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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______
Commission file number 000-21629
THE O'GARA COMPANY
(Exact name of registrant as specified in its charter)
Ohio 31-1470817
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
9113 LeSaint Drive
Fairfield, OH 45014
(513) 874-2112
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. [X]
The aggregate market value of the Common Stock of the registrant held by
non-affiliates of the registrant was approximately $28,339,464 as of February
28, 1997. As of February 28, 1997, 7,206,677 shares of Common Stock were
outstanding.
Documents Incorporated by Reference
Portions of The O'Gara Company's Proxy Statement for the 1997 Annual Meeting of
Shareholders, filed or to be filed with the Commission, are incorporated by
reference into Part III of this Form 10-K.
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PART I
ITEM 1. BUSINESS
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GENERAL
The O'Gara Company (the "Company") is a leading provider of fully
integrated ballistic and blast protected vehicle armoring systems for military,
commercial and governmental clients worldwide. Through its O'Gara-Hess &
Eisenhardt Armoring Company subsidiary ("OHE"), the Company currently is the
primary provider of armoring systems for High Mobility Multi-Purpose Wheeled
Vehicles ("HMMWVs") used by the U.S. Military and other armed forces worldwide.
OHE also provides armored commercial vehicles for heads of state, business
executives and VIPs worldwide, including presidential limousines used by every
U.S. President since 1948. Through its O'Gara Satellite Network subsidiaries
("OSN"), the Company provides vital communications systems for its clients by
integrating proprietary hardware and smart card billing software that operate on
the International Maritime Satellite ("Inmarsat") network. The Company recently
began offering security related services, such as advanced driver training,
background clearances, business intelligence, country risk assessments,
foransic auditing, force protection consulting and private security agent
training. In addition, the Company offers customized turn-key site security
systems to international customers.
Originally founded in 1876 as Sayers & Scovil, a manufacturer of
horse-drawn carriages, the Company evolved into a producer of specialized motor
vehicles. By the early 1900s, the Company changed its ownership and name to Hess
& Eisenhardt and focused on the development and construction of a broad range of
specialized consumer and commercial vehicles such as ambulances and hearses. In
the 1940s, the Company was commissioned by the U.S. Secret Service to design and
assemble one of the first armored presidential limousines, which was used by
President Harry S Truman. In 1982, this business was acquired by certain members
of the O'Gara family, was subsequently renamed, and began focusing on producing
armored vehicles for commercial and governmental clients around the world. In
1993, the Company was awarded its first contract to up-armor the HMMWV for the
U.S. Military.
The Company's business today is increasingly being driven by the needs
of (i) worldwide military organizations to field a more versatile armored
vehicle, such as the HMMWV; (ii) governments to protect heads of state and
diplomats from terrorist attacks; (iii) multinational corporations to protect
executives, corporate assets and information; (iv) wealthy individuals to secure
themselves and their families from the growing threat of kidnappings worldwide;
(v) individuals to insulate themselves and their property from planned criminal
activity and random acts of violence; and (vi) individuals, corporations and
governments to obtain secure, remote or independent telecommunications services.
The Company has aligned its activities along three business lines:
security hardware products, security systems integration and security services.
The Security Hardware Products Group markets all of the Company's armoring
products, including fully integrated ballistic and blast protected armoring
systems for military and commercial vehicles, aircraft and missile container
armor, and field installed armor systems, through its various O'Gara-Hess &
Eisenhardt Armoring Company subsidiaries and Labbe, S.A ("Labbe"). The Security
Systems Integration Group offers planning, design, and hardware and software
integration services which are customized to meet specific satellite
communications or site protection needs of customers through its O'Gara Security
International, Inc., Next Destination, Limited ("Next Destination") and OSN
subsidiaries. The Security Services Group offers security-related services such
as advanced driver training, security background clearances, business
intelligence, country risk assessments, forensic auditing and private security
agent training through its O'Gara Security Associates and Palmer Associates
divisions and its International Training, Inc. ("ITI") subsidiary.
BACKGROUND AND RECENT DEVELOPMENTS
The Company was formed in 1996 for the purposes of becoming a holding
company for OHE and OSN and carrying out an initial public offering of its
Common Stock. Pursuant to various agreements dated August 23, 1996, among the
Company, OHE, O'Gara-Hess & Eisenhardt Armoring Company Limited, an affiliated
Irish corporation ("Limited"), and the equity holders of OHE, Limited and OSN,
the operations of these corporations
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were reorganized and combined on October 28, 1996 (the "Reorganization"). As a
result of the Reorganization, OHE and OSN became wholly owned subsidiaries of
the Company, and OHE succeeded to substantially all of the business formerly
carried out by Limited either directly or through subsidiary corporations. All
references to the "Company" in this document refer to The O'Gara Company and its
subsidiaries on a combined basis, giving effect to the completion of the
Reorganization, and to the Company and its predecessors in a historical sense.
In the Reorganization, the equity holders of OHE transferred their
ownership interests in OHE to the Company in exchange for shares of Common
Stock. The equity holders of OSN then transferred their ownership interests in
OSN to the Company in exchange for shares of Common Stock. In addition, OHE
acquired substantially all of the assets and assumed certain selected
liabilities of Limited. The Company's initial public offering was completed on
November 15, 1996.
Since completion of the Reorganization, the Company has acquired (i) on
October 29, 1996, substantially all of the assets of Palmer Associates, S.C.
("Palmer Associates"), a provider of security services, such as advanced driver
training, background investigations and due diligence reports, in Mexico City,
Mexico, for cash consideration of $1.2 million (including $0.2 million for a
non-competition agreement), most of which is payable over two years; (ii) on
February 5, 1997, all of the shares of Next Destination, a leader in the global
positioning satellite systems and satellite communications markets in the United
Kingdom and Europe, headquartered in Salisbury, United Kingdom, for 170,234
shares of Common Stock and $1.75 million in seller-provided financing in the
form of three-year 6% notes; (iii) on February 12, 1997, all of the shares of
Labbe, a leading armorer of commercial and private vehicles headquartered in
Lamballe, France, for $10.7 million in cash and 376,597 shares of Common Stock;
and (iv) on March 24, 1997, all of the shares of ITI, a provider of advanced
security training headquartered near Washington, D.C., for $0.5 million in cash,
68,086 shares of Common Stock, and $1.2 million in seller-provided financing in
the form of two-year 10% notes. The Company continues to review additional
acquisition opportunities.
BUSINESS STRATEGY
The principal elements of the Company's operating and growth strategy
are as follows:
Expand armored commercial vehicle sales in foreign markets. The Company
intends to expand its foreign market position as a leading provider of armored
commercial vehicles. To support this effort, the Company has established
manufacturing operations in Mexico, Brazil and Russia in 1996, acquired Labbe
and has significantly increased its sales and marketing budget in 1997 from
previous years. In the future, the Company intends to establish manufacturing
operations in additional countries as it deems appropriate.
Expand foreign military sales. As the nature of armed conflicts changes
and worldwide military budgets are cut, the Company believes that expensive
heavily armored tracked vehicles will continue to be replaced by more versatile
and less expensive tactical wheeled vehicles ("TWVs"), such as the HMMWV. The
Company markets both factory assembled, fully armored ("Up-Armored") HMMWVs and
armor kits which may be added in the field to certain existing HMMWVs. The
Company believes a significant opportunity exists to market aggressively these
kits, internationally as well as domestically. The armed forces of over twenty
countries worldwide utilize the HMMWV and seventeen of those countries maintain
inventories of over 200 vehicles. The Company believes that those countries
currently utilizing HMMWVs also are candidates for future sales of the
Up-Armored HMMWV. For example, in 1996 the Company entered into contracts to
provide Up-Armored HMMWVs to two foreign countries, Luxembourg and Qatar.
Grow non-armoring security-related businesses. The Company's Security
Systems Integration Group intends to build upon its satellite communications
business and the physical site protection services it currently offers in Russia
by offering a broader array of products and services to existing hardware
customers and to buyers in new geographic markets. In addition, the Company's
Security Services Group offers additional security-related services such as
advanced driver training, security background clearances, business intelligence,
country risk assessments, forensic auditing, force protection consulting and
private security agent training.
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Standardize production to improve efficiencies and reduce throughput
time. Since 1994, the Company has made a significant commitment to engineering,
tooling and training to standardize its product design, armoring components and
assembly line operations. Through the application of these techniques, the
number of employee work hours needed to produce the Up-Armored HMMWV and the
number of components involved have been reduced significantly. These techniques
also have been applied by the Company to the production of certain commercial
products, the first being a standard armored GMC/Chevrolet Suburban ("Standard
Suburban"). The Company currently is developing a standard armored passenger
sedan.
Pursue strategic acquisition opportunities. The fragmented nature of
the global security industry provides ample opportunities for strategic
acquisitions. The Company believes it is positioned to consolidate companies in
the armoring, systems integration, security services, engineering and secured
satellite communications sectors of the industry. See "--Background and Recent
Developments."
Explore longer term, related growth opportunities. Under a written
memorandum of understanding with International Electronics Engineering, a
Luxembourg company ("IEE"), the Company has been appointed the distributor in
the United States, Canada, Mexico and Brazil for Passenger Presence Detection
sensors and childseat presence and orientation detection sensors manufactured by
IEE for the automotive industry. These sensors are designed to (i) prevent
automotive airbags from inflating when an infant is in the front seat, and (ii)
to prevent or control the airbag deployment based on the presence and
orientation of a special childseat. The Company and IEE are now engaged in
discussions concerning the possible formation of a joint venture which would
engineer and manufacture the sensors and other IEE products in the United
States. The Company plans to enter the U.S. automotive consumer safety market
with this product in the near future and subsequently pursue other markets for
that and related products. The Company also intends to evaluate the cost
effectiveness of potential market opportunities for introducing other
consumer-oriented automotive safety products.
PRODUCTS AND SERVICES
The following table presents the net sales of the Company's principal
products and services for the periods indicated (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994
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<S> <C> <C> <C>
Security Hardware Products Group........................ $72,900 $30,773 $33,466
Security Systems Integration Group...................... 9,823 2,044 446
Security Services Group................................. 55 - -
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Total.......................................... $82,778 $32,817 $33,912
================ ================= =================
</TABLE>
See Note 14 to the Company's Consolidated Financial Statements for operating
profit and identifiable assets for each group.
Security Hardware Products Group
The following table provides net sales information about the products
and services of the Company's Security Hardware Products Group (in thousands):
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
MILITARY PRODUCTS:
Up-Armored HMMWVs....................................... $43,780 $13,275 $15,222
HMMWV Armor Kits........................................ 6,938 -- --
Other Armor Systems..................................... 3,878 1,680 1,772
------------ ------------ -------------
54,596 14,955 16,994
ARMORED COMMERCIAL PRODUCTS:
Fully Armored Vehicles.................................. 13,424 11,024 11,265
Light Armored Vehicles.................................. 3,889 2,213 2,953
Other................................................... 991 2,581 2,254
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18,304 15,818 16,472
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Total............................................ $72,900 $30,773 $33,466
============ ============ =============
</TABLE>
Military Products
Up-Armored HMMWVs. The Company is the prime contractor to the U.S.
Military for the supply of Up-Armored HMMWVs. The basic four door HMMWV chassis
is produced by AM General Corporation ("AM General"), the exclusive designer
and manufacturer of HMMWVs for the U.S. Military, and shipped directly to the
Company's facility where perimeter armor and blast protection components are
added. In addition, the Company installs other features designed to enhance crew
safety, comfort and performance, such as air conditioning, weapon turrets and
mounts, door locks and shock-absorbing seats. The customers for this product are
the U.S. Military as well as defense and peacekeeping forces around the world.
The Company charges its customers $70,000 to $100,000 for these ballistic and
blast protective systems, which is exclusive of the cost of the vehicle. The
Company also supplies spare parts and logistics support for all of its military
programs.
In addition to the products described above, the Company supplies
engineering design and prototype services to the U.S. Army Tank Automotive
Command ("TACOM") primarily in support of the Up-Armored HMMWV Program. As a
result of this support, in January 1997, the Company signed a contract with the
U.S. Army to support continued research and development on the Army's HMMWV
program.
Under an agreement which expires in November 1998, the Company serves
as the primary designer and integrator for all of AM General's ballistic systems
and as its primary armoring integrator on all other programs. This agreement
also establishes the Company as AM General's primary subcontractor for providing
armoring kits and parts, and requires AM General to involve the Company in the
design, development or procurement of any other armoring systems. The Company's
relationship with AM General has had a favorable impact on its business. There
can be no assurance that future contracts will be entered into with AM General
or as to the size of any such contracts. A substantial reduction in, or
termination of, the Company's business with AM General could have a material
adverse effect on the Company's financial condition, results of operations and
cash flows. Additionally, should AM General for any reason be unable to deliver
HMMWVs to the Company, which occurred during 1995, or should the U.S. Military
select a new primary TWV, there could be a material adverse effect on the
Company's financial condition, results of operations and cash flows.
HMMWV armor kits. The Company supplies field-installable armoring kits
to the U.S. Military. These kits are installable on HMMWVs which are currently
in the U.S. Military inventory as well as new HMMWV chassis that are delivered
to the Company's manufacturing facilities. Potential customers for this product
are current owners of non-armored HMMWVs, which include the U.S. Military as
well as defense and peacekeeping forces around the world. At present, over
130,000 HMMWVs have been sold worldwide, and the Company estimates that
approximately 12,000 of these HMMWVs may be suitable for kit installation. These
kits sell for $18,000 to $30,000, without installation.
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Other armor systems. The Company markets armor sub-systems for certain
U.S. Military tracked vehicles, such as the M9ACE earth mover, and other TWVs
such as 2.5 ton and 5.0 ton trucks. The Company also produces various armor
systems as a subcontractor to larger defense contractors, such as Lockheed
Martin Corporation ("Lockheed Martin") and The Boeing Company. These products
include armor for containers for fuels and missile launchers, and for pilot
protection, and typically involve the use of materials or methods which are
unique to the Company.
Commercial Products
Fully armored vehicles (FAVs). The base vehicle that is converted into
a FAV may be a limousine, a large size sedan (such as a Cadillac or Mercedes
Benz S600), or a sport utility vehicle (such as the Standard Suburban) which is
purchased new from a dealership or directly from the factory. The armoring
process begins with disassembly of the new vehicle at the Company's production
facilities. The passenger compartment is then armored with both opaque armor
(metallic, fibrous and ceramic materials) and transparent armor (glass/plastic
laminate) and other features, such as run flat tires, are added. Finally, the
vehicle is reassembled as close to its original appearance as possible. The
designation of FAV normally connotes the ability of the completed vehicle to
protect against attacks from military assault rifles and from certain underbody
explosives. Certain FAVs also are blast protected. A blast-protected vehicle
normally incorporates the ballistic and underbody protection of a FAV but with
proprietary materials and installation methods that enable the vehicle occupants
to survive a defined blast threat. A FAV normally sells for $50,000 to
$200,000, exclusive of the cost of the vehicle.
The FAV class of vehicle includes the Parade Car, a formal limousine
used predominately for high level, official functions by a president or other
head of state. Since the threat of organized assassination attempts is greater
for heads of state, these vehicles normally incorporate more advanced armor and
sophisticated protection systems. In addition to the more protective opaque and
transparent armor systems, special features may include supplemental oxygen
systems, air purification systems to protect against chemical or biological
contamination, underbody fire suppressant systems, tear gas launchers,
anti-explosive self-sealing fuel tanks, electric deadbolt door locks, gun ports
and remote-starters with bomb scanning capabilities. Parade Cars normally sell
for $300,000 to in excess of $1.0 million, which includes the cost of the base
vehicle.
Light armored vehicles (LAVs). The armoring process for an LAV is
similar in all respects to that for an FAV except that substantially less armor
is added. Typical base vehicles include the Volkswagen Jetta, the General Motors
Omega, the Mercedes Benz S600 and the Jeep Cherokee. The designation of LAV
connotes the ability of the completed vehicle to protect against attacks from
certain handguns. The price of a LAV ranges from $5,000 to $60,000, exclusive of
the cost of the vehicle.
Other. Other commercial products include specialty vehicles which are
custom built for a specific mission. Vehicle types that fall into this category
are Escort Cars (usually a convertible) and Chase Cars (usually a closed-top
vehicle) in which security personnel ride while in a head of state motorcade.
Also included in this business line are armor kits, normally designed for a
specific vehicle to be installed at a location outside of the Company's main
production facilities in Fairfield, Ohio, Lamballe, France or Torino, Italy.
These armor kits usually provide LAV levels of protection. The Company also
provides technical support, training and spare parts for all of its manufactured
products.
As result of the Labbe acquisition, the Company has added the
manufacturing and marketing of cash-in-transit vehicles to its line of
commercial products. Cash-in-transit vehicles normally are used by banks or
other businesses that transport large amounts of hard currency. After starting
with a van or small truck, the base vehicle is radically modified to provide
protection for the cargo and the individuals attending the vehicle from
ballistic and blast threats.
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Security Systems Integration Group
Satellite communication integration. The Company offers comprehensive
design and hardware and software integration services customized to meet
specific satellite communication requirements of its customers. This involves
the integration of portable satellite terminals, mobile antennas and
software-based air time. Usually these systems are designed for remote or
security intensive operations.
The portable satellite terminals, which are manufactured by third party
suppliers to Company specifications, allow the user to make voice and data
transmissions via satellite link anywhere in the world. Most terminal sales
consist of the Company's latest product manufactured by Glocom, Inc., which are
marketed for the Company by Next Destination under the microCOM-M name and
marketed by the Company directly under the Compact-M brand name. The terminal
operates on the Inmarsat-M network. The Company offers an Inmarsat approved
mobile "M" antenna System called the Voyager (developed through a strategic
alliance with Nera AS, a Norwegian company, and marketed by the Company and Nera
AS under a cooperative marketing agreement) that allows vehicle occupants to
make and receive voice and data transmissions via satellite link while the
vehicle is in motion. The Company recently began marketing a similar product
that operates on the Inmarsat-B network and also provides high speed data and
video capacity. The Company currently offers air time primarily through joint
ventures and block time agreements utilizing an internally developed and
proprietary "smart card" billing application. The "smart card" is a convenient
prepaid telephone calling card which a customer purchases from the Company and
which can be used only on the Company's systems. Most air time sales are made in
conjunction with the microCOM-M and Compact-M terminals.
The recent acquisition of Next Destination enhances the Company's
ability to market and distribute directly the satellite communication systems
currently offered by the Company. The acquisition also expands the Company's
product line to include global positioning satellite systems manufactured by a
third party and distributed by Next Destination.
Site protection systems integration. The Company offers comprehensive
planning, design and hardware and software integration services customized to
meet the requirements of customers for physical site protection. Primarily
intended for perimeter security around business facilities and plant operations,
the Company also offers its services to embassies, VIPs' homes and public
facilities. Generally, such a systems integration project begins with a site
survey, which identifies areas of vulnerability and recommends methods for
securing the entire area surveyed. Specific pieces of hardware are ordered and
installed, processes and procedures are outlined, engineering documentation are
provided and control centers are established.
Security Services Group
The Company is leveraging its reputation in the armored vehicle
industry and its customer base by marketing an expanded range of security
services such as advanced driver training, security background clearances,
business intelligence, country risk assessments, forensic auditing and private
security agent training. The Company is offering these services first in
countries in which it is currently selling hardware products or providing
security systems integration and then plans to expand into other geographic
areas in which there is a demonstrated need for such services, such as the
Philippines and the Middle East. The acquisition of Palmer Associates enables
the Company to provide integrated security products and services in the Mexican
market. The Company intends to expand the white collar criminal investigation
and executive protection capabilities offered by Palmer Associates to enhance
the overall marketability of the entity. Additionally, the acquisition of ITI
will expand further the capabilities of the Security Services Group to include
training in evasive and defensive driving tactics, terrorist surveillance
detection and progressive weapons operations as well as other advanced security
services products.
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CUSTOMERS
Security Hardware Products Group
Military. The Company's market for military hardware products is
worldwide in scope, including the U.S. Military and foreign defense forces. The
Company's major contracts for delivery of Up-Armored HMMWVs and armoring kits
are with TACOM. Additionally, the Company provides protected container systems,
typically used to protect missile systems from small arms fire, to the U.S.
Missile Command ("MICOM") under a subcontract with Lockheed Martin. The ability
to obtain future U.S. Military business will be affected by future levels of
defense spending and TACOM's budget. The Company has sold Up-Armored HMMWVs to
Qatar and Luxembourg, either directly or through the Foreign Military Sales
("FMS") Program. The Company is leveraging the reputation earned by its
Up-Armored HMMWVs in Bosnia, Somalia and Haiti to expand its sales to foreign
defense forces. See "-- U.S. Government Contracts."
Commercial. The Company's armored commercial vehicle customers include
governmental and private buyers. U.S. and foreign governmental buyers purchase
both FAVs, including Parade Cars, and LAVs. Typically, governmental buyers
consist of ministries of foreign affairs, defense and internal affairs and
offices of presidential security. The procurement cycles of governmental buyers
can range from relatively rapid, when the vehicles are for the use of the head
of state or in a crisis mode, to prolonged bureaucratic bids and evaluations
where the procurement is for normally budgeted items. Over the past five years,
the Company has sold FAVs, including Parade Cars, and LAVs to numerous foreign
countries and to departments and agencies of the U.S. Government (including the
Department of State, the Drug Enforcement Agency, the Agency for International
Development and the General Services Administration).
The Company's private customers for armored commercial vehicles include
corporations and individuals. Private buyers are sensitive to cost (of which
import duties and taxes may be a substantial part) and, therefore, often will
buy a locally produced product if one exists. Local servicing of the vehicle is
also a critical concern to private buyers. Over the past five years, the Company
has sold FAVs or LAVs to more than 125 private customers, including a number of
Fortune 500 companies.
Security Systems Integration Group
Satellite communication integration. Principal customers for satellite
communications services include private corporations and individuals,
governmental agencies, peacekeeping forces and disaster relief organizations
which operate in under-developed countries that lack a telecommunications
infrastructure, in rural areas of developed countries or in areas stricken by
disasters in which the traditional forms of telecommunications are rendered
inoperable. Most of the Company's satellite communication customers are located
outside of the United States because the U.S. Federal Communications Commission
does not permit private corporations or individuals to use terminals in the
United States which do not utilize the American Mobile Satellite Corp. ("AMSC")
satellite network. The terminals marketed by the Company access the Inmarsat
network rather than the AMSC network.
Site protection systems integration. As of December 31, 1996, the
Company had several commercial contracts to provide integrated site protection
systems, all to customers in Russia. Currently, the Company is marketing these
services to both governmental and commercial entities. Corporate and
governmental buyers of integrated security systems normally purchase through
their corporate security officers, a governmental department responsible for the
particular facility's security, a facility manager or a construction project
manager. Purchases generally are made on project-specific proposals and include
the cost of the hardware, transportation costs to the site, engineering
integration and documentation.
Security Services Group
The Company markets its Security Services products to both commercial
and governmental clients. Corporate or governmental buyers of security services
usually contract for such services through their security officers.
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Corporate security officers, who are normally former members of a government
agency themselves, tend to purchase services based upon industry reputation for
quality and expertise, trust in the firm or individual from whom they are buying
the services, price and availability.
MARKETING AND SALES
Military marketing. The Company continues to position itself in the
marketplace as a commercial company with a military production capability and to
emphasize its ability to develop new products, or product adaptations, quickly
and more cost-effectively than traditional defense contractors. The Company
markets its military products through a combination of trade show exhibitions,
print advertising in military-related periodicals and direct customer visits.
The Company emphasizes the cross-marketing of military and commercial products,
which it believes strengthens the image of each product group. The Company also
has entered into a joint marketing agreement with AM General for sales in the
military and commercial arenas. This agreement allows the Company to benefit
from the AM General distribution network and save on certain costs, such as
exhibitions where AM General and the Company otherwise would both show products.
Military sales. The Company's military sales activities are directed
toward identifying contract bid opportunities with various U.S. Government
agencies, private enterprises acting as prime contractors on government
contracts, sales through the FMS Program, and military sales directly to foreign
military organizations. The Company has two full-time business development
managers who are responsible for this activity and also has contractual
arrangements with several outside consultants who assist the business
development managers in their activities.
Commercial marketing. The Company believes that, as a result of its
long history of successfully armoring vehicles, it enjoys excellent name
recognition and a strong reputation in that sector of the security industry. The
central element of the Company's commercial marketing strategy is to leverage
its name recognition and reputation by positioning the Company as a global
provider of one-stop security services and products. When entering a foreign
market, the Company normally seeks to penetrate the market with its strongest
product offering, which in most cases is armored vehicles. The Company tailors
its marketing strategy to each geographic area of the world and will often
tailor its product offering by country.
Commercial sales. On a worldwide basis, the Company employs 40 sales
professionals who operate out of Fairfield, Ohio; Moscow, Russia; Geneva,
Switzerland; Sao Paulo, Brazil; Lamballe and Paris, France; Salisbury, England;
Mexico, City, Mexico; Nairobi, Kenya; London, England; Los Angeles, California;
and Washington, D.C. All sales personnel have a geographic and/or
product-specific responsibility. In most cases, sales personnel also maintain
and recruit sales agents or distributors for the Company's principal product
groups. In some instances, particularly when commercial products are sold to
governments, the Company's salespersons will handle sales directly with the
ultimate customer without any involvement from an agent or distributor.
The acquisitions of Labbe and Next Destination have expanded the number
of sales professionals the Company employs by one-third. As a result of this
increase, the Company believes it is well positioned to enter and exploit
certain markets, such as Europe and Africa, where it did not have a significant
presence in the past. Labbe markets and distributes certain of its products
through relationships with automobile manufacturers such as Volvo, Renault,
Peugeot and Citroen. This relationship will also augment the product line of OHE
to include vehicles from these manufacturers. Additionally, the Company will
expand distribution of Labbe's line of cash-in-transit vehicles to all markets
currently serviced, providing an enhanced product line to all subsidiaries.
Foreign operations. See Note 14 to the Company's Consolidated Financial
Statements for information concerning foreign and domestic operations and export
sales.
As indicated above, the Company has operations and assets in Brazil,
France, Italy, Mexico, Russia and the United Kingdom. In addition, the Company
sells its products and services in other foreign countries and is seeking to
increase its level of
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<PAGE> 10
international business activity. Accordingly, the Company is subject to various
risks, including U.S. imposed embargoes of sales to specific countries, foreign
currency restrictions, exchange rate fluctuations, expropriation of assets, war,
civil uprisings and riots, government instability and legal systems of decrees,
laws, regulations, interpretations and court decisions which are not always
fully developed and which may be retroactively applied. The Company's operations
in foreign countries may be adversely affected in that certain governmental
agencies in such countries may interpret laws, regulations or court decisions in
a manner which might be considered inconsistent or inequitable in other
countries. The Company may be subject to unanticipated income taxes, excise
duties, import taxes, export taxes or other governmental assessments.
ENGINEERING AND DEVELOPMENT
In January 1997, the Company signed a $9.5 million Systems Technical
Support Contract ("STS Contract") with the U.S. Army to support continued
research and development on the Army's HMMWV program. See "Business -- U.S.
Government Contracts." The Company believes that the knowledge gained from this
contract can be applied to the Company's commercial manufacturing programs.
The Company estimates that it expended approximately $2.8, $2.0 and
$0.7 million, respectively, in 1996, 1995 and 1994 on engineering and
development efforts related to its armored vehicles and satellite
communications products.
U.S. GOVERNMENT CONTRACTS
The Company serves as the U.S. Military's primary provider of armoring
for its HMMWV fleet. Under the initial contract in August 1993, TACOM engaged
the Company to armor fully 59 HMMWVs. A contract to armor an additional 100
vehicles was executed in May 1994. As of March 1995 all of these 159 HMMWVs had
been shipped.
In 1995, the HMMWV was redesigned to include a more powerful engine and
greater cargo space. In March 1995, TACOM engaged the Company to armor 309 of
the redesigned HMMWVs. This agreement included options for the armoring of up to
an additional 155 vehicles. In February 1996, TACOM requested an acceleration of
the production of Up-Armored HMMWVs previously ordered and subsequently
exercised options for the armoring by the Company of all 155 vehicles under
option. Of these vehicles, 16 were sold to Luxembourg under the FMS program. The
FMS Program is part of the U.S. Government's security assistance program which
provides equipment and services to more than 100 nations and international
organizations. As of February 28, 1997, the Company had shipped all 464 of these
HMMWVs.
Under a July 1996 contract, TACOM engaged the Company to armor 72
additional HMMWVs. As of February 28, 1997, all of these vehicles had been
shipped.
On September 27, 1996, the Company was awarded a contract by TACOM for
an additional 133 Up-Armored HMMWVs. The contract includes options for the
armoring of up to 67 additional vehicles. As of February 28, 1997, 17 of these
133 vehicles had been delivered. TACOM has not yet exercised the option for the
additional 67 vehicles.
The Company also manufactures armoring kits that can be shipped to
customers and installed in HMMWVs on location. The Company installed 166 of such
kits for TACOM in its Fairfield facility during 1996 and shipped 14 kits to the
U.S. Army in Germany for purposes of providing instruction to Army personnel
concerning the installation process.
The U.S. Government's budget for fiscal year 1997 includes
appropriations for the purchase of 360 additional Up-Armored HMMWVs as well as
substantial discretionary funds for the U.S. Department of Defense (the "DoD").
The Company has recently negotiated the terms for this contract, and is
expecting final approval in the very near future. The Company expects this
contract will also contain an option for an additional 360 units.
-10-
<PAGE> 11
In January 1997, the Company signed a $9.5 million STS Contract with
the U.S. Army to support continued research and development on the Army's HMMWV
program. The four year contract, three of which are option years, is budgeted
for $2.5 million in 1997, with $2.5 million options in 1998 and 1999 and a $2.0
million option in 2000. The contract requires the Company to provide 25,000
hours per year of engineering and development time to the U.S. Army. The Company
believes that the knowledge gained from STS Contract work also can be applied to
the Company's commercial manufacturing programs.
On March 19, 1997, OHE signed a $0.7 million contract with Lockheed
Martin to provide armored components for the Army Tactical Missile System
("ATACMS"). The contract also includes options for additional components, valued
at $1.3 million. The Company was first engaged in September 1993 by Lockheed
Martin to armor fuel systems of missiles. The Company believes that it is well
positioned for future engagements.
Military contracts have accounted for an increasing portion of the
Company's business, representing 66.0%, 45.6% and 50.1% of net sales for 1996,
1995 and 1994, respectively. The Company's U.S. Military contracts are funded in
annual increments and require subsequent authorization and appropriation which
may not occur or which may provide less than the total amount of the contract
due to budgetary or other considerations. There can be no assurance that future
contracts will be received or as to the size of any contracts that are received.
Fluctuations in spending by the U.S. Government for national defense could
adversely affect the Company's ability to receive future contracts. Moreover,
government contracts in general are cancelable unilaterally at the convenience
of the government and a variety of international and/or domestic political
factors or decisions could result in the cancellation of the HMMWV armoring
project or a curtailing of its scope.
