INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT is entered into as of the 31st day of
December 1999 (this "AGREEMENT"), by and among SIMULA, INC., an Arizona
corporation (the "COMPANY"), XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P., a
California limited partnership ("LLCP"), and XXXXXXX X. XXXXXXXXXX
("DESJARDINS"), XXXXXX X. XXXXXXXX ("XXXXXXXX"), XXXXX X. XXXXXXXX ("XXXXXXXX")
and XXXXXXX X. XXXXX ("XXXXX" and, together with Desjardins, Xxxxxxxx and
Xxxxxxxx, the "PRINCIPAL SHAREHOLDERS").
R E C I T A L S
A. The Company, the other Company Parties and LLCP are parties
to the Securities Purchase Agreement dated of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "SECURITIES PURCHASE
AGREEMENT") pursuant to which, on the date hereof, the Company Parties are
jointly and severally issuing and selling to LLCP, and LLCP is purchasing from
the Company Parties, the Notes, and the Company is issuing and selling to LLCP,
and LLCP is purchasing from the Company, the Warrant, all on the terms and
subject to the conditions set forth in the Securities Purchase Agreement.
Unless otherwise indicated, capitalized terms used and not otherwise defined in
this Agreement shall have the meanings set forth in the Securities Purchase
Agreement.
B. The execution of this Agreement by the Company and the
Principal Shareholders is a condition precedent to the obligation of LLCP to
consummate the transactions contemplated by the Securities Purchase Agreement.
C. In addition, in consideration of the substantial direct and
indirect benefits which the Company and the Principal Shareholders will realize
from the consummation of the transactions contemplated by the Securities
Purchase Agreement, the Company has agreed to grant to LLCP the investment
monitoring and other rights set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. INVESTMENT MONITORING RIGHTS.
1.1 ELECTION OF LLCP REPRESENTATIVE TO BOARD UPON EVENT OF DEFAULT.
(a) If an Event of Default shall occur, LLCP shall have
the right to require the Company to cause to be elected or appointed to the
Board of Directors of the Company (the "BOARD") an individual designated by
LLCP in an LLCP Representative Request (as such term is defined below) (the
"LLCP REPRESENTATIVE") furnished to the Company, in accordance with the
following terms:
(i) The Company shall, within five (5) Business
Days after its receipt of an LLCP Representative Request, take or
cause to be taken as soon as practicable such actions (including,
without limitation, creating a vacancy) as may be necessary or
advisable to cause the LLCP Representative to be elected or appointed
to the Board and to remain a duly elected or appointed member of the
Board until the later to occur of (A) the 180th day after the
effective date of such election or appointment and (ii) the date upon
which the next annual meeting of the shareholders of the Company at
which directors are to be elected shall occur (it being understood
that the occurrence of each and every Event of Default shall trigger
the right of LLCP to cause the Company to elect or appoint the LLCP
Representative to the Board and the Company's obligations with respect
thereto (PROVIDED that only one LLCP Representative shall serve as a
member of the Board at any time)); and
(ii) In connection with any such election of
appointment of the LLCP Representative to the Board pursuant to this
SECTION 1.1, each Principal Shareholder agrees that he will vote (or
cause to be voted) all shares of Capital Stock of the Company owned
beneficially and of record by him, directly or indirectly, whether now
owned or hereafter acquired, so that the LLCP Representative shall be
elected or appointed to the Board for the period required under clause
(i) above.
For purposes of this Agreement, the term "LLCP REPRESENTATIVE REQUEST"
shall mean a written request delivered by or on behalf of LLCP to the Company
notifying the Company of LLCP's election under this SECTION 1.1 to have an LLCP
Representative elected or appointed to the Board and naming the individual who
has been so designated.
(b) In no event shall the Company, the Board, any
Principal Shareholder or any other Person (other than LLCP) have the power to
remove the LLCP Representative from the Board, without the prior written
consent of LLCP, other than pursuant to an order or decree of any Governmental
Authority or for "cause" (which shall include conviction of a felony or any act
involving moral turpitude or willful failure to perform his duties as a
director).
