<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended SEPTEMBER 30, 1999 or
------------------
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
----------- ---------
Commission file number 1-12410
------------------------------------------
SIMULA, INC.
- ------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
ARIZONA 86-0320129
- ------------------------------- --------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2700 NORTH CENTRAL AVENUE, SUITE 1000, PHOENIX, ARIZONA 85004
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(Address of Principal Executive Offices) (Zip Code)
(602) 631-4005
- ------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- ------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports)
Yes X No
----------- -----------
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
----------- -----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
<TABLE>
<CAPTION>
Class Outstanding at September 30, 1999
- ------------------------------- --------------------------------------------
<S> <C>
Common Stock, $.01 par value 10,376,233
</TABLE>
<PAGE> 2
SIMULA, INC.
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1 - Financial Statements
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998........................... 2
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1999 and 1998....... 3
Consolidated Statement of Shareholders' Equity
Nine Months Ended September 30, 1999.......................... 4
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1999 and 1998................. 5
Notes to Interim Consolidated Financial Statements ................ 6 - 11
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial Condition............... 12 - 18
PART II - OTHER INFORMATION
Item 2 - Legal Proceedings ................................................ 18
Item 6 - Exhibits and Reports.............................................. 19 - 20
SIGNATURES................................................................. 21
</TABLE>
1
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SIMULA, INC.
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,669,046 $ 933,462
Contract and trade receivables - Net 31,226,897 27,113,757
Inventories 32,078,170 26,021,433
Deferred income taxes 3,173,000 3,173,000
Prepaid expenses and other 1,801,257 601,614
Net current assets of discontinued operations 4,580,773
------------- -------------
Total current assets 71,948,370 62,424,039
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Net 17,985,823 21,494,535
DEFERRED INCOME TAXES 19,061,000 20,550,000
NOTE RECEIVABLE 10,066,805
DEFERRED FINANCING COSTS 2,346,792 2,627,765
INTANGIBLES - Net 3,426,182 3,452,402
OTHER ASSETS 358,453 430,340
------------- -------------
TOTAL $ 125,193,425 $ 110,979,081
============= =============
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit $ 24,800,000 $ 16,900,000
Trade accounts payable 7,996,897 11,028,062
Other accrued liabilities 9,791,055 7,496,841
Advances on contracts 2,387,276 2,220,737
Current portion of long-term debt 6,695,057 7,530,222
------------- -------------
Total current liabilities 51,670,285 45,175,862
LONG-TERM DEBT - Less current portion 45,482,184 47,233,558
------------- -------------
Total liabilities 97,152,469 92,409,420
------------- -------------
REDEEMABLE CONVERTIBLE 6% SERIES A PREFERRED STOCK,
$.05 par value - issued 6,250 shares 6,250,000
-------------
SHAREHOLDERS' EQUITY
Preferred stock, $.05 par value - authorized
50,000,000 shares; issued 6,250 shares redeemable convertible 6% series
A preferred stock
Common stock, $.01 par value - authorized 50,000,000
shares; issued 10,376,233 and 9,915,391 103,762 99,154
Additional paid-in capital 53,391,038 51,742,593
Accumulated deficit (31,218,842) (33,452,571)
Accumulated other comprehensive income (485,002) 180,485
------------- -------------
Total shareholders' equity 21,790,956 18,569,661
------------- -------------
TOTAL $ 125,193,425 $ 110,979,081
============= =============
</TABLE>
See notes to consolidated financial statements
2
<PAGE> 4
SIMULA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 33,169,131 $ 23,680,404 $ 99,123,530 $ 71,962,001
Cost of revenue 23,468,135 18,197,029 72,043,888 53,880,615
------------ ------------ ------------ ------------
Gross margin 9,700,996 5,483,375 27,079,642 18,081,386
Administrative expenses 6,278,521 5,138,051 18,272,771 14,225,832
------------ ------------ ------------ ------------
Operating income 3,422,475 345,324 8,806,871 3,855,554
Interest expense (1,711,125) (1,326,708) (5,119,728) (3,730,358)
Interest income 11,381 48,234 35,586 163,309
------------ ------------ ------------ ------------
Earnings (loss) before taxes and discontinued operations 1,722,731 (933,150) 3,722,729 288,505
Income tax (expense) benefit (689,000) 374,000 (1,489,000) (116,000)
------------ ------------ ------------ ------------
Earnings (loss) before discontinued operations 1,033,731 (559,150) 2,233,729 172,505
Discontinued operations:
Loss from discontinued operations, net of tax (2,156,388)
Estimated loss on disposal, net of tax (4,680,000)
------------ ------------ ------------ ------------
Net earnings (loss) 1,033,731 (559,150) 2,233,729 (6,663,883)
Dividends on preferred stock 93,834 205,039
------------ ------------ ------------ ------------
Net earnings (loss) available for common shareholders $ 939,897 $ (559,150) $ 2,028,690 $ (6,663,883)
============ ============ ============ ============
Earnings (loss) per common share - basic:
Earnings (loss) before discontinued operations
per common shareholder $ 0.09 $ (0.06) $ 0.20 $ 0.02
Discontinued operations:
Loss from discontinued operations, net of tax (0.22)
Estimated loss on disposal, net of tax (0.47)
============ ============ ============ ============
Net earnings (loss) per common share $ 0.09 $ (0.06) $ 0.20 $ (0.67)
============ ============ ============ ============
Earnings (loss) per common share - assuming dilution:
Earnings before discontinued operations 0.09 $ 0.20 $ 0.02
Discontinued operations:
Loss from discontinued operations, net of tax (0.21)
Estimated loss on disposal, net of tax (0.46)
------------ ------------ ------------
Net earnings (loss) per common share $ 0.09 $ 0.20 $ (0.65)
============ ============ ============
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 5
SIMULA, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
--------------------------
Shares Amount Capital Deficit
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
BALANCE, January 1, 1999 9,915,391 $ 99,154 $ 51,742,593 $(33,452,571)
Net earnings 2,233,729
Issuance of common shares 188,220 1,882 505,473
Conversion of redeemable convertible
Series A Preferred Stock 252,824 2,528 1,247,472
Conversion of accrued Series A
Preferred Stock dividends 19,798 198 100,539
Preferred stock dividends (205,039)
Currency translation adjustment
------------ ------------ ------------ ------------
BALANCE, September 30, 1999 10,376,233 $ 103,762 $ 53,391,038 $(31,218,842)
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other Total
Comprehensive Shareholders' Comprehensive
Income Equity Income
------------- ------------- --------------
<S> <C> <C> <C>
BALANCE, January 1, 1999 $ 180,485 $ 18,569,661
Net earnings 2,233,729 $ 2,233,729
Issuance of common shares 507,355
Conversion of redeemable convertible
Series A Preferred Stock 1,250,000
Conversion of accrued Series A
Preferred Stock dividends 100,737
Preferred stock dividends (205,039)
Currency translation adjustment (665,487) (665,487) (665,487)
------------ ------------ ------------
BALANCE, September 30, 1999 $ (485,002) $ 21,790,956 $ 1,568,242
============ ============ ============
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 6
SIMULA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows used for operating activities:
Net income (loss) $ 2,233,729 $ (6,663,883)
Adjustment to reconcile net income (loss) to net cash used by operating activities:
Estimated loss on disposal of discontinued operations 7,800,000
Depreciation and amortization 4,264,762 3,350,424
Deferred income taxes 1,489,000 (4,794,000)
Gain on sale of assets (356,809)
Currency translation adjustment (665,487) 334,622
Changes in net assets and liabilities:
Contract and trade receivables - net of advances (3,946,601) (5,368,122)
Inventories (6,056,737) (8,244,235)
Prepaid expenses and other (828,827) 94,513
Other assets 71,887 109,324
Net assets of discontinued operations (4,398,565) (1,366,736)
Trade accounts payable (3,031,165) (358,022)
Other accrued liabilities 764,150 1,576,983
------------ ------------
Net cash used by operating activities (10,460,663) (13,529,132)
------------ ------------
Cash flows used by investing activities:
Purchase of property and equipment (2,147,713) (4,185,179)
Proceeds from the sale of assets 2,960,362
Costs incurred to obtain intangibles (832,916) (334,241)
------------ ------------
Net cash used in investing activities (20,267) (4,519,420)
------------ ------------
Cash flows from financing activities:
Net borrowings under line of credit 7,900,000 10,600,000
Principal payments under other debt arrangements (2,586,539) (1,546,359)
Issuance of common shares 507,355 615,328
Issuance of preferred shares 7,500,000
Preferred stock dividends (104,302)
------------ ------------
Net cash provided by financing activities 13,216,514 9,668,969
------------ ------------
Net increase (decrease) in cash and cash equivalents 2,735,584 (8,379,583)
Cash and cash equivalents at beginning of period 933,462 9,367,031
------------ ------------
Cash and cash equivalents at end of period $ 3,669,046 $ 987,448
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
In 1999, $1,250,000 of Series A Preferred Stock plus accrued dividends of
$100,737 were exchanged for 272,622 shares of the Company's common stock.
Interest paid $ 4,859,357 $ 4,567,528
============ ============
Taxes paid $ 36,513 $ 6,424
============ ============
</TABLE>
See notes to consolidated financial statements
5
<PAGE> 7
SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The accompanying interim consolidated financial statements of Simula,
Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include
all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion
of Management, all adjustments and reclassifications considered
necessary for a fair and comparable presentation have been included and
are of a normal recurring nature. Operating results for the three and
nine months ended September 30, 1999 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1999.
NOTE 2 - INVENTORIES:
At September 30, 1999 and December 31, 1998, inventories consisted of
the following.
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Raw materials $20,515,702 $15,581,952
Work in process 9,293,688 9,077,849
Finished goods 2,268,780 1,361,632
----------- -----------
Total inventories $32,078,170 $26,021,433
=========== ===========
</TABLE>
Inventories included in net current assets of discontinued operations
at December 31, 1998 were $6,198,387 and consisted mainly of raw
materials.
NOTE 3 - DEBT:
During the 1999 period, there have been several modifications to the
Senior Credit Agreement. Among other things, these modifications
adjusted the maximum outstanding under its revolving line of credit,
imposed and later rescinded a revolving line of credit adjustment date,
provided for a monthly penalty fee of $100,000 beginning in May and
continuing until disposal of the Company's discontinued operating
segment, adjustment of the fee to $150,000 per month beginning in
August and upon disposal of the segment imposed a monthly credit fee of
$150,000 until all balances under the Senior Credit Agreement have been
retired. In addition, the Company has pledged a security interest in
the notes receivable and related pledge and proxy security agreement
received in conjunction with the sale of the Company's discontinued
rail and mass transit operations. At November 15, 1999, the Company's
revolving line of credit provides for borrowings up to the lesser of
$23 million or the Revolving Line of Credit Borrowing Base (as
defined). At November 15, 1999, available and outstanding borrowings
under the line of credit is $23 million and $22.8 million,
respectively. Issued and outstanding letters of credit under the line
of credit at November 15, 1999 is $200,000.
The Company's Series C 10% Senior Subordinated Convertible Notes (the
"10% Notes") with an outstanding principal balance of $4,750,000
matured on September 15, 1999. In September 1999, the Company paid and
retired $500,000 of the 10% Notes upon maturity and executed a
Modification and Consent Agreement (the "September Modification")
extending the maturity date of the remaining $4,250,000 10% Notes until
October 31, 1999 and adjusted the interest rate to 15% from 10%. In
October 1999, the Company and the 10% Note holders entered into another
Modification and Consent Agreement (the "October Modification) which
further extended the maturity date until December 31, 1999, maintained
the interest rate at 15% and provided for a $40,000 extension payment
payable upon maturity of the agreement. In addition, the October
Modification requires that in the event the Company completes a public
or private financing or sale of assets prior to the Maturity Date, such
proceeds shall be applied as a reduction of the Company's indebtedness
under the 10% Notes.
On October 15, 1999, the Company entered into a $1,000,000 Promissory
Note with it's Chairman of the Board of Directors. The note bears
interest at 12%, matures on October 15, 2000, and provides for a
placement fee of $20,000 to be paid upon maturity or any accelerated
repayment of the note. In addition, the note provides for an
accelerated maturity in the event the Company completes a senior credit
banking agreement, or a public or private offering of debt or equity
securities for proceeds of $10,000,000 or more. Messrs. Townsend,
6
<PAGE> 8
SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Saunders and Forst, officers of the Company were required to guarantee
the $1,000,000 Promissory Note in the aggregate amount of $200,000.
NOTE 4 - REDEEMABLE CONVERTIBLE PREFERRED STOCK:
On March 29, 1999, the Company completed a private placement to an
accredited investor of $7.5 million of the Company's Series A
Convertible Preferred Stock (the "Series A"). Under the terms of this
offering the Series A bears a dividend rate of 6% per annum payable
quarterly in cash, or in stock that will be valued at 90% of fair
market value at the time of payment. The Series A may be converted into
shares of the Company's Common Stock at any time at 101% of the average
closing price of any 15 out of the 30 consecutive trading days
preceding conversion, up to a specified maximum conversion price (the
"Conversion Cap"). The Conversion Cap for the first twelve months is
$8.60 per share and is subject to an annual adjustment to the lesser of
the then existing Conversion Cap or 130% of the average of the closing
bid prices for 20 consecutive trading days immediately proceeding the
annual adjustment anniversary date. In addition, the first year
Conversion Cap is subject to an interim adjustment on August 1, 1999 if
the Company is unable to consummate the sale of its rail and mass
transit operation for aggregate cash proceeds of at least $7.5 million
by July 31, 1999. The Company was unable to complete the sale
transaction and accordingly the Conversion Cap was adjusted on August
1, 1999 and is $8.04 per share. Conversion of the Series A is limited
to 10% of the initial amount per month, accumulating monthly up to a
maximum of 30% of the accumulated convertible amount in any month. The
Company may require the conversion of the Series A if the market price
of the Company's Common Stock exceeds the Conversion Cap by at least
50% for at least 20 consecutive trading days, subject to the same
conversion limitations imposed upon the Series A holders.
Series A Preferred Stock is subject to a mandatory redemption of the
remaining outstanding shares on May 1, 2004 at which time the Company
is required to redeem all such shares at the greater of 130% of the
preferred stock stated value plus accrued and unpaid dividends, or the
average of the closing bid prices on the ten consecutive trading days
immediately preceding the redemption date. The holders of the Company's
Series A Preferred Stock have the option to require the Company to
redeem all or a portion of the Series A Preferred Stock at a redemption
price equal to 105% of the preferred stock stated value plus accrued
and unpaid dividends if the Company consolidates or merges with or into
another company.
In May 1999, $750,000 of Series A Preferred Stock plus accrued
dividends of $6,904 were exchanged for 157,361 shares of the Company's
common stock. In July 1999, $500,000 of Series A Preferred Stock plus
accrued dividends of $83 were exchanged for 96,926 shares of the
Company's common stock. In September 1999, accrued dividends of $93,750
were satisfied in exchange for 18,335 shares of the Company's common
stock.
NOTE 5 - DISCONTINUED OPERATIONS:
In 1998, the Company's board of directors adopted a plan to dispose of
its rail and mass transit seating operations. Accordingly, the
operating results of these rail and mass transit operations, including
a provision for estimated loss upon disposition, have been segregated
from continuing operations and are reported as discontinued operations.
The Company executed the sale of its rail and mass transit seating
operation on August 31, 1999 under an Asset Purchase and Sale Agreement
dated June 30, 1999, as amended and restated August 31, 1999 and
subsequently on October 21, 1999, a Note Refinancing Agreement was
executed. A former director of the Company wholly owns the acquiring
company. Consideration received consisted of $100,000 cash and a
promissory note for $9,996,000 which matured on October 15, 1999. On
October 21, 1999, the parties entered into the Note Refinancing
Agreement which refinanced the note as two separate notes in the
amounts of $1,996,000 and $8,118,008 and reflects the capitalization of
$118,008 of interest related to the original note into principal
outstanding. The notes each carry an interest rate of 8 1/2% and mature
on October 15, 2004. Interest is required to be paid quarterly
beginning April 2000 on the $1,996,000 promissory note and
semi-annually beginning April 2001 on the $8,118,008 promissory note.
The notes are secured by the underlying assets and a Pledge and Proxy
Security Agreement in the stock of the underlying company and the stock
of Beacon Industries, Inc. which is owned under common control of the
acquirer. Under the an Asset Purchase and Sale Agreement the Company
has retained the liability for claims incurred through August 31, 1999
under its self funded health insurance plan and has agreed to indemnify
the acquiring company for any customary warranty and litigation claims.
7
<PAGE> 9
SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Revenues for the rail and mass transit operations were $1,192,478 and
$8,247,294 for the two and eight months ended August 30, 1999,
respectively, and $4,360,279 and $13,093,611 for the three and nine
months ended September 30, 1998, respectively. Interest expense has
been allocated to discontinued operations based on the ratio of the
discontinued operations' net assets to consolidated net assets. General
corporate administrative expenses are not allocated to discontinued
operations.