COMPETITION
The markets for the Company's products and services are highly
competitive. However, in the vehicle armoring systems business, the Company
believes that its design, engineering and production expertise in providing
fully integrated ballistic and blast protected vehicles gives it a competitive
advantage over those competitors who provide protection against only selected
ballistic threats. In the market for military armoring systems, there are a
large number of companies, such as Simula, Inc., that provide specific armoring
packages for TWVs (other than the HMMWV), helicopters and selected other
military applications. The Company believes that, as the size of the Up-Armored
HMMWV requirement continues to grow, competition from major defense contractors
may increase. The principal competitive factors are price, quality of
engineering and design, production capability and capacity, ability to meet
delivery schedules and reputation in the industry.
As a result of the Company's experience with the Up-Armored HMMWV
program, the U.S. Army has contracted with the Company to provide support for
design improvements, to conduct additional testing of materials components and
vehicles and to explore alternate and more advanced armor configurations for
current and future armoring programs. The Company believes the relationship that
will develop as result of the execution of the STS Contract will give the
Company certain advantages when bidding on future armoring programs.
The largest competitor on a worldwide basis in the production of
armored commercial vehicles is Mercedes-Benz Aktiengesellschaft ("MBZ") of
Germany. MBZ produces its own armored passenger vehicles based upon the S600
chassis, the new Pullman Limousine and the S300 chassis. MBZ sells its product
through its worldwide dealer distribution system. In addition to MBZ, there are
a number of other vehicle armorers focused on their local foreign markets in
Europe, the Middle East and Latin America, armoring primarily locally
manufactured automobiles. U.S.-based protected passenger automobile armorers
include the Pittston Company (owner of Brinks armored vehicles), Moloney
Coachbuilders, Inc., Safe Car, Inc. and Armet Armored Vehicles, Inc. The
principal competitive factors are price, quality of engineering and design,
production capability and capacity, ability to deliver and reputation in the
industry.
With respect to satellite communication systems integration services,
the Company competes with many companies, including STN Atlas Elektronik GmbH,
COMSAT Corporation and Nera AS in both the portable terminal market and
sales of air time. The Company believes that the competitive factors in this
portion of its
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<PAGE> 12
business include product reliability, the incorporation of advanced
technological features, price, ease of installation, availability and service.
In the site protection systems integration and security services
businesses, the Company competes primarily with numerous local integrators and
also large suppliers of security-related equipment such as Westinghouse Electric
Corporation, The Wackenhut Corporation, Borg-Warner Security Corporation,
Pittway Corporation and ADT Inc. The principal competitive factors are the best
approach to solving the security problem, availability and the company or
individual reputation. Finally, the Company's Security Services Group competes
with major companies such as Pinkerton's, Inc., Kroll Associates, Inc., ICTS
International, N.V. and The Wackenhut Corporation and numerous small
consultant-type businesses. The principal competitive factors are industry
reputation for quality, expertise, trust in the individual firm, price and
availability.
EMPLOYEES
As of February 28, 1997, the Company had 581 employees (including 39
temporary employees), comprised of 56 (including 6 temporary employees) in
marketing and sales, 380 (including 17 temporary employees) in manufacturing, 41
(including 11 temporary employees) in engineering and 104 (including 5 temporary
employees) in general and administrative. The Company's U.S. employees are not
represented by any union and are not covered by any collective bargaining
agreements. The Company has not experienced any work stoppages or employee
related slowdowns and believes that its relationship with its employees is good.
U.S. GOVERNMENT REGULATION
As a contractor with agencies of the U.S. Government, the Company is
obligated to comply with a variety of regulations governing certain aspects of
its operations and the workplace. Additionally, the Company's contracts give the
contracting agency the right to conduct audits of the Company's facilities and
operations, and such audits occur routinely. The Company also may be subject to
investigations as a result of an audit or other causes. Adverse findings in an
audit or other investigation, including a violation of environmental or labor
laws, could result in fines or other penalties, up to and including
disqualification as a government contractor. In addition, government contracts
generally contain cost or performance incentives based on stated targets or
other criteria. Failure to meet these stated targets or criteria could result in
penalties or lost profits to the Company.
The Company is subject to federal licensing requirements with respect
to the sale in foreign countries of certain of its hardware products.
Regulations promulgated by the U.S. Commerce Department require the Company to
obtain a general destination license in connection with the sale of certain
commercial products in foreign countries, and certain U.S. State Department
regulations require the Company to file an export license in connection with
sales of military equipment in foreign countries. Furthermore, the U.S. State
Department prohibits all sales of military equipment to certain countries,
including Cuba, Iran, Iraq, Libya and China.
ENVIRONMENTAL MATTERS
The Company and its operations are subject to a number of environmental
laws, regulations and ordinances, both in the U.S. and various foreign
countries, that govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as well as handling,
storage and disposal practices regarding solid and hazardous materials, and
impose liability for the cost of remediating, and certain damages resulting
from, sites of past releases of hazardous materials. Environmental laws continue
to change rapidly, and it is likely that the Company will be subject to
increasingly stringent environmental standards in the future. The Company
believes that it currently conducts its activities and operations in substantial
compliance with applicable environmental laws. The Company is implementing
recommendations of an environmental consulting company designed to address
certain air pollution, hazardous waste, underground storage tank and hazard
communication matters at its Fairfield, Ohio headquarters. No notices of
violation have been issued to the Company by any regulatory agency with respect
to environmental matters which remain uncorrected. The Company believes that its
potential liability under the environmental laws, if any, would not have a
material adverse
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<PAGE> 13
effect, individually or in the aggregate, on its results of operations,
financial condition or cash flows. There can be no assurance in this regard,
however, nor can there be any assurance that environmental laws will not become
more stringent in the future or that the Company will not incur significant
costs in the future to comply with such environmental laws.
PATENTS, TRADEMARKS AND COPYRIGHTS
The Company currently has three issued U.S. patents and one pending
patent application relating to its armoring business. The Company currently has
no federally registered trademarks or copyrights. Although the Company does not
believe that its ability to compete in any of its product markets is dependent
on its patents, the Company does believe that the protection afforded by its
"Armoring Assembly" patent and its pending "Vehicle Mine Protection Structure"
patent application, both of which relate to vehicle underbody blast protection,
provides the Company with important technological advantages over its
competitors.
SEASONALITY, BACKLOG AND RELATED MATTERS
The Company's backlog at February 28, 1996 and 1995 was approximately
$47.9 million and $44.0 million respectively. Backlog consists of net sales
value for firm orders not previously included in net sales on the basis of
percentage of completion accounting. Because many factors affect the conclusion
of definitive agreements for contracts awarded and the production and delivery
of the Company's products, no assurance can be given as to when or whether net
sales will be recognized from the Company's backlog. Year-to-year comparisons of
backlog are not necessarily indicative of future operating results.
Approximately 66.0% of the Company's net sales during 1996 were derived
from military contracts and an additional 11.6% were derived from commercial
contracts with U.S. governmental agencies or foreign governments. These
contracts generally are awarded on a periodic or sporadic basis. The Company
frequently receives substantial orders, and begins to incur related expenses,
in one quarter, the revenues from which will not be received until one or more
subsequent quarters. As a result, the Company generally has significant
fluctuations from time to time in its business. Historically, these
fluctuations have not been seasonal. Period-to-period comparisons within a
given year or between years may not be meaningful or indicative of operating
results over a full fiscal year.
The Company's net sales from government contracts and most commercial
contracts are recognized using the percentage-of-completion method. Under this
method, estimated contract revenues are accrued based generally on the
percentage that costs to date bear to total estimated costs. Estimated contract
losses are recognized in full when determined. Accordingly, contract revenues
and total cost estimates are reviewed and revised periodically as the work
progresses and as change orders are approved, and adjustments based upon the
percentage of completion are reflected in contract revenues in the period when
such estimates are revised. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
ITEM 2. PROPERTIES
- -------------------
-13-
<PAGE> 14
The Company's current properties and facilities are as follows:
<TABLE>
<CAPTION>
Date Industry Square
Location Opened Segment Footage Status
-------- ------ -------- ------- ------
<S> <C> <C> <C> <C>
Fairfield, Ohio
9113 LeSaint Drive............................. Dec. 86 Hardware 130,000 owned
4175 Mulhauser Road............................ Mar. 96 Hardware 70,000 leased
Deer Park, New York.............................. Feb. 95 Integration 4,000 leased
Mexico City, Mexico.............................. June 96 Hardware,
Integration
and Services 20,000 owned
Sao Paulo, Brazil
Av. Tambore' 1511-Alphaville Barueri-SP........ Dec. 96 Hardware 22,000 leased
Av. Tambore' 1393-Alphaville Barueri-SP........ Apr. 96 Hardware 28,000 leased
Moscow, Russia................................... Jan. 96 Hardware and
Integration 2,700 leased
Lamballe, France
14, rue d'Armor................................ Jul. 48 Hardware 75,000 leased
42-44 rue d'Armor.............................. Jun. 88 Hardware 50,000 leased
St. Brieue, France............................... Feb. 78 Hardware 19,000 owned
Auxerre, France.................................. Jan. 85 Hardware 21,500 leased
Caen, France..................................... Jul. 92 Hardware 15,000 leased
Salisbury, UK
Unit 5 Barnack Business Centre, Blakey Road.... Jan. 95 Integration 750 leased
Unit 25 Salisbury Business Park................ Jan. 96 Integration 3,000 leased
Washington, D.C. area............................ Jan. 90 Services N/A leased
Torino, Italy.................................... Nov. 90 Hardware 15,000 subcontractor
</TABLE>
Fairfield, Ohio. The LeSaint Drive facility is the Company's
headquarters and houses senior management, accounting and sales offices, as well
as providing full production and assembly facilities for armored commercial
vehicles, parts, fabrication, painting and prototyping operations. This facility
is financed through tax-exempt debt and is pledged to secure the repayment of
such debt. The Mulhauser Road facility focuses primarily on the manufacturing
and distribution of Up-Armored HMMWVs and HMMWV armoring kits. This facility is
currently leased for a term expiring in March 1997. The Company intends to
either renew the lease or purchase the property in the near future. The Company
has the right to renew the lease on terms to be agreed upon by the parties. For
accounting purposes, this lease has been treated as an operating lease, and the
Company has the option to purchase the property at any time during the term of
the lease at fair market value as defined in the lease. In its Fairfield
facilities, the Company has a complete fabrication and machine shop equipped
with a computer controlled plasma cutter, a computer controlled press break,
mills, automated grinders, a robotic welder and two coordinate measuring
machines, paint booths and ancillary equipment for both military and commercial
painting.
Deer Park, New York. This facility is used for administration,
engineering and sales for the Company's integrated portable and mobile satellite
communication systems and is currently leased for a term expiring in February
1998. For accounting purposes, this lease has been treated as an operating
lease.
-14-
<PAGE> 15
Mexico City, Mexico. This facility is used for manufacturing and sales
of armored commercial vehicles. The facility, which previously had been leased,
was purchased by the Company in November 1996 at a price of approximately
$1,241,000. The facilities in Mexico City, Mexico and Sao Paulo, Brazil are
currently assembling kits which have been engineered in the Fairfield facility.
The Company expects these facilities to have the capability to build a complete
product line once they have fully trained their production work forces.
Sao Paulo, Brazil. This facility, which was expanded to include a
second facility on an adjacent location in December 1996, is used for
manufacturing and sales of armored commercial vehicles and is currently leased
for a term expiring in March 2000. For accounting purposes, this lease is
treated as an operating lease.
Moscow, Russia. This facility is used for design and sales services by
the Company's security systems integration business. It is leased under an
agreement with an open term. For accounting purposes, the lease is treated as an
operating lease.
Lamballe, France. These facilities house the management, sales and
accounting functions of Labbe. The site contains facilities for production of
armored commercial and cash-in-transit vehicles, plus design studios for
development of prototypes and integrated computer systems, plus parts,
fabrication, painting and quality control. This facility also contains a
ballistics range. Labbe has inhabited the site since 1948, it is leased for a
term expiring in September 2000. For accounting purposes, this is treated as an
operating lease.
St. Brieue, France. This facility houses Labbe's coachwork design and
repair business. The facility was purchased for cash in February 1978.
Auxerre, France. This facility is used for manufacturing of commercial
armored vehicles by Labbe. The building is leased for a term expiring in July
1997. For accounting purposes, this is treated as an operating lease.
Caen, France. This facility houses coachwork repair functions performed
by Labbe. This building is leased for a term expiring in January 1998. For
accounting purposes, this is treated as an operating lease.
Salisbury, UK. These facilities are used by Next Destination for sales
and warehousing of satellite communication systems. Both facilities are leased,
with the agreement on the Blakey Road facility expiring in January 2000, and the
Salisbury Business Park expiring in January 1999. For accounting purposes, these
are treated as operating leases.
Washington, D.C. area. This facility is used for advanced security
training by ITI. It includes a portion of an abandoned airport runway that is
used specifically for advanced driver training. The facility is leased for a
term expiring May 31, 1999. For accounting purposes this is treated as an
operating lease.
Torino, Italy. This facility is owned by a subcontractor, but is
supervised by the Company's personnel and performs all aspects of manufacturing
specialty armored and unarmored commercial vehicles, from component fabrication
through final assembly. On occasion, the Torino subcontractor will act as a
vendor to the Company.
The Company's manufacturing capabilities include fully integrated
manufacturing programs which link production control, materials control, quality
control and accounting, thus allowing the Company to issue work orders, update
and track inventories, insert quality assurance procedures, schedule and track
production and report, on a daily basis, costs accumulated to a job. The Company
believes that its facilities are adequate for its present needs and that its
properties, including machinery and equipment, are generally in good condition,
well maintained and suitable for their intended current and foreseeable uses.
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<PAGE> 16
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
Certain of the services offered by the Company's Security Services
Group are similar to activities carried on by O'Gara Protective Services, Inc.
("OPS"), in which certain shareholders of the Company have approximately a 47%
interest, but which is controlled by Edward F. O'Gara III, the brother of Thomas
M. O'Gara and Wilfred T. O'Gara, respectively, the Company's Chairman of the
Board and Chief Executive Officer. On October 9, 1996, OPS and Edward F. O'Gara
III filed a complaint against the Company, OHE and Thomas M. O'Gara in the
Federal District Court for the Southern District of Ohio (O'Gara Protective
Services, Inc., et al. v. The O'Gara Company, et al., No. C-1-96-979). The
complaint alleges: that Thomas M. O'Gara and OHE agreed not to compete with OPS
and that the Company's plan to enter the security services market constitutes a
breach of the agreement; that Thomas M. O'Gara breached unspecified fiduciary
duties which he owed to OPS by virtue of his status as a director and
significant shareholder of OPS; and that the Company's plan to enter the
security services market constitutes a violation of the Lanham Act, which
prohibits false advertising and use of an established corporate name in such a
manner as to confuse consumers, as well as unfair competition in violation of
the Ohio Deceptive Trade Practices Act and common law. The plaintiffs are
seeking a preliminary and permanent injunction prohibiting OHE and Thomas M.
O'Gara from using the name O'Gara "in connection with the provision of security
services, or from otherwise competing with OPS in the market for security
services" and an award to OPS of any profits earned by OHE in connection with
the provision of such services, as well as costs, punitive damages and
attorneys' fees. The Company denies the assertions made by OPS in the complaint.
The Company believes it has strong defenses to this action and will continue to
contest the matter vigorously.
Other than as set forth above, the Company is not involved in any
litigation or legal proceedings at this time and is not aware of any material
litigation or proceeding threatened against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
SEE ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------
The Company consummated the initial public offering of shares of its
Common Stock in November 1996. Shares of the Company's Common Stock are traded
on the Nasdaq National Market under the symbol "OGAR." The table below sets
forth the high and low sale prices for the Common Stock during the period from
November 13, 1996 to December 31, 1996.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1996 Fourth Quarter $9.75 $8.63
</TABLE>
As of February 28, 1997, the Company had 58 shareholders of record.
The Company anticipates that any future earnings will be retained to
finance the Company's operations and for the growth and development of its
business. Accordingly, the Company has not paid, and currently does not
anticipate paying, cash dividends on its Common Stock in the foreseeable future.
Additionally, the Company's credit agreement with The Fifth Third Bank and
LaSalle National Bank, dated February 11, 1997, prohibits the payment of cash
dividends and distributions.
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<PAGE> 17
All information required by Item 701 of Regulation S-K (Recent Sales of
Unregistered Securities) for fiscal year 1996 prior to completion of the
Company's initial public offering in November 1996 was provided in Item 15 of
Part II of the Company's Registration Statement on Form S-1, No. 333-11093.
There were no such sales in 1996 subsequent to the initial public offering.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
The selected historical consolidated financial data presented below as
of December 31, 1996, 1995 and 1994, and for each of the four years in the
period ended December 31, 1996, have been derived from the audited consolidated
financial statements of the Company. The consolidated financial data as of
December 31, 1992 and 1993, and for the year ended December 31, 1992, are
derived from the Company's unaudited consolidated financial statements. The
selected consolidated financial data should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" appearing
elsewhere in this annual report on Form 10-K. (In thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales ......................... $ 82,778 $ 32,817 $ 33,912 $ 21,054 $ 16,860
Cost of sales ..................... 61,523 25,237 24,505 14,640 11,511
-------- -------- -------- -------- --------
Gross profit ............ 21,255 7,580 9,407 6,414 5,349
Selling and marketing expenses .... 4,810 3,628 2,736 1,932 2,432
General and administrative expenses 7,930 4,129 4,441 3,169 1,464
-------- -------- -------- -------- --------
Operating income (loss) .. 8,514 (177) 2,231 1,312 1,453
Interest (expense) ................ (1,300) (842) (410) (269) (481)
Other income (expense), net ....... (38) (103) 60 (81) 92
-------- -------- -------- -------- --------
Income (loss) before provision for
income taxes....................... 7,177 (1,122) 1,880 962 1,064
Provision for income taxes (1) .... 518 - - - -
-------- -------- -------- -------- --------
Net income (loss).................. $ 6,659 $ (1,122) $ 1,880 $ 962 $ 1,064
======== ======== ======== ======== ========
Pro forma earnings per share (1) .. $ .69 - - - -
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital (deficit) ....... $ 4,278 $ (4,094) $ (1,999) $ (2,238) $ (4,468)
Net property, plant and equipment 4,925 3,171 2,945 2,622 2,236
Total assets .................... 43,938 27,817 19,243 11,372 10,504
Total debt ...................... 12,241 12,372 7,900 4,752 4,715
Shareholders' equity (deficit) .. 12,656 239 1,273 (1,023) (1,713)
<FN>
(1) Prior to the Reorganization, the Company's business was conducted by a
group of corporations (the "Related Corporations") affiliated by
substantially common management and control. See "Background and Recent
Developments." The most significant of the Related Corporations had
elected to be treated as an S Corporation for federal and state income
tax purposes, and such Related Corporation's income was allocable to
its shareholders for income tax purposes, rather than being taxed at
the corporate level. Accordingly, the Selected Consolidated Financial
Data do not contain a provision for income taxes in years prior to
1996. The provision for income taxes in 1996 reflects a tax provision
for the period subsequent to the Reorganization. See the Consolidated
Statements of Operations and Notes to the Company's Consolidated
Financial Statements.
</TABLE>
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<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATION
- ------------
The following discussion of results of operations and financial condition
is based upon and should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto.
GENERAL
The O'Gara Company is a leading provider of fully integrated ballistic and
blast protected vehicle armoring systems for military, commercial and
governmental clients worldwide. These products are provided through the
Company's principal subsidiary O'Gara-Hess & Eisenhardt Armoring Company and the
Company's Security Hardware Products Group. Through O'Gara Satellite Networks
and its Security Systems Integration Group, the Company provides integrated
satellite communications systems to commercial and governmental clients and
integrated site protection security systems. The Company recently began offering
security-related services, such as advanced driver training, background
clearances, business intelligence, country risk assessments, forensic auditing,
force protection consulting and private security agent training, through its
Security Services Group.
For the year ended December 31, 1996, net sales increased to $82.8 million,
compared to $32.8 million for the year ended December 31, 1995. The primary
reasons for this growth were (i) a U.S. Military request to accelerate the
production of Up-Armored High Mobility Multi-Purpose Wheeled Vehicles ("HMMWV")
and HMMWV kits in 1996, (ii) the growth of the Company's Security Systems
Integrations Group, (iii) revenue from start-up operations in Russia, Mexico and
Brazil, and (iv) an unanticipated six month delay in 1995 in the delivery of
HMMWV chassis from a supplier that led to the production of significantly fewer
Up-Armored HMMWV's than expected, thereby reducing net sales and net income.
On November 15, 1996, the Company completed an initial public offering of
2,000,000 shares of its Common Stock at $9.00 per share (the "Offering").
Additionally, on December 16, 1996, the Company issued 48,000 shares under a
partial exercise of the underwriters' over-allotment option. The net proceeds
from the Offering were used to finance certain distributions to existing
shareholders, to acquire the Company's leased Mexico City manufacturing
facility, and to pay initial installments for the acquisition of Palmer
Associates. The balance of the proceeds were used to repay a portion of the
indebtedness of the Company.
On October 29, 1996, the Company acquired substantially all the assets of
Palmer Associates of Mexico City, Mexico, for $1.2 million (including $0.2
million for a non-competition agreement), most of which is payable over two
years. Palmer Associates is a provider of security services such as advanced
driver training, background investigations, due diligence reports and forensic
auditing, and reports its revenue through the Company's Security Services Group.
This acquisition provides an entry into the security services industry and
allows the Company's Mexico City based subsidiary to offer an integrated line of
security products.
On February 5, 1997, the Company completed the acquisition of all of the
shares of Next Destination of Salisbury, UK, a distributor of high technology
products for the global positioning satellite and satellite communication
markets. The purchase price consisted of 170,234 shares of Common Stock and
$1.75 million in seller-provided financing in the form of unsecured,
subordinated three-year 6% notes. Next Destination, which has been selling the
portable satellite terminal offered by the Company, will report revenue through
the Company's Security Systems Integration Group.
On February 12, 1997, the Company completed the acquisition of all of the
shares of Labbe, a leading armorer of commercial and private vehicles
headquartered in Lamballe, France. The purchase price consisted of $10.7 million
in cash and 376,597 shares of Common Stock. The acquisition of Labbe will
increase substantially the level of commercial revenue generated by the Security
Hardware Products Group and enhance the Company's competitive position due to an
expanded product line, which includes cash-in-transit vehicles, and penetration
into new markets, such as Europe and Africa.
-18-
<PAGE> 19
On March 24, 1997, the Company completed the acquisition of all of the
shares of ITI, a provider of advanced security training headquartered near
Washington, D.C. The purchase price consisted of $0.5 million in cash, 68,086
shares of Common Stock, and $1.2 million in seller-provided financing in the
form of unsecured, subordinated two-year 10% notes. ITI, which will report
revenue through the Company's Security Services Group, offers many new products,
such as evasive and defensive driver training, terrorist surveillance training,
force protection consulting and advanced weapons training not previously
available from the Company.
IMPACT ON OPERATIONS
The Company's operations have been or will be affected by several factors,
including: (i) revenue recognition, and (ii) provision for income taxes in
connection with the termination of OHE's S Corporation status.
Revenue recognition. The Company's net sales from government contracts and
most commercial contracts are recognized using the percentage-of-completion
method calculated utilizing the cost-to-cost approach. Under this method,
estimated contract revenues are accrued based generally on the percentage that
costs to date bear to total estimated costs. Estimated contract losses are
recognized in full when determined. Accordingly, contract revenues and total
cost estimates are reviewed and revised periodically as the work progresses and
as change orders are approved, and adjustments based upon the percentage of
completion are reflected in contract revenues in the period when such estimates
are revised. To the extent that these adjustments result in an increase, a
reduction or an elimination of previously reported contract revenues, the
Company would recognize a credit or a charge against current earnings, which
could be material. Contract costs include all direct material and labor costs,
along with certain overhead costs allocated to contract production.
Provisions for any estimated total contract losses on uncompleted contracts
are recorded in the period in which it is concluded that such losses will occur.
Changes in estimated total contract costs will result in revisions to contract
revenue. The revisions are recognized when determined.
Revenue related to telecommunications equipment and services is recognized
as equipment is shipped or as services are provided. Revenue and related direct
costs of brokered satellite time are recorded when payments are received from
customers.
Provision for income taxes. From 1988 until October 28, 1996, OHE was
treated as an S Corporation under Subchapter S of the Internal Revenue Code and
comparable provisions of certain state tax laws. As a result, it paid no federal
or state income tax. The Company is a C Corporation and is responsible for
federal and state income taxes.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the items noted as a
percentage of net sales:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Security hardware products:
Military ................. 66.0% 45.6% 50.1%
Commercial ............... 22.1 48.2 48.6
Security systems integration ...... 11.8 6.2 1.3
Security services ................. 0.1 - -
-----------------------------------
Total net sales .......... 100.0% 100.0% 100.0%
Cost of sales ..................... 74.3 76.9 72.3
-----------------------------------
Gross profit ............. 25.7 23.1 27.7
</TABLE>
-19-
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Operating expenses:
Selling and marketing .... 5.8 11.0 8.1
General and administrative 9.6 12.6 13.1
-----------------------------------
Operating income (loss)............ 10.3 (0.5) 6.5
Other expense (income):
Interest expense ......... 1.6 2.6 1.2
Other, net ............... - 0.3 (0.2)
-----------------------------------
Income (loss) before provision for
income taxes..................... 8.7 (3.4) 5.5
Provision for income taxes 0.6 - -
-----------------------------------
Net income (loss).................. 8.0% (3.4)% 5.5%
===================================
</TABLE>
1996 Compared to 1995
Net sales. Net sales increased $50.0 million or 152.2% from $32.8 million
in 1995 to $82.8 million in 1996. Net sales of the Security Hardware Products
Group were $72.9 million for 1996, with military sales contributing $54.6
million and armored commercial vehicle net sales of $18.3 million. The Security
Systems Integration Group had net sales of $9.8 million in 1996 compared to $2.0
million in 1995. Net sales from the Company's satellite communications business
increased from $2.0 million in 1995 to $7.8 million in 1996, a change of 280.1%.
Net sales of the Company's integrated site protection services were $2.1 million
in 1996. The Security Services Group, which commenced offering services in late
1996, had net sales of $0.1 million for the year.
While net sales in 1996 reflect the effect of the request to accelerate
HMMWV and HMMWV kit production, the Company expects that production levels and
military net sales figures will return to a non-accelerated level in 1997.
The Company believes its commercial vehicle armoring and security
integration businesses will generate a greater percentage of the Company's net
sales as a result of recent acquisitions and the growth in the Company's
businesses in foreign markets such as Brazil, Mexico and Russia. Increased net
sales are also expected from the Security Services Group in 1997.
Cost of Sales. Cost of sales in 1996 increased $36.3 million or 143.8% from
$25.2 million in 1995 to $61.5 million. The increase in cost of sales was due to
the increase in production levels. Gross profit as a percentage of net sales was
25.7% for the year ended December 31, 1996 as compared to 23.1% for the year
ended December 31, 1995. Revenue recognized on new military contracts, both U.S.
and foreign, with a higher gross margin percent than previously experienced,
contributed to the increase in gross margin percent. The Company will continue
to pursue opportunities for sales of its military products. No assurance can be
given, however, that any new contract will contribute at the gross margin level
experienced in 1996. In general, the gross margin percent recognized on military
contracts is lower than gross margin percent recognized on commercial contracts.
-20-
<PAGE> 21
Gross margin percent was favorably affected by an increase in net
sales from foreign subsidiaries, both in the Company's Security Hardware
Products Group and Security Systems Integration Group, where the margin
percentages are higher than have been experienced in other markets due to lower
direct costs and less developed competition. The Company expects the effect of
net sales of foreign subsidiaries to continue to have a positive effect on the
Company's consolidated gross margin percent until these markets become more
competitive.
Operating Expenses. Selling and marketing expenses for 1996 increased $1.2
million or 32.6% from $3.6 million in 1995 to $4.8 million. This increase was
primarily attributable to increases in personnel and advertising to implement
the Company's business strategy.
General and administrative expenses for 1996 increased $3.8 million or
92.1% from $4.1 million in 1995 to $7.9 million. This increase in administrative
expenses was due to the addition of professional employees and associated
infrastructure to support the increased level of business activity.
Both selling and general and administrative expenses will continue to
increase in total dollars as the Company acquires new businesses, expands into
new foreign markets and administers a more complex corporate environment. The
Company, however, expects operating expenses as a percent of net sales to
decrease in 1997 as a result of expected higher net sales.
Interest expense. Interest expense for 1996 was $1.3 million, an increase
of $0.5 million or 54.4%, compared to $0.8 million for 1995. This was due to
increased borrowings necessary to finance increased production levels and new
operations. As a result of recent acquisitions and the Company's continued
efforts to expand into new foreign markets, interest expense will be
significantly higher in 1997 than it has been in previous years.
Provision for income taxes. The provision for income taxes was $0.5 million
in 1996. There was no provision for income taxes recorded in 1995 due to OHE's
S Corporation status.
1995 Compared to 1994
Net sales. Net sales for 1995 were $32.8 million, a decrease of $1.1
million or 3.2%, compared to $33.9 million for 1994. The decrease in net sales
was primarily due to the late delivery of HMMWV chassis by a supplier which
resulted in a six-month delay in the armoring of HMMWV's for the U.S. Department
of Defense ("DoD"). Such delay was principally responsible for a decrease in net
sales of military armoring products from $17.0 million in 1994 to $15.0 million
in 1995, a decrease of $2.0 million or 12.0%. Net sales of commercial armoring
products decreased $0.7 million or 4.0% from $16.5 million in 1994 to $15.8
million for 1995. Net sales of the satellite communications business increased
$1.6 million or 358.3% from $0.4 million in 1994 to $2.0 million in 1995.
Cost of sales. Cost of sales was $25.2 million for 1995, an increase of
$0.7 million or 3.0%, compared to $24.5 million for 1994. The increase in cost
of sales was primarily due to the absorption of manufacturing and material
overhead associated with the six-month delay in the armoring of the HMMWV's for
the DoD. Since production was expected to return to anticipated levels once the
delay period ended, the Company retained its trained manufacturing personnel and
did not temporarily reduce its head count. As a result of this delay and the
increased percentage of sales associated with military sales, which have a lower
gross profit margin than commercial sales, cost of sales as a percentage of net
sales increased to 76.9% for 1995 from 72.3% for 1994. In addition, engineering
expenses for OHE increased approximately $0.5 million to $1.1 million as a
result of the additional engineering requirements for the HMMWV contract.
Selling and marketing. Selling and marketing expenses were $3.6 million for
1995, an increase of $0.9 million or 32.6%, compared to $2.7 million for 1994.
This increase was primarily attributable to increased sales personnel and travel
expenses that were incurred to support OSN's growth.
-21-
<PAGE> 22
General and administrative. General and administrative expenses were $4.1
million for 1995, a decrease of $0.3 million or 7.0%, compared to $4.4 million
for 1994. Increases in personnel costs were offset by lower travel and insurance
costs.
Interest expense. Interest expense was $0.8 million for 1995, an increase
of $0.4 million or 105.4%, compared to $0.4 million for 1994. This increase in
interest expense was due to additional borrowings to finance working capital
growth and the HMMWV contract.
LIQUIDITY AND CAPITAL RESOURCES
General. The Company historically has met its operating cash needs by
utilizing borrowings under its credit arrangements to supplement cash provided
by cumulative net income and depreciation and amortization. In 1996, cash flow
was supplemented by proceeds from the Company's initial public offering.
