EXHIBIT 10.45
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SIMULA, INC.
AND
ITS DIRECT AND INDIRECT SUBSIDIARIES
$25,000,000.00
AND CONTINGENT REFINANCE FACILITY
LOAN AGREEMENT
Dated as of September 26, 2001
Financing provided by
ALLIED CAPITAL CORPORATION
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TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
PREAMBLE
Parties 1
Recitals 1
ARTICLE I LOAN AND TERMS OF PAYMENT............................................. 2
Section 1.1 Loan.......................................................... 2
Section 1.2 Interest Rate................................................. 3
Section 1.3 Principal and Interest Payments............................... 3
Section 1.4 Default Rate.................................................. 3
Section 1.5 Fees.......................................................... 4
Section 1.6 Prepayments/Redemptions....................................... 4
Section 1.7 Payments after Event of Default............................... 6
Section 1.8 Method of Payments; Immediately Available Funds............... 6
Section 1.9 Savings Clause................................................ 6
Section 1.10 Collateral.................................................... 6
ARTICLE II GUARANTIES........................................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................... 8
Section 3.1 Due Organization; Authority; Binding Obligation............... 8
Section 3.2 Principal Business; Title to Assets........................... 8
Section 3.3 Litigation.................................................... 9
Section 3.4 Taxes......................................................... 9
Section 3.5 Financial Statements.......................................... 10
Section 3.6 Leases........................................................ 10
Section 3.7 Material Contracts; Accounts Payable.......................... 10
Section 3.8 Disclosure.................................................... 10
Section 3.9 Specified Debt Documents...................................... 11
Section 3.10 No Material Change............................................ 11
Section 3.11 No Side Agreements............................................ 11
Section 3.12 Compliance; Non-Contravention................................. 12
Section 3.13 Governmental Permits; Third-Party Consents.................... 12
Section 3.14 Fees & Brokerage.............................................. 12
Section 3.15 Other Debts................................................... 12
Section 3.16 Capitalization................................................ 12
Section 3.17 Solvency...................................................... 13
Section 3.18 Investment Company Act Representations........................ 13
Section 3.19 Regulatory Compliance......................................... 13
Section 3.20 Employee Benefit Matters...................................... 13
Section 3.21 Collective Bargaining......................................... 14
Section 3.22 Employees and Employment Agreements........................... 14
Section 3.23 Related-Party Transactions.................................... 14
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Section 3.24 No Competing Business Interests............................... 15
Section 3.25 No Conflicting Non-Competition Agreements..................... 15
Section 3.26 Patents, Trademarks, Copyrights, Licenses, Etc................ 15
ARTICLE IV AFFIRMATIVE COVENANTS................................................ 15
Section 4.1 Monthly Financials............................................ 15
Section 4.2 Certification of Non-Default.................................. 16
Section 4.3 Year-end Financials; Annual Audit............................. 16
Section 4.4 Projected Financials and Budget; Audit Reports................ 16
Section 4.5 Regulatory Filings............................................ 17
Section 4.6 Notice of Litigation.......................................... 17
Section 4.7 Notice of Defaults or Judgments............................... 17
Section 4.8 Board Meetings................................................ 17
Section 4.9 Insurance..................................................... 18
Section 4.10 Use of Proceeds; Certification................................ 18
Section 4.11 Future Financing.............................................. 18
Section 4.12 Access to Records............................................. 18
Section 4.13 Financial Covenants........................................... 19
Section 4.14 Payments under the Note and Other Debts....................... 21
Section 4.15 Maintain Existence............................................ 22
Section 4.16 Financing Statements.......................................... 22
Section 4.17 Information Requests.......................................... 22
Section 4.18 Compliance With Applicable Law................................ 22
Section 4.19 Further Assurance............................................. 22
Section 4.20 Environmental Matters......................................... 22
Section 4.21 Real Estate Matters........................................... 23
Section 4.22 Sale of Designated Companies.................................. 23
ARTICLE V NEGATIVE COVENANTS.................................................... 24
Section 5.1 Change of Control............................................. 24
Section 5.2 Restricted Payments........................................... 24
Section 5.3 Disposal of Assets............................................ 24
Section 5.4 Liens and Related Matters..................................... 24
Section 5.5 Restriction on Fundamental Changes............................ 25
Section 5.6 Fees.......................................................... 25
Section 5.7 Affiliate Transactions........................................ 25
Section 5.8 Change in Companies, Subsidiaries or Business................. 25
Section 5.9 Judgments..................................................... 26
Section 5.10 Additional Debt............................................... 26
Section 5.11 Permitted Investments......................................... 27
Section 5.12 Debt Modifications............................................ 27
Section 5.13 Fiscal Year................................................... 27
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ARTICLE VI TERMINATION.......................................................... 27
ARTICLE VII DEFAULT............................................................. 27
Section 7.1 Events of Default............................................. 27
Section 7.2 Remedies...................................................... 29
Section 7.3 Application of Proceeds Following Default..................... 30
ARTICLE VIII CONDITIONS TO CLOSING.............................................. 30
Section 8.1 Issuance of Note.............................................. 30
Section 8.2 Transaction Documents......................................... 30
Section 8.3 Certified Documents........................................... 30
Section 8.4 Representations and Warranties; No Default; No Adverse Change. 31
Section 8.5 Opinions of Counsel........................................... 31
Section 8.6 Transaction Permitted by Applicable Laws; No Injunction....... 31
Section 8.7 Approvals and Consents........................................ 31
Section 8.8 Compliance with Securities Laws............................... 31
Section 8.9 Specified Debt Documents...................................... 32
Section 8.10 Expenses...................................................... 32
Section 8.11 Closing Fee................................................... 32
Section 8.12 Insurance..................................................... 32
Section 8.13 Due Diligence................................................. 32
ARTICLE IX CONDITIONS TO FUNDING OF CONTINGENT REFINANCE LOAN................... 32
Section 9.1 Representations and Warranties; No Default; No Adverse Change. 32
Section 9.2 Transaction Permitted by Applicable Laws; No Injunction....... 33
Section 9.3 Compliance with Securities Laws............................... 33
Section 9.4 Specified Debt Documents...................................... 33
Section 9.5 Additional Documentation...................................... 33
ARTICLE X FEES AND COSTS........................................................ 33
ARTICLE XI INDEMNIFICATION; ENVIRONMENTAL LIABILITY............................. 34
ARTICLE XII CUMULATIVE REMEDIES; NO IMPLIED WAIVER.............................. 35
Section 12.1 Cumulating; Receivership...................................... 35
Section 12.2 No Implied Waiver............................................. 35
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ARTICLE XIII PARTIES............................................................ 35
ARTICLE XIV NOTICE.............................................................. 36
ARTICLE XV RELATIONSHIP OF THE PARTIES.......................................... 36
ARTICLE XVI CONTROLLING LAW; VENUE AND JURISDICTION; SERVICE OF PROCESS......... 37
ARTICLE XVII WAIVER OF TRIAL BY JURY............................................ 38
ARTICLE XVIII CAPTIONS; SEVERANCE............................................... 38
ARTICLE XIX COUNTERPARTS; ENTIRE AGREEMENT...................................... 38
ARTICLE XX DEFINITIONS AND RULES OF CONSTRUCTION................................ 39
Section 20.1 Definitions................................................... 39
Section 20.2 Rules of Construction......................................... 48
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of September 26, 2001 by and among
(i) Simula, Inc., an Arizona corporation (collectively with its successors and
assigns, "Simula"), (ii) the direct and indirect Subsidiaries of Simula listed
on the signature pages hereto (collectively with Simula and with their
successors and assigns, the "Companies", and each individually a "Company") and
(iii) Allied Capital Corporation, a Maryland corporation (collectively with its
successors and assigns, "Holder"). Capitalized terms not otherwise defined
herein shall have the meanings set out in the definition section hereof, which
is Section 20.1.
RECITALS
Simula and the other Companies desire to borrow from Holder, and
Holder desires, on the terms and conditions set forth herein, to lend to the
Companies on a joint and several basis a term loan in the original principal
amount of $25,000,000 (collectively with all modifications, renewals, extensions
and replacements thereof and therefor, the "Initial Loan"), the proceeds of
which shall be used (i) to repay in full on the Closing Date all Debt owing by
the Companies to Xxxxxx Xxxxxxxxx Capital Partners II, L.P., a California
limited partnership, (ii) for working capital purposes of the Companies and
(iii) to pay fees, costs and expenses in connection with the transactions
contemplated hereby (collectively, the "Initial Specified Loan Purposes"). In
the event that Simula and/or the other Companies shall have failed by August 31,
2003 to enter into Permitted Bank One Refinancing Documents, Simula and the
other Companies desire to borrow from Holder, and Holder may desire, in its sole
discretion, and on the terms and conditions set forth herein, to lend to the
Companies on a joint and several basis on any single date over the period
commencing on September 1, 2003 through and including September 30, 2003 an
additional term loan in the original principal amount equal to the sum of (x)
the then outstanding principal amount of the 9 1/2% Senior Subordinated Notes
together with all accrued and unpaid interest and fees thereon and (y) the
amount of the Contingent Loan Fee (collectively with all modifications,
renewals, extensions and replacements thereof and therefor, the "Contingent
Refinance Loan"). The proceeds of the Contingent Refinance Loan shall be
immediately used by Simula to (i) repay in full the 9 1/2% Senior Subordinated
Notes together with all accrued and unpaid interest and fees thereon and (ii) to
pay the Contingent Loan Fee (the "Contingent Refinance Loan Purposes").
PROVISIONS
In consideration of the premises and the representations,
warranties, covenants and other agreements herein, Holder and the Companies
hereby agree as set forth below.
ARTICLE I
LOAN AND TERMS OF PAYMENT
Section 1.1 Loan.
(a) Amount and Disbursement. The Initial Loan shall consist of a
term loan from Holder to the Companies, on a joint and several basis, in an
original principal amount equal to $25,000,000. Holder shall disburse the entire
amount of the Initial Loan to or as directed by the Companies when all terms and
conditions in Article VIII have been satisfied. The Contingent Refinance Loan
shall consist of a term loan from Holder to the Companies, on a joint and
several basis, in an original principal amount equal to the sum of (x) the then
outstanding principal amount of the 9 1/2% Senior Subordinated Notes together
with all accrued and unpaid interest and fees thereof and (y) the amount of the
Contingent Loan Fee. The Contingent Refinance Loan shall be funded in Holder's
sole and absolute discretion in the event Simula and/or the other Companies
shall have failed by August 31, 2003 to either (x) enter into Permitted Bank One
Refinancing Documents or (y) establish to the reasonable satisfaction of Holder
as indicated by Holder's written acknowledgement thereof that, upon the stated
maturity of the 9 1/2% Senior Subordinated Notes, (I) no Default or Event of
Default shall exist and (II) Simula shall receive or shall have received equity
investments sufficient to permit Simula to repay the 9 1/2% Senior Subordinated
Notes in cash on their stated maturity dates. The Companies hereby acknowledge
and agree that Holder has no commitment or any other obligation to make the
Contingent Refinance Loan. The Companies further hereby acknowledge and agree
that Holder may elect not to fund the Contingent Refinance Loan for any reason,
or for no reason at all, and that no Company shall be entitled at any time to
challenge any decision by Holder not to fund the Contingent Refinance Loan.
Without limiting the sole right of Holder to decline funding the Contingent
Refinance Loan as set forth herein, Holder shall decline to fund the Contingent
Refinance Loan in the event that the conditions set forth in Article IX shall
not have been satisfied in full or otherwise waived by Holder. Holder shall
disburse the entire amount of the Contingent Refinance Loan, if funded, net the
amount retained by Holder in satisfaction of the Contingent Loan Fee, to the
holders of the 9 1/2% Senior Subordinated Notes or any payment agent therefor.
(b) Use of Proceeds. The proceeds of the Initial Loan shall be
used only for the Specified Loan Purposes. The proceeds of the Contingent
Refinance Loan, if funded, shall be used only for the Contingent Refinance Loan
Purposes.
(c) Note. The Loan shall be evidenced by the Note.
(d) Reborrowing. No Company shall be entitled to reborrow any
portion of the Loan which is repaid or prepaid.
(e) Senior Indebtedness. The Companies hereby acknowledge and
agree that the Loan and any other obligations owing by any Company to Holder,
including without
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limitation the Obligations, shall constitute "Senior Indebtedness" as such term
is defined in the Bank One Indenture.
Section 1.2 Interest Rate.
The Principal Balance shall bear interest from the Closing Date
until paid, computed on the basis of a 365-day year for the actual number of
days elapsed, at a fixed annual rate equal to the sum of (a) a tranche of
interest calculated at twelve and one-half of one percent (12.5%) per annum,
payable on a current basis as set forth in Section 1.3(a)(i) (the "Current
Interest Tranche") plus (b) a tranche of interest calculated at a per annum rate
equal to the PIK Percentage payable on a deferred basis as set forth in Section
1.3(a)(ii) (the "Deferred Interest Tranche").
Section 1.3 Principal and Interest Payments.
(a) Interest. Except as otherwise provided in Section 1.6, the
Companies agree, with respect to interest on the Principal Balance, as follows:
(i) interest calculated under the Current Interest Tranche
will be earned (but will not be compounded) on a daily basis, and the
Companies shall jointly and severally pay interest calculated under the
Current Interest Tranche quarterly in arrears on each Quarterly Payment
Date; and
(ii) interest calculated under the Deferred Interest Tranche
will be earned (but will not be compounded) on a daily basis and be added
to the Principal Balance on each Quarterly Payment Date; provided,
however, that the Companies shall have the right to pay in cash the
accrued Deferred Interest Tranche as of any Quarterly Payment Date if on
such Quarterly Payment Date, and after giving effect to such payment, (i)
Specified Availability is not less than $3,000,000, (ii) no Default or
Event of Default shall have occurred and be continuing and (iii) the
Companies are in compliance on a pro forma basis with the provisions of
Section 4.13(b) and Section 4.13(f), recomputed for the most recently
ended fiscal quarter for which information is available and assuming for
such purposes that any such cash payments constitute cash Interest
Expenses. The Principal Balance, including all amounts added thereto
pursuant to this Section 1.3(a)(ii), shall be payable according to Section
1.3(b).
