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                                                                     EXHIBIT 4.8


      STATEMENT PURSUANT TO SECTION 10-602 OF THE ARIZONA REVISED STATUTES

         OF THE DESIGNATIONS, PREFERENCES, RIGHTS AND PRIVILEGES OF THE

                 $7,500,000 SERIES A CONVERTIBLE PREFERRED STOCK
                           PAR VALUE $.05 PER SHARE OF

                                  SIMULA, INC.


            Simula, Inc., a corporation organized and existing under the laws of
the state of Arizona (the "Company"), does hereby submit this Statement pursuant
to Section 10-602 of the Arizona Revised Statutes as follows:

            1. The name of this corporation is: Simula, Inc.

            2. The resolution (the "Resolution") determining the terms of the
Series A Convertible Preferred Stock, par value $.05 per share, of the Company
is attached as Exhibit A hereto and is incorporated by reference herein.

            3. The Resolution was duly adopted by unanimous consent of the Board
of Directors of the Company on March 16, 1999.

            4. The Resolution was duly adopted by the Board of Directors of the
Company and has not been amended, modified, rescinded or superseded and remains
in full force and effect.

            IN WITNESS WHEREOF, the Company has caused this Statement to be
executed, delivered and filed this 16 day of March, 1999.

                                        /s/ Donald W. Townsend
                                        __________________________________
                                        Donald W. Townsend, President

                                        /s/ Bradley P. Forst
                                        __________________________________
                                        Bradley P. Forst, Secretary
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                                    Exhibit A

              RESOLUTION OF THE BOARD OF DIRECTORS OF SIMULA, INC.
           PURSUANT TO SECTION 10-602 OF THE ARIZONA REVISED STATUTES

            RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Articles of
Incorporation, a new series of preferred stock, par value $.05 per share, to be
titled the "SERIES A CONVERTIBLE PREFERRED STOCK" of the Company is hereby
created and designated. The number of shares of Series A Preferred Shares (as
defined in Section 1 below) shall be 7,500 shares. The voting powers,
preferences and relative, participating, optional and other special rights of
the Series A Preferred Shares, and the qualifications, limitations and
restrictions thereof, are as follows:

            (1) Designation. The series of preferred stock established hereby
      shall be designated the "Series A Convertible Preferred Stock" (and shall
      be referred to herein as the "SERIES A PREFERRED SHARES") and the
      authorized number of Series A Preferred Shares shall be 7,500. The stated
      value per share shall be $1,000 (the "STATED VALUE").

            (2) Conversion of Series A Preferred Shares. A holder of Series A
      Preferred Shares (collectively, the "HOLDERS" and each a "HOLDER") shall
      have the right, at such holder's option, to convert the Series A Preferred
      Shares into shares of the Company's common stock, par value $.01 per share
      (the "COMMON STOCK"), on the following terms and conditions:

                  (a) Conversion Right. Subject to the provisions of Section
      2(f) below, each Series A Preferred Share shall be convertible at the
      option of the Holder thereof, at any time or from time to time on or after
      the initial date of issuance of the Series A Preferred Shares which shall
      be the date of the Securities Purchase Agreement (the "SECURITIES PURCHASE
      AGREEMENT"), among the Company and the initial Investors named therein
      (such date, "INITIAL ISSUANCE DATE") into fully paid, validly issued and
      nonassessable shares (rounded to the nearest whole share in accordance
      with Section 2(g) below) of Common Stock, at the Conversion Rate (as
      defined below), provided, however, that (i) no Holder shall be entitled to
      convert any Series A Preferred Shares in excess of the Conversion Limit
      (except pursuant to Section 2(f)) or (ii) with respect to the Holders in
      the aggregate, the Common Share Limit (as defined in Section 2(b)(vii)
      below), unless the Company (A) has obtained approval of the issuance of
      the Common Stock upon conversion of the Series A Preferred Shares by a
      majority of the total votes eligible to be cast on such proposal, in
      person or by proxy, by the holders of the then outstanding shares of
      Common Stock, (B) shall have otherwise obtained permission to allow such
      issuances from the New York Stock Exchange ("NYSE") or (C) is no longer
      governed by a rule promulgated by a stock exchange, NASDAQ or other
      applicable body prohibiting the issuance of the Common Stock upon
      conversion of the Series A Preferred Shares in excess of 19.99% of the
      number of shares of Common Stock outstanding on the Initial Issuance Date
      and in the case of (i) and (ii) above, except as provided in this
      Statement. In addition, in no event shall any Holder be entitled to
      convert Series A Preferred Shares in excess of that number of Series A
      Preferred Shares which, upon 
<PAGE>   3
      giving effect to such conversion, would cause the aggregate number of
      shares of Common Stock beneficially owned by the Holder and its affiliates
      to exceed 4.99% of the outstanding shares of the Common Stock following
      such conversion, provided, however, that a Holder may elect to waive this
      restriction upon not less than sixty-one (61) days prior written notice to
      the Company. For purposes of this paragraph "beneficial ownership" shall
      be calculated in accordance with Section 13(d) of the Securities Exchange
      Act of 1934, as amended.

                  (b) Conversion Rate. The number of shares of Common Stock
      issuable upon conversion of each of the Series A Preferred Shares pursuant
      to Sections (2)(a) and 2(f) shall be determined in accordance with the
      following formula (the "CONVERSION RATE"):

                 Stated Value + all accrued and unpaid dividends
                ------------------------------------------------
                                Conversion Price

            For purposes of this Statement, the following terms shall have the
      following meanings:

                        (i) "ADDITIONAL SHARES OF COMMON STOCK" shall mean, all
      shares (including treasury shares) of Common Stock issued or sold or
      deemed to be issued by the Company after the Initial Issuance Date,
      whether or not subsequently reacquired or retired by the Company other
      than (A) shares of Common Stock issued upon conversion of the Series A
      Preferred Shares and (B) Approved Stock Plan Shares;

                        (ii) "ANNIVERSARY DATE" means the calendar date of the
      Initial Issuance Date of each calendar year;

                        (iii) "ANNIVERSARY MARKET PRICE" means the average of
      the Closing Bid Prices of the Common Stock on the 20 consecutive trading
      days immediately preceding the applicable Anniversary Date;

                        (iv) "APPROVED STOCK PLAN SHARES" means any Options (as
      defined below) issued to an employee, officer, director, consultant or
      other service provider of the Company pursuant to any contract, plan or
      agreement which has been approved by the Board of Directors of the Company
      (collectively, the "APPROVED STOCK PLANS") for which the price per share
      of the Common Stock issuable upon the exercise of such Options (a) is
      equal or in excess of the last sale price of the Common Stock on the date
      of such issuance (the "SALES PRICE") or (b) is greater than 85% of the
      Sales Price, but less than the Sales Price (the "BELOW FAIR MARKET VALUE
      OPTIONS"); provided, however, that the aggregate amount of such Below Fair
      Market Value Options issued in total by the Company under the Approved
      Stock Plans cannot exceed 0.5% of the number of shares of Common Stock
      issued and outstanding as of such issuance date.