Credit Facility. On February 11, 1997, the Company entered into a new
credit agreement with The Fifth Third Bank of Cincinnati, Ohio, and LaSalle
National Bank of Chicago, Illinois (the "Banks"). The facility provides for (i)
a one-year revolving line of credit of $12,000,000, (ii) a five-year term loan
in the amount of $16,000,000, the principal of which is payable to the Banks in
twenty quarterly installments beginning July 1, 1997, and (iii) a $5,500,000
letter of credit facility. Both loans bear interest at the prime rate plus a
percentage of up to 1.25% over the prime rate, or, at the Company's option, the
LIBOR Rate plus a percentage ranging from 2.25% to 3.5%. The applicable
percentage for any period is based on the Company's cash flow coverage and
leverage ratio as defined in the agreement. The agreement provides the Banks
with a security interest in the Company's assets. The agreement also imposes,
among other covenants, a prohibition on cash dividends and distributions,
limitations on foreign investment and capital expenditures, requirements on the
Company's financial performance and limits on additional funded debt. Bank
approval of all acquisitions is also required.
On March 12, 1997, there was $16.0 million outstanding on the term loan,
and $9.3 million outstanding on the revolving credit agreement associated with
the new credit facility. The Company believes that the borrowings from the new
credit facility along with cash provided by net income, depreciation and
amortization will be sufficient to fund the Company's cash requirements through
1997, without taking into consideration additional acquisitions. Additional
business growth, consummation of additional acquisitions and expansion of
operations into additional new markets will require supplementary capital. The
Company will continue to explore market conditions and expects new sources of
capital to be available as needed.
The new credit facility replaced a credit facility with The Fifth Third
Bank which matured in early 1997. Outstanding borrowings under this credit
arrangement were $9.9 million as of December 31, 1996, with interest at the
prime rate. The Company continues to have $0.5 million credit arrangement with a
Brazilian bank to support the Company's Brazilian subsidiary.
Cash flows from operating activities. Net cash used in operating activities
was $0.7 million and $4.0 million for the years ended December 31, 1996 and
1995, respectively. During 1996, the Company experienced a significant aggregate
net increase in receivables, costs in excess of billings, inventories, and other
assets as a result of increased production related to the Up-Armored HMMWV
program and the acquisition of the assets of Palmer Associates. The Company
expects the levels of accounts receivable, costs in excess of billings and
inventory to increase in 1997 due to expanded commercial business activity.
Capital expenditures. Historically, the Company has limited its capital
expenditure requirements by leasing certain facilities and equipment from an
affiliated entity. Capital expenditures totaled $2.5 million for the twelve
months ended December 31, 1996, and $0.6 million for 1995. Capital expenditures
in 1996 include the $1.2 million purchase of the Company's manufacturing
facility in Mexico City. The new credit facility contains a requirement that the
Company not exceed $1.5 million in capital expenditures in 1997.
-22-
<PAGE> 23
Cash flows from financing activities. Net cash provided by financing
activities was $5.0 million and $4.6 million for the years ended December 31,
1996 and 1995, respectively. The increase in 1996 was due primarily to the net
proceeds from the Company's initial public offering of Common Stock,
approximately $14.9 million, offset by the AAA Note distribution.
S Corporation distributions. OHE, upon its formation in 1988, elected S
Corporation status and historically made distributions to its shareholders for
the purpose of paying taxes on income which was taxable to the shareholders. On
October 28, 1996, OHE terminated its S Corporation status and distributed to its
shareholders a dividend of $9.0 million in AAA Notes, which represented the
balance of accumulated earnings of OHE on which taxes either have been paid or
are payable by the existing shareholders. These AAA Notes were paid with a
portion of the proceeds of the Company's initial public offering of Common
Stock.
Foreign operations. The Company attempts to mitigate the risks of doing
business in developing countries by separately incorporating its operations in
such countries; having local partners in certain countries; entering into
contracts providing for payment in U.S. dollars instead of the local currency
where possible; maintaining reserves for credit losses; and maintaining
insurance on equipment to protect against losses related to political risks and
terrorism.
Quarterly fluctuations. The Company's operations are not seasonal, but may
fluctuate on a quarterly basis as a result of the timing of contract costs. The
incurrence of contract costs and related production scheduling must be
responsive to specific customer delivery requirements which may involve the
acceleration of deliveries under a contract at a customer's request, such as
occurred with the HMMWV contract in 1996. The Company's liquidity may be
affected by the payment terms of its DoD and certain foreign government
contracts.
Inflation. Given the Company's product line and customer list, inflation has not
been a significant factor to its cost or operations. The Company generally has
been able to raise prices in the past to compensate for cost increases.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
-23-
<PAGE> 24
Report of Independent Public Accountants
----------------------------------------
To The O'Gara Company:
We have audited the accompanying consolidated balance sheets of THE
O'GARA COMPANY (Note 1) and subsidiaries as of December 31, 1996 and 1995 and
the related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The O'Gara
Company and subsidiaries as of December 31, 1996 and 1995 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
March 19, 1997
-24-
<PAGE> 25
THE O'GARA COMPANY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
ASSETS (NOTE 7)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,454,475 $ 323,851
Trade accounts receivable, net of allowance for doubtful accounts of
approximately $211,000 and $109,000 in 1996 and 1995, respectively
(Note 2) 7,736,286 7,094,894
Other receivables (Note 6)-
Advances to shareholders 248,829 204,698
Affiliates 249,981 128,222
Advances to vendors (Notes 2 and 12) 664,539 2,496,689
Notes receivable - shareholder (Note 6) - 233,253
Costs and estimated earnings in excess of billings on uncompleted
contracts (Note 2) 15,326,548 7,700,075
Inventories (Note 2) 8,733,640 4,927,499
Prepaid expenses 677,603 149,250
---------- ----------
Total current assets 35,091,901 23,258,431
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, at cost (Notes 2 and 8):
Land 901,079 372,039
Buildings and improvements 3,772,295 2,762,905
Furniture and fixtures 1,743,876 1,286,421
Machinery and equipment 2,797,433 2,260,005
---------- ----------
9,214,683 6,681,370
Less- accumulated depreciation (4,289,861) (3,510,702)
---------- ----------
4,924,822 3,170,668
---------- ----------
OTHER ASSETS (Note 2) 3,921,664 1,387,887
---------- ----------
$ 43,938,387 $ 27,816,986
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
-25-
<PAGE> 26
THE O'GARA COMPANY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Revolving lines of credit (Note 7) $ 9,935,947 $ 10,188,765
Current portion of long-term debt (Note 8) 1,836,420 1,649,018
Notes payable - shareholders (Note 6) - 308,630
Accounts payable-
Trade 11,087,422 10,075,075
Affiliates (Note 6) 532,998 499,730
Billings in excess of costs and estimated earnings on uncompleted
contracts (Note 2) 1,330,402 1,706,042
Accrued liabilities 3,971,887 1,677,307
Customer deposits 2,118,609 1,248,197
---------- ----------
Total current liabilities 30,813,685 27,352,764
---------- ----------
LONG-TERM DEBT, net of current portion (Note 8) 469,092 225,429
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 9 and 12)
SHAREHOLDERS' EQUITY (Note 1):
Preferred stock, $.01 par value, 100,000 shares authorized; none issued - -
Common stock, $.01 par value, 25,000,000 shares authorized, 6,659,846 and
4,490,383 shares issued and outstanding in 1996 and 1995, respectively 66,598 15,235
Additional paid-in-capital 17,591,656 2,730,977
Retained deficit (4,957,872) (2,508,834)
Cumulative foreign currency translation
adjustment (Note 2) (44,772) 1,415
---------- ----------
Total shareholders' equity 12,655,610 238,793
---------- ----------
$ 43,938,387 $ 27,816,986
============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
-26-
<PAGE> 27
THE O'GARA COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
NET SALES $ 82,777,691 $ 32,816,996 $ 33,912,279
COST OF SALES 61,522,946 25,237,159 24,505,236
------------ ------------ -----------
Gross profit 21,254,745 7,579,837 9,407,043
OPERATING EXPENSES:
Selling and marketing 4,810,232 3,628,312 2,735,940
General and administrative 7,930,293 4,129,017 4,440,552
------------ ------------ -----------
Operating income (loss) 8,514,220 (177,492) 2,230,551
OTHER INCOME (EXPENSES):
Interest expense (1,299,930) (841,972) (410,325)
Other, net (37,687) (102,588) 60,250
------------ ------------ ------------
Income (loss) before provision
for income taxes 7,176,603 (1,122,052) 1,880,476
Provision for income taxes (Note 4) 517,641 - -
------------ ------------ ------------
Net income (loss) $ 6,658,962 $ (1,122,052) $ 1,880,476
============ ============ ============
UNAUDITED PRO FORMA INFORMATION (Note 18):
Gross profit $ 21,254,745
Selling and marketing 4,810,232
General and administrative 8,030,918
------------
Operating income 8,413,595
Interest expense (960,866)
Other, net (37,687)
------------
Income before provision for income taxes 7,415,043
Provision for income taxes 2,966,049
------------
Net income $ 4,448,994
============
Earnings per share $ 0.69
============
Weighted average shares outstanding 6,449,050
============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
-27-
<PAGE> 28
THE O'GARA COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
CURRENCY
ADDITIONAL TRANSLATION
COMMON PAID-IN RETAINED ADJUSTMENT
SHARES STOCK CAPITAL DEFICIT (NOTE 2) TOTAL
------ ----- ------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993 2,681,012 $ 9,826 $ 1,121,996 $(2,155,308) $ - $ (1,023,486)
Net income - - - 1,880,476 - 1,880,476
Aggregate translation adjustment - - - - 493 493
Issuance of OHE stock (Note 15) 885,996 3,246 1,356,144 - - 1,359,390
Incorporation of Limited 1,000 1,000 4,000 - - 5,000
Distributions to shareholders - - - (949,150) - (949,150)
--------- ------- ----------- ----------- ----------- ------------
BALANCE, December 31, 1994 3,568,008 14,072 2,482,140 (1,223,982) 493 1,272,723
Net loss - - - (1,122,052) - (1,122,052)
Aggregate translation adjustment - - - - 922 922
Incorporation of OSN 922,375 1,163 248,837 - - 250,000
Distributions to shareholders - - - (162,800) - (162,800)
--------- ------- ----------- ----------- ----------- ------------
BALANCE, December 31, 1995 4,490,383 15,235 2,730,977 (2,508,834) 1,415 238,793
Net income - - - 6,658,962 - 6,658,962
Aggregate translation adjustment - - - - (46,187) (46,187)
Distributions to shareholders,
prior to the offering - - - (230,000) - (230,000)
Sale of common stock between shareholders
prior to the offering - - 39,780 - - 39,780
Exercise of stock options, prior to the
offering (Notes 11 and 17) 121,463 4 441 - - 445
Initial public offering of common stock,
net of issuance costs of approximately
$3,550,000 (Note 17) 2,048,000 51,359 14,820,458 - - 14,871,817
Distribution of previously taxed S Corp
earnings to S Corp shareholders (Note 17) - - - (9,000,000) - (9,000,000)
Forgiveness of affiliate obligation (Note 6) - - - 122,000 - 122,000
--------- ------- ----------- ----------- ----------- ------------
BALANCE, December 31, 1996 6,659,846 $66,598 $17,591,656 $(4,957,872) $ (44,772) $ 12,655,610
========= ======= =========== =========== =========== ============
The accompanying notes to consolidated financial statements are an integral part of these consolidated statements.
</TABLE>
-28-
<PAGE> 29
THE O'GARA COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ 6,658,962 $ (1,122,052) $ 1,880,476
Adjustments to reconcile net income (loss) to net cash used in
operating activities-
Depreciation and amortization 851,332 476,868 469,889
Shareholder stock compensation 39,780 - -
Decrease (increase) in receivables (807,282) 502,872 (4,887,854)
Decrease (increase) in advances to vendors 870,390 (3,360,136) -
Increase in costs and estimated earnings in
excess of billings on uncompleted contracts (7,626,473) (3,957,287) (1,608,458)
Increase in inventories (3,806,141) (1,590,370) (444,879)
Decrease (increase) in prepaid expenses (528,353) (50,320) 47,839
Increase in other assets (322,342) (33,950) (146,882)
Increase in accounts payable 1,167,615 6,070,946 106,655
Increase (decrease) in billings in excess of costs and
estimated earnings on uncompleted contracts (375,640) (43,150) 427,650
Increase (decrease) in accrued liabilities 2,294,580 (502,422) 1,021,620
Increase (decrease) in customer deposits 870,412 (389,425) 871,021
------- -------- -------
Net cash used in operating activities (713,160) (3,998,426) (2,262,923)
-------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net (2,534,617) (638,009) (683,319)
Decrease (increase) in notes receivable - shareholder 233,253 (233,253) -
Acquisition costs (Note 3) (305,128) - -
Purchase of Palmer net assets (Note 3) (509,582) - -
---------- --------- ---------
Net cash used in investing activities (3,116,074) (871,262) (683,319)
---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving lines of credit (252,818) 4,551,025 4,676,630
Proceeds from long-term debt 50,899 41,608 30,958
Payments of long-term debt (125,668) (120,869) (109,351)
Repayment of notes payable - shareholder (308,630) - (190,000)
Net proceeds from issuance of common stock (Note 17) 14,871,817 250,000 104,390
Foreign currency translation (46,187) 922 493
Distributions to shareholders (9,230,000) (162,800) (949,150)
Proceeds from exercise of stock options 445 - -
--------- --------- ---------
Net cash provided by financing activities 4,959,858 4,559,886 3,563,970
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH 1,130,624 (309,802) 617,728
CASH, beginning of year 323,851 633,653 15,925
------- ------- ------
CASH, end of year $ 1,454,475 $ 323,851 $ 633,653
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 1,321,000 $ 796,000 $ 361,000
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Conversion of note payable to the majority shareholder to
common stock (Note 15) $ - $ - $ 1,260,000
============== ============ =============
Note payable issued for purchase of Palmer net assets (Note 3) $ 505,834 $ - $ -
============== ============ =============
Affiliate obligation forgiven in connection with the
reorganization $ 122,000 $ - $ -
============== ============ =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
-29-
<PAGE> 30
THE O'GARA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(1) Basis of Presentation-
----------------------
The O'Gara Company, an Ohio corporation, together with its subsidiaries
(collectively the "Company"), provides fully integrated ballistic and
blast protected vehicle armoring systems; planning, design and hardware
and software integration services which are customized to meet specific
satellite communications or site protection needs of customers; and
customized turn-key site security systems to international customers.
The Company was formed in 1996 for the purposes of becoming a holding
company, effecting a reorganization and a combination of certain
affiliated entities and carrying out an initial public offering of common
stock which was completed on November 15, 1996. Pursuant to the terms of
the offering, the Company issued 2,048,000 shares of common stock at
$9.00 per share (Note 17).
The accompanying consolidated financial statements of the Company
consist of the following subsidiaries:
O'Gara-Hess & Eisenhardt Armoring Company (OHE) - OHE is a
Delaware corporation whose principal business is the armoring of
commercial and military vehicles for the U.S. Government, foreign
governments, large foreign and domestic corporations and
individuals.
O'Gara Satellite Networks, Limited (Satellite Ltd.), and its
sister corporation, O'Gara Satellite Networks, Inc.
(Satellite Inc.) (collectively "OSN") - OSN is engaged in the
business of providing satellite communication equipment and
services primarily to European and Middle Eastern customers.
O'Gara-Hess & Eisenhardt Armoring Company Limited (Limited) -
Limited is an Irish corporation that historically was engaged in
the armoring of commercial vehicles primarily for Middle Eastern
governments, large foreign corporations and individuals. Pursuant
to the corporate reorganization on October 28, 1996, OHE succeeded
to substantially all of the businesses formerly carried out by
Limited either directly or through subsidiary corporations.
-30-
<PAGE> 31
O'Gara-Hess & Eisenhardt de Mexico S.A. de C.V. (OHEM) - OHEM, a
100% owned Mexican subsidiary of OHE, was formed in 1995 for the
purpose of producing light armored commercial vehicles primarily
for customers in Mexico.
O'Gara-Hess & Eisenhardt do Brasil (OHEB) - OHEB, a 75% owned
Brazilian subsidiary of OHE, was formed in 1996 for the purpose of
producing armored commercial vehicles primarily for customers in
South America (Note 17).
O'Gara Security International, Inc. (OSI) - OSI, a Delaware
corporation and a 100% owned subsidiary of OHE, was formed in 1996
for the purpose of providing security products and services in
the former Soviet Union.
O'Gara-Hess & Eisenhardt, S.r.l. (Italy) - Italy, a 90% owned
Italian subsidiary of OHE was formed in 1992 for the purpose of
facilitating contract manufacturing of armored commercial vehicles
by an unrelated manufacturer.
In connection with the Company's public equity offering, the above
entities and respective shareholders entered into a reorganization plan
on October 28, 1996 which resulted in the following:
(1) The shareholders of OHE transferred their ownership
interests in OHE to the Company in exchange for 3,689,476
shares of common stock of the Company. The ratio of exchange
was 272.95 shares of Company common stock for each share of
OHE stock.
(2) The Company acquired all of the equity ownership of
Satellite Limited from the shareholders of Satellite
Limited in exchange for 922,370 shares of common stock of
the Company. The ratio of exchange was 793.1 shares of
Company common stock for each share of OSN stock.
(3) OHE acquired substantially all of the assets and
assumed certain selected liabilities of Limited for
consideration (including OHE's interest in O'Gara Overseas
Services, S.A.), which the Board of Directors of the Company
believed represented the fair value of such assets and
liabilities.
Prior to the initial public offering, all entities that now comprise the
Company were owned or controlled by substantially the same shareholders,
with one such shareholder owning or controlling approximately 86% to 88%
of each entity. Accordingly, the accompanying consolidated financial
statements present, as a combination of entities under common control as
if using the pooling method of accounting, the financial position and
related results of operations of the Company on a consolidated basis for
all periods presented. All significant balances and transactions between
the consolidated entities have been eliminated in these consolidated
statements.
-31-
<PAGE> 32
(2) Summary of Significant Accounting Policies-
--------------------------------------------
(a) REVENUE RECOGNITION--Revenue related to government contracts and
most commercial contracts results principally from long-term fixed
price contracts and is recognized on the percentage-of-completion
method calculated utilizing the cost-to-cost approach. The percent
deemed to be complete is calculated by comparing the costs
incurred to date to estimated total costs for each contract. This
method is used because management considers costs incurred to be
the best available measure of progress on these contracts.
However, adjustments to this measurement are made when management
believes that costs incurred materially exceed effort expended.
Contract costs include all direct material and labor costs, along
with certain direct overhead costs related to contract production.
Provisions for any estimated total contract losses on uncompleted
contracts are recorded in the period in which it becomes known
that such losses will occur. Changes in estimated total contract
costs will result in revisions to contract revenue. These
revisions are recognized when determined.
Revenue related to telecommunications equipment and services is
recognized as equipment is shipped or as services are provided.
Revenue and related direct costs of brokered satellite time are
recorded when payments are received from customers.
(b) TRADE ACCOUNTS RECEIVABLE AND COSTS AND ESTIMATED EARNINGS IN
EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS--The following
summarizes the components of trade accounts receivable and costs
and estimated earnings in excess of billings on uncompleted
contracts:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1996 1995
---- ----
<S> <C> <C>
United States Military:
Billed receivables $ 1,461,491 $2,322,553
Costs and estimated earnings in excess of billings on
uncompleted contracts 10,189,891 6,201,466
---------- ---------
Total United States Military $11,651,382 $8,524,019
=========== ==========
</TABLE>
-32-
<PAGE> 33
<TABLE>
<CAPTION>
December 31,
-------------
1996 1995
---- ----
<S> <C> <C>
Other contracts:
Billed receivables $ 6,274,795 $4,772,341
Costs and estimated earnings in excess of billings on
uncompleted contracts 5,136,657 1,498,609
--------- ---------
Total other contracts $11,411,452 $6,270,950
=========== ==========
Total trade accounts receivable $ 7,736,286 $7,094,894
=========== ==========
Total costs and estimated earnings in excess of billings on
uncompleted contracts $ 15,326,548 $7,700,075
============ ==========
</TABLE>
Costs and estimated earnings in excess of billings on uncompleted
contracts are net of $66,180,434 and $20,385,270 of progress
billings to the United States Military at December 31, 1996 and
1995, respectively.
Costs and estimated earnings in excess of billings on uncompleted
contracts represent revenue recognized on long-term contracts in
excess of billings because amounts were not billable at the
balance sheet date. It is anticipated such unbilled amounts
attributable to the United States Military will generally be
billed over the next 180 days as the contract is substantially
completed. Amounts receivable on other contracts are generally
billed as shipments are made. It is estimated that substantially
all of such amounts will be billed within one year, although
contract extensions may delay certain collections beyond one year.
(c) ADVANCES TO VENDORS--OHE and OSN periodically make advances to
vendors. Such advances are non-interest bearing and are generally
applied to vendor billings for shipments of inventory.
(d) INVENTORIES--Inventories are stated at the lower of cost or market
using the first-in, first-out (FIFO) method and include the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1996 1995
---- ----
<S> <C> <C>
Raw materials $4,782,321 $2,306,176
Vehicle costs and work-in-process 3,951,319 2,621,323
--------- ---------
$8,733,640 $4,927,499
========== ==========
</TABLE>
-33-
<PAGE> 34
(e) PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are
stated at cost. Depreciation is computed on the straight-line
method over the estimated useful lives of the related assets as
follows:
Buildings and improvements 5-40 years
Furniture and fixtures 5- 7 years
Machinery and equipment 5- 7 years
(f) OTHER ASSETS--Other assets are stated at cost less accumulated
amortization and are being amortized on a straight line basis over
their estimated useful lives, as applicable. Other assets consist
of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
USEFUL LIFE --------------------
DESCRIPTION (YEARS) 1996 1995
------------------------------------------------- ------- ---- ----
<S> <C> <C> <C>
Advance to vendor (Notes 2(c) and 12(b)) - $1,825,207 $ 863,447
Goodwill, intangibles and acquisition costs (Note 3) 1-25 1,420,543 50,000
Non-refundable deposit on an equipment lease with a
related party (Notes 6(f) and 9) 10 503,858 503,858
Non-compete agreement with a former OHEM shareholder 5 115,000 -
Loan origination costs 30 152,940 152,940
Advance to minority shareholder of OHEB - 60,000 -
Investment in OGM Communications, Ltd. (OGM)
(Note 2(k)) - 69,266 25,215
Deferred bid costs and other - 76,753 23,461
------ ------
4,223,567 1,618,921
Less-accumulated amortization (301,903) (231,034)
-------- --------
$3,921,664 $1,387,887
========== ==========
</TABLE>
Costs applicable to bids in process are deferred when management
believes it is probable that future contracts will be obtained.
These costs are transferred to contract costs when contracts are
awarded or are expensed when the contract award is no longer
considered probable.
(g) FOREIGN CURRENCY TRANSLATION--Assets and liabilities of foreign
operations are translated using year-end exchange rates and
revenues and expenses are translated using exchange rates
prevailing during the year, with gains or losses resulting from
translation included in a separate component of shareholders'
equity. Gains and losses resulting from transactions in foreign
currencies were immaterial.
(h) USE OF ESTIMATES--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and
-34-
<PAGE> 35
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(i) RESEARCH AND DEVELOPMENT--Research and development costs are
expensed as incurred. The Company incurred approximately $130,000,
$91,000 and $69,000 for the years ended December 31, 1996, 1995
and 1994, respectively, for research and development. These costs
are included in general and administrative expenses in the
accompanying consolidated statements of operations.
(j) ADVERTISING--The Company expenses the cost of advertising as
incurred. Advertising expenses for the years ended December 31,
1996, 1995 and 1994 were $638,000, $280,000 and $185,000,
respectively.
(k) INVESTMENTS--In May 1995, OSN entered into a joint venture, OGM,
with Morsviazsputnik (MVS), the Russian signatory to Inmarsat and
a marketer of Inmarsat mobile services. OSN owns a 49% interest in
OGM. The investment in OGM was recorded at the cost of the initial
capital contribution of $50,000 in May 1995 and is accounted for
on the equity method. The Company's proportionate share of OGM's
loss was $2,052 and $24,785 for the years ended December 31, 1996
and 1995, respectively.
(l) SFAS 121 "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF"--In March 1996, the
Financial Accounting Standards Board issued Statement No. 121
(SFAS No. 121), "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," which
requires impairment losses to be recorded on long-lived assets
used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. This statement
also addresses the accounting for long-lived assets that are
expected to be disposed of in the future. The Company adopted SFAS
No. 121 in the first quarter of fiscal 1996 with no material
impact.
(m) SFAS 123 "ACCOUNTING FOR STOCK-BASED COMPENSATION"--The Company
has elected to account for the cost of its stock options utilizing
the intrinsic value method prescribed in Accounting Principles
Board Opinion No. 25 (APB 25) as allowed by Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (SFAS 123). Accordingly, no compensation cost has
been recognized for stock options as all stock options were
granted at fair market value, as defined by the plan, at the
measurement date. The pro forma disclosures required by SFAS 123
are presented in Note 16.
-35-
<PAGE> 36
(n) RECLASSIFICATIONS--Certain reclassifications have been reflected
in 1995 and 1994 to conform with the current period presentation.
(o) PREFERRED STOCK--In August 1996, the Company authorized the
issuance of up to 100,000 preferred shares, $.01 par value.
(3) Acquisitions-
-------------
(a) PALMER ACQUISITION--In October 1996, the Company completed the
purchase of substantially all of the assets and certain
liabilities of Palmer Associates, S.C. ("Palmer"), a security
services provider, for approximately $1,000,000, which resulted in
goodwill and intangible assets equal to the purchase price. The
purchase was payable $500,000 at the closing of the Company's
completion of the common stock offering (Note 17) and $250,000
each in November 1997 and 1998. The former owner will also be
subject to a four year non-competition agreement, payable in
annual installments of $50,000, and a two year employment
agreement.
(b) NEXT DESTINATION LIMITED ACQUISITION--On February 5, 1997, the
Company completed its acquisition of all of the shares of Next
Destination Limited (Next). Next, headquartered in Salisbury,
United Kingdom (UK), is a distributor of high technology
communication equipment for the consumer electronic, marine,
aviation, professional and leisure markets in both the UK and
Europe. Pursuant to the agreement, the Company acquired Next for
$3.5 million, consisting of $1.75 million in shares of the
Company's common stock (170,234 shares) and $1.75 million in
seller-provided financing in the form of three-year 6% notes. The
former managing director and founder of Next will continue to
manage the business and is subject to a three year non-competition
agreement.
(c) LABBE, S.A. ACQUISITION--On February 12, 1997, the Company
completed its acquisition of all of the shares of Labbe, S.A.
(Labbe) for $14,230,000. Labbe, headquartered in Lamballe, France,
provides vehicle armoring systems for commercial customers located
mainly in Western Europe. Pursuant to an agreement signed January
21, 1997, the Company acquired all of the shares of Labbe for
$10.7 million in cash, financed through funds advanced under the
term loan portion of the new credit agreement (Note 7) and 376,597
shares of the Company's common stock. The former shareholders of
Labbe, who were employed by Labbe prior to the acquisition, will
continue in their formerly-held capacities. The former
shareholders will also be subject to certain non-competition
agreements upon their leaving the employment of the Company. The
Company has capitalized certain transaction costs related to this
acquisition as of December 31, 1996, which amounted to
approximately $305,000 (Note 2(f)).
-36-
<PAGE> 37
(4) Income Taxes-
-------------
Prior to October 28, 1996, OHE was an S Corporation. Accordingly, OHE
generally was not responsible for payment of income taxes. Rather, the
respective shareholders were taxed on OHE's taxable income at the
respective individual federal and state income tax rates. Therefore, no
income taxes have been provided in the accompanying consolidated
financial statements for the period prior to October 28, 1996.
Effective with the reorganization on October 28, 1996, the Company is
subject to federal and state income taxes as well as certain foreign
income taxes. The Company accounts for income taxes under the liability
method pursuant to Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". Under the liability method, deferred tax
liabilities and assets are determined based on the differences between
the financial reporting and tax bases of assets and liabilities using
enacted tax rates.
The Company's provision for income taxes for the period October 28, 1996
through December 31, 1996 is summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Currently payable:
Federal $371,641
State 63,000
Foreign 83,000
-------
517,641
-------
Deferred -
-------
$517,641
========
</TABLE>
A reconciliation between the statutory federal income tax rate and the
effective tax rate is summarized as follows:
<TABLE>
<CAPTION>
1996
--------------------------
AMOUNT RATE
------ ----
<S> <C> <C>
Provision for income taxes at the federal statutory
rate $ 2,440,046 34.0%
State and local income taxes, net of federal benefit 41,303 0.6
Impact of S Corp income, prior to reorganization (2,087,529) (29.1)
Impact of foreign income, prior to reorganization (199,095) (2.8)
Change in valuation allowance 176,080 2.5
Foreign losses providing no current benefit 151,604 2.1
Other (4,768) (0.1)
------ ----
Provision for income taxes $ 517,641 7.2%
=========== ===
</TABLE>
-37-
<PAGE> 38
<TABLE>
<CAPTION>
The components of the Company's consolidated deferred income tax asset as
of December 31 are summarized below:
1996
----
<S> <C>
Deferred tax assets:
Inventory reserve $ 148,000
Vacation and other benefits 220,000
Warranty reserve 130,000
Allowance for doubtful accounts 60,000
Other accruals 206,000
Foreign loss carryforwards 152,000
Other 116,000
Valuation allowance (1,032,000)
----------
$ -
</TABLE> ==========
The valuation allowance is required due to the recently completed
reorganization and the uncertainty of realizing the net future tax
benefit through future operations. A valuation allowance has been
recorded in an amount equal to the deferred tax asset associated with the
differences between the Company's basis for financial reporting and tax
purposes. Adjustments to the valuation allowance, if any, will be
recorded in the periods in which it is determined the asset is
realizable.
(5) Affiliated Entities-
--------------------
Affiliated entities are not included in the accompanying consolidated
financial statements, and include the following:
O'Gara Overseas Services, SA (OOS) - OOS is a Swiss corporation
that, subsequent to the reorganization, is indirectly owned by the
former shareholders of OHE, through Overseas International
(Overseas) and O'Gara Overseas Services Trust (OOS Trust). OOS
previously performed sales functions, primarily in the Middle
East, Africa and Europe.
Excel Armor Products, Inc. (Excel) - Excel is a Delaware S
Corporation, owned substantially by the former shareholders of
OHE, that purchases and distributes dual-hard opaque armor
material and armoring products. Excel had an exclusive purchasing
arrangement with a dual-hard steel producer through December 31,
1996.
Longline Leasing, Inc. (Longline) - Longline is a Delaware S
Corporation, owned substantially by the former shareholders of
OHE. OHE leases certain manufacturing and production equipment
from Longline. Longline and Excel have a 50/50 joint venture in a
corporate aircraft. OHE has a minimum monthly usage agreement with
the joint venture.
-38-
<PAGE> 39
O'Gara Protective Services, Inc. (OPS) - OPS is a Delaware
corporation that provides protective training and services,
primarily to foreign governments. The former shareholders of OHE
own approximately 47% of OPS (see Note 12).
Overseas International (Overseas) - In connection with the
reorganization discussed in Note 1, whereby OHE acquired
substantially all of the assets and assumed certain selected
liabilities of Limited, Limited changed its name to Overseas.