(b) Principal. Unless otherwise required or permitted to be sooner
paid pursuant to the provisions hereof, the Companies shall jointly and
severally repay the Principal Balance in full on the Maturity Date, together
with all other sums which then are due and payable pursuant to the terms of the
Loan Documents.
Section 1.4 Default Rate.
After the occurrence and during the continuance of an Event of
Default, at Holder's election, the Principal Balance shall bear interest equal
to the sum of (a) the Current Interest Tranche, (b) the Deferred Interest
Tranche, and (c) a third tranche calculated at three
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percent (3%) per annum which will be earned (but will not be compounded) on a
daily basis and added to the Principal Balance on each Quarterly Payment Date.
Section 1.5 Fees.
(a) On or before the Closing Date, the Companies shall pay to
Holder a fee (the "Closing Fee") in the amount of $562,500. The Closing Fee
shall be deemed to be fully earned and payable by the Companies as of such date,
and shall be accounted for as follows: $125,000 shall be for the account of
Holder in consideration of closing and funding the Loan; $250,000 shall be for
the account of Holder as a consulting fee and $187,500 shall be a structuring
fee for the account of AC Corp., an affiliate of Holder.
(b) On the date of the funding of the Contingent Refinance Loan,
the Companies shall pay to Holder a fee (the "Contingent Loan Fee") in the
amount of (x) the original principal amount of the Contingent Refinance Loan
multiplied by (y) two and one-fourth of one percent (2.25%) (the "Contingent
Refinance Loan Fee"). The Contingent Refinance Loan Fee shall be deemed to be
fully owed and payable by the Companies on the date of the funding of the
Contingent Refinance Loan, and shall be accounted for as determined by Holder on
or prior to the date of funding of the Contingent Refinance Loan.
Section 1.6 Prepayments/Redemptions.
(a) Optional and Mandatory Prepayments/Redemptions.
(i) Optional Prepayments/Redemptions. Subject to the
provisions of Section 1.6(b), any Company may, at its option, prepay all
or a portion of the Principal Balance and thereby redeem the Note or that
portion of the Note evidencing the Loan portion being prepaid, together
with the accrued interest thereon and the applicable Redemption Charge as
set forth in Section 1.6(c); and
(ii) Mandatory Prepayment/Redemption. Concurrently with the
consummation of any Specified Prepayment Event, the Companies shall
jointly and severally prepay the Loan, together with accrued interest
thereon and the applicable Redemption Charge as set forth in Section
1.6(c), by the amount of Net Proceeds received in connection with such
Specified Prepayment Event (and by the full outstanding amount of the
Loan, together with accrued interest thereon, in the event of a Change of
Control).
(b) Amount and Manner of Prepayment/Redemption. If the Loan is
prepaid in whole or in part, by any Company or otherwise pursuant to the terms
of this Section 1.6, thereby redeeming all or a portion of the Note, the
following conditions shall apply:
(i) Notice of Prepayment; Number and Amount of Prepayments/
Redemption. Not less than five (5) days prior to the date upon which any
Company desires to make any voluntary prepayment of the Loan, the
applicable Company or Companies shall deliver to Holder notice of its or
their intention to prepay, which
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notice shall be irrevocable and shall state the prepayment date and the
amount of the Principal Balance to be prepaid. The amount of any voluntary
partial prepayment of the Principal Balance shall be not less than
$500,000 or in integral increases of $100,000 therefrom. A voluntary
prepayment of the Principal Balance shall not be made more frequently than
twice per each calendar quarter.
(ii) Additional Payments/Redemption. Concurrently with any
prepayment of the Principal Balance (and the resulting partial redemption
of the Note), the Companies shall pay to Holder accrued and unpaid
interest on the portion of the Principal Balance which is being prepaid to
the date on which Holder is in receipt of immediately available funds in
the amount of the portion of the Principal Balance which is being prepaid,
and any other sums which are due and payable pursuant to the terms of any
of the Loan Documents.
(c) Redemption Charge.
(i) Subject to clauses (ii) and (iii) of this subsection
1.6(c), concurrently with any prepayment of all or any part of the
Principal Balance (and the resulting partial or full redemption of the
Note) the Companies shall jointly and severally pay to Holder a redemption
charge (the "Redemption Charge"), which shall not be less than zero, equal
to the amount of interest which would have been payable for the full term
of this Agreement on each Quarterly Payment Date after the date of
prepayment on the portion of the Principal Balance which is being prepaid
(and the Deferred Interest Tranche with respect to such Principal Balance
shall continue to accrue as if such Principal Amount remained outstanding
for the full term of this Agreement).
(ii) Concurrently with the delivery of the annual financial
statements required pursuant to Section 4.3, the Companies shall provide
Holder with a calculation of Excess Cash Flow for the fiscal year most
recently ended, which calculation shall be certified by a Responsible
Officer. In the event that any Company elects, in accordance with the
provisions of Section 1.6(b), to prepay all or any portion of the Loan
within twenty (20) days of the delivery of any such calculation then,
notwithstanding anything to the contrary set forth in this Agreement, (A)
the Redemption Charge, with respect to not more than $5,000,000 of the
Loan prepaid in accordance with this Section 1.6(c)(ii) (reduced by the
aggregate dollar amount of prepayments made pursuant to Section
1.6(c)(iii)(A)), shall equal one percent (1%) of the amount so prepaid,
and (B) the Redemption Charge, with respect to a portion of the
outstanding principal amount of the Loan prepaid equal to the Designated
Sum in addition to amounts prepaid pursuant to the preceding clause (A)
(reduced by the aggregate dollar amount of prepayments made pursuant to
Section 1.6(c)(iii)(B)), shall equal ten percent (10%) of the amount so
prepaid, but solely to the extent that, with respect to each of the
preceding clauses (A) and (B), (u) the outstanding CIT Loans shall be
concurrently prepaid by the Companies in an amount equal to the amount so
prepaid to Holder, (v) the commitment of CIT to make CIT Loans shall be
concurrently and permanently reduced, on a dollar-by-dollar basis, by
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the amount of the amount so prepaid to Holder pursuant to documentation in
form and substance reasonably acceptable to Holder, (w) the amount so
prepaid to Holder constitutes less than fifty percent (50%) of Excess Cash
Flow for the most recently ended fiscal year, (x) Specified Availability
is not less than $3,000,000 on the date of prepayment and after giving
effect thereto, (y) no Default or Event of Default shall have occurred and
be continuing and (z) the Companies are in compliance on a pro forma basis
with the provisions of Section 4.13(b) and Section 4.13(f), recomputed for
the most recently ended fiscal quarter for which information is available.
(iii) In the event that the Companies prepay all or any
portion of the Loan with Net Proceeds of Asset Dispositions permitted
under the terms of this Agreement then, notwithstanding anything to the
contrary set forth in this Agreement, (A) the Redemption Charge, with
respect to not more than $5,000,000 of the Loan prepaid in accordance with
this Section 1.6(c)(iii) (reduced by the aggregate dollar amount of
prepayments made pursuant to Section 1.6(c)(ii)(A)) shall equal one
percent (1%) of the amount so prepaid and (B) the Redemption Charge, with
respect to a portion of the outstanding principal amount of the Loan
prepaid equal to the Designated Sum in addition to amounts prepaid
pursuant to the preceding clause (A) (reduced by the aggregate dollar
amount of prepayments made pursuant to Section 1.6(b)(ii)(B)) shall equal
ten percent (10%) of the amount so prepaid.
Section 1.7 Payments after Event of Default.
All payments received by Holder during the existence of an Event of
Default shall be applied in accordance with Section 7.3.
Section 1.8 Method of Payments; Immediately Available Funds.
All payments to be made pursuant to the Loan Documents by Companies
to Holder shall be made by wire transfer of immediately available funds to the
account of Holder described on Exhibit 1.8 or to such other account or accounts
as Holder shall notify Company.
Section 1.9 Savings Clause.
In no contingency or event shall the interest rate charged pursuant
to the terms of this Loan Agreement exceed the highest rate permissible under
any law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. In the event that such a court determines that Holder
has received interest hereunder in excess of the highest applicable rate, the
amount of such excess interest shall be applied against the Principal Balance
then outstanding, and any excess interest remaining after such application shall
be refunded to the Companies.
Section 1.10 Collateral.
Subject only to the terms of the Intercreditor Agreement, the
Note and the Holder's rights herein shall be secured by a first priority lien on
and a first priority security
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interest in all properties and interests in properties of the Companies pursuant
to the terms of the Security Documents.
ARTICLE II
GUARANTIES
Each Company acknowledges that it is jointly and severally liable
for all of the Obligations, and as a result hereby unconditionally guaranties
the full and prompt payment when due, whether at maturity or earlier, by reason
of acceleration or otherwise, and at all times thereafter, of all indebtedness,
liabilities and obligations of every kind and nature of the other Companies to
Holder, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, joint or several, now or hereafter existing, or due or
to become due, and howsoever owned, held or acquired by Holder. Each Company
agrees that if this guaranty, or any Liens securing this guaranty, would, but
for the application of this sentence, be unenforceable under applicable law,
this guaranty and each such Lien shall be valid and enforceable to the maximum
extent that would not cause this guaranty or such Lien to be unenforceable under
applicable law, and this guaranty and such Lien shall automatically be deemed to
have been amended accordingly at all relevant times.
Each Company hereby agrees that its obligations under this guaranty
shall be unconditional, irrespective of (a) the validity or enforceability of
the Obligations or any part thereof, or of any promissory note or other document
evidencing all or any part of the Obligations, (b) the absence of any attempt to
collect the Obligations from a Company or any other guarantor or other action to
enforce the same, (c) the waiver or consent by Holder with respect to any
provision of any agreement, instrument or document evidencing or securing all or
any part of the Obligations, or any other agreement, instrument or document now
or hereafter executed by a Company and delivered to Holder, (d) the failure by
Holder to take any steps to perfect and maintain its security interest in, or to
preserve its rights to, any security or collateral for the Obligations, (e)
Holder's election, in any proceeding instituted under the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code, (f) any borrowing
or grant of a security interest by a Company as debtor-in-possession, under
Section 364 of the Bankruptcy Code, (g) the disallowance, under Section 502 of
the Bankruptcy Code, of all or any portion of Holder's claim(s) for repayment of
the Obligations, or (h) any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a Company or a guarantor.
Each Company hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of receivership or
bankruptcy of a Company, protest or notice with respect to the Obligations and
all demands whatsoever, and covenants that this guaranty will not be discharged,
except by complete and irrevocable payment and performance of the Obligations.
No notice to a Company or any other party shall be required for Holder to make
demand hereunder. Such demand shall constitute a mature and liquidated claim
against a Company. Upon the occurrence of any Event of Default, Holder may, in
its sole election, proceed directly and at once, without notice, against one or
more Companies to collect and recover the full amount or any portion of the
Obligations, without first proceeding against any other Company, any other
Person, firm, corporation, or any security
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or collateral for the Obligations. Holder shall have the exclusive right to
determine the application of payments and credits, if any from any Company, any
other person, firm or corporation, or any security or collateral for the
Obligations, on account of the Obligations or of any other liability of a
Company to Holder.
At any time after and during the continuance of an Event of Default,
Holder may, in its sole discretion, without notice to any Company and regardless
of the acceptance of any collateral for the payment hereof, appropriate and
apply toward payment of the Obligations (i) any indebtedness due or to become
due from Holder to any Company and (ii) any monies, credits or other property
belonging to any Company at any time held by or coming into the possession of
Holder, or any affiliates thereof, whether for deposit or otherwise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce Holder to enter into the transactions contemplated herein,
make the Loan and purchase the Note, the Companies hereby represent and warrant
as set out below.
Section 3.1 Due Organization; Authority; Binding Obligation.
(a) Each Company is duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of organization, as set forth
on the signature pages hereto;
(b) each Company is duly qualified to conduct business and is in
good standing as a foreign corporation in all jurisdictions in which the nature
of its business or location of its properties require such qualification except
where failure to so qualify would not have a Material Adverse Effect; and
(c) each Company has full power and authority to enter into this
Agreement, to borrow money as contemplated hereby, and to carry out the
provisions hereof; each Company has taken all corporate action necessary for the
execution and performance of this Agreement; this Agreement and each document to
be executed by such Company herewith will constitute a valid and binding
obligation of each Company, enforceable in accordance with their respective
terms when executed and delivered subject to bankruptcy, insolvency, and similar
laws affecting the enforceability of creditors' rights generally and to general
principles of equity.
Section 3.2 Principal Business; Title to Assets.
(a) The Companies are primarily engaged in three business
segments: (i) engineering, product development, product manufacturing, testing
and analysis of safety and personal protection products for commercial
automobiles, light trucks and heavy trucks, (ii) engineering, product
development, product manufacturing, testing and analysis of safety and personal
protection products for military aircraft, ships and vehicles, paramilitary
applications, commercial aircraft and police use including (but not limited to)
seating
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systems, armor, parachutes, survival equipment, and inflatable restraints, and
(iii) licensing of technology related to the two areas listed above, as well as
licensing of technology related to transparent polymers and elastomers for a
range of uses and other technologies contained in Simula's intellectual property
portfolio for a range of markets outside of Simula's core business
(collectively, the "Business"); and
(b) each Company has good and marketable title to and ownership of
all real and personal property it purports to own, free and clear of all liens,
claims, security interests and encumbrances except for Permitted Liens.
Section 3.3 Litigation.
No Company has been made a party to or threatened by any suits,
actions, claims, investigations by governmental bodies or legal, administrative
or arbitrational proceedings, except as set out in the litigation schedule
attached hereto as Exhibit 3.3 (the "Litigation Schedule"); neither any Company
nor any officers or directors of any Company knows of any basis or grounds for
any such suit or proceeding; there are no outstanding orders, judgments, writs,
injunctions or decrees or any court, government agency or arbitrational tribunal
against or affecting any Company or its properties, assets or business.
Section 3.4 Taxes.
(a) Generally. Each Company has filed all tax returns, federal,
state and local, which are required to have been filed by such Company, and has
duly paid or fully reserved for all taxes or installments thereof (including any
interest or penalties), which have or may become due pursuant thereto or
pursuant to any assessment received by such Company.
