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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
The O'Gara Company
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(Name of Issuer)
Common Stock, $.01 Par Value
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(Title of Class of Securities)
67083U 10 2
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(CUSIP Number)
Daniel Gautier
La Germignonnerie
ZA La Moriniere
9100 Evry, France
(011) 332 9650 1290
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 12, 1997
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 5 Pages
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CUSIP No. 67083U 10 2 13D 2 of 5 pages
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1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
Alian SARL
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [ ]
(b) [ ]
Not Applicable
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3) SEC Use Only
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4) Source of Funds (See Instructions)
Not Applicable
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
Not Applicable
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6) Citizenship or Place of Organization
France
===============================================================================
NUMBER OF SHARES 7) Sole Voting Power 376,597
BENEFICIALLY OWNED ==============================================
BY EACH REPORT 8) Shared Voting Power -0-
PERSON WITH ===============================================
9) Sole Dispositive Power 376,597
===============================================
10) Shared Dispositive Power -0-
================================================================================
11) Aggregate Amount Beneficially Owned by Each Reporting Person
376,597
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12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
Not Applicable
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13) Percent of Class Represented by Amount in Row (11)
5.5%
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14) Type of Reporting Person (See Instructions)
CO
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Item 1. Security and Issuer
This statement relates to the common stock, $.01 par value
(the "Common Stock"), of The O'Gara Company ("O'Gara"). The address of the
principal executive offices of O'Gara is 9113 LeSaint Drive, Fairfield, Ohio
45014.
Item 2. Identity and Background
This statement is filed by Alian SARL, a general purpose
business corporation organized under the laws of France. The address of its
principal business and office is La Germignonnerie, ZA La Moriniere, 9100 Evry,
France. During the past five years Alian SARL has not been convicted in a
criminal proceeding, nor has Alian SARL been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
it was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
The person performing the functions equivalent to the sole
"executive officer" and "director" of Alian SARL is Fernand Gautier. Fernand
Gautier's residence is 4 Bis Castel Saint Martin, (35) Rennes, France. Apart
from his duties at Alian SARL, Fernand Gautier is retired. During the past five
years, Fernand Gautier has not been convicted in a criminal proceeding nor been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he was or is subject to a judgment decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws. Fernand Gautier is a French citizen.
Daniel Gautier, the brother of Fernand Gautier, may be deemed
to "control" Alian SARL (for purposes of Section 13(d) of the Securities
Exchange Act of 1934) as a result of his direct and indirect equity ownership
interest in Alian SARL. Daniel Gautier's residence is 14 rue de Pleurtuit, (35)
Saint Briac, France. Daniel Gautier's principal occupation is providing armoring
consulting services. Daniel Gautier is employed as the President of Labbe S.A.,
a manufacturer of armored vehicles. The address of Labbe S.A. is Zone
Industrielle, Rue d'Armor, (22400) Lamballe, France. During the past five years,
Daniel Gautier has not been convicted in a criminal proceeding nor been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he was or is subject to a judgment decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws. Daniel Gautier is a French citizen. Fernand Gautier
and Daniel Gautier are collectively referred to herein as the "Gautiers."
Item 3. Source and Amount of Funds or Other Consideration
Not applicable. See Item 4 below.
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Item 4. Purpose of Transaction
The shares of O'Gara Common Stock which are the subject of
this Schedule 13D were received by Alian SARL as a result of O'Gara's
acquisition, on February 12, 1997, of Labbe, S.A., a French corporation of which
Alian SARL was a shareholder. Neither Alian SARL nor the Gautiers have any plans
or proposals which relate to or would result in any of the actions identified in
Item 4 of this Schedule.
Item 5. Interest in Securities of the Issuer
Alian SARL beneficially owns 376,597 shares of O'Gara's Common
Stock representing approximately 5.5% of the class. Alian SARL has sole voting
and dispositive power over all shares beneficially owned by it. Other than as
described above, Alian SARL has engaged in no transaction in the Common Stock of
O'Gara within the past 60 days. Except through Alian SARL, the Gautiers neither
own nor exercise voting or dispositive power over any shares of O'Gara Common
Stock. Except through Alian SARL and as described above, the Gautiers have
engaged in no transactions in the Common Stock of O'Gara within the past 60
days.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
None.
Item 7. Material to be Filed as Exhibits
Sale and Purchase Agreement dated January 21, 1997, relating
to the acquisition of Labbe, S.A.
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Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Alian SARL
By: /s/ Fernand Gautier
------------------------------------
Fernand Gautier
Gerant (Chief Executive Officer)
Date: As of the 24th day of February, 1997.
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SALE AND PURCHASE AGREEMENT
BETWEEN THE UNDERSIGNED :
1. SCP FRANCOIS IER, a societe civile de portefeuille with a capital of
FRF 1,000 whose registered office is at 2, rue de Belle-Ile, 35760
Saint-Gregoire, and which is registered under number D 349 401 828 at
the Commercial and Companies Registry of Rennes, represented by Mr.
Daniel Gautier duly authorized for the purposes hereof by a resolution
of its shareholders dated December 27, 1996, of which a certified copy
is attached as Schedule 1 hereto (hereinafter individually referred to
as "SCP")
a)
2. ALIAN, a societe a responsabilite limitee with a capital of FRF 50,000
whose registered office is at La Germignonnerie, ZA La Moriniere, 91000
Evry, and which is registered under number B 337 929 145 at the
Commercial and Companies Registry of Corbeil, represented by Mr. Daniel
Gautier duly authorized for the purposes hereof by resolution of its
shareholders dated January 7, 1997, of which a certified copy is
attached as Schedule 2 hereto (hereinafter individually referred to as
"Alian")
a)
3. MR. DANIEL GAUTIER, residing at Tertre Cottin, 14, rue de Pleurtuit,
35800 Saint-Briac (hereinafter individually referred to as
"Mr. Gautier")
a) (for the purposes of this agreement the above three parties, namely
b) SCP, Alian and Mr. Gautier shall be referred to collectively as "the
Gautier Group".)
c)
4. MR. JEAN-PIERRE PECHEUR, residing at Beau Sejour, 22400 Noyal.
a)
5. MR. JEAN-PHILIPPE TIBLE, residing at 16, clos d'Ahaut, 22400
Noyal.
a)
6. MR. PHILIPPE QUINTIN, residing at Le Tertre Gicquel - Rocher Morieux,
22530 Erquy.
a)
The above six parties being hereinafter together referred to
as the "Vendors"
OF THE ONE PART
AND
O'GARA FRANCE S.A. a societe anonyme with capital of FRF 250,000 whose
registered office is at 37 rue des Mathurins, 75008 Paris and which is
registered with the Commercial and Companies Registry of Paris under number B
410 476 444, represented by Mr. Nick Hodgson, duly authorized for the purposes
hereof pursuant to the statement of commitments attached to the by-laws of the
company dated January 3, 1997 of which a certified copy is attached as Schedule
3 hereto,
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hereinafter referred to as the "Purchaser"
AND
THE O'GARA COMPANY, a company existing and incorporated under the laws of the
State of Ohio, whose registered office is at 9113 Le Saint Drive, Fairfield,
Ohio 45014, United States of America, represented by Mr. Wilfred T. O'Gara duly
authorized by resolution of the Board of Directors dated December 18, 1996, of
which a certified copy is attached in Schedule 4 hereto.
hereinafter referred to as the "Guarantor"
OF THE OTHER PART.
WHEREAS
A. Labbe is a societe anonyme a directoire et a conseil de surveillance
with a capital of FRF 15,000,000, whose registered office is at Zone
Industrielle, Rue d'Armor, (22400) Lamballe and which is registered
under number B 347 994 196 at the Commercial and Companies Registry of
Saint-Brieuc (hereinafter called the "Company").
B. The capital of the Company is FRF 15,000,000 divided into 150,000
shares of FRF 100 each (hereinafter called "the Shares"). On the date
hereof, the Shares, are held by the individuals and the entities
listed in Schedule 5 (a), all such individuals and entities being the
Vendors under this Agreement with the exception of one legal entity,
UEO; however, Mr. Gautier declares and represents that he has obtained
from UEO the necessary legal document pursuant to which the latter has
irrevocably undertaken to transfer to the Gautier Group the shares
that it holds in the capital of the Company prior to the closing of
the transaction contemplated hereunder; as a result, the Vendors
represent that on the Closing Date (as defined in Article 4.1 hereto),
they will be the owners between them of all the Shares, in the
proportion set out in Schedule 5 (b) hereto.
C. The principal activity of the Company is the manufacture of industrial
coach work, security and armored products, and, commercial and private
armor-plated vehicles.
D. The Company shall at the Closing Date have the following subsidiary
companies of which further details (including the number of shares
held by each shareholder) are set out in Schedule 6 hereto:
- Hellio Poids Lourds - Carrosserie, Tolerie, Peinture,
("Hellio"), a societe anonyme with a capital of FRF 1,176,000
whose registered office is located at ZAC de la Hazaie in
Tregueux (22950) and which is registered with the
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Commercial and Companies Registry of Saint-Brieuc under number
B 311 051 379;
- SARL Normandie Carrosserie, ("NC"), is an SARL with a capital
of FRF 150,000 whose registered office is located at 4 rue Ampere
in Mondeville (14120) and which is registered with the Commercial
and Companies Registry of Caen under number B 388 140 360;
- Societe de Blindage and de Securite - SBS, ("SBS"), an SARL
with a capital of FRF 250,000 whose registered office is located
at 47 route d'Auxerre in Moneteau (89470) and which is registered
with the Commercial and Companies Registry of Auxerre under
number B 388 307 738;
(hereinafter referred to as the "Subsidiaries").
E. Schedule 6 identifies the shares of the Subsidiaries which are not held
by the Company and which are excluded from the scope of this Agreement
(hereinafter called the "Minority Shares"); as a result, the Minority
Shares shall remain on and after the Closing Date in the hands of the
individuals who hold them at present. All other shares in the capital
of the Subsidiaries shall on the Closing Date be held by the Company.
F. As a result of the on-going expansion of the Company's coachwork and
armoring business, negotiations are currently taking place for the
acquisition by the Company of 51% of the shares of Maintenance
Carrosserie Poids Lourds, a societe a responsabilite limitee with a
capital of FRF 100,000 whose registered office is located at Z.I. de
l'Apport Paris, rue Fernand-Reynaud, 91100 Corbeil-Essonnes and which
is registered at the Commercial and Companies Registry of Corbeil under
number B 351 810 247, ("MCPL") together with an option in favor of the
Company to acquire a further 25% thereof ("MCPL Option Shares").
G. In addition, the Company is currently negotiating with a view to
entering into a joint venture with Guangdong Maoming Kaimao Trade
Co., a company based in Maoming City, Guangdong Province, The Peoples
Republic of China, with the aim of setting up a joint-venture entity
and opening a factory for the production of armored vehicles ("the
Chinese Joint-Venture").
H. The Guarantor is the ultimate parent company of the Purchaser and is a
party to this agreement for the purposes of guarantying the
obligations of the Purchaser hereunder.