OLG, Limited (OLG) - OLG is an Ohio limited liability company,
owned substantially by the former shareholders of OHE, which was
organized in March 1996. In 1996, OLG acquired a building for
approximately $1.8 million and leased the building to OHE for a
one year period for $468,000.
Excel Metal Products, Inc. (Excel Metal) - Excel Metal is a
wholly-owned corporation of the former majority shareholder of
OHE. Excel Metal provides management consulting services to
Satellite Inc.
Silver Springs Land and Cattle Company (Silver) - Silver is a
wholly-owned corporation of the former majority shareholder of
OHE that provided facilities for certain corporate meetings.
(6) Related Party Transactions-
---------------------------
(a) NOTES RECEIVABLE - SHAREHOLDER--Notes receivable, shareholder,
consisted of two unsecured promissory notes in the principal
amounts of $100,000 and $130,000, respectively. These notes bore
interest at the rate of 8.75% per annum and were repaid upon the
completion of the Company's common stock offering (Note 17).
Accrued interest amounted to $3,253 at December 31, 1995.
(b) ADVANCES TO SHAREHOLDERS--The Company periodically makes advances
to certain employee-shareholders. Such advances are due on demand
and are non-interest bearing. Advances to the Company's majority
shareholder were $120,191 and $189,698 at December 31, 1996 and
1995, respectively. At December 31, 1996 the Company also had an
advance to the minority shareholder of OHEB in the amount of
$128,638.
-39-
<PAGE> 40
(c) NOTES PAYABLE - SHAREHOLDERS--OHE had the following notes payable
to shareholders, which were repaid upon the completion of the
Company's common stock offering (Note 17):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1995
---- ----
<S> <C> <C>
Note payable to former minority shareholder of OHE, interest at
10%, payable on demand, unsecured $ - $ 243,630
Notes payable to former minority shareholders of OHE, interest at
7.5% through December 31, 1995, 10% thereafter, payable on
demand, unsecured - 65,000
----------- ----------
$ - $ 308,630
=========== ==========
</TABLE>
Interest cost associated with the above obligations expensed by
OHE approximated $27,000, $33,000 and $38,000 for the years ended
December 31, 1996, 1995 and 1994, respectively.
(d) SALES - AFFILIATED ENTITIES--In 1995, OHE entered into a contract
with Excel to provide certain manufacturing services. Total
revenue recognized under this contract approximated $97,000 and
$27,000 for the years ended December 31, 1996 and 1995,
respectively.
Beginning in 1995, OSN entered into certain sales contracts with
MVS for the sale of portable satellite terminals. Total revenue
recognized approximated $139,000 and $66,000 for the years ended
December 31, 1996 and 1995, respectively.
(e) PURCHASES - AFFILIATED ENTITIES--Prior to December 31, 1996, OHE
purchased dual-hard steel used in the vehicle armoring process
from Excel. Purchases were approximately $960,000 and $521,000 for
the years ended December 31, 1996 and 1995, respectively.
OSN offers satellite air time to customers through an agreement
with MVS. Total purchases under this agreement were approximately
$216,000 and $36,000 for the years ended December 31, 1996 and
1995, respectively.
(f) BUILDING AND EQUIPMENT LEASES--OHE currently leases a corporate
aircraft from Longline/Excel under a ten year lease agreement
which began in February 1995. The lease stipulates minimum monthly
payments of $35,200, with additional charges accruing for usage in
excess of established base limits. In 1994, OHE leased a corporate
aircraft from Longline under a five year agreement. This original
lease was canceled upon the execution of the lease with
Longline/Excel. The terms of the original lease and the newly
-40-
<PAGE> 41
executed lease required a non-refundable deposit. The original
deposit of approximately $504,000 is being amortized as rental
expense over the existing lease period. Rental expense, including
amortization recognized, approximated $422,000, $414,000 and
$365,000 for the years ended December 31, 1996, 1995 and 1994,
respectively. Additionally, the Company paid Longline/Excel
$327,000 related to usage of the corporate aircraft during the
roadshow for the initial public stock offering and included such
amount in issuance costs (Note 17). Management is of the opinion
that the hourly rate paid by the Company was equivalent to the
rate charged by Longline/Excel to other unrelated companies for
IPO roadshows during 1996 and it was favorably comparable to rates
charged by another unrelated charter services for similar
aircraft.
OHE is also currently leasing equipment from Longline under
various three year lease agreements which began in July 1995.
Rental expense approximated $381,000 and $17,000 for the years
ended December 31, 1996 and 1995, respectively.
OHE leases a manufacturing facility from OLG under a
non-cancelable one year lease agreement which began in March 1996.
The lease stipulates monthly payments of $39,000. Rental expense
recognized approximated $376,000 for the year ended December 31,
1996.
(g) CONSULTING SERVICES--OOS and a minority shareholder of the Company
provided certain sales and marketing services for OHE and OSN. OHE
recognized expense of approximately $363,000, $506,000 and
$490,000 for the years ended December 31, 1996, 1995 and 1994,
respectively. Effective with the reorganization (Note 1), these
services were terminated.
In May 1993, OHE renewed an existing consulting agreement with a
former shareholder whereby Excel assumed a $10,000 monthly payment
which was formerly paid by OHE. In conjunction with this renewal,
OHE provided a payment guarantee to the former shareholder. For
the year ended December 31, 1995, OHE incurred $20,000 in expense
relating to payments made under this guarantee. There were no such
payments during 1996. OHE's payment guarantee expired on December
31, 1996.
In 1996, OSN entered into a management consulting agreement with
Excel Metal which stipulates monthly payments of $6,000. OSN
recognized approximately $60,000 in expense in 1996 under this
agreement. This agreement was terminated upon the completion of
the common stock offering (Note 17).
-41-
<PAGE> 42
In 1995 and 1994, prior to joining the Company, a minority
shareholder of OSN was paid $135,000 and $45,000, respectively, in
conjunction with a consulting agreement. These payments were
recognized in selling and marketing expenses in the accompanying
consolidated statements of operations.
(h) COMMISSIONS--In accordance with the OGM joint venture agreement
with MVS (Note 2), OSN was required to pay a stipulated amount per
minute for prepaid time sold to customers in the form of phone
cards through June 1996. Beginning July 1, 1996, this requirement
was terminated by agreement of OSN and MVS. For the year ended
December 31, 1996, OSN recognized commission expense of
approximately $43,000.
(i) OTHER--During 1996, 1995 and 1994, OHE recognized approximately
$3,000, $11,000 and $55,000, respectively, in expense relating to
payments made to Silver for use of its facilities for corporate
meetings.
(j) SUMMARY OF RELATED PARTY TRANSACTIONS--The following summarizes
transactions with related parties:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Sales
to Excel $ 97,000 $ 27,000 $ -
to MVS 139,000 66,000 -
Purchases
from Excel 960,000 521,000 -
from MVS 216,000 36,000 -
Lease expense
to Longline 381,000 17,000 365,000
to Longline/Excel 422,000 414,000 -
to OLG 376,000 - -
Consulting service expense
provided by OOS 245,000 377,000 361,000
provided by minority shareholder 118,000 129,000 129,000
provided by minority shareholder
of OSN - 135,000 45,000
provided by Excel Metal 60,000 - -
provided by former shareholder - 20,000 -
Facility service fees paid to Silver 3,000 11,000 55,000
Commission expense to OGM 43,000 - -
Charter fee included in costs of the
offering (Note 17) 327,000 - -
</TABLE>
-42-
<PAGE> 43
<TABLE>
<CAPTION>
(k) OTHER RECEIVABLES - AFFILIATES--Other receivables - affiliates
consist of the following:
DECEMBER 31,
-----------------------------
1996 1995
---- ----
<S> <C> <C>
Excel $ 210,659 $ 53,057
OPS 39,322 9,657
OGM - 38,669
Longline - 26,839
------ ------
$ 249,981 $ 128,222
=========== ===========
(l) ACCOUNTS PAYABLE - AFFILIATES--Accounts payable - affiliates
consist of the following:
DECEMBER 31,
----------------------
1996 1995
---- ----
OOS $ 32,921 $348,535
MVS 177,191 29,195
OOS Trust - 122,000
Longline 151,080 -
OGM 22,028 -
Overseas 149,778 -
------- --------
$ 532,998 $499,730
========= ========
</TABLE>
In conjunction with the reorganization discussed in Note 1, the
shareholders of OOS Trust forgave the amount owed by OHE for no
consideration. OOS Trust is controlled by a shareholder of the
Company and accordingly this transaction has been reflected as a
contribution of capital in the accompanying consolidated statement
of shareholders equity.
(7) Revolving Lines of Credit-
--------------------------
OHE had a $12,000,000 revolving line of credit with a bank at December
31, 1996, which was renegotiated subsequent to year-end. Interest on the
first $8,500,000 was at the bank's prime rate, which approximated 8.25%
at December 31, 1996, while interest on the remaining $3,500,000 was at
the bank's prime rate plus 1%. This line of credit was secured by
substantially all of the assets of OHE and, on the $3,500,000 portion of
the revolver, included the personal guarantees of certain former
shareholders of OHE. Borrowings under this line of credit were $9,935,947
and $7,601,686 at December 31, 1996 and 1995, respectively.
On February 11, 1997, the Company entered into a new credit agreement
which provides a revolving line of credit of up to $12,000,000 through
January 1998, subject to a borrowing base calculation, a term loan of
$16,000,000 through January 2002, and a letter of credit facility of up
to $5,500,000. Amounts outstanding under the credit agreement bear
interest at the prime rate plus a percentage of up to 1.25% over the
prime rate, or, at the Company's option, LIBOR plus a percentage ranging
from 2.25% to 3.5%, dependent upon the calculation of certain financial
ratios. Amounts outstanding under the credit agreement secured by
substantially all of the Company's assets. The credit agreement includes
certain financial covenants which among other restrictions, prohibits
dividends, requires the maintenance of certain
-43-
<PAGE> 44
financial ratios, including tangible net worth and cash flow coverage,
and imposes limitations on foreign investment and capital expenditures.
Additionally, the agreement also requires the Company to obtain, by
July 1, 1997, an interest rate protection agreement.
OSN had a bank credit facility consisting of (i) a $1,000,000 six-month
revolving loan, of which $1,000,000 was outstanding at December 31, 1995,
and (ii) an available $3,000,000 six-month letter of credit of which
$1,587,079 was outstanding at December 31, 1995. These balances were
repaid in November, 1996 with proceeds from the offering (Note 17) and
the credit facility was terminated.
In June 1996, OHEB obtained a $500,000 line of credit with interest at
prevailing Brazilian market rates. This line of credit matures on May 31,
1997 and is supported by a standby letter of credit issued by the
Company's primary lender with a similar maturity. As of December 31,
1996, there were no borrowings under this line of credit.
(8) Long-Term Debt-
---------------
<TABLE>
<CAPTION>
The components of long-term debt are as follows at:
DECEMBER 31,
---------------------------
1996 1995
---- ----
<S> <C> <C>
Development Bonds, variable interest rate approximating 85% of the bond
equivalent yield of 13 week U.S. Treasury bills (not to exceed 12%),
which approximated 3.6% at December 31, 1996, payable in scheduled
installments through September 2016, subject to optional tender
by the bondholders, secured by the property, plant and equipment of
OHE, the guaranty of OHE's former majority shareholder and a bank
letter of credit (Note 12) $ 1,525,000 $ 1,606,250
Note payable to former shareholder of Palmer, interest at 7%, payable in
scheduled installments through November 1998 505,834 -
Mortgage note to bank, interest at 8.68%, payable in monthly
installments of $2,349, including interest, through April 2003,
secured by real estate and the guaranty of OHE's former majority
shareholder 195,723 208,274
Note payable to former shareholder of OHEM, interest imputed at 9%, due
October 1, 1997 45,000 -
</TABLE>
-44-
<PAGE> 45
<TABLE>
<CAPTION>
December 31
----------------------
1996 1995
---- ----
<S> <C> <C>
Other notes payable, interest at 6.84% to 15.7%, payable in scheduled
installments through July 2000, secured by equipment 33,955 59,923
----------- ------------
2,305,512 1,874,447
Less- current portion (1,836,420) (1,649,018)
----------- ------------
$ 469,092 $ 225,429
=========== ============
</TABLE>
<TABLE>
<CAPTION>
Scheduled maturities of long-term debt at December 31, 1996 are as follows:
<S> <C>
1997, including $1,525,000 of Development Bonds subject
to optional tender by the bondholders $1,836,420
1998 283,220
1999 23,829
2000 18,621
2001 16,210
Thereafter 127,212
-------
$2,305,512
==========
</TABLE>
(9) Operating Leases-
-----------------
The Company leases certain equipment under agreements with terms from one
to ten years. The following is a schedule, by year, of approximate future
minimum rental or usage payments required under operating leases that
have initial or non-cancelable lease terms in excess of one year as of
December 31, 1996:
<TABLE>
<CAPTION>
AFFILIATED
COMPANIES OTHER TOTAL
--------- ----- -----
<S> <C> <C> <C>
1997 $ 883,573 $ 293,373 $1,176,946
1998 703,265 207,409 910,674
1999 439,600 166,941 606,541
2000 246,400 37,143 283,543
2001 422,400 - 422,400
Thereafter 1,513,600 - 1,513,600
--------- ---------- ----------
$4,208,838 $ 704,866 $4,913,704
========== =========== ==========
</TABLE>
Rental expense charged against current operations amounted to
approximately $1,521,000, $670,000 and $500,000, for the years ended
December 31, 1996, 1995 and 1994, respectively.
-45-
<PAGE> 46
(10) Retirement Plans-
------------------
During 1991, OHE established a non-contributory profit sharing/401(k)
plan covering substantially all employees. Contributions are
discretionary and are determined annually by OHE's Board of Directors.
Plan contribution expense charged against current operations amounted to
approximately $125,000, $25,000 and $75,000 for the years ended December
31, 1996, 1995 and 1994, respectively.
The Company does not maintain any other postretirement or postemployment
benefit plans.
(11) Executive Bonus Plan-
---------------------
During 1993, OHE adopted an executive bonus plan, which covered four
individuals. The plan awarded a bonus based on the attainment of goals
stipulated in the five year business plan, ranging from 50% to 120% of
the executives' base compensation. The bonus amounts were distributed 50%
in cash and 50% in non-qualified stock options to purchase stock of OHE.
Subject to the executives' ability to elect a decrease in the percentage
of cash payments and to increase the percentage of stock options, 50% of
the bonus amount was payable in cash, and the remainder in stock options.
OHE issued 445 options in 1994 based on 1993's operating results and
recorded compensation expense of approximately $207,000 in fiscal 1994.
No options were issued in 1996 or 1995. In August 1996 the 445 options
were exercised for 445 shares of OHE common stock at their $1 per share
stated value (121,463 shares of the Company, giving effect to the
reorganization) and the executive bonus plan was terminated.
(12) Commitments and Contingencies-
------------------------------
(a) LETTERS OF CREDIT--Under the terms of the Economic Development
Revenue Bonds Agreement, OHE is required to maintain a letter of
credit supporting the debt. OHE's lender is committed to providing
this letter of credit through September 2, 1997. As of December
31, 1996, OHE had an outstanding letter of credit in the amount of
$1,681,750.
At December 31, 1996, OHE had standby and purchase letters of
credit, issued by its primary lender, in the aggregate amount of
$3,296,028.
(b) SUPPLY AND PURCHASE AGREEMENTS--In June 1995, OSN entered into an
irrevocable supply agreement with Magellan Systems Corporation
("Magellan") whereby Magellan will purchase 4,000 Compact-M
portable satellite telecommunication units for delivery within two
years of the first shipment, which has already occurred, at a
predetermined price for a total contract value of approximately
-46-
<PAGE> 47
$16,000,000. In the agreement, OSN granted worldwide distribution
to Magellan except for certain limited markets retained by OSN.
In June 1995, in connection with the above-mentioned supply
agreement, OSN entered into a firm purchase agreement with Glocom,
Inc. ("Glocom"). The agreement provides for an irrevocable
purchase order for the purchase of 4,000 units of the Compact-M
for approximately $12,000,000. In accordance with the agreement,
OSN advanced a total of $3,000,000 to Glocom for the funding of
the related production costs. As of December 31, 1996 and 1995,
OSN had advances to the above vendor of $2,320,307 and $1,607,597,
respectively.
As a result of certain market conditions related to the sale of
the Compact M, the Company is in discussions with both Glocom and
Magellan regarding reducing the number of units required under the
respective purchase and supply agreements. These negotiations have
not been concluded. Although the amount the Company will
ultimately realize may differ materially from carrying amounts,
management believes there will be no material impact on the
results of future operations, or the carrying value of inventory
or the advances.
In 1996, OHEB committed to purchase 100 glass kits, valued at
approximately $675,000, for delivery at various dates prior to
June 1997.
(c) EMPLOYMENT AGREEMENTS--In 1996, the Company entered into
employment agreements with key officers and employees with two
year terms.
(d) OPTION TO PURCHASE OHEB MINORITY INTEREST--In August 1996, the
Company entered into an option agreement to acquire the minority
interest in OHEB on or prior to December 31, 1999. Under terms of
the agreement, if the Company exercises its option, it will be
obligated to transfer to the former shareholder, over a period of
three years, common shares of the Company valued at $1,200,000.
The number of shares transferred is dependent on the market value
of the stock at the time of transfer. The exercise price for the
purchase option increases by $100,000 for each year after 1997
through 1999.
In conjunction with this agreement, the Company also entered into
a two year employment agreement with the former shareholder.
(e) LEGAL MATTERS--The Company is party to various legal proceedings
arising from its consolidated operations. On October 9, 1996, the
Company was named in a lawsuit which alleges, among other
allegations, that the Company's expansion into the security
services market constitutes a breach of a non-competition
agreement existing with OPS and the controlling shareholder of
OPS, Mr. Edward F. O'Gara, the brother of Mr. Thomas M. O'Gara,
the Company's Chairman of the Board, and Mr. Wilfred T. O'Gara,
the Company's Chief Executive Officer. The Company denies the
assertions
-47-
<PAGE> 48
made by OPS in this matter. Management of the Company believes
that the outcome of this, as well as other proceedings,
individually and in the aggregate, will have no material adverse
effect on the Company's consolidated financial position, results
of operations or cash flows.
(13) Fair Value of Financial Instruments-
------------------------------------
The fair values of significant current assets, current liabilities and
long-term debt approximate their respective historical carrying amounts.
(14) Customer and Segment Data-
--------------------------
(a) SEGMENT DATA--The Company operates in three business segments, the
security hardware products group (Products Group), the security
systems integration group (Integration Group) and the security
services group (Services Group). The Products Group markets all of
the Company's fully integrated ballistic and blast protected
vehicle armoring systems for military, commercial and governmental
clients worldwide. The Integration Group provides vital
communication systems for its clients by integrating proprietary
hardware and smart card billing software that operate on the
International Maritime Satellite ("Inmarsat") network. The
Services Group provides security-related services including, among
others, business intelligence, advanced driver training and
security background clearances to international customers. The
following summarizes information about the Company's business
segments (in 000's):
<TABLE>
<CAPTION>
PRODUCTS INTEGRATION SERVICES
GROUP GROUP GROUP CONSOLIDATED
----- ----- ----- --------------
1996
----
<S> <C> <C> <C> <C>
Net sales to unaffiliated customers $ 72,900 $ 9,823 $ 55 $82,778
======== ======== ========= =======
Operating income $ 8,004 $ 505 $ 5 $ 8,514
======== ======== ========= =======
Identifiable assets $ 36,149 $ 6,816 $ 55 $43,020
======== ======== =========
Corporate assets 918
-------
Total assets at yearend $43,938
=======
1995
----
Net sales to unaffiliated customers $ 30,773 $ 2,044 $ - $32,817
======== ======== ========= =======
Operating income (loss) $ 411 $ (588) $ - $ (177)
======== ======== ========= =======
Identifiable assets at yearend $ 24,493 $ 3,324 $ - $27,817
======== ======== ========= =======
1994
----
Net sales to unaffiliated customers $ 33,466 $ 446 $ - $33,912
======== ======== ========= =======
Operating income (loss) $ 2,275 $ (44) $ - $ 2,231
======== ======== ========= =======
Identifiable assets at yearend $ 19,108 $ 135 $ - $19,243
======== ======== ========= =======
</TABLE>
-48-
<PAGE> 49
Total net sales by segment includes sales to unaffiliated
customers. Intersegment sales are nominal. Operating income (loss)
is total net sales less operating expenses. Operating income
(loss) does not include the following items: interest expense,
other expenses and income taxes. Depreciation expense for the
Products Group for the years ended December 31, 1996, 1995 and
1994 was $780,463, $411,970 and $360,713 respectively. Capital
expenditures for the Products Group for the years ended December
31, 1996, 1995 and 1994 was $2,543,168, $638,009 and $683,319,
respectively. There were no capital expenditures or depreciation
expense for the Integration Group or the Services Group during
1996, 1995 and 1994. Identifiable assets by segment are those
assets that are used in the Company's operations in each segment.
Corporate assets are principally cash, certain intangible assets
and certain prepaid expenses.
The following summarizes information about the Company's different
geographic areas (in 000's):
<TABLE>
<CAPTION>
UNITED
STATES FOREIGN ELIMINATIONS CONSOLIDATED
------ ------- ------------ ------------
1996
- ----
<S> <C> <C> <C> <C>
Net sales to unaffiliated
customers $ 75,743 $7,035 $ - $ 82,778
Intercompany 2,226 - (2,226) -
-------- ------ -------- --------
Total net sales $ 77,969 $7,035 $ (2,226) $ 82,778
======== ====== ======== ========
Operating income $ 8,141 $ 373 $ - $ 8,514
======== ====== ======== ========
Identifiable assets $ 37,384 $6,291 $ (655) 43,020
======== ====== ========
Corporate assets 918
--------
Total assets at yearend $ 43,938
========
1995
- ----
Net sales to unaffiliated
customers $ 30,080 $2,737 $ - $ 32,817
======== ====== ======== ========
Operating income (loss) $ (336) $ 159 $ - $ (177)
======== ====== ======== ========
Identifiable assets at yearend $ 26,182 $1,635 $ - $ 27,817
======== ====== ======== ========
1994
- ----
Net sales to unaffiliated
customers $ 33,278 $ 634 $ - $ 33,912
======== ====== ======== ========
Operating income $ 2,014 $ 217 $ - $ 2,231
======== ====== ======== ========
Identifiable assets at yearend $ 17,908 $1,335 $ - $ 19,243
======== ====== ======== ========
</TABLE>
The Company accounts for transfers between geographic areas at cost plus a
proportionate share of operating profit.
-49-
<PAGE> 50
The following summarizes the Company's sales in the United States
and foreign locations (in 000's):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Sales to unaffiliated customers:
U.S. Government $ 51,505 $ 11,514 $ 15,332
Other United States 8,994 7,356 2,711
Middle East 7,598 8,582 7,795
Central & South America 5,807 1,050 4,093
Other Foreign 8,874 4,315 3,981
---------- ---------- ----------
$ 82,778 $ 32,817 $ 33,912
========== ========== ==========
</TABLE>
Export sales by the Company's domestic operations were
approximately 21%, 37% and 46% of net sales for the years ended
December 31, 1996, 1995 and 1994, respectively.
The Company is subject to audit and investigation by various
agencies which oversee contract performance in connection with the
Company's contracts with the U.S. Government. Management believes
that potential claims from such audits and investigations will not
have a material adverse effect on the consolidated financial
statements. In addition, contracts with the U.S. Government may
contain cost or performance incentives or both based on stated
targets or other criteria. Cost or performance incentives are
recorded at the time there is sufficient information to relate
actual performance to targets or other criteria.
The Company has foreign operations and assets in Brazil, Mexico,
Russia and Italy. In addition, the Company sells its products and
services in other foreign countries and continues to increase its
level of international activity. Accordingly, the Company is
subject to various risks including, among others, foreign currency
restrictions, exchange rate fluctuations, government instability
and complexities of local laws and regulations.
(b) MAJOR CUSTOMERS--During the years ended December 31, 1996, 1995
and 1994 sales to three customers and their affiliated entities
approximated 68%, 52% and 64%, respectively, of the Company's net
sales. These customers are individually presented as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
U.S. Government 62% 35% 45%
Middle East Foreign Government A 6% 14% 9%
Middle East Foreign Government B - 3% 10%
-- -- --
68% 52% 64%
== == ==
</TABLE>
-50-
<PAGE> 51
The year end accounts receivable balances of these
customers approximated 22%, 62% and 61% of the Company's
total trade receivable balance at December 31, 1996, 1995
and 1994, respectively. In addition, two other customers not
included above had year end accounts receivable balances
which approximated 10% and 16% of total trade accounts
receivable as of December 31, 1996 and 1994, respectively.
(15) Issuance of OHE Stock-
----------------------
Prior to August 1994, OHE was indebted to Letter International Limited
Irrevocable Trust (Trust), a trust for which OHE was the sole
beneficiary, in the amount of $1,260,000. At the same time, the Trust was
indebted in an equal amount to OHE's majority shareholder. In August
1994, the majority shareholder received from the Trust an assignment of
OHE's obligation. The majority shareholder then agreed to the
cancellation of this indebtedness of OHE in exchange for 2,692 shares of
common stock of OHE (734,781 shares of the Company, giving effect to the
reorganization).
(16) Stock Option Plans-
-------------------
In 1996, the Company adopted a stock option plan (the 1996 Plan) for
employees and non-employee directors. Had compensation cost for this plan
been determined consistent with SFAS 123, the Company's net income and
earnings per share would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
---------------
<S> <C>
Net income
As reported $6,658,962
Pro forma $6,636,312
Earnings per share
Pro forma before SFAS No. 123 impact $ 0.69
Pro forma after SFAS No. 123 impact $ 0.69
</TABLE>
The Company may grant options for up to 400,000 shares under the 1996
Plan. The Company granted options for 180,000 shares during fiscal 1996
at the initial public offering price. Options granted under the plan are
generally granted at fair market value at the date of grant and are
exercisable over periods not exceeding ten years.
-51-
<PAGE> 52
A summary of the status of the Company's stock option plan at December
31, 1996, and the change during the year then ended is presented in the
table and narrative below:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
SHARES PRICE
------ -----
<S> <C> <C>
Outstanding, beginning of year - $ -
Granted 180,000 9.00
Exercised - -
Forfeited/Expired - -
------- -------
Outstanding, end of year 180,000 $ 9.00
======= =======
Exercisable, end of year - $ -
======= =======
</TABLE>
At December 31, 1996, all 180,000 of the options have an exercise price
of $9.00, a fair value of $4.98, and remaining contractual life of 10
years.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1996:
<TABLE>
YEAR ENDED
DECEMBER 31,
1996
----
<S> <C>
Dividend yield 0%
Expected volatility 39.3%
Risk-free interest rate 6.5%
Expected lives 7.5 years
</TABLE>
(17) Initial Public Offering-
------------------------
On November 15, 1996, the Company completed its initial public offering
of common stock. The proceeds from the sale of 2,048,000 shares of common
stock, including 48,000 shares issued through the underwriter's partial
exercise of their over-allotment option, were used by the Company for
retirement of bank debt, payment of the AAA notes described below,
purchase of a manufacturing facility in Mexico, acquisition of Palmer net
assets (Note 3) and transaction costs associated with the offering.
-52-
<PAGE> 53
On October 28, 1996, OHE distributed to its shareholders a dividend of
$9,000,000 in the form of long-term notes (the "AAA Notes") which
represented the undistributed previously taxed income of OHE as an S
Corporation through the effective date of the reorganization. During 1996
the Company recognized approximately $27,000 in interest expense related
to the AAA notes.
(18) Pro Forma Information (Unaudited)-
----------------------------------
(a) PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS ADJUSTMENTS--The
pro forma consolidated statements of operations information
presents the pro forma effects on the historical consolidated
financial information reflecting certain transactions as if they
occurred on January 1, 1996. The following adjustments have been
reflected in the pro forma consolidated statements of operations
information:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1996
<S> <C>
Amortization on intangible assets resulting from
the purchase of Palmer net assets $ (101,000)
The elimination of interest expense relating to the
retirement of bank debt 339,000
The provision for income taxes at an effective rate
of 40% as if the Company had filed a
consolidated U.S. Federal tax return (2,448,000)
-----------
Total $(2,210,000)
===========
</TABLE>
(b) PRO FORMA NET INCOME PER SHARE--Pro forma net income per common
share is based on the weighted average number of shares of common
stock of the Company outstanding during the period (assuming the
reorganization had occurred as of the beginning of the year and
using the treasury stock method), plus the number of shares
required to fund the distribution to shareholders and the number
of shares required to repay existing debt.
Supplemental pro forma income per share considering only the
repayment of existing debt would have been $.83 for the year ended
December 31, 1996, based on the weighted average number of shares
of common stock outstanding during the period, plus the estimated
number of shares to be issued to repay existing debt.
-53-
<PAGE> 54
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
PART III
Except as set forth below, the information required in this Part III is
incorporated by reference from the Company's definitive Proxy Statement for its
1997 Annual Meeting of Shareholders filed or to be filed with the Securities and
Exchange Commission.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The executive officers of the Company (as of March 24, 1997) are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas M. O'Gara 46 Chairman of the Board
Wilfred T. O'Gara 39 President and Chief Executive Officer
Gary W. Allen 42 Vice President - Operations, O'Gara-Hess & Eisenhardt
Armoring Company
Nicholas P. Carpinello 47 Executive Vice President, Secretary and Treasurer
Richard L. Curotto 58 Vice President - Worldwide Product Development, O'Gara-
Hess & Eisenhardt Armoring Company
Abram S. Gordon 33 Vice-President, General Counsel and Assistant Secretary
Michael J. Lennon 40 President, O'Gara-Hess & Eisenhardt Armoring Company
Hugh E. Price 60 President, O'Gara Security Associates
Neil P. Saldin 50 President, O'Gara Satellite Networks Limited
</TABLE>
Thomas M. O'Gara is Chairman of the Board of the Company. Mr. O'Gara
has been Chairman of the Board of OHE since 1990 and was OHE's Chief Executive
Officer from 1990 until 1995; he has been an executive of the Company and its
predecessors since 1975. From 1984 until 1986, Mr. O'Gara also was Honorary
Consul General for the Sultanate of Oman. Thomas M. O'Gara and Wilfred T. O'Gara
are brothers.
Wilfred T. O'Gara is President and Chief Executive Officer of the
Company. He has been associated with the Company and its predecessors since
1983. He has been Chief Executive Officer of OHE since January 1996, was
President and Chief Operating Officer of OHE from 1991 through 1995 and was Vice
President - Sales and Marketing from 1988 until 1991. He also has been Vice
Chairman of O'Gara Satellite Networks, Inc. since October 1995, having served as
President of OSN, Inc. from January 1995 through September 1995.
-54-
<PAGE> 55
Gary W. Allen is Vice President - Operations of OHE, a position in which he
has served since 1994. From 1989 until 1994 Mr. Allen was Manager of Shop
Operations for the G.E. Aircraft Engines business of General Electric Company.
Mr. Allen held several other management positions in operations and
manufacturing with G.E. Aircraft Engines between 1984, when he joined that
business, and 1989.
Nicholas P. Carpinello is the Company's Executive Vice President, Chief
Financial Officer, Secretary and Treasurer. He has held these same positions
with OHE since 1993 and also has been Treasurer of OSN, Inc. since 1995. Mr.