(b) No Open Returns. No federal, state, local, foreign or other
return of any Company for tax years that remain open under any applicable
statute of limitations has been examined by the Internal Revenue Service or
other tax authorities; or if so examined no deficiencies have been asserted or
assessments made as a result of such examinations (including all penalties and
interest); there are no waivers, agreements or other arrangements providing for
any extension of time with respect to the assessment or collection of any unpaid
tax, interest or penalties relating to any Company; no issues have been raised
by (or are currently pending before) the Internal Revenue Service or any other
taxing authority in connection with any return of any Company, which could
reasonably be expected to have a Material Adverse Effect if decided adversely to
any Company.
(c) True Copies of Returns. Each Company has delivered to Holder
true, correct and complete copies of all Federal, state and local tax returns
for the most recent taxable year ended for which a return is required to have
been filed, and all information set forth on such returns is true, complete and
accurate.
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Section 3.5 Financial Statements.
The Companies have furnished the Holder with the following financial
statements, certified by a Responsible Officer of Simula: (a) consolidated
balance sheets and statements of income, retained earnings and cash flows of the
Companies as of and for the fiscal year ended December 31, 2000, all certified
by Simula's independent certified public accountants, which financial statements
have been prepared in accordance with GAAP consistently applied; and (b)
unaudited consolidated balance sheets and consolidated statements of income,
retained earnings and cash flows of the Companies as of and for the month ended
July 31, 2001, attached hereto as Exhibit 3.5, all certified by a Responsible
Officer as fairly presenting the financial condition and results of operations
of the Companies in all material respects and that such financial statements
have been prepared in accordance with GAAP consistently applied. Each Company
further represents and warrants to the Holder that (a) said balance sheets
fairly present the condition of the Companies on a consolidated basis as of such
dates, and (b) no Company has any direct or contingent liabilities which were
required under GAAP to be disclosed but which are not disclosed on said
financial statements or the notes thereto.
Section 3.6 Leases.
A list of all real property leases to which any Company is a party
have been provided to Holder, and is attached hereto as Exhibit 3.6; each
Company's possession of its leased properties has not been disturbed, and no
claim has been asserted against any Company adverse to such leasehold interests.
All real property lease obligations of any Company are current in all material
respects.
Section 3.7 Material Contracts; Accounts Payable.
All material contracts to which any Company is a party are valid and
binding agreements, enforceable according to their terms, subject to bankruptcy,
insolvency and similar laws affecting the enforceability of creditors' rights
generally, and to general principles of equity, and neither any Company nor, to
each Company's knowledge, any other party is in default thereunder, and no
Company's rights thereunder are subject to any offset or counterclaim. Except as
set forth on Exhibit 3.7 attached hereto, all accounts payable of $5,000 or
greater of each Company are current in all material respects.
Section 3.8 Disclosure.
(a) None of the statements made in this Agreement or in any other
written statement or document furnished by or on behalf of any Company to Holder
in connection with the Loan contained, both as of its respective date and as of
the Closing Date, any untrue statement of a material fact; or as of any such
date omitted, or as of the Closing Date omit, a material fact necessary to make
the statements contained herein and therein not misleading.
(b) The current forecast projections and long range projections
attached as Exhibit 3.8 hereto were based on reasonable estimates and
assumptions made by the
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management of Simula in good faith; such projections and assumptions were fair
and reasonable in light of the historical financial performance of the Companies
and reasonably foreseeable business conditions. All material operative
assumptions made in the preparation of such projections are set out in writing
as part of the projections. To the knowledge of the Companies no facts exist
which would require a material change in any such projections. However,
projections as to future events are not represented or warranted as fact, actual
results during future periods may differ from projections, and such differences
may be material.
Section 3.9 Specified Debt Documents.
Set forth as Exhibit 3.9 hereto are true copies of (i) the CIT
Financing Agreement and (ii) the Bank One Indenture, together with, in each
case, all amendments, renewals and replacements thereof and therefor, and all
exhibits thereto (collectively, the "Specified Debt Documents"); such documents
are unmodified, except as disclosed on Exhibit 3.9, and are in full force and
effect, and no party is in breach thereunder.
Section 3.10 No Material Change.
Except as set forth on Exhibit 3.10 hereto, since December 31, 2000,
no Company has suffered any material adverse change in its condition (financial
or otherwise) or its overall business prospects, nor entered into any material
transactions, or incurred any material debt, obligation or liability, absolute
or contingent, except as proposed herein, nor sustained any material loss or
damage to its property, whether or not insured, nor suffered any material
interference with its business or operations, present or proposed; and there has
been no sale, lease, abandonment or other disposition by any Company of any of
its property, real or personal, or any interest therein or relating thereto,
that is materially adverse to the financial position of any Company.
Section 3.11 No Side Agreements.
In each case except as set out on Exhibit 3.11 hereto: neither any
Company nor any officers, directors or shareholders of any Company (to the best
of the Companies' knowledge with respect to the shareholders of Simula) are
party to any agreement with Holder except for this Agreement and the other Loan
Documents; no Company is a party to any agreement calling for any action by any
Company outside the ordinary course of its business; there exists no agreement
or understanding calling for any payment or consideration from a customer or
supplier of any Company to an officer, director or shareholder of any Company
(to the best of the Companies' knowledge with respect to the shareholders of
Simula) in respect of any transaction between any Company and such supplier or
customer. No Affiliate of any Company, directly or through any business concern
affiliated with such Affiliate, transacts any business with any Company other
than employment.
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Section 3.12 Compliance; Non-Contravention.
Except for matters set out in the Litigation Schedule, no Company is
in breach of, default under, or in violation of (i) any applicable law, decree,
order, rule or regulation which could have a Material Adverse Effect; or (ii)
any material indenture, contract, agreement, deed, lease, loan agreement,
commitment, bond, note, deed of trust, restrictive covenant, license or other
material instrument or material obligation to which it is a party, or by which
it is bound, or to which any of its assets are subject or any charter document
of any Company; the execution, delivery and performance of this Agreement and
the other documents mentioned herein will not constitute any such breach,
default or violation, or require consent or approval of any court, governmental
agency or body, except as expressly contemplated herein.
Section 3.13 Governmental Permits; Third-Party Consents.
Each Company has all franchises, permits, licenses, consents and any
similar authority from any governmental body or other Person necessary for (i)
the execution, delivery and performance of this Agreement and the other
documents mentioned herein, and (ii) the operation of its business as previously
conducted and as proposed herein, except, solely with respect to clause (ii),
for such franchises, permits, licenses or consents the failure to obtain or
maintain could not reasonably be expected to have a Material Adverse Effect. No
Company is in breach of any such franchise, permit, license, consent or other
authority.
Section 3.14 Fees & Brokerage.
Except as set out on Exhibit 3.14 hereto, no brokerage or similar
fees are due to any party in respect to the transactions contemplated herein.
Section 3.15 Other Debts.
Except for the Debt arising under the Specified Debt Documents, the
Debt described on Exhibit 5.10, the matters set out in the Litigation Schedule,
and other Debts of the types and in the amounts described in the financial
statements identified in Section 3.5, no Company has any debts, liabilities or
obligations of any nature in excess of $5,000, whether accrued, absolute,
contingent or otherwise, arising out of any transaction entered into or any
state of facts existing prior to the Closing Date, including without limitation,
liabilities or obligations on account of taxes or government charges, penalties,
interest or fines thereon or in respect thereof; no Company knows, and has no
reasonable grounds to know, of any basis for any claim against it as of the
Closing Date in excess of $5,000, or of any debt, liability or obligation in
excess of $5,000 other than those mentioned herein.
Section 3.16 Capitalization.
The authorized equity securities of each of the Companies and each
of their Subsidiaries is as set forth on Exhibit 3.16. All issued and
outstanding equity securities of each of the Companies and each of their
Subsidiaries are duly authorized and validly issued, fully paid and
nonassessable; all such equity securities (exclusive of equity securities issued
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by Simula) are free and clear of all Liens other than those in favor of Holder
or consented to by Holder pursuant to the Intercreditor Agreement; and all such
equity securities were issued in compliance with all applicable state, Federal
and foreign laws concerning the issuance of securities. The identity of the
holders of the equity securities of each of the Companies, other than Simula,
and the percentage of their fully-diluted ownership of the equity securities of
each of the Companies is set forth on Exhibit 3.16. No shares of the capital
stock or other equity securities of any Company, other than those described
above, are issued and outstanding. Except in respect of the equity securities of
Simula or as provided in Exhibit 3.16, there are no preemptive or other
outstanding rights, options, warrants, conversion rights or similar agreements
or understandings for the purchase or acquisition from any Company of any equity
securities of any such entity.
Section 3.17 Solvency.
As of the Closing Date, and after giving effect to the transactions
contemplated by this Agreement, (i) the fair saleable value of the Companies'
assets is greater than the amount required to pay the Companies' total
indebtedness (contingent or otherwise), and is greater than the amount that will
be required to pay such indebtedness as it matures and as it becomes absolute
and matured; (ii) the transactions contemplated hereby are being effectuated
without intent to hinder, delay or defraud present or future creditors of any
Company; (iii) it is the Companies' intention that the Companies will maintain
the above-referenced solvent financial condition for the Companies in the
aggregate, giving effect to the debt incurred hereunder, as long as any Company
is obligated to Holder under this Agreement or in any other manner whatsoever;
and (iv) each Company has sufficient capital to carry on its previous operations
and the Business as they are conducted on the Closing Date, and to consummate
the transactions contemplated herein.
Section 3.18 Investment Company Act Representations.
No Company is, nor does any Company intend to become, an Investment
Company and no Company nor any officer, director, partner or controlling Person
of any Company is an Affiliated Person of Holder.
Section 3.19 Regulatory Compliance.
Except as set out on the Litigation Schedule, each Company has
complied in all material respects with all laws, ordinances and regulations
applicable to it or to its business, including without limitation laws,
ordinances and regulations relating to securities, zoning, labor, food and drug
matters, the Exchange Act, the Occupational Safety & Health Act, ERISA, all
regulations promulgated under such acts, and all Federal and state environmental
laws and regulations (in each case, as amended).
Section 3.20 Employee Benefit Matters.
No Company has withdrawn from a "pension plan", as defined in
Section 3(2) of ERISA in which it was a "substantial employer" as defined in
Section 4001(a)(2) of
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ERISA or was deemed to be a "substantial employer" under Section 4062(e) of
ERISA. To the Company's knowledge there have been no reportable events as set
forth in Section 4043 of ERISA in respect of any plan described in Section
4021(a) of ERISA in respect of which any Company will be liable to make
contributions or pay benefits, and there has been no termination of any such
plan since the effective date of ERISA which could result in any tax, penalty or
liability being imposed upon any Company; neither any Company nor, to the best
of each Company's knowledge, any predecessors in interest of any Company, has
participated in, nor will the purchase of the Note by the Holder involve, any
"prohibited transaction" (as defined in Section 4975 of the Internal Revenue
Code of 1986, as amended) that could subject any Company or Holder to any tax or
penalty imposed by said Section 4975; since the effective date of ERISA, neither
any Company nor, to the best of each Company's knowledge, any predecessors in
interest of any Company has incurred any "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA, to which any Company could be
subject or for which it might be liable; no Company is a party to, and none of
the operations of any Company is a multi-employer plan, as defined in Section
3(37) of ERISA.
Section 3.21 Collective Bargaining.
No Company is a party to or subject to any collective bargaining
agreements or union contracts. There are no labor disputes pending or threatened
against any Company or, to the best of each Company's knowledge, against any
Company's business which singly or in the aggregate could have a Material
Adverse Effect.
Section 3.22 Employees and Employment Agreements.
The Companies have delivered to Holder copies of all employment,
compensation, non-competition and non-disclosure agreements and contracts
between any Company and any officers, directors, executives or key employees of
any Company; no party is in breach under any such contract or agreement; all
such contracts and agreements are in full force and effect and are the legal,
valid and binding obligation of each party thereto; no officer, executive or key
employee of any Company has advised any Company (orally or in writing) that he
or she intends to terminate employment with any Company.
Section 3.23 Related-Party Transactions.
Except as set forth in Exhibit 3.23 hereto: no Affiliate of any
Company or member of his or her immediate family, (i) is indebted to any
Company, nor is any Company indebted (or committed to make loans or extend or
guarantee credit) to any of them; (ii) is directly or indirectly interested in
any material contract of any Company; or (iii) directly or through any business
concern affiliated with such Person, transacts any business with any Company,
other than employment reflected on the Companies' books and records.
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Section 3.24 No Competing Business Interests.
Except as set forth in Exhibit 3.24 hereto, none of any Company's
Affiliates has any direct or indirect interest, including, but not limited to,
the ownership of equity or debt securities in any Person (other than, with
respect to Affiliates which are not Subsidiaries of any Company, indirect
ownership as a consequence of ownership of shares or other interests in a mutual
fund, hedge fund or similar form of indirect ownership, or, with respect to such
Affiliates, ownership of shares having less than two percent (2%) of the voting
power of the outstanding securities), in any business, that is involved in any
way with, competes with, or conducts any business similar to any business
conducted by any Company.
Section 3.25 No Conflicting Non-Competition Agreements.
Except as and to the extent set forth on Exhibit 3.25, and except
for noncompetition agreements in favor of any Company, no Company is subject to
any contract or agreement purporting to limit its rights to compete in any
market in which such Company presently provides, or proposes to provide, goods
or services; or purporting to restrict their rights to disclose information in
respect to such competition.
Section 3.26 Patents, Trademarks, Copyrights, Licenses, Etc.
Exhibit 3.26 attached hereto sets forth a list of (i) all Federally
registered patents, patent applications, patent rights, trademarks, trademark
applications, trademark rights and copyrights of each Company and (ii) all
licenses or other intellectual property which are material to the business of
each Company. Each Company possesses all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, licenses and other
intellectual property necessary to conduct its Business without conflict with
any patent, patent right, trademark, trademark right, trade name, copyright,
license or other intellectual property of any other Person, except where the
failure to possess the same could not reasonably be expected to have a Material
Adverse Effect.