I. The Vendors wish to sell and the Purchaser wishes to purchase the
whole, but not part only, of the Shares (on the basis that prior to the
Closing Date, the Vendors will be between them the owners of all the
Shares, as specified in paragraph B above).
J. In anticipation of this sale and purchase, the Purchaser, in
conjunction with, and based on information provided by, the Vendors as
regards the Labbe group of companies, has obtained, from the French
Ministry of Finance (Treasury Department), on
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December 20, 1996, the necessary clearance allowing it to complete the
acquisition contemplated herein.
NOW IT IS HEREBY AGREED AS FOLLOWS:
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1. SALE AND PURCHASE
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1.1 The Vendors shall sell (each Vendor undertaking to sell those Shares
owned by him/it, as the case may be and to procure the sale by the other
Vendors of those of the Shares owned by him/it respectively) and the
Purchaser shall purchase the whole, but not part only, of the Shares in
accordance with the terms and conditions of this Agreement together with
all rights now or hereafter attaching thereto. In order to be able to
abide by the commitment made hereunder, the members of the Gautier Group
hereby irrevocably undertake to carry out the necessary shares transfers
(transfer of UEO's shares as stated in paragraph B of the Preamble and
transfer of shares between them) prior to the Closing Date so that the
Vendors may be, on the Closing Date, the owners amongst them of all the
Shares in the proportions set out in Schedule 5 (b).
1.2 Under this Agreement, liability for the obligations of Mr. Jean-Pierre
Pecheur, Mr. Jean-Philippe Tible and Mr. Philippe Quintin, (the "Other
Vendors") and the Gautier Group, as a whole, shall be sole and individual
in proportion to the percentage of Shares held by each of them; the
liability of each of the members of the Gautier Group amongst them, shall
be joint and several.
2. PRICE
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2.1 Amount and Payment of Price
---------------------------
2.1.1 The price for the whole of the Shares (hereinafter called
"the Price") shall be the sum, in principal, of USD 14,230,000
(fourteen million, two hundred and thirty thousand U.S.
Dollars), increased by interest from the date hereof until the
Closing Date (as defined in Article 4.1), such interest to be
in the amount of 5% per annum in respect of the first thirty
days following the date hereof and 8% thereafter until the
Closing Date.
2.1.2 The allocation of the Price between the Vendors in
proportion to his/its respective holding of Shares, is set in
Schedule 7 hereto. The Price shall be paid on the Closing Date
in accordance with the provisions of Article 2.1, 2.2 and 4
below by the Purchaser to each of the Vendors in compliance
with the indications mentioned in Schedule 7.
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2.1.3 Out of the Price, as defined in Article 2.1.1 above,
25% of the price to be paid for the Shares held
globally by the Gautier Group in the Company shall be paid to
Alian in the form of common stock of the Guarantor
(hereinafter the "Stock" forming the "Payment in Stock"), in
accordance with the provisions of Articles 2.2, 4.5 and 4.6
hereof and a part of the Stock shall be subject to a pledge
as specified in Article 4.2.6 hereof; the remaining 75% of
the price to be paid for the Shares held by the Gautier Group
being paid in cash (hereinafter the "Cash Payment") in
accordance with the indications mentioned in Schedule 7
hereto.
2.1.4 For the purposes of registration of this Agreement, the
Price in French francs shall be calculated using the exchange
rate for the conversion of the US Dollar to its French Franc
equivalent on the Closing Date.
2.2 Representations and Warranties regarding the Stock and the Payment in
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Stock
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2.2.1 The Purchaser and the Guarantor represent and the
Gautier Group acknowledge that the Stock forming the Payment
in Stock transferred pursuant to Article 2.1.3 hereof have not
been registered under the United States Securities Act of
1933, as amended (the "Act"), or under the securities law of
any other jurisdiction, and that the sale of the Stock is
being made in reliance upon and in compliance with an
exemption from registration provided by the Act.
2.2.2 The Gautier Group covenants and agrees with the
Purchaser and the Guarantor and represents and warrants to the
Purchaser and the Guarantor as follows:
(a) the Gautier Group's acquisition of the Stock
does not violate any laws of France which is the
Gautier Group's country of origin and current
principal place of business;
(b) the Gautier Group has been provided with and
has reviewed copies of the Prospectus dated November
12, 1996, for the Guarantor's initial public offering
(which includes in particular a section concerning
dividend policy) and quarterly report on Form 10-Q
for the period ended September 30, 1996; the Gautier
Group has been supplied with such additional
information concerning the Guarantor and the Stock as
the Gautier Group has reasonably requested; by reason
of the Gautier Group's business and financial
experience, the Gautier Group has the capacity to
evaluate the merits and risks of an investment in the
Stock;
(c) the Gautier Group is acquiring the Stock for
its own account as an investment and not with a
current view to, or for resale in connection with,
any distribution or public offering, and the Gautier
Group has no
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agreement, understanding or arrangement to sell,
assign or transfer any portion of the Stock to any
other person or entity.
(d) the Stock are "restricted securities" as
defined in Rule 144 under the Act. The Gautier Group
will not offer, sell, transfer, assign, exchange or
otherwise dispose of any of the Stock at any time unless
the Stock are (i) registered under the Act or (ii)
offered, sold or otherwise disposed of in compliance
with an exemption from the registration requirements of
the Act (as evidenced by an opinion of counsel
satisfactory to the Guarantor that such an exemption is
available to the Gautier Group).
(e) The Gautier Group understands and agrees that
the certificates for the Stock will bear a restrictive
legend stating that transfer of the Stock is prohibited
except in accordance with the provisions of Article 2.2
of this Agreement and that the Guarantor is entitled to
refuse to register any transfer of the Stock not made in
accordance with the provisions of Article 2.2 of this
Agreement.
2.2.3 If the Guarantor registers any additional shares of its
common stock for sale subsequent to the Closing, pursuant to
the Act, and if the resale of the Stock by the Gautier Group
is then restricted as to holding period, or volume of sale
under U.S. Securities and Exchange Commission Rule 144, then
the Guarantor will use its best efforts to accord to the
Gautier Group the opportunity to include in such registration
statement shares of the Stock, on the same terms and
conditions as offered by the Guarantor in its registration
statement. Notwithstanding the foregoing, the number of
shares that the Gautier Group shall be entitled to register
shall be determined by the managing underwriter(s) after
giving careful consideration to the effect on the marketing
of the offering. The selection of the managing underwriter(s)
shall be made by the Guarantor without the consent of the
Gautier Group. In addition, the Gautier Group shall be
responsible for, and shall pay, their pro rata share of the
costs and expenses of the offering and the underwriting
discounts and commissions with respect to the shares of Stock
being sold.
3. CONDITIONS PRECEDENT
--------------------
3.1 The obligations of the parties hereunder are subject to the fulfillment
of the following conditions precedent:
3.1.1 The obtaining by the Purchaser, through the
Guarantor (its ultimate parent company), of the
financing necessary for the payment of the Price mentioned in
Article 2.1.1;
3.1.2 The completion by the Purchaser of an environmental
audit of the Company and the Subsidiaries which shall not
reveal any of the following:
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(i) any significant violation of the applicable laws and
regulations in force concerning the protection of the
environment,
(ii) the absence of any authorization, licence or other
approval required by the laws and regulations in force,
and/or, the receipt from any competent body of any
notification to the effect that any such authorization,
licence or approval has not been substantially complied with
or has been withdrawn,
(iii) the occurrence on any of the real properties
currently owned or occupied by the Company or any of the
Subsidiaries of any leak or spill or disposal of any
substance, material or waste which is regulated as "toxic" or
"hazardous" under any applicable environmental regulation,
particularly if, as a result of such leak, spill or disposal,
the Company or any of the Subsidiaries is obligated to
clean-up or otherwise remedy any contaminated surface water,
ground water or soil, or
(iv) the existence of storage tanks located on any real
property occupied by the Company or any of the Subsidiaries,
whether on the premises or underground, which have created or
are likely to create any environmental hazard, given their
current use.
3.1.3 The disposal by the Company of all of its present
subsidiaries other than the Subsidiaries referred to in
Schedule 6 (such other subsidiaries, a list of which is set
out in Schedule 8, being hereinafter referred to as the "Other
Subsidiaries") in accordance with the terms of Article 5.2.4.
3.1.4 The continuing accuracy, as at the Closing Date, of the
Representations and Warranties contained in Article 6.1,
together with compliance with the obligations set forth in
Article 5.2 hereof.
It is specifically understood that the Purchaser shall actively and
forthwith undertake the necessary steps for the fulfillment of the
conditions set out in Articles 3.1.1 and 3.1.2 above (it being
specified that the Purchaser shall procure that a copy of the report to
be prepared by the environmental firm which will carry out the
environmental audit be remitted to the Vendors no later than March 15,
1997) and the Vendors shall do the same as regards the fulfillment of
the condition set out in Article 3.1.3.
3.2 With the exception of the provisions of Article 3.1.1 and 3.1.2 which
are for the benefit of both parties, the above conditions are solely
for the benefit of the Purchaser who may waive all or any of them in
whole or in part.
3.3 Subject to any waiver by the Purchaser pursuant to Article 3.2 hereof,
if the above conditions are not fulfilled within six months (i.e. 180
days) from the date hereof, this Agreement shall be null and void. In
that case and provided only that the non
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completion of the transaction contemplated hereunder was due to the non
fulfillment of the condition set out in Article 3.1.1, the Purchaser
shall pay to the Vendors, within fifteen days from the end of the six
month period referred to above, a sum of FRF 1,500,000 (one million
five hundred thousand French francs) (this amount being hereinafter
referred to as the "Penalty"). In order to guarantee the payment of the
Penalty, the Purchaser hereby delivers to Mr. Gautier an irrevocable
standby letter of credit and Mr. Gautier, on behalf of the Vendors,
hereby acknowledges receipt thereof. It is understood between the
parties, that in the absence of fraud or manifest bad faith which may
have prevented the fulfillment of any of such conditions, the payment
of the Penalty (which shall be due if the condition of such payment, as
mentioned in the second sentence of this Article, is met) shall be
deemed to compensate fully and definitively any damage that the Vendors
may have suffered as a result of the Purchaser's inability to complete
the acquisition contemplated herein.
4. CLOSING
-------
4.1 Closing shall take place at The Law Offices of S.G. Archibald, 41 rue
Ybry, 92200 Neuilly-sur-Seine, on a date to be agreed upon between the
parties (hereinafter referred to as "the Closing Date") which shall not
be later than seven working days following the fulfillment (or waiver)
of the last to be fulfilled (or, as the case may be, waived) of the
conditions precedent set in Article 3.1 (other than that set out in
Article 3.1.4) provided that the Vendors are able to confirm, at the
Closing Date, compliance with the condition set out in Article 3.1.4,
or to the extent that they are not so able, that the Purchaser shall
have waived compliance with the said condition.