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                        (v) "AVERAGE MARKET PRICE" means the average of the
      Closing Bid Prices of the Common Stock on the ten consecutive trading days
      immediately preceding the applicable date;

                        (vi) "CLOSING BID PRICES" means, for any security as of
      any date, the last closing bid price on the New York Stock Exchange
      Composite Transactions Tape as reported by Bloomberg, L.P. ("BLOOMBERG"),
      or, if the NYSE is not the principal securities exchange for such
      security, the last closing bid price of such security on the principal
      securities exchange or trading market where such security is listed or
      traded as reported by Bloomberg, or if the foregoing do not apply, the
      last closing bid price of such security in the over-the-counter market on
      the electronic bulletin board for such security as reported by Bloomberg,
      or, if no closing bid price is reported for such security by Bloomberg,
      or, if no last closing trade price is reported for such security by
      Bloomberg, the average of the bid prices of any market makers for such
      security as reported in the "pink sheets" by the National Quotation
      Bureau, Inc.;

                        (vii) "COMMON SHARE LIMIT" means 1,982,681;

                        (viii) "COMPANY CONVERSION EVENT LIMIT" means with
      respect to Section 2(f), (A) 10% of the number of Series A Preferred
      Shares issued to the Holders on the Initial Issuance Date for the period
      beginning on the Initial Issuance Date and ending on March 31, 1999 and
      (B) for each calendar month thereafter, an additional 10% of the number of
      Series A Preferred Shares issued to the Holders on the Initial Issuance
      Date; provided, however, that in no event shall the Company in any one
      calendar month be required to convert more than 30% of the number of
      Series A Preferred Shares issued to the Holders on the Initial Issuance
      Date.

                        (ix) "CONVERSION LIMIT" means with respect to any
      Holder, (A) 10% of the number of Series A Preferred Shares issued to such
      Holder on the Initial Issuance Date for the period beginning on the
      Initial Issuance Date and ending on March 31, 1999 and (B) for each
      calendar month thereafter, an additional 10% of the number of Series A
      Preferred Shares issued to such Holder on the Initial Issuance Date;
      provided, however, that in no event shall the Company in any one calendar
      month be required to convert more than 30% of the number of Series A
      Preferred Shares issued to such Holder on the Initial Issuance Date.

                        (x) "CONVERSION PRICE" means as of any Conversion Date
      (as defined below) or other date of determination, the lesser of (A) the
      Fixed Conversion Price and (B) the Variable Conversion Price;

                        (xi) "FIXED CONVERSION PRICE" means with respect to any
      Conversion Date (A) for the period from the Initial Issuance Date and
      ending on the day immediately preceding the first Anniversary Date
      thereof, $8.60; provided, that if (I) on or prior to July 31, 1999 the
      Company fails to consummate the sale, in a single transaction, of all of
      the capital stock or all or substantially all of the assets of Coach and
      Car Equipment Corporation ("CCEC"), an Arizona corporation and
      wholly-owned subsidiary of the Company, for an aggregate cash
      consideration of at least $7.5 million 


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      and (II) for the period from January 1, 1999 through July 31, 1999, net
      income (after deduction of all expenses, taxes and interest) of CCEC, as
      determined in accordance with generally accepted accounting principles, is
      equal to or less than zero, then the Fixed Conversion Price from August 1,
      1999 and ending on the day immediately preceding the first Anniversary
      Date, shall equal the lesser of (x) $8.60 and (y) 130% of the average
      Closing Bid Prices of the Common Stock on the 20 consecutive trading days
      immediately preceding August 1, 1999; and (B) for each successive annual
      period thereafter, beginning on an Anniversary Date and ending on the day
      immediately preceding the next Anniversary Date, the lesser of (x) the
      Fixed Conversion Price then in effect and (y) 130% of the applicable
      Anniversary Market Price;

                        (xii) "VARIABLE CONVERSION PRICE" means 101% of the
      average of the Closing Bid Prices for any 15 trading days during a period
      of the 30 consecutive trading days ending one day prior to the applicable
      Conversion Date.

                  (c) Effect of Failure to Obtain and Maintain Effectiveness of
      Registration Statement. (i) If the registration statement (the
      "REGISTRATION STATEMENT") covering the resale of the shares of Common
      Stock issuable upon conversion of the Series A Preferred Shares and
      required to be filed by the Company pursuant to the Registration Rights
      Agreement between the Company and the initial Holders of the Series A
      Preferred Shares (the "REGISTRATION RIGHTS AGREEMENT") is not declared
      effective by the United States Securities and Exchange Commission or any
      successor entity thereto (the "SEC") on or before the 120th calendar day
      following the Initial Issuance Date (the "SCHEDULED EFFECTIVE DATE"), then
      for each consecutive thirty (30) day period following the Scheduled
      Effective Date, each Holder of Series A Preferred Shares shall, until such
      time as the Registration Statement is declared effective by the SEC (all
      such payments to be made in cash and nonrefundable on the first day of
      each thirty (30) day period), be entitled to an amount equal to the
      product of (A) one percent, multiplied by (B) the Stated Value plus all
      accrued and unpaid dividends thereon, multiplied by (C) the number of
      Series A Preferred Shares held by such Holder.

                        (ii) If the Registration Statement shall not have been
      declared effective by the 140th day following the Scheduled Effective
      Date, the Company shall be required, at the option of the Holders, to
      redeem the Series A Preferred Shares in accordance with Section 3(a) and
      in connection therewith the Company shall pay the Holders who so elect, a
      price per Series A Preferred Share equal to the Triggering Event
      Redemption Price (as defined in Section 3(a)(ii)).

                  (d) Adjustment to Fixed Conversion Price, the Common Share
      Limit, the Conversion Limit, the Company Conversion Event Limit and the
      Closing Bid Prices -- Dilution and Other Events. In order to prevent
      dilution of the rights granted under this Statement, the Fixed Conversion
      Price, the Common Share Limit, the Conversion Limit, the Company
      Conversion Event Limit and the Closing Bid Prices for any days during any
      measuring period prior to any of the events set forth below (the
      "ADJUSTING CLOSING BID PRICES") will be subject to adjustment from time to
      time as provided in this Section 2(d). Any such adjustments to the Fixed
      Conversion Price, the Conversion Limit, the Company 


                                       -4-
<PAGE>   6
      Conversion Event Limit and the Adjusting Closing Bid Prices will be
      applicable to Series A Preferred Shares not yet converted or redeemed.

                        (i) Dividends and Distributions. If the Company shall
      declare or pay to the holders of the Common Stock a dividend or other
      distribution payable in shares of Common Stock or any other security
      convertible into or exchangeable for shares of Common Stock, each Holder
      shall be entitled to receive the number of shares of Common Stock or other
      securities convertible into or exchangeable for shares of Common Stock, as
      applicable, which such Holder would have owned or been entitled to receive
      after the declaration and payment of such dividend or other distribution
      as if the Series A Preferred Shares then held by such Holder had been
      converted at the Conversion Price in effect immediately prior to the
      record date for the determination of stockholders entitled to receive such
      dividend or other distribution.

                        (ii) Stock Splits and Combinations. If the Company shall
      subdivide (by means of any stock split, stock dividend, recapitalization
      or otherwise) the outstanding shares of Common Stock into a greater number
      of shares of Common Stock, or combine (by means of any combination,
      reverse stock split or otherwise) the outstanding shares of Common Stock
      into a lesser number of shares, or issue by reclassification of shares of
      Common Stock any shares of the Company, the Fixed Conversion Price, the
      Common Share Limit, the Conversion Limit, the Company Conversion Event
      Limit and the Adjusting Closing Bid Prices, each in effect immediately
      prior thereto shall be adjusted so that each Holder shall receive the
      number of shares of Common Stock which such Holder would have owned or
      been entitled to receive after the happening of any and each of the events
      described above if such Holder had converted the Series A Preferred Shares
      held by such Holder immediately prior to the happening of each such event
      on the day upon which such subdivision or combination, as the case may be,
      becomes effective.

