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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant
to Rule 13d-1(a) and Amendments thereto Filed Pursuant to
Rule 13d-2(a)
(Amendment No. )
Simula, Inc.
(Name of Issuer)
Common Stock, Par Value $.01 per share
(Title of Class of Securities)
829206101
(CUSIP Number)
Stanley P. Desjardins
2700 North Central Avenue, Suite 1000, Phoenix, Arizona 85004
602-631-4005
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
December 31, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(continued on following pages)
Page 1 of 6 Pages
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SCHEDULE 13D
CUSIP No.: 829206101
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1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Stanley P. Desjardins
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7. SOLE VOTING POWER
NUMBER OF 3,273,414
SHARES
BENEFICIALLY ------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING -0-
PERSON
WITH ------------------------------------------
9. SOLE DISPOSITIVE POWER
3,273,414
------------------------------------------
10. SHARED DISPOSITIVE POWER
-0-
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,273,414
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ X ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.28%
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14. TYPE OF REPORTING PERSON*
IN
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* See instructions before filling out
Page 2 of 6 Pages
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ITEM 1. SECURITIES AND ISSUER
This Schedule 13D relates to the Common Stock, par value $.01 per
share, issued by Simula, Inc., an Arizona corporation (the "Issuer"), and is
being filed pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as
amended. The address of the Issuer's principal executive offices is 2700 North
Central Avenue, Suite 1000, Phoenix, Arizona 85004.
ITEM 2. IDENTITY AND BACKGROUND
(a) The name of the person filing this statement is Stanley P. Desjardins.
(b) Mr. Desjardins' address is 2700 North Central Avenue, Suite 1000,
Phoenix, Arizona 85004.
(c) Mr. Desjardins' principal occupation or employment is serving as the
Chairman of the Board of Directors of the Issuer. The address out of
which Mr. Desjardins conducts such occupation is 2700 North Central
Avenue, Suite 1000, Phoenix, Arizona 85004.
(d) During the last five years, Mr. Desjardins has not been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, Mr. Desjardins has not been a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in any judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Mr. Desjardins is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Desjardins did not acquire any securities at the date of the
event requiring the filing of this Schedule 13D. Rather, he already held such
securities and was deemed to have acquired them at such date by virtue of Rule
13d-5(b)(1). Accordingly, Mr. Desjardins paid no consideration for the
securities at such time. The events giving rise to the deemed acquisition are
described in Item 6.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the deemed acquisition was to assist the Issuer in
obtaining financing through the sale to LLCP (as defined below) of the Issuer's
Securities (as defined below). See Item 6. Mr. Desjardins has no plans or
proposals which relate to or would result in any of the actions listed in Items
4(a) through 4(j) of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Mr. Desjardins beneficially owns 3,273,414 shares, or 29.28%, of the
Issuer's Common Stock, of which Mr. Desjardins has a right to acquire
no shares. Mr. Desjardins is a member of a group which beneficially
owns, including Mr. Desjardins' shares, 4,774,897 shares, or 42.71%, of
the Issuer's Common Stock. Other members of the group are
Page 3 of 6 Pages
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Bradley P. Forst (431,154 shares, including 398,142 shares of which Mr.
Forst has a right to acquire), James A. Saunders (344,880 shares,
including 340,000 shares of which Mr. Saunders has a right to acquire)
and Donald W. Townsend (725,449 shares, including 679,800 shares which
Mr. Townsend has a right to acquire). The event resulting in the
formation of such group is described in Item 6.
(b) With respect to Mr. Desjardins' 3,273,414 shares, Mr. Desjardins has
sole power to vote 3,273,414 shares, shares the power to vote
no shares, has sole power to dispose of 3,273,414 shares, and
shares the power to vote no shares.
(c) There were no transactions in the Common Stock effected by any of
Messrs. Desjardins, Townsend, Forst or Saunders during the past 60 days
or since the most recent filing on Schedule 13D, whichever is less.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
the Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
On December 31, 1999, the Issuer, certain subsidiaries of the Issuer,
Messrs. Desjardins, Townsend, Saunders and Forst (collectively, the "Principal
Shareholders"), and Levine Leichtman Capital Partners II, L.P. ("LLCP") entered
into a Securities Purchase Agreement pursuant to which LLCP acquired a Secured
Senior Note Due 2000 in the principal amount of $5,000,000 (the "Term A Note"),
a Secured Senior Note Due 2003 in the principal amount of $15,000,000 (the "Term
B Note" and collectively with the Term A Note, the "Notes"), and a Warrant to
Purchase 850,000 Shares of Common Stock (the "Warrant" and collectively with the
Notes, the "Securities"). The execution of an Investor Rights Agreement among
the Issuer, LLCP, and the Principal Shareholders dated December 31, 1999 (the
"Investor Rights Agreement") was a condition to the obligation of LLCP to
purchase the Securities. Such parties have amended or will amend the Investor
Rights Agreement pursuant to a First Amendment to Investor Rights Agreement
dated December 31, 1999 (the "First Amendment"). The Investor Rights Agreement,
as amended or as to be amended by the First Amendment, is referred to in this
Schedule 13D as the "Investor Rights Agreement."