4.2 At Closing, the Vendors shall deliver to the Purchaser:
4.2.1 duly executed share transfer forms (ordres de mouvement)
in respect of the whole of the Shares in favor of such person
or persons as the Purchaser may specify;
4.2.2 the shareholder accounts and Register of Transfers of the
Company and of Hellio, in both cases up-to-date to record the
transfers made pursuant to the share transfer forms referred
to in Article 4.2.1 hereof;
4.2.3 the minute books of board meetings (of the Company and
Hellio) and shareholders' meetings of the Company, of the
Subsidiaries and of MCPL (if the acquisition by the Company of
51% of its share capital, as provided for in Article 5.1.1,
has been completed prior to the Closing Date) in both cases up
to date together with the attendance book in respect of board
meetings and proxies in respect of shareholders' meetings
together with the relevant attendance sheets for the last
financial year;
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4.2.4 the unconditional resignations of the members of the
directorate and of the supervisory board of the Company, with
effect on the Closing Date;
4.2.5 a certificate signed by all the Vendors, confirming, in
accordance with Article 3.1.4 hereof, that the Representations
and Warranties contained in Article 6.1 hereof remain true and
accurate in all respects as at the Closing Date;
4.2.6 a pledge agreement executed by Alian, in the form of
the draft agreement set out in Schedule 9 hereto, pursuant
to which a part (specified hereunder) of the Stock (as
defined in Article 2.1.3) shall be pledged, for the periods
mentioned below (the "Periods of Pledge"), in favor of the
Purchaser by way of security for the obligations of each of
the parties within the Gautier Group under Article 5.2.2 and
7 hereof;
(a) subject to the terms of paragraph (b)
and (c) hereafter, the amount of Stock to be
pledged under this Article 4.2.6 (hereinafter the
"Pledged Stock") shall be as follows:
(i) for the period from the Closing Date
until seven working days after the date of
certification by the Company's statutory auditors of
the accounts of the Company as at December 31, 1997
(the "1st Period of Pledge"), the Pledged Stock shall
be equal to 50% of the Stock delivered to Alian as
Payment in Stock on the Closing Date;
(ii) for the period from the end of the 1st
Period of Pledge until seven working days after the
date of certification by the Company's statutory
auditors of the accounts of the Company as at
December 31, 1998 (the "2nd Period of Pledge"), the
Pledged Stock shall be equal to 25% of the Stock
delivered to Alian as Payment in Stock on the Closing
Date;
(iii) for the period from the end of the 2nd
Period of Pledge until seven working days after the
date of certification by the Company's statutory
auditors of the accounts of the Company as at
December 31, 1999 (the "3rd Period of Pledge"), the
Pledged Stock shall be equal to 10% of the Stock
delivered to Alian as Payment in Stock on the Closing
Date;
(b) notwithstanding the terms of paragraph
(a) above, in the event that:
(i) notice of certain facts giving rise to
Damage is given in compliance with the terms of
Article 7.10 hereof during any one of the Periods of
Pledge and that the total indemnifiable Damage, for
which notice has thus been given, exceeds, on the
last day of the
<PAGE> 10
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Period of Pledge during which notification was given,
the value, calculated in accordance with the
provisions of Article 4.6, of the Stock which shall
constitute the Pledged Stock during the following
Period of Pledge,
and/or,
(ii) on the last day of the Period of Pledge
under consideration, the release of the obligations
referred to in Article 5.2.2 has not been obtained by
the Gautier Group as provided in such Article,
then, the amount of Pledged Stock, as
defined in paragraph (a) above, in respect of the
Period of Pledge to follow, shall be increased
(within the limit of the existing amount of Pledged
Stock on the last day of the Period of Pledge under
consideration) by:
(x) such excess amount of Damage over the
amount of Pledged Stock as defined in paragraph (a),
in the situation described in (i) above,
and
(y) the full amount of the guaranties or
commitments referred to in Article 5.2.2 and listed
in Schedule 12, in the situation described in (ii)
above.
For the purposes of determining the amount
of Pledged Stock to be kept during each Period of
Pledge pursuant to this Article, the indemnifiable
Damage shall be determined, taking into account (i)
the provisions of Article 7 hereof, to the extent
only that any deduction to be made thereunder can be
deemed to be certain and definitive on the date on
which any such deduction is to be taken into account
for the purposes of this paragraph and (ii) the
reasonable estimate of Damage made by the Purchaser,
to the extent that Damage is not then definitively
quantifiable.
In the event of increase of the Pledged
Stock pursuant to paragraph (x) and/or (y) above, the
increased Pledged Stock shall remain subject to the
said Pledge until respectively the relevant
indemnification has been made and/or until the
release of the guaranties and commitments referred to
in Article 5.2.2 has been given.
(c) In case of a public offering by the
Guarantor of its common stock, the Gautier Group
would be allowed to sell 75% of the Stock subject to
the terms of Article 2.2.3. However, the sale by
Alian
<PAGE> 11
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of the Pledged Stock, as defined in paragraphs (a)
and (b) above, during any one of the Periods of
Pledge, as defined in paragraph (a) above, shall only
be permitted under this Agreement, subject to the
terms of the Act and the securities law applicable
thereto, if the proceeds of such sale are immediately
deposited into an escrow account with an escrow agent
acceptable to the Purchaser, and subject to the terms
and conditions relating to such Pledged Stock
contained in this Agreement. Any interest paid in
relation to the proceeds of the sale placed in escrow
shall accrue to the account of Alian.
4.2.7 Certified copies of the minutes of the workers'
committee (comite d'entreprise) of the Company and, if
applicable, of the Subsidiaries and of the Other Subsidiaries
confirming that all information and consultation obligations
have been fulfilled.
4.2.8 Copies of all Material Contracts as defined in
Article 6.1.12.1 hereof.
4.2.9 Duly executed amendments to Mr. Philippe Quintin, Mr.
Jean-Pierre Pecheur and Mr. Jean-Philippe Tible's employment
contracts in compliance with the terms of Article 8.3 hereof.
4.3 The Vendors shall procure the holding, on the Closing Date, immediately
prior to the transfer of the Shares to the Purchaser, of an
extraordinary and ordinary shareholders' meeting of the Company for the
purpose of (i) modifying the articles of association of the Company to
adopt a traditional management structure with a board of directors and
make such other modifications as the Purchaser shall request and (ii)
appointing such persons as the Purchaser shall request as members of
the new board of directors.
4.4 At the Closing Date, the Purchaser shall pay to each of the Vendors by
certified check that part of the Cash Payment which is owed to them in
cash as mentioned in Schedule 7 and each of the Vendors shall give to
the Purchaser a receipt for that part of the Price received by him/it.
4.5 At the Closing Date, pursuant to the terms of Articles 2.1.3 and 2.2
hereof, Alian shall receive the Payment in Stock. For the purposes of
attributing a value to the Payment in Stock, and thereby fixing the
amount of Stock to be issued, reference shall be made to the common
stock of the Guarantor with a par value of one US cent (USD 0.01)
quoted on the NASDAQ National Market, the value of the said Stock being
determined in accordance with the provisions of Article 4.6 below.
4.6 The value of the Stock shall be determined by taking the average
daily closing price as reported in the Wall Street Journal of the
Stock on the NASDAQ National Market during the thirty consecutive
business days ending on the business day which is four business days
prior to the date hereof (the "Average Stock Price"). The number of
whole shares of Stock which shall be transferred to Alian shall be
<PAGE> 12
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determined by dividing the amount giving rise to the Payment in Stock
(i.e., 25 % of the price of the Shares held globally by the Gautier
Group) by this Average Stock Price. Any balance due and payable in the
form of Payment in Stock which could not give rise to the payment of an
additional whole share of Stock will be paid in cash.
4.7 At the Closing Date, the Guarantor shall deliver to Alian four
certificates for the Stock, as described in Article 2.2.2 (e) hereof,
three of them, (corresponding to the amount of Stock to be pledged in
respect of each Period of Pledge) to be endorsed in blank by Alian at
Closing in order to perfect the pledge in compliance with the terms of
the pledge agreement referred to in Article 4.2.6 hereof.
5. VENDORS' RIGHTS AND OBLIGATIONS PENDING CLOSING
-----------------------------------------------
5.1 Vendors' rights pending Closing
-------------------------------
It is expressly stated that the Purchaser is aware of the current
negotiations described in paragraph F and G of the Preamble and
furthermore has authorized the Vendors, in the event that they deem it
appropriate, to procure that, prior to the Closing Date, the Company:
5.1.1 complete the acquisition of 51% of the share capital
of MCPL substantially in accordance with the terms of the
agreement annexed at Schedule 10 and be granted an option to
purchase the MCPL Option Shares, it being specified however
that if, for the purposes of the MCPL acquisition, a guaranty
is given by the Company in respect of the obligation of any
other purchaser of MCPL shares in relation to the acquisition
of such shares, such as the obligation to repay a loan taken
out to finance the said acquisition, such guaranty shall have
to be secured by a pledge taken simultaneously by the Company
on the MCPL shares acquired by the purchaser whose obligations
are thus guaranteed;
5.1.2 sign the Chinese Joint-Venture Agreement substantially in
accordance with the terms of the agreement annexed at Schedule
10.
5.2 Vendors' obligations pending Closing
------------------------------------
5.2.1 As from the date hereof and up to and including the
Closing Date, the Vendors shall procure that:
(a) the businesses of the Company and of the Subsidiaries
shall be carried on in the ordinary course and in a prudent
and appropriate manner and that any material adverse change in
any of such businesses shall be notified immediately to the
Purchaser in writing;
<PAGE> 13
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(b) the Company and the Subsidiaries shall
substantially comply with all relevant laws and regulations
and, in particular, but without prejudice to the generality of
the foregoing, with all applicable employment law requirements
in relation to the subject matter of this Agreement;
(c) the Company shall not and shall procure that none
of the Subsidiaries shall, unless they have the prior written
consent of the Purchaser, modify its articles of association
(statuts), undertake any merger, spin-off or other form of
reorganization or propose, declare or pay any dividend or
grant any mortgage, pledge or security, or take any other
measure which may encumber or otherwise affect the free
disposition of their respective assets;
(d) save with the prior written consent of the
Purchaser, and except for (i) negotiated annual remuneration
increases for employees employed on the date hereof by the
Company and the Subsidiaries whose total cost, excluding
seniority benefits and the increases which are mandatory under
the law and the Collective Bargaining Agreement, shall not
represent an increase of more than 3% of the total of their
salaries and (ii) premiums and bonuses payable in 1997 to
certain employees of the Company and of the Subsidiaries which
have been fully accounted for in the Interim Statements for
the amounts sets forth in Schedule 11 hereto, there shall be
no increase or undertakings to increase the compensation
payable or other benefits due to any members of the personnel
or of any manager or mandataire social (whether or not having
employee status) of the Company or of any of the Subsidiaries
(such as premiums, profit sharing, pension or retirement
rights or other similar benefits) nor shall the Company or any
of the Subsidiaries hire or dismiss any corporate officers
(cadres superieurs) or executive employees (cadres
dirigeants);
(e) None of the properties, assets, books and records
of the Company and of the Subsidiaries shall be defaced,
damaged, destroyed or removed from the premises of the Company
or any of the subsidiaries pending the Closing Date;
(f) save with the prior agreement of the Purchaser,
the Company and the Subsidiaries shall not enter into any
contracts which are subject to unusual or unduly onerous terms
or which are outside the normal course of business of the
Company or of the Subsidiaries concerned;
(g) save in respect of 1) the Chinese Joint-Venture,
2) the acquisition of an interest in MCPL as described in the
Preamble and in Article 5.1.1 above, and 3) save with the
prior agreement of the Purchaser, the Company and the
Subsidiaries shall not undertake any capital or non-routine
expenditure save where such expenditure is essential to
preserve the value of an asset of the Company or of one of the
Subsidiaries;
<PAGE> 14
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(h) save for the purposes of the MCPL acquisition, as
described in the preamble and in Article 5.1.1 below, or save
with the prior agreement of the Purchaser, the Company and the
Subsidiaries shall neither grant nor receive any loan from a
third party for an aggregate sum in excess of FRF 100,000; nor
shall they give any guaranty in respect of any third party's
obligations.