                        (iii) Organic Changes. Any recapitalization,
      reorganization, reclassification, consolidation, merger, sale of all or
      substantially all of the Company's assets (in one or a series of related
      transactions) to another Person (as defined below) or other transaction
      which is effected in such a way that holders of Common Stock are entitled
      to receive (either directly or upon subsequent liquidation) stock,
      securities or assets with respect to or in exchange for Common Stock is
      referred to herein as an "ORGANIC CHANGE". In case the Company shall
      effect an Organic Change, then the Holder shall be given a written notice
      from the Company informing such Holder of the terms of such Organic Change
      and of the record date thereof for any distribution pursuant thereto, at
      least ten (10) days in advance of such record date, and, if such record
      date shall precede the Mandatory Redemption Date, each Holder shall have
      the right thereafter to receive, upon conversion of the Series A Preferred
      Shares, the number of shares of stock or other securities, property or
      assets of the Company, or of its successor or transferee or any affiliate
      thereof, or cash receivable upon or as a result of such Organic Change
      that would have been received by a holder of the number of shares of
      Common Stock equal to the number of shares each Holder would have received
      had such Holder converted its Series A Preferred Shares prior to such
      event at the Conversion Price in effect 


                                       -5-
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      immediately prior to such event. In any such case, the Company will make
      appropriate provision (in form and substance reasonably satisfactory to
      the Holders of a majority of the Series A Preferred Shares then
      outstanding) to insure that the provisions of this Section 2(d)(iii) will
      thereafter be applicable to the Series A Preferred Shares (including, in
      the case of any such Organic Change in which the successor entity or
      purchasing entity is other than the Company, an immediate adjustment of
      the Conversion Price to the value for the Common Stock reflected by the
      terms of such Organic Change, if the value so reflected is less than the
      Conversion Price in effect immediately prior to such Organic Change). The
      Company will not effect any such Organic Change unless prior to the
      consummation thereof the successor entity (if other than the Company)
      resulting from such Organic Change assumes, by written instrument (in form
      and substance satisfactory to the Holders of a majority of the Series A
      Preferred Shares then outstanding), the obligation to deliver to each
      Holder such shares of stock, securities or assets as, in accordance with
      the foregoing provisions, such Holder may be entitled to acquire or
      receive. The provisions of this subparagraph (iii) shall similarly apply
      to successive Organic Changes. "PERSON" means an individual, a limited
      liability company, a partnership, a joint venture, a corporation, a trust,
      an unincorporated organization and a government or any department or
      agency thereof.

                        (iv) Adjustment upon Issuance of Options and Convertible
      Securities. If the Company in any manner grants any rights or options to
      subscribe for or to purchase one or more classes of its Common Stock or
      any stock or other securities convertible into or exchangeable for Common
      Stock (such rights or options being herein called "OPTIONS" and such
      convertible or exchangeable stock or securities being herein called
      "CONVERTIBLE SECURITIES") (other than Approved Stock Plan Shares) and the
      price per share for which Common Stock is issuable upon the exercise of
      such Options or upon conversion or exchange of such Convertible Securities
      (the "NEW OPTION ISSUANCE PRICE") is less than the Average Market Price
      immediately prior to such time, then, from and after the time of such
      issue or sale, the Fixed Conversion Price shall be reduced, if necessary,
      so that it shall not exceed the New Option Issuance Price. For purposes of
      this Section 2(d)(iv), the New Option Issuance Price shall mean the amount
      determined by dividing (A) the total amount, if any, received or
      receivable by the Company as consideration for the granting of such
      Options, plus the minimum aggregate amount of additional consideration
      payable to the Company upon the exercise of all such Options, plus in the
      case of such Options which relate to Convertible Securities, the minimum
      aggregate amount of additional consideration, if any, payable to the
      Company upon the issuance or sale of such Convertible Securities and the
      conversion or exchange thereof, by (B) the total maximum number of shares
      of Common Stock issuable upon exercise of such Options or upon the
      conversion or exchange of all such Convertible Securities issuable upon
      the exercise of such Options. No further adjustment of the Conversion
      Price shall be made upon the actual issuance of such Common Stock or of
      such Convertible Securities upon the exercise of such Options or upon the
      actual issuance of such Common Stock upon conversion or exchange of such
      Convertible Securities.

                        (v) Change in Option Price or Rate of Conversion. If the
      purchase price provided for in any Options, the additional consideration,
      if any, payable 


                                      -6-
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      upon the issue, conversion or exchange of any Convertible Securities, or
      the rate at which any Convertible Securities are convertible into or
      exchangeable for any class of Common Stock change at any time, the Fixed
      Conversion Price at the time of such change shall be readjusted, effective
      on and after the date of such change, to the Fixed Conversion Price which
      would have been in effect on the date of such change had such Options or
      Convertible Securities still outstanding provided for such changed
      purchase price, additional consideration or changed conversion rate, as
      the case may be, at the time initially granted, issued or sold; provided
      that no adjustment shall be made if such adjustment would result in an
      increase of the Fixed Conversion Price then in effect.

                        (vi) Issuance of Additional Shares of Common Stock. In
      case the Company at any time or from time to time after the date hereof
      shall issue or sell Additional Shares of Common Stock (including
      Additional Shares of Common Stock deemed to be issued pursuant to Section
      2(d)(ii), (iv) or (v)), without consideration or for a consideration per
      share less than the Average Market Price in effect immediately prior to
      such issue or sale, then, and in each such case, the Fixed Conversion
      Price shall be reduced, to a price determined by multiplying such Fixed
      Conversion Price by a fraction

                              (A) the numerator of which shall be the sum of (i)
      the number of shares of Common Stock outstanding immediately prior to such
      issue or sale and (ii) the number of shares of Common Stock which the 
      aggregate consideration received by the Company for the total number of 
      such Additional Shares of Common Stock so issued or sold would purchase at
      the Average Market Price, and

                              (B) the denominator of which shall be the
      number of shares of Common Stock outstanding immediately after such issue
      or sale, provided that, for the purposes of this Section 2(d)(vi),
      immediately after any Additional Shares of Common Stock are deemed to have
      been issued pursuant to Section 2(d)(ii), (iv) or (v), such Additional
      Shares of Common Stock shall be deemed to be outstanding, and (y) treasury
      shares of Common Stock shall not be deemed to be outstanding.

                        (vii) Other Dilutive Events. In case any event shall
      occur as to which the provisions of this Section 2(d) are not strictly
      applicable or if strictly applicable would not fairly protect the
      conversion rights of the Holder in accordance with the essential intent
      and principles of this Section 2(d), then, in each such case, the Board of
      Directors of the Company shall make an adjustment in the application of
      such provisions, in accordance with such essential intent and principles,
      so as to preserve, without dilution, the conversion rights represented by
      this Note.

                        (viii) No Dilution or Impairment. The Company shall not,
      by amendment of its certificate of incorporation or through any Organic
      Change or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Statement, but will
      at all times in good faith assist in the carrying out of all such terms
      and in the taking of all such action as may be necessary or appropriate in
      order to protect the rights of the Holders against dilution or other
      impairment. Without limiting the generality of the foregoing, the Company
      (A) shall take all such action as may be 


                                       -7-
<PAGE>   9
      necessary or appropriate in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock, free from all
      taxes, liens, security interests, encumbrances, preemptive rights and
      charges on the conversion of the Series A Preferred Shares, (B) shall not
      take any action which results in any adjustment of the Fixed Conversion
      Price or the Adjusting Closing Bid Prices if the total number of shares of
      Common Stock issuable after the action upon the conversion of the Series A
      Preferred Shares would exceed the total number of shares of Common Stock
      then authorized by the Company's articles of incorporation and available
      for the purpose of issue upon such exercise, (C) shall not permit the par
      value of any shares of stock receivable upon the conversion of the Series
      A Preferred Shares to exceed the amount payable therefor upon such
      exercise, and (D) shall not issue any capital stock of any class which, as
      to the Holders, is preferred as to dividends or as to the distribution of
      assets upon voluntary or involuntary dissolution, liquidation or
      winding-up, unless the rights of the holders thereof shall be limited to a
      fixed sum or percentage of par value or a sum determined by reference to a
      formula based on a published index of interest rates, an interest rate
      publicly announced by a financial institution or a similar indicator of
      interest rates in respect of participation in dividends and to a fixed sum
      or percentage of par value in any such distribution of assets.