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(c) In the event of the death or resignation of the LLCP
Representative at any time, or in the event the LLCP Representative shall not
be elected to the Board at any election of directors for any reason, the
Company shall, upon the request of LLCP, promptly (and in any event within five
(5) days of such request) take such steps as may be necessary or appropriate to
cause another Person designated by LLCP to become the LLCP Representative on
the Board, including increasing the size of the Board and/or filling the
resulting vacancy with an LLCP Representative. Such steps may include calling
and holding, in accordance with the Bylaws of the Company and Applicable Laws,
a special meeting of the Board or the shareholders of the Company or
circulating a written consent for execution by members of the Board and/or the
shareholders. To the extent that the Board delegates any of its duties to an
executive committee or other committee, the LLCP Representative shall, upon the
request of LLCP, be appointed to such committee.
(d) The agreements set forth in this SECTION 1.1 are
intended to constitute enforceable voting agreements within the scope of
Section 706(a) of the General Corporation Law of the State of California.
1.2 OBSERVATION RIGHTS. Without limiting any of the rights of
LLCP in this SECTION 1, and whether or not any LLCP Representative is then
serving on the Board, LLCP shall receive notice of and be entitled to have, at
LLCP's option, two (2) representatives or one (1) representative and one (1)
advisor to such representative, attend as observers all meetings of the Board
and of all committees thereof and at all meetings of the shareholders of the
Company. Notice of such meetings shall be given to LLCP in the same manner and
at the same time as to the members of the Board or such committees (which in
any event shall not be less than forty-eight (48) hours prior to such meeting
unless otherwise agreed to by LLCP in advance and in writing) and at the same
time as to the shareholders of the Company, as the case may be. LLCP shall be
provided with copies of (i) a meeting agenda, if any is prepared, (ii) all
information that is provided to the members of the Board or such committees or
to the shareholders of the Company (whether prior to, at, or subsequent to any
such meetings), as the case may be, at the same time as such materials are
provided to the members of the Board or such committee or to the shareholders
of the Company, as the case may be, and (iii) copies of the minutes of all
meetings of the Board and such committees and of all meetings of shareholders
concurrently with the distribution of such minutes to one or more members of
the Board or such committees or shareholders, as the case may be, but in no
event later than forty-five (45) days after each such meeting.
1.3 MONTHLY OPERATING MEETINGS. In each calendar month after the
date hereof, representatives of LLCP and of the Company shall meet to review
the financial condition of the Company and its Subsidiaries as reflected in the
financial information furnished to SECTION 9.3 of the Securities Purchase
Agreement. Each meeting shall at all times be comprised of at least two (2)
members of senior management of the Company, who initially shall be Xxxxxx
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X. Xxxxxxxx and Xxxxx X. Xxxxxxxx, and two (2) individuals designated by LLCP
(who shall be representatives of Xxxxxx Xxxxxxxxx Capital Partners, Inc. ("LLCP
INC."), an Affiliate of LLCP). The financial officers and other members of
senior management of the Company shall be available at each meeting to review
financial information and discuss other matters. LLCP and the Company shall
mutually agree in each calendar month on the date and time for the meeting to be
held in the immediately succeeding calendar month (PROVIDED that the failure to
agree on such date and time in any month shall not be construed as an agreement
not to hold a meeting in the immediately succeeding month). Meetings may be
conducted by telephone so long as each of the persons attending can hear each of
the other persons attending the meeting.
1.4 SURVIVAL OF RIGHTS. The rights granted to LLCP under SECTIONS
1.1 (Election of LLCP Representative to Board Upon Certain Events of Default),
SECTION 1.2 (Observation Rights) and SECTION 1.3 (Monthly Operating Meetings)
shall be effective as of the date hereof and shall continue for so long as the
Obligations remain outstanding; PROVIDED, HOWEVER, that the rights granted to
LLCP under such Sections shall survive the repayment and performance of all
Obligations to the extent that LLCP holds any portion of the Indebtedness
evidenced by the Note or any Warrant Shares and informs the Company in writing
that it believes in good faith that it is required to retain such rights to
qualify as a "venture capital operating company" for purposes of complying with
ERISA and, if requested by the Company, LLCP will furnish to the Company
written advice of its counsel with respect to such qualification.
