-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H26dMLhJdWeyZNan6MJHGxD16nrmK3JJ+x+AdmibXkp4f2StiPUtZ6GeKxOlv5kP gXFMMHWcoc0W5ccPGjikDQ== 0000950153-99-001095.txt : 19990817 0000950153-99-001095.hdr.sgml : 19990817 ACCESSION NUMBER: 0000950153-99-001095 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMULA INC CENTRAL INDEX KEY: 0000885080 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531] IRS NUMBER: 860320129 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12410 FILM NUMBER: 99693807 BUSINESS ADDRESS: STREET 1: 2700 NORTH CENTRAL AVE STREET 2: STE 1000 CITY: PHOENIX STATE: AZ ZIP: 85004 BUSINESS PHONE: 6027528918 MAIL ADDRESS: STREET 1: 2700 NORTH CENTRAL AVE STREET 2: STE 1000 CITY: PHOENIX STATE: AZ ZIP: 85004 10-Q 1 FORM 10-Q 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 JUNE 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 (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: Class Outstanding at June 30, 1999 Common Stock, $.01 par value 10,167,371 2 SIMULA, INC. INDEX PART I - FINANCIAL INFORMATION PAGE Item 1 - Financial Statements Consolidated Balance Sheets June 30, 1999 and December 31, 1998....................... 2 Consolidated Statements of Operations Three and Six Months Ended June 30, 1999 and 1998........ 3 Consolidated Statement of Shareholders' Equity Six Months Ended June 30, 1999........................... 4 Consolidated Statements of Cash Flows Six Months Ended June 30, 1999 and 1998.................. 5 Notes to Interim Consolidated Financial Statements ........... 6 - 10 Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition............ 11 - 15 PART II - OTHER INFORMATION Item 2 - Legal Proceedings............................................. 16 Item 4 - Submission of Matters to Vote of Security Holders............. 17 Item 6 - Exhibits and Reports.......................................... 18 SIGNATURES............................................................. 19 1 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. SIMULA, INC. CONSOLIDATED BALANCE SHEETS - --------------------------------------------------------------------------------
JUNE 30, DECEMBER 31, 1999 1998 ------------- ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,455,121 $ 933,462 Contract and trade receivables - Net 33,848,110 27,113,757 Inventories 31,127,494 26,021,433 Deferred income taxes 3,173,000 3,173,000 Prepaid expenses and other 1,048,233 601,614 Net current assets of discontinued operations 7,807,170 4,580,773 ------------- ------------- Total current assets 79,459,128 62,424,039 PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Net 18,244,594 21,494,535 DEFERRED INCOME TAXES 19,750,000 20,550,000 DEFERRED FINANCING COSTS 2,549,848 2,627,765 INTANGIBLES - Net 3,437,285 3,452,402 OTHER ASSETS 424,783 430,340 ------------- ------------- TOTAL $ 123,865,638 $ 110,979,081 ============= ============= LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Revolving line of credit $ 20,600,000 $ 16,900,000 Trade accounts payable 11,572,382 11,028,062 Other accrued liabilities 9,022,011 7,496,841 Advances on contracts 2,769,644 2,220,737 Current portion of long-term debt 7,125,759 7,530,222 ------------- ------------- Total current liabilities 51,089,796 45,175,862 LONG-TERM DEBT - Less current portion 46,069,304 47,233,558 ------------- ------------- Total liabilities 97,159,100 92,409,420 ------------- ------------- REDEEMABLE CONVERTIBLE 6% SERIES A PREFERRED STOCK, $.05 par value - issued 6,750 shares 6,750,000 ------------- SHAREHOLDERS' EQUITY Preferred stock, $.05 par value - authorized 50,000,000 shares; issued 6,750 shares redeemable convertible 6% series A preferred stock Common stock, $.01 par value - authorized 50,000,000 shares; issued 10,167,371 and 9,915,391 101,674 99,154 Additional paid-in capital 52,681,769 51,742,593 Accumulated deficit (32,252,573) (33,452,571) Accumulated other comprehensive income (574,332) 180,485 ------------- ------------- Total shareholders' equity 19,956,538 18,569,661 ------------- ------------- TOTAL $ 123,865,638 $ 110,979,081 ============= =============
See notes to consolidated financial statements 2 4 SIMULA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - --------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ----------------------------- ----------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Revenue $ 34,026,137 $ 25,739,419 $ 65,954,399 $ 48,281,597 Cost of revenue 25,161,644 19,067,593 48,575,753 35,683,586 ------------ ------------ ------------ ------------ Gross margin 8,864,493 6,671,826 17,378,646 12,598,011 Administrative expenses 5,944,406 4,690,539 11,994,250 9,087,781 ------------ ------------ ------------ ------------ Operating income 2,920,087 1,981,287 5,384,396 3,510,230 Interest expense (1,741,531) (1,194,824) (3,408,603) (2,403,650) Interest income 13,173 52,513 24,205 115,075 ------------ ------------ ------------ ------------ Earnings before taxes and discontinued operations 1,191,729 838,976 1,999,998 1,221,655 Income tax expense (476,000) (336,000) (800,000) (490,000) ------------ ------------ ------------ ------------ Earnings before discontinued operations 715,729 502,976 1,199,998 731,655 Discontinued operations: Loss from discontinued operations, net of tax -- (1,932,410) -- (2,156,388) Estimated loss on disposal, net of tax -- (4,680,000) -- (4,680,000) ------------ ------------ ------------ ------------ Net earnings (loss) 715,729 (6,109,434) 1,199,998 (6,104,733) Dividends on preferred stock 111,205 -- 111,205 -- ------------ ------------ ------------ ------------ Net earnings available for common shareholders $ 604,524 $ (6,109,434) $ 1,088,793 $ (6,104,733) ============ ============ ============ ============ Earnings (loss) per common share - basic: Earnings before discontinued operations per common shareholder $ 0.06 $ 0.05 $ 0.11 $ 0.07 Discontinued operations: Loss from discontinued operations, net of tax -- (0.20) -- (0.22) Estimated loss on disposal, net of tax -- (0.47) -- (0.47) ------------ ------------ ------------ ------------ Net earnings (loss) per common share $ 0.06 $ (0.62) $ 0.11 $ (0.62) ============ ============ ============ ============ Earnings (loss) per common share - assuming dilution: Earnings before discontinued operations $ 0.06 $ 0.05 $ 0.10 $ 0.07 Discontinued operations: Loss from discontinued operations, net of tax -- (0.19) -- (0.21) Estimated loss on disposal, net of tax -- (0.46) -- (0.46) ------------ ------------ ------------ ------------ Net earnings (loss) per common share $ 0.06 $ (0.60) $ 0.10 $ (0.60) ============ ============ ============ ============
See notes to consolidated financial statements 3 5 SIMULA, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY SIX MONTHS ENDED JUNE 30, 1999 - --------------------------------------------------------------------------------
Accumulated Common Stock Additional Other Total --------------------- Paid-in Accumulated Comprehensive Shareholders' Comprehensive Shares Amount Capital Deficit Income Equity Income ---------- --------- ----------- ------------ ------------- ------------- ------------- BALANCE, January 1, 1999 9,915,391 $ 99,154 $51,742,593 $(33,452,571) $ 180,485 $18,569,661 Net earnings (loss) 1,199,998 1,199,998 $1,199,998 Issuance of common shares 94,619 946 295,051 295,997 Conversion of redeemable convertible Series A Preferred Stock 157,361 1,574 755,330 756,904 Preferred stock dividends (111,205) (111,205) Currency translation adjustment (754,817) (754,817) (754,817) ---------- --------- ----------- ------------ --------- ----------- ---------- BALANCE, June 30, 1999 10,167,371 $ 101,674 $52,681,769 $(32,252,573) $(574,332) $19,956,538 $ 445,181 ---------- --------- ----------- ------------ --------- ----------- ----------
See notes to consolidated financial statements 4 6 SIMULA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, ---------------------------- 1999 1998 ----------- ----------- Cash flows used for operating activities: Net income (loss) $ 1,199,998 $(6,104,733) 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 2,855,397 2,210,009 Deferred income taxes 800,000 (4,069,000) Gain on sale of assets (365,714) Currency translation adjustment (754,817) 141,017 Changes in net assets and liabilities: Contract and trade receivables - net of advances (6,185,447) (2,908,278) Inventories (5,106,061) (3,890,626) Prepaid expenses and other (446,619) (443,472) Deferred costs (377,765) Other assets 5,557 90,189 Net assets of discontinued operations (3,226,397) 1,565,013 Trade accounts payable 544,320 (1,954,460) Other accrued liabilities 1,532,074 1,043,806 ----------- ----------- Net cash used by operating activities (9,525,474) (6,520,535) ----------- ----------- Cash flows used by investing activities: Purchase of property and equipment (1,352,661) (2,888,934) Proceeds from the sale of assets 2,860,362 Costs incurred to obtain intangibles (276,643) (77,279) ----------- ----------- Net cash provided by (used in) investing activities 1,231,058 (2,966,213) ----------- ----------- Cash flows from financing activities: Net borrowings under line of credit 3,700,000 7,050,000 Principal payments under other debt arrangements (1,568,717) (980,731) Issuance of common shares 295,997 339,575 Issuance of preferred shares 7,500,000 Preferred stock dividends (111,205) ----------- ----------- Net cash provided by financing activities 9,816,075 6,408,844 ----------- ----------- Net (decrease) increase in cash and cash equivalents 1,521,659 (3,077,904) Cash and cash equivalents at beginning of period 933,462 9,367,031 ----------- ----------- Cash and cash equivalents at end of period $ 2,455,121 $ 6,289,127 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: 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 Interest paid $ 3,118,196 $ 2,534,708 =========== =========== Taxes paid $ 15,000 ===========
See notes to consolidated financial statements 5 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 six months ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. NOTE 2 - INVENTORIES: At June 30, 1999 and December 31, 1998, inventories consisted of the following.