Under the Investor Rights Agreement, the Issuer and the Principal
Shareholders granted LLCP certain investment monitoring and other rights. Among
other things, if an Event of Default (as defined in the Investor Rights
Agreement) occurs, LLCP has the right to require the Issuer to cause to be
elected to the Issuer's Board of Directors an individual designated by LLCP (the
"LLCP Representative"). The LLCP Representative must remain a member until the
later to occur of (A) the 180th day after the effective date of such election
and (B) the date upon which the next annual meeting of the shareholders at which
directors are to be elected shall occur. In connection with such election, each
Principal Shareholder must vote his shares so that the LLCP Representative shall
be elected or appointed to the Board for such period. Subject to certain
exceptions, in no event shall the Issuer, the Board, any Principal Shareholder
or any other person (other than LLCP) remove the LLCP Representative from the
Board without the prior written consent of LLCP.
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In addition, LLCP has certain co-sale rights under the Investor Rights
Agreement. If one or more Principal Shareholders propose to sell or transfer any
shares of Common Stock owned by them ("Co-Sale Shares") as of the date of the
Investor Rights Agreement in any transaction that does not constitute a Public
Sale (as defined in the Investor Rights Agreement), they must notify the Issuer
and LLCP in writing (the "Co-Sale Notice") at least 20 days before closing the
proposed sale or transfer. LLCP has the right, exercisable upon written notice
to the Principal Shareholders within 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,
the number of shares that the Principal Shareholders may sell in the transaction
is correspondingly reduced. 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 the event of any sale or purported sale of Co-Sale Shares by any
Principal Shareholder in contravention of LLCP's co-sale rights, 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 as described in
the above paragraph.
The Co-Sale rights and the Prohibited Transfer Put rights do not apply,
however, to the first 1,000,000 shares of Common Stock now owned by Mr.
Desjardins which are sold by him. In addition, LLCP's rights with respect to the
Co-Sale Shares owned or held by any Principal Shareholder terminate on the date
that is 180 days following the date his employment by the Issuer, if applicable,
is terminated. Further, all of LLCP's Co-Sale rights and Prohibited Transfer Put
rights expire on December 31, 2006.
In addition, the Issuer granted to LLCP the right to purchase up to a
pro rata share of New Securities (as defined in the Investor Rights Agreement)
which the Issuer may from time to time propose to sell and issue.
Finally, LLCP shall not, without the prior written consent of the
Issuer, acquire shares of Common Stock after December 31, 1999 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 15% of the Common Stock calculated at
such time on a fully diluted basis.
A copy of the Investor Rights Agreement is attached as Exhibit 99.1 and
a copy of the Form of the First Amendment is attached as Exhibit 99.2, and they
are incorporated in their entirety in this Schedule 13D by reference. The above
description of the Investor Rights Agreement is a summary of material provisions
only and is qualified in its entirety by reference to the Investor Rights
Agreement and the Amendment. Copies of the Securities Purchase Agreement, the
Notes and the Warrant have been filed as exhibits to the Schedule 13D of LLCP
filed on January 10, 2000 with the Securities and Exchange Commission.
Page 5 of 6 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit
Number Description
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99.1 Investor Rights Agreement, dated December 31, 1999, among the Issuer,
LLCP, and the Principal Shareholders.
99.2 Form of First Amendment to Investor Rights Agreement, dated December
31, 1999, among the Issuer, LLCP, and the Principal Shareholders.
99.3 Power of Attorney (incorporated by reference to Simula Inc.'s Form 10-K
for the year ended December 31, 1997).
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 11, 2000.
/s/ Stanley P. Desjardins
_______________________________________
Stanley P. Desjardins
Page 6 of 6 Pages
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EXHIBIT 99.1
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"), LEVINE LEICHTMAN CAPITAL PARTNERS II, L.P., a
California limited partnership ("LLCP"), and STANLEY P. DESJARDINS
("Desjardins"), DONALD W. TOWNSEND ("Townsend"), JAMES A. SAUNDERS ("Saunders")
and BRADLEY P. FORST ("Forst" and, together with Desjardins, Townsend and
Saunders, the "Principal Shareholders").
RECITALS
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.
AGREEMENT
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:
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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 Donald
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W. Townsend and James A. Saunders, and two (2) individuals designated by LLCP
(who shall be representatives of Levine Leichtman 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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<PAGE> 8
(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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<PAGE> 9
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 is 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
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<PAGE> 10
in the notice by giving 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
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<PAGE> 11
or 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:
Levine Leichtman Capital Partners II, L.P.
c/o Levine Leichtman Capital Partners, Inc.
335 North Maple Drive, Suite 240
Beverly Hills, CA 90210
Attention: Arthur E. Levine, President
Telephone: (310) 275-5335
Telecopier: (310) 275-1441
with a copy to:
Riordan & McKinzie
300 South Grand Avenue, Suite 2900
Los Angeles, CA 90071
Attention: Mitchell S. Cohen, Esq.