Carpinello has been associated with the Company and its predecessors since 1984.
From 1975 until 1984, he was employed by Arthur Andersen LLP where he served as
a manager in the audit and small business consulting divisions.
Richard L. Curotto is Vice President - Worldwide Product Development of
OHE, a position which he has held since 1992. Mr. Curotto joined OHE in
September 1990 as Vice-President-Engineering. Prior to joining OHE, Mr. Curotto
was an engineer, manager and executive with Stutz Motor Cars of America, Inc., a
company he co-founded in 1968.
Abram S. Gordon is Vice President, General Counsel and Assistant Secretary
of the Company. Prior to joining the Company in January 1997, he was with the
law firm of Taft, Stettinius & Hollister, Cincinnati, Ohio, from October 1987
until December 1996.
Michael J. Lennon is President and Chief Operating Officer of OHE,
positions he has held since January 1996. Mr. Lennon joined OHE in February 1994
as Manager of Commercial and Military Programs; he became Vice President for
Sales, Marketing and Program Management in October 1994 and served OHE in that
capacity through 1995. Prior to joining OHE, Mr. Lennon had 15 years' experience
in manufacturing, engineering quality control and marketing with General
Electric Company, which he joined in 1979. From 1990 to 1994, he was Manager of
Advanced Technology Marketing for their G.E. Aircraft Engines business.
Hugh E. Price is President, O'Gara Security Associates. During 1995 and
1996, prior to joining the Company, he was a consultant to various businesses
and organizations. Until his retirement in 1995, Mr. Price had been employed by
the Central Intelligence Agency since 1964. His positions with the Agency
included Deputy and Associate Deputy Director for Operations (1991-1995), Chief
and Deputy Chief for Counterintelligence (1988-1990) and Director of Personnel
(1986-1988).
Neil P. Saldin is President of OSN, a position he has held since 1995.
Since 1995, he also has been President of OGM Communications Limited, an Irish
corporation which is 49% owned by OSN. Prior to joining the Company in 1994, Mr.
Saldin had served since 1988 in a variety of executive capacities with Magnavox
Electronic Systems Company, most recently as Vice President, Commercial SatCom.
Mr. Saldin is an electrical engineer whose experience prior to 1988 includes a
number of management positions with companies in the communications software and
engineering businesses.
Officers of the Company are elected annually and serve at the discretion of
the Board of Directors.
-55-
<PAGE> 56
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- ------------------------------------------------------------------------
(a)(1) The following consolidated financial statements of the Company and its
subsidiaries are included in Item 8:
Report of Independent Public Accountants
Consolidated Balance Sheets
-As of December 31, 1996 and 1995
Consolidated Statements of Operations
-For the Years Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity -For the Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows
-For the Years Ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules
Report of Independent Public Accountants
To The O'Gara Company:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of THE O'GARA
COMPANY included in this Form 10-K and have issued our report thereon
dated March 19, 1997. Our audit was made for the purpose of forming
on opinion on the basic consolidated financial statements taken as a
whole. The schedule included below is the responsibility of the
Company's management and is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part of the
basic consolidated financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the
basic consolidated financial statements and, in our opinion, fairly
states, in all material respects, the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
March 19, 1997
-56-
<PAGE> 57
Schedule II - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
The O'Gara Company
Schedule II - Valuation and Qualifying Accounts
For the Years Ended December 31, 1996, 1995 and 1994
(in 000's)
Additions
Balance Charged to Balance
Beginning Costs and End of
Description of Period Expenses Deductions Period
- ----------- --------- -------- ---------- ------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year Ended December 31, 1996 $109 $151 $(49) $211
Year Ended December 31, 1995 $100 $ 52 $(43) $109
Year Ended December 31, 1994 $145 $ 45 $(90) $100
INVENTORY OBSOLESCENCE RESERVES:
Year Ended December 31, 1996 $ -- $264 $ -- $264
Year Ended December 31, 1995 $ -- $ -- $ -- $ --
Year Ended December 31, 1994 $ -- $ -- $ -- $ --
</TABLE>
Schedules not listed above have been omitted because they are not
required or the information required to be set forth therein is
included in the consolidated financial statements or notes thereto.
(b) Reports on Form 8-K: None.
(c) Exhibits: See the Exhibit Index beginning on page 59.
(d) Financial Statements: None.
-57-
<PAGE> 58
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, as of the 27th day of
March, 1997.
THE O'GARA COMPANY
By: /s/ Wilfred T. O'Gara
-------------------------------------
Wilfred T. O'Gara
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities indicated as of the 27th day of March, 1997.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Thomas M. O'Gara* Chairman of the Board
- --------------------------------
Thomas M. O'Gara
/s/ Wilfred T. O'Gara President, Chief Executive Officer and Director
- -------------------------------- (principal executive officer)
Wilfred T. O'Gara
/s/ Nicholas P. Carpinello Executive Vice President, Secretary and Treasurer
- -------------------------------- (principal financial and accounting officer)
Nicholas P. Carpinello
/s/ Raymond E. Mabus* Director
- --------------------------------
Raymond E. Mabus
/s/ Hugh E. Price* President, O'Gara Security Associates and Director
- --------------------------------
Hugh E. Price
/s/ Jerry E. Ritter* Director
- --------------------------------
Jerry E. Ritter
/s/ William S. Sessions* Director
- --------------------------------
William S. Sessions
<FN>
*Pursuant to Power of Attorney
</TABLE>
By /s/ Nicholas P. Carpinello
---------------------------
Nicholas P. Carpinello
Attorney-in-Fact
-58-
<PAGE> 59
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
--- -----------
3.1 Amended and Restated Articles of Incorporation of the Company*
3.2 Code of Regulations of the Company*
10.1 Credit Agreement dated February 11, 1997 between the Company and The
Fifth Third Bank, LaSalle National Bank, and The Fifth Third Bank as
agent.
10.2 Trust Indenture, Economic Development Revenue Bonds, Series 1986*
10.3 Loan Agreement, Economic Development Revenue Bonds, Series 1986*
10.4 Agreement to armor HMMWVs between the Company and the United States
Army Tank Automotive Command, dated May 12, 1994, as amended*
10.5 Agreement to armor HMMWVs between the Company and the United States
Army Tank Automotive Command, dated September 27, 1996*
10.6 Systems Technical Support Agreement between the Company and the United
States Army, dated January 20, 1997
10.7 Supply agreement between O'Gara Satellite Networks Limited and Glocom,
Inc.*
10.8 Marketing agreement between O'Gara Satellite Networks Limited and
Magellan Systems Corporation*
10.9 License agreement between O'Gara Satellite Networks Limited and
Morsviasputnik, dated March 21, 1995*
10.10 Lease of Mulhauser Road facility between O'Gara-Hess & Eisenhardt
Armoring Company and OLG, Limited, dated March 12 1996, as amended*
10.11 Terms of Lease (English Translation) of Sao Paulo, Brazil facility
between O'Gara-Hess & Eisenhardt Armoring Company do Brazil and Piero
Balducci and Elvira Miriam Cob Balducci, dated March 8, 1996*
10.12 1996 Stock Option Plan*
10.13 Employment Agreement between O'Gara-Hess & Eisenhardt Armoring Company
and Richard L. Curotto, dated August 23, 1996*
10.14 Employment Agreement between the Company and Thomas M. O'Gara, dated
August 23, 1996*
10.15 Employment Agreement between the Company and Wilfred T. O'Gara, dated
August 23, 1996*
10.16 Employment Agreement between the Company and Nicholas P. Carpinello,
dated August 23, 1996*
10.17 Employment Agreement between O'Gara Satellite Networks Limited and Neil
P. Saldin, dated August 23, 1996*
10.18 Employment Agreement between O'Gara-Hess & Eisenhardt Armoring Company
and Gary W. Allen, dated August 23, 1996*
10.19 Employment Agreement between O'Gara-Hess & Eisenhardt Armoring Company
and Michael J. Lennon, dated August 23, 1996*
-59-
<PAGE> 60
10.20 Form of Accumulated Adjustments Account ("AAA") promissory notes to
former shareholders of O'Gara-Hess & Eisenhardt Armoring Company*
10.21 Aircraft Lease between O'Gara-Hess & Eisenhardt Armoring Company and
Longline Leasing, Inc. and Excel Armor Products, Inc., dated February
13, 1995, as amended*
10.22 Asset Purchase Agreement between O'Gara-Hess & Eisenhardt Armoring
Company de Mexico, S.A. de C.V. and Palmer Associates, S.C. dated
October 29, 1996
10.23 Asset Purchase Agreement between O'Gara-Hess & Eisenhardt Armoring
Company and Palmer Associates, LTD. dated October 29, 1996
10.24 Acquisition Agreement between the Company and Next Destination Limited,
dated February 5, 1997
10.25 Acquisition Agreement between the Company and Labbe, S.A., dated
January 21, 1997**
10.26 Stock Purchase Agreement between O'Gara-Hess and Eisenhardt Armoring
Company and Jerome E. Hoffman, Gerald O. Smith, Rosemary Smith and
Katherine L. Kropp dated March 24, 1997.
11 Computation of pro forma earnings per common share
21 Subsidiaries of the registrant
24 Power of Attorney
27 Financial Data Schedule***
- -------------------
* Filed as an exhibit to the Company's Registration Statement on Form
S-1, No. 333-11093 and incorporated herein by reference.
** Filed as an exhibit to the Company's Current Report on Form 8-K (Date
of Report: February 12, 1997) and incorporated herein by reference.
*** EDGAR filing only.
-60-
<PAGE> 1
Exhibit 10.1
2/11/97
CREDIT AGREEMENT
BETWEEN
THE O'GARA COMPANY
O'GARA-HESS & EISENHARDT
ARMORING COMPANY
O'GARA SATELLITE NETWORKS, INC.
O'GARA SATELLITE NETWORKS LIMITED,
BORROWERS
AND
THE FIFTH THIRD BANK
LASALLE NATIONAL BANK,
LENDERS
AND
THE FIFTH THIRD BANK,
AS AGENT
DATED FEBRUARY 11, 1997
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
Section 1. Definitions..................................................................1
Section 2. Loans........................................................................1
2.1. Revolving Credit Loans. ...........................................1
2.2. Term Loan. .......................................................3
2.3. Fees................................................................5
2.4. Interest............................................................5
2.5. Applicable Margins..................................................7
2.6. Commercial Letter of Credit Facility................................8
2.7. IRB Letter of Credit................................................9
2.8. Letter of Credit Costs.............................................10
2.9. Actions Relating to the Letter of Credit Liability of Banks........10
2.10. Letter of Credit Indemnification...................................11
2.11. Increased Costs, Etc...............................................11
2.12. Payments...........................................................12
2.13. Maximum Interest Rate..............................................12
2.14. Joint and Several Liability; Parent as Agent.......................13
2.15. Defaulting Bank....................................................15
Section 3. Representations And Warranties..............................................15
3.1. Organization and Qualification.....................................15
3.2. Due Authorization..................................................15
3.3. Litigation.........................................................15
3.4. Margin Stock.......................................................15
3.5. Business...........................................................16
3.6. Licenses, etc......................................................16
3.7. Laws and Taxes.....................................................16
3.8. Financial Condition................................................16
3.9. Title..............................................................16
3.10. Defaults...........................................................17
3.11. Environmental Laws.................................................17
3.12. Subsidiaries and Partnerships......................................18
3.13. ERISA..............................................................18
3.14. Solvency...........................................................18
Section 4. Affirmative Covenants.......................................................18
4.1. Books and Records..................................................18
4.2. Financial Statements...............................................18
4.3. Condition and Repair...............................................20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
4.4. Insurance..........................................................20
4.5. Taxes..............................................................20
4.6. Existence; Business................................................21
4.7. Compliance with Laws...............................................21
4.8. Notice of Default..................................................21
4.9. Costs..............................................................21
4.10. Depository/Banking Services........................................21
4.11. Other Amounts Deemed Loans.........................................22
4.12. French Documents...................................................22
4.13. Next Destination...................................................22
4.14. Life Insurance.....................................................22
Section 5. Negative Covenants..........................................................22
5.1. Prepayments........................................................22
5.2. Pledge or Encumbrance of Assets....................................22
5.3. Guarantees and Loans...............................................23
5.4. Merger; Disposition of Assets......................................23
5.5. Transactions with Affiliates.......................................23
5.6. Investments........................................................23
5.7. Foreign Investments................................................23
5.8. Indebtedness to Tangible Net Worth.................................23
5.9. Tangible Net Worth.................................................24
5.10. Debt Service Coverage Ratio........................................24
5.11. Current Ratio......................................................24
5.12. Cash Flow Coverage.................................................24
5.13. Indebtedness. .....................................................24
5.14. Capital Expenditures...............................................25
5.15. Dividends. .......................................................24
5.16. Interest Rate Protection...........................................24
Section 6. Events of Default and Remedies..............................................25
6.1. Events of Default..................................................25
6.2. Remedies...........................................................27
6.3. Setoff.............................................................27
6.4. Default Rate.......................................................28
6.5. Late Payment Penalty...............................................28
6.6. No Remedy Exclusive................................................28
6.7. Effect of Termination..............................................28
Section 7. Conditions Precedent........................................................28
7.1. Conditions to Initial Loans........................................28
7.2. Conditions to Each Revolving Loan..................................29
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 8. Agent.......................................................................30
8.1. Appointment........................................................30
8.2. Delegation of Duties. .............................................30
8.3. Exculpatory Provisions.............................................30
8.4. Reliance by Agent..................................................31
8.5. Notice of Default..................................................31
8.6. Non-Reliance on Agent and Other Banks..............................31
8.7. Indemnification....................................................32
8.8. Agent in Its Individual Capacity...................................33
8.9. Successor Agent....................................................33
8.10. Amendments and Waivers.............................................33
8.11. Setoff; Sharing....................................................34
8.12. Enforcement........................................................35
Section 9. Miscellaneous Provisions....................................................35
9.1. Miscellaneous......................................................35
9.2. Waiver by Borrower.................................................35
9.3. Binding Effect.....................................................35
9.4. Security...........................................................35
9.5. Survival...........................................................35
9.6. Delay or Omission..................................................36
9.7. Notices............................................................36
9.8. No Partnership.....................................................36
9.9. Indemnification....................................................36
9.10. Setoff.............................................................37
9.11. Taxes and Fees.....................................................37
9.12. Expenses of Agent and Banks........................................37
9.13. Governing Law; Jurisdiction........................................37
9.14. Confession of Judgment.............................................38
EXHIBIT 1 DEFINITIONS........................................................42
EXHIBIT 2.1 FORM OF REVOLVING NOTE.............................................50
EXHIBIT 2.2 FORM OF TERM NOTE..................................................53
EXHIBIT 2.4 BORROWING CONFIRMATION.............................................56
EXHIBIT 2.6 FORM OF LETTER OF CREDIT NOTE......................................57
EXHIBIT 3.3 LITIGATION.........................................................61
EXHIBIT 3.9 LIENS..............................................................62
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
EXHIBIT 3.12 SUBSIDIARIES AND PARTNERSHIPS......................................70
EXHIBIT 7.1(b) CERTIFICATE OF BORROWER............................................72
EXHIBIT 7.1(c) OPINION OF COUNSEL FOR BORROWER....................................74
EXHIBIT 7.2 COLLATERAL REPORT..................................................76
EXHIBIT 8.5 SECURITY AGREEMENT.................................................78
SCHEDULE I SPECIFIC REPRESENTATIONS...........................................87
</TABLE>
iv
<PAGE> 6
CREDIT AGREEMENT
This Credit Agreement (the "Agreement") is entered into as of
February 11, 1997 between THE O'GARA COMPANY, an Ohio corporation ("Parent"),
O'GARA-HESS & EISENHARDT ARMORING COMPANY, a Delaware corporation
("Armoring"), O'GARA SATELLITE NETWORKS, INC., a Delaware corporation
("Satellite"), O'GARA SATELLITE NETWORKS LIMITED, an Irish corporation
("Irish") (collectively, the "Borrowers" and individually a "Borrower"), and
THE FIFTH THIRD BANK, an Ohio banking corporation ("Fifth Third"), and LASALLE
NATIONAL BANK, a national banking association ("LaSalle") (Fifth Third and
LaSalle are collectively referred to as "Banks" and individually as a "Bank"),
and THE FIFTH THIRD BANK, as agent for the Banks ("Agent").
Section 1. DEFINITIONS.
Certain capitalized terms have the meanings set forth on
Exhibit 1 hereto or in the Security Agreement. All financial terms used in
this Agreement but not defined on Exhibit 1 or in the Security Agreement have
the meanings given to them by generally accepted accounting principles. All
other undefined terms have the meanings given to them in the Ohio Uniform
Commercial Code.
Section 2. LOANS.
2.1. REVOLVING CREDIT LOANS.
(a) Subject to the terms and conditions hereof, each
Bank severally hereby extends to Borrowers a line of credit facility (the
"Revolving Credit Facility") under which Banks will make loans (the "Revolving
Loans") to Borrowers at Parent's request and direction from time to time during
the term of this Agreement in an amount up to the lesser of: (i) $12,000,000 or
(ii) the sum of seventy percent (70%) of the net amount of Eligible Accounts
plus 40% of Eligible Inventory. Borrowers may borrow, prepay (without penalty or
charge), and reborrow under the Revolving Credit Facility, provided that the
principal amount of all Revolving Loans outstanding at any one time under the
Revolving Credit Facility will not exceed the limits set forth in this clause
(a). If the principal amount of Revolving Loans outstanding at any time under
the Revolving Credit Facility exceeds the limit set forth in this clause (a),
Borrowers will immediately upon receiving notice thereof from Agent pay the
amount of such excess to Agent in cash. In the event Borrowers fail to promptly
pay such excess, any Bank may, in its discretion, setoff such amount against any
Borrower's accounts at such Bank. Banks will make Revolving Loans by crediting
the amount thereof to either Parent's account at Agent or such account at Agent
of any other Borrower as directed by Parent.
(b) (i) Subject to Section 2.1(f) hereof, Parent may
request Revolving Loans on any Monday or Thursday that is a Business Day (or the
next Business Day if such Monday or Thursday is not a Business Day) by giving
the Agent irrevocable written notice on or before 11:00 a.m., prevailing
Cincinnati, Ohio time, on such day. Each loan request shall specify (A) the
<PAGE> 7
requested borrowing date, which shall be a Business Day, and (B) the aggregate
amount of such Loan. The Agent, promptly upon receipt of any loan request,
shall give notice thereof to the Banks.
(ii) Each Bank shall provide the Agent with
funds, on or before 4:00 p.m., prevailing Cincinnati, Ohio time, on each
borrowing date in an amount equal to such Bank's pro-rata share of the requested
Revolving Loans by transferring same day or immediately available funds to such
account as the Agent shall specify from time to time by notice to the Banks. On
the date requested in such notice, the Agent shall make available to the
Borrowers, in immediately available funds, the proceeds of the Revolving Loans
being made; PROVIDED, HOWEVER, that the Agent shall be obligated to make the
proceeds of such Revolving Loans available only to the extent received by it
from the Banks. No Bank's obligation to fund any Revolving Loan shall be
affected by any other Bank's failure to fund any Revolving Loan.
(iii) In the event that the Agent remits
in same day or immediately available funds to any Bank its share of any payments
to be made by any Borrower pursuant to this Agreement, the Revolving Note or the
Term Note prior to the time when the Agent receives such payments from such
Borrower, and such Borrower fails to make such payments when due, immediately
upon receipt of notice from the Agent, such Bank shall repay directly to the
Agent in same day or immediately available funds such amount as will equal the
amount that such Borrower failed to pay together with interest thereon at a rate
per annum equal to (A) if paid within one Business Day, the overnight Federal
Funds Rate, or (B) if not paid within one Business Day, the Prime Rate as then
in effect. In either case, the foregoing shall not be deemed to affect the
obligation of such Borrowers to pay interest at the applicable rate provided
herein.
(iv) If Agent advances to Borrowers any
portion of Revolving Loans requested by Parent before the corresponding amount
has been received by Agent from the Banks which are to send such moneys to
Agent, and Agent does not receive the corresponding amount from the relevant
Bank when due, then the relevant Bank shall immediately pay such sum to Agent,
with interest at the rate set forth in Section 2.15 hereof; and upon demand from
Agent, Borrowers shall repay to Agent the amount not paid to Agent by such Bank,
with interest at the rate applicable for Revolving Loans. If any Bank fails to
make a Revolving Loan to be made by it hereunder, no other Bank shall be
responsible for such failure or be required to advance such sum to Borrowers but
such non-Defaulting Bank shall use its best efforts to obtain a substitute bank
or participant.
(c) On the date hereof and within twenty (20)
days after each month end thereafter, and as otherwise required by Agent, Parent
shall deliver to Agent a Collateral Report in the form of Exhibit 7.2 hereto.
(d) The Revolving Loan proceeds will be used
for:
(i) general corporate and working
capital purposes;
2
<PAGE> 8
(ii) intercompany loans to any direct or
indirect Subsidiaries of a Borrower, including without limitation, O'Gara
France, S.A., Labbe and the other companies to be directly or indirectly owed by
O'Gara France, S.A. after completion of the Labbe Transaction (subject to the
limitations contained in Section 5.7 of this Agreement); and
(iii) such other purposes as approved by
Agent in writing.
(e) On the date hereof, Borrowers will duly
issue and deliver to each Bank a Revolving Note in the form of Exhibit 2.1
(collectively, the "Revolving Note"), in the principal amount of $6,000,000,
bearing interest as specified in Section 2.4 of this Agreement.
(f) The term of the Revolving Credit Facility
will expire on February 11, 1998, and the Revolving Note will become payable in
full on that date. Borrowers may prepay the principal balance of the Revolving
Note in whole or part at any time.
(g) So long as this Agreement is in effect,
Borrowers will pay to Agent for the pro-rata benefit of Banks an unused facility
fee at an annual rate equal to one-quarter of one percent (.25%) of that portion
of the Revolving Credit Facility that is not outstanding on each day (the
"Unused Facility Fee"), which will be payable on the first (1st) day of each
calendar month in arrears for the previous calendar month with a final payment
due on the termination of this Agreement; provided, however, that the Unused
Facility Fee shall be 0.375% for any period of time at which the Leverage Ratio
exceeds 7.5:1.0.
2.2. TERM LOAN.
(a) Banks agree on the terms and conditions
hereinafter set forth, to make a term loan (the "Term Loan") to Borrowers on the
date of this Agreement (or such later date in one lump sum as specified by
Parent) in the principal sum of Sixteen Million Thousand Dollars ($16,000,000).
Borrowers' obligation to repay the Term Loan shall be evidenced by their two
promissory notes (collectively, the "Term Note") in the principal amount of
Eight Million Dollars ($8,000,000.00) each in substantially the form of Exhibit
2.2 hereto. The Term Note shall be dated the date of this Agreement. The
principal amount of the Term Note will be payable in 20 quarterly installments,
due on the 1st day of each quarter as set forth below in Section 2.2(b).
(b) The aggregate principal amount of the Term
Loan shall be paid as follows:
PAYMENT DATE AMOUNT
--------------------- --------------------
July 1, 1997 $500,000
October 1, 1997 $500,000
January 1, 1998 $750,000
3
<PAGE> 9
PAYMENT DATE AMOUNT
----------------------- -----------------------
April 1, 1998 $750,000
July 1, 1998 $750,000
October 1, 1998 $750,000
January 1, 1999 $750,000
April 1, 1999 $750,000
July 1, 1999 $750,000
October 1, 1999 $750,000
January 1, 2000 $750,000
April 1, 2000 $750,000
July 1, 2000 $875,000
October 1, 2000 $875,000
January 1, 2001 $875,000
April 1, 2001 $875,000
July 1, 2001 $1,000,000
October 1, 2001 $1,000,000
January 1, 2002 $2,000,000
or the then unpaid
principal balance of the
Term Loan
(c) On or prior to the later of the expiration
date for the then current Pricing Option for the Term Loan or the 105th day
following the end of each fiscal year during which the Leverage Ratio was
2.5:1.0 or greater, Borrowers shall prepay principal of, the Term Loan in an
amount equal to fifty percent (50%) the Excess Cash Flow for the Borrowers' then
immediately preceding year. The principal amount of such prepayment shall be
applied to the principal of the Term Loan, in inverse order of maturity.
(d) Borrowers shall pay interest to Agent for
the benefit of Banks on the outstanding principal amount of the Term Loan at the
applicable rate specified in Section 2.4 of this Agreement. Interest shall be
calculated on the basis of a year of 360 days, and charged for the actual number
of days elapsed. Interest shall be payable in immediately available funds at the
principal office of Agent, on the date of each principal payment. After the
occurrence of an Event of Default, the Term Loan shall bear interest until paid
at a rate which shall be 6% above the rate that would otherwise be in effect;
this provision does not constitute a waiver of any Events of Default or an
agreement by Agent or any Bank to permit any late payments whatsoever.
4
<PAGE> 10
(e) Borrowers may, upon at least 3 days' notice
to Agent, prepay the Term Loan in whole or in part with accrued interest on the
amount prepaid, provided that each partial payment shall be in a principal
amount of not less than Five Thousand Dollars ($5,000) and shall be applied to
the principal installments of the Term Loan in the inverse order of their
maturity.
2.3. FEES. In addition to the other fees set forth in
this Agreement, Borrowers shall pay the following:
(a) Revolving Loans Commitment Fee: On the
date hereof, Borrowers shall pay to Agent for the pro-rata benefit of Banks a
nonrefundable closing fee of $240,000 as a commitment for the Revolving Loans.
(b) Term Loan Commitment Fee: On the date
hereof, Borrowers shall pay to Agent for the pro-rata benefit of Banks a
nonrefundable closing fee of $60,000 as a commitment fee for the Term Loan.
2.4. INTEREST.
(a) Subject to the terms and conditions of this
Agreement, the Revolving Credit Loans and the Term Loan (collectively the
"Pricing Loans") shall bear interest as follows:
(i) on amounts subject to a Pricing
Option, at an annual rate equal to the LIBOR Rate plus the Applicable LIBOR
Margin; and
(ii) on amounts not subject to a Pricing
Option, at an annual rate equal to the Prime Rate plus the Applicable Prime
Margin in effect on each date.
(b) Subject to the terms and conditions of this
Agreement, Parent for the benefit of Borrowers may from time to time elect to
have a Pricing Option apply to a portion of the principal amount of outstanding
Pricing Loans, as specified by Parent, for a permissible LIBOR Interest Period
specified by Parent. Parent shall make each such election by giving notice
(which notice shall be irrevocable) to Agent, not later than 11:00 a.m. on the
proposed date for Revolving Loans or part of the Term Loan not then subject to
the Pricing Option, and not later than 11:00 a.m. on the third Business Day
prior to the proposed date for Revolving Loans or part of the Term Loan then
subject to a Pricing Option. Such notice shall specify the principal amount of
the Revolving Loans then to be made on such date, the principal amount of the
Term Loans (if any) subject to the notice and shall specify whether a Pricing
Option is to apply to such Pricing Loans. The amount of the Revolving Loans
subject to a Pricing Option to be made on any Borrowing Date shall be at least
One Million 00/100 Dollars ($1,000,000.00). In addition, Parent shall send Agent
a Borrowing Confirmation in the form of Exhibit 2.4 hereto within one Business
Day after the date of each pricing.
5
<PAGE> 11
(c) Parent's right to elect a Pricing Option for any
portion of outstanding Pricing Loans is subject to the following limitations:
(i) the total number of Pricing Options outstanding at any one time under this
Agreement shall not exceed five; (ii) Parent may not elect a Pricing Option at
a time when an Event of Default has occurred and has not been waived; (iii) no
LIBOR Interest Period shall end later than the maturity date of the respective
Note evidencing the borrowing of the relevant principal amount; (iv) the
principal amount that can be subject to a Pricing Option is $1,000,000; and
(v) once a Pricing Option has been selected for a portion of the Pricing
Loans, no other Pricing Option may apply to such portion until the expiration
of the LIBOR Interest Period applicable to the first Pricing Option.
(d) Interest on the principal amount subject to a Pricing
Option is payable on the last day of the relevant LIBOR Interest Period.
Interest on the principal amount of Pricing Loans not subject to a Pricing
Option is payable quarterly, commencing April 1, 1997 and on each July 1,
October 1 and January 1 thereafter until maturity of the Pricing Loans. Agent
and Borrowers shall attempt to procure a Pricing Option from the date hereof
to and through April 1, 1997.
(e) Interest on the Pricing Loans shall be computed on the
basis of a 360- day year and charged for the actual number of days involved.
The interest rate applicable to amounts not subject to any Pricing Option
shall change automatically upon each change in the Prime Rate. Upon the
occurrence of an Event of Default and until such Event of Default is waived,
the Pricing Loans shall bear interest at the Borrower Default Rate; this
provision does not constitute a waiver of any Event of Default or an agreement
by Bank to permit any late payments whatsoever.
(f) Borrowers shall have the right to prepay the Pricing
Loans in whole at any time, or in part from time to time, without premium or
penalty, provided that, at any time when a Pricing Option is in effect, no
prepayment of such portion of the principal amount of the Pricing Loans as is
subject to such Pricing Option shall be made except on the last day of the
applicable Interest Period unless an amount necessary to compensate a Bank for
costs, losses and expenses resulting from such prepayment (as reasonably
determined by such Bank) is paid by Borrowers to Agent. Each notice of
prepayment shall be irrevocable and shall obligate Borrowers to prepay the
amount stated therein on the date stated therein.
(g) Parent's right to elect a LIBOR Pricing Option shall
be terminated automatically for such period that Eurodollar deposits which
have a maturity corresponding to the proposed LIBOR Interest Period, in an
amount equal to the amount requested by Borrowers to be subject to a LIBOR
Pricing Option, are not readily available in the London Inter-Bank
Eurocurrency Market, or for such period that, by reason of circumstances
affecting such market, adequate and reasonable methods do not exist for
ascertaining the interest rate applicable to such deposits for the proposed
LIBOR Interest Period.
(h) Notwithstanding anything herein contained to the
contrary, if at any time any change in any law, regulation or official
directive, or in the interpretation thereof, by any governmental body charged
with the administration thereof, shall make it unlawful, or any central
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<PAGE> 12
bank or other governmental authority shall assert that it is unlawful, for a
Bank to fund or maintain its funding in Eurodollars of any portion of the
principal amount of the Pricing Loans or otherwise to give effect to a Bank's
obligations as contemplated hereby, (i) such Bank may by facsimile or other
written notice thereof to Parent for the benefit of Borrowers declare such
Bank's obligations in respect of the LIBOR Pricing Option to be terminated
forthwith for the period that such Bank can no longer do LIBOR Options, and
(ii) all LIBOR Pricing Options then in effect shall forthwith cease to be in
effect, and interest shall from and after such date be calculated at the
interest rate applicable to amounts to which no Pricing Option applies; and
(iii) Parent's right to elect LIBOR Pricing Options for Borrowers is
terminated until Agent notifies Parent that Borrowers' right to elect LIBOR
Pricing Options is reinstated.