2. INDEMNIFICATION AND INSURANCE.
2.1 The Company shall, to the maximum extent permitted by law,
indemnify, defend and hold harmless the LLCP Representative, LLCP and the
employees, partners, principals, agents, attorneys, accountants,
representatives and other Affiliates of LLCP (including, without limitation,
LLCP Inc.) (collectively, the "LLCP PARTIES"), from and against all costs,
expenses, liabilities, claims, judgments, damages and losses, including,
without limitation, all attorneys' fees and the cost of any investigation and
preparation incurred in connection therewith, incurred in connection with any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative or investigative (collectively, "LIABILITIES AND COSTS"),
arising out of or in any way related to the fact that any LLCP Party is or was
a director, officer, employee or other agent of the Company or any subsidiary
of the Company, is or was serving as an observer of the Board, or is or was
serving at the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise and, in connection with any
LLCP Party serving as such director, officer, employee or other agent, that
such LLCP Party acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the Company.
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2.2 Upon request by any LLCP Party, the Company, shall advance
(within five (5) Business Days of such request) any and all expenses,
including, without limitation, any and all attorneys' fees and the cost of any
investigation and preparation incurred in connection with any matter for which
such LLCP Party is or may be entitled to indemnification hereunder. The Company
shall also indemnify each LLCP Party from and against any and all Liabilities
and Costs incurred in connection with any claim or action brought to enforce
such LLCP Party's rights under this SECTION 2, or under Applicable Law or the
Company's charter or bylaws now or hereafter in effect relating to
indemnification, or for recovery under directors' and officers' liability
insurance policies maintained by the Company, regardless of whether such LLCP
Party is ultimately determined to be entitled to such indemnification or
insurance recovery, as the case may be. If, for any reason, the foregoing
indemnification is not available for any reason or is not sufficient to
indemnify and hold the LLCP Parties harmless from all such Liabilities and
Costs, then the Company shall contribute to the amount of all such Liabilities
and Costs paid or payable by any LLCP Party in such proportion as is
appropriate to reflect not only the relative benefits received by the Company,
on the one hand, and LLCP, on the other hand, but also the relative fault of
each, as well as any other equitable considerations. The Company's
reimbursement, indemnity and contribution obligations shall be in addition to
any liability the Company may otherwise have at law or under any other
agreement, including, without limitation, the Securities Purchase Agreement,
and such obligations shall extend, upon the same terms, to all LLCP Parties.
This SECTION 2 shall survive indefinitely the termination of this Agreement.
2.3 At any time that an LLCP Representative is serving on the
Board, the Company shall have in place and shall maintain in force and effect
one or more directors and officers liability insurance policies providing at
least $10,000,000 in insurance coverage for director liability, including
coverage for claims under federal and state securities laws.
3. CO-SALE AGREEMENT.
3.1 If one or more Principal Shareholders propose to sell or
transfer any shares of Common Stock now owned or held by it or them ("CO-SALE
SHARES") in any transaction (or series of related transactions) that does not
constitute a Public Sale, then such Principal Shareholder or Principal
Shareholders shall promptly notify the Company and LLCP in writing (the
"CO-SALE NOTICE") at least twenty (20) days prior to the closing of such
proposed sale or transfer. The Co-Sale Notice shall describe in reasonable
detail the proposed sale or transfer, including, without limitation, the number
of Co-Sale Shares to be sold or transferred, the nature of such sale or
transfer, the consideration to be paid and the name and address of each
prospective purchaser or transferee. In the event that the sale or transfer is
being made pursuant to the provisions of SECTION 3.8, the Notice shall state
under which paragraph and subparagraph the sale or transfer is being made. For
purposes of this Agreement, the term "PUBLIC SALE" shall mean a sale, transfer
or other disposition of Common Stock pursuant to
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Rule 144 promulgated under the Securities Act or in a public offering pursuant
to an effective registration statement under the Securities Act. It is
acknowledged and understood that each Principal Shareholder may pledge his
shares or transfer or "gift" his shares for estate planning purposes, PROVIDED
that such shares continue to be subject to the provisions of this SECTION 3.