                        (ix) Notices.

                              (A) Immediately upon any adjustment pursuant
      hereto, the Company will give immediate written notice thereof to each
      Holder, setting forth in reasonable detail and certifying the calculation
      of such adjustment.

                              (B) The Company will give written notice to
      each Holder at least twenty (20) days prior to the date on which the
      Company closes its books or takes a record (I) with respect to any
      dividend or distribution upon the Common Stock, or (II) for determining
      rights to vote with respect to any Organic Change, dissolution or
      liquidation; provided, that in no event shall such notice be provided to
      such Holder prior to such information being made known to the public.

                              (C) The Company will also give written notice
      to each Holder at least twenty (20) days prior to the date on which any
      Organic Change, dissolution or liquidation will take place.

                        (x) Successive Adjustments. Successive adjustments in
      the Fixed Conversion Price, the Common Share Limit, the Conversion Limit,
      the Company Conversion Event Limit and the Adjusting Closing Bid Prices
      shall be made whenever any event specified above shall occur. All
      calculations under this Section 2(d) shall be made to the nearest cent or
      to the nearest one-hundredth of a share, as the case may be. No adjustment
      in the Adjusting Closing Bid Prices shall be made if the amount of such
      adjustment would be less than $0.01, but any such amount shall be carried
      forward and an adjustment with respect thereto shall be made at the time
      of, and together with, any subsequent adjustment which, together with such
      amount and any other amount or amounts so carried forward, shall in the
      aggregate equal $0.01 or more.


                                       -8-
<PAGE>   10
                  (e) Mechanics of Conversion. Subject to the Company's
      inability to fully satisfy its obligations under a Conversion Notice (as
      defined below) as provided for in Section 5 below:

                        (i) Holder's Delivery Requirements. To convert Series A
      Preferred Shares into full shares of Common Stock on any date (the
      "CONVERSION DATE"), the Holder thereof shall (A) deliver by courier or
      transmit by facsimile, for receipt on or prior to 11:59 p.m., Central Time
      on such date, a copy of a fully executed notice of conversion in the form
      attached hereto as Exhibit I (the "CONVERSION NOTICE"), to the Company or
      its designated transfer agent (the "TRANSFER AGENT"), and (B) surrender to
      a common carrier for delivery to the Company or the Transfer Agent as soon
      as practicable following such date, the original certificates representing
      the Series A Preferred Shares being converted (or an indemnification
      undertaking with respect to such shares in the case of their loss, theft
      or destruction pursuant to the provisions set forth in Section 12 hereof)
      (the "PREFERRED STOCK CERTIFICATES") and the originally executed
      Conversion Notice.

                        (ii) Company's Response. Upon receipt by the Company of
      a copy of a Conversion Notice, the Company shall immediately send, via
      facsimile, a confirmation of receipt of such Conversion Notice to such
      Holder. Upon receipt by the Company or the Transfer Agent of the Preferred
      Stock Certificates to be converted pursuant to a Conversion Notice (or an
      indemnification undertaking with respect to such shares in the case of
      their loss, theft or destruction pursuant to the provisions set forth in
      Section 12 hereof), together with the originally executed Conversion
      Notice, the Company or the Transfer Agent (as applicable) shall, on the
      next business day following the date of such receipt (A) issue and
      surrender to a common carrier for overnight delivery to the address as
      specified in the Conversion Notice, a certificate, registered in the name
      of the Holder or its designee, for the number of shares of Common Stock to
      which the Holder shall be entitled, (B) credit such aggregate number of
      shares of Common Stock to which the Holder shall be entitled to the
      Holder's or its designee's balance account with The Depository Trust
      Company, or (C) if the Holder requests, issue shares in electronic format
      (e.g. via DWAC).

                        (iii) Dispute Resolution. In the case of a dispute as to
      the determination of the Conversion Price, the Company shall promptly
      issue to the Holder the number of shares of Common Stock that is not
      disputed pursuant to the provision in this Section 2(e) and shall submit
      the disputed determinations or arithmetic calculations to the Holder via
      facsimile within one (1) business day of receipt of such Holder's
      Conversion Notice. If such Holder and the Company are unable to agree upon
      the determination of the Conversion Price within one (1) business day of
      such disputed determination or arithmetic calculation being submitted to
      the Holder, then the Company shall within one (1) business day submit via
      facsimile the disputed determination of the Conversion Price to an
      independent, reputable accounting firm of national standing acceptable to
      the Company and such Holder of Series A Preferred Shares. The Company
      shall cause such accounting firm to perform the determinations or
      calculations and notify the Company and the Holder of the results no later
      than forty-eight (48) hours from the 


                                       -9-
<PAGE>   11
      time it receives the disputed determinations or calculations. Such
      accounting firm's determination, shall be binding upon all parties absent
      manifest error. If as a result of such determination by the accounting
      firm the Company is required to issue additional shares of Common Stock to
      a Holder, the Company or the Transfer Agent, as applicable, shall on the
      next business day following the date such determination is made, issue
      such shares of Common Stock in accordance with the options set forth in
      the last sentence of Section 2(e)(ii) above. The reasonable fees and
      expenses of the accounting firm shall be borne by the party whose
      calculations is furthest from the accounting firm's determination.

                        (iv) Record Holder. The Person or Persons entitled to
      receive the shares of Common Stock issuable upon a conversion of Series A
      Preferred Shares shall be treated for all purposes as the record Holder or
      Holders of such shares of Common Stock on the Conversion Date.

                        (v) Company's Failure to Timely Convert. If the Company
      shall fail (other than as a result of the situations described in Section
      4(a) with respect to which the Holder has elected, and the Company has
      satisfied its obligations under, one of the options set forth in
      subparagraphs (i) through (v) of Section 4(a)) to issue to a Holder on a
      timely basis as described in this Section 2(e), a certificate for the
      number of shares of Common Stock to which such Holder is entitled upon
      such Holder's conversion of Series A Preferred Shares, the Company shall
      pay damages to such Holder equal to the greater of (A) actual damages
      incurred by such Holder as a result of such Holder's needing to "buy in"
      shares of Common Stock to satisfy its securities delivery requirements
      ("BUY IN ACTUAL DAMAGES") and (B) if the Company fails to deliver such
      certificates within five days after the last possible date which the
      Company could have issued such Common Stock to such Holder without
      violating this Section 2(e), on each date such conversion is not timely
      effected in an amount equal to 1% of the product of (A) the number of
      shares of Common Stock not issued to the Holder on a timely basis and to
      which such Holder is entitled and (B) the Closing Bid Price of the Common
      Stock on the last possible date which the Company could have issued such
      Common Stock to such Holder without violating this Section 2(e).