2.5. APPLICABLE MARGINS.
(a) The Applicable LIBOR Margin and Applicable Prime
Margin expressed as a percentage, in effect on any date shall be determined
based on the higher of the Leverage Ratio (Section 5.8) and Cash Flow Coverage
("Cash Flow Coverage") (Section 5.12) of Parent on a consolidated basis (which
shall be specified in the chart below and determined pursuant to clause (b) of
this paragraph), as follows:
<TABLE>
<CAPTION>
HIGHER OF APPLICABLE APPLICABLE
CASH FLOW COVERAGE LEVERAGE RATIO LIBOR MARGIN PRIME MARGIN
<S> <C> <C> <C>
2.0 or greater 7.5 or greater 3.50% 1.25%
2.0 or greater 5.0 to 7.49 3.25% 1.00%
1.5 to 1.99 3.5 to 4.99 3.00% 0.75%
1.0 to 1.49 2.0 to 3.49 2.75% 0.50%
.99 or less less than 2.0 2.25% 0.00%
</TABLE>
(b) The Leverage Ratio and Cash Flow Coverage in effect on
a certain date is determined by the Agent based upon the financial statements
and Compliance Certificate delivered to the Agent pursuant to Section 4.2
hereof; provided, however, if such financial statements and Compliance
Certificate are not delivered on a timely basis as provided in said Section
4.2, are not accurate and correct, or are not prepared in accordance with the
financial statement and other requirements of this Agreement, then the
Leverage Ratio and Cash Flow Coverage shall be recalculated by the Agent and
determined by the Agent in its sole judgment. If the Leverage Ratio and Cash
Flow Coverage as provided in Borrowers' financial statements and Compliance
Certificate or as recalculated by the Agent requires a change in the
Applicable Margin, the Applicable Prime Margin will change accordingly
starting on the first day of the calendar quarter following Agent's receipt of
such financial statements, and the Applicable LIBOR Margin will change
accordingly effective for LIBOR Interest Periods that start on the first day
of the calendar quarter following Agent's receipt of such financial
statements. Notwithstanding the foregoing, the Applicable LIBOR
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<PAGE> 13
Margin in effect on the first day of the LIBOR Interest Period applicable to a
Pricing Option shall remain in effect for such entire LIBOR Interest Period
with respect to the amount of Pricing Loans subject to such Pricing Option.
(c) If there has been a miscalculation of the Leverage
Ratio or Cash Flow Coverage or if any financial statements of Borrowers are
later determined to have been incorrect, and if the Leverage Ratio and Cash
Flow Coverage determined pursuant to the correct information would result in a
greater amount owing by Borrowers for the relevant period than had been
actually paid by Borrowers for such period, Borrowers shall pay to Agent for
the benefit of the Banks upon demand, the difference between the amount
actually paid for the relevant period and the amount owed based on the
Leverage Ratio and Cash Flow Coverage as corrected determined pursuant to the
correct information, together with interest on the amount owed at the Default
Rate.
(d) If there has been any miscalculation of the Leverage
Ratio or the Cash Flow Coverage, and if the Leverage Ratio and Cash Flow
Coverage determined pursuant to such information would result in a lesser
amount owing by Borrowers for the relevant period than had been actually paid
by Borrowers for such period, Banks shall rebate or credit the difference to
Borrowers between the amount actually paid for the relevant period and the
amount owed based on the Leverage Ratio and Cash Flow Coverage as corrected or
as determined pursuant to the changed information. However, interest will only
be rebated or credited to Borrowers if the credit or rebate is based upon a
clerical error and such claim is made to Agent within sixty (60) days of the
date the interest is paid. For purposes of this clause (d), the calculations
shall be presumed correct absent manifest error.
2.6. COMMERCIAL LETTER OF CREDIT FACILITY.
(a) Banks hereby grant to Borrowers a letter of credit
facility (the "Commercial Letter of Credit Facility") under which a Borrower
or any Subsidiaries may, from time to time and at Parent's request, obtain
standby letters of credit and commercial letters of credit from the Issuing
Bank (the "Commercial Letters of Credit" and individually a "Commercial Letter
of Credit") in an aggregate amount not to exceed $4,000,000 outstanding at any
one time (the "Commercial Letter of Credit Facility"). The Commercial Letters
of Credit shall be in favor of such beneficiaries (collectively the
"Beneficiaries" and each a "Beneficiary") and for such purposes as an
authorized representative of such Borrower or Parent specifies, and provided
that no Letters of Credit shall have a term one year beyond its date of issue.
(b) All advances to the holder of any Commercial Letter of
Credit will be funded by advances under a Letter of Credit Note from Borrowers
to the Issuing Bank in the form attached hereto as Exhibit 2.6 (the "Letter of
Credit Note"). In the event that the Issuing Bank pays any amount under or on
account of any Commercial Letter of Credit issued by it (the payment by the
Issuing Bank under or on account of a Commercial Letter of Credit being herein
called a "Draw"), a Revolving Loan by Banks shall be made to Borrowers in a
total amount equal to the amount of such Draw to reimburse the Issuing Bank
for such Draw which shall be evidenced by the
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<PAGE> 14
Revolving Note; provided, however, if the entire principal amount of the
Revolving Loans is then outstanding, then the amount of such Draw shall be
evidenced as an amount outstanding under the Letter of Credit Note, bearing
interest as specified therein. Each Borrower hereby irrevocably requests that
such Revolving Loans be made and irrevocably authorizes Agent to apply the
proceeds of such Revolving Loans to immediately reimburse the Issuing Bank for
the amount of the Draw, to the extent available or as soon as amounts become
available under the Revolving Credit Facility.
(c) Prior to the date of issuance of any Commercial Letter
of Credit, each Borrower agrees to execute a Letter of Credit Application for
each Commercial Letter of Credit (the "Applications"). The obligations of
Borrowers with respect to any Commercial Letter of Credit shall include the
terms of the application for such Commercial Letter of Credit and any other
documentation executed between the Issuing Bank and Borrowers with respect to
such Commercial Letter of Credit.
(d) Borrowers agree to pay to the Issuing Bank (for the
pro-rata benefit of Banks in accordance with their percentages of the
Revolving Loans), a non-refundable fee of one and one-half percent (1.50%) per
annum of the amount of each new Commercial Letter of Credit or each extension
of the expiration date of a Commercial Letter of Credit. Borrowers agree to
pay a non-refundable fee for each new Commercial Letter of Credit or each
extension of a Commercial Letter of Credit based upon the Issuing Bank's
Commercial Letter of Credit Fee Schedule to be delivered to Borrowers from
time to time, as applicable to all other customers of the Issuing Bank. The
fee shall be payable on or before the issuance of each Commercial Letter of
Credit.
(e) The obligations of Borrowers to Banks and the Issuing
Bank under this Agreement with respect to each Commercial Letter of Credit
shall be absolute, unconditional and irrevocable, and shall be paid and
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever.
(f) The proceeds of the Commercial Letter of Credit(s)
will be used for general business purposes of Borrowers or its Subsidiaries.
(g) The Commercial Letter of Credit Facility shall expire
on the maturity date of the Revolving Credit Facility, as specified in Section
2.1 of this Agreement.
2.7. IRB LETTER OF CREDIT.
(a) Banks hereby grant to Borrowers a letter of credit
facility (the "IRB Letter of Credit Facility") under which Parent may, at its
request, obtain a letter of credit from the Issuing Bank (the "IRB Letter of
Credit") in an aggregate principal amount of coverage not to exceed
$1,500,000. The IRB Letter of Credit shall be in favor of the trustee for the
Bonds, and shall have an expiration date as the Issuing Bank and Parent agree.
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<PAGE> 15
(b) All advances to the holder of any IRB Letter of Credit
shall be subject to the Reimbursement Agreement.
(c) Prior to the date of issuance of the IRB Letter of
Credit, each Borrower agrees to execute the Reimbursement Agreement and any
related security documents or assignments reasonably required by the Issuing
Bank. The obligations of Borrowers with respect to the IRB Letter of Credit
shall include the terms of the Reimbursement Agreement.
(d) Borrowers agree to pay to the Issuing Bank (for the
pro-rata benefit of Banks), a non-refundable fee equal to one and one-half
(1.50%) per annum of the amount of the IRB Letter of Credit or each extension
of the expiration date of the IRB Letter of Credit. This annual fee shall be
payable in advance in quarterly installments.
(e) The obligations of Borrowers to the Issuing Bank under
this Agreement with respect to the IRB Letter of Credit shall be absolute,
unconditional and irrevocable, and shall be paid and performed strictly in
accordance with the terms of this Agreement and the Reimbursement Agreement,
under all circumstances whatsoever.
(f) The IRB Letter of Credit will be used for the purpose
of securing a Borrowers' obligations with respect to the Bonds.
2.8. LETTER OF CREDIT COSTS. If any change in any law or
regulation or in the interpretation thereof by any court or administrative
agency shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued by a Bank or
(ii) impose on any Bank any other condition regarding this Agreement or the
Letters of Credit (other than changes in the rates of income taxation
generally applicable to such Bank), and the result of any such event shall be
to increase the costs of a Bank for issuing or maintaining the Letters of
Credit (which increases in cost shall be determined by such Bank's reasonable
allocation of the aggregate of such cost increases resulting from such events,
other than increases which result solely from such Bank's acts or omissions,
then (a) such Bank shall so notify Parent for the benefit of Borrowers and (b)
upon receipt of such notice from Bank, Borrowers shall promptly pay to such
Bank, from time to time as specified by such Bank, additional amounts which
shall be sufficient to compensate it for such increased costs, together with
interest on each such amount from the date of such notice until payment in
full thereof at the rate then applicable to Revolving Loans not subject to a
Pricing Option. A certificate setting forth in reasonable detail such
increased cost incurred by a Bank as a result of any such event and that such
increased costs are being charged to its other similarly-situated letter of
credit customers, submitted to Borrowers shall be prima facie evidence, absent
manifest error, as to the amount thereof.
2.9. ACTIONS RELATING TO THE LETTER OF CREDIT LIABILITY OF
BANKS. Any action taken or omitted by any Bank, under or in connection with
the Letters of Credit or sight drafts or documents relating thereto, if taken
or omitted without gross negligence or willful misconduct, shall be binding
upon Borrowers and shall not result in a Bank being under any liability to
Borrowers.
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<PAGE> 16
Each Borrower assumes all risks of the acts or omissions of the beneficiaries
of such Letters of Credit, a Bank or any permitted transferee of the Letters
of Credit with respect to its use of the Letters of Credit, if such acts or
omissions are without negligence or wilful misconduct. Neither a Bank nor any
of its officers or directors will be liable or responsible for: (a) the use
which may be made of the Letters of Credit or for any acts or omissions of any
Beneficiary and any permitted transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement(s)
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) any other
circumstances whatsoever in making or failing to make payment under the
Letters of Credit, except only damages which a Borrower proves were caused by
(i) any Bank's willful misconduct or gross negligence in determining whether a
sight draft or other documents presented under the Letters of Credit comply
with the terms of the Letters of Credit or (ii) any Bank's willful or gross
negligent failure to pay under the Letter(s) of Credit after the presentation
to it by a beneficiary (or a permitted successor to whom the Letter(s) of
Credit has been transferred in accordance with its terms) of a sight draft and
documents strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the foregoing, any Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation.
2.10. LETTER OF CREDIT INDEMNIFICATION. Each Borrower hereby
agrees at all times to protect, defend, indemnify, save and hold harmless
Banks from and against any and all claims, actions, suits and other legal
proceedings, and from and against any and all losses, claims, demands,
liabilities, damages, charges, counsel fees, interest and penalties and other
expenses which Banks may, at any time, sustain or incur by reason of or in
consequence of or arising out of any Letter of Credit or the use (or the
proposed or potential use) of the proceeds of any drawing under such Letter of
Credit or any increased costs incurred by Banks (and being charged to all other
similarly-situated customers of such Bank) due to any change in law or
regulations governing Banks or letters of credit in general; provided that
Borrowers shall not be required to indemnify a Bank for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (i) the willful misconduct or gross negligence of a Bank in
determining whether a sight draft or other documents presented under any Letter
of Credit complied with the terms of such Letter of Credit or (ii) such Bank's
willful or gross negligent failure to pay under such Letter of Credit after the
presentation to it by the Beneficiary (or a successor to whom the Letter of
Credit has been transferred in accordance with its terms) of a sight draft and
documents strictly complying with the terms and conditions of such Letter of
Credit. Notwithstanding any of the foregoing, a Bank shall not, in any way, be
liable for any failure by such Bank to pay any sight draft under any Letter of
Credit as a result of any act of a governmental authority or any other cause
beyond the reasonable control of that Bank.
2.11. INCREASED COSTS, ETC.
(a) If, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii) the
compliance with a guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall
be
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<PAGE> 17
any increase in the cost to a Bank of agreeing to make or of making, funding
or maintaining Pricing Loans subject to the LIBOR Pricing Option and such Bank
charges similar increases to other similarly-situated borrowers, then from
time to time, upon written demand by such Bank (a copy of which shall be sent
to Parent) Borrowers shall pay to such Bank additional amounts sufficient to
compensate it for such increased cost. A certificate as to the amount of such
increased cost submitted to Parent by such Bank shall be conclusive and
binding for all purposes, absent manifest error.
(b) If a Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by
such Bank or any corporation controlling it and that amount of such capital is
increased by the existence of its commitment to lend or issue Letters of
Credit hereunder and other commitments of such type or by the existence of
outstanding Pricing Loans or Letters of Credit (or similar obligations), and
such Bank charges similar increases to similarly-situated borrowers then, upon
written demand by such Bank (a copy of which shall be sent to Parent),
Borrowers shall pay to such Bank, from time to time as specified by it,
additional amounts sufficient to compensate it in the light of such
circumstances, to the extent that it reasonably determines such increase in
capital to be allocated to the existence of such Bank's Loans or commitment to
lend hereunder or to the issuance or maintenance of any Letters of Credit. A
certificate as to such amounts submitted to Parent by Bank shall be conclusive
and binding for all purposes, absent manifest error.
2.12. PAYMENTS. Each payment, including each pre-payment, of
principal and interest on the Notes shall be made by Borrowers to Agent (for
the pro-rata benefit of Banks) at its office set forth in Section 8.7 hereof
in immediately available funds by noon, Cincinnati time, on the due date for
such payment. The failure of Borrowers to make any such payment by noon,
Cincinnati time, shall not constitute a default hereunder, provided that such
payment is made on such due date, but any such payment made after noon,
Cincinnati time, on such due date shall be deemed to have been made on the
next Business Day for the purpose of calculating interest on amounts
outstanding on the Notes. If any payment hereunder or under the Notes shall be
due and payable on a day which is not a Business Day the maturity thereof
shall, except as otherwise provided in the definition of LIBOR Interest
Period, be extended to the next Business Day, and interest shall be payable at
the applicable rate specified herein during such extension.
2.13. MAXIMUM INTEREST RATE. In no event shall the interest rate
and other charges hereunder exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that a court determines that Banks have
received interest and other charges hereunder in excess of the highest
permissible rate applicable hereto, such excess shall be deemed received on
account of, and shall automatically be applied to reduce, the principal
balance of the Loans (Revolving Loans first, then the Term Loan), and the
provisions hereof shall be deemed amended to provide for the highest
permissible rate. If there are no Obligations outstanding, the Banks shall
refund to Borrowers such excess.
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<PAGE> 18
2.14. JOINT AND SEVERAL LIABILITY; PARENT AS AGENT.
(a) The obligations and liabilities of Borrowers under,
and all representations, warranties and covenants of Borrowers in, this
Agreement and the Loan Documents shall be joint and several in all respects
whatsoever, regardless of which Borrower actually receives loans or other
extensions of credit hereunder or the amount of such loans received or the
manner in which Agent accounts for such loans or other extensions of credit on
its books and records. Each Borrower's Obligations with respect to Loans made
to it or accommodations issued for its account, and related fees, costs and
expenses, and each Borrower's Obligations arising as a result of the joint and
several liability of the Borrowers hereunder, with respect to Loans made to
the other Borrower hereunder or accommodations issued for the account of the
other Borrower hereunder, together with the related fees, costs and expenses,
and each Borrower's obligations otherwise arising under this Agreement, shall
be separate and distinct obligations, all of which are primary obligations of
each Borrower. Whenever the term "Borrower" or "Borrowers" is used in this
Agreement or the Loan Documents it shall mean each individual Borrower and all
Borrowers jointly and severally, unless the context clearly and specifically
requires otherwise.
(b) Each Borrower's Obligations arising as the result of
the joint and several liability of the Borrowers hereunder with respect to
loans or other extensions of credit made to the other Borrowers hereunder
shall, to the fullest extent permitted by law, be unconditional irrespective
of (i) the validity or enforceability, avoidance or subordination of the
Obligations of the other Borrowers or of any promissory note or other document
evidencing all or any part of the Obligations of the Borrowers, (ii) the
absence of any attempt to collect the Obligations from the other Borrowers,
any other guarantor, or any other security therefor, or the absence of any
other action to enforce the same, (iii) the waiver, consent, extension,
forbearance or granting of any indulgence by the Agent or any Bank with
respect to any provision of any instrument evidencing the Obligations of the
other Borrowers, or any part thereof, or any other agreement now or hereafter
executed by the other Borrowers and delivered to the Agent, (iv) the failure
of Agent to take any steps to perfect and maintain its security interest in,
or to preserve its rights to, any security or collateral for the Obligations
of the other Borrowers, (v) the Agent's election, in any proceeding instituted
under the Bankruptcy Code, of the application of Section 1111(b)(2) of the
Bankruptcy Code, (vi) any borrowing or a grant of a security interest by the
other Borrowers, as debtor-in-possession under Section 364 of the Bankruptcy
Code, or (viii) any other circumstance which might constitute a legal or
equitable discharge or defense of a guarantor or of the other Borrowers.
(c) Agent and Banks may deal with each Borrower as if it
were the sole obligor, without impairing in any way the liability of any other
Borrower. Without limiting the generality of that right, Banks may in
particular release, impair, or fail to perfect an interest in any Collateral
of any Borrower, waive defaults by any Borrower, or extend, compromise or
release the liability of any Borrower, without the consent of any other
Borrower.
(d) Borrowers represent that they have carefully
considered the alternatives to and the legal consequences of incurring joint
and several liability for the Obligations
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<PAGE> 19
and have determined that by such arrangement they are able to obtain financing
on terms more favorable than otherwise, and that under a joint and several
loan facility they will each realize substantial interest savings over
alternative financing arrangements.
(e) All Borrowers hereby irrevocably appoint The O'Gara
Company ("Parent") as their agent representative to deal with Agent and the
Banks on their behalf in all respects in connection with this Agreement and
the transactions contemplated herein, including the submission of requests for
Revolving Loans. All Borrowers agree to be bound by all actions of Parent in
all such respects.
(f) Agent (on behalf of the Banks) may bring a separate
action or actions on the Obligations against each, any, or all of the
Borrowers, whether action is brought against any other or all of such
Borrowers, or any one or more of the Borrowers is or is not joined therein.
Each Borrower agrees that any release which may be given to any one or more of
the Borrowers or any guarantor of the Obligations shall not release any other
Borrower from its obligations hereunder. Each Borrower hereby waives any right
to assert against Agent or any Bank any defense (legal or equitable), set off,
counterclaim, or claims which such Borrower individually may now or any time
hereafter have against another Borrower or any other party liable to Agent or
any Bank in any manner whatsoever. Each Borrower consents and agrees that
Agent or any Bank shall not be under any obligation to marshall any assets in
favor of such Borrower or against or in payment of any of or all of the
Obligations.
(g) Any and all present and future debt and other
obligations of any Borrower to any other Borrower are hereby subordinated to
the full payment and performance of the Obligations; provided, however, such
debt and other obligations may be incurred and repaid, subject to the terms of
this Agreement, so long as no Default or Event of Default shall have occurred
and not have been waived.
(h) Each Borrower is presently informed as to the
financial condition of each of the other Borrowers and of all other
circumstances which a diligent inquiry would reveal and which bear upon the
risk of nonpayment of the Obligations. Each Borrower hereby covenants that it
will continue to keep itself informed as to the financial condition of all
other Borrowers, the status of all other Borrowers, and of all circumstances
which bear upon the risk of nonpayment. Absent a written request from any of
the Borrowers to Agent for information, each Borrower hereby waives any and
all rights it may have to require Agent or Banks to disclose to such Borrower
any information which Agent or Banks may now or hereafter acquire concerning
the condition or circumstances of any of the Borrowers.
(i) Except to the extent that the Parent is entitled to
notices on behalf of Borrowers, each Borrower waives all rights to notices of
default, existence, creation, or incurring of new or additional indebtedness,
and all other notices of formalities to which such Borrower may, as a joint
and several Borrower hereunder, be entitled.
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<PAGE> 20
2.15. DEFAULTING BANK. In the event that, at any time, any
Bank shall be a Defaulting Bank, (a) a Defaulted Amount owed to Agent, Issuing
Bank or another Bank shall bear interest at an annual rate equal to the
Federal Funds Rate for the first three Business Days such Defaulted Amount is
owing, and thereafter at a rate of 3% above the Federal Funds Rate, and (b)
Agent may apply all monies that would otherwise be payable to the Defaulting
Bank under the Loan Documents instead to the payment of any Defaulted Amounts
owed to the following Persons, in the following order of priority: first to
Agent, then to Issuing Bank, then to the other Banks, then to Borrowers. In
addition, a Person owed a Defaulted Amount may exercise all available remedies
to collect such Defaulted Amount from the Defaulting Bank.
Section 3. REPRESENTATIONS AND WARRANTIES.
Each Borrower hereby warrants and represents to Agent and
Banks the following:
3.1. ORGANIZATION AND QUALIFICATION. Each Borrower is a duly
organized, validly existing corporation in good standing under the laws of the
state or jurisdiction of incorporation, has the power and authority (corporate
and otherwise) to carry on its business and to enter into and perform this
Agreement, the Notes and the other Loan Documents and is qualified and
licensed to do business in each jurisdiction in which a failure to so qualify
would have a material adverse effect on its financial condition. All
information set forth in the Specific Representations Exhibit to the Security
Agreement of each Borrower is true and correct as of the date of this
Agreement.
3.2. DUE AUTHORIZATION. The execution, delivery and
performance by each Borrower of this Agreement, its Security Agreement, the
Notes and the other Loan Documents have been duly authorized by all necessary
corporate action, and will not contravene any law or any governmental rule or
order binding on such Borrower, or the Articles of Incorporation or Code of
Regulations of such Borrower, nor violate any agreement or instrument by which
a Borrower is bound nor result in the creation of a Lien on any assets of a
Borrower except the Lien granted to Agent herein. Each Borrower has duly
executed and delivered this Agreement, its Security Agreement, the Notes and
the other Loan Documents and they are valid and binding obligations of such
Borrower enforceable according to their respective terms except as limited by
equitable principles and by bankruptcy, insolvency or similar laws affecting
the rights of creditors generally. No notice to or consent by any governmental
body is needed in connection with this transaction, except for appropriate
filing of the Security Documents.
3.3. LITIGATION. Except as set forth on Exhibit 3.3 or as
materially covered by insurance, there are no suits or proceedings currently
pending or threatened against a Borrower, and no proceedings before any
governmental body is currently pending or threatened against any Borrower.
3.4. MARGIN STOCK. No part of the Loans will be used to
purchase or carry, or to reduce or retire or refinance any credit incurred to
purchase or carry, any margin stock (within the meaning of Regulations U and X
of the Board of Governors of the Federal Reserve System) or to
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<PAGE> 21
extend credit to others for the purpose of purchasing or carrying any margin
stock. If requested by Agent, Borrowers will furnish to Agent statements in
conformity with the requirements of Federal Reserve Form U-1.
3.5. BUSINESS. No Borrower is a party to or subject to any
agreement or restriction which in the opinion of such Borrower's management is
so unusual or burdensome that it might have a material adverse effect on such
Borrower's business or properties.
3.6. LICENSES, ETC. Each Borrower has obtained any and all
licenses, permits, franchises, governmental authorizations, patents,
trademarks, copyrights or other rights necessary for the ownership of its
properties and the advantageous conduct of its business. Each Borrower
possesses adequate licenses, patents, patent applications, copyrights,
trademarks, trademark applications, and trade names to continue to conduct its
business as previously conducted by it, without any conflict with the rights
of any other person or entity. All of the foregoing are in full force and
effect and none of the foregoing are in known conflict with the rights of
others, except with respect to certain litigation disclosed on attached
Exhibit 3.3.
3.7. LAWS AND TAXES. Each Borrower is in material compliance
with all laws, regulations, rulings, orders, injunctions, decrees, conditions
or other requirements applicable to or imposed upon such Borrower by any law
or by any governmental authority, court or agency. Excluding items being
diligently contested in good faith and from which a Borrower has established
adequate reserves or other appropriate provisions as required by generally
accepted accounting principles, each Borrower has filed all required tax
returns and reports that are now required to be filed by it in connection with
any federal, state and local tax, duty or charge levied, assessed or imposed
upon such Borrower or its assets, including unemployment, social security, and
real estate taxes. Each Borrower has paid all taxes which are now due and
payable. No taxing authority has asserted or assessed any additional tax
liabilities against any Borrower which are outstanding on the date of this
Agreement, and no Borrower has filed for any extension of time for the payment
of any tax or the filing of any tax return or report.
3.8. FINANCIAL CONDITION. All historical financial
information relating to Borrowers which has been or may hereafter be delivered
by Borrowers on their behalf to Agent is true and correct in all material
respects and has been prepared in accordance with generally accepted
accounting principles consistently applied (excluding, however, interim
financial statements which are not prepared in accordance with generally
accepted accounting principles). Borrowers have no material obligations or
liabilities of any kind not disclosed in that financial information which
should be so disclosed in accordance with generally accepted accounting
principles, and there has been no material adverse change in the financial
condition of Borrowers nor have Borrowers suffered any damage, destruction or
loss which has materially adversely affected its business or assets since the
submission of the most recent financial information to Agent.
3.9. TITLE. Each Borrower has good and marketable title to
the assets reflected on the most recent balance sheet submitted to Agent, free
and clear from all liens and encumbrances of
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any kind, except for (collectively, the "Permitted Liens"): (a) taxes and
assessments not yet due and payable, (b) liens and encumbrances, if any,
reflected or noted on such balance sheet or notes thereto, (c) assets
(including inventory and obsolete or worn-out equipment) disposed of in the
ordinary course of business, (d) any security interests, pledges, assignments
or mortgages granted to Agent or Banks to secure the repayment or performance
of the Obligations, (e) easements and other restrictions of record which do
not materially and adversely impact the use of a Borrower's property, (f)
capital leases in an amount not to exceed $500,000 at any time, (g) liens
securing purchase money security interests in an amount not to exceed $300,000
at any time so long as such liens only secure the asset being financed by such
purchase money financing, and (h) items set forth on attached Exhibit 3.9.
3.10. DEFAULTS. Each Borrower is in material compliance with
all material agreements applicable to it and there does not now exist any
default or material violation by such Borrower of or under any of the terms,
conditions or obligations of (a) its Articles of Incorporation,
Regulations/Bylaws or other applicable governing instruments, or (b) any
indenture, mortgage, deed of trust, franchise, permit, contract, agreement or
other instrument to which a Borrower is a party or by which it is bound, and
the consummation of the transactions contemplated by this Agreement will not
result in such default or violation.
3.11. ENVIRONMENTAL LAWS.
(a) Each Borrower has obtained all material permits,
licenses and other authorizations or approvals which are required under
Environmental Laws and each Borrower is in compliance in all material respects
with all terms and conditions of the required permits, licenses,
authorizations and approvals, and is also in compliance in all material
respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws.
(b) Borrowers are not aware of, and have not received
notice of, any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent compliance or continued compliance, in any material respect, with
Environmental Laws, or may give rise to any material common law or legal
liability, or otherwise form the basis of any material claim, action, demand,
suit, proceeding, hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
(c) There is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice or demand letter, notice of
violation, investigation or proceeding pending or threatened against any
Borrower, relating in any way to Environmental Laws.
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3.12. SUBSIDIARIES AND PARTNERSHIPS. As of the date of this
Agreement, no Borrower has any subsidiaries or is a party to any partnership
agreement or joint venture agreement other than those set forth on Exhibit
3.12 attached to this Agreement (as such Exhibit may be updated by Borrowers
from time to time).
3.13. ERISA. Borrowers and all individuals or entities which
along with Borrowers would be treated as a single employer under ERISA or the
Internal Revenue Code of 1986, as amended (an "ERISA Affiliate"), are in
compliance with all of their obligations to contribute to any "employee
benefit plan" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, and any regulations promulgated
thereunder from time to time ("ERISA"). Borrowers and each of their ERISA
Affiliates are in compliance in all material respects with ERISA, and there
exists no event described in Section 4043(b) thereof ("Reportable Event").
3.14. SOLVENCY. Each Borrower individually is, and Borrowers
taken as a whole are, Solvent and upon consummation of the transactions
contemplated by this Agreement will be Solvent. "Solvent" means that: (a) the
present fair salable value of a person's assets (including its right of
contribution arising pursuant to the Contribution Agreement or otherwise at
law) is in excess of the total amount of its liabilities (including contingent
liabilities); (b) a person does not have unreasonably small capital and is
able to pay its debts as they become due; and (c) a person does not intend to
or believe it will incur obligations beyond its ability to pay as they mature.
Section 4. AFFIRMATIVE COVENANTS.
4.1. BOOKS AND RECORDS. Borrowers will maintain proper books
of account and records and enter therein complete and accurate entries and
records of all of their transactions in accordance with generally accepted
accounting principles and give representatives of Agent access thereto at all
reasonable times upon reasonable prior notice, including permission to
examine, copy and make abstracts from any such books and records and such
other information which might be helpful to Agent in evaluating the status of
the Loans as it may reasonably request from time to time. Borrowers will give
Agent reasonable access to the Collateral and the other property securing the
Obligations for the purpose of performing examinations thereof and to verify
its condition or existence. Agent may conduct an internal audit of all books
and records of Borrowers up to two times per year, at its discretion.
4.2. FINANCIAL STATEMENTS. Borrowers will maintain a
standard and sufficient system for accounting and will furnish to Agent (who
shall be obligated hereby to distribute the same promptly to Banks):
(a) Within twenty (20) days after the end of each month
(excluding December), a copy of Parent's consolidated financial statements for
that month and for the year to date in a form reasonably acceptable to Agent,
prepared and certified as complete and correct in all material respects,
subject to changes resulting from year-end adjustments, by the principal
financial officer of Parent;
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(b) Within forty-five (45) days after the end of each
quarter, a copy of Parent's consolidated financial statements for that quarter
reviewed by a firm of independent certified public accountants acceptable to
Agent (which acceptance will not be unreasonably withheld), and accompanied by
a standard letter of review for the year to date in a form reasonably
acceptable to Agent, prepared and certified as complete and correct in all
material respects, subject to changes resulting from year-end adjustments, by
the principal financial officer of Parent and also a Compliance Certificate
which sets forth the computation of the financial status of Parent (on a
consolidated basis) with respect to the financial covenants contained in
Sections 5.8 through 5.14 of this Agreement;
(c) Within ninety (90) days after the end of each fiscal
year, a copy of Borrowers' consolidated financial statements for that year
audited by a firm of independent certified public accountants acceptable to
Agent (which acceptance will not be unreasonably withheld), and accompanied by
a standard audit opinion of such accountants without qualification; and within
120 days after the end of each fiscal year, a management letter of such
accountants in connection with such audit;
(d) With the statements submitted under (a), (b) and (c)
above, a certificate signed by the principal financial officer of Parent, (i)
stating he is familiar with all documents relating to Borrowers' borrowing
relationship with Banks and that no Event of Default specified in this
Agreement, nor any event which upon notice or lapse of time, or both would
constitute such an Event of Default, has occurred, or if any such condition or
event existed or exists, specifying it and describing what action Borrowers
have taken or propose to take with respect thereto, and (ii) setting forth, in
summary form, figures showing the financial status of Borrowers in respect of
the financial covenants contained in Sections 5.8 through 5.14 of this
Agreement;
(e) With the financial statements submitted under clause
(b) above, an agreed upon procedures letter from such accountants with respect
to the following accounts: (i) Cost and Estimated Earnings in Excess of
Billings on Uncompleted Contracts; (ii) Customer Deposits/Progress Payments;
(iii) Work-in-Progress; and (iv) Inventory/Stock. This agreed upon procedures
letter shall detail the following procedures performed with respect to such
accounts:
(i) Obtain detailed supporting schedules for such
accounts;
(ii) Agree the reconciliation of such accounts to the
general ledger and the detailed supporting schedules as of quarter-end: foot
the reconciliation and inquire of the Borrowers' management regarding any
reconciling items and their applicability to the income statement;
(iii) Trace the general ledger account balances to the
work papers used for the quarterly financial statement presentation (i.e.
ensure that general ledger balances are accurately reflected in the financial
statements); and
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(iv) Determine that the procedures followed by
Borrowers to reconcile such accounts on a monthly basis are consistent with
those utilized quarterly.