NOTE 6 - SEGMENT REPORTING
The Company is a holding company for wholly owned subsidiaries which
operate in two business segments. The Commercial Transportation
Products segment includes operations which primarily manufacture
seating systems for domestic and foreign passenger airlines and
includes operations encompassing inflatable restraints and related
technology for automobiles. The Government and Defense segment includes
operations that design and manufacture crash resistant components,
energy absorbing devices, ballistic armor and composites principally in
connection with branches of the United States armed forces procurement.
The remaining segment, entitled Other, represents general corporate
operations.
For the three month period ended September 30, 1999 and 1998,
inter-segment sales were insignificant and total intercompany sales of
$847,747 and $1,453,084, respectively, have been eliminated.
<TABLE>
<CAPTION>
1999
----------------------------------------------------------------------------
Commercial Government
Transportation and
Products Defense Other Total
-------- ------- ----- -----
<S> <C> <C> <C> <C>
Revenue:
Contract revenue $12,489,890 $12,489,890
Product sales:
Airline seat systems $12,206,257 12,206,257
Automotive safety systems 8,107,959 8,107,959
Other 118,981 118,981
Technology sales and royalties 246,044 246,044
----------- ----------- ---------- -----------
Total revenue $20,560,260 $12,608,871 $ $33,169,131
=========== =========== ========== ===========
Operating (loss) income $3,097,645 $1,174,556 $(849,726) $3,422,475
</TABLE>
8
<PAGE> 10
SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1998
-----------------------------------------------------------------
Commercial Government
Transportation and
Products Defense Other Total
-------- ------- ----- -----
<S> <C> <C> <C> <C>
Revenue:
Contract revenue $9,197,525 $9,197,525
Product sales:
Airline seat systems $7,228,730 7,228,730
Automotive safety systems 6,824,035 6,824,035
Other 178,249 $ (6,819) 171,430
Technology sales and royalties 258,684 258,684
----------- ---------- ---------- -----------
Total revenue $14,311,449 $9,375,774 $ (6,819) $23,680,404
=========== ========== ========== ===========
Operating (loss) income $422,001 $354,944 $(431,621) $345,324
</TABLE>
For the nine month period ended September 30, 1999 and 1998,
inter-segment sales were insignificant and total intercompany sales of
$3,576,537 and $3,749,955 respectively, have been eliminated.
<TABLE>
<CAPTION>
1999
----------------------------------------------------------------------------
Commercial Government
Transportation and
Products Defense Other Total
-------- ------- ----- -----
<S> <C> <C> <C> <C>
Revenue:
Contract revenue $33,978,567 $33,978,567
Product sales:
Airline seat systems $41,029,095 41,029,095
Automotive safety systems 22,538,297 22,538,297
Other 710,894 $ 199,547 910,441
Technology sales and royalties 667,130 667,130
----------- ----------- ------------ -----------
Total revenue $64,234,522 $34,689,461 $ 199,547 $99,123,530
=========== =========== ============ ===========
Operating (loss) income $7,650,583 $2,857,047 $(1,700,759) $8,806,871
</TABLE>
9
<PAGE> 11
SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------
Commercial
Transportation Government and
Products Defense Other Total
-------- ------- ----- -----
<S> <C> <C> <C> <C>
Revenue:
Contract revenue $25,272,287 $25,272,287
Product sales:
Airline seat systems $27,526,826 27,526,826
Automotive safety systems 18,143,314 18,143,314
Other 323,915 $ 1,417 325,332
Technology sales and royalties 694,242 694,242
----------- ----------- ------------ -----------
Total revenue $46,364,382 $25,596,202 $ 1,417 $71,962,001
=========== =========== ============= ===========
Operating (loss) income $4,340,094 $735,386 $(1,219,926) $3,855,554
</TABLE>
10
<PAGE> 12
SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - EARNINGS PER SHARE:
The following is a reconciliation of the numerators and denominators of
basic and diluted earnings per share computations. Earnings per share
amounts are calculated using only weighted average shares outstanding.
For the three and nine month periods ended September 30, 1999 and the
nine month period ended September 30, 1998, diluted earnings per share
does not include the effects of shares to be issued upon conversion of
the Company's 8% Senior Subordinated Convertible Notes (the "8% Notes")
and the Series C 10% Senior Subordinated Convertible Notes (the "10%
Notes" ) of 2,248,223, 2,251,668 and 2,253,390, respectively, because
the result would be anti-dilutive. For the three month period ended
September 30, 1998, diluted earnings per share does not include the
effects of options to purchase common stock and shares to be issued
upon conversion of the Company's 8% Notes and 10% Notes of 4,308,111
because the result would be anti-dilutive.
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income (loss) before discontinued operations $1,033,731 $(559,150) $2,233,729 $ 172,505
Discontinued operations:
Loss from discontinued operations, net of
tax (2,156,388)
Estimated loss on disposal, net of tax (4,680,000)
----------- ----------- ----------- -------------
Net earnings (loss) 1,033,731 (559,150) 2,233,729 (6,663,883)
Dividends on preferred stock 93,834 205,039
----------- ----------- ----------- -------------
Net earnings (loss) available to common
stockholders $939,897 $(559,150) $2,028,690 $(6,663,883)
=========== =========== =========== =============
Basic weighted average shares outstanding 10,301,721 9,880,703 10,090,510 9,868,452
===========
Effect of dilutive securities 1,346,228 964,941 234,095
----------- ----------- -------------
Diluted weighted average shares outstanding 11,647,949 11,055,451 10,102,547
=========== =========== =============
Basic per share amounts:
Earnings (loss) before discontinued
operations per common shareholder $0.09 $ (0.06) $0.20 $0.02
Discontinued operations:
Loss from discontinued operations,
net of tax - - - (0.22)
Estimated loss on disposal, net of
tax - - - (0.47)
----------- ----------- ----------- -------------
Earnings (loss) per common shareholder $0.09 $ (0.06) $ 0.20 $ (0.67)
=========== =========== =========== =============
Diluted per share amounts:
Income before discontinued operations $0.09 $ 0.20 $0.02
Discontinued operations:
Loss from discontinued operations,
net of tax - - (0.21)
Estimated loss on disposal, net of
tax - - (0.46)
----------- ----------- -------------
Net earnings (loss) per common shareholder $0.09 $ 0.20 $ (0.65)
=========== =========== =============
</TABLE>
11
<PAGE> 13
SIMULA, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
GENERAL - The following discussion and analysis provides information that
management of Simula, Inc. (the "Company") believes is relevant to an assessment
and understanding of the Company's results of operations and financial condition
for the three and nine month periods ended September 30, 1999 compared to the
same periods in 1998. This discussion should be read in conjunction with the
Interim Consolidated Financial Statements and the Notes thereto included
elsewhere in this Form 10-Q. Except for the historical information contained
herein, this discussion contains forward looking statements (including
statements in the future tense and statements using the terms "believe,"
"anticipate," "expect," "intend," or similar terms) which are made pursuant to
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward looking statements involve risks and uncertainties that could
cause the Company's actual results to differ materially form those discussed
herein. See Forward Looking Information and Risks of the Business.
OVERVIEW
The Company designs and manufactures occupant safety systems and
devices engineered to safeguard human life in a wide range of air and ground
transportation vehicles. Utilizing its substantial proprietary technology in
energy-absorbing seating, inflatable restraints, and composite materials, the
Company focuses on reducing injury and increasing survivability in vehicle and
aircraft crashes.
The Company is a holding company for wholly owned subsidiaries which
operate in two business segments. The Commercial Transportation Products segment
includes operations which primarily manufacture seating systems for domestic and
foreign passenger airlines and operations producing inflatable restraints and
related safety technologies for automobiles. The Government and Defense segment
includes technology development and operations that design and manufacture crash
resistant seats and components, energy absorbing devices, and ballistic armor,
principally in connection with United States armed forces procurement. The
remaining segment, entitled Other, represents general corporate operations.
Since its founding in 1975, the Company's historic business has been as
a government and defense contractor. Additionally, commencing with acquisitions
and commercial products development since 1993 has introduced crashworthy
systems for a variety of vehicles and aircraft including its 16g commercial
airliner passenger seat ("16g Seat") and various inflatable restraint systems
for automobiles including the Inflatable Tubular Structure ("ITS(R)").
Management made a strategic decision to enter the commercial aircraft
seating market to bring its proprietary energy-absorbing technologies to a new
industry and take advantage of positive industry trends in 1993. To implement
its decision, the Company completed three acquisitions that allowed it to
develop the necessary infrastructure to support future growth. In August 1993,
the Company acquired Airline Interiors, Inc. (the "Airline Acquisition"), which
was primarily involved with the refurbishment, reupholstery, reconditioning, and
reconfiguring of existing passenger seats. The Airline Acquisition provided
certain FAA certifications, enhanced the Company's management team and customer
base, and provided substantial assembly capacity. During 1994, the Company
acquired Coach & Car Equipment Corporation ("Coach and Car") and Artcraft
Industries Corp. ("Artcraft"). The acquisitions of Coach and Car and Artcraft
are collectively referred to as the 1994 Acquisitions. The 1994 Acquisitions'
existing operations included providing a majority of all manufacturing and
refurbishment of rail and mass transit seating systems in North America. The
1994 Acquisitions provided the Company with substantial large-scale
manufacturing capacity and synergies utilized in the production of its 16g Seat
for airliners.
In 1994, the Company made a strategic decision to enter the inflatable
restraint market for automobiles utilizing its proprietary technology, the
ITS(R). Through 1996, the Company completed its development of this technology
and start-up of its manufacturing facilities. In 1997, the Company began
manufacturing the ITS(R) for sale to BMW, a major European automobile
manufacturer, which began including it in certain models of its automobiles in
1997.
In 1998 the Company adopted a plan to sell its rail and mass transit
seating operations at Coach and Car and Artcraft. The rail and mass transit
seating operation was disposed of August 31, 1999 pursuant to the Amended and
Restated Asset Purchase and Sale Agreement. The company's rail and mass transit
seating operations are reported as discontinued operations.
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SIMULA, INC.
Simula's revenue has historically been derived from three sources:
sales of Company manufactured products; contract research and development for
third parties; and technology sales and royalties. A substantial portion of its
current revenue from the government and defense segment is accounted for under
the percentage of completion method of accounting. Under this method, revenue is
recorded as production progresses so that revenue less costs incurred to date
yields the percentage of gross margin estimated for each contract. Overall gross
margin percentages can increase or decrease based upon changes in estimated
gross margin percentages over the lives of individual contracts.
RESULTS FROM CONTINUING OPERATIONS
Three and Nine Months Ended September 30, 1999 Compared to 1998
Revenue for the three months ended September 30, 1999 increased 40% to
$33.2 million from $23.7 million for the comparable period in 1998. Revenue for
the nine months ended September 30, 1999 increased 38% to $99.1 million from
$72.0 million for the comparable period in 1998. The increases in revenue are
attributable to both of the Company's business segments. Commercial
Transportation Products revenue for the three months ended September 30, 1999
increased 44% to $20.6 million from $14.3 million and for the nine month period
ended September 30, 1999 increased 39% to $64.2 million from $46.4 million for
the comparable periods in 1998. The Commercial Transportation Products revenue
increases are due to increased deliveries of ITS(R) and 16g Seats. Government
and Defense revenue for the three months ended September 30, 1999 increased 34%
to $12.6 million from $9.4 million and for the nine months period ended
September 30, 1999 increased 36% to $34.7 million from $25.6 million for the
comparable periods in 1998. The increase in Government and Defense revenue is
attributable to increased overall contracts.
Gross margin for the three months ended September 30, 1999 increased
77% to $9.7 million from $5.5 million and for the nine months ended September
30, 1999 and increased 50% to $27.1 million from $18.1 million for the
comparable period in 1998. The Commercial Transportation Products gross margin
for the three months ended September 30, 1999 increased 123% to $6.0 million
from $2.7 million and for the nine months ended September 30, 1999 increased 57%
to $16.5 million from $10.5 million for the comparable periods in 1998. Gross
margin as a percent of sales for the Commercial Transportation Products segment
increased to 29% from 19% for the three months ended September 30, 1999 and
increased to 26% from 23% for the nine months ended September 30, 1999 as
compared to the comparable 1998 periods. The substantial improvement in
Commercial Transportation Products gross margin for the three and nine months
ended September 30, 1999 is primarily related to higher costs and lower
production output during the 1998 period related to the 16g Seat as new programs
began into production offset partially by decreases in the gross margins
attained on the ITS(R) due to realization of customer sales volume discounts.
Government and Defense gross margin increased 32% to $3.7 million from $2.8
million and for the nine months ended September 30, 1999 increased 37% to $10.4
million from $7.6 million for the comparable periods in 1998. The increase in
gross margin is attributable to the increases in revenue noted above. Gross
margin as a percent of sales for the three months ended September 30, 1999
decreased to 29% from 30% for the comparable period in 1998. Gross margin as a
percent of sales for the nine months ended September 30, 1999 remained
comparable to the 1998 period of 30%.
Administrative expenses for the three months ended September 30, 1999
increased 22% to $6.3 million from $5.1 million and for the nine months ended
September 30, 1999 increased 28% to $18.3 million from $14.2 million for the
comparable periods in 1998. The overall increase in administrative expenses is
attributable to increases in the support structure to support revenue growth in
the Commercial Transportation Products segment as well as increased legal
expenses related to the Company's litigation with Autoliv (defense of its ITS(R)
patent). The Commercial Transportation Products administrative expenses for the
three months ended September 30, 1999 increased 28% to $2.9 million from $2.3
million and for the nine months ended September 30, 1999 increased 44% to $8.9
million from $6.2 million for the comparable periods in 1998. Commercial
Transportation Products administrative expenses as a percentage of sales for the
three and nine month periods ended September 30, 1999 was 14.2% and 13.8%,
respectively, as compared to 15.9% and 13.3% for the three and nine month
periods ended September 30, 1998, respectively. Government and Defense
administrative expenses for the three month period ended September 30, 1999
decreased 3% to $2.5 million from $2.4 million for the comparable 1998 period.
Government and Defense administrative expenses for the nine month period ended
September 30, 1999 increased 10% to $7.5 million from $6.8 million for the
comparable period in 1998 and is principally related to increases during the
first quarter of internally funded research and development and pre-production
parachute costs. Administrative expenses as a percentage of sales for the three
and nine month periods ended September 30, 1999 was 20% and 22%, respectively,
as compared to 26% and 27% for the three and nine month periods ended
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SIMULA, INC.
September 30, 1998, respectively. The improvement in administrative expenses as
a percentage of sales is attributable to increased revenues of the segment.
Interest expense increased 29% to $1.7 million from $1.3 million for
the three months ended September 30, 1999 and 1998, respectively, and increased
37% to $5.1 million from $3.7 million for the nine month period ended September
30, 1999 and 1998, respectively. The increase in interest expense is primarily
attributable to increased outstanding borrowing.
The effective income tax rate for the three and nine month periods
ended September 30, 1999 and 1998 approximated the Company's combined statutory
rate of 40%.
DISCONTINUED OPERATIONS
In 1998, the Company's board of directors adopted a plan to dispose of
its rail and mass transit seating operations. Accordingly, the operating results
of these rail and mass transit operations, including a provision for estimated
loss upon disposition, have been segregated from continuing operations and have
been reported as discontinued operations. The Company executed the sale of its
rail and mass transit seating operation on August 31, 1999 under an Asset
Purchase and Sale Agreement dated June 30, 1999, as amended and restated August
31, 1999 and subsequently on October 21, 1999, a Note Refinancing Agreement was
executed. A former director of the Company wholly owns the acquiring company.
The Asset Purchase and Sale Agreement and Note Refinancing Agreement
provided for a total purchase price of $10,096,000 to be satisfied by two
promissory notes and the application of $100,000 earnest deposit received prior
to closing. The first note in the amount of $1,996,000 requires quarterly
installments of interest commencing in April 2000. The second note, for
$8,118,008 includes capitalized interest from August 31, 1999 to October 21,
1999 of $118,008 and requires semi-annual payments of interest commencing April
2001. Both notes carry interest at 8 1/2% and mature in October 2004 at which
time the outstanding principal and accrued interest is due. As security for the
notes, the Company has a lien on the assets and has received a pledge of stock
held by the former director in the successor corporation and in Beacon
Industries, a corporation under common control of the acquirer. The successor
corporation is negotiating a senior credit facility with a third party lender,
and if obtained, the indebtedness to the Company may be subordinated to such
senior secured debt. Until maturity of the notes, the Company will receive
monthly financial reports and a Company executive shall serve on the successor
board of directors.
Revenues for the rail and mass transit operations were $1,192,478 and
$8,247,294 for the two and eight months ended August 30, 1999, respectively, and
$4,360,279 and $13,093,611 for the three and nine months ended September 30,
1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company defines liquidity as the ability to access cash to meet
operating and capital needs. The Company's primary source of cash in the 1999
period was from financing activities.
The Company's liquidity and ability to fund working capital and debt
service requirements during the next year will be dependent upon improved cash
flow from operating units and obtaining replacement financing of its bank line
of credit under a Senior Credit Agreement, and replacement financing of $4.3
million in its 10% Senior Subordinated Notes (the "10% Notes"). The 10% Notes
were originally due September 15, 1999 and have been extended until December 31,
1999. The Company previously anticipated cash proceeds related to the sale of
the company's discontinued operation would be sufficient to satisfy the
Company's obligation to reduce its revolving line of credit under its Senior
Credit Agreement, meet the required debt service on the 10% Notes upon maturity
and provide some working capital. The Company completed the sale of its
discontinued rail and mass transit operation, however, the terms of the
transaction were modified and the purchase price was paid by the issuance of two
promissory notes to the Company due in April 2004.