3.2 LLCP shall have the right, exercisable upon written notice
to the Principal Shareholders within fifteen (15) days after receipt of the
Co-Sale Notice, to participate in such sale on the same terms and conditions as
specified in the Co-Sale Notice. To the extent that LLCP exercises such right
of participation in accordance with the terms and conditions set forth in this
SECTION 3, the number of Co-Sale Shares that the Principal Shareholders may
sell in the transaction(s) shall be correspondingly reduced.
3.3 If there shall be a decrease in the price to be paid by the
proposed purchaser for the Co-Sale Shares to be purchased from the price set
forth in the Co-Sale Notice, which decrease is acceptable to the Principal
Shareholders, or any other material change in the terms or conditions set forth
in the Co-Sale Notice which are less favorable to the Principal Shareholders
but which are acceptable to the Principal Shareholders, the Principal
Shareholders shall immediately notify LLCP in writing of such decrease or other
change, and LLCP shall have five (5) Business Days from the date of receipt of
such written notice to modify the number of shares of Common Stock it will sell
to the purchaser, as previously indicated in the written notice delivered by
LLCP pursuant to SECTION 3.2.
3.4 LLCP may sell all or any portion of that number of shares of
Common Stock equal to the product of (a) the aggregate number of shares of
Common Stock covered by the Co-Sale Notice, MULTIPLIED BY (b) a fraction, the
numerator of which is the number of shares of Common Stock or Warrant Shares,
as applicable, owned by LLCP at the time of the sale or transfer (collectively,
the "LLCP SHARES"), and the denominator of which is the total number of issued
and outstanding shares of Common Stock owned by the Principal Shareholders and
LLCP at the time of the sale or transfer. In no event shall LLCP be required to
make any representation or warranty in connection with the sale to any
prospective purchase other than as to the organization and authority of LLCP,
title to the shares of Common Stock to be sold by LLCP and the absence of
conflict with laws or material agreements of LLCP.
3.5 LLCP shall effect its participation in the sale by promptly
delivering to the Principal Shareholders for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which
represent:
(a) the type and number of shares of Common Stock which
LLCP elects to sell; or
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(b) that number of Warrant Shares which is at such time
convertible into the number of shares of Common Stock which LLCP elects to sell;
PROVIDED, HOWEVER, that if the prospective purchaser objects to the delivery of
Warrant Shares in lieu of Common Stock, LLCP shall convert such Warrant Shares
into Common Stock and deliver Common Stock as provided in SECTION 3.4(a). The
Company agrees to make any such conversion concurrent with the actual transfer
of such shares to the purchaser.
3.6 The stock certificate or certificates that LLCP delivers to
the Principal Shareholders pursuant to SECTION 3.4 shall be transferred to the
prospective purchaser in consummation of the sale of the Common Stock pursuant
to the terms and conditions specified in the Co-Sale Notice, and the Principal
Shareholders shall concurrently therewith remit to LLCP by wire transfer in
immediately available funds that portion of the sale proceeds to which LLCP is
entitled by reason of LLCP's participation in such sale. To the extent that any
prospective purchaser prohibits such assignment or otherwise refuses to
purchase shares or other securities from LLCP, the Principal Shareholders shall
not sell to such prospective purchaser any shares of Common Stock unless and
until, simultaneously with such sale, the Principal Shareholders shall purchase
such shares or other securities from LLCP. Subject to the foregoing sentence,
if the Principal Shareholders do not complete the proposed sale or transfer for
any reason, the Principal Shareholders shall immediately return to LLCP all
documents (including, without limitation, the Warrant and all stock
certificates, stock assignments and/or powers of attorney) which LLCP delivered
to the Principal Shareholders pursuant to this SECTION 3 or otherwise in
connection with such sale or other transfer.