June 30, December 31, 1999 1998 ----------- ----------- Raw materials $14,047,790 $15,581,952 Work in process 11,479,644 9,077,849 Finished goods 5,600,060 1,361,632 ----------- ----------- Total inventories $31,127,494 $26,021,433 =========== ===========
Inventories included in net current assets of discontinued operations at June 30, 1999 and December 31, 1998 were $6,069,946 and $6,198,387, respectively, and consisted mainly of raw materials. NOTE 3 - DEBT: The Company's Senior Credit Agreement, as amended by the Modification Agreements executed in February, April, June and July of 1999, provided for a revolving line of credit up to the lesser of $25,000,000 or the Revolving Line of Credit Borrowing Base (as defined) until August 31, 1999 or the date in which the outstanding principal balance is reduced below $20,000,000 from proceeds received from the issuance of junior capital, at which time the revolving line of credit is adjusted to the lesser of $20,000,000 or the Revolving Line of Credit Borrowing Base (as defined). 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. 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 6 8 SIMULA, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 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. 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. Due to the subjective nature of estimated future operations and incremental costs of disposal, it is reasonably possible that these estimates may change in the future. Future changes in estimates will be included in the consolidated statement of operations in the reporting period determined. Revenues for the rail and mass transit operations were $3,659,473 and $3,271,808 for the three months ended June 31, 1999 and 1998, respectively and were $7,054,816 and $8,733,332 for the six months ended June 30, 1999 and 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. 7 9 SIMULA, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three month period ended June 30, 1999 and 1998, inter-segment sales were insignificant and total intercompany sales of $1,158,729 and $1,254,562, respectively, have been eliminated.
1999 ------------------------------------------------------------ Commercial Transportation Governments Products and Defense Other Total -------------- ------------ ---------- ------------ Revenue: Contract revenue $ 10,276,044 $ 10,276,044 Product sales: Airline seat systems $ 16,068,159 16,068,159 Automotive safety systems 7,251,988 7,251,988 Other $ 199,549 199,549 Technology sales and royalties 230,397 230,397 ------------ ------------ ---------- ------------ Total revenue $ 23,550,544 $ 10,276,044 $ 199,549 $ 34,026,137 ============ ============ =========== ============ Operating (loss) income $ 2,167,490 $ 1,084,180 $ (331,583) $ 2,920,087
1998 ------------------------------------------------------------ Commercial Transportation Governments Products and Defense Other Total -------------- ------------ ---------- ------------ Revenue: Contract revenue $ 8,080,428 $ 8,080,428 Product sales: Airline seat systems $ 10,817,935 10,817,935 Automotive safety systems 6,593,482 6,593,482 Other $ (6,817) (6,817) Technology sales and royalties 254,391 254,391 ------------ ----------- ---------- ------------ Total revenue $ 17,665,808 $ 8,080,428 $ (6,817) $ 25,739,419 ============ =========== ========== ============ Operating (loss) income $ 2,232,046 $ 233,027 $ (483,786) $ 1,981,287
8 10 SIMULA, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six month period ended June 30, 1999 and 1998, inter-segment sales were insignificant and total intercompany sales of $2,728,790 and $2,296,870 respectively, have been eliminated.
1999 ------------------------------------------------------------ Commercial Transportation Governments Products and Defense Other Total -------------- ------------ ---------- ------------ Revenue: Contract revenue $ 21,488,676 $ 21,488,676 Product sales: Airline seat systems $ 28,822,838 28,822,838 Automotive safety systems 14,621,027 14,621,027 Other 591,913 $ 199,548 791,461 Technology sales and royalties 230,397 230,397 ------------ ------------ ---------- ------------ Total revenue $ 43,674,262 $ 22,080,589 $ 199,548 $ 65,954,399 ============ ============ ========== ============ Operating (loss) income $ 4,552,938 $ 1,682,490 $ (851,032) $ 5,384,396
1998 ------------------------------------------------------------ Commercial Transportation Governments Products and Defense Other Total -------------- ------------ ---------- ------------ Revenue: Contract revenue $ 16,220,430 $16,220,430 Product sales: Airline seat systems $20,298,095 20,298,095 Automotive safety systems 11,319,279 11,319,279 Other $ 8,235 8,235 Technology sales and royalties 435,558 435,558 ------------ ------------ ---------- ------------ Total revenue $32,052,932 $ 16,220,430 $ 8,235 $48,281,597 ============ ============ ========== =========== Operating (loss) income $ 3,917,473 $ 380,357 $ (787,600) $ 3,510,230
9 11 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 month period ended June 30, 1999 and 1998 and the six month period ended June 30, 1999 and 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% Senior Subordinated Convertible Notes (the "8% Notes") and the Series C 10% Senior Subordinated Convertible Notes (the "10% Notes") of 5,179,784, 4,311,861, 5,186,861 and 4,313,148, respectively, because the result would be anit-dilutive.