(f) Within twenty (20) days after the end of each month, a
work-in-process report, receivables aging report and Collateral Report in form
and substance acceptable to Agent;
(g) Prior to the end of each fiscal year, a projected
balance sheet, projected income statement and projected statement of cash flow
for the subsequent fiscal year in detail reasonably acceptable to Agent
(h) Immediately upon any officer of a Borrower obtaining
knowledge of any condition or event which constitutes or, after notice or
lapse of time or both, constitutes an Event of Default, a certificate of such
person specifying the nature and period of the existence thereof, and what
action Borrowers have taken or are taking or propose to take in respect
thereof; and
(i) Upon request, copies of all federal, state and local
income tax returns and such other information as Agent may reasonably request.
If at any time a Borrower has any additional subsidiaries which have financial
statements that could be consolidated with those of such Borrower under
generally accepted accounting principles, the financial statements required by
subsections (a) and (b) above will be the financial statements of Borrowers
and all such subsidiaries prepared on a consolidating (with respect to each of
the three categories of business) and consolidated basis.
4.3. CONDITION AND REPAIR. Each Borrower will maintain its
assets in good repair and working order (ordinary wear and tear excepted) and
will make all appropriate repairs and replacements thereof.
4.4. INSURANCE. Each Borrower will insure its properties and
business against loss or damage of the kinds and in the amounts customarily
insured against by corporations with established reputations engaged in the
same or similar business as a Borrower. All such policies will (a) be issued
by financially sound and reputable insurers, (b) name Agent as an additional
insured and, where applicable, as loss payee under a lender loss payable
endorsement satisfactory to Agent, and (c) will provide for thirty (30) days
written notice to Agent before such policy is altered or canceled, all of
which will be evidenced by a Certificate of Insurance delivered to Agent by
Borrowers on the date of execution of this Agreement.
4.5. TAXES. Each Borrower will pay when due all taxes, assessments
and other governmental charges imposed upon it or its assets, franchises,
business, income or profits before any penalty or interest accrues thereon,
and all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which by law might be a lien or charge upon
any
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of its assets, provided that (unless any material item or property would be
lost, forfeited or materially damaged as a result thereof) no such charge or
claim need be paid if it is being diligently contested in good faith, if Agent
is notified in advance of such contest and if an adequate reserve is
established or other appropriate provision required by generally accepted
accounting principles.
4.6. EXISTENCE; BUSINESS. Each Borrower will (a) maintain
its existence, (b) engage primarily in the three general categories of
business (being security hardware, security services and security integration
services), and (c) refrain from entering into any lines of business
substantially different from such three categories of business or activities
in which Borrowers are presently engaged.
4.7. COMPLIANCE WITH LAWS. Each Borrower will comply with
all federal, state and local laws, regulations and orders applicable to such
Borrower or its assets including but not limited to all Environmental Laws, in
all respects material to a Borrower's business, assets or prospects and will
immediately notify Agent of any material violation of any rule, regulation,
statute, ordinance, order or law relating to the public health or the
environment and of any complaint or notifications received by a Borrower
regarding to any environmental or safety and health rule, regulation, statute,
ordinance or law.
4.8. NOTICE OF DEFAULT. Each Borrower will, within three (3)
days of its knowledge thereof, give written notice to Agent of: (a) the
occurrence of any event or the existence of any condition which would be,
after notice or lapse of applicable grace periods, an Event of Default, and
(b) the occurrence of any event or the existence of any condition which would
prohibit a Borrower from continuing to make the representations set forth in
this Agreement.
4.9. COSTS. Borrowers will pay to Agent and each Bank its
respective fees, costs and expenses (including, without limitation, reasonable
attorneys' fees, other professionals' fees), expert fees, court costs,
litigation and other expense (collectively, "Costs") incurred or paid by them
in connection with the negotiating, documenting, administering and enforcing
the Loans and the Loan Documents and the defense, preservation and protection
of Agent and Banks' rights and remedies thereunder, including without
limitation, its security interest in the Collateral or any other property
pledged to secure the Loans, whether incurred in bankruptcy, insolvency,
foreclosure or other litigation or proceedings or otherwise. The Costs will be
due and payable upon demand by Agent or a Bank. If Borrowers fail to pay the
Costs when upon such demand, Banks are entitled to disburse such sums as an
advance under the Revolving Credit Facility. Thereafter, the Costs will bear
interest from the date incurred or disbursed at the highest rate set forth in
the Revolving Note. This provision will survive the termination of this
Agreement and/or the repayment of any amounts due or the performance of any
Obligation.
4.10. DEPOSITORY/BANKING SERVICES. So long as this Agreement
is in effect, Fifth Third will be the principal depository in which
substantially all of Borrowers' funds are deposited, and the principal bank of
account of Borrowers. Borrowers will also maintain a non-interest bearing
account with Fifth Third at all times during the term of this Agreement with a
collected balance of
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at least $250,000 deposited therein. Borrowers will grant Fifth Third the
first and last opportunity to provide any corporate banking services required
by Borrowers, including, without limitation, payroll, cash management and
employee benefit plan services. Notwithstanding the foregoing, Banks consent
to Irish and Subsidiaries of a Borrower domiciled outside of the United States
establishing and maintaining bank accounts with banks in their respective
country.
4.11. OTHER AMOUNTS DEEMED LOANS. If a Borrower fails to pay
any tax, assessment, governmental charge or levy or to maintain insurance
within the time permitted or required by this Agreement, or to discharge any
Lien prohibited hereby, or to comply with any other Obligation, a Bank may,
but shall not be obligated to, pay, satisfy, discharge or bond the same for
the account of such Borrower, and to the extent permitted by law and at the
option of such Bank, all monies so paid by a Bank on such behalf of such
Borrower will be deemed Loans and Obligations.
4.12. FRENCH DOCUMENTS. Borrowers shall cause the
appropriate parties to execute and deliver share pledges, guarantees (to the
extent permitted by French law) and other security over assets from the
following: (a) shareholders of O'Gara France, S.A.; (b) O'Gara France, S.A.;
and (c) Labbe. Any documents required by Agent not delivered on the date
hereof shall be executed and delivered within twenty (20) days of the date of
this Agreement.
4.13. NEXT DESTINATION. Borrowers shall cause the delivery
to Agent of a share pledge of the shares of Next Destination Limited in form
and substance reasonably acceptable to Agent. Borrowers shall not permit Next
Destination Limited to encumber its assets without the prior consent of Agent.
4.14. LIFE INSURANCE. Borrowers shall deliver to Agent the
Life Insurance Policy and an acknowledged Collateral Assignment of such Life
Insurance Policy within sixty (60) days of the date of this Agreement, as
contemplated by the Security Agreement from Parent.
Section 5. NEGATIVE COVENANTS.
5.1. PREPAYMENTS. So long as no Event of Default is
continuing or will occur as a result of such prepayment, Borrowers will not
voluntarily prepay any Indebtedness prior to the stated maturity date thereof
other than (i) the Obligations and (ii) Indebtedness to trade creditors where
the prepayment will result in either a discount on the amount due or delivery
of shipments of goods from suppliers that maintain credit limits with respect
to receivables from a Borrower.
5.2. PLEDGE OR ENCUMBRANCE OF ASSETS. Other than the
Permitted Liens, Borrowers will not create, incur, assume or permit to exist,
arise or attach any Lien in any present or future asset, except for Liens to
Agent or Banks, Liens arising with respect to government progress billings,
Liens existing on the date of this Agreement which have been disclosed to and
approved by Banks and Liens imposed by law which secure amounts not at the
time due and payable.
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5.3. GUARANTEES AND LOANS. Borrowers will not enter into any
direct or indirect guarantees other than by endorsement of checks for deposit
or other than in the ordinary course of business nor make any advance or loan
other than in the ordinary course of business as presently conducted,
including, without limitation, loans and advances to employees of a Borrower
(except in connection with reimbursable business or travel expenses), but
excluding, however, the following: (a) guaranties of obligations of
Subsidiaries; (b) loans and other advances to Subsidiaries; (c) loans in
connection with acquisitions permitted under this Agreement; and (d) advances
to vendors in the ordinary course of business.
5.4. MERGER; DISPOSITION OF ASSETS. No Borrower will (a)
change its capital structure, (b) merge or consolidate with any corporation,
(c) amend or change its Articles of Incorporation or Code of Regulations or
(d) sell, transfer or otherwise dispose of all or any substantial part of its
assets, whether now owned or hereafter acquired.
5.5. TRANSACTIONS WITH AFFILIATES. Except as otherwise
permitted by this Agreement or as fully disclosed in Parent's S-1 Filing with
the Securities and Exchange Commission, no Borrower will (a) directly or
indirectly issue any guarantee for the benefit of any of its Affiliates, other
than transactions entered into on an arm's length basis in the normal course
of a Borrower's business, (b) directly or indirectly make any loans or
advances to or investments in any of its Affiliates, other than transactions
entered into on an arm's length basis in the normal course of a Borrower's
business, (c) enter into any transaction with any of its Affiliates, other
than transactions entered into on an arm's length basis in the normal course
of a Borrower's business, or (d) divert (or permit anyone to divert) any of
its business opportunities to any Affiliate or any other corporate or business
entity in which a Borrower or its shareholders holds a direct or indirect
interest.
5.6. INVESTMENTS. Borrowers will not purchase or hold
beneficially any stock, securities or evidences of indebtedness of, or make
any investment or acquire any interest in, any other firm, partnership,
corporation or entity other than (a) short term investments of excess working
capital in (i) direct or guaranteed obligations of the United States, or any
agencies thereof, or (ii) investments (of one year or less) in certificates of
deposit of banks or trust companies organized under the laws of the United
States or any jurisdiction thereof, provided that such banks or trust
companies are insured by the Federal Deposit Insurance Corporation and have
capital in excess of $25,000,000; (b) stock of Subsidiaries; (c) trade credit
in the ordinary course of business; (d) the Labbe Transaction and (e) the
acquisition of International Training, Inc.
5.7. FOREIGN INVESTMENTS. Borrowers will not make loans,
advances or cash investments in any foreign entity or entities, in an
aggregate amount in excess of $17,000,000 at any time.
5.8. INDEBTEDNESS TO TANGIBLE NET WORTH (the "Leverage
Ratio"). Parent (on a consolidated basis) will not permit its ratio of
outstanding Indebtedness to Tangible Net Worth, on a consolidated basis during
the following time periods, to exceed the following:
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PERIOD ENDING MAXIMUM RATIO
12/31/97 - 06/29/98 5.50 : 1.00
06/30/98 - 12/30/98 5.00 : 1.00
12/31/98 - 06/29/99 3.00 : 1.00
06/30/99 - Thereafter 2.25 : 1.00
5.9. TANGIBLE NET WORTH. Parent (on a consolidated basis)
will not permit its Tangible Net Worth, on a consolidated basis, at any time
during the following time periods to be less than the following:
PERIOD ENDING REQUIREMENT
Closing through 03/30/97 $ 3,500,000
03/31/97 - 06/29/97 $ 5,000,000
06/30/97 - 12/30/97 $ 6,500,000
12/31/97 - 06/29/98 $10,500,000
06/30/98 - 12/30/98 $15,000,000
12/31/98 - 06/29/99 $19,000,000
06/30/99 - Thereafter $25,000,000
5.10. DEBT SERVICE COVERAGE RATIO. As of the end of each
fiscal quarter, Parent (on a consolidated basis) will not permit its Debt
Service Coverage Ratio, on a consolidated basis, to be less than 1.30: 1.00 so
long as any of the Obligations remain outstanding.
5.11. CURRENT RATIO. Parent (on a consolidated basis) will
not permit its Current Ratio, on a consolidated basis, to be less than 1.10:1.00
so long as any of the Obligations remain outstanding.
5.12. CASH FLOW COVERAGE. Parent (on a consolidated basis)
will not permit its consolidated ratio of Funded Debt to Cash Flow (on a
consolidated basis on a 4-quarter rolling basis) to be more than (a) 2.50 : 1.00
from the date of this Agreement through December 30, 1997 and (b) 2.0 : 1.0 from
December 31, 1997 and thereafter.
5.13. INDEBTEDNESS. Borrowers will not incur, create, assume
or permit to exist Indebtedness in excess of $60,000,000 at any time during
the term of this Agreement (excluding therefrom inter-company loans between
Borrowers).
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5.14. CAPITAL EXPENDITURES. Borrowers will not make any
capital expenditures (including capitalized leases), or any commitment
therefor, in any fiscal year in excess of $1,500,000.
5.15. DIVIDENDS. Parent will not declare or pay any dividend
or distributions (except stock dividends) on its capital stock, or redeem any
shares of its capital stock without the prior written approval of Agent.
5.16. INTEREST RATE PROTECTION. Borrowers will obtain by
July 1, 1997 and maintain interest rate protection/hedging arrangements from
an Interest Rate Provider for a minimum of 75% of the outstanding principal
balance of the Term Loan. Such arrangements shall be subject to the review and
approval of Required Banks.
Section 6. EVENTS OF DEFAULT AND REMEDIES.
6.1. EVENTS OF DEFAULT. Any of the following events will be
an Event of Default ("Event of Default"):
(a) any representation or warranty made by any Borrower
herein or in any of the Loan Documents is incorrect in any material respect when
made or reaffirmed; or
(b) A Borrower defaults in the payment of any
principal or interest on any Obligation within ten (10) days of when due and
payable, by acceleration or otherwise; or
(c) A Borrower defaults under the following provisions:
4.10; 5.1; 5.6; 5.7; 5.8; 5.9; 5.10, 5.11, 5.12, 5.13, 5.14 and 5.15; or
(d) A Borrower fails to observe or perform any covenant,
condition or agreement herein and fails to cure such default within thirty (30)
days after written notice thereof from Agent, provided that such thirty (30) day
grace period will not apply to (i) a breach of any covenant which in Required
Bank's good faith judgment is incapable of cure, (ii) any failure to maintain
insurance or permit inspection of the Collateral or of the books and records of
a Borrower, (iii) any breach of any provisions specified in Sections 6.1(a), (b)
or (c), or (iv) any breach of any covenant which has occurred prior to the date
of this Agreement; or
(e) a court enters a decree or order for relief with
respect to any Borrower in an involuntary case under any applicable
bankruptcy, insolvency or other similar law then in effect, or appoints a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of a Borrower or for any substantial part of its property,
or orders the wind-up or liquidation of its affairs; or a petition initiating
an involuntary case under any such bankruptcy, insolvency or similar law is
filed and is pending for forty-five (45) days without dismissal; or
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(f) A Borrower commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law in effect, or makes
any general assignment for the benefit of creditors, or fails generally to
pay its debts as such debts become due;
(g) A Borrower defaults under the terms of any
Indebtedness or lease involving total payment obligations of such Borrower in
excess of $500,000, and such default gives any creditor or lessor the right
to accelerate the maturity of any such indebtedness or lease payments which
right is not contested by such Borrower or is determined by any court of
competent jurisdiction to be valid and such Borrower fails to pay such
obligation within thirty (30) days; or
(h) final judgment of the payment of money in excess of
$500,000 is rendered against a Borrower and remains undischarged for 10 days
during which execution is not effectively stayed; or
(i) any event occurs which has a material adverse effect
on the Collateral or on a Borrower's financial condition, operations or
assets, or on any other property securing the repayment of the Obligations;
or
(j) a material change occurs in the collective management
of Parent; or
(k) an Event of Default occurs under any Loan Document;
or
(l) the dissolution of Parent; or
(m) the commencement of any foreclosure proceedings,
proceedings in aid of execution, attachment actions, levies against, or the
filing by any taxing authority of a lien against any material part of the
Collateral or any material part of the property securing the repayment of
any of the Obligations; or
(n) the loss, theft or substantial damage to the
Collateral or any property securing the repayment of the Obligations if the
result of such occurrence will be, in Agent's reasonable judgment, the
failure or inability of a Borrower to continue substantially normal
operation of its business within thirty (30) days of the date of such
occurrence, unless the same is covered by business interruption insurance;
(o) Fifth Third ceases to be Parent or Armoring's (i)
principal depository bank where its funds are deposited, and (ii) principal
bank of account.
(p) (i) the validity or effectiveness of any of the Loan
Documents or its transfer, grant, pledge, mortgage, or assignment by the
party executing such Loan Document is impaired; (ii) any party executing any
of the Loan Documents asserts that any of such Loan Documents is not a
legal, valid and binding obligation of the party thereto enforceable in
accordance with its terms, except to the extent that enforcement thereof may
be limited by equitable principles
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or by bankruptcy, insolvency or other similar laws affecting the rights of
creditors generally; (iii) the security interest or Lien purporting to be
created by any of the Loan Documents will for any reason cease to be a valid,
perfected lien subject to no other liens other than Liens permitted by the
terms of this Agreement; or (iv) any Loan Document is amended, hypothecated,
subordinated, terminated or discharged, or if any person is released from any
of its covenants or obligations under any of the Loan Documents except as
permitted by Agent in writing; or
(q) Agent in good faith reasonably believes after due
inquiry that the ability of the Borrowers to make their payments or perform
their obligations hereunder or under any of the Loan Documents has been
materially and adversely impaired;
(r) a Reportable Event (as defined in ERISA) occurs
with respect to any employee benefit plan maintained by a Borrower for its
employees other than a Reportable Event caused solely by a decrease in
employment or other event that would not have a material adverse effect on
such employee benefit plan; or a trustee is appointed by a United States
District Court to administer any employee benefit plan; or the Pension Benefit
Guaranty Corporation institutes proceedings to terminate any of a Borrower's
employee benefit plans; or
(s) the filing of any lien or charge against the
Collateral or any part thereof which is not permitted by this Agreement and
is not removed to the satisfaction of Agent within a period of 30 days
thereafter; or
(t) the abandonment by a Borrower of all or any part
of the Collateral, except for sales of inventory in the ordinary course of
business or dispositions of obsolete or worn- out equipment.
6.2. REMEDIES. If any Event of Default occurs, Banks may
cease advancing money hereunder and Agent may (i) declare all Obligations to
be immediately due and payable, whereupon such Obligations will immediately
become due and payable, (ii) exercise any and all rights and remedies provided
by applicable law and the Loan Documents, (iii) proceed to realize upon the
Collateral or any property securing the Obligations, including, without
limitation, causing all or any part of the Collateral to be transferred or
registered in its name or in the name of any other person, firm or
corporation, with or without designation of the capacity of such nominee, all
without presentment, demand, protest, or notice of any kind, each of which are
hereby expressly waived by Borrowers. Each Borrower shall be liable for any
deficiency remaining after disposition of any Collateral, and waives all
valuation and appraisement laws.
6.3. SETOFF. If any Event of Default occurs, each Bank is
authorized, without notice to Borrowers, to offset and apply to all or any
part of the Obligations all moneys, credits and other property of any nature
whatsoever of Borrowers now or at any time hereafter in the possession of, in
transit to or from, under the control or custody of, or on deposit with
(whether held by any Borrower individually or jointly with another party), a
Bank, including but not limited to certificates of deposit.
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6.4. DEFAULT RATE. After the occurrence of an Event of
Default, all amounts of principal outstanding as of the date of the occurrence
of such Event of Default will accrue interest at the Default Rate, in Agent's
sole discretion, without notice to Borrowers. This provision does not
constitute a waiver of any Events of Default or an agreement by Agent (for the
pro-rata benefit of Banks) to permit any late payments whatsoever.
6.5. LATE PAYMENT PENALTY. If any payment of principal is
not paid when due (whether at maturity, by acceleration or otherwise after the
expiration of any applicable notice, grace and cure periods), Borrowers agree
to pay to Agent (for the pro-rata benefit of Banks) a late payment fee equal
to five percent (5%) of the payment amount then due.
6.6. NO REMEDY EXCLUSIVE. No remedy set forth herein is
exclusive of any other available remedy or remedies, but each is cumulative
and in addition to every other remedy available under this Agreement, the Loan
Documents or as may be now or hereafter existing at law, in equity or by
statute. Each Borrower waives any requirement of marshaling of assets which
may be secured by any of the Loan Documents.
6.7. EFFECT OF TERMINATION. The termination of this
Agreement will not affect any rights of any party or any obligation of any
party to the other, arising prior to the effective date of such termination,
and the provisions hereof shall continue to be fully operative until all
transactions entered into, rights created or Obligations incurred prior to
such termination have been fully disposed of, concluded or liquidated. The
security interest, lien and rights granted to Agent and Banks hereunder and
under the Loan Documents will continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that no Loans
are outstanding to Borrowers, until all of the Obligations, have been paid in
full.
Section 7. CONDITIONS PRECEDENT.
7.1. CONDITIONS TO INITIAL LOANS. Banks will have no
obligation to make or advance any Revolving Loan, the Term Loans or any
Letters of Credit until Borrowers have delivered to Agent at or before the
closing date, in form and substance satisfactory to Agent:
(a) The executed Notes.
(b) A Certificate of Borrower from each Borrower in the
form of Exhibit 7.1(b) and all attachments thereto.
(c) A favorable opinion of counsel to Borrowers,
substantially in the form of Exhibit 7.1(c) attached hereto.
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<PAGE> 34
(d) An executed version of the Security Agreement from
each Borrower in the form of Exhibit 8.5 attached hereto along with a
completed version on Schedule I attached thereto entitled "Specific
Representations".
(e) All appropriate financing statements (Form UCC-1)
and consents or waivers of material landlords, as requested by Agent.
(f) UCC searches, tax lien and litigation searches,
insurance certificates, notices or other documents which Agent may require to
reflect, perfect or protect Agent's first priority lien in the Collateral and
all other property pledged to secure the Obligations and to fully consummate
this transaction.
(g) All requisite releases of liens, termination
statements and satisfactions of mortgages necessary to release all liens and
encumbrances not permitted hereunder against the Collateral and any other
property pledged to secure the Loans and all requisite waivers and
subordination agreements, in a form satisfactory to Agent, to be executed and
delivered by any Borrower's landlords and mortgagees which are necessary to
grant Agent for the Banks a first lien in the Collateral, including but not
limited to all Inventory and Equipment of Borrowers.
(h) Borrowers have paid or will pay to Agent and Banks
all out of pocket expenses incurred by them in connection with the preparation
of this Agreement and accompanying documents and the consummation of the
transactions contemplated hereby.
(i) A Certificate of Insurance as described in
Section 4.4 hereof.
(j) Banks shall have completed to their reasonable
satisfaction an audit of the books and records of Borrowers, including the
Collateral. It is understood, however, that any such audit by Banks will in no
respect waive Banks' rights to pursue remedies upon an Event of Default.
(k) executed copies of all documents set forth on Agent's
document list for this transaction.
(l) Such additional information and materials as Agent
and any Bank may reasonably request.
7.2. CONDITIONS TO EACH REVOLVING LOAN. On the date of each
Revolving Loan, the following statements will be true:
(a) All of the representations and warranties contained
herein and in the Loan Documents will be correct in all material respects as
though made on such date.
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<PAGE> 35
(b) No event will have occurred and be continuing, or
would result from such Revolving Loan, which constitutes an Event of Default,
or would constitute an Event of Default but for the requirement that notice
be given or lapse of time or both.
(c) The aggregate unpaid principal amount of the
Revolving Loans after giving effect to such Revolving Loan will not violate
the lending limits set forth in Section 2.1 of this Agreement.
(d) The acceptance by Borrowers of the proceeds of each
Revolving Loan will be deemed to constitute a representation and warranty by
Borrowers that the conditions in Section 7.2 of this Agreement, other than
those that have been waived in writing by the Required Banks, have been
satisfied.
Section 8. AGENT.
8.1. APPOINTMENT. Each Bank hereby irrevocably designates
and appoints The Fifth Third Bank as Agent of such Bank, and each such Bank
hereby irrevocably authorizes The Fifth Third Bank, as Agent for such Bank, to
take such actions on its behalf under the provisions of this Agreement, and to
exercise such powers and perform such duties as are expressly delegated to
Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto; provided, however, that Agent shall not be
required to take any action that exposes Agent to personal liability or that
is contrary to this Agreement or applicable law. Each Bank hereby authorizes,
consents to and directs Borrowers to deal with Agent as the true and lawful
agent of such Bank to the extent set forth hereunder. Notwithstanding any
provision to the contrary elsewhere in this Agreement, Agent shall not have
any duties or responsibilities, except those expressly set forth herein or
therein, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or otherwise exist against Agent.
8.2. DELEGATION OF DUTIES. Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care, and
reliance upon advice of counsel in good faith shall be full justification for
any act or omission of Agent.
8.3. EXCULPATORY PROVISIONS. Neither Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall
be (a) liable to any of Banks or Borrowers for any action lawfully taken or
omitted to be taken by it or by any such person under or in connection with
the Loan Documents, except that Agent shall be liable for its own willful
misconduct or gross negligence, or (b) responsible in any manner to any of
Banks for any recitals, statements, representations or warranties made by
Borrowers or any officer of either, contained in the Loan Documents or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, the Loan Documents or
for the value, legality,
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<PAGE> 36
validity, effectiveness, genuineness, enforceability or sufficiency of the
Loan Documents or the Notes or any failure of Borrowers to perform their
obligations hereunder or thereunder. Agent shall not be under any obligation
to any Bank to ascertain or inquire as to the observance or performance of any
of the agreements contained in, or conditions of, the Loan Documents or any of
the Notes, or to inspect the properties, books or records of Borrowers or any
Subsidiary. Agent shall not be under any liability or responsibility
whatsoever, as Agent, to Borrowers or any other Person as a consequence of any
failure or delay in performance by, or breach by, any Bank of any of its
obligations under any of the Loan Documents, or as a consequence of any
determination as to the classification or qualification of the transactions
contemplated by the Loan Documents under any regulatory rules or regulations.
8.4. RELIANCE BY AGENT. Agent shall be entitled to rely, and
shall be fully protected in relying upon, any writing, resolution, notice
(whether written, oral or telephonic), consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order, other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons or in
acting upon any representation or warranty made or deemed to be made hereunder
and upon advice and statements of legal counsel (including, without
limitation, counsel to Borrowers), independent accountants and other experts
selected by Agent. Agent may deem and treat the payee of any Note as the owner
thereof for all purposes. Agent shall be fully justified in failing or
refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of Banks as it deems appropriate or it
shall first be indemnified to its satisfaction by Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take and any such action. Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents
and the Notes in accordance with a request of the Required Banks, and any such
request and any action taken or failure to act pursuant thereto shall be
binding upon all Banks and all future holders of the Notes.
8.5. NOTICE OF DEFAULT. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless Agent has received written notice from a Bank or Borrowers
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that Agent
receives such a notice, Agent shall promptly give notice thereof to Banks and
Borrowers. Agent shall take such action with respect to any such Event of
Default as shall be reasonably directed by the Required Banks; provided that,
unless and until Agent shall have received such direction, Agent, in its
capacity as such, may (but shall not be obliged to) take such action, or
refrain from taking such action, with respect to any such Event of Default.
8.6. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
expressly acknowledges that neither Agent, any other Bank nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
Agent or any other Bank hereafter taken, including any review of the affairs
of Borrowers or the Subsidiaries, shall be deemed to constitute any
representation or warranty by Agent or any other
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Bank to such Bank. Each Bank represents to Agent and each other Bank that it
has, independently and without reliance upon Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
assets, financial and other condition, creditworthiness and prospects of
Borrowers and the Subsidiaries, and made its own decision to make Loans
hereunder and enter into this Agreement or the Loan Documents. Each Bank also
represents that it will, independently and without reliance upon Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analyses, appraisals
and decisions in taking or not taking action under this Agreement, and make
such investigation as it deems necessary inform itself as to the business,
operations, property, assets, financial and other condition, creditworthiness
and/or prospects of Borrowers and the Subsidiaries. Except for any notices,
reports and other documents expressly required to be furnished by Agent to
Banks hereunder, Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the business,
operations, property, assets, financial and other condition, creditworthiness
or prospects of Borrowers or Subsidiaries which may come into the possession
of Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
8.7. INDEMNIFICATION.
(a) Banks agree to indemnify Agent in its
capacity as such (to the extent not reimbursed by Borrowers and without
limiting any obligation of Borrowers to do so), pro-rata from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at the time following
the payment of the Obligations) be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of this Agreement, the
Loan Documents or any of the Notes or any action taken or omitted by Agent
under or in connection with any of the foregoing; provided that no Bank shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting solely from Agent's willful misconduct
or gross negligence.
(b) Without limiting but subject to the foregoing,
each Bank agrees to reimburse Agent promptly upon demand for its pro-rata
share of any costs and expenses incurred by Agent that are payable by
Borrowers under the Loan Documents to the extent that Agent is not promptly
reimbursed for such costs and expenses by Borrowers; and, if Agent is later
reimbursed for any such costs and expenses by Borrowers, Agent shall repay
such reimbursed amounts to Banks in proportion to the amounts Agent received
from the respective Banks on account of such costs and expenses.
(c) The agreements in this subsection shall
survive termination of this Agreement, payment of the Notes, expiration or
drawing under the Letters of Credit and payment of all other amounts payable
hereunder.
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8.8. AGENT IN ITS INDIVIDUAL CAPACITY. Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with Borrowers and the Subsidiaries as though Agent were not
Agent hereunder. With respect to the Loans made by it and all renewals,
extensions or deferrals of the payment thereof, Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise the same
as though it were not Agent, and the terms "Bank" and "Banks" shall include
Agent in its individual capacity.
8.9. SUCCESSOR AGENT. If at any time it deems it advisable,
Agent may resign as Agent upon 30 days' notice to Banks but only with the
prior written consent of Parent. If Agent shall resign as Agent under this
Agreement, then Banks shall appoint a successor agent for Banks. If
appointment of a successor Agent by Banks and acceptance of the appointment by
the successor have not occurred within 30 days after Agent gives the
above-described notice of resignation, Agent may appoint a successor agent,
which shall be a commercial bank organized under the laws of the United States
or any state thereof having combined capital and surplus of at least
$250,000,000. Upon acceptance by the successor agent of the agency hereunder
and notice thereof to Borrowers, such successor agent shall succeed to the
rights, powers and duties of Agent, and the term "Agent" shall mean such
successor agent, effective upon its appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any other parties to
this Agreement or any holders of the Notes, and such former Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article 11 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If at any time
hereunder there shall not be a duly appointed and acting Agent, Borrowers
agree to make each payment due hereunder and under its Notes directly to Banks
entitled thereto during such time.