                  (f) Conversion at the Option of the Company. On any Company
      Conversion Event Date (as defined below), the Holders shall be required to
      convert on a pro rata basis such number of Series A Preferred Shares as
      required by the Company pursuant to a written notice delivered to the
      holders via facsimile provided, that such notice is delivered within one
      (1) business day following a Company Conversion Event Date. Any such
      conversion shall be made in accordance with this Section 2 as if the
      Holders of such Series A Preferred Shares had given a Conversion Notice on
      the Company Conversion Event Date, and the Conversion Date had been fixed
      as of the Company Conversion Event Date for all purposes of this Section
      2. Any conversion pursuant to this Section 2(f) shall be subject to the
      Common Share Limit and the Company Conversion Event Limit, in each case as
      adjusted as provided herein, but shall not be subject to or otherwise
      counted towards the Conversion Limit. The Holders of Series A Preferred
      Shares shall thereupon and within two (2) business days thereafter


                                      -10-
<PAGE>   12
      surrender the Preferred Stock Certificates to be converted (or an
      indemnification undertaking with respect to such shares in the case of
      their loss, theft or destruction pursuant to the provisions set forth in
      Section 12 hereof), duly endorsed for cancellation, to the Company or the
      Transfer Agent. No person shall thereafter have any rights in respect of
      the Series A Preferred Shares so converted, except the right to receive
      shares of Common Stock on conversion thereof as provided in this Section
      2. "COMPANY CONVERSION EVENT DATE" means any date on which the average of
      the Closing Bid Prices of the Common Stock for the twenty (20) consecutive
      trading days immediately preceding such date exceeds the Fixed Conversion
      Price multiplied by 150%.

                  (g) Fractional Shares. The Company shall not issue any
      fraction of a share of Common Stock upon any conversion. All shares of
      Common Stock (including fractions thereof) issuable upon conversion of
      more than one Series A Preferred Share by a Holder shall be aggregated for
      purposes of determining whether the conversion would result in the
      issuance of a fraction of a share of Common Stock. If, after the
      aforementioned aggregation, the issuance would result in the issuance of a
      fraction of a share of Common Stock, the Company shall round such fraction
      of a share of Common Stock up or down to the nearest whole share.

                  (h) Taxes. The Company shall pay any and all taxes which may
      be imposed upon it with respect to the issuance and delivery of Common
      Stock upon the conversion of the Series A Preferred Shares.

            (3) Redemption.

                  (a) Voluntary Redemption.

                        (i) Major Transaction. In addition to all other rights
      of the Holders of Series A Preferred Shares contained in this Statement
      (including, without limitation, the provisions of Section 2), after a
      Major Transaction (as defined in Section 3(b) below), each Holder shall
      have the right in accordance with Section 3(e), at such Holder's option,
      to require the Company to redeem all or a portion of such Holder's Series
      A Preferred Shares at a price per Series A Preferred Share equal to the
      product of (A) the Stated Value plus all accrued and unpaid dividends
      thereon, multiplied by (B) 105% ("MAJOR TRANSACTION REDEMPTION PRICE").
      The provisions of this Section 3(a)(i) shall not be deemed to restrict the
      ability of a Holder to convert Series A Preferred Shares pursuant to the
      provisions of Section 2 at any time and from time to time before the
      consummation of a Major Transaction.

                        (ii) Triggering Event. In addition to all other rights
      of the Holders of Series A Preferred Shares contained in this Statement
      (including, without limitation, the provisions of Section 2), after a
      Triggering Event (as defined in Section 3(c) below), each Holder of Series
      A Preferred Shares shall have the right in accordance with Section 3(e),
      at such Holder's option, to require the Company to redeem all or a portion
      of such Holder's Series A Preferred Shares at a price per Series A
      Preferred Share equal to the greater of (x) product of (A) the aggregate
      number of shares of Common Stock for which such Holder would be entitled
      to receive if the Series A Preferred Shares 


                                      -11-
<PAGE>   13
      that it holds would be converted as of the date immediately preceding such
      Triggering Event on which the exchange or market on which the Common Stock
      is traded is open, multiplied by (B) the greater of (x) the Average Market
      Price of the Common Stock on such date and (y) the product of (A) the
      Stated Value plus all accrued and unpaid dividends thereon, multiplied by
      (B) 130% (the "TRIGGERING EVENT REDEMPTION PRICE"). The provisions of this
      Section 3(a)(ii) shall not be deemed to restrict the ability of a Holder
      to convert the Series A Preferred Shares pursuant to the provisions of
      Section 2 at any time and from time to time before such Holder receives
      the Triggering Event Redemption Price.

                  (b) "Major Transaction". A "MAJOR TRANSACTION" means the
      occurrence at such time of any of the following events:

                        (i) the consolidation or merger of the Company with or
      into another Person (other than pursuant to a migratory merger effected
      solely for the purpose of changing the jurisdiction of incorporation of
      the Company or pursuant to a merger after which the Holders of the
      Company's outstanding capital stock immediately prior to the merger own a
      number of shares of the resulting company's outstanding capital stock
      sufficient to elect a majority of the resulting company's board of
      directors;

                        (ii) the sale, transfer, lease, disposal or abandonment
      of (whether in one transaction or in a series of transactions) of all or
      substantially all of the Company's assets (other than a sale or transfer
      to an entity controlling, controlled by or under common control with the
      Company); or

                        (iii) a purchase, tender or exchange offer for more than
      50% of the outstanding shares of Common Stock or other voting securities
      of the Company is made and accepted by the holders thereof.

                  (c) "Triggering Event". A "TRIGGERING EVENT" shall be deemed
      to have occurred at such time as any of the following events:

                        (i) notice from the Company that Common Stock issued or
      issuable upon conversion of the Series A Preferred Shares cannot be sold
      under the Registration Statement covering such Common Stock (the
      "SUSPENSION PERIOD"), for any period of ten consecutive trading days or
      any twenty non-consecutive trading days during any period of 180
      consecutive days that is (A) after the date the Registration Statement has
      been declared effective by the SEC and (B) prior to the time that the
      Conversion Stock issuable upon conversion of the Series A Preferred Shares
      may be sold without limitation in accordance with Rule 144(k) under the
      Securities Act of 1933, as amended (the "1933 ACT"); provided, that any
      demand for redemption under this Section 3(c)(i) must be made by a Holder
      of Series A Preferred Shares within 30 days after receipt of notice from
      the Company of the termination of the Suspension Period; provided,
      further, that if the aggregate number of days in all Suspension Periods
      (the "SUSPENSION DAYS") is equal to or greater than thirty (30) days, then
      the Mandatory Redemption Date may, at the option of the Holder, be
      extended by the aggregate number of Suspension Days;


                                      -12-
<PAGE>   14
                        (ii) the failure of the Common Stock or the Conversion
      Shares to be listed on the American Stock Exchange (the "AMEX"), the NYSE
      or the Nasdaq National Market System for a period of 10 days during any
      period of 12 months (the "DELISTING PERIOD"); provided, however, that any
      demand for redemption under this Section 3(c)(ii) must be made by a Holder
      within 30 days after receipt of the Notice of Redemption Event (as defined
      in Section 3(e)); or

                        (iii) the Company's notice to any Holder of Series A
      Preferred Shares, including by way of public announcement, at any time, of
      its intention not to comply with proper requests for conversion of any
      Series A Preferred Shares into shares of Common Stock, including due to
      any of the reasons set forth in Section 4(a) below, except in any case in
      which the basis for such intention by the Company is a bona fide dispute
      as to the right of such Holder to such conversion.

                  (d) Mandatory Redemption. If any of the Series A Preferred
      Shares remain outstanding on May 1, 2004 (the "MANDATORY REDEMPTION DATE")
      (subject to extension as provided in Section 3(c)(i) above), then the
      Company shall be required to redeem all of such Series A Preferred Shares
      at a price per Series A Preferred Shares equal to the Triggering Event
      Redemption Price (the "MANDATORY REDEMPTION PRICE" and together with the
      Major Transaction Redemption Price, and the Triggering Event Redemption
      Price, each a "REDEMPTION PRICE").