Three Months Ended June 30, Six Months Ended June 30, -------------------------------- -------------------------------- 1999 1998 1999 1998 -------------- -------------- -------------- -------------- Income before discontinued operations $ 715,729 $ 502,976 $ 1,199,998 $ 731,655 Discontinued operations: Loss from discontinued operations, net of tax (1,932,410) (2,156,388) Estimated loss on disposal, net of tax (4,680,000) (4,680,000) -------------- -------------- -------------- -------------- Net earnings (loss) 715,729 (6,109,434) 1,199,998 (6,104,733) Dividends on preferred stock 111,205 111,205 -------------- -------------- -------------- -------------- Net earnings (loss) available to common stockholders $ 604,524 $ (6,109,434) $ 1,088,793 $ (6,104,733) ============== ============== ============== ============== Basic weighted average shares outstanding 10,049,111 9,873,668 9,983,154 9,851,392 Effect of dilutive securities 1,425,245 402,970 1,458,076 367,561 -------------- -------------- -------------- -------------- Diluted weighted average shares outstanding 11,474,356 10,276,638 11,441,230 10,218,953 ============== ============== ============== ============== Basic per share amounts: Earnings before discontinued operations per common shareholder $ 0.06 $ 0.05 $ 0.11 $ 0.07 Discontinued operations: Loss from discontinued operations, net of tax -- (0.20) -- (0.22) Estimated loss on disposal, net of tax -- (0.47) -- (0.47) -------------- -------------- -------------- -------------- Earnings (loss) per common shareholder $ 0.06 (0.14) $ 0.11 (0.14) ============== ============== ============== ============== Diluted per share amounts: Income before discontinued operations $ 0.06 $ 0.05 $ 0.10 $ 0.07 Discontinued operations: Loss from discontinued operations, net of tax -- (0.19) -- (0.21) Estimated loss on disposal, net of tax -- (0.46) -- (0.46) -------------- -------------- -------------- -------------- Net earnings (loss) per common shareholder $ 0.06 $ (0.60) $ 0.10 $ (0.60) ============== ============== ============== ==============
10 12 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 six month periods ended June 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. This Form 10-Q contains certain forward-looking statements and information. The cautionary statements contained below should be read as being applicable to all related forward-looking statements wherever they appear. 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 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, the Company has become the largest North American-based supplier of seating systems for rail and other mass transit vehicles and a successful new entrant in the manufacture of new commercial airliner seating and inflatable restraints for automobiles. Utilizing its proprietary safety technology, the Company 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. 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. To continue it's strategic plan, in 1998 the Company adopted a plan to sell its rail and mass transit seating operations at Coach and Car and Artcraft. Because the Company's commercial airliner seating operation moved into a new significantly larger facility in July 1998 and has established substantial production, the rail operations are no longer required to demonstrate the Company's production capabilities to current and potential airliner seating customers. In addition, the larger airliner seating manufacturing facility reduced the synergies achieved previously with the rail and mass transit seating operation. The sale of these rail seating businesses will provide cash that will be used to repay outstanding indebtedness. The company anticipates it will sell these operations as ongoing businesses. These companies will continue their marketing, sales and manufacturing activities pending the sale. The company's rail and mass transit seating operations are reported as discontinued operations. 11 13 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 Six Months Ended June 30, 1999 Compared to 1998 Revenue for the three months ended June 30, 1999 increased 32% to $34.0 million from $25.7 million for the comparable period in 1998. Revenue for the six months ended June 30, 1999 increased 37% to $66.0 million from $48.3 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 June 30, 1999 increased 33% to $23.6 million from $17.7 million and for the six month period ended June 30, 1999 increased 36% to $43.7 million from $32.1 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 June 30, 1999 increased 27% to $10.3 million from $8.1 million and for the six month period ended June 30, 1999 increased 36% to $22.1 million from $16.2 million for the comparable periods in 1998. The increase in Government and Defense revenue is attributable to increased overall contracts and the timing of material costs incurred on contracts. Gross margin for the three months ended June 30, 1999 increased 33% to $8.9 million from $6.7 million and for the six months ended June 30, 1999 increased 38% to $17.4 million from $12.6 million for the comparable period in 1998. Gross margin as a percent of sales for the three and six months ended June 30, 1999 remained consistent with the comparable 1998 periods in each of the Company's segments. Commercial Transportation Products gross margin for the three months ended June 30, 1999 increased 30% to $5.3 million from $4.1 million and for the six months ended June 30, 1999 increased 34% to $10.5 million from $7.8 million for the comparable periods in 1998. Government and Defense gross margin increased 30% to $3.4 million from $2.6 million and for the six months ended June 30, 1999 increased 40% to $6.7 million from $4.8 million for the comparable periods in 1998. The increase in gross margin is attributable to the increase in revenue noted above. Administrative expenses for the three months ended June 30, 1999 increased 27% to $5.9 million from $4.7 million and for the six months ended June 30, 1999 and increased 32% to $12.0 million from $9.1 million for the comparable periods in 1998. Commercial Transportation Products administrative expenses for the three months ended June 30, 1999 increased 68% to $3.1 million from $1.9 million and for the six months ended June 30, 1999 increased 52% to $5.9 million from $3.9 million for the comparable periods in 1998. The increases in Commercial Transportation Products administrative expenses is attributable to an increased support structure required to support revenue growth. Commercial Transportation Products administrative expenses as a percentage of sales for the three and six month periods