ARTICLE IV
AFFIRMATIVE COVENANTS
Commencing on the Closing Date, and until terminated pursuant to
Article VI hereto, unless the Holder in each instance otherwise gives its prior
written consent:
Section 4.1 Monthly Financials.
Each Company will (i) maintain a standard modern system of
accounting in accordance with GAAP (it being hereby acknowledged by Holder that,
as of the Closing Date, each Company maintains a standard modern system of
accounting); (ii) make full, true and correct entries in such system of all
dealings and transactions in relation to its business and affairs; and (iii)
forward, or cause to be forwarded to Holder the Companies' consolidated
financial statements prepared in accordance with GAAP (including a balance
sheet, comparisons to the previous years results for such period, comparisons to
budget, profit and loss statement and cash flow statement, each prepared on a
monthly and year-to-
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date basis), within thirty (30) days from the end of each month beginning with
September, 2001, together with (A) a monthly management summary description of
operations and (B) a certificate as to fairness of presentation, compliance with
GAAP and consistency by a Responsible Officer.
Section 4.2 Certification of Non-Default.
The Companies will provide to Holder in writing each quarter
concurrently with the financial statements and other materials required to be
delivered pursuant to Section 4.1 for the most recently ended month a written
certification by a Responsible Officer in the form of Exhibit A attached hereto
(x) stating that (i) no Default or Event of Default has occurred under the Note
or this Agreement, and (ii) no default or breach has occurred under any
Specified Debt Documents, or if any such Event of Default, Default, default or
breach exists, stating the nature thereof and the Companies' responses thereto
and (y) containing computations evidencing the Companies' compliance with the
financial covenants contained in Section 4.13 of this Agreement (or, in the
event of any non-compliance, containing a statement to such effect by reference
to particular financial covenants).
Section 4.3 Year-end Financials; Annual Audit.
Within ninety (90) days of each fiscal year-end, Simula will provide
to Holder its audited year-end consolidated financial statements and cause a
public accounting firm acceptable to Holder to address and provide to Holder its
unqualified written opinion that such statements fairly present the Companies'
financial position and the results of their operations at the stated dates and
for the stated periods according to GAAP together with (A) a certificate from
such public accounting firm to the effect that, in making the examination
necessary for the signing of such annual audit report, such accounting firm has
not become aware of any Default or Event of Default that has occurred and is
continuing or, if such accounting firm has become aware of any such event,
describing it and the steps, if any, being taken to cure it and (B) the
computations of such public accounting firm evidencing the Companies' compliance
with the financial covenants contained in Section 4.13 of this Agreement; such
statements shall include statements of cash flow and management compensation;
all national public accounting firms shall be acceptable to Holder in this
respect.
Section 4.4 Projected Financials and Budget; Audit Reports.
(a) Prior to each fiscal year-end, the Companies will provide
Holder with projected financial statements for the coming year and a copy of the
Companies' monthly budget for the next fiscal year, in the same format as used
for Section 4.1.
(b) Each Company will provide to Holder promptly upon receipt
thereof, any reports (including, without limitation, any management letters)
submitted to such Company (other than reports previously delivered pursuant to
Sections 4.1 and 4.3 above) by independent accountants in connection with any
annual, interim or special audit made by them of the books of any Company.
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Section 4.5 Regulatory Filings.
Each Company will timely file all returns and other documents
required to be provided by such Company to any federal, state or local
governmental agency, including without limitation the Internal Revenue Service,
the Environmental Protection Agency, the Occupational Safety & Health
Administration and the Securities & Exchange Commission, and shall provide
Holder a copy of each such filing as follows: (i) with respect to each filing
with the Securities & Exchange Commission, within three (3) days of such filing,
and (ii) with respect to all other such filings, within five (5) days of request
therefor by Holder.
Section 4.6 Notice of Litigation.
Each Company will notify Holder of (i) any litigation to which such
Company is a party within thirty (30) days of receipt of any complaint or other
pleadings, and (ii) any litigation to which such Company is not a party but
which could substantially, directly and adversely affect operation of such
Company's business or the collateral pledged pursuant to the Security Documents
within thirty (30) days of such Company's receipt of knowledge thereof. Within
thirty (30) days of a request by Holder, each Company will send a copy of any
documentation received with respect to any litigation described in (i) or (ii)
above or, if no such documents are received by the applicable Company, a letter
setting out the material facts known about the litigation.
Section 4.7 Notice of Defaults or Judgments.
Each Company will give Holder notice of default declared in regard
to any material loan or lease of such Company or any judgment entered against
such Company by mailing a copy to Holder as soon as commercially feasible and,
in any event, within seven (7) business days of receipt thereof.
Section 4.8 Board Meetings.
Simula will hold meetings of its Board of Directors at least four
times a year; will allow one designee of the Holder to attend and participate on
an observer basis in such meeting and all meetings of committees of such Board
either in person or via video- or teleconference and at Company's expense; and
will provide the Holder with the same prior notice received by directors to
meetings, and written materials as given to the directors; provided, however,
that if any such Board desires to act by unanimous written consent in lieu of a
meeting, it may do so if the Holder receives, prior to their adoption, a copy of
the resolutions to be adopted in the same manner and at the same time as
provided to the directors and provided, further, that in the event any other
Company at any time or from time to time holds meetings of its Board of
Directors and/or desires to act by unanimous written consent in lieu of a
meeting, then the provisions of this Section 4.8 shall also apply to such
Company. Notwithstanding the foregoing, the designee of the Holder may be
excluded from any such meeting or a portion thereof: (i) if, on the advice of
Simula's counsel, the designee's presence would reasonably likely invalidate the
attorney-client privilege between Simula and its counsel; or (ii) if the Board
of Directors will be discussing matters pertaining
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to the Loan and any member of the Board of Directors shall request that the
designee not be present.
Section 4.9 Insurance.
Each Company will maintain all-risk hazard insurance on its assets,
liability insurance, and business interruption insurance, in such reasonable
amounts and forms as acceptable to Holder; this shall include federal flood
insurance if any material assets are in a designated flood plain; and, at
Holder's request, supply Holder annually with a certification of such insurance
from the relevant insurers.
Section 4.10 Use of Proceeds; Certification.
The Companies will use the proceeds of the Loan only for the
purposes set forth in the Recitals to this Agreement.
Section 4.11 Future Financing.
The Companies will first offer to permit Holder to consummate with
the Companies all senior and subordinated finance proposals (excluding (i)
capital leases, (ii) purchase money obligations and (iii) any extension of the
maturity of the CIT Financing Agreement or any increase in the amount of CIT
Loans provided for thereunder) offered to any Company and provide Holder not
less than thirty (30) days (the "Review Period") within which Holder shall be
permitted, without obligation, to issue to the Companies Holder's proposal with
respect to any such contemplated financings. If any Company rejects the Holder's
proposed financing arrangements, such Company shall not complete such proposed
transaction with any other party on economic terms substantially similar to or
more adverse to such Company unless the Companies first pay Holder a fee of one
percent (1.0%) of the outstanding Obligations at the time such Company completes
such proposed financing; provided, that the fee described in this sentence shall
also be due and payable in the event that (i) any Company rejects Holder's
proposed financing arrangements as being less favorable to such Company on
economic terms than a competing proposed financing and (ii) the applicable
Company or Companies consummate such competing proposed financing (or a
substantially similar financing) more than thirty (30) days following the end of
the applicable Review Period. In the event Holder shall fail by the end of any
Review Period to offer any proposed financing, Holder shall be deemed to have
offered no proposal with respect to the financing proposal giving rise to such
Review Period.
Section 4.12 Access to Records.
Each Company will (i) permit from time-to-time any authorized agent
of Holder to obtain credit and other background information on any Company and
its management; (ii) permit any authorized agent of Holder to inspect, examine
and make copies and abstracts of the books of account and records of any Company
at reasonable times during normal business hours; and (iii) allow Holder's
agents and such appraisers to interview any
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Company's outside accountants who are by this covenant irrevocably instructed to
respond to such inquiries as fully as if the inquiries were made by such Company
itself.
Section 4.13 Financial Covenants.
Notwithstanding Section 5.10 hereof or any other covenant herein,
the Companies will maintain the following financial covenants, as reflected on
the Companies' books of account in accordance with GAAP:
(a) Minimum Consolidated EBITDA. The Companies will have a
Consolidated EBITDA, determined for each four (4) consecutive fiscal quarter
period of the Companies ending as of the dates set forth below (other than with
respect to the test date of September 30, 2001, which shall be tested for the
one (1) fiscal quarter period of the Companies ending on such date), of at least
the amount set forth below opposite each such date:
FOUR QUARTERS ENDING MINIMUM EBITDA
-------------------- --------------
September 30, 2001 $ 2,875,000
December 31, 2001 $13,500,000
March 31, 2002 $14,000,000
June 30, 2002 $14,500,000
September 30, 2002 $15,250,000
December 31, 2002 $16,000,000
March 31, 2003 $17,350,000
June 30, 2003 $18,000,000
September 30, 2003 $19,250,000
December 31, 2003, and each $21,100,000
March 31, June 30, September 30
and December 31 thereafter
(b) Minimum Fixed Charge Coverage Ratio. The Companies will have a
Fixed Charge Coverage Ratio, determined for each four (4) consecutive fiscal
quarter period of the Companies ending as of the dates set forth below (other
than with respect to the test date of September 30, 2001, which shall be tested
for the one (1) fiscal quarter period of the Companies ending on such date), of
at least the amounts set forth below opposite each such date:
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FOUR QUARTERS ENDING AMOUNT
-------------------- ------
September 30, 2001 1.05 to 1.0
December 31, 2001 1.05 to 1.0
March 31, 2002 1.05 to 1.0
June 30, 2002 1.25 to 1.0
September 30, 2002 1.40 to 1.0
December 31, 2002 1.45 to 1.0
March 31, 2003 1.60 to 1.0
June 30, 2003 1.75 to 1.0
September 30, 2003 1.90 to 1.0
December 31, 2003, and each 2.05 to 1.0
March 31, June 30, September 30
and December 31 thereafter
(c) Maximum Consolidated Debt to EBITDA Ratio. The Companies will
have a Consolidated Debt to EBITDA Ratio determined as of each date set forth
below, of not more than the amounts set forth below opposite each such date:
FOUR QUARTERS ENDING AMOUNT
-------------------- ------
December 31, 2001 5.10 to 1.0
March 31, 2002 5.10 to 1.0
June 30, 2002 4.80 to 1.0
September 30, 2002 4.40 to 1.0
December 31, 2002 4.00 to 1.0
March 31, 2003 3.85 to 1.0
June 30, 2003 3.60 to 1.0
September 30, 2003 3.40 to 1.0
December 31, 2003, and each 3.15 to 1.0
March 31, June 30, September 30
and December 31 thereafter
(d) Capital Expenditures and Capitalized Leases. No Company will,
nor will any Company permit any of its Subsidiaries to, make any Capital
Expenditure or enter into any capitalized lease, if the sum of (i) the aggregate
amount of all Capital Expenditures (including the Capital Expenditure in
question) made by the Companies and their Subsidiaries during the applicable
period set forth below, other than DCI Capital Expenditures, plus (ii) the
aggregate amount of all capitalized lease obligations (including the capitalized
lease in question) made or required to be made by the Companies and their
Subsidiaries during such period, other than DCI Capitalized Lease Obligations,
would exceed the amount set forth below with respect to such period:
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PERIOD AMOUNT
------ ------
January 1, 2001 - December 31, 2001 $4,000,000
January 1, 2002 - December 31, 2002 $4,000,000
January 1, 2003 - December 31, 2003 $3,750,000
and each calendar year thereafter
(e) DCI Capital Expenditures and Capitalized Lease Obligations. No
Company will, nor will any Company permit any of its Subsidiaries to, make any
DCI Capital Expenditure or incur any DCI Capitalized Lease Obligation if the
aggregate total amount of all DCI Capital Expenditures and all DCI Capitalized
Lease Obligations (including the DCI Capital Expenditure or DCI Capitalized
Lease Obligation in question and any and all DCI Capital Expenditures and DCI
Capitalized Lease Obligations made or incurred prior to the Closing Date) would
exceed $2,750,000.
(f) Minimum Interest Coverage Ratio. The Companies will have an
Interest Coverage Ratio, determined for each four (4) consecutive fiscal quarter
period of the Companies ending as of the dates set forth below (other than with
respect to the test date of September 30, 2001, which shall be tested for the
one (1) fiscal quarter period of the Companies ending on such date), of at least
the amounts set forth below opposite each such date:
FOUR QUARTERS ENDING AMOUNT
-------------------- ------
September 30, 2001 1.45 to 1.0
December 31, 2001 1.80 to 1.0
March 31, 2002 1.90 to 1.0
June 30, 2002 2.05 to 1.0
September 30, 2002 2.25 to 1.0
December 31, 2002 2.40 to 1.0
March 31, 2003 2.55 to 1.0
June 30, 2003 2.70 to 1.0
September 30, 2003 2.75 to 1.0
December 31, 2003, and each 2.75 to 1.0
March 31, June 30, September 30
and December 31 thereafter
Section 4.14 Payments under the Note and Other Debts.
The Companies will make all payments of principal, interest and
expenses as and when due under the Note and this Agreement without setoff and
regardless of any claim
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the Companies may have against Holder; and shall comply in all respects with all
terms, conditions and covenants relating to other debt obligations of the
Companies.
Section 4.15 Maintain Existence.
Each Company will take all appropriate actions to maintain and
preserve (i) its existence as a corporation and good standing in the
jurisdiction of its organization, and (ii) its qualification to conduct business
and good standing in each jurisdiction in which it conducts business, except
where the failure to be so qualified or in good standing could not reasonably be
expected to have a Material Adverse Effect.
Section 4.16 Financing Statements.
Each Company will pay the taxes and costs of, or incidental to, any
recording or filing of any financing statements concerning any collateral for
the Note.
Section 4.17 Information Requests.
Each Company will furnish from time to time to Holder at such
Company's expense all information Holder may reasonably request to enable Holder
to prepare and file any report or form required of Holder by the Securities and
Exchange Commission or any other regulatory authority.
Section 4.18 Compliance With Applicable Law.