5.2.2 The Gautier Group shall put in hand forthwith the requisite steps
to terminate as soon as possible all obligations of the Company and the
Subsidiaries with regard to underwriting, guarantying or supporting the Other
Subsidiaries (a complete and accurate list of such obligations appearing in
Schedule 12 hereto), the Vendors undertaking to use their best endeavors to
procure the release for the Company and the Subsidiaries from such obligations
prior to the Closing Date and to the extent that such release cannot be put in
place prior to the Closing Date, the Gautier Group hereby represents and
warrants jointly and severally to hold the Purchaser, and to the extent
necessary the Guarantor, harmless in respect of any claims made thereunder prior
to the release of such obligations which shall in any event be completed not
more than 90 days after the Closing Date. Any indemnification which shall be due
by the Gautier Group to the Purchaser, or the Guarantor, if applicable, under
this Article 5.2.2 shall be secured by the Pledged Stock, in compliance with
Article 4.2.6 hereof, for the full amount of the loss suffered by the Purchaser
or the Guarantor or the Company or any of the Subsidiaries, as the case may be,
it being specifically agreed that neither the deductible provided for in Article
7.3 below nor any of the provisions of Article 7 shall apply to limit such
indemnification.
5.2.3 The Vendors shall fulfill all legal requirements for the completion
of this Agreement in connection with the obligation to inform and/or consult the
workers' committee (comite d'entreprise) of the Company and of any Other
Subsidiary at the Closing Date.
5.2.4 The disposal by the Company of all of the Other Subsidiaries
referred to in Article 3.1.3 shall be carried out in favor of any third
party(ies) (it being specified that such third party(ies) could include any of
the Vendors) without any representations and warranties other than those
resulting from the general provisions of the French Civil Code applicable to the
sale of goods and in accordance with the provisions set out in Schedule 13
hereto.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
a)
6.1 The Vendors now and at the Closing Date, hereby make the
representations and give the warranties (herein called "the
Representations and Warranties") set forth below:
<PAGE> 15
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6.1.1 CORPORATE EXISTENCE AND CAPITALIZATION OF THE COMPANY
6.1.1.1 the Company is a societe anonyme a
directoire et a conseil de surveillance duly
organized, validly existing under the laws of France
whose registered office is at Z.I., rue d'Armor,
22400 Lamballe, registered at the Commercial and
Companies Registry of Saint-Brieuc under number B347
994 196 and whose registered capital is FRF
15,000,000 divided into 150,000 shares (actions) of
FRF 100 each;
6.1.1.2 a copy of the articles of association
(statuts) of the Company which is certified to be
true and up-to-date on the date hereof is attached as
Schedule 14 hereto; a copy of the articles of
association (statuts) of the Company which will be
certified to be true and up-to-date on the Closing
Date (reflecting only the transfers of shares
referred to in paragraph B of the Preamble and in
Article 1.1 hereof) shall be delivered to the
Purchaser at Closing; the minutes and other corporate
records of the Company which shall be delivered to
the Purchaser at Closing shall be on that date
accurate and up-to-date; the Company's filings with
the Commercial and Companies Registry are complete
and up-to-date in all respects; the extract (extrait
K-bis) from the Commercial and Companies Registry of
Saint-Brieuc dated December 23, 1996 regarding the
Company attached hereto as Schedule 14 is true and
accurate;
6.1.1.3 the Company is not in a state of insolvency
or in suspension of payments (cessation des
paiements) and is not and has never been subject to a
judicial reorganization (redressement judiciaire) or
judicial liquidation (liquidation judiciaire)
proceedings or any other conciliation (reglement
amiable) or collective bankruptcy proceedings
provided for by Law No. 84-148 of March 1, 1984 nor
has it requested an extension period (delai de grace)
in application of Article 1244-1 of the French Civil
Code;
6.1.1.4 except for possible minor infringements with
no significant financial implications, the Company
(i) has the corporate power and authority and holds
all governmental and other authorizations and permits
to own all of its properties and other assets and to
carry on its business as it is currently being
conducted, and (ii) is in compliance with all laws
and regulations to which it is subject, it being
specified that, save in respect of the quotation
given to the DGA Angers for the supply of PVP in
response to a tender dated November 26, 1996, neither
the Company's present activity nor that of any of the
Subsidiaries falls within the scope of activities
covered by French Decree n(degree)95-589 of May 6,
1995;
<PAGE> 16
-16-
6.1.1.5 as at the Closing Date, save with respect to
MCPL (in the event of completion prior to the Closing
Date of the acquisition envisaged in Article 5.1.1),
the Subsidiaries will be the only subsidiary
companies of the Company, the disposal of all other
former subsidiaries having taken place as stated in
Article 5.2.4 hereof. Neither the Company nor any of
the Subsidiaries is or has over the last five years
been, directly or indirectly a member of any
partnership, joint venture, economic interest group
or any other organization or structure having
unlimited liability, with the exception of the
Chinese Joint-Venture;
6.1.1.6 except as set forth in Schedule 15 and in
Schedule 8, neither the Company nor any of the
Subsidiaries has since January 1, 1992 (i) held any
shares in any corporation or (ii) exercised any
mandate as board member or manager of any corporation
or (iii) acted as de facto manager of any
corporation;
6.1.2 CORPORATE EXISTENCE AND CAPITALIZATION OF THE SUBSIDIARIES
6.1.2.1 as at the Closing Date, the Company shall
have only the Subsidiaries whose details are as
listed at Schedule 6; none of the Subsidiaries has
any shareholding or interest in any corporate entity;
6.1.2.2 a certified true and up-to-date copy of the
articles of association (statuts) of each of the
Subsidiaries is attached as Schedule 16 hereto; the
minutes and other corporate records of the
Subsidiaries are accurate and up-to-date; save with
respect to SBS' recent change of corporate form (from
SA to SARL) for which the required formalities are
still pending, the Subsidiaries' filings with the
Commercial and Companies Registry are complete and
up-to-date in all respects; the extract (extrait
K-bis) from the Commercial and Companies Registry for
each of the Subsidiaries is true and accurate and is
as dated and found attached hereto at Schedule 16;
6.1.2.3 the Subsidiaries, except for SBS for which
no representation is made and no warranty given to
that effect, are not in a state of insolvency or in
suspension of payments (cessation des payments) and
are not and never have been subject to a judicial
reorganization (redressement judiciaire) or judicial
liquidation (liquidation judiciaire) proceedings or
any other conciliation (reglement amiable) or
collective bankruptcy proceedings provided for by Law
No. 84-148 of March 1, 1984 nor has it requested an
extension period (delai de grace) in application of
Article 1244-1 of the French Civil Code;
<PAGE> 17
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6.1.2.4 the Subsidiaries, except for SBS for which
no representation is made and no warranty given to
that effect other than what is specified in Schedule
17 and, except for possible minor infringements with
no significant financial implications, (i) have the
corporate power and authority and holds all
governmental and other authorizations and permits to
own all of its properties and other assets and to
carry on their business as they are currently being
conducted, and (ii) are in compliance with all laws
and regulations to which they are subject. The
Subsidiaries are not in default with respect to any
judgment or order of any court, arbitral tribunal or
government department or agency;
6.1.3 THE SHARES AND THE MINORITY SHARES
6.1.3.1 the Shares represent the whole of the share
capital of the Company, are fully paid and are freely
transferable; all the shares of the Subsidiaries are
held by the Company with the exception of the
Minority Shares and all such shares of the
Subsidiaries including the Minority Shares are fully
paid and, to the best of the Vendors' knowledge
(based on their review of the articles of association
and corporate registers of the Subsidiary concerned),
freely transferable, subject to the board of
directors' approval, as regards Hellio and the
shareholders' approval (as regards SBS and NC).
6.1.3.2 there exists no agreement or undertaking
pursuant to which any person is or could become
entitled to request the issue of new shares by the
Company or by any of the Subsidiaries. The Company
has not issued any securities which could give rise
to a capital increase or the issue of securities
granting the right to any amount which the Company
may distribute or voting rights or which could result
in any limitation of the rights attached to the
Shares. The provisions of this Article 6.1.3.2 apply
mutatis mutandis to the Subsidiaries;
6.1.3.3 Each of the shareholders listed in Schedule
5 (a) has, on the date hereof, full and valid title
to those of the Shares set out against his/its name
and each of the Vendors shall, on the Closing Date,
have full and valid title to those of the Shares set
out against his/its name in Schedule 5 (b) hereto;
the Company and, to the best of the Vendors'
knowledge (based on their review of the articles of
association and corporate registers of the Subsidiary
concerned), the holders of the Minority Shares, have
full and valid title to the shares of the
Subsidiaries set out against their respective names
in Schedule 6; the Shares, the shares of the
Subsidiaries held by the Company and, to the best of
the Vendors' knowledge (based on their
<PAGE> 18
-18-
review of the articles of association and corporate
registers of the Subsidiary concerned), the Minority
Shares are free from any lien charge or encumbrance
or any other third party rights (save as mentioned in
Schedule 6 regarding the Minority Shares) and at the
Closing Date, title to the Shares shall be validly
transferred to the Purchaser or to such person or
persons as the Purchaser may specify, with the
consent of the spouse of any individual Vendors, to
the extent necessary. All the authorizations which
must be obtained prior to the transfer of the Shares,
in application of the Company's statuts and the law,
have been or will, at the Closing Date, have been
obtained.
6.1.4 EFFECTS OF THE TRANSFER OF THE SHARES
6.1.4.1 Save as mentioned in Schedule 18,
the transfer of the Shares to or in accordance with
the instructions of the Purchaser will not result
in:
(i) any breach of any agreement or
undertaking by the Company or any of the
Subsidiaries;
(ii) the possibility for any person
having dealings with the Company or any of
the Subsidiaries (a) to terminate any
agreement or contract or to modify the
effects thereof, or (b) to claim the
reimbursement of any subsidy or grant or
loan or advance, save with respect to the
rights of Mr. and Mrs. Gerard Hellio
pursuant to the Share Sale Agreement entered
into between them and the Company on March
20, 1995; however, the Gautier Group hereby
represents and declares that it shall make
its best efforts to obtain that Mr. and Mrs.