ended June 30, 1999 was 13.3% and 13.5%, respectively, as compared to 10.5% and 12.1% for the three and six month periods ended June 30, 1998, respectively. Government and Defense administrative expenses for the three month period ended June 30, 1999 decreased 3% to $2.3 million from $2.4 million for the comparable 1998 period and is principally related to a decrease in efforts related to internally funded research and development due to increased demand of technical resources applied to third party contracts. Government and Defense administrative expenses for the six month period ended June 30, 1999 increased 14% to $5.0 million from $4.4 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 was 22.1% and 22.7% for the three and six month period ended June 30, 1999 as compared to 29.0% and 27.1% in the comparable 1998 period. Interest expense increased 46% to $1.7 million from $1.2 million for the three months ended June 30, 1999 and 1998, respectively, and increased 42% to $3.4 million from $2.4 million for the six month period ended June 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 six month periods ended June 30, 1999 and 1998 approximated the Company's combined statutory rate of 40%. 12 14 SIMULA, INC. 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. Due to the subjective nature of estimated future operations and incremental costs of disposal, it is reasonably possible that these estimates may change in the future. Future changes in estimates will be included in the consolidated statement of operations in the reporting period determined. On June 30, 1999, the Company executed a definitive purchase agreement with a third party for the sale of the rail and mass transit operations. Under the terms of the agreement, the total purchase price is $10.0 million. The agreement requires the buyer to assume all liabilities, to deposit nonrefundable earnest money and calls for a closing date no later than July 30, 1999. The buyer paid the earnest money but was unable to meet the July 30, 1999 closing date because it is relying upon funds from a lender, which is currently completing final due diligence and loan approval. The company is cooperating with the third party and it's lender to complete the transaction in an expeditious manner. Depending upon the level of funding the buyer will receive from it's lender, the Company may modify the June 30, 1999 definitive agreement to extend the closing date and to adjust the amount of cash to be received by the Company at closing, with the balance represented by a note from the buyer. Although the Company has continued to cooperate with the third party buyer, it has also entered into discussions with two other buyer groups. Under the terms of the June 30 definitive purchase agreement, Management of the Company does not believe an additional provision for loss on disposal of its discontinued operation will be required. Revenues for the rail and mass transit operations were $3,659,473 and $3,271,808 for the three months ended June 30, 1999 and 1998, respectively and $7,054,816 and $8,733,332 for the six months ended June 30, 1999 and 1998, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company's ability to fund working capital requirements and meet debt service requirements during the next year will be dependent upon improved cash flow from operating units, the proceeds received from the sale of its discontinued operations to repay indebtedness and increase availability of funds under its Senior Credit Agreement, and obtaining replacement financing of $4.8 million in its 10% Senior Subordinated Notes (the "10% Notes") due September 15, 1999. Anticipated cash proceeds related to the sale of the company's discontinued operation should be sufficient to satisfy the Company's obligation to reduce its revolving line of credit borrowing base under its Senior Credit Agreement. In addition, the Company believes it will secure replacement financing of the $4.8 million due on its 10% Notes in order to meet its repayment obligation under these notes. The Company's ability to fund working capital requirements after the Revolving Line of Credit borrowing base is adjusted to $20 million on August 31, 1999 is primarily dependent upon its ability to generate the necessary funds from its operating units. The Company is investigating a number of financing alternatives including additional potential strategic asset and technology sales licensing and financing, and negotiated increases to its revolving line of credit borrowing base in order to improve its liquidity position. The Company may also, however, 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. 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 $6.2 million for the six months ended June 30, 1999 due principally to increased receivables from 16g Seat and ITS sales and the timing of billing provisions on certain Government and Defense contracts. Operating activities required the use of $9.5 million of cash during the six months ended June 30, 1999, compared to the use of $6.5 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 and funding of discontinued operations current operating losses and increase in net assets. The increase in inventories was primarily due to an increase in 16g Seat inventory necessary to support anticipated future deliveries and inventories in the Government and Defense segment primarily related to timing of material deliveries. Investing activities provided $1.2 million of cash during the six months ended June 30, 1999, compared to use of $2.9 million of cash during the same period in 1998. The increase in cash provided 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 $1.4 million in purchases of various production equipment as compared to equipment purchases of $2.9 million during 13 15 SIMULA, INC. 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 during the 1998 period. Financing activities provided $9.8 million of cash during the six months ended June 30, 1999 as compared to $6.4 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 $3.7 million in net borrowings under the Company's line of credit partially offset by principal payments under other debt arrangements for scheduled principal reductions. Cash provided from financing activities during the 1998 period includes $7.1 million in net borrowing under the Company's line of credit partially offset by principal payments under other debt arrangements for scheduled principal reductions. In April 1999, the Senior Credit Agreement was amended to reduce the Company's revolving line of credit from the lesser of $26 million or the Revolving Line of Credit Borrowing Base (as defined) to the lesser of $23 million or the Revolving Line of Credit Borrowing Base (as defined). In June and July 1999, the Senior Credit Agreement was amended to increase the revolving line of credit from $23 million to $25 million and extend the date at which time the revolving line of credit is reduced to $20 million from July 31, 1999 to August 31, 1999. At August 16, 1999, under the line of credit the Company had available borrowing of $25 million and outstanding borrowing of $22.9 million. 