Each Company will conduct its business and operations and otherwise
comply in all material respects with all laws, regulations and other
requirements of law imposed by all governmental authorities and agencies having
jurisdiction over such Company, or any material part of its assets, business or
operations.
Section 4.19 Further Assurance.
Each Company will from time to time promptly execute and deliver to
Holder such additional documents, and take such other reasonable steps, as
Holder may reasonably require to carry out the purposes hereof and of the other
Loan Documents, or to protect Holder's rights thereunder, including (without
limiting the generality of the foregoing) the execution of any documents to
perfect the Holder's interests in any collateral for the Loan.
Section 4.20 Environmental Matters.
Each Company will give the Holder prompt written notice of (i) any
environmental claim or any other action or investigation with respect to the
existence or potential existence of any hazardous substances instituted or
threatened with respect to such Company or any of the properties or facilities
owned, leased or operated by such Company which, if determined adversely to such
Company, could reasonably be expected to have a Material Adverse Effect and (ii)
any condition or occurrence on any of the properties or facilities owned, leased
or operated by such Company which constitutes a violation in any
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material respect of any Environmental Laws or which gives rise to a reporting
obligation or requires removal or remediation under any Environmental Laws.
Within thirty (30) days after the giving of any such notice, each Company shall
deliver to the Holder such Company's plan with respect to any removal or
remediation required by any Environmental Law or any other applicable law, rule
or regulation and each Company agrees to complete any such removal and/or
remediation within the time required thereby. Each Company shall promptly
provide the Holder with copies of all documentation relating thereto, and such
other information with respect to environmental matters as the Holder may
reasonably request from time to time.
Section 4.21 Real Estate Matters.
In the event any Company or any Subsidiary of any Company acquires
any interest in real property after the Closing Date, such Company shall, or
shall cause its Subsidiary to (as applicable), deliver to Holder an executed
mortgage or deed of trust over such real property in form and substance
satisfactory to Holder, together with such title insurance policies, surveys,
appraisals, evidence of insurance, legal opinions, environmental assessments and
other documents and certificates as shall be reasonably required by Holder.
Section 4.22 Sale of Designated Companies.
Within one hundred fifty (150) days of the Closing Date, either (i)
Simula shall sell or cause to be sold all of the outstanding capital stock of
each Designated Company in an arm's length transaction to a Person not an
Affiliate of any Company, (ii) each Designated Company shall sell all or
substantially all of the assets of such Designated Company in an arm's length
transaction to a Person not an Affiliate of any Company or (iii) each Designated
Company shall discontinue all operations and promptly liquidate its assets;
provided, that (a) no sale described in the preceding clauses (i) and (ii) shall
give rise to any continuing obligations, liabilities or indebtedness on the part
of the seller other than customary unsecured indemnification obligations
incurred under any applicable purchase and sale agreement and (b) the aggregate
costs of consummating the discontinuance and liquidation of any Designated
Company's operations and assets made pursuant to the preceding clause (iii),
including without limitation all severance expenses and all liquidation
expenses, shall not exceed $125,000 plus the aggregate amount of continuing
operating lease expenses incurred by the Designated Company. Notwithstanding
anything to the contrary set forth in this Agreement, (x) no Designated Company
shall make any Capital Expenditures or incur any capitalized lease obligations
other than as directly incident to the discontinuance and liquidation of such
Designated Company's operations and assets in accordance with the preceding
clause (iii) and (y) no Company shall make any loans to or other investments in
any Designated Company (other than those loans or other investments existing as
of the Closing Date) other than as directly incident to the discontinuance and
liquidation of such Designated Company's operations and assets in accordance
with the preceding clause (iii).
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ARTICLE V
NEGATIVE COVENANTS
Commencing on the Closing Date, and until terminated pursuant to
Article VI hereto, unless the Holder in each instance otherwise gives its prior
written consent:
Section 5.1 Change of Control.
No Company will, nor will any Company permit any of its Subsidiaries
to, effect a Change of Control or approve any agreements that would result in a
Change of Control.
Section 5.2 Restricted Payments.
No Company will, nor will any Company permit any of its Subsidiaries
to, declare, order, pay, make or set apart any sum for any Restricted Payment,
except that (i) wholly-owned Subsidiaries of any Company may make Restricted
Payments to such Company and (ii) the Companies may make regularly scheduled
cash interest and principal payments required pursuant to the terms (including
without limitation the subordination terms and provisions) of the Bank One
Indenture and any Permitted Bank One Refinancing Documents.
Section 5.3 Disposal of Assets.
No Company will, nor will any Company permit any of its Subsidiaries
to, transfer, sell, lease, lend or in any other manner dispose of any of its
assets (except in respect to inventory sold in the ordinary course of business),
unless the assets are obsolete and the proceeds from the sale are promptly
applied to replace or upgrade the assets or to repay the Note in accordance with
the terms of this Agreement.
Section 5.4 Liens and Related Matters.
(a) No Liens. No Company will, nor will any Company permit any of
its Subsidiaries to, create or allow to exist any Liens on any of its real or
personal property, assets, or rights of whatsoever nature (whether now owned or
hereinafter acquired) except for Permitted Liens.
(b) No Negative Pledges. No Company will, nor will any Company
permit any of its Subsidiaries to, enter into or assume any agreement (other
than the Loan Documents and the CIT Financing Agreement) prohibiting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired.
(c) No Restrictions on Distributions to Companies. Except as
provided herein or in the Specified Debt Documents, no Company will, nor will
any Company permit any of its Subsidiaries to, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any such Person to: (1) pay dividends or make any
other distribution on any of such Person's capital stock owned by
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such Company; (2) pay any Debt owed to any Company; (3) make loans or advances
to any Company; or (4) transfer any of its property or assets to any Company.
Section 5.5 Restriction on Fundamental Changes.
No Company will, nor will any Company permit any of its Subsidiaries
to: (a) amend, modify or waive any term or provision of its organizational
documents, including without limitation its articles of incorporation,
certificates of designations pertaining to preferred stock or by-laws, unless
required by law; (b) enter into any transaction of merger or consolidation; (c)
except as expressly contemplated by Section 4.22 with respect to any Designated
Company, liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); or (d) acquire by purchase or otherwise all or any substantial
part of the business or assets of any other Person.
Section 5.6 Fees.
Except as set forth on Exhibit 5.6, no Company will, nor will any
Company permit any of its Subsidiaries to, pay or incur any management or
consulting fee (other than bona fide legal or accounting fees), in excess of
$100,000 per year.
Section 5.7 Affiliate Transactions.
No Company will, nor will any Company permit any of its Subsidiaries
to, purchase or sell any property or services or borrow or lend money or
property from or to, or co-invest in any transaction with, any officer,
director, management employee or other Affiliate of any Company, or any
Affiliate of any such officer, director, employee or Affiliate, except for
employment related transactions and transactions approved by such Company's
Board of Directors in cases wherein the terms are no less favorable to such
Company than those that would be available in a comparable transaction in arm's
length dealing negotiated in good faith with an unaffiliated Person.
Section 5.8 Change in Companies, Subsidiaries or Business.
(a) No Company will, nor will any Company permit any of its
Subsidiaries to, (i) change its corporate form, or (ii) amend or otherwise
modify or waive any rights under its Articles of Incorporation, By-Laws, or
other organizational documents in any manner which will have a material adverse
effect on Holder's rights under this Agreement or any other Loan Document (and
each applicable Company will promptly notify Holder of any amendment,
modification, or waiver with respect to any of the foregoing documents);
(b) No Company will, nor will any Company permit any of its
Subsidiaries to, establish, organize or acquire any Subsidiaries, transfer any
operating assets of such Person to a Subsidiary or Affiliate (other than any
other Company), or invest in any Affiliates or other entities (other than any
Company); and
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(c) Except as expressly contemplated by Section 4.22 with respect
to any Designated Company, no Company will, nor will any Company permit any of
its Subsidiaries to, materially change the nature of its current operations or
Business.
Section 5.9 Judgments.
No Company will, nor will any Company permit any of its Subsidiaries
to, permit any judgment in excess of $300,000 obtained against such Person to
remain unpaid for over thirty (30) days without obtaining a stay of execution or
bond.
Section 5.10 Additional Debt.
No Company will, nor will any Company permit any of its Subsidiaries
to, incur any Debt, or create or incur any contingent liability, which shall not
include operating leases, other than:
(a) the Loan;
(b) Debt arising under the Specified Debt Documents;
(c) Debt arising under the Permitted Bank One Refinancing
Documents;
(d) intercompany Debt arising from loans made between Companies;
(e) purchase money obligations incurred solely to finance Capital
Expenditures (including without limitation DCI Capital Expenditures) and
capitalized leases (including without limitation DCI Capitalized Lease
Obligations) for specific assets not incurred in connection with the purchase of
a business, in an aggregate amount not to exceed $4,000,000 at any time
outstanding;
(f) contingent obligations in the form of customary and reasonable
indemnification provisions or purchase price adjustments incurred in connection
with any asset sale;
(g) liabilities under performance, surety, bid, approval or
similar bonds purchased by any Company or any Subsidiary of any Company in the
ordinary course of business;
(h) Debt arising under the documents described on Exhibit 5.10, as
the same exist on the Closing Date; and
(i) unsecured guaranties by any Company of ordinary course
unsecured obligations incurred by any other Company, to the extent such
obligations are permitted under this Agreement.
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Section 5.11 Permitted Investments.
No Company will, nor will any Company permit any of its Subsidiaries
to, make any investments except for the following permitted investments: (i) any
obligation of, or guaranteed as to principal and interest by, the United States
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States supports the obligation or guarantee of such agency
or instrumentality), (ii) any money market fund that invests solely in such
obligations or types described in clause (i), or (iii) short term deposits in
commercial banks having a capitalization in excess of $500,000,000.
Section 5.12 Debt Modifications.
No Company shall, nor shall any Company permit any of its
Subsidiaries to, amend or otherwise modify (i) any of the Specified Debt
Documents or (ii) any Permitted Bank One Refinancing Documents, following the
execution and delivery thereof and written approval thereof by Holder; provided,
that the Companies shall be permitted to amend or otherwise modify the CIT
Financing Agreement to the extent permitted under the Intercreditor Agreement.
Section 5.13 Fiscal Year.
No Company will, nor will any Company permit any of its Subsidiaries
to, change its fiscal year.
ARTICLE VI
TERMINATION
All of the Obligations shall become due and payable as otherwise set
forth herein, but in any event all of the remaining Obligations shall become due
and payable upon the Maturity Date. Until all Obligations have been fully paid
and satisfied (other than those Obligations arising under Article XI, should
they remain at any time the sole Obligations outstanding in accordance with the
terms of this Agreement), Holder shall be entitled to retain the security
interests in the collateral granted under the Security Documents and the ability
to exercise all rights and remedies available to Holder under the Loan Documents
and applicable laws.
ARTICLE VII
DEFAULT
Section 7.1 Events of Default.
Any of the following events shall be an "Event of Default" as that
term is used herein:
(a) Principal and Interest Payments. Any Company fails to make any
payment when due of any principal, interest installment or other charge under
the Note;
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(b) Representations and Warranties. Any representation or warranty
made by any Company or any Subsidiary of any Company in any Loan Document proves
to have been incorrect in any material respect as of the date as of which the
facts therein set forth were stated or certified; or any representation,
statement (including financial statements), certificate or data furnished or
made by any Company or any Subsidiary of any Company (or any officer, accountant
or attorney of any Company or any Subsidiary of any Company) under this
Agreement, proves to have been untrue in any material respect as of the date as
of which the facts therein set forth were stated or certified;
(c) Covenants.
(i) Any Company defaults in the observance or performance of
any of the covenants in any of Sections 4.1 through and including 4.14
hereof, or in the observance or performance of any of the covenants in
Section 4.22, or in the observance or performance of any of the covenants
contained in Article V hereof; or
(ii) Any Company defaults in the observance or performance of
any covenant herein (other than a default under the covenants in any of
Sections 4.1 through and including 4.14 and the covenants contained in
Article V) and such default continues unremedied for a period of thirty
(30) days after notice thereof being given in writing by Holder to any
Company, or after an executive officer of any Company otherwise acquires
knowledge of such defaults;
(d) Loan Documents. Any Company or any Subsidiary of any Company
defaults in the observance or performance of any of the covenants or agreements
contained in any Loan Document to which it is a party, which default is not
waived and continues beyond the expiration of any notice and cure period
pertaining thereto;
(e) Other Debt to Holder. Any Company or any Subsidiary of any
Company defaults in the payment of any amounts due to Holder, or Holder declares
a default by any Company or any Subsidiary of any Company, in connection with
the observance or performance of any of the covenants or agreements contained in
any credit agreements, notes, collateral or other documents relating to any
indebtedness of such Person to Holder, other than the Note;
(f) Cross Default to Other Obligations. (i) A default occurs under
any of the Specified Debt Documents; or (ii) without implying that such other
Debt is permitted hereunder, a default occurs under any other Debt of any
Company or any Subsidiary of any Company (other than Debt arising under the
Specified Debt Documents or the Note) after any grace period applicable to such
default has elapsed; or (iii) a default occurs under any other material
agreement relating to any obligation of any Company or any Subsidiary of any
Company to any Person (other than Holder) after any grace period applicable to
such default has elapsed;
(g) Involuntary Bankruptcy or Receivership Proceedings. A
receiver, administrative receiver, administrator, conservator, liquidator or
trustee of any Company or
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of any Subsidiary of any Company or of any property covered by any such Persons
is appointed by order or decree of any court or agency or supervisory authority
having jurisdiction; or an order for relief is entered against any Company or
any Subsidiary of any Company under the Bankruptcy Code; or any Company or any
Subsidiary of any Company is, or is deemed for the purposes of any law to be,
unable to pay its debts as they fall due or is adjudicated bankrupt or
insolvent; or any material portion of the properties of any Company or any
Subsidiary of any Company is sequestered by court order; or a petition is filed
against any Company or any Subsidiary of any Company under any state,
reorganization, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or receivership law of any jurisdiction, whether now or hereafter in
effect; or any other step is taken with a view to a composition, assignment,
scheme of arrangement or similar arrangement with any of the creditors of any
Company or any Subsidiary of any Company;
(h) Voluntary Petitions. Any Company or any Subsidiary of any
Company files a petition under the Bankruptcy Code or seeks relief under any
provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, or consents to the filing of any case or
petition against it under any such law;
(i) Undischarged Judgments. Judgment for the payment of money in
excess of $500,000, which is not covered by insurance, is rendered by any court
or other governmental body against any Company or any Subsidiary of any Company,
and the applicable Company or Subsidiary does not discharge the same or provide
for its discharge in accordance with its terms, or procure a stay of execution
thereof, within thirty (30) days from the date of entry thereof;
(j) Change of Control. The occurrence of any Change of Control;
and
(k) ERISA. Any violation of ERISA that could reasonably be
expected to result in a liability to any Company or Subsidiary of any Company in
excess of $50,000.