Gerard Hellio will not exercise their rights
under such Share Sale Agreement to require
the payment before normal due date of the
Company's debt towards them.
(iii) the modification, cancellation or
revocation of any permit, authorization or
license, necessary for the operations of the
Company's or of the Subsidiaries' activities
or the modification, cancellation or
revocation of any preferential tax regime or
subsidy or other assistance granted by
public or quasi-public authorities;
(iv) the possibility for a third party
to invoke any guaranty, surety, letter of
comfort or any other document having an
equivalent effect which may have been
granted by or in favor of the Company or any
of the Subsidiaries.
<PAGE> 19
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6.1.5 FINANCIAL STATEMENTS OF THE COMPANY AND THE SUBSIDIARIES
6.1.5.1 copies of an interim balance sheet and
profit and loss account together with annexed
documents referred to in Article 8 of the Code de
Commerce ("l'Annexe") of the Company and of the
Subsidiaries, as prepared by the Vendors as at
September 30, 1996 (hereinafter called "the Balance
Sheet Date") (hereinafter called the "Interim
Statements") are annexed as Schedule 19;
6.1.5.2 the Interim Statements were prepared in
accordance with the accounting principles generally
accepted in France (being, in the case of the Company
and the Subsidiaries defined in the Nouveau Plan
Comptable Francais and drawn up in accordance with
the recommendations of the Ordre des
Experts-Comptables Francais and the Conseil National
de la Comptabilite) which principles have been
consistently applied by the Company and the
Subsidiaries;
6.1.5.3 the Interim Statements were prepared in the
form required by relevant law and show a true and
fair view of the position of the Company and of the
Subsidiaries at, and the results of their respective
operations for the financial period ended on, the
Balance Sheet Date;
6.1.5.4 at the Balance Sheet Date, the Company and
the Subsidiaries had no liabilities or obligations
other than those set out, or for which adequate
provision has been made, in the Interim Statements;
6.1.5.5 the depreciation and other provisions
appearing in the Interim Statements have been
determined in accordance with applicable legislation
and in the context in which they were made, they are
sufficient and conservative;
6.1.5.6 all the accounts, books and records of the
Company and of the Subsidiaries have been kept and
completed in compliance with the law. They give a
true and fair view of the accounting position of the
Company and the Subsidiaries.
<PAGE> 20
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6.1.6 RECEIVABLES
6.1.6.1 the trade and other receivables of the
Company and of the Subsidiaries as shown in the
Interim Statements and any receivables which have
arisen since the Balance Sheet Date are valid and
have been recovered, or are recoverable in full,
within six months from their due date (subject, in
the case of receivables shown in the Interim
Statements, to any provision for bad and/or doubtful
debts appearing therein). In this connection, the
Purchaser undertakes to procure that the Company
will make all reasonable efforts in light of its
usual practice to recover all of its receivables
within six months from their due date; after the
expiry of this six month period following a
receivable's due date, the Purchaser represents that
if it is reasonably appropriate, in light of its
usual practice, for the Company or the Subsidiary
concerned, to continue to make it best efforts to try
to recover it, it shall procure that the Company or
the Subsidiary concerned do so.
6.1.7 INVENTORIES
6.1.7.1 the inventories set out in the Interim
Statements consist of usable articles which can be
sold in the normal course of business at a price at
least equal to the value at which they appear in the
Interim Statements, namely the lower of cost and net
realizable value. The Company and the Subsidiaries do
not hold in their inventories any products on
consignment which belong to third parties (save,
possibly, as regards that part of SBS's inventory
which was acquired from SIBS), and no undertakings
have been given to take back the inventories of any
agents, distributors or other representatives of the
Company or of the Subsidiaries. Inventories acquired
since the Balance Sheet Date consist of quality,
usable articles which can be sold in the normal
course of business and are carried in the books at
the lower of cost and net realizable value. The
current levels of inventories are adequate for the
present and anticipated requirements of the Company
and of the Subsidiaries.
<PAGE> 21
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6.1.8 TAXES AND SOCIAL CHARGES
6.1.8.1 the provisions for taxes and the provisions
for social and parafiscal charges (including, but not
limited to, social security contributions, and
contributions to complementary welfare and pension
schemes) which appear in the Interim Statements are
sufficient for the payment of all taxes, social and
parafiscal charges due or accrued at the Balance
Sheet Date (regardless of the date of the event which
is the origin of the taxes, social or parafiscal
charges and regardless of the date on which payment
thereof is due). The Company and the Subsidiaries
have filed all national, departmental and local tax
and social declarations at the required time and have
kept copies of the originals filed. All State,
departmental and local taxes, and duties (including,
but not limited to, corporation tax, value added tax,
business tax, registration tax, land tax and customs
duties) and all social and parafiscal charges owed by
the Company and/or the Subsidiaries or payable at the
date hereof have been paid within the legal time
limits;
6.1.8.2 the Company and the Subsidiaries have
withheld all tax and/or social or parafiscal charges
to be withheld by them in respect of wages, license
fees, interest or any other sum payable them;
6.1.8.3 the interest paid to the Company's
shareholders prior to the date hereof has never
exceeded the maximum authorized by Articles 39-1
3(degree) and 212 of the General Tax Code.
6.1.8.4 there are no taxes or allied parafiscal
charges due as a result of the transfers of the
shares of the Other Subsidiaries mentioned in Article
5.2.4 hereof (regardless of the date of the event
which is the origin of the taxes or parafiscal
charges and regardless of the date on which payment
thereof is due), with the exception of the capital
gain tax which may result from the sale of those
shares in the conditions set forth in Article 5.2.4
and Schedule 13.
<PAGE> 22
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6.1.9 OWNERSHIP OF ASSETS
6.1.9.1 the Company and each of the Subsidiaries has
full and unencumbered title to all its assets
including its on-going business(es) (fonds de
commerce), with the exception of SBS to the extent
described in Schedule 17 and with the exception of
the pledges listed in Schedule 20, for which the
Vendors hereby represent that they are not aware of
any reason why such pledges should be enforced, that
all payments made thereunder have been made in good
order and are up-to-date. All tangible assets (both
real estate and otherwise) are in serviceable
condition and are fit for the purpose for which they
are intended, subject only to normal wear and tear,
and have been consistently and properly maintained;
6.1.9.2 save as mentioned in Article 6.1.1.4 and in
Article 6.1.9.1, as regards SBS, the carrying on of
business and the use by the Company and each of the
Subsidiaries of its respective assets is
substantially in accordance with all legal or
regulatory requirements, particularly with regard to
health and safety.
6.1.10 LEASES
6.1.10.1 Details of all lease agreements to which the
Company and any of the Subsidiaries is a party
whether as lessor or lessee (of which copies have
been supplied to the Purchaser) appear in Schedule
21;
6.1.10.2 each of the leases of real or personal
property to which the Company or any of the
Subsidiaries is a party, either as lessor or lessee,
is valid and enforceable in accordance with its
terms. All the premises in which the Company and any
of the Subsidiaries carries on its activity under a
commercial lease subject to the provisions of the
Decree of September 30, 1953 are registered with the
relevant Commercial and Companies Registries; it
being specified that the Company holds certain
premises in Evry under a valid commercial lease and
that such premises may be sub-leased in the future,
with the landlord's consent, to SBS.
6.1.10.3 no notice to terminate has been given to the
Company or any of the Subsidiaries in respect of any
of the leases attached as Schedule 21 and neither the
Company nor any of the Subsidiaries has been
responsible for any act or omission which could
justify the lessor in terminating any such lease.
<PAGE> 23
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6.1.11 INTELLECTUAL PROPERTY
6.1.11.1 Schedule 22 contains:
(i) a list of the patents, trademarks, trade
names, copyright, logos, designs, software and other
intellectual property rights (hereinafter called "the
Rights") owned by the Company and the Subsidiaries;
(ii) a list of the Rights used by the
Company and the Subsidiaries;
(iii) a list of the Rights owned by the
Company but the use of which has been granted to
third parties and the main terms and conditions under
which such use has been granted;
6.1.11.2 The Vendors hereby represent that they are
aware of certain infringements of patents registered
in the name of the Company or the Subsidiaries and
acknowledge that such rights have not been defended
in view of the disproportionate cost of such defense
as compared with the commercial value of the patents.
6.1.11.3 No Rights are used by the Company or any of
the Subsidiaries which would require licenses from
third parties.
6.1.11.4 Schedule 23 contains details of the
trademarks mentioned in 6.1.11.1 above including the
name of their registered owner and the class in which
they are registered. These trademarks have been used
continuously for the class of goods or services for
which they are registered throughout the past five
years, solely by their registered owner, who has
neither during such period had its rights to such
trademarks contested or challenged nor has allowed or
tolerated the use of such trademarks, or trademarks
of such a similar nature as to constitute
infringements thereof, by any other individual or
corporate entity at any time during the same five
year period.
6.1.11.5 to the best of the Vendors' knowledge,
neither the Company nor any of the Subsidiaries has
infringed, or does infringe, any right belonging to
any third party relating to any patent, trademark,
trade name, copyright, logo, design or software or
any other intellectual property rights belonging to
third parties;
6.1.11.6 none of the Vendors and, to the best of the
Vendors' knowledge, none of the directors or managers
of the Company or any of the Subsidiaries owns,
directly or indirectly, in whole or in part, any
patent, trademark or other intellectual or industrial
property right
<PAGE> 24
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to which the Company or any of the Subsidiaries has a
license or which are necessary or desirable for their
commercial activities as presently carried on;
6.1.11.7 the Company has the unfettered right to use
its corporate name of which it has full title and
enjoyment, without paying any royalty to a third
party. The same applies to each of the Subsidiaries.