                  (e) Mechanics of Redemption. (i) Upon Major Transaction. No
      sooner than fifteen (15) days nor later than ten (10) days prior to the
      consummation of a Major Transaction, but not prior to the public
      announcement of such Major Transaction, the Company shall deliver written
      notice thereof via facsimile and overnight courier to each Holder (each a
      "NOTICE OF MAJOR TRANSACTION"). At anytime after receipt of a Notice of
      Major Transaction, any Holder of the Series A Preferred Shares then
      outstanding may require the Company to redeem all or any portion of its
      Series A Preferred Shares by delivering written notice thereof via
      facsimile or overnight courier (each a "NOTICE OF VOLUNTARY REDEMPTION
      UPON MAJOR TRANSACTION") to the Company, which Notice of Voluntary
      Redemption Upon Major Transaction shall indicate (A) the number of Series
      A Preferred Shares that such Holder is requesting redemption for and (B)
      the Major Transaction Redemption Price as calculated pursuant to Section
      3(a)(i) above.

                        (ii) Upon Triggering Event. Within one day after the
      occurrence of a Triggering Event, the Company shall deliver written notice
      thereof via facsimile and overnight courier to each Holder (each a "NOTICE
      OF TRIGGERING EVENT"). At anytime after receipt of a Notice of Triggering
      Event, but only for so long as the facts giving rise to the Triggering
      Event continue to exist, any Holder may require the Company to redeem all
      or any portion of its Series A Preferred Shares by delivering written
      notice thereof via facsimile or overnight courier (each a "NOTICE OF
      VOLUNTARY REDEMPTION UPON TRIGGERING EVENT") to the Company, which Notice
      of Voluntary Redemption Upon Triggering Event shall indicate (A) the
      number of Series A Preferred 


                                      -13-
<PAGE>   15
      Shares that such Holder is requesting redemption for and (B) the
      Triggering Event Redemption Price as calculated pursuant to Section
      3(a)(ii) above.

                        (iii) Upon Mandatory Redemption Date. Within two
      business days after receipt of the Mandatory Redemption Price in cash, the
      Holders shall surrender all Preferred Stock Certificates, duly endorsed
      for cancellation, to the Company or the Transfer Agent. No Person shall
      thereafter have any rights in respect of Series A Preferred Shares, except
      the right to receive the Mandatory Redemption Price.

                  (f) Payment of Redemption Price Upon Voluntary Redemption.
      Upon the Company's receipt of a Notice of Voluntary Redemption Upon Major
      Transaction or Notice of Voluntary Redemption Upon Triggering Event from
      any Holder, the Company shall immediately notify such Holder by facsimile
      of the mechanics of the delivery of each Holder's Preferred Stock
      Certificate and, if applicable, the Company's receipt of such requisite
      notice necessary to effect a redemption and such Holder of Series A
      Preferred Shares shall thereafter promptly send such Holder's Preferred
      Stock Certificates to be redeemed to the Company or its Transfer Agent (or
      an indemnification undertaking with respect to such shares in the case of
      their loss, the theft or destruction pursuant to the provisions set forth
      in Section 12 hereof). The Company shall deliver the applicable Redemption
      Price to such Holder within ten (10) days after the Company's receipt of
      the requisite notice required to affect a redemption; provided, that a
      Holder's Preferred Stock Certificates shall have been so delivered to the
      Company or its Transfer Agent (or an indemnification undertaking with
      respect to such shares in the case of their loss, the theft or destruction
      pursuant to the provisions set forth in Section 12 hereof); provided
      further that if the Company is unable to redeem all of the Series A
      Preferred Shares, the Company shall redeem an amount from each Holder of
      Series A Preferred Shares equal to such Holder's pro rata amount (based on
      the number of Series A Preferred Shares held by such Holder relative to
      the number of Series A Preferred Shares outstanding) of all Series A
      Preferred Shares being redeemed. If the Company shall fail to redeem all
      of the Series A Preferred Shares submitted for redemption (other than
      pursuant to a dispute as to the arithmetic calculation of the applicable
      Redemption Price), in addition to any remedy such Holder of Series A
      Preferred Shares may have under this Statement and the Securities Purchase
      Agreement, the applicable Redemption Price payable in respect of such
      unredeemed Series A Preferred Shares shall bear interest at the rate of
      1.25% per month (prorated for partial months) until paid in full. Until
      the Company pays such unpaid Redemption Price in full to each Holder,
      Holders of the Series A Preferred Shares then outstanding, including
      shares of Series A Preferred Shares submitted for redemption pursuant to
      this Section 3 and for which the applicable Redemption Price has not been
      paid, shall have the option (the "VOID REDEMPTION OPTION") to, in lieu of
      redemption, require the Company to promptly return to each Holder all of
      the Series A Preferred Shares that were submitted for redemption by such
      Holder under this Section 3 and for which the applicable Redemption Price
      has not been paid, by sending written notice thereof to the Company via
      facsimile or by courier (the "VOID REDEMPTION NOTICE"). Upon the Company's
      receipt of such Void Redemption Notice and prior to payment of the full
      applicable Redemption Price to each Holder, (i) the Notice of Voluntary
      Redemption Upon Major Transaction or Notice of Voluntary Redemption Upon
      Triggering Event, as 


                                      -14-
<PAGE>   16
      applicable, shall be null and void with respect to those Series A
      Preferred Shares submitted for redemption and for which the applicable
      Redemption Price has not been paid, and (ii) the Company shall immediately
      return any Series A Preferred Shares submitted to the Company by each such
      Holder for redemption under this Section 3(f) and for which the applicable
      Redemption Price has not been paid. Notwithstanding the foregoing, in the
      event of a dispute as to the determination of the arithmetic calculation
      of the applicable Redemption Price, such dispute shall be resolved
      pursuant to the provisions set forth in Section 2(e)(iii) above. Payments
      provided for in this Section 3 in connection with a Redemption Upon a
      Major Transaction shall have priority to payments to other stockholders in
      connection with a Major Transaction.

                  (g) Redemption Upon Reaching Common Share Limit. In addition
      to all other rights of the Holder contained herein (including, without
      limitation, the provisions of Section 2), after the Common Share Limit has
      been reached (unless it is no longer applicable as contemplated by Section
      2(a)), the Company shall redeem all of the Series A Preferred Shares then
      outstanding, and pay each Holder in cash an amount per Series A Preferred
      Share equal to the greater of (i) 130% of the Stated Value plus accrued
      and unpaid dividends to the date of such redemption and (ii) the product
      of (A) the aggregate number of shares of Common Stock for which such
      Holder would be entitled to receive if the Series A Preferred Shares that
      it holds would be converted as of the date that the Common Share Limit was
      reached and (B) the Average Market Price ("COMMON SHARE LIMIT REDEMPTION
      PRICE"). The provisions of this Section 3(g) shall not be deemed to
      restrict the ability of the Holder to convert Series A Preferred Shares
      pursuant to the provisions of Section 2 at any time and from time to time
      before the Common Share Limit is reached or if the Common Share Limit is
      no longer applicable.

             (4) Inability to Fully Convert.