Section 7.2 Remedies.
Upon the occurrence and during the continuance of any Event of
Default, Holder may:
(a) by written notice to any Company, declare the entire principal
amount of the Loan then outstanding, including interest accrued thereon,
together with all other fees and charges payable in connection with the Loan
(including, but not limited to, prepayment charges calculated as if the Note
were prepaid on the date of default), to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice of
default of any kind, all of which are hereby expressly waived by each Company;
(b) exercise any of the rights or remedies provided in the
Security Documents or avail itself of any other rights or remedies provided by
applicable law; and
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(c) set-off any funds of any Company in the possession of Holder
against any amounts then due by the Companies to Holder pursuant to this
Agreement.
Section 7.3 Application of Proceeds Following Default.
Upon the occurrence of an Event of Default, the proceeds of any sale
of, or other realization upon, all or any part of the collateral secured by the
Security Documents shall be applied: first, to all fees, costs and expenses
incurred by Holder with respect to this Agreement and the other Loan Documents;
second, to all fees due and owing to Holder; third, to accrued and unpaid
interest on the Obligations (including any interest accruing after the
commencement of any insolvency proceedings regardless of whether such interest
is allowed by the court having jurisdiction over such proceedings); fourth, to
the principal amounts of the Obligations outstanding; and fifth, to any other
indebtedness or obligations of any Company owing to Holder in such order and
manner to the Obligations as Holder shall elect. Any balance remaining shall be
delivered to the Companies.
ARTICLE VIII
CONDITIONS TO CLOSING
The obligations of the Holder to fund the Loan shall be subject to
the prior satisfaction of the following conditions:
Section 8.1 Issuance of Note.
The Companies shall have issued to Holder the Note.
Section 8.2 Transaction Documents.
The Holder shall have received, in form and substance satisfactory
to it and its counsel, this Agreement and the other Loan Documents, each duly
executed and delivered, and each such document shall be in full force and
effect.
Section 8.3 Certified Documents.
The Companies shall have delivered or caused to be delivered to the
Holder copies of the following documents, duly certified, or the following
certificates, as applicable:
(a) Resolutions of the Board of Directors of each Company
authorizing (i) the execution, delivery, and performance of the Loan Documents
to which it is a party, (ii) the consummation of the transactions contemplated
by the Loan Documents to which it is a party, and (iii) all other actions to be
taken by any Company in connection with the Loan Documents.
(b) Certificates, signed by the Secretary or an Assistant
Secretary of each Company, dated as of the Closing Date, as to (i) the
incumbency, and containing the specimen signatures of, the Persons authorized to
execute on behalf of each Company the Loan Documents, together with evidence of
the incumbency of such Secretary or Assistant
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Secretary, and (ii) the authenticity of each Company's Articles of Incorporation
and By-Laws; and
(c) A certificate of status or good standing of each Company, from
the jurisdiction in which such Company is organized, and from each jurisdiction
in which such Company is presently qualified to do business, in each case dated
within 30 days of the Closing Date.
Section 8.4 Representations and Warranties; No Default; No
Adverse Change.
The representations and warranties of each Company contained in this
Agreement shall be true in all material respects on the Closing Date, and there
shall exist on the Closing Date no Event of Default or breach of any Loan
Document. Simula shall have delivered to the Holder an Officer's Certificate,
dated as of the Closing Date, to all such effects.
Section 8.5 Opinions of Counsel.
The Holder shall have received the opinion or opinions of counsel to
the Companies addressed to the Holder and dated as of the Closing Date, each in
form and substance satisfactory to Holder and its counsel.
Section 8.6 Transaction Permitted by Applicable Laws; No
Injunction.
The making of the Loan shall not be prohibited by any applicable law
or governmental regulation. No preliminary, temporary or permanent injunction or
restraining order or other binding order, decree or ruling issued by a court or
governmental agency, shall be in effect or be pending which shall or would have
the effect of preventing the consummation of the transactions contemplated by
this Agreement.
Section 8.7 Approvals and Consents.
The Holder shall have received evidence satisfactory to it that the
Companies have received all authorizations, consents, approvals, licenses,
franchises, permits, and certificates by or of all governmental bodies in each
case, necessary for the issuance of the Note, and the execution and delivery of
the Loan Documents, and all of the foregoing shall be in full force and effect
on the Closing Date.
Section 8.8 Compliance with Securities Laws.
The offering, issuance, and sale by the Companies of the Note shall
have complied with all applicable requirements of Federal and State securities
laws.
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Section 8.9 Specified Debt Documents.
No default or event of default exists or would be caused under any
Specified Debt Document.
Section 8.10 Expenses.
The Companies shall have paid all of the reasonable fees, costs, and
expenses of the Holder to the extent provided, including the fees and expenses
of Holder's counsel Goldberg, Kohn, Bell, Black, Xxxxxxxxxx & Xxxxxx, Ltd., it
being acknowledged that Holder has received a deposit of $140,000 from the
Companies as of the date hereof, which deposit shall be applied toward such
fees, costs and expenses.
Section 8.11 Closing Fee.
The Holder shall have received payment, in immediately available
funds, of the Closing Fee.
Section 8.12 Insurance.
The Companies shall have furnished evidence satisfactory to the
Holder that the Companies have the insurance required by the Loan Documents.
Section 8.13 Due Diligence.
The Holder shall have completed its financial and legal due
diligence with the respect to the Companies, their management and the Business,
the results of which shall be satisfactory to the Holder.
ARTICLE IX
CONDITIONS TO FUNDING
OF CONTINGENT REFINANCE LOAN
As set forth in Section 1.1 hereof, the decision to fund or to
decline the funding of the Contingent Refinance Loan shall be made by Holder in
its sole and absolute discretion. Unless expressly waived by Holder, however,
Holder shall decline to fund the Contingent Refinance Loan in the event the
following conditions shall not have been satisfied:
Section 9.1 Representations and Warranties; No Default; No
Adverse Change.
The representations and warranties of each Company contained in this
Agreement shall be true in all material respects as of the funding date of the
Contingent Refinance Loan, and there shall exist on such date no Event of
Default or breach of any Loan Document.
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Section 9.2 Transaction Permitted by Applicable Laws; No
Injunction.
The making of the Contingent Refinance Loan shall not be prohibited
by any applicable law or governmental regulation. No preliminary, temporary or
permanent injunction or restraining order or other binding order, decree or
ruling issued by a court or governmental agency, shall be in effect or be
pending which shall or would have the effect of preventing the funding of the
Contingent Refinance Loan.
Section 9.3 Compliance with Securities Laws.
The making of the Contingent Refinance Loan shall have complied with
all applicable requirements of Federal and State securities laws.
Section 9.4 Specified Debt Documents.
No default or event of default exists or would be covered under any
Specified Debt Document. In furtherance of the foregoing, the Companies hereby
agree to deliver to Holder upon request evidence establishing the right of the
Companies to incur the Debt under the Contingent Refinance Loan consistent with
the terms and provisions of the Bank One Indenture.
Section 9.5 Additional Documentation.
Each Company shall have delivered to Holder such documents,
agreements and instruments requested by Holder, including without limitation
amendments to any and all real property deeds of trust and mortgages, and date
down endorsements related thereto, each in form and substance acceptable to
Holder.
ARTICLE X
FEES AND COSTS
The Companies shall jointly and severally pay:
All closing costs, brokerage and other commissions, due diligence
costs, reasonable fees and expenses of Holder's attorneys for their services,
and other reasonable fees and expenses incurred by the Companies or the Holder
in connection with the transactions contemplated by this Agreement; and the
Holder may pay or reimburse such costs or expenses directly from its funding as
described in Section 1.1;
The Closing Fee shall be paid on the Closing Date, and the Holder
may pay or reimburse such Closing Fee directly from its funding as described in
Section 1.1;
All of Holder's expenses with respect to the enforcement or
preservation of Holder's rights under this Agreement, the Note, any other Loan
Document, or any other agreement of the Company mentioned herein, including but
not limited to attorneys' fees, appellate costs and fees, and costs incurred by
Holder as a participant in any bankruptcy
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proceeding, workout, debt restructuring, extension of maturity or document
amendment, involving any Company or any other obligor under the Note; and
All costs and fees, including attorneys' fees and expenses, incurred
by any of Holder or its Affiliates in connection with:
(a) any suit, action or claim of Holder to enforce the provisions
of this Agreement or any other document related hereto; and
(b) any suit, action, claim or other liability asserted against
any of Holder or their Affiliates by any Company or any Subsidiary of any
Company, arising out of this Agreement, any other Loan Document or any document
or transaction related hereto or thereto.
ARTICLE XI
INDEMNIFICATION; ENVIRONMENTAL LIABILITY
Each Company hereby indemnifies Holder and its directors, officers,
employees, agents and controlling Persons (hereinafter collectively,
"Indemnitees") against, and agrees to hold each such Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses (including
attorneys' fees and expenses) incurred by or asserted against Holder or any such
Indemnitee arising out of, in any way connected with, or resulting from the
following:
(a) this Agreement, any other Loan Document, any other documents
contemplated hereby or thereby, the performance by the parties hereto and
thereto of their respective obligations hereunder and thereunder, or
consummation of the transactions contemplated hereby and thereby;
(b) any and all liability and loss with respect to or resulting
from any and all claims for or on account of any broker's or finder's fees or
commissions with respect to this transaction as may have been created by any
Company or its officers, partners, employees or agents, together with any stamp
or excise taxes which may become payable in connection with this transaction;
(c) the spilling, leaking, pumping, pouring, unsettling,
discharging, leaching or releasing of hazardous substances on property owned by
any Company or any Subsidiary of any Company or any violations by any Company or
any Subsidiary of any Company of any Environmental Law; and
(d) any claim, litigation investigation or proceeding relating to
any of the foregoing, whether or not Holder or any such Person is a party
thereto;
PROVIDED, HOWEVER, that any such indemnity shall not apply to any
such losses, claims, damages, liabilities or related expenses arising from
Holder's or any other Indemnitee's gross negligence or willful misconduct.
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Notwithstanding anything to the contrary set forth in this
Agreement, the provisions of this Article XI shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of the Note,
the invalidity or unenforceability of any term or provision of this Agreement,
the Note or any Loan Documents, or any investigation made by or on behalf of
Holder. All amounts due under this Article XI shall be payable on written demand
therefor.
ARTICLE XII
CUMULATIVE REMEDIES; NO IMPLIED WAIVER
Section 12.1 Cumulating; Receivership.
None of the rights or remedies of the Holder provided herein shall
be exclusive, but each shall be cumulative with and in addition to every other
right or remedy of Holder, now or hereafter existing, at law or in equity, by
statute, agreement or otherwise. In any action under this Agreement or any other
Loan Document, the Holder shall be entitled to appointment of a receiver to
administer any Company, or all or any portion of its assets as may be subject to
Holder's claims.
Section 12.2 No Implied Waiver.
No course of dealing between Holder and any other party hereto, or
any failure or delay on the part of Holder in exercising any rights or remedies
hereunder, shall operate as a waiver of any rights or remedies of Holder under
this or any other applicable agreement. No single or partial exercise of any
rights or remedies hereunder shall operate as a waiver or preclude the exercise
of any other rights or remedies hereunder.
ARTICLE XIII
PARTIES
This Agreement will bind and accrue to the benefit of each Company,
the Holder, any holders of the Note, and their successors and assigns; provided,
that without Holder's express prior written consent, no Company shall be
permitted to assign any of its rights or delegate any of its duties hereunder or
under any other Loan Document. Any purchaser, assignee, transferee or pledgee of
the Note, or any document arising in connection with the transaction subject to
this Agreement (or any of them), sold, assigned, transferred, pledged or
repledged by Holder shall forthwith become vested with and entitled to exercise
all rights and remedies provided herein to Holder, as if said purchaser,
assignee, transferee or pledgee were originally named in this Agreement in place
of the Holder; provided, that any participant in the Loan shall be entitled only
to those rights expressly provided by Holder in connection with the agreement
giving rights to such participation, and any such participant shall have no
direct rights or remedies under this Agreement or any other Loan Document.
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ARTICLE XIV
NOTICE
All notices or communications under this Agreement or the Note shall
be in writing and mailed, postage prepaid, or delivered as follows:
To Holder: Allied Capital Corporation
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx, Principal
and to
Goldberg, Kohn, Bell, Black,
Xxxxxxxxxx & Moritz, Ltd.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
To any Company: Simula, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
and to
Xxxxx Xxxx LLP
Two X. Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxxx, Esq.
or, to such subsequent addresses as may hereafter be specified by the parties.
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which no notice was given, shall not affect the date of such
notice sent in accordance with the foregoing provisions. Each such notice,
request or other communication shall be deemed sufficiently given, served, sent
and received for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of the messenger
or the answer back being deemed conclusive but not exclusive evidence of such
delivery), or at such time as delivery is refused by addressee upon
presentation.
ARTICLE XV
RELATIONSHIP OF THE PARTIES
This Agreement provides, among other things, for the making of loans
by Holder, in its capacity as a lender, to the Companies, in their capacities as
borrowers, and for
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the payment of interest and repayment of principal by the Companies to Holder.