6.1.12 CONTRACTS
6.1.12.1 The Vendors shall remit to the Purchaser, at
Closing, a copy of all contracts, commitments,
agreements and guaranties or other undertakings of
all types (financial, commercial or other) to which
the Company and/or any of the Subsidiaries is a party
(including, but not limited to, those which contain
an exclusivity commitment by, or for the benefit of,
the Company or any of the Subsidiaries or contain any
commitment by any party not to compete with any
other) which are material to the management,
development or marketing of the Company and the
Subsidiaries or are for the manufacture, sale, supply
of armored vehicles and all armoring supplies and
parts (hereinafter called "Material Contracts");
6.1.12.2 neither the Company nor any of the
Subsidiaries has (i) entered into any Material
Contract which gives rise to duties or liabilities
which are unusual in relation to the normal rules of
proper management of a commercial enterprise, and
(ii) is in breach of any of its obligations under any
Material Contract;
6.1.12.3 all Material Contracts represent valid
enforceable obligations. Except for possible minor
infringements with no significant financial adverse
impact on the Company or any of the Subsidiaries, no
such Material Contract has been entered into in
violation of applicable laws or regulations and the
Company and the Subsidiaries and the other
contracting parties have respected their obligations
thereunder;
6.1.12.4 save as mentioned in Schedule 24 with regard
to Hellio, subject to the terms of Article 6.1.4.1,
the transfer of the Shares on the Closing Date will
not result in the accelerated maturity of any loan or
guaranty agreement or any other payment to be made to
any third party under any other contract or
arrangement to which the Company or any of the
Subsidiaries is a party;
6.1.12.5 save as mentioned in Schedule 24 with regard
to Hellio, subject to the terms of Article 6.1.4.1,
the execution and performance of this Agreement (i)
do not and will not result directly in the
<PAGE> 25
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termination of any Material Contract or will not
grant to any other contracting party the right to
terminate or modify any such Material Contract and
(ii) do not and will not conflict with or result in
any violation or breach by the Company or any of the
Subsidiaries under any Material Contract;
6.1.12.6 neither the Vendors nor the Company nor any
of the Subsidiaries has received any notice whatever
pursuant to which any of the ten largest customers
of, or suppliers or lenders to, the Company or any of
the Subsidiaries has disclosed its intention to cease
or substantially reduce its commercial relationship
with the Company or any of the Subsidiaries for any
reason whatsoever including, without limitation, as a
result of the transfer of the Shares to the
Purchaser;
6.1.12.7 save in respect of the lease entered into
between the Company and SCI Bondoufle for the Evry
premises and in respect of Messrs. Pecheur, Tible and
Quintin's employment contracts listed in Schedule 26,
neither the Company nor any of the Subsidiaries is
bound by any contract, commitment or other
arrangement directly or indirectly with any of the
Vendors or any of their corporate officers
(mandataires sociaux) or any of their spouses,
parents or children or any legal entity controlled by
any of them.
6.1.12.8 neither the Company nor any of the
Subsidiaries have entered into an agreement for the
sale of any of their on-going businesses (fonds de
commerce) or shares or interests in any corporate
entity, which granted any other party the right to
make a claim for indemnification thereunder which was
not time-barred by the Balance Sheet Date;
6.1.12.9 save as set forth in Article 5.1, neither
the Company nor any of the Subsidiaries have entered
into any negotiations for the sale or purchase of any
on-going business (fonds de commerce), shares or
interests in any corporate entity, which have reached
such a stage at the Closing Date that if the Company
or the Subsidiaries were to withdraw from these
negotiations such withdrawal would give rise to a
claim against the Company or the Subsidiaries for
wrongful and abusive termination of negotiations
(rupture abusive de pourparlers);
6.1.12.10 without prejudice to the provisions of
Article 5.2.2 hereof, and, save as set forth in
Schedule 25, neither the Company nor any of the
Subsidiaries has made any representation or granted
any right of recourse, warranty or guaranty of any
kind whatsoever, whether by act or omission, in favor
or in respect of the Other Subsidiaries.
<PAGE> 26
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6.1.13 PERSONNEL
6.1.13.1 set out in Schedule 26 are:
(i) a list of all the employees of the
Company and of the Subsidiaries including
their age, seniority and present annual I
remuneration (including any right to bonus,
profit sharing or benefits in kind in excess
of what is provided for in the law or the
applicable collective bargaining agreement)
and, for persons having an employment
contract for a definite period, the date of
expiration of the contract;
(ii) a list of all the corporate
officers of the Company and of the
Subsidiaries which are entitled in that
capacity to any remuneration (including
bonuses, profit sharing, benefits in kind,
pension benefits), details of which appear
in Schedule 26.
(iii) a list of all pension benefits
offered by the Company and the Subsidiaries
to any of its/their present or former
employees or corporate officers all of which
benefits, save as mentioned in Schedule 26,
appear in the Annexe to the Interim
Statements;
(iii) a list of temporary personnel, of
outside collaborators, of sales
representatives (VRPs) and any other persons
who do not have the status of salaried
employees but who regularly collaborate in
the operations of the Company and of the
Subsidiaries and receive some remuneration
from the Company or any of the Subsidiaries
in that connection; and
(iv) a list of the collective bargaining
and other collective agreements applicable
to the personnel of the Company and, to the
extent applicable, of the Subsidiaries
(including any agreement relating to
bonuses, pensions, deferred remuneration,
profit sharing or share option schemes);
6.1.13.2 the Company and the Subsidiaries have
satisfied substantially, and continue to satisfy
substantially all their obligations pursuant to
applicable labor law;
6.1.13.3 to the best of the knowledge of the Vendors,
none of the employees of the Company or of the
Subsidiaries has made it known that he/she intends to
terminate his/her employment agreement;
<PAGE> 27
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6.1.13.4 there have been no strikes, lock-outs,
sit-ins or other industrial action at any of the
premises of the Company or of the Subsidiaries during
the nine months prior to the date hereof and the
Vendors have no knowledge of any such industrial
action being threatened or pending.
6.1.14 INSURANCE
6.1.14.1 set out in Schedule 27 are details of all
insurance policies (of which copies have been
supplied to the Purchaser) covering the activities of
the Company and of the Subsidiaries and all the
assets owned, leased or used by them; it is specified
that the three insurance policies mentioned in such
Schedule regarding Hellio are subject to current
negotiations in order to be renewed on terms which,
taken into account that the coverage under the new
policies will be more adequate in view of Hellio's
activity, may result in increased premiums, such
increases however being justified and reasonable in
view of the benefit that will result from such new
policies for the company concerned.
6.1.14.2 the Company and each of the Subsidiaries
have fulfilled all of their obligations pursuant to
the insurance policies, in particular with respect to
the declarations of risks and claims and the payment
of premiums relating to such policies. Save as
mentioned in Article 6.1.14.1 in respect of the
policies that are in the process of being negotiated,
neither Company nor any of the Subsidiaries has
received any notice of termination or non-renewal or
received any notice from any of the relevant
insurance companies of their intention substantially
to increase the premiums due, or to raise the
franchises or to reduce the cover provided.
6.1.15 PRODUCT LIABILITY
6.1.15.1 in respect of products sold by the Company
or any of the Subsidiaries and which, on the Balance
Sheet Date, were covered under the Company's or
Subsidiaries' sales warranty, a provision was made in
the Interim Statements for FRF 1,600,000;
<PAGE> 28
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6.1.15.2 no claim is pending or has been made or is
threatened verbally or in writing on the Company or
on any of the Subsidiaries in respect of other loss,
not covered under the Company's or Subsidiaries'
sales warranty, resulting from a significant defect
in any product manufactured, assembled or sold by the
Company or any of the Subsidiaries.
6.1.16 ENVIRONMENT
Save as disclosed in the environmental audit report
referred to in Article 3.1.2 hereof, a copy of which shall be
remitted by the Purchaser to the Vendors prior to Closing and
which shall be deemed to be a part of this Agreement,
6.1.16.1 the Company and the Subsidiaries have always
run their activities substantially in compliance with
the applicable laws and regulations in force
concerning the protection of the environment, and no
product manufactured, assembled or sold or any
service supplied by the Company or any of the
Subsidiaries is in violation of such laws and
regulations;
6.1.16.2 the Company and the Subsidiaries have at all
times obtained and complied substantially with all
authorizations, licenses and other approvals required
by the laws and regulations in force and have not
received any notification from any competent body to
the effect that any such authorization, license or
approval has not been substantially complied with or
has been withdrawn;
6.1.16.3 no leak or spill or disposal of any
substance, material or waste which is regulated as
"toxic" or "hazardous" under any applicable
environmental regulation has occurred on any of the
real properties currently owned or occupied by the
Company or any of the Subsidiaries. Neither the
Company nor any of the Subsidiaries is obligated or
reasonably likely to become obligated to clean up or
otherwise remedy any contaminated surface water,
ground water or soil;
6.1.16.4 there are no storage tanks located on any
real property occupied by the Company or any of the
Subsidiaries, whether on the premises or underground,
which have created or are likely to create any
environmental hazard, given their current use.
<PAGE> 29
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6.1.17 LITIGATION
6.1.17.1 save for the cases brief details of which
are set out in Schedule 28, there is no current,
threatened (verbally or in writing) or pending
litigation, arbitration, claim, administrative
proceeding, administrative or tax investigation or
any other action or proceeding pending or threatened
whether as plaintiff or defendant in relation to the
Company or any of the Subsidiaries relating to
payments of amounts in excess of FRF 50,000 or assets
worth in excess of such amount, or which could have a
material negative impact on the business of the
Company or the Subsidiaries and the Vendors are
unaware of any facts which might give rise to any
such action or proceeding. The provisions shown in
the Interim Statements have been determined in
accordance with applicable legislation and, in the
context in which they were made, they are sufficient,
to cover any liability (excluding legal fees) in
relation to such actions and are conservative.
Neither the Company nor any of the Subsidiaries is in
default with respect to any judgment or order of any
court, arbitral tribunal or government department or
agency.
6.1.18 ABSENCE OF CHANGES
6.1.18.1 save in respect of Article 5.1 and 5.2
hereof, which, on the Closing Date, will have been
fully complied with and save as mentioned in Schedule
28 bis, since the Balance Sheet Date and until the
date hereof, there has not been in relation to the
Company or (where the context so permits) to any of
the Subsidiaries:
(i) any change in the financial
position, the assets, liabilities, business
or operations otherwise than in the normal
course of business;
(ii) save with the prior written consent
of the Purchaser, any declaration or payment
of any dividend or any other distribution of
profits or reserves;
(iii) any damage, destruction or other
casualty loss (whether or not covered by
insurance) materially affecting the business
or financial position of the Company or any
of the Subsidiaries;
(iv) any purchase or sale of securities
by the Company or any of the Subsidiaries,
or the issuance by the Company or any of the
Subsidiaries of shares or other securities,
rights or options to purchase or subscribe
shares in the Company
<PAGE> 30
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or any of the Subsidiaries or which are
capable of granting the right to acquire or
subscribe securities which represent a share
in the capital of the Company or that of the
Subsidiaries;
(v) any loan incurred, granted,
promised or secured by the Company or by any
of the Subsidiaries in excess of FRF
100,000;
(vi) save as contained in the Material
Contracts which will be remitted to the
Purchaser at Closing pursuant to the terms
of Article 6.1.12.1 hereof, the assumption
of an obligation or liability other than
current obligations or liabilities incurred
in the normal course of business;
(vii) any termination, waiver, amendment
of, or default in relation to, any contract,
undertaking or arrangement other than in the
normal course of business;
(viii) save as provided for in Article
5.2.1 (d), any increase or promised increase
in the remuneration of the employees,
agents, sales representatives or corporate
officers or in any of their benefits;
(ix) any sale, lease or transfer of any
tangible or intangible assets other than
items of stock in the normal course of
business, nor any cancellation or waiver of
any receivables save in respect of Article
5.1 hereof
(x) any guaranty, surety or letter of
comfort in respect of the obligations of
third parties, save as mentioned in Article
5.2.1 (h) and 5.2.2;.
(xi) any lien, security interest,
pledge, mortgage, easement, or other charge
granted over any tangible or intangible
assets.