3.7 The exercise or non-exercise of the rights of LLCP hereunder
to participate in one or more sales of Co-Sale Shares by the Principal
Shareholders shall not adversely affect its rights to participate in subsequent
sales of Co-Sale Shares by the Principal Shareholders.
3.8 PROHIBITED TRANSFERS.
(a) In the event of any sale or purported sale
(including, without limitation, the entering into of any agreement, arrangement
or understanding to sell) of Co-Sale Shares by any Principal Shareholder in
contravention of the co-sale rights of LLCP hereunder (a "PROHIBITED
TRANSFER"), LLCP shall have, in addition to all other rights, powers or
remedies available at law, in equity, under this Agreement or any other
Investment Document or under Applicable Law, the right to exercise the
Prohibited Transfer Put (as such term is defined below), and such Principal
Shareholder agrees that he shall be bound by the applicable provisions hereof.
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(b) In the event of a Prohibited Transfer by a Principal
Shareholder:
(i) The Company shall, upon the request of LLCP,
instruct the Company's transfer agent not to enter such Prohibited
Transfer on the stock ledger or other similar records of the Company;
and
(ii) LLCP may exercise a right (the "PROHIBITED
TRANSFER PUT") to require such Principal Shareholder to purchase a
number of shares of Common Stock equal to the number of shares LLCP
would have been entitled to sell to the purchaser under SECTION 3.2 had
the Prohibited Transfer been effected pursuant to and in compliance
with the terms hereof. Such sale shall be made on the following terms
and conditions:
(A) The price per share at which shares are
to be sold to such Principal Shareholder shall be equal to the
price per share paid by the purchaser to such Principal
Shareholder in the Prohibited Transfer. Such Principal
Shareholder shall also reimburse LLCP for any and all fees and
expenses, including attorneys, accountants and other expenses,
incurred pursuant to the exercise or attempted exercise of
LLCP's rights under SECTION 3;
(B) Within thirty (30) days after the later
of the dates on which LLCP (x) received notice of the
Prohibited Transfer or (y) otherwise became aware of the
Prohibited Transfer, LLCP shall, if exercising the Prohibited
Transfer Put, deliver to such Principal Shareholder the
certificate or certificates representing the shares to be
sold, each certificate to be properly endorsed for transfer;
(C) Such Principal Shareholder shall, upon
receipt of the certificate or certificates representing the
shares to be sold by LLCP, pay to LLCP the aggregate purchase
price therefor and the amount of reimbursable fees and
expenses, as specified in SECTION 3.9(b)(i), by wire transfer
in immediately available funds; and
(D) Notwithstanding the foregoing, any
attempt by such Principal Shareholder to transfer any Co-Sale
Shares in violation of SECTION 3 shall be void and the Company
agrees that it will not effect such a transfer nor will it
treat any alleged transferee as the holder of such shares
without the written consent of LLCP.
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3.9 EXEMPT SALES BY DESJARDINS. The provisions of this SECTION 3
shall not apply to the first one million (1,000,000) shares of Common Stock now
beneficially owned or held by Desjardins which are sold by him, whether or not
pursuant to a Public Sale.
3.10 TERMINATION OF CO-SALE RIGHTS. The rights of LLCP under this
SECTION 3 with respect to the Co-Sale Shares owned or held by any Principal
Shareholder (and only with respect to such Principal Shareholder) shall
terminate on the date that is 180 days immediately following the date that the
employment by the Company of such Principal Shareholder, if applicable, is
terminated.
3.11 EXPIRATION OF CO-SALE RIGHTS. The rights granted to LLCP
under this SECTION 3 shall expire on the seventh anniversary of this Agreement.
4. PREEMPTIVE RIGHTS.
4.1 The Company hereby grants to LLCP the right to purchase up to
a PRO RATA share of New Securities (as such term in defined below) which the
Company may from time to time propose to sell and issue, and the Company shall
not issue any New Securities without complying with the provisions of this
SECTION 4. For purposes of this SECTION 4.1, LLCP's PRO RATA share shall be
equal to a percentage based on a fraction, the numerator of which is the number
of shares of Common Stock held by LLCP or issuable upon the exercise of the
Warrant or other Equity Rights of the Company held by LLCP immediately prior to
the issuance of the New Securities, and the denominator of which is the sum of
the total number of shares of Common Stock outstanding immediately prior to the
issuance of the New Securities.