The Company is investigating a number of financing alternatives. In
November the Company retained nationally recognized financial advisors and is
implementing a program to address its short and long term liquidity requirements
and debt structure. The Company believes that the program will significantly
improve its liquidity within 90 days of this filing.
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SIMULA, INC.
The Company is also investigating potential asset and technology sales and
licensing. The Company may also seek to obtain additional capital should demand
for its products exceed current capacity. The raising of additional capital in
public or private markets will be primarily dependent upon prevailing market
conditions and demand for the Company's technologies and products.
Financing activities provided $13.2 million of cash during the nine
months ended September 30, 1999 as compared to $9.7 million during the
comparable period in 1998. Cash provided from financing activities during the
1999 period includes $7.5 million received for the issuance of redeemable
preferred stock and $7.9 million in net borrowings under the Company's line of
credit partially offset by $2.6 million of principal payments made under other
debt arrangements for scheduled principal reductions. Cash provided from
financing activities during the 1998 period includes $10.6 million in net
borrowing under the Company's line of credit partially offset by $1.5 million of
principal payments made under other debt arrangements for scheduled principal
reductions.
During the 1999 period, there have been several modifications to the
Senior Credit Agreement. Among other things, these modifications adjusted the
maximum outstanding under its revolving line of credit, imposed and later
rescinded a revolving line of credit adjustment date, provided for a monthly
penalty fee of $100,000 beginning in May and continuing until disposal of the
Company's discontinued operating segment, adjustment of the fee to $150,000 per
month beginning in August and upon disposal of the segment imposed a monthly fee
of $150,000 until all balances under the Senior Credit Agreement have been
retired. In addition, the Company has pledged a security interest in the notes
receivable and related pledge and proxy security agreement received in
conjunction with the sale of the Company's discontinued rail and mass transit
operations. At November 15, 1999, the Company's revolving line of credit
provides for borrowings up to the lesser of $23 million or the Revolving Line of
Credit Borrowing Base (as defined). At November 15, 1999, available and
outstanding borrowings under the line of credit is $23 million and $22.8
million, respectively. Issued and outstanding letters of credit under the line
of credit at November 15, 1999 is $200,000.
The Company's 10% Notes originally matured on September 15, 1999. On
September 15, 1999, the Company retired $500,000 of its 10% Notes and negotiated
a Modification and Consent Agreement which extended the remaining $4,250,000 in
10% Notes until October 31, 1999 and adjusted the interest rate to 15%. A Second
Modification and Consent Agreement for a further extension of repayment for the
remaining 10% Notes until December 31, 1999. The Second Modification and Consent
Agreement maintained the 15% interest rate, provided for an extension fee of
$40,000 to be paid upon maturity at December 31, 1999 and requires application
of proceeds received from a public or private financing or sale of assets prior
to maturity.
On October 15, 1999, the Company executed a $1 million Promissory Note
to Stanley Desjardins its Chairman of the Board of Directors. The proceeds were
applied to working capital. The term of the note is for one year and accrues
interest at a rate of 12% payable upon maturity. The note provides for
accelerated maturity in the event the Company completes a senior credit banking
agreement, or a public or private offering of debt or equity securities for
proceeds of $10 million or more. A placement fee of $20,000 is also required to
be paid upon maturity or any accelerated repayment of the note. The Chairman
required certain officers of the Company to guarantee the $1,000,000 Promissory
Note in the aggregate amount of $200,000. Messrs. Townsend, Saunders and Forst
and their respective spouses provided signed personal quarantees.
The Company's liquidity is impacted by the nature of the billing
provisions under its contracts. Generally, in the early period of contracts,
cash expenditures and accrued profits are greater than allowed billings while
contract completion results in billing previously unbilled costs and profits.
Contract and trade receivables, net of advances on contracts, increased
approximately $3.9 million for the nine months ended September 30, 1999 due
principally to increased sales volume in all segments of the business.
Operating activities required the use of $10.5 million of cash during
the nine months ended September 30, 1999, compared to the use of $13.5 million
of cash during the same period in 1998. Cash used by operating activities in the
1999 period was primarily used to increase accounts receivable (discussed above)
and inventories, decrease in accounts payable and funding of discontinued
operations current operating losses. The increase in inventories is due to
increases in 16g Seat and Government and Defense segment inventory necessary to
support anticipated future deliveries and inventories in the Government and
Defense segment primarily related to timing of material deliveries. The decrease
in accounts payable is attributable to usage of cash generated from increased
sales volume.
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SIMULA, INC.
Investing activities required the use of $20,267 of cash during the
nine months ended September 30, 1999, compared to use of $4.5 million of cash
during the same period in 1998. The decrease in cash used by investing
activities is primarily due to net proceeds of $2.9 million received under a
sale and leaseback of a subsidiary office and development facility and of the
sale of certain technology intangibles, inventory and related production
equipment. The 1999 cash proceeds received was partially offset by $2.3 million
in purchases of various production equipment as compared to equipment purchases
of $4.2 million during the comparable period in 1998. The decrease in equipment
purchases is due to a higher level of investing in additional production
capacity in the company's Commercial Transportation Products segment to meet
increased demand for the 16g Seat and the ITS(R) during the 1998 period.
INFLATION
The Company does not believe that it is significantly impacted by
inflation.
RESEARCH AND DEVELOPMENT
The Company's research and development occurs under fixed-price,
government-funded contracts and Company-sponsored efforts. Historically,
research and development efforts have fluctuated based upon available
government-funded contracts and available Company funding. The Company
anticipates that future fluctuations may also occur as a result of efforts to
expand its inflatable restraint, commercial airliner and helicopter seating, and
other technologies.
SEASONALITY
The Company does not believe that it is currently significantly
impacted by seasonal factors.
YEAR 2000 MATTERS
Background
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define an applicable year. Any computer
programs or equipment that have time-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions in
commerce, including among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
The Company employs a number of information technology ("IT") systems
in its operations, including computer networking systems, hardware and software,
financial systems, and other similar systems. The Company also employs a number
of non-IT devices such as building security and safety devices, and other
devices containing embedded electronic circuits. Both IT systems and non-IT
devices are subject to potential failure due to the Year 2000 issue.
The Company's Year 2000 Plan
In 1996, the Company initiated a plan for the conversion from existing
accounting software to new state-of-the-art, Year 2000-compliant, manufacturing
and accounting systems at each of its operating companies. That conversion is
part of an overall plan (the "Year 2000 Plan") the Company has developed to
achieve Year 2000 readiness. The Year 2000 Plan is intended to remediate the
Year 2000 issue in all categories of systems and electronic devices in use by
the Company, including IT and non-IT devices, so that the Company may continue
its operations without interruption or with minimal disruption. The Year 2000
Plan also includes communication with critical third parties such as customers,
vendors and other business partners to determine the expected degree of Year
2000 compliance of those parties and to monitor their progress toward Year 2000
readiness. The Year 2000 Plan includes the following phases: 1) assessment, 2)
remediation, 3) testing, and 4) implementation.
The Company is in the remediation phase with regard to its state of
readiness relative to non-IT devices containing embedded circuitry. The Company
is in the process of communicating with the manufacturers of non-IT
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SIMULA, INC.
devices containing embedded circuitry and to date has fully assessed (confirmed
that such devices are Year 2000 compliant or upgraded the devices as needed)
substantially all of such devices. The assessed devices are in various stages of
remediation, testing and implementation. Completion thru implementation is
expected during the forth quarter of 1999.
The Company is also in the assessment phase with regard to third
parties with which the Company has a material relationship. In connection with
this assessment, the Company has appointed a Year 2000 Program Manager at each
of its subsidiaries, and has made or is making written inquiries of its
customers and suppliers. This process is not yet complete. While the Company has
not been made aware of any problems that would materially impact the Company's
operations, there can be no assurance that one or more material third parties
will not have Year 2000 problems that materially impact the Company's business
in some fashion. Various agencies of the U.S. government and military branches
of the U.S. armed forces are significant customers of the Company. As of the
date of this report, the Company has received conflicting data as to the state
of any of such customers' Year 2000 readiness. Therefore, the Company is unsure
at this time the extent, if any, that any entity of the U.S. government with
whom the Company has a material relationship will have internal Year 2000 issues
which may materially impact the Company's business.
The Company continues to be in the implementation phase with regard to
its IT systems. IT systems are compliant in accordance with the most recent
updated provided by the manufacturers.
Selection of a remediation tool set for desktop personal computers and
servers was completed in February 1999. The tool was implemented in June 1999
and results are being used to remediate Year 2000 deficiencies highlighted by
its application.
In addition to the internal assessment and remediation efforts being
conducted by the Company pursuant to the Year 2000 Plan as described above, the
Company has engaged the services of a third party consultant to review Year 2000
matters on a subsidiary-by-subsidiary basis. The consultant commenced work in
January 1999. The consultants work is complete and the Company has incorporated
the findings into its implementation plan.
Costs
The Company has incurred significant costs in connection with its
conversion, beginning in 1996, to the state-of-the-art manufacturing and
accounting systems discussed above. An incidental benefit of this conversion is
that such systems are Year 2000-compliant.
In addition to the foregoing, the costs associated with the Company's
Year 2000 Plan, including the on-going systems conversions described above, are
expensed as incurred and to date have not been, and are not anticipated to be,
material to the Company's financial position or results of operations.
Risks of Year 2000 Failure
The failure on any party's part to correct a material Year 2000 problem
could result in an interruption in, or a failure of, certain normal business
activities or operations. Such failures could materially and adversely affect
the Company's results of operations, liquidity and financial condition. The
Company has not developed a formal written contingency plan for dealing with
potential Year 2000 issues in general. The risks associated with each particular
system not being Year 2000 compliant are analyzed in connection with the
Company's assessment of Year 2000 issues as described above, and contingency
plans will be effected by the Company on a case-by-case basis as the need
arises.
Due to the general uncertainty inherent in the Year 2000 issue,
resulting in large part from the uncertainty of the Year 2000 readiness of
material third party suppliers and customers, the Company is unsure at this time
the extent, if any, that it might be materially adversely impacted by Year 2000
issues.
Readers are cautioned that forward-looking statements contained in this
Year 2000 discussion should be read in conjunction with the Company's
disclosures under the heading "Forward Looking Information and Risks of the
Business" below.
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SIMULA, INC.
FORWARD LOOKING INFORMATION AND RISKS OF THE BUSINESS
Projected operating results and capital needs will be affected by a
wide variety of factors which could adversely impact revenues, profitability and
cash flows. The Company's liquidity and available working capital will be
dependent upon improved cash flow from operating units and obtaining replacement
financing for the Company's Senior Credit Agreement and 10% Notes due December
31, 1999. Factors and risks that may affect results include those described in
the Company's registration statements and periodic reports filed with the U.S.
Securities and Exchange Commission. In addition, other factors include, but are
not limited to contract mix and shifting production and delivery schedules;
amount of resources committed to independent research and development from time
to time; success in building strategic alliances with large prime contractors
and first tier suppliers to OEMs; the level of orders which are received and can
be shipped and invoiced in a quarter; customer order patterns and seasonality;
the cyclical nature of the industries and markets addressed by the Company's
products; the level and makeup of military expenditures; technological changes;
increased costs attributable to changes in government regulations and
certifications for transport vehicles; competition and competitive pressures on
pricing; and economic conditions in the United States and worldwide markets
served by the Company.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In February 1998, the Company filed a complaint in United States
District Court for the District of Arizona against Autoliv, Inc. seeking
injunctive relief from alleged anti-competitive acts and practices by Autoliv.
The complaint alleged numerous unlawful actions taken by Autoliv in connection
with a license from the Company to market and distribute the Company's ITS(R).
In 1998, the District Court stayed the proceedings and ruled that the dispute
between the parties was a contractual one and was subject to arbitration
pursuant to a contract provision. The Company disagreed and appealed the order
to the United States Court of Appeals for the Ninth Circuit. In April 1999, this
Court ruled that the proper jurisdiction for this dispute is arbitration. No
court has ruled on the merits of the Company's claims. In May 1999, the Company
commenced a proceeding for international arbitration. This arbitration is
proceeding in the ordinary course.
On November 3, 1998, the Company filed a separate complaint against
Autoliv in the United States District Court for the District of Delaware seeking
injunctive relief and damages for patent infringement. The Company's complaint
alleges that Autoliv developed, offered, and sold a side impact head protection
device in the United States that infringes the patent that Simula owns for the
ITS(R). This litigation is pending.
In addition, the Company is involved in other litigation in the
ordinary course of business from time to time. The Company presently is not a
party to any threatened or pending litigation, the negative outcome of which
would be material to the Company.
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SIMULA, INC.
ITEM 6. EXHIBITS AND REPORTS.
(a) The following Exhibits are included pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
No. Description Reference
--- ----------- ---------
<S> <C> <C>
2.1 Amended and Restated Asset Purchase Agreement for the sale of Coach and Car Equipment (14)
Corporation, a wholly-owned subsidiary of the Company, dated August 31, 1999 and Note
Refinancing Agreement dated October 21, 1999
3.1 Articles of Incorporation of Simula, Inc., as amended and restated (4)
3.2 Bylaws of Simula, Inc., as amended and restated (1)
4.2 Indenture dated December 17, 1993, as amended (2)
4.5 Supplemental Indenture No. 2 dated September 12, 1996, entered into in connection with the
Company's issuance of Series C 10% Senior Subordinated Convertible Notes (6)
4.6 Supplemental Indenture No.3, effective March 14, 1997, amending the Indenture of Simula,
Inc. dated December 17, 1993 (7)
4.7 Indenture dated April 1, 1997, in connection with the Company's issuance of the 8% Senior
Subordinated Convertible Notes due May 1, 2004 (7)
4.8 Certificate of Designation, Preferences, Rights and Privileges of the Company's $7,500,000
Series A Preferred Stock (12)
*4.9 Amendment No. 2 to Supplemental Indenture No. 2 and Modification and Consent Agreement
each dated September 15, 1999 extending the maturity date of the Series C 10% Senior
Subordinated Convertible Notes
*4.10 Amendment No. 3 to Supplemental Indenture No. 2 and Second Modification and Consent
Agreement each dated October 31, 1999 extending the maturity date of the Series C 10%
Senior Subordinated Convertible Notes
10.11 1992 Stock Option Plan, as amended effective September 15, 1998 (10)
10.12 1992 Restricted Stock Plan (1)
10.21 1994 Stock Option Plan, as amended effective September 15, 1998 (10)
10.24 Senior Credit Agreement with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
November 6, 1998 (10)
10.25 Modification Agreement with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
February 12, 1999 (11)
10.26 Simula, Inc. Employee Stock Purchase Plan (4)
10.29 Form of Change of Control Agreements, as amended and restated, between the Company and
Donald W. Townsend, Bradley P. Forst, and James A. Saunders (9)
10.30 Form of Employment Agreements between the Company and Donald W. Townsend, Bradley P.
Forst, and James A. Saunders (8)
10.31 Modification Agreement No. 2 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
April 28, 1999 (12)
10.32 Form of Employment Agreement between the Company and James C. Dodd (12)
10.33 Form of Change of Control Agreement between the Company and James C. Dodd (12)
10.34 Modification Agreement No. 3 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
June 28, 1999 (13)
10.35 Modification Agreement No. 4 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
July 28, 1999 (13)
*10.36 Modification Agreement No. 5 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
September 29, 1999
*10.37 Modification Agreement No. 6 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
October 19, 1999
*10.38 Modification Agreement No. 7 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
November 1, 1999
*10.39 Promissory Note between the Company and Stanley P. Desjardins dated October 15, 1999 and
Guarantees by Don and Nelda Townsend, James and Linda Saunders and Bradley and Teresa Forst
dated November 2, 1999
18. Preference Letter re: change in accounting principles (5)
21. Subsidiaries of the Company (8)
24. Powers of Attorney - Directors (8)(11)
*27. Financial Data Schedule
</TABLE>
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SIMULA, INC.
* Filed herewith.
(1) Filed with Registration Statement on Form S-18, No. 33-46152-LA, under
the Securities Act of 1933, effective April 13, 1992.
(2) Filed with Registration Statement on Form SB-2, No. 33-61028 under the
Securities Act of 1933, effective December 10, 1993.
(3) Filed with Registration Statement on Form SB-2, No. 33-87582, under the
Securities Act of 1933, effective December 28, 1994.
(4) Filed with Definitive Proxy on May 14, 1996, for the Company's Annual
Meeting of Shareholders held on June 20, 1996.
(5) Filed with report on Form 10-Q/A for the quarter ended June 30, 1996.
(6) Filed with report on Form 10-K for the year ended December 31, 1996.
(7) Filed with registration Statement on Form S-3, No. 333-13499, under the
Securities Act of 1993, effective April 24, 1997.
(8) Filed with report on Form 10-K for the year ended December 31, 1997.
(9) Filed with report on Form 10-Q for the quarter ended March 31, 1998.
(10) Filed with report on Form 10-Q for the quarter ended September 30,
1998.