6.1.19 LISTS
6.1.19.1 set out in Schedule 29, save in respect of
the Material Contracts which will be remitted to the
Purchaser at Closing pursuant to the terms of Article
6.1.12.1 hereof, are lists showing in relation to the
Company and each of the Subsidiaries:
(i) the name and address of each person
who has received general or special powers;
<PAGE> 31
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(ii) all real estate, land, facilities
or other property owned, rented, leased or
otherwise occupied including the Evry lease;
(iii) banks and bank accounts and credit
lines showing (a) the names of people with
power of signature, (b) the amount of each
credit line and the level of utilization and
any long, medium or short term credit or any
other financing agreement, and (c) the
amount of any borrowing guarantied by the
Company or by any of the Subsidiaries or any
third party;
(iv) all guaranties, sureties or
endorsements granted in favor of third
parties;
(v) the name of each corporate officer
(mandataire social) and of the gross annual
remuneration (including all benefits) of
each of them;
(vi) all agency, license, distribution
or representation agreements;
(vii) all grants, subsidies or other
public benefits in excess of FRF 100,000
which the Company or any of the Subsidiaries
is under a contingent liability to repay;
(viii) the ten main existing customers and
suppliers, assessed by reference to trading
turnover of each customer and supplier with
the Company and the Subsidiaries.
6.1.20 GENERAL
6.1.20.1 all the information contained in this
Agreement including the recitals and the Schedules
hereto is sincere and accurate;
6.1.20.2 there is no existing significant fact or
event known to the Vendors which is likely to have a
significant negative effect on the assets, business
or activities of the Company or any of the
Subsidiaries which has not been disclosed to the
Purchaser by or on behalf of the Vendors in writing;
6.1.20.3 for the purposes of Article 6.1.20.2, the
Vendors shall be deemed to have knowledge of a fact
or event if any one of them or any of the other
corporate officers (mandataires sociaux) of the
Company or of any of the Subsidiaries had knowledge
of it.
<PAGE> 32
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6.1.21 AUTHORITY RELATIVE TO THIS AGREEMENT
6.1.21.1 the execution and performance of this
Agreement by the Vendors do not and will not conflict
with or result in any violation or breach of, or any
default under, any law or any obligation of the
Vendors or any of them or any other agreement to
which any of them is a party, nor is there any
litigation current or pending involving any of the
Vendors which could prevent or hinder their execution
and performance of this Agreement; the same is true
as regards the Purchaser and the Guarantor.
6.1.21.2 the Vendors on the one hand and the
Purchaser and the Guarantor on the other hand have
full corporate or individual power, authority and
right to enter into this Agreement and to consummate
the transactions contemplated hereby. The boards of
directors and shareholders of those of the Vendors
which are corporate entities on the one hand and the
boards of directors of the Purchaser and of the
Guarantor on the other hand have taken all necessary
corporate action duly to authorize the execution and
performance of this Agreement.
6.2 The Vendors recognize and accept that the Purchaser has entered into
this Agreement in reliance on the Representations and Warranties.
7. INDEMNIFICATION
---------------
7.1
The Vendors undertake to indemnify the Purchaser, by way of a
refund of the Price, or, if the Purchaser in its absolute discretion so
wishes, by making good and holding harmless the Company or any of the
relevant Subsidiaries, for an amount (hereinafter called "Damage")
equal to :
7.1.1 any increase in any liabilities or any reduction of
assets (taking into account the accounting methods currently
used by the Company and/or the Subsidiaries) as compared with
the Interim Statements provided that the origin of such
increase or reduction is prior to the Balance Sheet Date (i.e.
September 30, 1996) and that the effect thereof, if it were
taken into account, would be to reduce the Net Assets of the
Company (or, as the case may be, of the Subsidiary concerned),
as at September 30, 1996, below the amount of the Net Assets
of the Company, (or as the case may be, of that of the
Subsidiary concerned), as shown in the Interim Statements, the
resulting shortfall of Net Assets representing the amount of
Damage giving rise to indemnification under this Article; for
the purposes of this Article, it is recalled that the Net
Assets of the Company and of the Subsidiaries as they appear
in the Interim
<PAGE> 33
-33-
Statements are as follows: FRF 30,875,918, for the Company,
FRF 5,325,829 for Hellio, FRF 621,068 for SBS and FRF 908,353
for NC.
7.1.2 any loss suffered by the Company and/or any of the
Subsidiaries, which results from any inaccuracy in the
Representations and Warranties set forth in Article 6 hereof
and which has not already given rise to indemnification
pursuant to Article 7.1.1 above.
7.2 The division of liability as between the Vendors, shall be (i) joint
and several as between the members of the Gautier Group to the extent
of 98.344 per cent, such figure reflecting the percentage of Shares
sold by the Gautier Group, and (ii) individual and sole with regard to
the other Vendors in proportion to the percentage of Shares held by
each of them, as stated below:
(1) up to 1.1413 percent by Mr. Jean-Pierre Pecheur
(2) up to 0.3781 percent by Mr. Jean-Philippe Tible
(3) up to 0.1366 percent by Mr. Philippe Quintin
7.3 Save as mentioned in Article 5.2.2, the Vendors shall not be liable to
indemnify the Purchaser unless the cumulative total of all Damage
suffered by the Purchaser or the Company or the Subsidiaries is higher
than seven hundred and fifty thousand French francs (FRF 750,000). This
amount shall be considered as a deductible. In consequence, in the
event that the cumulative total of the Damage exceeds FRF 750,000, the
Vendors shall only be required to indemnify the Purchaser in respect of
the amount above and in excess of the agreed deductible of FRF 750,000.
7.4 It is specifically agreed that the maximum cumulative amount of
indemnifiable Damage under this Article 7, shall not exceed the value
of the Price, as defined in Article 2.1.1 above.
7.5 Furthermore, it is specifically agreed that no indemnification will be
due from the Vendors in respect of facts or circumstances which are
disclosed in this Agreement or in any of the Schedules hereto.
7.6 For the calculation of Damage resulting from the terms of Article
7.1.1, any increase in the value of any assets or reduction in any
liabilities as at the Balance Sheet Date compared with the Interim
Statements (such as, for example, a reduction of liabilities resulting
from a provision made in the Interim Statements which would in the end
appear to be totally or partially unfounded) shall be taken into
account and automatically set off against any indemnity which may be
due by the Vendors to the Purchaser pursuant to Article 7. The
Purchaser hereby undertakes to provide the Vendors with all relevant
information, reasonably requested by the Vendors in this respect.
<PAGE> 34
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7.7 The parties agree that if it emerges that any Damage is deductible from
the taxable results of the Company or the Subsidiaries, the amount of
any indemnity to be paid by the Vendors shall be reduced by the tax
saving effectively made by the Company or the Subsidiary concerned. The
Purchaser shall procure in this respect that the Company and the
Subsidiaries shall use their best endeavors to obtain all tax saving
measures which are reasonably available to them and which do not give
rise to any adverse effect on the Company or the Subsidiaries.
7.8 The parties agree that if it emerges that any indemnification under
insurance contracts is paid to the Company or any of the Subsidiaries
which reduces the Damage suffered by the Company or the Subsidiaries,
such sums shall be deductible from the Damage. The Purchaser shall
procure in this respect that the Company and the Subsidiaries shall use
their best endeavors to obtain the benefit of all insurance policies in
their favor, which are reasonably available to them and which do not
give rise to any adverse effect on the Company or the Subsidiaries.
7.9 Moreover, for the calculation of the Damage, any tax reassessment,
including in particular those relating to depreciation, inventory
and/or provisions, which lead merely to a time-lag in taxation (or to a
transfer of taxation from one fiscal year to another) shall not be
taken into account inasmuch as it does not result in a final expense in
principal, penalties or indemnity for late payment, unless, for
example, such temporary tax cost becomes a definitive tax cost as a
result of the effect of the tax principle relating to the inability to
amend the balance sheet for the year following the last fiscal year
that has become statute barred for tax claims ("principe
d'intangibilite du bilan d'ouverture").
7.10 Save for claims in respect of fiscal, parafiscal or social security
matters which may be made up to the expiry of the relevant legal
prescription period, and for claims in respect of environmental matters
(Article 6.1.16) which may be made up to five years following the
Closing Date, any claim for indemnification pursuant to Article 7.1
must be made no later than the three years following the Closing Date
by notice in writing, to the Vendors in accordance with Article 12
hereof. Such notice shall give brief details of the relevant facts and
an estimate of the Damage.
7.11 Indemnification shall be due if notice of the relevant facts, giving
rise to Damage, is given within the relevant period even if the
quantification of the Damage does not take place until after the
expiration of such period.
7.12 Damage shall not be deemed to be quantifiable unless and until all
rights of recourse which may be legally and reasonably exercised
against third parties, taking into account the business interests of
the Company and the Subsidiaries and those of the Vendors, have been
exhausted.
7.13 In the event that notice of a certain fact giving rise to Damage is
given within the relevant period, pursuant to Article 7.10, yet it has
not been possible to quantify the Damage in question in the given time,
the pledge over the Pledged Stock referred to
<PAGE> 35
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in Article 4.2.6 hereof or the duration of the escrow alternative as
referred to in Article 4.2.6 (c)above shall be extended, until such
Damage has been quantified, and thereafter, until the relevant
indemnification has been made.
7.14 In the event that any Damage results from a demand or claim made by a
third party, the Purchaser shall notify the Vendors as quickly as
possible, and in any case within a maximum of thirty days, of the
Purchaser becoming aware of the same, (or sooner if the facts dictate
that a reply or some action is needed sooner). In default of the
Purchaser giving notice within such period or more generally in case of
significant violation by the Purchaser of its information obligation
set out in Article 7.16 below, it shall be deemed to have waived its
rights accruing thereunder, provided that the Vendors can show that the
Purchaser's failure to give such notice or such information by the
given date has had a significant adverse effect on the Vendors' ability
to resist or defend the third party's claim and, subsequently, on the
Vendors' indemnification obligation hereunder.
7.15 Furthermore, for as long as Mr. Gautier and/or any of the Vendors shall
remain involved in the affairs of the Company or of any of the
Subsidiaries as officers (mandataire social) or as employees of the
Company and/or of any of the Subsidiaries, they shall inform the
Purchaser promptly of any such demand or claim made by a third party
against the Company and/or any of the Subsidiaries.
7.16 The Purchaser shall procure that the Vendors receive copies or be kept
informed promptly of any correspondence, relevant document, significant
meeting due to take place or significant telephone conversation which
may have taken place regarding any demand or claim made by a third
party, and generally shall do what may be reasonably required so as to
enable the Vendors to defend their interests in this connection.
7.17 Regarding third party claims of a commercial nature which could give
rise to Damage:
7.17.1 the Purchaser shall have the right to settle,
negotiate or otherwise conclude the matters concerning these
demands or claims, subject to the Vendors' approval, which
shall not be unreasonably withheld in the context of the
Company's business interests and those of the Vendors;
7.17.2. the Purchaser and the company involved (the Company
and/or the Subsidiaries) shall consult with the Vendors with
regard to possible lines of defense and argument, strategy
and in general all relevant and significant information
concerning the claim.