4.2 The term "NEW SECURITIES" shall mean any Capital Stock
(including Common Stock or preferred stock) of the Company whether now
authorized or not, and any Equity Rights of the Company; PROVIDED, HOWEVER,
that the term New Securities does not include any securities issued in a public
offering pursuant to an effective registration statement under the Securities
Act with an aggregate offering price to the public of at least $10,000,000 nor
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 services as directors, officers or employees pursuant to any Equity
Rights 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.
4.3 If the Company proposes to undertake an issuance of New
Securities, it shall give LLCP written notice (an "ISSUANCE NOTICE") of its
intention, describing the type of New Securities, and their price and the
general terms upon which the Company proposes to issue the same. LLCP shall
have thirty (30) days after its receipt of the Issuance Notice to agree to
purchase LLCP's pro rata share of such New Securities for the price and upon
the terms specified in the notice by giving
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written notice to the Company and indicating therein the quantity of New
Securities to be purchased.
4.4 The rights granted under this SECTION 4 shall expire on the
earlier to occur of (a) the seventh anniversary of the date of this Agreement
and (b) the date upon which LLCP ceases to own or hold beneficially or of
record, directly or indirectly, at least 250,000 Warrant Shares.
5. LIMITATION ON PURCHASES OF COMMON STOCK BY LLCP. LLCP shall not,
without the prior written consent of the Company, purchase or otherwise acquire
shares of Common Stock at any time after the date hereof if, after giving
effect to the number of shares of Common Stock then owned or held by LLCP, LLCP
would beneficially own or hold more than fifteen percent (15.0%) of the Common
Stock calculated at such time on a Fully Diluted Basis. Nothing in this SECTION
5 or otherwise shall prohibit, restrict or otherwise limit the right of LLCP to
beneficially own or hold at any time up to fifteen percent (15.0%) of the
shares of Common Stock calculated at such time on a Fully Diluted Basis without
the consent of the Company or any Principal Shareholder.
6. MISCELLANEOUS.
6.1 LEGENDS. All certificates representing shares of Capital
Stock of the Company now owned or held or hereafter acquired by the Principal
Shareholders shall have stamped or endorsed thereon a legend substantially in
the following form (in addition to any legends required under applicable state
securities laws):
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF AN INVESTOR RIGHTS AGREEMENT DATED AS OF
DECEMBER 31, 1999, BY AND AMONG THE HOLDER, THE COMPANY AND
CERTAIN OTHER PERSONS. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED FROM THE COMPANY UPON WRITTEN REQUEST.
6.2 STOCK TRANSFER RECORDS. The Company shall make appropriate
notations in its stock transfer records of the restrictions on transfer
provided for in this Agreement and shall not record any transfers of capital
stock not made in strict compliance with the terms of this Agreement. The
Company acknowledges that any such transfer shall constitute an Event of
Default under Section 10.1 of the Securities Purchase Agreement.
6.3 SUCCESSORS AND ASSIGNS. The rights and obligations of LLCP
under this Agreement shall be freely assignable in connection with any transfer
of the Warrant or any portion thereof or of any shares of Common Stock issued
upon the exercise thereof in whole or
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in part. Any assignee of such rights shall be entitled to all of the benefits of
this Agreement as if such assignee were an original party hereto.
6.4 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire agreement and understanding among the parties with respect to the
subject matter hereof and supersedes all prior oral and written, and all
contemporaneous oral, agreements and understandings relating to the subject
matter hereof.
6.5 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement 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 72 hours after mailing, if mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
(1) If to LLCP, to:
Xxxxxx Xxxxxxxxx Capital Partners II, L.P.
c/o Levine Xxxxxxxxx Capital Partners, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (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
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(2) If to the Company or any Principal
Shareholder, 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 LLCP, such assignee, the Company or any
Principal Shareholder, as the case may be, may specify by written notice given
in accordance with this SECTION 6.5.