(11) Filed with report on Form 10-K for the year ended December 31, 1998.
(12) Filed with report on Form 10-Q for the quarter ended March 31, 1999.
(13) Filed with report on Form 10-Q for the quarter ended June 30, 1999.
(14) Filed with report on Form 8-K, under the Securities Act of 1993,
effective October 25, 1999.
20
<PAGE> 22
SIMULA, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q for the quarter ended
September 30, 1999 to be signed on its behalf by the undersigned thereunto duly
authorized.
SIMULA, INC.
DATE: November 15, 1999 /s/ Donald W. Townsend
-----------------------------------
DONALD W. TOWNSEND
President
Chief Executive Officer
/s/ James C. Dodd
-----------------------------------
JAMES C. DODD
Executive Vice President
Chief Financial Officer
21
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Description Reference
--- ----------- ---------
<S> <C> <C>
2.1 Amended and Restated Asset Purchase Agreement for the sale of Coach and Car Equipment (14)
Corporation, a wholly-owned subsidiary of the Company, dated August 31, 1999 and Note
Refinancing Agreement dated October 21, 1999
3.1 Articles of Incorporation of Simula, Inc., as amended and restated (4)
3.2 Bylaws of Simula, Inc., as amended and restated (1)
4.2 Indenture dated December 17, 1993, as amended (2)
4.5 Supplemental Indenture No. 2 dated September 12, 1996, entered into in connection with the
Company's issuance of Series C 10% Senior Subordinated Convertible Notes (6)
4.6 Supplemental Indenture No.3, effective March 14, 1997, amending the Indenture of Simula,
Inc. dated December 17, 1993 (7)
4.7 Indenture dated April 1, 1997, in connection with the Company's issuance of the 8% Senior
Subordinated Convertible Notes due May 1, 2004 (7)
4.8 Certificate of Designation, Preferences, Rights and Privileges of the Company's $7,500,000
Series A Preferred Stock (12)
*4.9 Amendment No. 2 to Supplemental Indenture No. 2 and Modification and Consent Agreement
each dated September 15, 1999 extending the maturity date of the Series C 10% Senior
Subordinated Convertible Notes
*4.10 Amendment No. 3 to Supplemental Indenture No. 2 and Second Modification and Consent
Agreement each dated October 31, 1999 extending the maturity date of the Series C 10%
Senior Subordinated Convertible Notes
10.11 1992 Stock Option Plan, as amended effective September 15, 1998 (10)
10.12 1992 Restricted Stock Plan (1)
10.21 1994 Stock Option Plan, as amended effective September 15, 1998 (10)
10.24 Senior Credit Agreement with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
November 6, 1998 (10)
10.25 Modification Agreement with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
February 12, 1999 (11)
10.26 Simula, Inc. Employee Stock Purchase Plan (4)
10.29 Form of Change of Control Agreements, as amended and restated, between the Company and
Donald W. Townsend, Bradley P. Forst, and James A. Saunders (9)
10.30 Form of Employment Agreements between the Company and Donald W. Townsend, Bradley P.
Forst, and James A. Saunders (8)
10.31 Modification Agreement No. 2 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
April 28, 1999 (12)
10.32 Form of Employment Agreement between the Company and James C. Dodd (12)
10.33 Form of Change of Control Agreement between the Company and James C. Dodd (12)
10.34 Modification Agreement No. 3 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
June 28, 1999 (13)
10.35 Modification Agreement No. 4 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
July 28, 1999 (13)
*10.36 Modification Agreement No. 5 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
September 29, 1999
*10.37 Modification Agreement No. 6 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
October 19, 1999
*10.38 Modification Agreement No. 7 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated
November 1, 1999
*10.39 Promissory Note between the Company and Stanley P. Desjardins dated October 15, 1999 and
Guarantees by Don and Nelda Townsend, James and Linda Saunders and Bradley and Teresa Forst
dated November 2, 1999
18. Preference Letter re: change in accounting principles (5)
21. Subsidiaries of the Company (8)
24. Powers of Attorney - Directors (8)(11)
*27. Financial Data Schedule
</TABLE>
<PAGE> 24
* Filed herewith.
(1) Filed with Registration Statement on Form S-18, No. 33-46152-LA, under
the Securities Act of 1933, effective April 13, 1992.
(2) Filed with Registration Statement on Form SB-2, No. 33-61028 under the
Securities Act of 1933, effective December 10, 1993.
(3) Filed with Registration Statement on Form SB-2, No. 33-87582, under the
Securities Act of 1933, effective December 28, 1994.
(4) Filed with Definitive Proxy on May 14, 1996, for the Company's Annual
Meeting of Shareholders held on June 20, 1996.
(5) Filed with report on Form 10-Q/A for the quarter ended June 30, 1996.
(6) Filed with report on Form 10-K for the year ended December 31, 1996.
(7) Filed with registration Statement on Form S-3, No. 333-13499, under the
Securities Act of 1993, effective April 24, 1997.
(8) Filed with report on Form 10-K for the year ended December 31, 1997.
(9) Filed with report on Form 10-Q for the quarter ended March 31, 1998.
(10) Filed with report on Form 10-Q for the quarter ended September 30,
1998.
(11) Filed with report on Form 10-K for the year ended December 31, 1998.
(12) Filed with report on Form 10-Q for the quarter ended March 31, 1999.
(13) Filed with report on Form 10-Q for the quarter ended June 30, 1999.
(14) Filed with report on Form 8-K, under the Securities Act of 1993,
effective October 25, 1999.
<PAGE> 1
Exhibit 4.9a
AMENDMENT
NO. 2
(SEPTEMBER 15, 1999)
TO SUPPLEMENT NO. 2
TO
INDENTURE
DATED AS OF DECEMBER 17, 1993
BY AND AMONG
SIMULA, INC.
AS ISSUER
THE SUBSIDIARY GUARANTORS
AS GUARANTORS
AND
BANK ONE TRUST COMPANY, NA
AS TRUSTEE
SERIES C 10% SENIOR SUBORDINATED CONVERTIBLE NOTES
<PAGE> 2
AMENDMENT NO. 2
TO SUPPLEMENT NO. 2
This amendment ("Amendment") is dated as of September 15, 1999, among
Simula, Inc., an Arizona corporation (hereinafter the "Company"), having its
principal office at 2700 North Central Avenue, Suite 1000, Phoenix, Arizona
85004; and Simula Safety Systems, Inc., Intaero, Inc., Airline Interiors, Inc.,
Artcraft Industries Corp., Simula Automotive Safety Devices, Inc., Simula
Technologies, Inc., International Center for Safety Education, Inc., all Arizona
corporations, and Simula Composites Corporation, a Delaware corporation
(hereinafter the "Subsidiary Guarantors"), having the same principal office as
the Company; and Bank One Trust Company, NA, having its principal office at
Corporate Trust Client Service Group, 100 East Broad Street, Columbus, Ohio
43271-0181, as trustee (hereinafter the "Trustee").
R E C I T A L S
Pursuant to Article 9 and Article 14 of the Company's indenture, dated
as of December 17, 1993 ("Indenture"), and Amended and Restated Supplement No.
2, dated as of September 12, 1996 ("Supplement No. 2"), the Company issued its
Series C 10% Senior Subordinated Convertible Notes due 1999 ("Notes").
The Notes mature on September 15, 1999.
The Company desires to give current holders of the Notes
("Noteholders") the option to extend the maturity date of their Notes until
October 31, 1999, in exchange for a payment of interest from the period
extending from September 15, 1999 until October 31, 1999 at a rate of 15% per
annum.
All things necessary to make this Amendment a valid agreement of the
Company and the Subsidiary Guarantors, in accordance with their and its terms,
have been done.
NOW THEREFORE, for and in consideration of the foregoing, it is
mutually covenanted and agreed, for the benefit of the holders of the Notes, as
follows:
1
MODIFICATIONS TO SUPPLEMENT NO. 2
1.1 Capitalized Terms. All capitalized terms not otherwise defined
herein shall have the meaning given in Supplement No. 2.
1.2 Extension of Maturity. On or before September 15, 1999, a Holder
may elect to extend the Series C Notes Stated Maturity until October 31, 1999.
Accrued interest due and payable as of September 15, 1999 shall be paid to
Holder. Any Notes extended shall bear interest at the rate of 15% per annum
during the period extending from September 15, 1999 until October 31, 1999.
1.3 No Further Modifications. With the exception of the foregoing, no
other modifications have been made to the terms of the Series C Notes as
described in Supplement No. 2, and all other provisions of Supplement No. 2
remain unchanged as stated therein.
2
<PAGE> 3
2
STEPS TO EFFECT CHANGE
Authority Under Indenture. Pursuant to Article 9.2 of the Indenture,
the foregoing changes require the consent of Holders of not less than a majority
in principal amount of the Outstanding Notes by Act of said Holders and the
authorization by a Board Resolution. Both requirements have been met.
IN WITNESS WHEREOF, SIMULA, INC., SIMULA SAFETY SYSTEMS, INC. INTAERO,
INC., AIRLINE INTERIORS, INC., ARTCRAFT INDUSTRIES CORP., SIMULA AUTOMOTIVE
SAFETY DEVICES, INC., SIMULA TECHNOLOGIES, INC., INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC. and SIMULA COMPOSITES CORPORATION have each caused this
Supplement to be signed in their respective corporate names by their respective
authorized officers and Bank One Trust Company, NA, Trustee, has caused this
Supplemental Indenture to be executed in its corporate name by one of its
authorized officers, all as of the date and year first above written.
SIMULA, INC., an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Executive Vice
President and Secretary
BANK ONE TRUST COMPANY, NA
as Trustee
By /s/ David B. Knox
------------------------------------
Trust Officer
3
<PAGE> 4
SUBSIDIARY GUARANTORS:
SIMULA SAFETY SYSTEMS, INC.,
an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
INTAERO, INC., an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
AIRLINE INTERIORS, INC.,
an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
ARTCRAFT INDUSTRIES CORP.,
an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
SIMULA AUTOMOTIVE SAFETY DEVICES, INC.
an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
4
<PAGE> 5
SIMULA TECHNOLOGIES, INC.,
an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
SIMULA COMPOSITES CORPORATION,
a Delaware corporation
By /s/ Bradley P. Forst
------------------------------------
Bradley P. Forst, Assistant Secretary
5
<PAGE> 6
STATE OF Arizona )
) ss.
County of Maricopa )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst, to me
personally known and known to me to be the same person who executed the within
and foregoing instrument, who, being by me duly sworn, did depose, acknowledge
and say that he is the Executive Vice President and Secretary of SIMULA, INC.,
one of the corporations described in and which executed the foregoing
instrument; that said instrument was executed on behalf of said corporation by
authority of its Board of Directors; and he acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it
voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
STATE OF Ohio )
) ss.
County of Franklin )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared David B. Knox to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say: That he/she is a Trust Officer of BANK ONE TRUST COMPANY, NA, one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he/she acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Marie E. Jackson
--------------------------
Notary Public
(Seal)
6
<PAGE> 7
STATE OF Arizona )
) ss.
County of Maricopa )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA SAFETY SYSTEMS, INC., one of
the corporations described in and which executed the foregoing instrument; that
said instrument was executed on behalf of said corporation by authority of its
Board of Directors; and he acknowledged the execution of said instrument to be
the voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of INTAERO, INC., one of the corporations
described in and which executed the foregoing instrument; that said instrument
was executed on behalf of said corporation by authority of its Board of
Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
7
<PAGE> 8
STATE OF Arizona )
) ss.
County of Maricopa )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of AIRLINE INTERIORS, INC., one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA TECHNOLOGIES, INC., one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
8
<PAGE> 9
STATE OF Arizona )
) ss.
County of Maricopa )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of ARTCRAFT INDUSTRIES CORP., one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa )
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA AUTOMOTIVE SAFETY DEVICES,
INC., one of the corporations described in and which executed the foregoing
instrument; that said instrument was executed on behalf of said corporation by
authority of its Board of Directors; and he acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it
voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
9
<PAGE> 10
STATE OF Arizona )
) ss.
County of Maricopa)
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., one of the corporations described in and which executed the
foregoing instrument; that said instrument was executed on behalf of said
corporation by authority of its Board of Directors; and he acknowledged the
execution of said instrument to be the voluntary act and deed of said
corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa)
On this 15th day of September, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA COMPOSITES CORPORATION, one of
the corporations described in and which executed the foregoing instrument; that
said instrument was executed on behalf of said corporation by authority of its
Board of Directors; and he acknowledged the execution of said instrument to be
the voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
15th day of September, 1999.
/s/ Elaine Micucci
--------------------------
Notary Public
(Seal)
10
<PAGE> 1
Exhibit 4.9b
MODIFICATION AND CONSENT AGREEMENT
BY THIS MODIFICATION AND CONSENT AGREEMENT (the "Agreement"), made and
entered into effective September 15, 1999, SIMULA, INC., an Arizona corporation
(the "Company") and SIEGLER & CO. (NORTHSTAR HIGH TOTAL RETURN FUND --
CUSTODIAN) ("Noteholder"), in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, hereby confirm and agree as follows:
RECITALS
A. Noteholder holds Simula, Inc. Series C 10% Senior Subordinated
Convertible Notes Nos. 16 through 32 in an aggregate principal amount of Four
Million Two Hundred Fifty Thousand Dollars ($4,250,000) (the "Notes") issued
pursuant to an indenture dated December 17, 1993, as amended and supplemented,
by and among Simula, Inc. as Issuer, Subsidiary Guarantors as Guarantors, and
BankOne Trust Company NA as Trustee (the "Indenture").
B. The Notes mature on September 15, 1999.
C. The accrued interest due and payable on September 15, 1999 has been
paid to Noteholder.
D. Noteholder and the Company wish to modify the Notes as set forth
herein.
AGREEMENT
SECTION 1. ACCURACY OF RECITALS.
The Company and Noteholder acknowledge the accuracy of the Recitals.
SECTION 2. DEFINED TERMS.
All capitalized terms not otherwise defined herein shall have the
meaning assigned to them in the Indenture.
SECTION 3. MODIFICATION OF THE NOTES.
The Notes are modified as follows:
(a) Maturity Date. The Maturity Date is extended to October 31, 1999.
(b) Interest Rate. Interest is payable at a rate of fifteen percent
(15%) per annum from September 15, 1999 until the Maturity Date.
(c) Required Modifications. The Notes and the corresponding provisions
of the Indenture are hereby amended consistent with the above modifications.
SECTION 4. CONSENT TO AMENDMENT OF INDENTURE.
To effect the modification of the Notes, Noteholder, who represents a
majority in principal amount of all notes issued by Simula, Inc. pursuant to the
Indenture, hereby consents to the modifications and amendment set out in Section
3 above in the form of Amendment No. 2 to Supplement No. 2 of the Indenture.
<PAGE> 2
SECTION 5. NO OTHER CHANGES; INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE,
TERMINATION, OR WAIVER.
The Notes as modified herein contain the complete understanding and
agreement of the Company and Noteholder and supersede all prior representations,
warranties, agreements, arrangements, understandings, and negotiations. Except
as expressly modified herein, no other changes are made to the Notes or the
Indenture. No provision of the Notes as modified herein may be changed,
discharged, supplemented, terminated, or waived except in a writing signed by
the parties thereto.
SECTION 5. CHOICE OF LAW; JURISDICTION.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of laws
principles. Any dispute arising under this Agreement shall be brought in a court
of competent jurisdiction located within the State of Arizona.
DATED as of the date first above stated.
SIMULA, INC., an Arizona corporation
By /s/ James C. Dodd
---------------------------------------
Its Chief Financial Officer
---------------------------------------
SIEGLER & CO. (NORTHSTAR HIGH TOTAL RETURN
FUND -- CUSTODIAN)
By /s/ Robert T. Claiborne
---------------------------------------
Its Vice President
---------------------------------------
<PAGE> 1
Exhibit 4.10a
AMENDMENT
NO. 3
(OCTOBER 31, 1999)
TO SUPPLEMENT NO. 2
TO
INDENTURE
DATED AS OF DECEMBER 17, 1993
BY AND AMONG
SIMULA, INC.
AS ISSUER
THE SUBSIDIARY GUARANTORS
AS GUARANTORS
AND
BANK ONE TRUST COMPANY, NA
AS TRUSTEE
SERIES C 10% SENIOR SUBORDINATED CONVERTIBLE NOTES
<PAGE> 2
AMENDMENT NO. 3
TO SUPPLEMENT NO. 2
This amendment ("Amendment") is dated as of October 31, 1999, among
Simula, Inc., an Arizona corporation (hereinafter the "Company"), having its
principal office at 2700 North Central Avenue, Suite 1000, Phoenix, Arizona
85004; and Simula Safety Systems, Inc., Intaero, Inc., Airline Interiors, Inc.,
Artcraft Industries Corp., Simula Automotive Safety Devices, Inc., Simula
Technologies, Inc., International Center for Safety Education, Inc., all Arizona
corporations, and Simula Composites Corporation, a Delaware corporation
(hereinafter the "Subsidiary Guarantors"), having the same principal office as
the Company; and Bank One Trust Company, NA, having its principal office at
Corporate Trust Client Service Group, 100 East Broad Street, Columbus, Ohio
43271-0181, as trustee (hereinafter the "Trustee").