                  (a) Holder's Option if Company Cannot Fully Convert. If, upon
      the Company's receipt of a Conversion Notice, the Company cannot issue
      shares of Common Stock registered for resale under the Registration
      Statement for any reason, including, without limitation, because the
      Company (x) does not have a sufficient number of shares of Common Stock
      authorized and available, (y) is otherwise prohibited by applicable law or
      by the rules or regulations of any stock exchange, interdealer quotation
      system or other self-regulatory organization with jurisdiction over the
      Company or its securities, including without limitation the NYSE, from
      issuing all of the Common Stock which is to be issued to a Holder pursuant
      to a Conversion Notice or (z) fails to have a sufficient number of shares
      of Common Stock registered for resale under the Registration Statement,
      then the Company shall issue as many shares of Common Stock as it is able
      to issue in accordance with such Holder's Conversion Notice and pursuant
      to Section 2(e) above and, with respect to the unconverted Series A
      Preferred Shares, the Holder, solely at such Holder's option, can elect to
      (unless the Company issues and delivers the Common Stock underlying the
      unconverted Series A Preferred Shares prior to the Holder's election
      hereunder, in which case such Holder shall only be entitled to receive Buy
      In Actual Damages under Section 2(e)(v)):


                                      -15-
<PAGE>   17
                        (i) require the Company to redeem from such Holder those
      Series A Preferred Shares for which the Company is unable to issue Common
      Stock in accordance with such Holder's Conversion Notice ("DEFAULT
      REDEMPTION") at a price per Series A Preferred Share equal to the
      Triggering Event Redemption Price as of such Conversion Date;

                        (ii) if the Company's inability to fully convert Series
      A Preferred Shares is pursuant to Section 4(a)(i)(z) above, require the
      Company to issue restricted shares of Common Stock in accordance with such
      Holder's Conversion Notice pursuant to Section 2(e) above;

                        (iii) void its Conversion Notice and retain or have
      retained, as the case may be, the nonconverted Series A Preferred Shares
      that were to be converted pursuant to such Holder's Conversion Notice; or

                        (iv) if the Company's inability to fully convert Series
      A Preferred Shares is pursuant to the rules and regulations described in
      Section 4(a)(i)(y) above, require the Company to issue shares of Common
      Stock in accordance with such Holder's Conversion Notice and pursuant to
      Section 2(e) above at a Conversion Price equal to the Average Market Price
      of the Common Stock on the date preceding such Holder's Notice in Response
      to Inability to Convert (as defined below).

                  (b) Mechanics of Fulfilling Holder's Election. The Company
      shall immediately send via facsimile to a Holder of Series A Preferred
      Shares, upon receipt of a facsimile copy of a Conversion Notice from such
      Holder which cannot be fully satisfied as described in Section 4(a) above,
      a notice of the Company's inability to fully satisfy such Holder's
      Conversion Notice (the "INABILITY TO FULLY CONVERT NOTICE"). Such
      Inability to Fully Convert Notice shall indicate (i) the reason why the
      Company is unable to fully satisfy such Holder's Conversion Notice, (ii)
      the number of Series A Preferred Shares which cannot be converted and
      (iii) the Default Redemption Price. Such Holder must within five (5)
      business days of receipt of such Inability to Fully Convert Notice deliver
      written notice via facsimile to the Company ("NOTICE IN RESPONSE TO
      INABILITY TO CONVERT") of its election pursuant to Section 4(a) above.

                  (c) Payment of Default Redemption Price. If such Holder shall
      elect to have its shares redeemed pursuant to Section 4(a)(i) above, the
      Company shall pay the Default Redemption Price in cash to such Holder
      within ten (10) days of the Company's receipt of the Holder's Notice in
      Response to Inability to Convert. If the Company shall fail to pay the
      Default Redemption Price to such Holder on a timely basis as described in
      this Section 4(c) (other than pursuant to a dispute as to the
      determination of the arithmetic calculation of the Default Redemption
      Price), in addition to any remedy such Holder of Series A Preferred Shares
      may have under this Statement and the Securities Purchase Agreement, such
      unpaid amount shall bear interest at the rate of 1.25% per month (prorated
      for partial months) until paid in full. Until the full Default Redemption
      Price is paid in full to such Holder, such Holder may void the Default
      Redemption with respect to those Series A Preferred Shares for which the
      full Default Redemption Price has not been 


                                      -16-
<PAGE>   18
      paid and receive back such Series A Preferred Shares. Notwithstanding the
      foregoing, if the Company fails to pay the Default Redemption Price within
      such ten (10) day time period due to a dispute as to the determination of
      the arithmetic calculation of the Default Redemption Price, such dispute
      shall be resolved pursuant to Section 2(e)(iii) above.

                  (d) Pro-rata Conversion and Redemption. In the event the
      Company receives a Conversion Notice from more than one Holder on the same
      day and the Company can convert and redeem some, but not all, of the
      Series A Preferred Shares pursuant to this Section 4, the Company shall
      convert and redeem from each Holder electing to have Series A Preferred
      Shares converted and redeemed at such time an amount equal to such
      Holder's pro rata amount (based on the number of Series A Preferred Shares
      held by such Holder relative to the number of Series A Preferred Shares
      outstanding) of all Series A Preferred Shares being converted and redeemed
      at such time.

            (5) Reissuance of Certificates. In the event of a conversion or
      redemption pursuant to this Statement of less than all of the Series A
      Preferred Shares represented by a particular Preferred Stock Certificate,
      the Company shall promptly cause to be issued and delivered to the Holder
      of such Series A Preferred Shares a preferred stock certificate
      representing the remaining Series A Preferred Shares which have not been
      so converted or redeemed.

            (6) Reservation of Shares. The Company shall, so long as any of the
      Series A Preferred Shares are outstanding, reserve and keep available out
      of its authorized and unissued Common Stock, solely for the purpose of
      effecting the conversion of the Series A Preferred Shares, such number of
      shares of Common Stock as shall from time to time be sufficient to effect
      the conversion of all of the Series A Preferred Shares then outstanding;
      provided, that the number of shares of Common Stock so reserved shall at
      no time be less than 200% of the aggregate number of shares of Common
      Stock for which (a) the Series A Preferred Shares are at any time
      convertible and (b) the dividends on the Series A Preferred Shares
      pursuant to Section 7 hereof are payable; provided, further, that such
      shares of Common Stock so reserved shall be allocated for issuance upon
      conversion of Series A Preferred Shares pro rata among the Holders of
      Series A Preferred Shares based on the number of Series A Preferred Shares
      held by such Holder relative to the total number of authorized Series A
      Preferred Shares.

            (7) Dividends. The Holders of the outstanding Series A Preferred
      Shares shall be entitled to receive cumulative dividends at the rate of 6%
      per annum of the Stated Value per Series A Preferred Share. Such dividends
      shall be payable quarterly in arrears on the last day of March, June,
      September and December of each year, commencing on June 30, 1999 (each of
      such dates being a "DIVIDEND PAYMENT DATE"). Such dividend shall accrue on
      each Series A Preferred Share from the Initial Issuance Date (with
      appropriate proration for any partial dividend period) and shall accrue
      from day-to-day, whether or not earned or declared. Dividend payments made
      with respect to Series A Preferred Shares may be made, subject to the
      terms hereof, in cash or, at the option and in the sole discretion of the
      Board of Directors of the Company, in full or in part, by issuing validly
      issued, fully paid and nonassessable shares of Common Stock; provided that
      the 


                                      -17-
<PAGE>   19
      shares of Common Stock so issued are covered by an effective Registration
      Statement or may otherwise be sold without limitation in accordance with
      Rule 144(k) under the 1933 Act. The number of shares of Common Stock to be
      so issued shall be equal to the quotient of (a) the amount of the dividend
      to be paid on such Dividend Payment Date which is not being paid in cash,
      divided by (b) 90% times the Average Market Price. If the Board of
      Directors shall elect to pay any part of a dividend by such issuance of
      Common Stock, the Company shall provide notice (the "COMMON STOCK ELECTION
      NOTICE") to such effect to the Holders of the Series A Preferred Shares by
      no later than thirty (30) days prior to the applicable Dividend Payment
      Date. If the Company shall not provide a Common Stock Election Notice, the
      applicable dividend shall be paid in cash. The issuance of such Common
      Stock (plus the amount of cash dividend, if any, paid together therewith)
      shall constitute full payment of such dividend. In no event shall an
      election by the Board of Directors to pay dividends, in full or in part,
      in cash on any Dividend Payment Dates preclude the Board of Directors from
      electing any other available alternative in respect of all or any portion
      of any subsequent dividend.

