prior written consent of the Holder (which consent may be withheld
for any reason or no reason at all). Subject to the requirements of Applicable
Laws, the Holder may assign this Warrant, in whole or in part, at any time or
from time to time, without the consent of the Company. Each assignment of this
Warrant shall be registered on the books of the Company to be maintained for
such purpose upon surrender of this Warrant at the Designated Office, together
with appropriate instruments of assignment, duly completed and executed. Upon
such surrender, the Company shall, within three (3) Business Days of surrender,
at its own expense, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees specified in such assignment and in the
denominations specified therein and this Warrant shall promptly be canceled. If
any portion of this Warrant is not being assigned, the Company shall, at its
own expense, within three (3) Business Days issue to the Holder a new Warrant
evidencing the portion not so assigned. If the Holder assigns this Warrant to
one or more Persons, any decisions that the Holder is entitled to make at any
time hereunder shall be made by the Holders holding more than fifty percent
(50.0%) of the aggregate number of Warrant Shares issuable upon exercise of all
of the
17
then exercisable Warrants. The Company may require the Holder, as a condition to
the execution and delivery of any new Warrant in connection with an assignment
of this Warrant, to represent and warrant to the Company that such assignment
complies with applicable federal or state securities laws and to deliver an
opinion of its legal counsel to such effect.
This Warrant shall be binding upon and inure to the benefit of
the Company, the Holder and their respective successors and permitted assigns,
and shall include, with respect to the Company, any Person succeeding the
Company by merger, consolidation, combination or acquisition of all or
substantially all of the Company's assets, and in such case, except as expressly
provided herein and in the Securities Purchase Agreement, all of the obligations
of the Company hereunder shall survive such merger, consolidation, combination
or acquisition.
5.10 CAPTIONS; CONSTRUCTION AND INTERPRETATION. The
captions in this Warrant are for convenience of reference only, do not
constitute a part of this Agreement and are not to be considered in construing
or interpreting this Warrant. All section, preamble, recital, exhibit,
schedule, disclosure schedule, annex, clause and party references are to this
Warrant unless otherwise stated. No party, nor its counsel, shall be deemed the
drafter of this Warrant for purposes of construing the provisions of this
Warrant, and all provisions of this Warrant shall be construed in accordance
with their fair meaning, and not strictly for or against any party.
5.11 LOST WARRANT OR CERTIFICATES. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant or of a stock certificate evidencing Warrant
Shares and, in the case of any such loss, theft or destruction, upon receipt of
an indemnity reasonably satisfactory to the Company or, in the case of any such
mutilation, upon surrender and cancellation of this Warrant or stock
certificate, the Company shall make and deliver to the Holder, within three (3)
Business Days of receipt by the Company of such documentation, a new Warrant or
stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.
5.12 NO IMPAIRMENT. The Company shall not by any action,
including, without limitation, amending its charter documents or regulations or
through any reorganization, reclassification, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of the Holder against
impairment. Without limiting the generality of the foregoing, the Company will
(i) not increase the par value (if any) of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (ii) take
all such action as may be necessary or appropriate in order that the Company
may validly and
18
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, free and clear of all liens, encumbrances, equities
and claims, and (iii) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant. The Company shall not be required to register the Warrant
Shares under the Securities Act except pursuant to the provisions of the
Registration Rights Agreement.
5.13 GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE (WITHOUT REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS
THEREOF) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
5.14 REMEDIES. If the Company fails to perform, comply
with or observe any covenant or agreement to be performed, complied with or
observed by it under this Warrant, the Holder may proceed to protect and
enforce its rights by suit in equity or action at law, whether for specific
performance of any term contained in this Warrant or for an injunction against
the breach of any such term or in aid of the exercise of any power granted in
this Warrant or to enforce any other legal or equitable right, or to take any
one or more of such actions. The Company hereby agrees that the Holder shall
not be required or otherwise obligated to, and hereby waives any right to
demand that the Holder, post any performance or other bond in connection with
the enforcement of its rights and remedies hereunder. The Company agrees to pay
all fees, costs, and expenses, including, without limitation, fees and expenses
of attorneys, accountants and other experts retained by the Holder, and all
fees, costs and expenses of appeals, incurred or expended by the Holder in
connection with the enforcement of this Warrant or the collection of any sums
due hereunder, whether or not suit is commenced. None of the rights, powers or
remedies conferred under this Warrant shall be mutually exclusive, and each
right, power or remedy shall be cumulative and in addition to any other right,
power or remedy whether conferred by this Warrant or now or hereafter available
at law, in equity, by statute or otherwise.
19
5.15 WAIVER OF JURY TRIAL. THE COMPANY AND THE HOLDER
(BY ACCEPTANCE HEREOF) HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION,
SUIT OR OTHER PROCEEDING ARISING OUT OF, CONNECTED WITH OR RELATED TO THIS
WARRANT OR ANY OTHER INVESTMENT DOCUMENT, OR ANY CLAIM, CONTROVERSY OR DISPUTE
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR ACTIONS.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and issued by its duly authorized representatives on the date first above
written.
SIMULA, INC., an Arizona corporation
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Xxxxx X. Xxxx
Executive Vice President and Chief
Financial Officer and Treasurer
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx
Assistant Secretary
20
SIMULA, INC.
FORM OF EXERCISE SUBSCRIPTION
(To be signed only upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise its Warrant to
purchase __________________________________________________ (_______) shares of
Common Stock for an aggregate Warrant Purchase Price of ________________________
Dollars ($______).
[If the Holder has determined upon advice of counsel that compliance
with the HSR Act is required, include the following sentences: "The undersigned
has determined that this exercise is subject to the HSR Act and requests that
the Company file the requisite notification and report form with, and pay all
requisite filing fees to, the FTC and the DOJ as promptly as possible. The
purchase of the shares described above and the payment of the Warrant Purchase
Price are subject to the expiration or earlier termination of the waiting period
under the HSR Act."]
The Warrant Purchase Price to be paid as follows (check as applicable):
__ Certified or official bank check in the amount of $______;
__ Wire transfer in the amount of $_________;
__ Cancellation of _______________________ Warrant Shares; or
__ Surrender of __________________ shares of Common Stock.
The undersigned hereby requests that [if the Holder has determined upon
advice of counsel that compliance with the HSR Act is required, include the
following phrase: "upon the expiration or earlier termination of the waiting
period under the HSR Act"] a certificate(s) for the shares of Common Stock be
issued in the name of _________________________, and delivered to,
____________________, whose address is ________________________________________.
The undersigned hereby represents that it is acquiring such shares of
Common Stock for its own account for investment purposes only and not with a
view to or for sale in connection with any distribution thereof.
Dated: _____________________________________________________
Name of the Holder (must conform precisely to the
name specified on the face of the Warrant)
_____________________________________________________
Signature of authorized representative of the Holder
_____________________________________________________
Print or type name of authorized representative
Social Security Number or Employer
Tax Identification Number of the Holder: ____________
Address of the Holder: ____________________________
____________________________
____________________________