Telephone: (213) 629-4824
Telecopier: (213) 629-8550
- 11 -
<PAGE> 12
(2) If to the Company or any Principal Shareholder, at:
Simula, Inc.
2700 North Central Avenue, Suite 1000
Phoenix, AZ 85004
Attention: Donald W. Townsend
Telephone: (602) 631-4005
Telecopier: (602) 631-9005
with a copy to:
Fennemore Craig
3003 North Central Avenue, Suite 2600
Phoenix, AZ 85012-2913
Attention: Robert J. Hackett, Esq.
Telephone: (602) 916-5336
Telecopier: (602) 916-5536
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.
- 12 -
<PAGE> 13
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 injuction 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
-13-
<PAGE> 14
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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<PAGE> 15
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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<PAGE> 16
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/ James C. Dodd
----------------------------------
James C. Dodd
Executive Vice President and Chief
Financial Officer
By: /s/ Nora T. Harden
----------------------------------
Nora T. Harden
Assistant Secretary
LLCP
LEVINE LEICHTMAN 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: Levine Leichtman Capital Partners,
Inc., a California corporation,
its General Partner
By: /s/ Arthur E. Levine
-------------------------------
Arthur E. Levine
President
-16-
<PAGE> 17
DATED as of the 31st day of December, 1999.
/s/ S.P. Desjardins
--------------------------
Stanley P. Desjardins
<PAGE> 18
DATED as of the 31st day of December, 1999.
/s/ Donald Townsend /s/ James A. Saunders
- ----------------------- -------------------------
Donald W. Townsend James A. Saunders
/s/ Bradley P. Forst
- -----------------------
Bradley P. Forst
<PAGE> 1
Exhibit 99.2
FIRST AMENDMENT TO
INVESTOR RIGHTS AGREEMENT
THIS FIRST AMENDMENT is entered into as of the 31st day of December
1999 (this "Amendment"), by and among SIMULA, INC., an Arizona corporation (the
"Company"), LEVINE LEICHTMAN CAPITAL PARTNERS II, L.P., a California limited
partnership ("LLCP"), and STANLEY P. DESJARDINS ("Desjardins"), DONALD W.
TOWNSEND ("Townsend"), JAMES A. SAUNDERS ("Saunders") and BRADLEY P. FORST
("Forst" and, together with Desjardins, Townsend and Saunders, the "Principal
Shareholders").
R E C I T A L S
A. The parties have entered into the Investor Rights Agreement dated as
of December 31, 1999 (the "Investor Rights Agreement"), pursuant to which, among
other things, the Company and the Principal Shareholders granted certain
investment monitoring, voting and other rights to the Purchaser as more fully
set forth therein. Unless otherwise indicated, all capitalized terms used and
not otherwise defined herein have the meanings set forth in the Investor Rights
Agreement.
B. The parties wish to amend clause (b) of Section 6.11 (Principal
Shareholders) of the Investor Rights Agreement to identify and clarify the
provisions in the Investor Rights Agreement to which the Principal Shareholders
have agreed to be bound in their personal capacities.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, conditions and provisions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Amendment of Section 6.11(b). Clause (b) (Capacities) of Section
6.11(Principal Shareholders) of the Investor Rights Agreement is hereby amended
by deleting such Section in its entirety and replacing it with the following:
"(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, for the purposes of Section
1.1, Section 1.4 (to the extent that such Section relates to the
obligations of the Principal Shareholders under Section 1.1), Section 3
and Section 6, for the
1
<PAGE> 2
purposes of making the representations and warranties set forth in
Section 6.11(a), and no Principal Shareholder shall have any personal
liability under any other provisions contained herein."
2. Incorporation of Section 6 (Miscellaneous). The provisions in
Sections 6 (Miscellaneous) of the Investor Rights Agreement are hereby
incorporated herein by this reference, to the extent applicable.
3. Counterparts. This Amendment may be executed in any number of
counterparts and by facsimile, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same instrument.
4. Full Force and Effect. This Amendment amends the Investor Rights
Agreement on and as of December 31, 1999, and the Investor Rights Agreement
shall remain in full force and effect as amended hereby. The Investor Rights
Agreement, as amended hereby, is hereby ratified and affirmed by the parties in
all respects.
IN WITNESS WHEREOF, the parties have executed this Amendment, or have
caused this Amendment to be executed and delivered by their duly authorized
representatives, as of the date first written above.
COMPANY
SIMULA, INC., an Arizona corporation
By:
------------------------------------
James C. Dodd
Executive Vice President and Chief
Financial Officer
By:
------------------------------------
Nora T. Harden
Assistant Secretary
2
<PAGE> 3
LLCP
LEVINE LEICHTMAN 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: Levine Leichtman Capital Partners,
Inc., a California corporation, its
General Partner
By:
____________________________
Arthur E. Levine
President
PRINCIPAL SHAREHOLDERS
_____________________________
Stanley P. Desjardins
_____________________________
Donald W. Townsend
_____________________________
James A. Saunders
_____________________________
Bradley P. Forst
3