6.6 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be an original, but all of
which together shall constitute one instrument.
6.8 DESCRIPTIVE HEADINGS, CONSTRUCTION AND INTERPRETATION. The
descriptive headings of the several paragraphs of this Agreement are for
convenience of reference only and do not constitute a part of this Agreement
and are not to be considered in construing or interpreting this Agreement. All
section, preamble, recital and party references are to this Agreement unless
otherwise stated. No party, nor its counsel, shall be deemed the drafter of
this Agreement for purposes of construing the provisions of this Agreement, and
all provisions of this Agreement shall be construed in accordance with their
fair meaning, and not strictly for or against any party.
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6.9 WAIVERS AND AMENDMENTS. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally or by
course of dealing, but only by a statement in writing signed by all of the
parties.
6.10 REMEDIES. In the event that the Company or any Principal
Shareholder fails to observe or perform any covenant or agreement to be
observed or performed under this Agreement, LLCP 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 Agreement or for an injunction
against the breach of any such term or in aid of the exercise of any power
granted in this Agreement or to enforce any other legal or equitable right of
LLCP, or to take any one or more of such actions. The Company and the Principal
Shareholders hereby agree that LLCP shall not be required or otherwise
obligated to, and hereby waive any right to demand that LLCP, 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 LLCP, and all fees, costs and expenses of appeals,
incurred or expended by LLCP in connection with the enforcement of this
Agreement or the collection of any sums due hereunder, whether or not suit is
commenced. None of the rights, powers or remedies conferred under this
Agreement shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy whether
conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.
6.11 PRINCIPAL SHAREHOLDERS.
(a) REPRESENTATIONS AND COVENANTS. Each Principal
Shareholder hereby represents and warrants to LLCP that (a) he has the sole
power and authority to execute, deliver and perform his obligations under this
Agreement, without obtaining the Consent of any other Person, (b) this
Agreement has been duly executed and delivered by such Principal Shareholder
and constitutes the legal, valid and binding obligation of such Principal
Shareholder, enforceable against such Principal Shareholder in accordance with
its terms, and (c) the execution and delivery of this Agreement by such
Principal Shareholder, and the performance by such Principal Shareholder of his
obligations hereunder, does not and will not breach or violate any agreement,
instrument or other document to which such Principal Shareholder is a party or
to which such Principal Shareholder's assets are bound or any Applicable Laws.
In addition, each Principal Shareholder hereby represents and warrants to LLCP
that he has carefully read this Agreement and has had sufficient time and
opportunity to consider its terms and to obtain legal advice, if desired, and
he fully understands the final and binding effect of this Agreement. Each
Principal Shareholder hereby covenants and agrees with LLCP that he will not
sell, transfer or otherwise dispose of in any transaction which does
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not constitute a Public Sale any shares of Capital Stock of the Company
beneficially owned or held by him without the prior written consent of LLCP.
(b) CAPACITIES. Notwithstanding anything to the contrary
contained in this Agreement, the parties acknowledge that the Principal
Shareholders have signed this Agreement in their individual capacities, and not
as representatives of the Company, solely for the purposes of the provisions of
SECTION 3 regarding Co-Sale, for the purposes of making the representations and
warranties set forth in this SECTION 6.11 and for the purposes of the applicable
miscellaneous provisions set forth in this SECTION 6, and shall have no personal
liability for any other provisions contained herein.
(c) SPOUSAL CONSENTS. Each Principal Shareholder
covenants and agrees that he will deliver to LLCP, as soon as practicable but
not later than the close of business on Friday, January 7, 2000, a Spousal
Consent to this Agreement, in substantially the form of EXHIBIT A, duly
executed by his spouse.
(d) ACKNOWLEDGMENT. It is acknowledged and understood
that each Principal Shareholder may pledge his shares or transfer or "gift" his
shares for estate planning purposes, PROVIDED that such shares continue to be
subject to the provisions of SECTION 3.