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 14 16 SIMULA, INC. 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 devices containing embedded circuitry and to date has fully assessed (confirmed that such devices are Year 2000 compliant or upgraded the devices as needed) approximately 90% of such devices. The assessed devices are in various stages of remediation, testring and implementation. Completion thru implementation is expected during the third 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. As of the date of this report, the Company has one subsidiary using accounting and manufacturing systems significantly affected by the Year 2000 issue. This subsidiary is currently in the remediation phase and completion thru implementation is expected by November 1999. 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 beign 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. 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. 15 17 SIMULA, INC. 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. FORWARD LOOKING INFORMATION AND RISKS OF THE BUSINESS Commencing in fiscal 1997, the Company entered large scale production of the ITS(R) and 16g Seat. Significant investments to transition to high volume manufacturing for these products were also made in 1997, which affected earnings. The Company began to realize significant revenues from the introduction of these products in 1997, which has continued in 1998 and is anticipated to continue in 1999. Growth in the automotive safety business should result from increased production volumes. However, auto industry customary price reductions will reduce operating margins. Improved financial performance in the airline seating business is expected but will be dependent on improvements in manufacturing efficiencies, materials cost reductions, better delivery records and customer satisfaction, and continued sales. It is estimated that the airline seating business should achieve break even results in 1999. During 1999, the government and defense business of the Company is expected to show growth in revenues and operating income. 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, the availability of cash sales proceeds from discontinued operations to repay indebtedness and increase availability of funds under its bank credit agreement and obtaining replacement financing for the 10% Notes due September 15, 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, manufacturing capacity and yield; costs of labor, raw materials, supplies, and equipment; reliability of vendor base; 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. 16 18 SIMULA, INC. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company's Annual Meeting of Shareholders was held on June 17, 1999. Proxies were solicited for votes on matters proposed at such meeting pursuant to Section 14 of the Securities Exchange Act of 1934. The Company's Proxy Statement for the 1999 Annual Meeting was filed with the Securities and Exchange Commission on May 1, 1999. April 23, 1999 was fixed as the record date for voting on matters presented at the Annual Meeting. As of such date, 9,976,752 shares of Common Stock were outstanding and eligible to be voted on all matters. At the meeting 9,815,135 shares were present in person or by proxy. A quorum was constituted of 4,907,569 shares. The first matter submitted for vote was the ratification of the selection of Deloitte & Touche, LLP as the independent public accountants for the Company's fiscal year 1998. Shares voted on the matter were 9,815,135 and votes tabulated were 9,590,158 for, 183,152 against, and 41,825 abstaining. The second matter submitted for Shareholder vote was the election of four directors. Votes for individual directors were tabulated as follows:
Name Votes For Votes Withheld - ---------------------------- ------------------ ------------------ James A. Saunders 9,398,212 416,923 Bradley P. Forst 9,406,612 408,523 James C. Withers 9,420,812 394,323 S. Thomas Emerson 9,405,812 409,323
The third matter submitted for Shareholder vote was the approval of the 1999 Incentive Compensation Option Plan. Shares voted on the matter were 9,815,135, and votes tabulated were 4,676,544 for, 950,551 against, and 110,076 abstaining. There were 4,077,964 broker non-votes on the matter. Under applicable rules the matter was approved. No other matters were voted upon at the meeting. 17 19 SIMULA, INC. ITEM 6. EXHIBITS AND REPORTS. (a) The following Exhibits are included pursuant to Item 601 of Regulation S-K.
No. Description Reference 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) 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 ................................................................................................... *10.35 Modification Agreement No. 4 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated July 28, 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
- ---------- * 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. 18 20 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 June 30, 1999 to be signed on its behalf by the undersigned thereunto duly authorized. SIMULA, INC. DATE: August 13, 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 20 21 Exhibit Index
No. Description Reference 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) 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 ................................................................................................... *10.35 Modification Agreement No. 4 with Bank One, Arizona, N.A. and Imperial Bank, Arizona dated July 28, 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