R E C I T A L S
Pursuant to Article 9 and Article 14 of the Company's indenture, dated
as of December 17, 1993 ("Indenture"), and Amended and Restated Supplement No.
2, dated as of September 12, 1996 ("Supplement No. 2"), the Company issued its
Series C 10% Senior Subordinated Convertible Notes due 1999 ("Notes").
The Notes were scheduled to mature on September 15, 1999. Holders of
the Notes ("Noteholders") were given the option to extend the maturity date of
their Notes until October 31, 1999 in exchange for a payment of interest from
the period extending from September 15, 1999 until October 31, 1999 at a rate of
15% per annum.
The Company desires to those current holders of the Notes
("Noteholders") the option to extend the maturity date of their Notes until
December 31, 1999, in exchange for a payment of interest from the period
extending from October 31, 1999 until December 31, 1999 at a rate of 15% per
annum, and an extension payment in the amount of Forty Thousand Dollars
($40,000).
All things necessary to make this Amendment a valid agreement of the
Company and the Subsidiary Guarantors, in accordance with their and its terms,
have been done.
NOW THEREFORE, for and in consideration of the foregoing, it is
mutually covenanted and agreed, for the benefit of the holders of the Notes, as
follows:
1
MODIFICATIONS TO SUPPLEMENT NO. 2
1.1 Capitalized Terms. All capitalized terms not otherwise defined
herein shall have the meaning given in Supplement No. 2.
1.2 Extension of Maturity. On or before October 31, 1999, a Holder may
elect to extend the Series C Notes Stated Maturity until December 31, 1999.
Accrued interest due and payable as of October 31, 1999 shall be paid to Holder.
Any Notes extended shall bear interest at the rate of 15% per annum during the
period extending from October 31, 1999 until December 31, 1999 and shall further
entitle the
2
<PAGE> 3
Holder thereof to an extension payment of Forty Thousand Dollars ($40,000) upon
the Series C Notes Stated Maturity. In the event the Company completes a public
or private financing or a sale of assets prior to the Series C Notes Stated
Maturity, the Company shall apply the proceeds from such financing or sale to
pay down the Company's indebtedness under the Notes.
1.3 No Further Modifications. With the exception of the foregoing, no
other modifications have been made to the terms of the Series C Notes as
described in Supplement No. 2, and all other provisions of Supplement No. 2
remain unchanged as stated therein.
2
STEPS TO EFFECT CHANGE
Authority Under Indenture. Pursuant to Article 9.2 of the Indenture,
the foregoing changes require the consent of Holders of not less than a majority
in principal amount of the Outstanding Notes by Act of said Holders and the
authorization by a Board Resolution. Both requirements have been met.
IN WITNESS WHEREOF, SIMULA, INC., SIMULA SAFETY SYSTEMS, INC., INTAERO,
INC., AIRLINE INTERIORS, INC., ARTCRAFT INDUSTRIES CORP., SIMULA AUTOMOTIVE
SAFETY DEVICES, INC., SIMULA TECHNOLOGIES, INC., INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC. and SIMULA COMPOSITES CORPORATION have each caused this
Supplement to be signed in their respective corporate names by their respective
authorized officers and Bank One Trust Company, NA, Trustee, has caused this
Supplemental Indenture to be executed in its corporate name by one of its
authorized officers, all as of the date and year first above written.
SIMULA, INC., an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Executive Vice President and
Secretary
BANK ONE TRUST COMPANY, NA
as Trustee
By /s/ David B. Knox
-------------------------------------------------
Trust Officer
3
<PAGE> 4
SUBSIDIARY GUARANTORS:
SIMULA SAFETY SYSTEMS, INC.,
an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
INTAERO, INC., an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
AIRLINE INTERIORS, INC., an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
ARTCRAFT INDUSTRIES CORP.,
an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
SIMULA AUTOMOTIVE SAFETY DEVICES, INC.
an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
4
<PAGE> 5
SIMULA TECHNOLOGIES, INC., an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
SIMULA COMPOSITES CORPORATION, a Delaware corporation
By /s/ Bradley P. Forst
-------------------------------------------------
Bradley P. Forst, Assistant Secretary
5
<PAGE> 6
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst, to me
personally known and known to me to be the same person who executed the within
and foregoing instrument, who, being by me duly sworn, did depose, acknowledge
and say that he is the Executive Vice President and Secretary of SIMULA, INC.,
one of the corporations described in and which executed the foregoing
instrument; that said instrument was executed on behalf of said corporation by
authority of its Board of Directors; and he acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it
voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
STATE OF Ohio )
) ss.
County of Franklin )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared David B. Knox to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say: That he/she is a Trust Officer of BANK ONE TRUST COMPANY, NA, one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he/she acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Marie E. Jackson
----------------------------------
Notary Public
(Seal)
6
<PAGE> 7
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA SAFETY SYSTEMS, INC., one of
the corporations described in and which executed the foregoing instrument; that
said instrument was executed on behalf of said corporation by authority of its
Board of Directors; and he acknowledged the execution of said instrument to be
the voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of INTAERO, INC., one of the corporations
described in and which executed the foregoing instrument; that said instrument
was executed on behalf of said corporation by authority of its Board of
Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
7
<PAGE> 8
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of AIRLINE INTERIORS, INC., one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA TECHNOLOGIES, INC., one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
8
<PAGE> 9
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of ARTCRAFT INDUSTRIES CORP., one of the
corporations described in and which executed the foregoing instrument; that said
instrument was executed on behalf of said corporation by authority of its Board
of Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA AUTOMOTIVE SAFETY DEVICES,
INC., one of the corporations described in and which executed the foregoing
instrument; that said instrument was executed on behalf of said corporation by
authority of its Board of Directors; and he acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it
voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
9
<PAGE> 10
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., one of the corporations described in and which executed the
foregoing instrument; that said instrument was executed on behalf of said
corporation by authority of its Board of Directors; and he acknowledged the
execution of said instrument to be the voluntary act and deed of said
corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
STATE OF Arizona )
) ss.
County of Maricopa )
On this 1st day of November, 1999, before me, a Notary Public in and
for said county and state, personally appeared Bradley P. Forst to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the Assistant Secretary of SIMULA COMPOSITES CORPORATION, one of
the corporations described in and which executed the foregoing instrument; that
said instrument was executed on behalf of said corporation by authority of its
Board of Directors; and he acknowledged the execution of said instrument to be
the voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
1st day of November, 1999.
/s/ Elaine Micucci
----------------------------------
Notary Public
(Seal)
10
<PAGE> 1
Exhibit 4.10b
SECOND MODIFICATION AND CONSENT AGREEMENT
BY THIS SECOND MODIFICATION AND CONSENT AGREEMENT (the "Agreement"),
made and entered into effective October 31, 1999, SIMULA, INC., an Arizona
corporation (the "Company") and SIEGLER & CO. (NORTHSTAR HIGH TOTAL RETURN FUND
- -- CUSTODIAN) ("Noteholder"), in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, hereby confirm and agree as follows:
RECITALS
A. Noteholder holds Simula, Inc. Series C 10% Senior Subordinated
Convertible Notes Nos. 16 through 32 in an aggregate principal amount of Four
Million Two Hundred Fifty Thousand Dollars ($4,250,000) (the "Notes") issued
pursuant to an indenture dated December 17, 1993, as amended and supplemented,
by and among Simula, Inc. as Issuer, Subsidiary Guarantors as Guarantors, and
BankOne Trust Company NA as Trustee (the "Indenture").
B. The Notes were initially scheduled to mature on September 15, 1999.
C. Noteholder and the Company negotiated a Modification and Consent
Agreement effective September 15, 1999 whereby the accrued interest due and
payable on September 15, 1999 was paid to Noteholder and the maturity date of
the Notes was extended until October 31, 1999.
D. The accrued interest due and payable on October 31, 1999 has been
paid to Noteholder.
E. Noteholder and the Company wish to modify the Notes as set forth
herein.
AGREEMENT
SECTION 1. ACCURACY OF RECITALS.
The Company and Noteholder acknowledge the accuracy of the Recitals.
SECTION 2. DEFINED TERMS.
All capitalized terms not otherwise defined herein shall have the
meaning assigned to them in the Indenture.
SECTION 3. MODIFICATION OF THE NOTES.
The Notes are modified as follows:
(a) Maturity Date. The Maturity Date is extended to December 31, 1999.
(b) Interest Rate. Interest is payable at a rate of fifteen percent
(15%) per annum on the principal amount outstanding under the Notes from October
31, 1999 until the Maturity Date, payable on the Maturity Date.
(c) Extension Payment. In addition to accrued interest, the Company
shall pay Noteholder an extension payment of Forty Thousand Dollars ($40,000) on
the Maturity Date.
(d) Dedication of Proceeds. In the event the Company completes a public
or private financing or a sale of assets prior to the Maturity Date, the Company
shall apply the proceeds from such financing or sale to pay down the Company's
indebtedness under the Notes.
<PAGE> 2
(e) Required Modifications. The Notes and the corresponding provisions
of the Indenture are hereby amended consistent with the above modifications.
SECTION 4. CONSENT TO AMENDMENT OF INDENTURE.
To effect the modification of the Notes, Noteholder, who represents a
majority in principal amount of all notes issued by Simula, Inc. pursuant to the
Indenture, hereby consents to the modifications and amendment set out in Section
3 above in the form of Amendment No. 2 to Supplement No. 2 of the Indenture.
SECTION 5. NO OTHER CHANGES; INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE,
TERMINATION, OR WAIVER.
The Notes as modified herein contain the complete understanding and
agreement of the Company and Noteholder and supersede all prior representations,
warranties, agreements, arrangements, understandings, and negotiations. Except
as expressly modified herein, no other changes are made to the Notes or the
Indenture. No provision of the Notes as modified herein may be changed,
discharged, supplemented, terminated, or waived except in a writing signed by
the parties thereto.
SECTION 5. CHOICE OF LAW; JURISDICTION.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of laws
principles. Any dispute arising under this Agreement shall be brought in a court
of competent jurisdiction located within the State of Arizona.
DATED as of the date first above stated.
SIMULA, INC., an Arizona corporation
By /s/ James C. Dodd
-----------------------------------
Its Chief Financial Officer
SIEGLER & CO. (NORTHSTAR HIGH TOTAL RETURN
FUND -- CUSTODIAN)
By /s/ Robert T. Claiborne
-----------------------------------
Its Vice President
-----------------------------------
<PAGE> 1
Exhibit 10.36
FIFTH MODIFICATION AGREEMENT
BY THIS FIFTH MODIFICATION AGREEMENT (the "Agreement"), made and
entered into as of the 29th day of September, 1999, BANK ONE, ARIZONA, NA, a
national banking association, as administrative agent for the Banks (as
hereinafter defined) (the "Administrative Agent"), and SIMULA, INC., an Arizona
corporation (the "Company"), all present and future Subsidiaries of the Company
(with the Company, the "Borrower"), in consideration of the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby confirm and agree as
follows:
RECITALS:
A. Borrower, the Administrative Agent, the Issuing Bank and the "Banks"
named therein entered into that Senior Credit Agreement dated November 6, 1998
to provide financial accommodations to the Borrower as provided therein (as
modified from time to time, including without limitation by that Modification
Agreement dated as of February 12, 1999, that Second Modification Agreement
dated as of April 28, 1999, that Third Modification Agreement dated as of June
23, 1999 and that Fourth Modification Agreement dated July 29, 1999, the "Senior
Credit Agreement").
B. Borrower and the Administrative Agent, with the consent of the Banks
and the Issuing Bank, desire to modify the Senior Credit Agreement as set forth
herein.
C. All undefined capitalized terms used herein shall have the meaning
given them in the Senior Credit Agreement.
AGREEMENT:
SECTION 1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATIONS OF LOAN DOCUMENTS; OTHER AGREEMENTS.
2.1 The following definition in Section 1.1 of the Senior Credit
Agreement is hereby amended to read as follows:
"RLC Adjustment Date" means the earliest of (i) October 31,
1999, (ii) the Discontinued Operations Sale Date, or (iii) the date on
which the aggregate outstanding principal balance of the RLC is reduced
to a balance below
<PAGE> 2
$20,000,000.00 by Borrower from funds obtained by it from a junior
capital source after the date of the Second Modification Agreement
between the Borrower and the Administrative Agent.
2.2 Section 7.19 of the Senior Credit Agreement is hereby amended to
read as follows:
7.19 Discontinued Operations.
(a) Upon its sale of the Discontinued Operations, the
Company shall apply the net proceeds from such sale to the
repayment of the Loans, first to the extent applicable the
RLC, second to the extent applicable the Term B Loan and third
to the extent applicable the Term A Loan.
(b) The Discontinued Operations shall be sold by the
Company no later than October 31, 1999. The terms of the sale
shall be approved by the Banks in writing. Any note and/or
other instrument delivered to the Company by the purchaser
evidencing any purchase carryback obligations to the Company
in connection with such sale shall be in a form that is
assignable to the Banks and, within two weeks after its
execution by the purchaser, shall be delivered to the
Administrative Agent with an assignment thereof acceptable to
the Bank, pledging it to the Banks to secure the Borrower's
Obligation hereunder.
(c) Unless the Banks otherwise agree in writing, the
Company shall not invest, directly or indirectly, more than an
$1,500,000.00 in cash in the Discontinued Operations during
the 1999 fiscal year.
2.3 Notwithstanding that the RLC Commitment was to be reduced to Twenty
Million And No/100 Dollars ($20,000,000.00), on or before August 31, 1999,
Administrative Agent, with the consent of the Banks and the Issuing Bank, agreed
to make RLC Advances, and Borrower hereby acknowledges that it has received RLC
Advances, in the following amounts: Five Hundred Thousand And No/100 Dollars
($500,000.00) on September 3, 1999, One Hundred Thousand And No/100 Dollars
($100,000.00) on September 17, 1999, and One Hundred Thousand And No/100 Dollars
($100,000.00) on September 24, 1999.
2.4 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantors is materially incomplete, incorrect, or misleading as of
the date hereof.
-2-
<PAGE> 3
2.5 Each reference in the Credit Documents to any of the Credit
Documents is hereby amended to be a reference to such document as modified
herein.
SECTION 3. RATIFICATION OF CREDIT DOCUMENTS AND COLLATERAL.
The Credit Documents are ratified and affirmed by Borrower and shall
remain in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Credit Documents shall remain
as security for the Loans and the obligations of Borrower in the Credit
Documents.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Company and each Co-Borrower to the extent applicable represents and
warrants to the Banks:
4.1 No default or event of default under any of the Credit Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Credit
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to the Banks in connection with the Loans from the most recent
financial statement received by the Banks.
4.3 Each and all representations and warranties of Borrower in the
Credit Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loans or the Credit Documents as modified herein.
4.5 The Credit Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Credit Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Credit Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and
delivered on behalf of Borrower.
-3-
<PAGE> 4
SECTION 5. BORROWER COVENANTS.
Borrower covenants with the Banks:
5.1 Borrower shall execute, deliver, and provide to the Administrative
Agent such additional agreements, documents, and instruments as reasonably
required by the Banks to effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and absolutely and forever releases and
discharges the Administrative Agent and the Banks and their present and former
directors, shareholders, officers, employees, agents, representatives,
successors and assigns, and their separate and respective heirs, personal
representatives, successors and assigns, from any and all actions, causes of
action, claims, debts, damages, demands, liabilities, obligations, and suits, of
whatever kind or nature, in law or equity of Borrower, whether now known or
unknown to Borrower, and whether contingent or matured, (i) in respect of the
Loans, the Credit Documents, or the actions or omissions of the Administrative
Agent or the Banks in respect of the Loans or the Credit Documents and (ii)
arising from events occurring prior to the date of this Agreement.
SECTION 6. CONDITIONS PRECEDENT.
The agreements of the Banks and the Administrative Agent and the
modifications contained herein shall not be binding upon the Banks until the
Banks have executed and delivered this Agreement and the Administrative Agent
has received, at Borrower's expense, all of the following, all of which shall be
in form and content satisfactory to the Administrative Agent and shall be
subject to approval by the Administrative Agent:
6.1 An original of this Agreement fully executed by the Borrower and
all Guarantors;
6.2 Such resolutions or authorizations and such other documents as the
Administrative Agent may require relating to the existence and good standing of
each Borrower and Guarantor the authority of any person executing this Agreement
or other documents on behalf of each Borrower and Guarantor; and
6.3 Payment of all the internal and external costs and expenses
incurred by the Administrative Agent and the Banks in connection with this
Agreement (including, without limitation, inside and outside attorneys,
appraisal, appraisal review, processing, title, filing, and recording costs,
expenses, and fees).
-4-
<PAGE> 5
SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
WAIVER.
The Credit Documents as modified herein contain the complete
understanding and agreement of Borrower and the Banks in respect of the Loans
and supersede all prior representations, warranties, agreements, arrangements,
understandings, and negotiations. No provision of the Credit Documents as
modified herein may be changed, discharged, supplemented, terminated, or waived
except in a writing signed by the parties thereto.
SECTION 8. BINDING EFFECT.