6.12 GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT 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.
6.13 CONSENT TO JURISDICTION AND VENUE. THE COMPANY, EACH PRINCIPAL
SHAREHOLDER AND LLCP HEREBY CONSENTS AND AGREES THAT ALL ACTIONS, SUITS OR OTHER
PROCEEDINGS ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
INVESTMENT DOCUMENT SHALL BE TRIED AND LITIGATED IN STATE OR FEDERAL COURTS
LOCATED IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
WHICH COURTS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY AND ALL
CLAIMS, CONTROVERSIES AND DISPUTES ARISING OUT OF THIS AGREEMENT OR ANY OTHER
INVESTMENT DOCUMENT OR ANY OTHER MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OTHER INVESTMENT DOCUMENT. NOTWITHSTANDING THE FOREGOING,
NOTHING CONTAINED IN THIS SECTION 6.13 SHALL PRECLUDE LLCP FROM BRINGING ANY
ACTION,
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SUIT OR OTHER PROCEEDING IN THE COURTS OF ANY OTHER LOCATION WHERE THE COMPANY
OR ANY OF ITS ASSETS OR THE COLLATERAL MAY BE FOUND OR LOCATED OR TO ENFORCE ANY
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LLCP.
THE COMPANY, EACH PRINCIPAL SHAREHOLDER AND LLCP HEREBY (A)
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION, SUIT OR OTHER PROCEEDING COMMENCED IN ANY
SUCH COURT, (B) WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR ANY OBJECTION THAT SUCH PERSON MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION OR IMPROPER VENUE AND (C) CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. THE COMPANY,
EACH PRINCIPAL SHAREHOLDER AND LLCP HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT OR OTHER PROCESS ISSUED IN ANY SUCH ACTION, SUIT OR OTHER
PROCEEDING AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE
ADDRESS SET FORTH IN SECTION 6.5 (NOTICES) AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH PERSON'S ACTUAL RECEIPT THEREOF OR
FIVE DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
TO THE EXTENT PERMITTED UNDER THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, THE COMPANY AND EACH PRINCIPAL SHAREHOLDER HEREBY EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH ACTION, SUIT OR OTHER PROCEEDING, THE
JURISDICTION OF ANY OTHER COURT OR COURTS THAT NOW OR HEREAFTER, BY REASON OF
SUCH PERSON'S PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE TO IT.
6.14 WAIVER OF JURY TRIAL. THE COMPANY, EACH PRINCIPAL SHAREHOLDER
AND LLCP HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER
PROCEEDING UNDER THIS AGREEMENT OR ANY OTHER INVESTMENT DOCUMENT OR ANY CLAIM,
CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATED TO THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER INVESTMENT DOCUMENT, REGARDLESS OF WHICH
PARTY INITIATES SUCH ACTION OR ACTIONS.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized representatives as of the date
first written above.
COMPANY
SIMULA, INC., an Arizona corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx
Executive Vice President and Chief
Financial Officer
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
Assistant Secretary
LLCP
XXXXXX XXXXXXXXX CAPITAL PARTNERS II,
L.P., a California limited partnership
By: LLCP California Equity Partners
II, L.P., a California limited
partnership, its General Partner
By: Xxxxxx Xxxxxxxxx Capital
Partners, Inc., a
California corporation,
its General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Xxxxxx X. Xxxxxx
President
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PRINCIPAL SHAREHOLDERS
/s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
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EXHIBIT A
FORM OF
SPOUSAL CONSENT
The undersigned is the spouse of ________________, one of the
individuals who has executed, delivered and agreed to be bound by the above
Investor Rights Agreement. The undersigned hereby acknowledges that she has
read and understands the terms and other provisions of the Investor Rights
Agreement. Further, the undersigned hereby consents to, approves of and agrees
to be bound by the terms and other provisions of the Investor Rights Agreement
for all purposes as if she were a party thereto, including, without limitation,
in order to bind any community property interest she has or may have in any
Co-Sale Shares owned by her and her spouse that is the subject of the Investor
Rights Agreement.
------------------------------------
[Name]
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