The provisions herein for compliance with financial covenants and delivery of
financial statements are intended solely for the benefit of Holder to protect
its interests as a lender in assuring payments of interest and repayment of
principal. Nothing contained in this Agreement shall be construed as permitting
or obligating Holder to act as financial or business advisors or consultants to
any Company, as permitting or obligating Holder to control any Company or to
conduct any Company's operations, as creating any fiduciary obligation on the
part of Holder to any Company, or as creating any joint venture, agency or other
relationship between the parties, other than as explicitly and specifically
stated in this Agreement. Holder is not, and shall not be construed as, a
partner, joint venturer, alter-ego, manager, controlling Person, operator or
other business participant of any kind of any Company; neither Holder nor any
Company intend Holder to assume such status, and, accordingly, Holder shall not
be deemed responsible for or a participant in any acts or omissions of any
Company. Each Company represents that it had the advice of experienced counsel
of its own choosing in connection with the negotiation and execution of this
Agreement and the other Loan Documents and with respect to all matters contained
herein and therein.
The Companies hereby acknowledge and agree that Holder, either
directly or through strategic affiliations, may, subject to applicable
securities laws, acquire equity, debt or other ownership interests in, provide
advisory services to and generally engage in any kind of business with any
Company.
ARTICLE XVI
CONTROLLING LAW; VENUE AND
JURISDICTION; SERVICE OF PROCESS
THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW. VENUE FOR ANY
ADJUDICATION HEREOF, SUBJECT TO HOLDER'S UNILATERAL RIGHT TO SELECT A DIFFERENT
JURISDICTION, SHALL BE IN THE COURTS OF THE STATE OF ILLINOIS OR THE FEDERAL
COURTS IN SUCH STATE, TO THE JURISDICTION OF WHICH COURTS ALL UNDERSIGNED
PARTIES HEREBY SUBMIT AS THE AGREEMENT OF SUCH PARTIES, AS NOT INCONVENIENT, AND
AS NOT SUBJECT TO REVIEW BY ANY COURT OTHER THAN SUCH COURTS IN THE STATE OF
ILLINOIS. ALL PARTIES INTEND AND AGREE THAT THE COURTS OF JURISDICTIONS IN WHICH
ANY COMPANY IS INCORPORATED AND CONDUCTS ITS BUSINESS SHALL AFFORD FULL FAITH
AND CREDIT TO ANY JUDGMENT RENDERED BY A COURT OF THE STATE OF ILLINOIS AGAINST
SUCH COMPANY OR OTHER OBLIGEES HEREUNDER, AND THAT THE STATE OF ILLINOIS AND
FEDERAL COURTS SHALL HAVE IN PERSONAM JURISDICTION TO ENTER A VALID JUDGMENT
AGAINST EACH COMPANY OR OTHER OBLIGEES HEREUNDER. SERVICE OF ANY SUMMONS AND/OR
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED ON ANY COMPANY IN ANY ACTION
IN RESPECT HERETO, MAY BE
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MADE BY MAILING VIA REGISTERED MAIL, OR DELIVERING A COPY OF SUCH PROCESS TO THE
COMPANIES AT ITS ADDRESS SPECIFIED ABOVE. THE PARTIES HERETO AGREE THAT THIS
SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS ARE REASONABLE AND
MADE FOR THE EXPRESS BENEFIT OF HOLDER.
ARTICLE XVII
WAIVER OF TRIAL BY JURY
EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO TRIAL BY JURY OF
ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATING TO THIS AGREEMENT, THE LOAN, THE LOAN DOCUMENTS OR THE
DEALINGS OF THE PARTIES IN RESPECT THERETO. THE PARTIES HERETO ACKNOWLEDGE AND
AGREE THAT THIS ARTICLE IS A MATERIAL TERM OF THIS AGREEMENT AND THAT THE HOLDER
WOULD NOT EXTEND ANY FUNDS HEREUNDER IF THIS WAIVER OF JURY TRIAL WERE NOT A
PART OF THIS AGREEMENT. EACH PARTY HERETO ACKNOWLEDGES THAT THIS IS A WAIVER OF
A LEGAL RIGHT AND THAT IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER
CONSULTATION WITH, OR THE OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE.
EACH PARTY HERETO AGREES THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS
SHALL BE TRIED BEFORE A JUDGE OF COMPETENT JURISDICTION, WITHOUT A JURY.
ARTICLE XVIII
CAPTIONS; SEVERANCE
The captions in this Agreement and the Note are inserted for
convenience of reference only and shall be construed neither to limit nor
amplify the meaning of the other text of such documents. To the extent any
provision herein violates any applicable law, such provision shall be void and
the balance of this Agreement shall remain unchanged.
ARTICLE XIX
COUNTERPARTS; ENTIRE AGREEMENT
This Agreement may be executed in as many counterpart copies and
with as many counterpart signature pages as may be convenient. It shall not be
necessary that the signature of, or on behalf of, each party appear on each
counterpart, but it shall be sufficient that the signature of, or on behalf of,
each party appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement; it shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties. This Agreement, the Note, the exhibits hereto and the documents
mentioned herein set forth the entire agreements and understandings of the
parties hereto in respect of this transaction. Any verbal agreements in respect
of this transaction are hereby terminated. The terms herein may
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not be changed verbally but only by a writing signed by the party against which
enforcement of the change is sought.
ARTICLE XX
DEFINITIONS AND RULES OF CONSTRUCTION
Section 20.1 Definitions.
As used in this Agreement, and unless the context requires a
different meaning, the following terms shall have the meanings as follow:
"Affiliate" means any Person which, directly or indirectly, controls
or is controlled by, or is under common control with any other Person. A Person
shall be deemed to be "controlled" by any other Person if such Person possesses,
directly or indirectly, power to vote 5% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or
managers or power to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise;
"Affiliated Person" shall have the definition for such term set
forth in Section 2(a)(3) of the Investment Company Act of 1940, as amended;
"Agreement" is defined as this Loan Agreement and the exhibits and
schedules hereto, as the same may be amended, amended and restated or otherwise
modified from time to time;
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, casualty, condemnation or otherwise of any
of the following: (a) any of the capital stock or other equity or ownership
interest of any of Simula's Subsidiaries or (b) any or all of the assets of any
Company other than sales of inventory in the ordinary course of business;
"Autoliv" means Autoliv AB, Autoliv GmbH, Autoliv France SNC,
Autoliv ASP, Inc., Autoliv North America, Inc. and Autoliv, Inc., collectively;
"Autoliv Settlement Agreement" means that certain Settlement
Agreement dated as of September 27, 2000 among certain Companies and Autoliv;
"Bank One Indenture" means that certain Indenture dated as of April
1, 1997 by and among Simula, certain additional Companies, as guarantors, and
Bank One, Columbus, NA, as Trustee, as amended by that certain Supplement No. 1
effective as of October 15, 1998 by and among Simula, certain additional
Companies, as guarantors, and Bank One, Columbus, NA, as Trustee, and as
otherwise amended or modified through the Closing Date;
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time or any applicable bankruptcy,
insolvency or
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other similar law now or hereafter in effect and all rules and regulations
promulgated thereunder;
"Business" shall have the meaning set out in Section 3.2 hereof;
"Capital Expenditures" is defined as expenditures for capital
improvements or acquisitions;
"Change of Control" is defined as the occurrence of any of the
following events: (i) any Person or any "group" (as such term is defined in
Section 13(d)(3) of the Exchange Act) who is not presently a stockholder of
Simula other than a trustee or other fiduciary holding securities under an
employee benefit plan of Simula, is or becomes the "beneficial owner" (as such
term is defined in Rule 13(d)(3) of the Exchange Act), directly or indirectly,
of securities of Simula representing 30% or more of the combined economic
interest or voting power of Simula's then outstanding securities; or (ii) during
any one year period individuals who at the beginning of such period constitute
the Board of Directors of Simula and any new director whose election by such
Board or nomination for election by Simula's shareholders was approved by a vote
of at least two-thirds (2/3) of members then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of such Board of Directors; or (iii) except in connection with the
sale or liquidation of any Designated Company's operations and assets pursuant
to the provisions of Section 4.22, the shareholders of any Company approve a
plan of complete liquidation of such Company or any agreement for the sale or
disposition by such Company of all, or substantially all, of such Company's
assets; or (iv) except as the result of the sale of any Designated Company
pursuant to the provisions of Section 4.22, any Subsidiary of any Company
existing as of the Closing Date ceases for any reason to be wholly-owned by such
Company; provided, however, that notwithstanding anything contained in clauses
(i) through (iv) herein to the contrary, if Xxxxxxx Xxxxxxxxxx renews or grants
a proxy or otherwise enters into a voting arrangement whereby his shares of
Simula common stock are voted by the Simula Board of Directors or one or more
members thereof, such event shall not in and of itself constitute a Change of
Control;
"CIT" means The CIT Group/Business Credit, Inc., a New York
corporation;
"CIT Financing Agreement" means that certain Financing Agreement
dated December 30, 1999 between CIT and the Companies, as amended to date and as
the same may be amended from time to time pursuant to the terms of the
Intercreditor Agreement;
"CIT Loans" means the loans and other financial accommodations made
by CIT pursuant to the CIT Financing Agreement;
"Closing Date" shall mean the date of this Agreement;
"Closing Fee" shall have the meaning set forth in Section 1.5;
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"Company" and "Companies" shall have the meaning set forth in the
preamble hereof;
"Consolidated Debt" shall mean, as of the date of any determination
thereof, all Debt of the Companies as of such date (provided that any revolving
loans available to any Company shall be averaged over the one month period
ending on such date), determined on a consolidated basis and in accordance with
GAAP;
"Consolidated Debt to EBITDA Ratio" shall mean, as of any date, the
ratio of (a) Consolidated Debt as of such date to (b) Consolidated EBITDA for
the four (4) consecutive fiscal quarter period of the Companies ending on such
date;
"Consolidated EBITDA" shall mean, for the period in question, the
sum of (a) Net Income during such period plus (b) to the extent deducted in
determining such Net Income, the sum of (i) Interest Expense during such period,
plus (ii) all provisions for any Federal, state, local and/or foreign income
taxes made by the Companies during such period (whether paid or deferred), plus
(iii) all depreciation and amortization expenses of the Companies during such
period, plus (iv) any extraordinary losses during such period, plus (v) any
losses incurred in connection with the repayment in full on or about the date
hereof of the Companies' obligations owing to Xxxxxx Xxxxxxxxx Capital Partners
II, LP, including accrued interest, fees and costs in connection therewith, plus
(vi) any losses from the sale or other disposition of property other than in the
ordinary course of business during such period, plus (vii) all non-cash expenses
during such period arising from the use of capital stock of Simula to pay
compensation minus (c) to the extent added in determining such Net Income, the
sum of (i) any extraordinary gains during such period, plus (ii) any gains from
the sale or other disposition of property other than in the ordinary course of
business during such period, plus (iii) any revenue realized by the Companies in
respect of settlement payments by Autoliv pursuant to the Autoliv Settlement
Agreement, plus (iv) any sale price adjustments made by any Company in respect
of components sold to Autoliv pursuant to the Autoliv Settlement Agreement, all
determined in accordance with GAAP; provided, however, that notwithstanding the
foregoing, for the fiscal quarters ending March 31, 2001 and June 30, 2001,
Consolidated EBITDA for such fiscal quarters shall be deemed to be $3,802,000
and $4,382,000, respectively;
"Contingent Loan Fee" has the meaning set forth in Section 1.5(b);
"Contingent Refinance Loan" has the meaning set forth in the
Recitals hereof;
"Contingent Refinance Loan Purposes" has the meaning set forth in
the Recitals hereof;
"Current Interest Tranche" shall have the meaning set forth in
Section 1.2;
"DCI Capital Expenditures" means Capital Expenditures made in
connection with the manufacture, implementation and production of distributed
charge inflators;
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"DCI Capitalized Lease Obligations" means capitalized lease
obligations incurred in connection with the manufacture, implementation and
production of distributed charge inflators;
"Debt" of any Person shall mean, as of the date of determination
thereof, the sum of, without duplication, (a) all indebtedness of such Person
for borrowed money (including, without limitation, each Company's obligations
hereunder, and with respect to the Specified Debt Documents), plus (b) all
indebtedness of such Person which has been incurred in connection with the
purchase or other acquisition of property (other than unsecured trade accounts
payable incurred in the ordinary course of business), plus (c) all capitalized
lease obligations of such Person, plus (d) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money; plus (e) "earnouts" and similar payment obligations; plus, (f)
all indebtedness secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person, plus
(g) the aggregate undrawn face amount of all letters of credit issued for the
account and/or upon the application of such Person together with all
unreimbursed drawings with respect thereto plus (h) all guarantees by such
Person of Debt of others; provided, however, that the unsecured guarantee by any
Company of any other Company's obligations shall not constitute Debt to the
extent such underlying obligations constitute Debt;
"Default" shall mean any event or circumstance which, upon notice
and/or the lapse of time, will constitute an Event of Default;
"Deferred Interest Tranche" shall have the meaning set forth in
Section 1.2 hereof;
"Designated Company" means any Subsidiary of Simula as may be agreed
to in writing from time to time between Simula and Holder.
"Designated Sum" means the sum of (i) $5,000,000, plus (ii) in the
event that, subject to the terms and provisions of this Agreement, either Simula
sells the outstanding capital stock of a Designated Company or a Designated
Company sells all or substantially all of the assets of such Designated Company,
an amount equal to the Net Proceeds of such sale minus the amount required to be
repaid to CIT under the CIT Financing Agreement in connection with such sale.