The Credit Documents as modified herein shall be binding upon and shall
inure to the benefit of Borrower and the Banks and their successors and assigns
and the executors, legal administrators, personal representatives, heirs,
devisees, and beneficiaries of Borrower, provided, however, Borrower may not
assign any of its right or delegate any of its obligation under the Credit
Documents and any purported assignment or delegation shall be void.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of law
principles.
SECTION 10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
SIMULA, INC., an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
COMPANY
-5-
<PAGE> 6
SIMULA SAFETY SYSTEMS, INC., formerly
known as Simula Government Products, Inc., an
Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES,
INC., an Arizona corporation, a/k/a ASD-Simula
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA TRANSPORTATION EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
AIRLINE INTERIORS, INC., an Arizona
corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
-6-
<PAGE> 7
ARTCRAFT INDUSTRIES CORP., an Arizona
corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
COACH AND CAR EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
VIATECH, INC., a Delaware corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA TECHNOLOGIES, INC., an Arizona
corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
-7-
<PAGE> 8
SIMULA AUTOMOTIVE SAFETY DEVICES
LIMITED, a company organized under the laws of
the United Kingdom
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
INTAERO, LTD., an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
CO-BORROWERS
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Steve Reinhardt
----------------------------------------
Name: Steve Reinhardt
Title: Vice President
ADMINISTRATIVE AGENT
-8-
<PAGE> 9
CONSENT AND AGREEMENT OF GUARANTORS
With respect to the Fourth Modification Agreement, dated September 29,
1999 ("Agreement"), between SIMULA, INC., an Arizona corporation (the
"Company"), all present and future Subsidiaries of the Company (with the
Company, the "Borrower") and BANK ONE, ARIZONA, NA, a national banking
association as administrative agent for the Banks (as defined in the Agreement)
("Administrative Agent"), the undersigned (individually and, if more than one,
collectively "Guarantor") agrees for the benefit of the Banks as follows:
1. Guarantor acknowledges (i) receiving a copy of and reading the Agreement,
(ii) the accuracy of the Recitals in the Agreement, and (iii) the effectiveness
of (A) the Continuing Guarantees as modified herein, and (B) any other
agreements, documents, or instruments securing or otherwise relating to the
Continuing Guarantees, (including, without limitation, any arbitration
resolution and any environmental certification and indemnity agreement
previously executed and delivered by the undersigned), as modified herein. The
Continuing Guarantees and such other agreements, documents, and instruments, as
modified herein, are referred to individually and collectively as the "Guarantor
Documents."
2. Guarantor consents to the modification of the Credit Documents and all other
matters in the Agreement.
3. Guarantor fully, finally, and forever releases and discharges the Banks and
the Administrative Agent and their successors, assigns, directors, officers,
employees, agents, and representatives from any and all actions, causes of
action, claims, debts, demands, liabilities, obligations, and suits of whatever
kind or nature, in law or equity, that Guarantor has or in the future may have,
whether known or unknown, (i) in respect of the Loans, the Credit Documents, the
Guarantor Documents, or the actions or omissions of the Banks and the
Administrative Agent in respect of the Loans, the Credit Documents, or the
Guarantor Documents and (ii) arising from events occurring prior to the date
hereof.
4. Guarantor agrees that all references, if any, to the Notes, the Senior Credit
Agreement, the Security Documents, and the Credit Documents in the Guarantor
Documents shall be deemed to refer to such agreements, documents, and
instruments as modified by the Agreement.
5. Guarantor reaffirms the Guarantor Documents and agrees that the Guarantor
Documents continue in full force and effect and remain unchanged, except as
specifically modified by this Consent and Agreement of Guarantors. Any property
or rights to or interests in property granted as security in the Guarantor
Documents shall remain as security for the Continuing Guarantees and the
obligations of Guarantor in the Continuing Guarantees.
6. Guarantor agrees that the Credit Documents, as modified by the Agreement, and
the Guarantor Documents, as modified by this Consent and Agreement of
Guarantors, are the legal,
-9-
<PAGE> 10
valid, and binding obligations of Borrower and the undersigned, respectively,
enforceable in accordance with their terms against Borrower and the undersigned,
respectively.
7. Guarantor agrees that Guarantor has no claims, counterclaims, defenses, or
offsets with respect to the enforcement against Guarantor of the Guarantor
Documents.
8. Guarantor represents and warrants that there has been no material adverse
change in the financial condition of any Guarantor from the most recent
financial statement received by Lender.
9. Guarantor agrees that this Consent and Agreement of Guarantors may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same document. Signature
and acknowledgement pages may be detached from the counterparts and attached to
a single copy of this Consent and Agreement of Guarantors to physically form one
document.
DATED as of the date of the Agreement.
SIMULA SAFETY SYSTEMS, INC., formerly
known as Simula Government Products, Inc., an
Arizona corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES,
INC., an Arizona corporation, a/k/a ASD-Simula
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA TRANSPORTATION EQUIPMENT
CORPORATION, an Arizona corporation
-10-
<PAGE> 11
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
AIRLINE INTERIORS, INC., an Arizona
corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
ARTCRAFT INDUSTRIES CORP., an Arizona
corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
COACH AND CAR EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
VIATECH, INC., a Delaware corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
-11-
<PAGE> 12
SIMULA TECHNOLOGIES, INC., an Arizona
corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES
LIMITED, a company organized under the laws of
the United Kingdom
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Treasurer
INTAERO, LTD., an Arizona corporation
By: /s/ Donald Townsend
-----------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
GUARANTOR
-12-
<PAGE> 13
CONSENT OF THE BANKS
Re: Simula, Inc. and its Subsidiaries
The undersigned:
(a) is a Bank named in that Senior Credit Agreement dated November 6, 1998
between Simula, Inc. and its Subsidiaries (the "Borrower"), Bank One, Arizona,
NA, a national banking association, as administrative agent for the Banks (the
"Administrative Agent"), the Issuing Bank, and the Banks; and
(b) consents to that Fifth Modification Agreement dated September 29, 1999
entered into between the Borrower and the Administrative Agent.
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Steve Reinhardt
--------------------------------------
Name: Steve Reinhardt
Its: Vice President
"Issuing Bank" and "Bank"
<PAGE> 14
CONSENT OF THE BANKS
Re: Simula, Inc. and its Subsidiaries
The undersigned:
(a) is a Bank named in that Senior Credit Agreement dated November 6,
1998 between Simula, Inc. and its Subsidiaries (the "Borrower"), Bank One,
Arizona, NA, a national banking association, as administrative agent for the
Banks (the "Administrative Agent"), the Issuing Bank, and the Banks; and
(b) consents to that Fifth Modification Agreement dated September 29,
1999 entered into between the Borrower and the Administrative Agent.
IMPERIAL BANK, California
banking corporation,
successor by merger to
IMPERIAL BANK ARIZONA, an
Arizona banking corporation
By: /s/ Kevin Halloran
----------------------------------------
Name: Kevin Halloran
Its: Senior Vice President
"Bank"
<PAGE> 1
Exhibit 10.37
SIXTH MODIFICATION AGREEMENT
BY THIS SIXTH MODIFICATION AGREEMENT (the "Agreement"), made and
entered into as of the 19th day of October, 1999, BANK ONE, ARIZONA, NA, a
national banking association, as administrative agent for the Banks (as
hereinafter defined) (the "Administrative Agent"), and SIMULA, INC., an Arizona
corporation (the "Company"), all present and future Subsidiaries of the Company
(with the Company, the "Borrower"), in consideration of the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby confirm and agree as
follows:
RECITALS:
A. Borrower, the Administrative Agent, the Issuing Bank and the "Banks"
named therein entered into that Senior Credit Agreement dated November 6, 1998
to provide financial accommodations to the Borrower as provided therein (as
modified from time to time, including without limitation by that Modification
Agreement dated as of February 12, 1999, that Second Modification Agreement
dated as of April 28, 1999, that Third Modification Agreement dated as of June
23, 1999, that Fourth Modification Agreement dated July 29, 1999 and that Fifth
Modification Agreement dated September 29, 1999, the "Senior Credit Agreement").
B. Borrower and the Administrative Agent, with the consent of the Banks
and the Issuing Bank, desire to modify the Senior Credit Agreement as set forth
herein.
C. All undefined capitalized terms used herein shall have the meaning
given them in the Senior Credit Agreement.
AGREEMENT:
SECTION 1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATIONS OF LOAN DOCUMENTS; OTHER AGREEMENTS.
2.1 The following definitions in Section 1.1 of the Senior Credit
Agreement are hereby amended to read as follows:
"Pricing Adjustment Date" means that date by which both the
Compliance Date and the date on which the aggregate outstanding
principal balance of the RLC is reduced to a balance below $20,000,000
by Borrower shall have occurred.
<PAGE> 2
"RLC Commitment" means Twenty-Three Million and No/100 Dollars
($23,000,000.00).
2.2 Section 1.1 of the Senior Credit Agreement is hereby
amended by the addition of the following definitions:
"CCAC" means Coach and Car Acquisition Corp., a Nevada
corporation.
"CCAC Note": See Section 4.1(e).
"CCAC Pledge Agreement": See Section 4.1(d).
"CCAC Pledgor" means Scott Miller.
"CCAC Security Agreement": See Section 4.1(e).
"Coach" means Coach and Car Equipment Corporation, an Arizona
corporation.
"Commitment Fee": See Section 3.2(e).
"Sale Security Agreement": See Section 4.1(e).
2.3 Section 1.1 of the Senior Credit Agreement is hereby amended by the
deletion of the following definitions:
Rail Credit Fee.
RLC Adjustment Date.
2.4 Section 3.2(e) of the Senior Credit Agreement is hereby amended to
read as follows:
(e) Commitment Fee. Company agrees to pay the Administrative
Agent for distribution to the Banks a monthly fee (the "Commitment
Fee") in the amount of $150,000.00 in advance on the first day of each
month, commencing November 1, 1999 until all Loans have been paid in
full, the Obligation has been satisfied and fulfilled by Borrower to
the satisfaction of the Banks, the RLC Commitment has been terminated
and any obligations outstanding under any agreement as to any interest
rate swap cap, collar or any similar transaction or any master
agreement related thereto to which any Bank, or an Affiliate of any
Bank, and Borrower is a party have been satisfied in full. The
Commitment Fee shall be distributed by the Administrative Agent as
follows: 80.0% to Bank One and 20.0% to Imperial.
2.5 Section 4.1 of the Senior Credit Agreement is hereby amended by the
addition of the following Paragraphs (d) and (e):
-2-
<PAGE> 3
(d) So long as any Loan is outstanding, Company shall cause
such Loan and Borrower's obligations under this Senior Credit Agreement
to be secured at all times by a valid and effective pledge and
irrevocable proxy security agreement (the "CCAC Pledge Agreement"),
duly executed and delivered by the CCAC Pledgor, together with the
stock related thereto and any other documents reasonably requested by
the Administrative Agent, granting the Administrative Agent on behalf
of the Banks and the Issuing Bank a valid and enforceable security
interest in the stock owned by the CCAC Pledgor of CCAC, subject to no
prior Lien other than Permitted Liens.
(e) So long as any Loan is outstanding, Coach shall cause such
Loan and Borrower's obligations under this Senior Credit Agreement to
be secured at all times by a valid and effective security agreement
(the "Sale Security Agreement"), granting the Administrative Agent for
the benefit of the Banks and the Issuing Bank a valid and enforceable
security interest in Coach's right, title and interest in (i) that
$9,996,000 promissory note (the "CCAC Note") delivered by CCAC to Coach
in payment for the purchase by CCAC of the Discontinued Operations and
(ii) that security agreement delivered by CCAC to Coach, granting the
Company a security interest in the assets of Coach purchased by CCAC,
and such other documents delivered to Coach to secure and/or guarantee
CCAC's obligations to Coach under the CCAC Note (collectively, the
"CCAC Security Agreement").
2.6 Section 7.19 of the Senior Credit Agreement is hereby amended
to read as follows:
7.19 Proceeds from any Asset Sale. The proceeds received by
Borrower from the sale of any of its assets shall be applied at the
direction of the Banks to payments among principal, interest, fees,
late charges and charges at the sole and absolute discretion of the
Banks.
2.7 Schedule 1.1 of the Senior Credit Agreement is hereby amended
to read as attached hereto.
2.8 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantors is materially incomplete, incorrect, or misleading as of
the date hereof.
2.9 Each reference in the Credit Documents to any of the Credit
Documents is hereby amended to be a reference to such document as modified
herein.
-3-
<PAGE> 4
SECTION 3. RATIFICATION OF CREDIT DOCUMENTS AND COLLATERAL.
The Credit Documents are ratified and affirmed by Borrower and shall
remain in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Credit Documents shall remain
as security for the Loans and the obligations of Borrower in the Credit
Documents.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Company and each Co-Borrower to the extent applicable represents and
warrants to the Banks:
4.1 No default or event of default under any of the Credit Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Credit
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to the Banks in connection with the Loans from the most recent
financial statement received by the Banks.
4.3 Each and all representations and warranties of Borrower in the
Credit Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loans or the Credit Documents as modified herein.
4.5 The Credit Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Credit Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Credit Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and
delivered on behalf of Borrower.
SECTION 5. BORROWER COVENANTS.
Borrower covenants with the Banks:
5.1 Borrower shall execute, deliver, and provide to the Administrative
Agent such additional agreements, documents, and instruments as reasonably
required by the Banks to effectuate the intent of this Agreement.
-4-
<PAGE> 5
5.2 Borrower fully, finally, and absolutely and forever releases and
discharges the Administrative Agent and the Banks and their present and former
directors, shareholders, officers, employees, agents, representatives,
successors and assigns, and their separate and respective heirs, personal
representatives, successors and assigns, from any and all actions, causes of
action, claims, debts, damages, demands, liabilities, obligations, and suits, of
whatever kind or nature, in law or equity of Borrower, whether now known or
unknown to Borrower, and whether contingent or matured, (i) in respect of the
Loans, the Credit Documents, or the actions or omissions of the Administrative
Agent or the Banks in respect of the Loans or the Credit Documents and (ii)
arising from events occurring prior to the date of this Agreement.
SECTION 6. CONDITIONS PRECEDENT.
The agreements of the Banks and the Administrative Agent and the
modifications contained herein shall not be binding upon the Banks until the
Banks have executed and delivered this Agreement and the Administrative Agent
has received, at Borrower's expense, all of the following, all of which shall be
in form and content satisfactory to the Administrative Agent and shall be
subject to approval by the Administrative Agent:
6.1 An original of this Agreement fully executed by the Borrower and
all Guarantors;
6.2 An original of the fully executed CCAC Pledge Agreement together
with the original stock certificates as to CCAC.
6.3 An original of the Sale Security Agreement fully executed by Coach,
together with the original CCAC Note fully endorsed to the Administrative Agent
and a copy of the CCAC Security Agreement and an assignment by Coach to the
Administrative Agent of the UCC-1 Financing Statement delivered by CCAC to
Coach.
6.4 Such monies as necessary to reduce the outstanding principal
balance of the RLC to an amount not exceeding the RLC Commitment as amended
herein.
6.5 Such resolutions or authorizations and such other documents as the
Administrative Agent may require relating to the existence and good standing of
each Borrower and Guarantor the authority of any person executing this Agreement
or other documents on behalf of each Borrower and Guarantor; and
6.6 Payment of all the internal and external costs and expenses
incurred by the Administrative Agent and the Banks in connection with this
Agreement (including, without limitation, inside and outside attorneys,
appraisal, appraisal review, processing, title, filing, and recording costs,
expenses, and fees).
-5-
<PAGE> 6
SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
WAIVER.
The Credit Documents as modified herein contain the complete
understanding and agreement of Borrower and the Banks in respect of the Loans
and supersede all prior representations, warranties, agreements, arrangements,
understandings, and negotiations. No provision of the Credit Documents as
modified herein may be changed, discharged, supplemented, terminated, or waived
except in a writing signed by the parties thereto.
SECTION 8. BINDING EFFECT.
The Credit Documents as modified herein shall be binding upon and shall
inure to the benefit of Borrower and the Banks and their successors and assigns
and the executors, legal administrators, personal representatives, heirs,
devisees, and beneficiaries of Borrower, provided, however, Borrower may not
assign any of its right or delegate any of its obligation under the Credit
Documents and any purported assignment or delegation shall be void.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of law
principles.