- ---------- * 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. EX-10.34 2 EX-10.34 1 Exhibit 10.34 THIRD MODIFICATION AGREEMENT BY THIS THIRD MODIFICATION AGREEMENT (the "Agreement"), made and entered into as of the 23rd day of June, 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 and that Second Modification Agreement dated as of April 28, 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: "RLC Commitment" means Twenty-Five Million And No/100 Dollars ($25,000,000.00) until the RLC Adjustment Date, after which it means Twenty Million And No/100 Dollars ($20,000,000.00). 2.2 Section 2.2(d) of the Senior Credit Agreement is hereby amended to read as follows: (d) Notwithstanding anything herein to the contrary, an amount of the RLC Commitment equal to $300,000.00 (the "Payment 2 Reserve") shall not be disbursed after June 23, 1999 for any purpose other than to pay the Rail Credit Fee and the fees, costs and expenses of the Administrative Agent, the Banks and their agents (including, without limitation, attorneys' fees and costs) with respect to the documentation of the Loans, and the drafting of the Credit Documents and any modification thereof until the Administrative Agent shall have determined in its sole discretion that all such amounts have been fully paid; provided that the Payment Reserve shall no longer be required once the Discontinued Operations have been sold and the RLC Loans prepaid in accordance with Section 7.19(b) hereof. 2.3 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 July 31, 1999. The net sales price therefrom shall not be less than $10,000,000.00 unless the Banks otherwise agree in writing. Of the net sales price, $8,000,000.00 in cash shall be applied to the prepayment of the RLC Loans. The purchaser's note in the amount of $2,000,000.00 for the balance of the purchase price 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. 2.4 Section 7.20 of the Senior Credit Agreement is hereby amended to read as follows: 7.20 Building Sale. The building located at 10016 South 51st Street, Phoenix, Arizona shall be sold no later than July 31, 1999. As a result of such sale, at least $2,000,000 of such sale proceeds shall be available for, and shall be applied -2- 3 to, the repayment of the Loans, first to the extent applicable the RLC and thereafter to the other Loans. 2.5 Section 8.9(f) of the Senior Credit Agreement is hereby amended to read as follows: (f) Its EBITDA to be less than $3,000,000.00 for the fiscal quarter ending March 31, 1999, $3,500,000 for the fiscal quarter ending June 30, 1999 and $4,000,000.00 for any fiscal quarter thereafter, calculated for each fiscal quarter without any annualization adjustment. 2.6 Exhibit "A" to the Senior Credit Agreement is hereby amended to read as attached hereto. 2.7 Schedule 1.1 of the Senior Credit Agreement is hereby amended to read as attached hereto. 2.8 The reference to "$23,000,000.00" in Section 2(a) of each Security Agreement is hereby amended to read "$25,000,000.00." 2.9 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. 2.10 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. -3- 4 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. 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. -4- 5 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 With respect to the increase in the RLC Commitment, Borrower shall pay to Bank One a $20,000.00 arrangement fee; 6.3 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 6.4 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. 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. -5- 6 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 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 ------------------------------------------ -6- 7 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 ------------------------------------------ -7- 8 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 ------------------------------------------ -8- 9 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 Reinhart ------------------------------------------ Name: Steve Reinhart ------------------------------------------ Title: Vice President ------------------------------------------ ADMINISTRATIVE AGENT -9- 10 CONSENT AND AGREEMENT OF GUARANTORS With respect to the Third Modification Agreement, dated June 23, 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, 11 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 ----------------------------------------- -2- 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 ----------------------------------------- -3- 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 ----------------------------------------- -4- 14 INTAERO, LTD., an Arizona corporation By: /s/ Donald Townsend ----------------------------------------- Name: Donald Townsend ----------------------------------------- Its: Assistant Treasurer ----------------------------------------- GUARANTOR -5- 15 EXHIBIT "A" COMPLIANCE CERTIFICATE FOR REPORTING PERIOD ENDING _____________, 19___ ("REPORTING PERIOD") Bank One, Arizona, NA Post Office Box 71 Phoenix, Arizona 85001 Attn: Commercial Banking AZ1-1178 Date: (1) ------------------------ Dear Ladies and Gentlemen: This Compliance Certificate refers to the Senior Credit Agreement dated as of November 6, 1998 (as it may hereafter be amended, modified, extended or restated from time to time, the "Senior Credit Agreement"), among Simula, Inc., an Arizona corporation ("Company"), all present and future Subsidiaries of the Company, the Banks named therein from time to time and Bank One, Arizona, NA, a national banking association as Administrative Agent for the Banks. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Senior Credit Agreement. Pursuant to Section 7.1 of the Senior Credit Agreement, the undersigned, an Authorized Officer of Company, hereby certifies that: (1) Enclosed are the required financial statements for the [month] [quarter] [fiscal year] ending for the Company as required under Section 7.1 of the Senior Credit Agreement, which, to the undersigned's knowledge, after due inquiry, fairly present in all material respects the financial position of the Company and the results of its operations at the dates and for the periods indicated, and have been prepared in accordance with GAAP. (2) To the best of the undersigned's knowledge, no "Event of Default" has occurred [or if so, specifying the nature and extent thereof and any corrective actions taken or to be taken]. (3) Attached is a schedule indicating the profit status of the Company's principal contracts. (4) As of the last day of the Reporting Period, the computations below were true and correct: - -------------------- (1) To be submitted within seventy-five (75) days after the end of the final fiscal quarter of each fiscal year of the Company and within forty-five (45) days after the end of all other fiscal quarters of the Company. 