"Environmental Law" shall mean all Federal, state or local
environmental laws, regulations and ordinances, including, but not limited to,
CERCLA and the Federal Clean Water Act;
"ERISA" is defined as the Employee Retirement Income Security Act of
1974, as amended;
"Event of Default" shall have the meaning set forth in Section 7.1
hereof;
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"Excess Cash Flow" means for any fiscal year of the Companies
Consolidated EBITDA of the Companies and their Subsidiaries for such fiscal year
minus the sum of the following: (i) all provisions for any Federal, state, local
and/or foreign income taxes made by any Company during such fiscal year (whether
paid or deferred), (ii) unfinanced Capital Expenditures of the Companies during
such year, (iii) scheduled principal payments with respect to Debt actually paid
in cash (including the principal portion of scheduled payments of capitalized
lease obligations but excluding mandatory prepayments required under this
Agreement and excluding principal payments on the revolving credit loans under
the CIT Financing Agreement) during such year (iv) Interest Expense for such
year, and (v) the aggregate of all voluntary prepayments of the Loan made during
such year in accordance with the terms of this Agreement;
"Exchange Act" is defined as the Securities Exchange Act of 1934, as
amended;
"Fixed Charge Coverage Ratio" shall mean, for the period in
question, the ratio of (a) Consolidated EBITDA during such period, to (b) Fixed
Charges during such period, all determined in accordance with GAAP;
"Fixed Charges" shall mean, for the period in question, without
duplication, the sum of (a) the aggregate amount of all principal payments
required to be made by the Companies on all Debt during such period (including
the principal portion of payments in respect of capitalized leases but
excluding, to the extent otherwise included in this clause (a), (i) DCI
Capitalized Lease Obligations and (ii) principal payments on the revolving
credit loans under the CIT Financing Agreement), plus (b) all unfinanced Capital
Expenditures made by any Company during such period (exclusive of DCI Capital
Expenditures), plus (c) all Federal, state, local and/or foreign income taxes
paid or payable by any Company in cash during such period, plus (d) the
aggregate amount of all Interest Expense of the Companies during such period, to
the extent payable in cash, plus (e) all dividends and other distributions made
by Simula to its shareholders during such period, all determined in accordance
with GAAP; provided, however, that notwithstanding the foregoing, for the fiscal
quarters ending March 31, 2001 and June 30, 2001, Fixed Charges for such fiscal
quarters shall be deemed to be $2,540,000 and $4,110,000, respectively;
"GAAP" is defined as generally accepted accounting principles as
established from time-to-time by the Financial Accounting Standards Board,
consistently applied and maintained throughout the period indicated;
"Holder" shall have the meaning set forth in the preamble hereof;
"Indemnitees" shall have the definition set out in Article XI
hereof;
"Initial Loan" has the meaning set forth in the Recitals hereof;
"Initial Specified Loan Purposes" shall have the meaning set forth
in the Recitals hereof;
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"Intercreditor Agreement" means that certain Intercreditor Agreement
of even date herewith between Holder and CIT;
"Interest Coverage Ratio" shall mean, for the period in question,
the ratio of (a) Consolidated EBITDA during such period, to (b) Interest Expense
during such period, to the extent payable in cash, all determined in accordance
with GAAP;
"Interest Expense" shall mean, for the period in question, without
duplication, all gross interest expense of any Company (including, without
limitation, all commissions, discounts and/or related amortization and other
fees and charges owed by any Company with respect to letters of credit, the net
costs associated with any interest rate swap, interest rate cap or other
interest rate hedge obligations of any Company, capitalized interest expense,
the interest portion of capitalized lease obligations and the interest portion
of any deferred payment obligation) for such period, all determined on in
accordance with GAAP; provided, however, that notwithstanding the foregoing, for
the fiscal quarters ending March 31, 2001 and June 30, 2001, Interest Expense
paid in cash for such fiscal quarters shall be deemed to be $1,900,000 and
$1,980,000, respectively;
"Investment Company" shall have the definition for such term set out
in the Investment Company Act of 1940, as amended;
"Key Company" means each of Simula, Simula Automotive Safety
Devices, Inc., an Arizona corporation, Simula Safety Systems, Inc., an Arizona
corporation and Simula Automotive Safety Devices Limited, a United Kingdom
corporation;
"Liens" is defined as any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of such
property, whether such interest is based on common law, statute or contract, and
including, but not limited to, the security interest, security title or lien
arising from a security agreement, mortgage, deed of trust, deed to secure debt,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes;
"Litigation Schedule" shall have the meaning set forth in Section
3.3 hereof;
"Loan" shall mean the Initial Loan together with, in the event the
Contingent Refinance Loan is funded by Holder, the Contingent Refinance Loan. In
the event that the Contingent Refinance Loan is not for any reason funded by
Holder (and at all times prior to September 1, 2003), the term "Loan" shall mean
the Initial Loan;
"Loan Documents" shall mean this Agreement, the Note, the Security
Documents and all other instruments, documents and agreements executed by or on
behalf of any Company and delivered concurrently herewith or at any time
hereafter to or for the benefit of Holder in connection with the Loan and other
transactions contemplated by this Agreement, all as amended, supplemented or
modified from time to time;
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or properties
of the Companies and
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their Subsidiaries taken as a whole, or (b) the business, operations, affairs,
financial condition, assets or properties of any Key Company, under situations
in which there exists no concurrent and reasonably equivalent related material
benefit to any other Company or (c) the ability of any Company to perform its
respective payment or other obligations under any of the Loan Documents, or (d)
the validity or enforceability of any of the Loan Documents;
"Maturity Date" shall mean the earlier of (i) the Specified
Termination Date and (ii) the date on which the Obligations are accelerated
pursuant to the terms of this Agreement;
"Net Income" shall mean the after-tax net income (or loss) of the
Companies on a consolidated basis for the period in question, determined in
accordance with GAAP;
"Net Proceeds" means (x) with respect to any Asset Disposition, cash
proceeds received by any Company from such Asset Disposition (including
insurance proceeds, awards of condemnation, and payments under notes or other
debt securities received in connection with such Asset Disposition), net of (a)
the reasonable costs of such sale, lease, transfer or other disposition
(including taxes attributable to such sale, lease or transfer) and (b) amounts
applied to repayment of Debt (other than the Obligations and the CIT Loans)
secured by a Lien on the asset or property disposed and (y) with respect to any
issuance of debt and/or equity securities of any Company, the cash proceeds
received by such Company from such issuance, net of any reasonable costs of such
issuance;
"Note" shall mean that certain Term Note of even date herewith
executed by the Companies in favor of Holder, as the same may be amended,
amended and restated or otherwise modified from time to time;
"Obligations" mean all obligations, liabilities and indebtedness of
every nature of each Company from time to time owed to Holder under the Loan
Documents including the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable whether before or after the filing
of a proceeding under the Bankruptcy Code by or against any Company or any
Subsidiary of any Company;
"Permitted Bank One Refinancing Documents" means documents,
agreements and instruments having terms and provisions, including without
limitation subordination terms and provisions, acceptable to Holder in its sole
discretion as indicated by Holder's written approval thereof, pursuant to which
Simula and/or one or more Companies incurs debt, the proceeds of which are used
to repay in full prior to the maturity thereof the 9 1/2% Senior Subordinated
Notes, together with all accrued and unpaid interest and fees thereon. Without
limitation of Holder's sole right to approve the terms and provisions of any
documents, agreements and instruments described in the proceeding sentence,
Holder's approval thereof shall be conditioned upon, among other things, (x) the
subordination of the Debt arising thereunder on terms at least as favorable to
Holder as those subordination
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provisions currently in effect with respect to the 9 1/2% Senior Subordinated
Notes and (y) the maturity of the Debt arising thereunder on a date no earlier
than May 1, 2004.
"Permitted Liens" shall mean (i) Liens at any time granted in favor
of Holder or otherwise consented to by Holder, pursuant to the Intercreditor
Agreement or otherwise, or (ii) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or demands of mechanics
and materialmen, but only if payment thereof is not at the time required or is
being contested in good faith and by appropriate proceedings with adequate
reserves maintained in accordance with GAAP; (iii) Liens (other than any Liens
imposed by ERISA) incidental to the conduct of business or the ownership of
properties and assets (including Liens in connection with worker's compensation,
unemployment insurance and other like laws, warehousemen's and attorneys' liens
and statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or appeal
bonds or other Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money or the purchase or
other acquisition of property; provided in each case the obligation secured is
not overdue or, if overdue, is being contested in good faith by appropriate
actions or proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been established; (iv) minor survey
exceptions or minor encumbrances, easements or reservations, or rights of others
for rights-of-way, utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties, which are necessary or desirable
for the conduct of the activities of a Company or which customarily exist on
properties of corporations engaged in similar activities and similarly situated
and which do not in any event materially impair the use of such real properties
in the operation of the business of the Company; (v) Liens existing as of the
Closing Date and listed on Exhibit 20.1 attached hereto; (vi) purchase money
Liens granted to a Person financing a Capital Expenditure so long as (A) the
Lien granted is limited to the specific fixed assets acquired and the proceeds
thereof, (B) the aggregate principal amount of debt secured by the Lien is not
more than the acquisition cost of the specific fixed assets on which the Lien is
granted, as reduced by repayments of principal thereon and (C) the transaction
does not violate any other provision of this Agreement; and (vii) capitalized
leases;
"Person" is defined as any natural person, partnership, corporation,
limited liability company, nation, state, government, union, association,
governmental agency, tribunal, board, bureau and any other form of business or
legal entity;
"PIK Percentage" shall mean six percent (6%); provided, however,
that in the event that the Consolidated Debt to EBITDA Ratio for any four fiscal
quarter period is less than 3.50 to 1.0, as evidenced by a written certification
of a Responsible Officer delivered in accordance with Section 4.2, the PIK
Percentage for the fiscal quarter in which such certification is delivered shall
mean five and one-half of one percent (5.5%).
"Principal Balance" shall mean the sum of (i) the unpaid principal
balance of the Loan or any specified portion thereof outstanding from time to
time, plus (ii) interest payable under the Deferred Interest Tranche which has
been capitalized pursuant to
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Section 1.3(a)(ii), plus (iii) interest which has been capitalized pursuant to
clause (c) of Section 1.4;
"Quarterly Payment Date" means the last day of each March, June,
September and December, beginning with September 30, 2001;
"Redemption Charge" shall have the meaning set forth in Section
1.6(c)(i).
"Responsible Officer" means any of the Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer of Simula;
"Restricted Payment" means: (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock or other
equity security of, or ownership interest in, any Company or any Subsidiary of
any Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class; (ii) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock or other equity security of, or ownership interest in, any Company or any
Subsidiary of any Company now or hereafter outstanding; (iii) any payment or
prepayment of interest on, principal of, premium, if any, redemption,
conversion, exchange, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Debt subordinated to the Obligations including,
without limitation, the Debt incurred pursuant to the Bank One Indenture; (iv)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock or
other equity security of, or ownership interest in, any Company or any
Subsidiary of any Company now or hereafter outstanding; and (v) distributions of
preferred stock or common stock rights, or shares of preferred stock or common
stock issued pursuant to such rights, issued pursuant to any shareholder rights
plan duly adopted by the Simula Board of Directors and approved in writing by
Holder prior to the adoption thereof, for the purpose of takeover protection;
"Security Documents" means all instruments, documents and agreements
executed by or on behalf of any Person concurrently herewith or at any time
hereafter to guaranty or provide collateral security with respect to the
Obligations including, without limitation, any security agreement or pledge
agreement, any guaranty of the Obligations, any mortgage or deed of trust, and
all instruments, documents and agreements executed pursuant to the terms of the
foregoing, all as amended, supplemented or modified from time to time;
"Simula" shall have the meaning set forth in preamble hereof;
"Specified Availability" means, as of any measurement date, the sum
of (x) "Availability", as such term is defined in the CIT Financing Agreement,
as evidenced by the most recently available borrowing base certificate or such
other documentation prepared by the Companies and delivered to Holder, which
documentation shall be reasonably acceptable to Holder, plus (y) available cash
on hand as of such date;
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"Specified Debt Documents" shall have the meaning set forth in
Section 3.9 hereof;
"Specified Prepayment Event" means each of (i) the receipt by any
Company of Net Proceeds of an Asset Disposition, excluding only sales of
obsolete assets, (ii) the receipt by any Company of Net Proceeds from the
issuance of any debt and/or equity securities, and (iii) the occurrence of a
Change of Control;
"Specified Termination Date" means December 31, 2003;
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than fifty
percent (50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof;
"9 1/2% Senior Subordinated Notes" means those certain 9 1/2% Senior
Subordinated Notes of Simula due September 30, 2003, issued pursuant to the
terms of the Bank One Indenture.
Section 20.2 Rules of Construction.
The rule of ejusdem generis shall not be applicable herein to limit
a general statement, which is followed by or referable to an enumeration of
specific matters, to matters similar to the matters specifically mentioned.
Unless the context otherwise requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Provisions apply to successive events and transactions;
(d) "Herein", "Hereof", "Hereto", "Hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision unless otherwise so provided;
(e) All words or terms used in this Agreement, regardless of the
number or gender in which they are used, shall be deemed to include any other
number and any other gender; and
(f) All financial terms used herein and not capitalized shall have
the meaning accorded them under GAAP.
BALANCE OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SIMULA, INC.,
an Arizona corporation
By /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Its President and Chief Executive Officer
---------------------------------------------
THE SUBSIDIARIES OF SIMULA, INC.:
AI CAPITAL CORP.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Its President
---------------------------------------------
CCEC CAPITAL CORP.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Its President
---------------------------------------------
INTERNATIONAL CENTER FOR SAFETY EDUCATION, INC.,
an Arizona corporation
By /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Its President
---------------------------------------------
SIMULA ARTCRAFT INDUSTRIES INC.,
an Arizona corporation
By /s/ J. Xxxxxxx Xxxxxx
---------------------------------------------
Its President
---------------------------------------------
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SIMULA AUTOMOTIVE SAFETY DEVICES, INC.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Its Secretary
---------------------------------------------
SIMULA COMPOSITES CORPORATION,
a Delaware corporation
By /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Its President
---------------------------------------------
SIMULA POLYMER SYSTEMS, INC.,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Its Secretary
---------------------------------------------
SIMULA SAFETY SYSTEMS, INC.,
an Arizona corporation
By /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Its President
---------------------------------------------
SIMULA TECHNOLOGIES, INC.,
an Arizona corporation
By /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Its President
---------------------------------------------
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SIMULA TRANSPORTATION EQUIPMENT CORPORATION,
an Arizona corporation
By /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Its President
---------------------------------------------
SIMULA AUTOMOTIVE SAFETY DEVICES, LTD.,
a United Kingdom limited company
By /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Its Assistant Secretary
---------------------------------------------
HOLDER:
ALLIED CAPITAL CORPORATION
By /s/ Xxxxx Xxxxx
---------------------------------------------
Its Principal
---------------------------------------------
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