SECTION 10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
SIMULA, INC., an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
COMPANY
-6-
<PAGE> 7
SIMULA SAFETY SYSTEMS, INC., formerly
known as Simula Government Products, Inc.,
an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES, INC.,
an Arizona corporation, a/k/a ASD-Simula
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA TRANSPORTATION EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
AIRLINE INTERIORS, INC.,
an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
-7-
<PAGE> 8
ARTCRAFT INDUSTRIES CORP.,
an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
COACH AND CAR EQUIPMENT
CORPORATION,an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
VIATECH, INC., a Delaware corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA TECHNOLOGIES, INC.,
an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
-8-
<PAGE> 9
SIMULA AUTOMOTIVE SAFETY DEVICES LIMITED,
a company organized under the laws of
the United Kingdom
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Treasurer
INTAERO, LTD., an Arizona corporation
By: /s/ Donald Townsend
----------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
CO-BORROWERS
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Steve Reinhardt
----------------------------------------
Name: Steve Reinhardt
Title: Vice President
ADMINISTRATIVE AGENT
-9-
<PAGE> 10
CONSENT AND AGREEMENT OF GUARANTORS
With respect to the Sixth Modification Agreement, dated October 19,
1999 ("Agreement"), between SIMULA, INC., an Arizona corporation (the
"Company"), all present and future Subsidiaries of the Company (with the
Company, the "Borrower") and BANK ONE, ARIZONA, NA, a national banking
association as administrative agent for the Banks (as defined in the Agreement)
("Administrative Agent"), the undersigned (individually and, if more than one,
collectively "Guarantor") agrees for the benefit of the Banks as follows:
1. Guarantor acknowledges (i) receiving a copy of and reading the
Agreement, (ii) the accuracy of the Recitals in the Agreement, and (iii) the
effectiveness of (A) the Continuing Guarantees as modified herein, and (B) any
other agreements, documents, or instruments securing or otherwise relating to
the Continuing Guarantees, (including, without limitation, any arbitration
resolution and any environmental certification and indemnity agreement
previously executed and delivered by the undersigned), as modified herein. The
Continuing Guarantees and such other agreements, documents, and instruments, as
modified herein, are referred to individually and collectively as the "Guarantor
Documents."
2. Guarantor consents to the modification of the Credit Documents and
all other matters in the Agreement.
3. Guarantor fully, finally, and forever releases and discharges the
Banks and the Administrative Agent and their successors, assigns, directors,
officers, employees, agents, and representatives from any and all actions,
causes of action, claims, debts, demands, liabilities, obligations, and suits of
whatever kind or nature, in law or equity, that Guarantor has or in the future
may have, whether known or unknown, (i) in respect of the Loans, the Credit
Documents, the Guarantor Documents, or the actions or omissions of the Banks and
the Administrative Agent in respect of the Loans, the Credit Documents, or the
Guarantor Documents and (ii) arising from events occurring prior to the date
hereof.
4. Guarantor agrees that all references, if any, to the Notes, the
Senior Credit Agreement, the Security Documents, and the Credit Documents in the
Guarantor Documents shall be deemed to refer to such agreements, documents, and
instruments as modified by the Agreement.
5. Guarantor reaffirms the Guarantor Documents and agrees that the
Guarantor Documents continue in full force and effect and remain unchanged,
except as specifically modified by this Consent and Agreement of Guarantors. Any
property or rights to or interests in property granted as security in the
Guarantor Documents shall remain as security for the Continuing Guarantees and
the obligations of Guarantor in the Continuing Guarantees.
6. Guarantor agrees that the Credit Documents, as modified by the
Agreement, and the Guarantor Documents, as modified by this Consent and
Agreement of Guarantors, are the legal, valid,
-10-
<PAGE> 11
and binding obligations of Borrower and the undersigned, respectively,
enforceable in accordance with their terms against Borrower and the undersigned,
respectively.
7. Guarantor agrees that Guarantor has no claims, counterclaims,
defenses, or offsets with respect to the enforcement against Guarantor of the
Guarantor Documents.
8. Guarantor represents and warrants that there has been no material
adverse change in the financial condition of any Guarantor from the most recent
financial statement received by Lender.
9. Guarantor agrees that this Consent and Agreement of Guarantors may
be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same document.
Signature and acknowledgement pages may be detached from the counterparts and
attached to a single copy of this Consent and Agreement of Guarantors to
physically form one document.
DATED as of the date of the Agreement.
SIMULA SAFETY SYSTEMS, INC., formerly
known as Simula Government Products, Inc., an
Arizona corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES,
INC., an Arizona corporation, a/k/a ASD-Simula
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Treasurer
-11-
<PAGE> 12
SIMULA TRANSPORTATION EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
AIRLINE INTERIORS, INC., an Arizona corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
ARTCRAFT INDUSTRIES CORP., an Arizona corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
COACH AND CAR EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
-12-
<PAGE> 13
VIATECH, INC., a Delaware corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA TECHNOLOGIES, INC., an Arizona
corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES
LIMITED, a company organized under the laws of
the United Kingdom
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Treasurer
-13-
<PAGE> 14
INTAERO, LTD., an Arizona corporation
By: /s/ Donald Townsend
------------------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
GUARANTOR
-14-
<PAGE> 15
CONSENT OF THE BANKS
Re: Simula, Inc. and its Subsidiaries
The undersigned:
(a) is a Bank named in that Senior Credit Agreement dated November 6,
1998 between Simula, Inc. and its Subsidiaries (the "Borrower"), Bank One,
Arizona, NA, a national banking association, as administrative agent for the
Banks (the "Administrative Agent"), the Issuing Bank, and the Banks; and
(b) consents to that Sixth Modification Agreement dated October 19,
1999 entered into between the Borrower and the Administrative Agent.
BANK ONE, ARIZONA, NA, a national banking association
By: /s/ Steve Reinhardt
-----------------------------------
Name: Steve Reinhardt
Its: Vice President
"Issuing Bank" and "Bank"
<PAGE> 16
CONSENT OF THE BANKS
Re: Simula, Inc. and its Subsidiaries
The undersigned:
(a) is a Bank named in that Senior Credit Agreement dated November 6,
1998 between Simula, Inc. and its Subsidiaries (the "Borrower"), Bank One,
Arizona, NA, a national banking association, as administrative agent for the
Banks (the "Administrative Agent"), the Issuing Bank, and the Banks; and
(b) consents to that Sixth Modification Agreement dated October 19,
1999 entered into between the Borrower and the Administrative Agent.
IMPERIAL BANK, California banking
corporation, successor by merger to
IMPERIAL BANK ARIZONA, an Arizona
banking corporation
By: /s/ Kevin Halloran
---------------------------------
Name: Kevin Halloran
Its: Senior Vice President
"Bank"
<PAGE> 17
SCHEDULE 1.1
PRO RATA SHARE AND NOTICE ADDRESS OF EACH BANK
<TABLE>
<CAPTION>
Pro Rata Share: Bank One Imperial
--------------- -------- --------
<S> <C> <C>
RLC $15,640,000 $7,360,000
Term A Loan $5,000,000 0
Term B Loan $2,500,000 0
</TABLE>
Notice Address:
Bank One: See Section 10.4
Imperial: Imperial Bank
400 East Van Buren
Suite 900
Phoenix, Arizona 85004
Attention: Kevin Halloran
Telecopier: (602) 261-7881
With a copy to: Imperial Bank
9920 South La Cienega Boulevard
Suite 636
Inglewood, California 90301
Attention: General Counsel
Telecopier: (310) 417-5695
<PAGE> 1
EXHIBIT 10.38
SEVENTH MODIFICATION AGREEMENT
BY THIS SEVENTH MODIFICATION AGREEMENT (the "Agreement"), made and
entered into as of the 1st day of November, 1999, BANK ONE, ARIZONA, NA, a
national banking association, as administrative agent for the Banks (as
hereinafter defined) (the "Administrative Agent"), and SIMULA, INC., an Arizona
corporation (the "Company"), all present and future Subsidiaries of the Company
(with the Company, the "Borrower"), in consideration of the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby confirm and agree as
follows:
RECITALS:
A. Borrower, the Administrative Agent, the Issuing Bank and the "Banks"
named therein entered into that Senior Credit Agreement dated November 6, 1998
to provide financial accommodations to the Borrower as provided therein (as
modified from time to time, including without limitation by that Modification
Agreement dated as of February 12, 1999, that Second Modification Agreement
dated as of April 28, 1999, that Third Modification Agreement dated as of June
23, 1999, that Fourth Modification Agreement dated July 29, 1999, that Fifth
Modification Agreement dated September 29, 1999 and that Sixth Modification
Agreement dated October 19, 1999, the "Senior Credit Agreement").
B. Borrower and the Administrative Agent, with the consent of the Banks
and the Issuing Bank, desire to modify the Senior Credit Agreement as set forth
herein.
C. All undefined capitalized terms used herein shall have the meaning
given them in the Senior Credit Agreement.
AGREEMENT:
SECTION 1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
SECTION 2. MODIFICATIONS OF LOAN DOCUMENTS; OTHER AGREEMENTS.
2.1 The following definitions in Section 1.1 of the Senior Credit
Agreement are hereby amended to read as follows:
"CCAC" means Coach and Car Equipment Corp., fka Coach and Car
Acquisition Corp., a Nevada corporation.
"CCAC Note": See Section 4.1(d).
<PAGE> 2
"CCAC Security Agreement": See Section 4.1(d).
"Coach" means CCEC Capital Corp., fka Coach and Car Equipment
Corporation, an Arizona corporation.
"Sale Security Agreement": See Section 4.1(d).
2.2 Section 1.1 of the Senior Credit Agreement is hereby amended by the
deletion of the following definitions:
CCAC Pledge Agreement.
2.3 Section 4.1(d) of the Senior Credit Agreement is hereby amended to
read as follows:
(e) So long as any Loan is outstanding, Borrower shall cause
such Loan and Borrower's obligations under this Senior Credit Agreement
to be secured at all times by a valid and effective security agreement
(the "Sale Security Agreement"), granting the Administrative Agent for
the benefit of the Banks and the Issuing Bank a valid and enforceable
security interest in Coach's right, title and interest in (i) those two
promissory notes (together, the "CCAC Note") in the original principal
amounts of $1,996,000 and $8,118,008, respectively, dated as of October
21, 1999 delivered by CCAC to Coach to refinance its payment for the
purchase by CCAC of the Discontinued Operations, (ii) that security
agreement delivered by CCAC to Coach dated October 21, 1999, granting
Coach a security interest in the assets of Coach purchased by CCAC,
(iii) that pledge and proxy security agreement delivered by CAC Pledgor
to Coach, pledging to Coach all stock owned by CAC Pledgor in CCAC and
Beacon Industries Inc., a Nevada corporation, and (iv) such other
documents delivered to Coach to secure and/or guarantee CCAC's
obligations to Coach under the CCAC Note ((ii), (iii) and (iv)
collectively, the "CCAC Security Agreement").
2.4 Section 4.1(e) of the Senior Credit Agreement is hereby deleted.
2.5 Each of the Loan Documents is modified to provide that it shall be
a default or an event of default thereunder if Borrower shall fail to comply
with any of the covenants of Borrower herein or if any representation or
warranty by Borrower herein or by any guarantor in any related Consent and
Agreement of Guarantors is materially incomplete, incorrect, or misleading as of
the date hereof.
2.6 Each reference in the Credit Documents to any of the Credit
Documents is hereby amended to be a reference to such document as modified
herein.
<PAGE> 3
SECTION 3. RATIFICATION OF CREDIT DOCUMENTS AND COLLATERAL.
The Credit Documents are ratified and affirmed by Borrower and shall
remain in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Credit Documents shall remain
as security for the Loans and the obligations of Borrower in the Credit
Documents.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.
Company and each Co-Borrower to the extent applicable represents and
warrants to the Banks:
4.1 No default or event of default under any of the Credit Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Credit
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to the Banks in connection with the Loans from the most recent
financial statement received by the Banks.
4.3 Each and all representations and warranties of Borrower in the
Credit Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loans or the Credit Documents as modified herein.
4.5 The Credit Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Credit Documents as modified
herein. The execution and delivery of this Agreement and the performance of the
Credit Documents as modified herein have been duly authorized by all requisite
action by or on behalf of Borrower. This Agreement has been duly executed and
delivered on behalf of Borrower.
SECTION 5. BORROWER COVENANTS.
Borrower covenants with the Banks:
5.1 Borrower shall execute, deliver, and provide to the Administrative
Agent such additional agreements, documents, and instruments as reasonably
required by the Banks to effectuate the intent of this Agreement.
-3-
<PAGE> 4
5.2 Borrower fully, finally, and absolutely and forever releases and
discharges the Administrative Agent and the Banks and their present and former
directors, shareholders, officers, employees, agents, representatives,
successors and assigns, and their separate and respective heirs, personal
representatives, successors and assigns, from any and all actions, causes of
action, claims, debts, damages, demands, liabilities, obligations, and suits, of
whatever kind or nature, in law or equity of Borrower, whether now known or
unknown to Borrower, and whether contingent or matured, (i) in respect of the
Loans, the Credit Documents, or the actions or omissions of the Administrative
Agent or the Banks in respect of the Loans or the Credit Documents and (ii)
arising from events occurring prior to the date of this Agreement.
SECTION 6. CONDITIONS PRECEDENT.
The agreements of the Banks and the Administrative Agent and the
modifications contained herein shall not be binding upon the Banks until the
Banks have executed and delivered this Agreement and the Administrative Agent
has received, at Borrower's expense, all of the following, all of which shall be
in form and content satisfactory to the Administrative Agent and shall be
subject to approval by the Administrative Agent:
6.1 An original of this Agreement fully executed by the Borrower and
all Guarantors;
6.2 An original of the Sale Security Agreement fully executed by Coach,
together with the two original CCAC Notes fully endorsed to the Administrative
Agent, a copy of the CCAC Security Agreement, and an assignment by Coach to the
Administrative Agent of the UCC-1 Financing Statement delivered by CCAC to
Coach.
6.3 Originals of fully executed Assignments Separate from Certificate
together with the original stock certificates as to CCAC and Beacon Industries
Inc.
6.4 Such resolutions or authorizations and such other documents as the
Administrative Agent may require relating to the existence and good standing of
each Borrower and Guarantor the authority of any person executing this Agreement
or other documents on behalf of each Borrower and Guarantor; and
6.5 Payment of all the internal and external costs and expenses
incurred by the Administrative Agent and the Banks in connection with this
Agreement (including, without limitation, inside and outside attorneys,
appraisal, appraisal review, processing, title, filing, and recording costs,
expenses, and fees).
SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
WAIVER.
-4-
<PAGE> 5
The Credit Documents as modified herein contain the complete
understanding and agreement of Borrower and the Banks in respect of the Loans
and supersede all prior representations, warranties, agreements, arrangements,
understandings, and negotiations. No provision of the Credit Documents as
modified herein may be changed, discharged, supplemented, terminated, or waived
except in a writing signed by the parties thereto.
SECTION 8. BINDING EFFECT.
The Credit Documents as modified herein shall be binding upon and shall
inure to the benefit of Borrower and the Banks and their successors and assigns
and the executors, legal administrators, personal representatives, heirs,
devisees, and beneficiaries of Borrower; provided, however, Borrower may not
assign any of its right or delegate any of its obligation under the Credit
Documents and any purported assignment or delegation shall be void.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona, without giving effect to conflicts of law
principles.
SECTION 10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
SIMULA, INC., an Arizona corporation
By: /s/ Donald Townsend
----------------------------------
Name: Donald Townsend
Its: Treasurer
COMPANY
-5-
<PAGE> 6
SIMULA SAFETY SYSTEMS, INC., formerly
known as Simula Government Products, Inc., an
Arizona corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES,
INC., an Arizona corporation, a/k/a ASD-Simula
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA TRANSPORTATION EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
AIRLINE INTERIORS, INC., an Arizona
corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
-6-
<PAGE> 7
ARTCRAFT INDUSTRIES CORP., an Arizona
corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
COACH AND CAR EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
VIATECH, INC., a Delaware corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA TECHNOLOGIES, INC., an Arizona
corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Treasurer
-7-
<PAGE> 8
SIMULA AUTOMOTIVE SAFETY DEVICES
LIMITED, a company organized under the laws of
the United Kingdom
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Treasurer
INTAERO, LTD., an Arizona corporation
By: /s/ Donald Townsend
---------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
CO-BORROWERS
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Steve Reinhardt
---------------------------------------
Name: Steve Reinhardt
Title: Vice President
ADMINISTRATIVE AGENT
-8-
<PAGE> 9
CONSENT AND AGREEMENT OF GUARANTORS
With respect to the Seventh Modification Agreement, dated November 1,
1999 ("Agreement"), between SIMULA, INC., an Arizona corporation (the
"Company"), all present and future Subsidiaries of the Company (with the
Company, the "Borrower") and BANK ONE, ARIZONA, NA, a national banking
association as administrative agent for the Banks (as defined in the Agreement)
("Administrative Agent"), the undersigned (individually and, if more than one,
collectively "Guarantor") agrees for the benefit of the Banks as follows:
1. Guarantor acknowledges (i) receiving a copy of and reading the Agreement,
(ii) the accuracy of the Recitals in the Agreement, and (iii) the effectiveness
of (A) the Continuing Guarantees as modified herein, and (B) any other
agreements, documents, or instruments securing or otherwise relating to the
Continuing Guarantees, (including, without limitation, any arbitration
resolution and any environmental certification and indemnity agreement
previously executed and delivered by the undersigned), as modified herein. The
Continuing Guarantees and such other agreements, documents, and instruments, as
modified herein, are referred to individually and collectively as the "Guarantor
Documents."
2. Guarantor consents to the modification of the Credit Documents and all other
matters in the Agreement.
3. Guarantor fully, finally, and forever releases and discharges the Banks and
the Administrative Agent and their successors, assigns, directors, officers,
employees, agents, and representatives from any and all actions, causes of
action, claims, debts, demands, liabilities, obligations, and suits of whatever
kind or nature, in law or equity, that Guarantor has or in the future may have,
whether known or unknown, (i) in respect of the Loans, the Credit Documents, the
Guarantor Documents, or the actions or omissions of the Banks and the
Administrative Agent in respect of the Loans, the Credit Documents, or the
Guarantor Documents and (ii) arising from events occurring prior to the date
hereof.