            (8) Liquidation, Dissolution, Winding-Up. In the event of any
      voluntary or involuntary liquidation, dissolution or winding up of the
      Company, the Holders of the Series A Preferred Shares shall be entitled to
      receive in cash out of the assets of the Company, whether from capital or
      from earnings available for distribution to its stockholders (the
      "PREFERRED FUNDS"), before any amount shall be paid to the holders of any
      of the capital stock of the Company of any class junior in rank to the
      Series A Preferred Shares in respect of the preferences as to the
      distributions and payments on the liquidation, dissolution and winding up
      of the Company, an amount per Series A Preferred Share equal to the
      product of (x) 110% and (y) the sum of (i) the Stated Value and (ii) all
      accrued and unpaid dividends thereon (such sum being referred to as the
      "LIQUIDATION VALUE"); provided, that if the Preferred Funds are
      insufficient to pay the full amount due to the holders of Series A
      Preferred Shares and holders of shares of other classes or series of
      preferred stock of the Company that are of equal rank with the Series A
      Preferred Shares as to payments of Preferred Funds (the "PARI PASSU
      SHARES"), then each holder of Series A Preferred Shares and Pari Passu
      Shares shall receive a percentage of the Preferred Funds equal to the full
      amount of Preferred Funds payable to such holder as a liquidation
      preference, in accordance with their respective Statement, as a percentage
      of the full amount of Preferred Funds payable to all holders of Series A
      Preferred Shares and Pari Passu Shares. The purchase or redemption by the
      Company of stock of any class, in any manner permitted by law, shall not,
      for the purposes hereof, be regarded as a liquidation, dissolution or
      winding up of the Company. Neither the consolidation or merger of the
      Company with or into any other Person, nor the sale or transfer by the
      Company of less than substantially all of its assets, shall, for the
      purposes hereof, be deemed to be a liquidation, dissolution or winding up
      of the Company.

            (9) Preferred Rank. All shares of Common Stock of the Company shall
      be of junior rank to all Series A Preferred Shares in respect to the
      preferences as to distributions and payments upon the liquidation,
      dissolution and winding up of the Company. All other shares of preferred
      stock shall not be of senior rank to all Series A Preferred Shares in
      respect to the preferences as to distributions and payments upon the


                                      -18-
<PAGE>   20
      liquidation, dissolution and winding up of the Company. As long as the
      Series A Preferred Shares initially issued remain outstanding, then
      without the prior express written consent of the holders of not less than
      two-thirds (2/3) of the then outstanding Series A Preferred Shares, the
      Company shall not hereafter authorize or issue additional or other capital
      stock that is of senior rank or rank pari passu to the Series A Preferred
      Shares in respect of the preferences as to distributions and payments upon
      the liquidation, dissolution and winding up of the Company. Without the
      prior express written consent of the holders of not less than two-thirds
      (2/3) of the then outstanding Series A Preferred Shares, the Company shall
      not hereafter authorize or make any amendment to the Company's Articles of
      Incorporation or bylaws, or file any resolution of the board of directors
      of the Company with the Arizona Secretary of State containing any
      provisions, which would adversely affect or otherwise impair the rights or
      relative priority of the holders of the Series A Preferred Shares relative
      to the holders of the Common Stock or the holders of any other class of
      capital stock. In the event of the merger or consolidation of the Company
      with or into another corporation, the Series A Preferred Shares shall
      maintain their relative powers, designations and preferences provided for
      herein and no merger shall result inconsistent therewith.

            (10) Restriction on Redemption and Cash Dividends with respect to
      Other Capital Stock. Until all of the Series A Preferred Shares have been
      converted or redeemed as provided herein, the Company shall not, directly
      or indirectly, declare or pay any cash dividend or distribution on its
      Common Stock without the prior express written consent of the holders of
      not less than two-thirds (2/3) of the then outstanding Series A Preferred
      Shares.

            (11) Voting Rights and Related Matters.

                  (a) The Holders of the outstanding Series A Preferred Shares
      shall have no voting rights, except as required by law, including, but not
      limited to, the laws of the State of Arizona, and as expressly provided in
      this Statement.

                  (b) The affirmative vote at a meeting duly called for such
      purpose or the written consent without a meeting, of the holders of not
      less than two-thirds (2/3) of the then outstanding Series A Preferred
      Shares, shall be required for any change to this Statement or the
      Company's Articles of Incorporation which would amend, alter, change or
      repeal any of the powers, designations, preferences and rights of the
      Series A Preferred Shares.

            (12) Lost or Stolen Certificates. Upon receipt by the Company of
      evidence satisfactory to the Company of the loss, theft, destruction or
      mutilation of any Preferred Stock Certificates representing the Series A
      Preferred Shares, and, in the case of loss, theft or destruction, of any
      indemnification undertaking by the holder to the Company and, in the case
      of mutilation, upon surrender and cancellation of the Preferred Stock
      Certificate(s), the Company shall execute and deliver new Preferred Stock
      Certificate(s) of like tenor and date; provided, however, the Company
      shall not be obligated to re-issue 


                                      -19-
<PAGE>   21
      Preferred Stock Certificates if the holder contemporaneously requests the
      Company to convert such Series A Preferred Shares into Common Stock.


                                      -20-
<PAGE>   22
            IN WITNESS WHEREOF, the Company has caused this Statement to be
signed, as of the 24 day of March, 1999.

                                        SIMULA, INC.



                                        By:  /s/  Donald W. Townsend
                                           _________________________________
                                           
                                           Name: Donald W. Townsend
                                           Its:  President         


                                      -21-
<PAGE>   23
                                    EXHIBIT I

                                  SIMULA, INC.
                                CONVERSION NOTICE

Reference is made to the Statement Pursuant to Section 10-602 of the Arizona
Revised Statutes of Simula, Inc. (the "CERTIFICATE OF DESIGNATIONS"). In
accordance with and pursuant to the Certificate of Designations, the undersigned
hereby elects to convert the number of shares of Series A Convertible Preferred
Stock, par value $.05 per share (the "SERIES A PREFERRED SHARES"), of Simula,
Inc., an Arizona corporation (the "COMPANY"), indicated below into shares of
Common Stock, par value $.01 per share (the "COMMON STOCK"), of the Company, by
tendering the stock certificate(s) representing the share(s) of Series A
Preferred Shares specified below as of the date specified below.


  Date of Conversion:                     
                                         ---------------------------------------

  Number of Series A 
  Preferred Shares to be converted:
                                         ---------------------------------------

  Stock certificate no(s). of Series A
  Preferred Shares to be converted:
                                         ---------------------------------------

Please confirm the following information:

  Conversion Price:
                                         ---------------------------------------

  Number of shares of Common Stock 
  to be issued:
                                         ---------------------------------------

Please issue and deliver the Common Stock and, if applicable, any check drawn on
an account of the Company into which the Series A Preferred Shares are being
converted in the following name and to the following address:

   Issue to:
                                         ---------------------------------------

                                         ---------------------------------------

                                         ---------------------------------------

                                         ---------------------------------------

                                         ---------------------------------------

   Facsimile Number:
                                         ---------------------------------------

   Authorization:
                                         ---------------------------------------
                                         By:
                                            ------------------------------------
                                         Title:
                                               ---------------------------------
   Dated:
                                         ---------------------------------------