16 I. Section 8.9(a) - EBITDA RATIO (in thousands) Numerator: Funded Debt $ less Subordinated Debt $ less advances on contracts $ less accruals $ less Restricted Bond Proceeds $ less accounts payable $ equals $ A divided by Denominator: Net Income(2) plus interest expense plus depreciation plus amortization less debt service on Subordinated Debt equals EBITDA(3) B equals A/B Maximum: Until the earlier of 7/31/99 or the Discontinued Operations Sale Date 3.5x - -------------------- (2) Disregarding any losses due to the Discontinued Operations. (3) Annualized: As of March 31, 1999, multiplied by 4. As of June 30, 1999, multiplied by 2. As of September 30, 1999, multiplied by 1.33. Thereafter, rolling 4 quarters. -2- 17 Thereafter 3.0x II. Section 8.9(b) - CURRENT RATIO Numerator: Current Assets A divided by Denominator: Current Liabilities B equals A/B Minimum 1.5x III. Section 8.9(c) - DEBT COVERAGE RATIO Numerator: Net Income(2) plus depreciation plus amortization less income taxes paid in cash equals NIDA(3) A divided by Denominator: Current maturities of long-term debt less, unless previously refinanced, $4,750,000 Subordinated Debt due 9/99 equals B equals A/B Minimum 1.75x IV. Section 8.9(d) - TANGIBLE NET WORTH PERCENTAGE Numerator: Equity -3- 18 plus Subordinated Debt less intangible assets equals A divided by Denominator: Assets less intangible assets less an amount equal to Restricted Bond Proceeds equals B equals A/B Minimum 50% V. Section 8.9(e) - NET INCOME(2) Two consecutive fiscal quarters beginning with the two fiscal quarters ending June 30, 1999 Fiscal Year beginning with the 1999 fiscal year Minimum $ 0 VI. Section 8.9(f) - QUARTERLY EBITDA(2) Fiscal quarter ending March 31, 1999 Minimum $3,000,000 Fiscal quarter ending June 30, 1999 Minimum $3,500,000 -4- 19 Each fiscal quarter thereafter Minimum $4,000,000 SIMULA, INC. By: --------------------------------------- Name: --------------------------------------- Its: --------------------------------------- -5- 20 SCHEDULE 1.1 PRO RATA SHARE AND NOTICE ADDRESS OF EACH BANK
Pro Rata Share: Bank One Imperial --------------- -------- -------- RLC: If RLC Commitment is $20,000,000: $12,000,000 $ 8,000,000 If RLC Commitment is $25,000,000: $17,000,000 $ 8,000,000 Term A Loan $ 5,000,000 0 Term B Loan $ 2,500,000 0
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 21 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 Third Modification Agreement dated June 23, 1999 entered into between the Borrower and the Administrative Agent. BANK ONE, ARIZONA, NA, a national banking association By: /s/ Steve Reinhart -------------------------------------- Name: Steve Reinhart -------------------------------------- Its: Vice President -------------------------------------- "Issuing Bank" and "Bank" 22 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 Third Modification Agreement dated June 23, 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/ Stephen Wallis --------------------------------------- Name: Steven Wallis --------------------------------------- Its: Senior Vice President --------------------------------------- "Bank" EX-10.35 3 EX-10.35 1 Exhibit 10.35 FOURTH MODIFICATION AGREEMENT BY THIS FOURTH MODIFICATION AGREEMENT (the "Agreement"), made and entered into as of the 28th day of July, 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 and that Third Modification Agreement dated as of June 23, 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) August 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 $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 2.2 Section 3.2(e) of the Senior Credit Agreement is hereby amended to read as follows: (e) Rail Credit Fee. Company agrees to pay the Administrative Agent for distribution to the Banks a monthly fee (the "Rail Credit Fee") in advance on the first day of each month, commencing May 1, 1999 if the Discontinued Operations Sale Date has not yet occurred and continuing until the Discontinued Operations Sale Date has occurred. The Rail Credit Fee shall be (i) commencing May 1, 1999, $100,000.00 and (ii) commencing August 1, 1999, $150,000.00. The Rail Credit Fee shall be distributed by the Administrative Agent as follows: 80.0% to Bank One and 20.0% to Imperial. 2.3 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 August 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. 2.4 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- 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- 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). SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER. -4- 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- 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- 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- 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 -------------------------------------- Its: Vice President -------------------------------------- ADMINISTRATIVE AGENT -8- 9 CONSENT AND AGREEMENT OF GUARANTORS With respect to the Fourth Modification Agreement, dated July 28, 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, 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 -------------------------------------- -2- 11 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 -------------------------------------- -3- 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- 13 INTAERO, LTD., an Arizona corporation By: /s/ Donald Townsend -------------------------------------- Name: Donald Townsend -------------------------------------- Its: Assistant Treasurer -------------------------------------- GUARANTOR -5- 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 Fourth Modification Agreement dated July 28, 1999 entered into between the Borrower and the Administrative Agent. BANK ONE, ARIZONA, NA, a national banking association By: /s/ Steve Reinhart -------------------------------------- Name: Steve Reinhart -------------------------------------- Its: Vice President -------------------------------------- "Issuing Bank" and "Bank" 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 Fourth Modification Agreement dated July 28, 1999 entered into between the Borrower and the Administrative Agent. IMPERIAL BANK, California banking corporation, successor by merger to IMPERIAL BANK banking corporation By: /s/ Stephen Wallis -------------------------------------- Name: Stephen Wallis -------------------------------------- Its: Senior Vice President -------------------------------------- "Bank" EX-27 4 FINANCIAL DATA SCHEDULE
5 U.S. DOLLARS 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 1 2,455,121 0 26,024,695 353,819 31,127,494 79,459,128 30,431,834 12,187,239 123,865,638 51,089,796 0 6,750,000 0 101,674 19,854,864 19,956,538 65,954,399 65,954,399 48,575,753 48,575,753 13,793,043 177,000 3,408,603 1,999,998 800,000 1,199,998 0 0 0 1,199,998 .11 .10
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