4. Guarantor agrees that all references, if any, to the Notes, the Senior Credit
Agreement, the Security Documents, and the Credit Documents in the Guarantor
Documents shall be deemed to refer to such agreements, documents, and
instruments as modified by the Agreement.
5. Guarantor reaffirms the Guarantor Documents and agrees that the Guarantor
Documents continue in full force and effect and remain unchanged, except as
specifically modified by this Consent and Agreement of Guarantors. Any property
or rights to or interests in property granted as security in the Guarantor
Documents shall remain as security for the Continuing Guarantees and the
obligations of Guarantor in the Continuing Guarantees.
6. Guarantor agrees that the Credit Documents, as modified by the Agreement, and
the Guarantor Documents, as modified by this Consent and Agreement of
Guarantors, are the legal,
<PAGE> 10
valid, and binding obligations of Borrower and the undersigned, respectively,
enforceable in accordance with their terms against Borrower and the undersigned,
respectively.
7. Guarantor agrees that Guarantor has no claims, counterclaims, defenses, or
offsets with respect to the enforcement against Guarantor of the Guarantor
Documents.
8. Guarantor represents and warrants that there has been no material adverse
change in the financial condition of any Guarantor from the most recent
financial statement received by Lender.
9. Guarantor agrees that this Consent and Agreement of Guarantors may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same document. Signature
and acknowledgement pages may be detached from the counterparts and attached to
a single copy of this Consent and Agreement of Guarantors to physically form one
document.
DATED as of the date of the Agreement.
SIMULA SAFETY SYSTEMS, INC., formerly
known as Simula Government Products, Inc., an
Arizona corporation
By: /s/ Donald Townsend
-----------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES,
INC., an Arizona corporation, a/k/a ASD-Simula
By: /s/ Donald Townsend
-----------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA TRANSPORTATION EQUIPMENT
CORPORATION, an Arizona corporation
-2-
<PAGE> 11
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
AIRLINE INTERIORS, INC., an Arizona
corporation
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
ARTCRAFT INDUSTRIES CORP., an Arizona
corporation
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
COACH AND CAR EQUIPMENT
CORPORATION, an Arizona corporation
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
-3-
<PAGE> 12
VIATECH, INC., a Delaware corporation
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
SIMULA TECHNOLOGIES, INC., an Arizona
corporation
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Treasurer
SIMULA AUTOMOTIVE SAFETY DEVICES
LIMITED, a company organized under the laws of
the United Kingdom
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
INTERNATIONAL CENTER FOR SAFETY
EDUCATION, INC., an Arizona corporation
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Treasurer
-4-
<PAGE> 13
INTAERO, LTD., an Arizona corporation
By: /s/ Donald Townsend
-------------------------------------
Name: Donald Townsend
Its: Assistant Treasurer
GUARANTOR
-5-
<PAGE> 14
CONSENT OF THE BANKS
Re: Simula, Inc. and its Subsidiaries
The undersigned:
(a) is a Bank named in that Senior Credit Agreement dated November 6, 1998
between Simula, Inc. and its Subsidiaries (the "Borrower"), Bank One, Arizona,
NA, a national banking association, as administrative agent for the Banks (the
"Administrative Agent"), the Issuing Bank, and the Banks; and
(b) consents to that Seventh Modification Agreement dated November 1, 1999
entered into between the Borrower and the Administrative Agent.
BANK ONE, ARIZONA, NA, a national banking
association
By: /s/ Steve Reinhardt
--------------------------------
Name: Steve Reinhardt
Title: Vice President
"Issuing Bank" and "Bank"
<PAGE> 15
CONSENT OF THE BANKS
Re: Simula, Inc. and its Subsidiaries
The undersigned:
(a) is a Bank named in that Senior Credit Agreement dated November 6, 1998
between Simula, Inc. and its Subsidiaries (the "Borrower"), Bank One, Arizona,
NA, a national banking association, as administrative agent for the Banks (the
"Administrative Agent"), the Issuing Bank, and the Banks; and
(b) consents to that Seventh Modification Agreement dated November 1, 1999
entered into between the Borrower and the Administrative Agent.
IMPERIAL BANK, California banking corporation,
successor by merger to IMPERIAL BANK
ARIZONA, an Arizona banking corporation
By: /s/ Kevin Halloran
----------------------------------
Name: Kevin Halloran
Its: Senior Vice President
"Bank"
<PAGE> 1
EXHIBIT 10.39a
PROMISSORY NOTE
$1,000,000
October 15, 1999
1. Promise to Pay.
The undersigned, Simula, Inc., an Arizona corporation
("Maker"), promises to pay to the order of Stanley P. Desjardins ("Desjardins")
the principal sum of One Million Dollars ($1,000,000).
Desjardins may transfer this Note, and Desjardins or anyone
who takes this Note by transfer and who is entitled to receive payments under
this Note is called the "Noteholder."
2. Interest.
Interest will be charged from the date above on the unpaid
principal balance until the full amount is paid. Maker will pay interest at an
annual rate of twelve percent (12%). Interest shall be calculated on the basis
of a 360-day year and shall be computed on the actual number of days elapsed.
3. Payments and Maturity Date.
3.1 Maker will pay the principal balance in full and accrued
interest thereon, on October 15, 2000 ("Maturity Date").
3.2 Maker shall have the right to prepay this Note in full or
in part without penalty.
4. Accelerated Maturity.
In the event Maker completes a senior credit banking
agreement, or a private or public offering of debt or equity securities for
proceeds of Ten Million Dollars ($10,000,000) or more, before the Maturity Date,
the proceeds shall be first
<PAGE> 2
applied to repayment of the Note thereby accelerating the Maturity Date, and
such repayment shall have priority over other applications of the proceeds.
5. Note Charges.
If a law which applies to this Note and which sets maximum
loan charges is finally interpreted so that the interest or other charges
collected or to be collected in connection with this Note exceed the permitted
limits, then: (i) any such Note charges shall be reduced by the amount necessary
to reduce the charge to the permitted limit; and (ii) any sums already collected
from Maker which exceeded permitted limits will be refunded to Maker. The
Noteholder may choose to make this refund by reducing the principal it owes
under this Note or by making a direct payment to Maker. If a refund reduces
principal the reduction will be treated as a partial prepayment.
6. No Waiver, Expenses.
6.1 Even if at a time when Maker is in default Noteholder does
not require Maker to pay immediately in full as directed below, Noteholder will
still have the right to do so if Maker is in default at a later time.
6.2 If Noteholder has required immediate payment in full as
described below, Noteholder will have the right to be reimbursed for all of its
costs and expenses to the extent not prohibited by applicable law. Those
expenses include, for example, reasonable attorneys' fees.
6.3 Presentment, demand, protest, notices of protest, dishonor
and non-payment of this Note and all notices of every kind except notices of
payment changes are hereby waived.
6.4 No single or partial exercise of any power under this Note
shall preclude other or further exercise thereof. The Noteholder shall at all
times have the right to proceed against any portion of any security held for
this Note in such order and in such manner as the Noteholder may deem fit,
without waiving any rights with respect to any other security. No delay or
omission on the part of the Noteholder in exercising any right under this Note
shall operate as a waiver of such right or of any other right under this Note.
The release of any party liable on this Note shall not operate to release any
other party liable on the Note.
6.5 Any payment hereunder otherwise due on a day that is not a
business day in Phoenix, Arizona shall be due on the immediately preceding
business day.
2
<PAGE> 3
7. Events of Default.
7.1 At the option of the Noteholder, the Note shall become
immediately due and payable unless otherwise stated, without notice or demand,
upon the occurrence at any time of any of the following events of default.
(a) Failure to pay when due any payment of principal
or interest due hereunder within five (5) days of the due date.
(b) Making an assignment for the benefit of creditors
by Maker, or the voluntary appointment (at the request of any such party or with
the consent of any such party) of a receiver, custodian, liquidator or trustee
in bankruptcy of any such party's property or the filing by any such party of a
petition in bankruptcy or other similar proceeding under law for relief of
debtors;
(c) Filing by Maker of a petition in bankruptcy or
other similar proceeding under the law for relief of debtors, or the involuntary
appointment of a receiver, custodian, liquidator or trustee in bankruptcy of the
property of any such party, and such petition or appointment is not vacated or
discharged within sixty (60) days after the filing or making thereof.
7.2 If this Note is not paid when due, whether at maturity or
by acceleration, Maker promises to pay all costs of collection, including,
without limitation, reasonable attorneys' fees, and all expenses in connection
with the protection or realization of any collateral securing this Note or the
enforcement of any guaranty hereof incurred by the Noteholder on account of such
collection whether or not suit is filed, such costs and expenses shall include,
without limitation, all attorneys' fees and expenses incurred by the Noteholder
in connection with the collection of this Note.
8. Placement Fee Agreement.
A placement fee equal to Twenty Thousand Dollars ($20,000) is
payable as part consideration for the loan represented by this Note and the fee
is payable in full upon the Maturity Date, or any accelerated repayment date of
this Note.
3
<PAGE> 4
9. Governing Laws; Jurisdiction.
This Note shall be constructed in accordance with the governed by laws
of the State of Arizona. Any dispute arising under this Note shall be brought in
a court of competent jurisdiction located within the State of Arizona.
SIMULA, INC.
By /s/ James C. Dodd
------------------------------
Its: Chief Financial Officer
4
<PAGE> 1
EXHIBIT 10.39b
GUARANTEE
FOR VALUE RECEIVED, the undersigned hereby unconditionally guarantees
to STANLEY P. DESJARDINS ("Desjardins"), the prompt payment and performance by
SIMULA, INC. ("Simula"), of Simula's payment, performance, and other obligations
(the "Obligations") under that certain Promissory Note dated October 15, 1999 in
the amount of One Million Dollars ($1,000,000) payable by Simula, Inc. to
Desjardins ("Note").
Upon the occurrence of any event of default under the Obligations,
Desjardins may enforce this Guaranty independently as to the undersigned and
independently of any other remedy or security which Desjardins may at any time
have in connection with the Obligations. The undersigned expressly waives any
right to require Desjardins to proceed against Simula and agrees that Desjardins
may proceed against the undersigned and/or any collateral in such order as
Desjardins shall determine in its sole and absolute discretion.
The undersigned's total obligation under this Guarantee shall be
payment in the amount of $100,000, only.
The undersigned hereby irrevocably waives all rights which may have
arisen in connection with this guarantee to be subrogated to any of the rights
(whether contractual, under Title 11 of the United States Code, including
Section 509 thereof, under common law or otherwise) of Desjardins against Simula
or against any collateral security or guarantee or right of offset held by
Desjardins for payment of the Obligations. The undersigned hereby further
irrevocably waives all contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against Desjardins or any other person which may have arisen in
connection with this guarantee. So long as the Obligations remain outstanding,
if any amount shall be paid by or on behalf of the Simula to the undersigned on
account of any of the rights waived in this paragraph, such amount shall be held
by the undersigned in trust, segregated from other funds of the undersigned, and
shall, forthwith upon receipt by the undersigned, be turned over to Desjardins
in the exact form received by the undersigned to be applied against the
Obligations. The provisions of this paragraph shall survive the term of this
guarantee and the satisfaction in full of the Obligations.
This Guarantee shall terminate upon the earliest of the following:
(a) The payment of the Note and all accrued interest in full;
(b) One year from the date hereof; or
(c) The voluntary resignation or involuntary termination of the
undersigned as an employee of Simula, Inc.
<PAGE> 2
Desjardins may not assign his rights and interests under this
Guarantee.
THIS GUARANTEE HAS BEEN DELIVERED AT PHOENIX, ARIZONA, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA.
Wherever possible each provision of this guarantee shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this guarantee shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this guarantee.
SIGNED AND DELIVERED this 2nd day of November, 1999.
/s/ Don Townsend
-------------------------------
Don Townsend
/s/ Nelda Townsend
-------------------------------
Nelda Townsend
<PAGE> 1
EXHIBIT 10.39c
GUARANTEE
FOR VALUE RECEIVED, the undersigned hereby unconditionally guarantees
to STANLEY P. DESJARDINS ("Desjardins"), the prompt payment and performance by
SIMULA, INC. ("Simula"), of Simula's payment, performance, and other obligations
(the "Obligations") under that certain Promissory Note dated October 15, 1999 in
the amount of One Million Dollars ($1,000,000) payable by Simula, Inc. to
Desjardins ("Note").
Upon the occurrence of any event of default under the Obligations,
Desjardins may enforce this Guaranty independently as to the undersigned and
independently of any other remedy or security which Desjardins may at any time
have in connection with the Obligations. The undersigned expressly waives any
right to require Desjardins to proceed against Simula and agrees that Desjardins
may proceed against the undersigned and/or any collateral in such order as
Desjardins shall determine in its sole and absolute discretion.
The undersigned's total obligation under this Guarantee shall be
payment in the amount of $50,000, only.
The undersigned hereby irrevocably waives all rights which may have
arisen in connection with this guarantee to be subrogated to any of the rights
(whether contractual, under Title 11 of the United States Code, including
Section 509 thereof, under common law or otherwise) of Desjardins against Simula
or against any collateral security or guarantee or right of offset held by
Desjardins for payment of the Obligations. The undersigned hereby further
irrevocably waives all contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against Desjardins or any other person which may have arisen in
connection with this guarantee. So long as the Obligations remain outstanding,
if any amount shall be paid by or on behalf of the Simula to the undersigned on
account of any of the rights waived in this paragraph, such amount shall be held
by the undersigned in trust, segregated from other funds of the undersigned, and
shall, forthwith upon receipt by the undersigned, be turned over to Desjardins
in the exact form received by the undersigned to be applied against the
Obligations. The provisions of this paragraph shall survive the term of this
guarantee and the satisfaction in full of the Obligations.
This Guarantee shall terminate upon the earliest of the following:
(c) The payment of the Note and all accrued interest in full;
(d) One year from the date hereof; or
(c) The voluntary resignation or involuntary termination of the
undersigned as an employee of Simula, Inc.
<PAGE> 2
Desjardins may not assign his rights and interests under this
Guarantee.
THIS GUARANTEE HAS BEEN DELIVERED AT PHOENIX, ARIZONA, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA.
Wherever possible each provision of this guarantee shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this guarantee shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this guarantee.
SIGNED AND DELIVERED this 2nd day of November, 1999.
/s/ Brad Forst
------------------------------
Brad Forst
/s/ Teresa Forst
------------------------------
Teresa Forst
<PAGE> 1
EXHIBIT 10.39d
GUARANTEE
FOR VALUE RECEIVED, the undersigned hereby unconditionally guarantees
to STANLEY P. DESJARDINS ("Desjardins"), the prompt payment and performance by
SIMULA, INC. ("Simula"), of Simula's payment, performance, and other obligations
(the "Obligations") under that certain Promissory Note dated October 15, 1999 in
the amount of One Million Dollars ($1,000,000) payable by Simula, Inc. to
Desjardins ("Note").
Upon the occurrence of any event of default under the Obligations,
Desjardins may enforce this Guaranty independently as to the undersigned and
independently of any other remedy or security which Desjardins may at any time
have in connection with the Obligations. The undersigned expressly waives any
right to require Desjardins to proceed against Simula and agrees that Desjardins
may proceed against the undersigned and/or any collateral in such order as
Desjardins shall determine in its sole and absolute discretion.
The undersigned's total obligation under this Guarantee shall be
payment in the amount of $50,000, only.
The undersigned hereby irrevocably waives all rights which may have
arisen in connection with this guarantee to be subrogated to any of the rights
(whether contractual, under Title 11 of the United States Code, including
Section 509 thereof, under common law or otherwise) of Desjardins against Simula
or against any collateral security or guarantee or right of offset held by
Desjardins for payment of the Obligations. The undersigned hereby further
irrevocably waives all contractual, common law, statutory or other rights of
reimbursement, contribution, exoneration or indemnity (or any similar right)
from or against Desjardins or any other person which may have arisen in
connection with this guarantee. So long as the Obligations remain outstanding,
if any amount shall be paid by or on behalf of the Simula to the undersigned on
account of any of the rights waived in this paragraph, such amount shall be held
by the undersigned in trust, segregated from other funds of the undersigned, and
shall, forthwith upon receipt by the undersigned, be turned over to Desjardins
in the exact form received by the undersigned to be applied against the
Obligations. The provisions of this paragraph shall survive the term of this
guarantee and the satisfaction in full of the Obligations.
This Guarantee shall terminate upon the earliest of the following:
(e) The payment of the Note and all accrued interest in full;
(f) One year from the date hereof; or
(c) The voluntary resignation or involuntary termination of the
undersigned as an employee of Simula, Inc.
<PAGE> 2
Desjardins may not assign his rights and interests under this
Guarantee.
THIS GUARANTEE HAS BEEN DELIVERED AT PHOENIX, ARIZONA, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA.
Wherever possible each provision of this guarantee shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this guarantee shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this guarantee.
SIGNED AND DELIVERED this 2nd day of November, 1999.
/s/ Jim Saunders
------------------------------
Jim Saunders
/s/ Linda Saunders
------------------------------
Linda Saunders
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