7.18 Regarding all other third party claims which could give rise to Damage:
7.18.1 the Vendors shall have the right to settle,
negotiate or otherwise conclude the matters concerning these
demands or claims, subject to the Purchaser's approval which
shall not be unreasonably withheld in the context of the
Company's business interests and those of the Vendors.
<PAGE> 36
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7.18.2 the Vendors shall consult with the Purchaser with
regard to possible lines of defense and argument, strategy
and in general all relevant and significant information
concerning the claim.
7.19 For all litigation relating to third party claims of a commercial
nature which could give rise to Damage, the Purchaser shall have the
right to choose and appoint the lawyer representing the interests of
the Company or relevant Subsidiary, subject to the Vendors' approval
which shall not be unreasonably withheld; for all litigation relating
to other third party claims which could give rise to Damage, the
Vendors shall have the right to choose and appoint the lawyer
representing the interests of the Company or relevant Subsidiary,
subject to the Purchaser's approval which shall not be unreasonably
withheld; for all litigation relating to third party claims, the party
which will have appointed the lawyer pursuant to the first part of this
Article shall procure that the said lawyer report on the development of
the proceedings to both parties, as regularly and diligently as the
parties may reasonably, together or separately, so require; for all
such litigation relating to third party claim, regardless of the party
which will have appointed the lawyer as mentioned above and regardless
of the outcome of the claim and all ensuing litigation, the Purchaser
and Vendors agree to bear equally all legal costs related thereto.
7.20 Payments under this Article 7 shall be deemed to fall due:
7.20.1 in respect of any insufficiency resulting from a loss
of assets, as compared with the Interim Statements, which
affects the Company and/or any one of the Subsidiaries, from
the moment the said loss of assets is definitive, which, in
respect of receivables, is agreed by the parties to be six (6)
months after the date on which payment was due; without
prejudice to the foregoing, it is agreed that if it is
reasonably appropriate in light of its usual practice, for the
Company or the Subsidiary concerned after the expiry of this
six month period following a receivable's due date to continue
to make it best efforts to try to recover it, it shall do so
and if eventually, part or all of the said receivable is
recovered, while indemnification in respect of such receivable
has already been paid to the Purchaser, the amount thus
recovered shall be set off, pursuant to Article 7.6, against
any indemnity which may be due by the Vendors or, if this is
no longer possible, shall give rise to reimbursement by the
Purchaser to the Vendors within fifteen days from the date on
which the said receivable has been recovered, provided that on
that date, no claim for indemnification is pending; if such a
claim is then pending, the amount of the receivable which has
been recovered after it has been paid to the Purchaser shall
be reimbursed to the Vendors only after the claim thus pending
has been settled and paid to the Purchaser;
7.20.2 in respect of any insufficiency resulting from an
increase of liabilities, as compared with the Interim
Statements, which affects the Company and/or any one of the
Subsidiaries, from the moment the company concerned shall
<PAGE> 37
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have effectively paid the amount of the additional liability
or from the moment the additional liability shall have become
due and payable, with instructions for payment to be made by
the Vendors directly to the third party, if the Purchaser so
chooses;
7.20.3 in respect of any other loss, from the moment that
the Company and/or Subsidiary definitively incurs it and the
nature and amount have been quantified, as mentioned in
Article 7.11 above.
7.21 The Vendors undertake to pay to the Purchaser the amount of
indemnification due under this Article 7, within fifteen (15) days from
receipt by the Vendors of notice of claims under Article 7.10 above,
subject to the terms of Article 7.20.
7.22 The Vendors hereby agree that and grant to Mr. Gautier an irrevocable
power of attorney to act in their name and on their behalf for the
purposes of this Article 7.
8. NON-COMPETITION
---------------
It is hereby agreed by the following individual Vendors that they shall not
engage directly or indirectly, or compete in, the armoring business in
accordance with the terms specified below.
8.1 Mr. Gautier hereby agrees not to engage, directly or indirectly, or
compete in any activity related to armoring for a period of two (2)
years as from him ceasing to be involved in the management of the
Company and/or the Subsidiaries, in any capacity whatsoever.
8.2 The Vendors represent that Mr. Philippe Quintin, Mr. Jean-Pierre
Pecheur and Mr. Jean-Philippe Tible are subject to the National
Collective Bargaining Agreement for Metallurgical Industries Executives
and Engineers (Convention Collective Nationale de la
Metallurgie-Ingenieurs et Cadres) (the "Collective Bargaining
Agreement") which provides, inter alia, that a non-competition
obligation may be imposed on employees, under certain conditions, for a
period of one year, renewable once, subject to an indemnity being paid
by the employer to the employee.
8.3 On the Closing Date, the Vendors undertake to deliver to the Purchaser,
agreements amending the employment contracts of Mr. Philippe Quintin,
Mr. Jean-Pierre Pecheur and Mr. Jean-Philippe Tible, duly signed by the
parties thereto. Such amendments shall evidence the employees'
acceptance of the employer's option, if it so wishes, to enforce the
non-competition obligations provided by the Collective Bargaining
Agreement, in relation to, direct or indirect, involvement or
competition in any activity related to armoring, subject to a monthly
indemnity payment equal to one hundred percent (100%) of their
respective total average monthly remuneration, as defined in the
Collective Bargaining Agreement.
<PAGE> 38
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8.4 For the sake of clarity, it is hereby specified that the non-
competition obligations referred to in Article 8.3 above, shall apply
as from the date on which the respective employment contracts shall
cease to be in effect, for whatever reason.
9. ASSIGNMENT
----------
9.1 This Agreement is personal to the parties and cannot be assigned by any
of them save that (i) the Purchaser may assign its rights hereunder to
an associated company for which purpose the term "associated company"
shall mean any company which, directly or indirectly, controls or is
controlled by or is under the same control as the Purchaser and the
term "control" shall mean the ability to exercise or to procure the
exercise, directly or indirectly, of at least fifty per cent of the
voting shares of a company; and (ii) the Purchaser (or such associated
company) may freely assign its rights pursuant to Article 7 hereof to
any person(s) or corporation(s) to whom the Shares may be transferred
following the Closing Date.
9.2 In the event of the death or permanent mental incapacity of one or more
of the Vendors this Agreement shall be binding on his/her heirs and
successors or, as the case may be, legal guardian or trustee.
10. EXPENSES
--------
10.1 Each of the parties shall bear all the costs and expenses incurred by
it in connection with this Agreement and its execution including, but
not limited to, the fees and disbursements of any counsel, independent
accountant or any other person whose services may have been used by the
said party in relation hereto. It is agreed that a short form French
version of this Agreement summarizing the main provisions concerning
the scope of the sale and purchase and the price shall be produced and
signed by the parties hereto at Closing and registered with the French
fiscal authorities at the expense of the Purchaser. It is expressly
agreed that none of the parties may avail themselves of the short form
agreement for any purpose other than as proof of such registration,
their rights and obligations in connection with the sale and purchase
contemplated herein deriving solely from this Agreement.
11. CONFIDENTIALITY
---------------
11.1 Save as where disclosure is obligatory by operation of law, the Vendors
and the Purchaser undertake to hold in confidence and not to disclose
to third parties (except to their professional advisors and, in the
case of the Purchaser, to any of its associated companies as defined in
Article 9.1) without the prior written consent of the other the terms
and conditions of the transaction contemplated hereby.
<PAGE> 39
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11.2 All announcements by or on behalf of the parties hereto relating to the
transaction contemplated hereby shall be in terms agreed by the parties
save that the Purchaser shall be entitled to make such announcement as
it thinks fit to comply with the regulations of the NASDAQ National
Market on which the Purchaser is quoted.
12. NOTICES
-------
12.1 Any notice required to be given hereunder shall be validly given if
sent by registered letter (with return receipt requested) or by fax,
confirmed by such registered letter, or by hand delivery against
written acknowledgment of receipt to the following addresses or to
such other address as may have been communicated by either of the
parties to the other in accordance herewith:
for notices to the Vendors:
Mr. Daniel Gautier
Tertre Cottin
14 rue de Pleurtuit
35800 Saint-Briac
for notices to the Purchaser:
O'Gara France S.A.
37, rue des Mathurins
75008 Paris
marked for the attention of Mr. Nicholas Hodgson
with a copy sent to:
The O'Gara Company
9113 Le Saint Drive,
Fairfield,
Ohio 45014, USA
marked for the attention of Mr. Bill O'Gara
Notices shall be effective as of the date of receipt.
12.2 The Vendors irrevocably confer on Mr. Daniel Gautier (referred to in
Article 12.1), who accepts, the authority to accept notices on behalf
of all of them and notice given to Mr. Daniel Gautier shall be deemed
to be notice to all of them.
<PAGE> 40
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13. PROPER LAW AND JURISDICTION
---------------------------
13.1 This Agreement shall be governed by and construed in accordance with
French law.
13.2 Any dispute arising in relation to this Agreement, its interpretation
or execution (including, without limitation, its validity, performance
or interpretation) shall be submitted to the Commercial Court of Paris.
14. LANGUAGE
--------
14.1 This Agreement shall be executed only in the English language; a
French-language translation shall be provided to the Vendors for
information purposes only and attached hereto as Schedule 30, it being
understood that in the event of a difference in interpretation of the
French and English language versions of this Agreement, then the
English language version shall prevail.
15. WAIVERS
-------
15.1 The failure by any party hereto promptly to avail itself in whole or in
part of any right, power or privilege to which such party is entitled
pursuant to the terms of this Agreement shall not constitute a waiver
of such right, power or privilege which may be exercised at any time.
To be valid, waiver by any party hereto of any such right, power or
privilege must be in writing and notified to the other parties as
provided herein.
16. HEADINGS
--------
16.1 The descriptive words or phrases at the head of the Articles are
inserted only as a convenience and for reference purposes and are not
intended in any way to define, limit or describe the scope or intent of
the Articles which they precede.
17. WHOLE AGREEMENT
---------------
17.1 This Agreement constitutes the entirety of the agreement between the
parties with regard to the subject matter hereof and supersedes any
previous agreement or agreements whether verbal or written with regard
thereto.
17.2 It is expressly agreed by the parties hereto that only five originals
of this Agreement as well as five original sets of Schedules thereto
shall be produced, one of which shall be held by Mr. Gautier for and on
behalf of all members of
<PAGE> 41
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the Gautier Group, three of which shall be held respectively by each of
the three other individual Vendors and one of which shall be held by
the Purchaser on its behalf and on behalf of the Guarantor.
SIGNED by the parties in Paris, on January 21, 1997
O'GARA FRANCE S.A. THE O'GARA COMPANY
- ---------------------- ----------------------
by: Nick Hodgson by: W.T. O'Gara
SCP FRANCOIS IER ALIAN
- ---------------------- ----------------------
by: Daniel Gautier by: Daniel Gautier
- ------------------------- ----------------------
Jean-Pierre Pecheur Jean-Philippe Tible
- ------------------------- ----------------------
Daniel Gautier Philippe Quintin