8.10. AMENDMENTS AND WAIVERS. With the written consent of
the Required Banks, Agent and the appropriate parties to the Loan Documents
may, from time to time, enter into written amendments, supplements or
modifications thereof and, with the consent of the Required Banks, Agent on
behalf of Banks may execute and deliver to any such parties a written
instrument waiving, on such terms and conditions as Agent may specify in such
instrument, any of the requirements of the Loan Documents or any Default or
Event of Default and its consequences, or releasing or discharging any
guarantor from its obligations under a guarantee; provided, however, that no
such amendment, supplement, modification or waiver shall (i) increase the
commitment of any Bank, (ii) extend the maturity date of any Note, (iii)
decrease the rate of interest of, extend the time or manner of payment of or
increase or forgive the principal amount of any Note, (iv) decrease the
Closing Fee, the Letter of Credit Fee or any other fee or extend the time of
payment thereof, or (v) change the provisions of this subsection without the
consent of all of Banks; and provided further, however, that no such
amendment, supplement, modification or waiver shall amend, modify or waive any
provision of this Section 8 or otherwise change any of the rights or
obligations of Agent hereunder or under the Loan Documents without the written
consent of Agent. Any such amendment, supplement, modification or waiver shall
apply equally to each of Banks and shall be binding upon the parties to the
applicable agreement, Banks, Agent and their successors and assigns. In the
case
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of any waiver, the parties to the applicable agreement, Banks and Agent shall
be restored to their former position and rights hereunder and under the
outstanding Notes and Loan Documents, and any Default or Event of Default
waived shall not extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
8.11. SETOFF; SHARING.
(a) Upon the occurrence of an Event of Default
and acceleration of the maturity of the Loans each Bank is hereby authorized,
at any time or from time to time thereafter, without prior notice to
Borrowers or any other Person, any such notice being hereby expressly waived,
to set-off and to appropriate and apply any and all deposits and any other
indebtedness or property at any time held or owing by such Bank to or for the
credit or the account of Borrowers, whether or not related to this Agreement
or any transaction or occurrence hereunder, against and on account of the
Obligations of Borrowers, regardless of whether or not such Bank shall have
made any demand hereunder and although such Obligations, or any of them,
shall be contingent or unmatured. The rights and remedies granted to each
Bank under this Section 8.11 shall be in addition to, and not in substitution
for, any rights or remedies, including, without limitation, any right of
set-off or banker's lien, to which such Bank may otherwise be entitled.
(b) Each Bank agrees, for the benefit of the
other Bank, that, with respect to all sums received or realized by such Bank,
after maturity of the Loans (whether by acceleration, notice of intention to
prepay in full or otherwise) equitable adjustment will be made among all of
Banks so that, in effect, all such sums shall be shared ratably by each of
Banks (based upon such Bank's percentage of the unpaid amount of all of the
Loans then outstanding owing to all of Banks), whether received by the
exercise of the right of set-off or banker's lien, by counterclaim or cross-
action, by the enforcement of any of the Notes or otherwise. If any Bank
shall, after maturity of the Loans (whether by reason of acceleration, notice
of intention to prepay in full or otherwise) receive any payment on its Loans
or on any commitment fees in a sum or sums in excess of its pro rata portion
of the sum of the aggregate principal amount of the Loans then outstanding,
then any such Bank shall, if requested by the other Bank, purchase for cash
from the other Bank an interest in its Loans in such amounts as shall result
in Banks sharing such payment ratably according to the aggregate principal
amount of the Loans then outstanding from each of them; provided, however,
that if all or any portion of such excess payment is thereafter recovered
from any such Bank, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest except as
required by law or by any judgment or settlement relating to such recovery.
Borrowers agrees that any Bank so purchasing a participation in the Loans
made by the other Bank may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully as
if such Bank were a direct holder of Loans in the amount of such
participation. Nothing contained herein shall require any Bank to exercise
any such right or shall affect the right of any Bank to exercise, and retain
the benefits of exercising any such right with respect to any other
indebtedness or obligation of Borrowers.
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8.12. ENFORCEMENT. Each Bank hereby authorizes Agent to take
all actions contemplated by this Agreement and any of the other Loan
Documents, and each Bank agrees that no Bank shall have any right individually
to seek or to enforce any remedy or to realize upon any security for the
Obligations, it being understood and agreed that such rights and remedies may
be exercised only by Agent, for the benefit of Banks.
Section 9. MISCELLANEOUS PROVISIONS.
9.1. MISCELLANEOUS. This Agreement, the exhibits and the
other Loan Documents are the complete agreement of the parties hereto and
supersede all previous understandings relating to the subject matter hereof.
This Agreement may be amended only in writing signed by the party against whom
enforcement of the amendment is sought. This Agreement may be executed in
counterparts. If any part of this Agreement is held invalid, illegal or
unenforceable, the remainder of this Agreement will not in any way be
affected. This Agreement is and is intended to be a continuing agreement and
will remain in full force and effect until the Loans are finally and
irrevocably paid in full and the Revolving Credit Facility is terminated.
9.2. WAIVER BY BORROWER. Each Borrower waives notice of
non-payment, demand, presentment, protest or notice of protest of any Accounts
or other Collateral, and all other notices (except those notices specifically
provided for in this Agreement); consents to any renewals or extensions of
time of payment thereof. Each Borrower hereby waives all suretyship defenses,
including but not limited to, all defenses set forth in Section 3-605 of the
Uniform Commercial Code, as revised in 1990 (the "UCC"). Such waiver is
entered to the full extent permitted by Section 3-605 (i) of the UCC.
9.3. BINDING EFFECT. This Agreement will be binding upon and
inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto; however, no Borrower may assign or transfer any
of its rights or delegate any of its Obligations under this Agreement or any
of the Loan Documents, by operation of law or otherwise. A Bank may transfer
or assign partial interests or participation in the Loans to other persons.
Banks may disclose to all prospective and actual participants all financial,
business and other information about a Borrower which Banks may possess at any
time. Absent an Event of Default, no Bank shall assign its interest in the
Loans, this Agreement or the Loan Documents except to affiliates of a Bank
(but nothing shall prohibit such Bank from selling participations herein).
9.4. SECURITY. The Obligations are secured as provided
herein, in this Agreement, the Security Agreement, in the Loan Documents and
in each other document or agreement which by its terms secures the repayment
or performance of the Obligations.
9.5. SURVIVAL. All representations, warranties, covenants and
agreements made by Borrowers herein and in the Loan Documents will survive
the execution and delivery of this Agreement, the Loan Documents and the
issuance of the Notes.
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9.6. DELAY OR OMISSION. No delay or omission on the part of
Agent or any Bank in exercising any right, remedy or power arising from any
Event of Default will impair any such right, remedy or power or any other
right remedy or power or be considered a waiver or any right, remedy or power
or any Event of Default nor will the action or omission to act by a Bank upon
the occurrence of any Event of Default impair any right, remedy or power
arising as a result thereof or affect any subsequent Event of Default of the
same or different nature.
9.7. NOTICES. Any notices under or pursuant to this
Agreement will be deemed duly sent when delivered in hand or when mailed by
registered or certified mail, return receipt requested, addressed as follows:
<TABLE>
<S> <C>
To Parent or Borrowers: The O'Gara Company, as agent for itself
O'Gara-Hess & Eisenhardt Armoring Company,
O'Gara Satellite Networks, Inc. and
O'Gara Satellite Networks Limited
9113 Le Saint Drive
Fairfield, Ohio 45014
Attention: Chief Financial Officer
To Agent and The Fifth Third Bank
Fifth Third: 38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Metropolitan Lending Department
To LaSalle: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Commercial Banking
</TABLE>
Either party may change such address by sending written
notice of the change to the other party.
9.8. NO PARTNERSHIP. Nothing contained herein or in any of
the Loan Documents is intended to create or will be construed to create any
partnership, joint venture or other relationship between Banks and Borrowers
other than as expressly set forth herein or therein and will not create any
joint venture, partnership or other relationship.
9.9. INDEMNIFICATION. If after receipt of any payment of all
or part of the Obligations, any Bank is for any reason compelled to surrender
such payment to any person or entity, because such payment is determined to
be void or voidable as a preference, impermissible setoff, or diversion of
trust funds, or for any other reason, this Agreement will continue in full
force
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and effect and each Borrower will be liable to, and will indemnify, save and
hold such Bank, its officers, directors, attorneys, and employees harmless of
and from the amount of such payment surrendered. The provisions of this
Section will be and remain effective notwithstanding any contrary action which
may have been taken by any Bank in reliance on such payment, and any such
contrary action so taken will be without prejudice to such Bank's rights under
this Agreement and will be deemed to have been conditioned upon such payment
becoming final, indefeasible and irrevocable. In addition, each Borrower will
indemnify, defend, save and hold each Bank and Agent, its officers, directors,
attorneys, and employees harmless of, from and against all claims, demands,
liabilities, judgments, losses, damages, costs and expenses, joint or several
(including all accounting fees and attorneys' fees reasonably incurred), that
a Bank or Agent or any such indemnified party may incur arising out of this
Agreement, any of the Loan Documents or any act taken by them hereunder except
for the willful misconduct or gross negligence of such indemnified party. The
provisions of this Section will survive the termination of this Agreement.
9.10. SETOFF. In addition to, and without limitation of, any
rights of Banks under applicable law, if a Borrower becomes insolvent, however
evidenced, or any Event of Default occurs, any indebtedness from a Bank to
Borrowers may be offset and applied toward the payment of the Loans, whether
or not the Loans, or any part hereof, shall then be due.
9.11. TAXES AND FEES. Should any tax (other than a tax based
upon the net income of a Bank or franchise taxes), regulation or filing fee
become payable in respect of this Agreement, the Notes or the other Loan
Documents, or any amendment, modification or supplement hereof or thereof,
Borrowers agrees to pay the same together with any interest or penalties
thereon and agrees to indemnify and to hold Agent and Banks harmless with
respect thereto.
9.12. EXPENSES OF AGENT AND BANKS. Whether or not the
transactions contemplated by this Agreement shall be consummated, Borrowers
agrees to pay the out-of-pocket expenses of Agent and Banks (including the
fees and expenses of their counsel) in connection with the preparation,
reproduction, execution and delivery of this Agreement and the Loan Documents
and any modification, waiver or amendment hereto and thereto, and Borrowers
further agrees to pay the out-of-pocket expenses of Agent and Banks (including
the fees and expenses of their counsel) incurred in connection with the
administration, interpretation, enforcement or collection against Borrowers of
any provision of this Agreement or the Loan Documents, whether or not suit is
instituted.
9.13. GOVERNING LAW; JURISDICTION. This Agreement, the
Notes and the other Loan Documents will be governed by the domestic laws of the
State of Ohio. Each Borrower, Agent and Banks agree that the state and
federal courts in Hamilton County, Ohio, or any other court in which Agent or
a Bank initiates proceedings with respect to any Collateral have exclusive
jurisdiction over all matters arising out of this Agreement, and that service
of process in any such proceeding will be effective if mailed to each
Borrower at its address described in the Notices section of this Agreement.
AGENT, BANKS AND EACH BORROWER HEREBY WAIVE THE RIGHT TO
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TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
9.14. CONFESSION OF JUDGMENT. Each Borrower authorizes any
attorney of record to appear for it in any court of record in the State of
Ohio, after an Obligation becomes due and payable whether by its terms or upon
default, waives the issuance and service of process, releases all errors and
rights of appeal, and confesses a judgment against it in favor of the holder
of such Obligation, for the principal amount of such Obligation plus interest
thereon, together with court costs and attorneys' fees. Stay of Execution and
all exemptions are hereby waived. Each Borrower also agrees that the attorney
acting for it as set forth in this paragraph may be compensated by Banks for
such services, and each Borrower waives any conflict of interest caused by
such representation and compensation arrangement. If an Obligation is referred
to an attorney for collection, and the payment is obtained without the entry
of a judgment, the obligors will pay to the holder of such Obligation its
attorneys' fees.
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IN WITNESS WHEREOF, Borrowers, Agent and Banks have executed this
Agreement by their duly authorized officers as of the date first above
written.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA-HESS & EISENHARDT THE O'GARA COMPANY, FOR ITSELF AND
ARMORING COMPANY AS AGENT FOR THE BORROWERS
By: /s/ Nicholas P. Carpinello By: /s/ Nicholas P. Carpinello
--------------------------------- -------------------------------
Its: Exec. V.P. Its: Exec. V.P.
--------------------------------- -------------------------------
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA SATELLITE NETWORKS, INC. O'GARA SATELLITE NETWORKS
LIMITED
By: /s/ Nicholas P. Carpinello By: /s/ Nicholas P. Carpinello
--------------------------------- -------------------------------
Its: Treasurer Its: Director
--------------------------------- -------------------------------
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LASALLE NATIONAL BANK THE FIFTH THIRD BANK, FOR ITSELF AND
AS AGENT FOR BANKS
By: /s/ Sean P. Forrest By: /s/ Lytle Thomas
-------------------------- -------------------------------
Its: Senior Vice President Its: Vice President
-------------------------- -------------------------------
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EXHIBITS
TO
CREDIT AGREEMENT
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EXHIBIT 1
DEFINITIONS
-----------
1. "Acquisition Agreement" means the Share Purchase Agreement dated
January 21, 1997 with respect to the Labbe Acquisition.
2. "Affiliate" means, as to a Borrower, (a) any person or entity which,
directly or indirectly, is in control of, is controlled by or is
under common control with, a Borrower excluding a Subsidiary, or (b)
any person who is a director, officer or employee (i) of a Borrower
or (ii) of any person described in the preceding clause (a).
3. "Parent" means The O'Gara Company, an Ohio corporation, as agent for
the Borrowers.
4. "Applicable Margin" means Applicable LIBOR Margin or Applicable
Prime Margin.
5. "Applicable LIBOR Margin" on any date means the percentage
identified as such in Section 2.5 hereof.
6. "Applicable Prime Margin" on any date means the percentage
identified as such in Section 2.5 hereof.
7. "Bonds" means the County of Butler, Ohio Variable Rate Demand
Economic Development Revenue Bonds, Series 1986 (O'Gara-Hess &
Eisenhardt Armoring Company Limited Partnership Project).
8. "Borrowing Confirmation" has the meaning set forth in Section 2.4
hereof.
9. "Borrowing Date" means any date on which Banks shall make Revolving
Loans hereunder.
10. "Borrower Default Rate" or "Default Rate" means six percent (6%) in
excess of the interest rate otherwise in effect under amounts
outstanding under the Notes. In no event will the interest rate
accruing under such Notes be increased to be in excess of the maximum
interest rate permitted by applicable state or federal usury laws
then in effect.
11. "Business Day" means any day on which the Banks and the Federal
Reserve Bank of Cleveland is open for business.
12. "Cash Flow" means the sum of Borrowers' net income plus tax expense,
interest expense, depreciation and amortization.
13. "Compliance Certificate" shall have the meaning set forth in Section
4.2.
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14. "Contribution Agreement" means the Contribution Agreement of even
date among the Borrowers.
15. "Current Assets" means all assets which may properly be classified
as current assets in accordance with generally accepted accounting
principles, provided that for the purpose of determining the Current
Assets (i) notes and accounts receivable shall be included only if
good and collectible and payable on demand or within twelve (12)
months from the date as of which Current Assets are to be determined
(and if not directly or indirectly renewable or extendible, at the
option of the debtors, by their terms or by the terms of any
instrument or agreement relating thereto, beyond such twelve (12)
months) and shall be taken at their face value less reserves
determined to be sufficient in accordance with generally accepted
accounting principles, and (ii) the cash surrender value of life
insurance policies shall be excluded.
16. "Current Liabilities" means all Indebtedness maturing on demand or
within twelve (12) months from the date as of which Current
Liabilities are to be determined (including, without limitation,
liabilities, including taxes accrued as estimated, as may properly be
classified as current liabilities in accordance with generally
accepted accounting principles).
17. "Current Ratio" means Current Assets divided by Current Liabilities.
18. "Debt Service Coverage Ratio" means the ratio of (a) net income on a
rolling 4 quarter basis (with the inclusion of historical Labbe
numbers permitted) plus depreciation expense, tax expense, interest
expense and extraordinary charges minus dividends and capital
expenditures for a given time period, to (b) the sum of interest
expense, plus that portion of the principal amount of Funded
Indebtedness required to be repaid during such time period.
19. "Defaulted Amount" means, with respect to any Bank at any time, any
amount that was required to be paid by such Bank to Borrowers, Agent,
Issuing Bank or any other Bank under any Loan Document at or prior to
such time and that has not been paid by such Bank.
20. "Defaulting Bank" means, at any time, each Bank with respect to
which a Defaulted Amount exists.
21. "Eligible Accounts" means those accounts which are due and payable
within ninety (90) days from the date of invoice and are not more
than ninety (90) days old measured from the date of invoice, have
been validly assigned to Agent and strictly comply with all of
Borrowers' warranties and representations to Agent; but Eligible
Accounts shall not include the following: (a) Accounts with respect
to which the Account Debtor is a shareholder, officer, employee or
agent of a Borrower, or a corporation more than five percent (5%) of
the stock of which is owned by any of such persons; (b) Accounts
with respect to which the Account Debtor is a subsidiary of, related
to, affiliated or has common officers or directors with a
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<PAGE> 49
Borrower; (c) any Accounts of a particular Account Debtor if a
Borrower is or may become liable to that Account Debtor for goods
sold or services rendered by that Account Debtor to such Borrower but
only to the extent of the amount that a Borrower is liable to such
Account Debtor; (d) any Accounts owed by a particular Account Debtor
if more than fifty percent (50%) of total balances of Accounts owed
by such Account Debtor are due with respect to invoices more than
ninety (90) days old; (e) that portion of the Accounts owed by a
particular Account Debtor (excluding the United States Government and
its agencies) which exceed 20% of all Eligible Accounts; (f) any
Accounts owed by an Account Debtor who does not meet Agent's
standards of credit worthiness, in Agent's credit judgment exercised
in good faith and in a commercially reasonable manner; and (h) any
Accounts deemed ineligible by Agent based on such credit and
collateral considerations as Agent may deem appropriate and in a
commercially reasonable manner.
22. "Eligible Inventory" means Borrowers' (i) Cost and Estimated Earnings
in Excess of Billings on Uncompleted Contracts (as described and
defined in Parent's financial statement in effect on the date of this
Agreement) and (ii) domestic Inventory, valued at the lower of cost
or fair market value on a first in, first out basis, in accordance
with generally accepted accounting principles consistently applied,
and excluding obsolete or unsalable items or other Inventory deemed
ineligible by Agent based on such credit and collateral
considerations as Agent may deem appropriate and in a commercially
reasonable manner.
23. "Environmental Laws" means all federal, state, local and foreign
laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or
industrial toxic or hazardous substances or wastes into the
environment (including without limitation ambient air, surface
water, ground water or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes,
and any and all regulations, codes, plans, orders, decrees,
judgments, injunctions, notices or demand letters issued, entered
promulgated or approved thereunder.
24. "ERISA" means the Federal Employee Retirement Income Security Act of
1974.
25. "Event(s) of Default" will have the meaning set forth in Section 6.1
of this Agreement.
26. "Excess Cash Flow" means the sum of Borrowers' Cash Flow minus cash
taxes, cash interest, capital expenditures, plus net proceeds of
equity offerings, plus decreases in Working Capital, minus increases
in Working Capital.
27. "Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding
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<PAGE> 50
Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received
by Agent from three federal funds brokers of recognized standing
selected by it.
28. "Funded Indebtedness" means all Indebtedness (i) in respect of money
borrowed or (ii) evidenced by a note, debenture (senior or
subordinated) or other like written obligation to pay money, or (iii)
in respect of rent or hire of property under leases or lease
arrangements which under generally accepted accounting principles are
required to be capitalized, or (iv) in respect of obligations under
conditional sales or other title retention agreements; and shall also
include all guaranties of any of the foregoing.
29. "Indebtedness" means (a) all items (except items of capital stock,
of capital surplus, of general contingency reserves or of retained
earnings, deferred income taxes, and amount attributable to minority
interests, if any) which in accordance with generally accepted
accounting principles would be included in determining total
liabilities on a consolidated basis as shown on the liability side
of a balance sheet as at the date as of which Indebtedness is to be
determined, (b) all indebtedness secured by any mortgage, pledge,
lien or conditional sale or other title retention agreement to which
any property or asset owned or held is subject, whether or not the
indebtedness secured thereby will have been assumed (excluding
non-capitalized leases which may amount to title retention
agreements but including capitalized leases), and (c) all
indebtedness of others which a Borrower or any Subsidiary has
directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, or in
respect of which a Borrower or any Subsidiary has agreed to apply or
advance funds (whether by way of loan, stock purchase, capital
contribution or otherwise) or otherwise to become directly or
indirectly liable, but excluding, however, the face amount of issued
and outstanding Letters of Credit for which no unreimbursed drawing
thereunder is outstanding.
30. "Interest Rate Provider" means the issuer of an Interest Rate
Agreement, which shall be LaSalle National Bank if it offers a
product on substantially the same terms, conditions and pricing as
other prospective providers of such product.
31. "Issuing Bank" means The Fifth Third Bank, as issuer of the Letters
of Credit.
32. "Labbe Transaction" means the purchase by O'Gara France, S.A. of all
of the outstanding shares of Labbe, S.A. and certain of its
subsidiaries pursuant to the Acquisition Agreement.
33. "Letter(s) of Credit" means collectively the Commercial Letters of
Credit and the IRB Letter of Credit.
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<PAGE> 51
34. "Letter of Credit Facility" means the Commercial Letter of Credit
Facility and the IRB Letter of Credit Facility.
35. "Letter of Credit Liability" means, as of any date of determination,
all of the then-existing liabilities of any Borrower or any
Defaulting Bank to Issuing Bank in respect of Letters of Credit,
whether such liability is contingent or fixed, and shall consist of
the sum of (a) the aggregate stated amount of all Letters of Credit
then outstanding, plus (b) the aggregate amount that has then been
paid by, and not been reimbursed to, Issuing Bank under Letters of
Credit.
36. "Letter of Credit Note" will have the meaning set forth in Section
2.6 of this Agreement.
37. "Letter of Credit Percentage" of each Bank is its pro-rata share.
38. "Leverage Ratio" means the ratio contained in Section 5.8 of this
Agreement.
39. "LIBOR Interest Period" means any one, two or three month period
selected by Parent, commencing on any Business Day. If a LIBOR
Interest Period so selected would otherwise end on a date which is
not a Business Day, such LIBOR Interest Period shall instead end on
the next Business Day, provided, however, that if such next Business
Day shall fall in a succeeding month, such LIBOR Interest Period
shall instead end on the preceding Business Day.
40. "LIBOR Pricing Option" means the option granted pursuant to Section
2.4 hereof to have all or a portion of the interest on the principal
amount of each Pricing Loan computed with reference to a LIBOR Rate.
41. "LIBOR Rate" means, as applied to any LIBOR Interest Period, the
rate (adjusted for LIBOR Reserves if Banks are required to maintain
LIBOR Reserves with respect to the relevant loan) being asked on an
amount of Eurodollar deposits equal to the principal amount of the
Notes which is to be subject to a LIBOR Pricing Option, and which
has a maturity corresponding to the LIBOR Interest Period in
question, as reported by the TELERATE rate reporting system (or any
successor), as determined by Banks by noon of the date upon which a
LIBOR Interest Period is to commence. Each determination by Banks of
the LIBOR Rate shall be conclusive in the absence of manifest error.
42. "LIBOR Reserves" means, for any principal amount which is subject to
a LIBOR Pricing Option for any LIBOR Interest Period therefor, the
daily average maximum rate (expressed as a decimal) at which reserves
(including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under
Regulation D established by the Board of Governors of the Federal
Reserve System (or any successor rule or regulation) by Banks against
"Eurocurrency Liabilities" (as such term is used in Regulation D) but
without benefit of credit or proration, exemptions or offsets that
might
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<PAGE> 52
otherwise be available to Parent from time to time under Regulation
D. Without limiting the effect of the foregoing, LIBOR Reserves
shall reflect any other reserves required to be maintained by Banks
against (1) any category of liabilities that includes deposits by
reference to which the LIBOR Interest Rate for loans is to be
determined; or (2) any category of extension of credit or other
assets that are subject to an interest rate based on the LIBOR Rate.
43. "Lien" means any security interest, mortgage, pledge, assignment,
lien or other encumbrance of any kind, including interests of
vendors or lessors under conditional sale contracts and capitalized
leases.
44. "Loan Documents" means this Agreement, the Notes, the Security
Agreement, and every other document or agreement executed by any
party evidencing, guarantying or securing any of the Obligations;
and "Loan Document" means any one of the Loan Documents.
45. "Loans" means the Revolving Loans, the Term Loans and any Draw(s)
under the Letter of Credit Facility or the Reimbursement Agreement.
46. "Next Destination Transaction" means the purchase by The O'Gara
Company of Next Destination Limited, an English company.
47. "Notes" means the Revolving Note, the Term Note, the Letter of
Credit Note and any Reimbursement Agreement.
48. "Obligation(s)" means all loans, advances, indebtedness, liabilities
and obligations of any Borrower owed to Agent or any Bank or any
affiliates of a Bank or owed to the Interest Rate Provider (if such
Interest Rate Provider is a Bank or an affiliate of a Bank) of every
kind and description whether now existing or hereafter arising
including without limitation, those owed by a Borrower to others and
acquired by a Bank or any affiliate of a Bank, by purchase,
assignment or otherwise, and whether direct or indirect, primary or
as guarantor or surety, absolute or contingent, liquidated or
unliquidated, matured or unmatured, whether or not secured by
additional collateral, and including without limitation all
liabilities, obligations and indebtedness arising under this
Agreement, the Notes and the other Loan Documents, all obligations
to perform or forbear from performing acts, all amounts represented
by letters of credit now or hereafter issued by a Bank for the
benefit of or at the request of a Borrower, and all expenses and
attorneys' fees incurred by a Bank and any affiliate of a Bank under
this Agreement or any other document or instrument related to any of
the foregoing.
49. "Permitted Liens" has the meaning assigned thereto as set forth in
Section 3.9 of this Agreement.
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50. "Pledge Agreements" means the Pledge Agreements of even date from
any Borrower to Agent with respect to the shares of a Subsidiary, as
such agreement may be amended or modified from time to time.
51. "Pricing Option" means a LIBOR Pricing Option exercised by Parent
pursuant to the provisions hereof.
52. "Prime Rate" means the rate of interest per annum announced to be
its prime rate from time to time by Agent at its principal office in
Cincinnati, Ohio whether or not Agent will at times lend to
borrowers at lower rates of interest or, if there is no such prime
rate, then its base rate or such other rate as may be substituted by
Agent for the prime rate.
53. "pro-rata" as used herein shall mean 50-50, unless there is a
Defaulting Bank in which case pro-rata shall refer to the ratio of
one Bank's outstanding principal amount of Pricing Loans to the
Defaulting Bank's outstanding principal amount of Pricing Loans.
54. "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as amended or supplemented from time to time,
or any successor law, rule or regulations.
55. "Reimbursement Agreement" means the Reimbursement Agreement to which
the Issuing Bank is a party with respect to the IRB Letter of
Credit, as such document may be amended or supplemented from time to
time.
56. "Required Banks" means at any time (a) Banks, other than those
disqualified pursuant to clause (b) of this definition, whose
pro-rata share together are at least 75% of the Revolving Credit
Commitments of Banks other than those disqualified pursuant to
clause (b) of this definition; provided, however, (b) if any Bank is
a Defaulting Bank and has been a Defaulting Bank for more than
fifteen (15) days at such time, the Revolving Credit Commitment of
such Bank shall not be considered in determining the percentage set
forth in clause (a) of this definition and such Bank shall not be
entitled to a vote on any relevant matter.
57. "Revolving Credit Facility" will have the meaning set forth in
Section 2.1 of this Agreement.
58. "Revolving Loans" has the meaning assigned to that term in Section
2.1 of this Agreement.
59. "Revolving Note" has the meaning assigned to that term in Section
2.1 of this Agreement.
60. "Security Agreement" means each of the four documents entitled:
"Security Agreement" of even date herewith between a Borrower and
Agent, securing the Obligations.
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61. "Seller" means the parties to the Acquisition Agreement who are
selling stock to O'Gara France, S.A.
62. "Subordinated Debt" means Indebtedness which has been subordinated
in writing to the Obligations, in a manner satisfactory to Banks.
63. "Subsidiary" means any corporation of which a Borrower directly or
indirectly owns or controls at the time outstanding stock having
under ordinary circumstances (not depending on the happening of a
contingency) voting power to elect a majority of the board of
directors of said corporation.
64. "Tangible Net Worth" means the total of the Subordinated Debt plus
consolidated net worth determined in accordance with generally
accepted accounting principles, after eliminating all inter-company
items and all amounts properly attributable to minority interests,
if any, in the stock and surplus of any Subsidiary, MINUS the
following items (without duplication of deductions) if any,
appearing on the consolidated balance sheet of Borrowers:
(i) all deferred charges (less amortization, unamortized debt
discount and expense and corporate organization expenses);
(ii) the book amount of all assets which would be treated as
intangibles under generally accepted accounting principles,
including, without limitation, such items as good-will, trademark
applications, trade names, service marks, brand names, copyrights,
patents, patent applications and licenses, and rights with respect
to the foregoing;
(iii) the amount by which aggregate inventories or aggregate
securities appearing on the asset side of such consolidated balance
sheet exceed the lower of cost or market value (at the date of such
balance sheet) thereof;
(iv) any subsequent write-up in the book amount of any asset
resulting from a revaluation thereof from the book amount entered
upon acquisition of such asset;
(v) goodwill, other receivables due from Shareholders, and "Other
Assets" as identified on Borrowers' financial statements.
65. "Term Note" has the meaning set forth in Section 2.2
66. "Working Capital" means, in the case of any person, the amount by
which such person's Current Assets (less cash) at any given time in
any fiscal year exceed such person's Current Liabilities for such
time in such fiscal year.
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EXHIBIT 2.1
FORM OF REVOLVING NOTE
$6,000,000 Cincinnati, Ohio
_________________, 1997
On February 11, 1998, THE O'GARA COMPANY, O'GARA-HESS & EISENHARDT
ARMORING COMPANY, O'GARA SATELLITE NETWORKS, INC. and O'GARA SATELLITE
NETWORKS LIMITED (collectively and jointly and severally, the "Borrowers"
and individually, a "Borrower") for value received, hereby jointly and
severally promise to pay to the order of ______________________________ (the
"Bank"), at Agent's offices, located at 38 Fountain Square Plaza, Cincinnati,
Ohio 45263, in lawful money of the United States of America and in immediately
available funds, the principal sum of Six Million Dollars ($6,000,000) or such
lesser unpaid principal amount as may be advanced by Bank pursuant to the
terms of the Credit Agreement of even date herewith to which Bank and
Borrowers are parties, as the same may be amended from time to time (the
"Agreement").
Principal amounts outstanding hereunder shall bear interest
commencing on the date of the first advance hereunder at the rate or rates
specified in the Agreement. Interest shall be payable quarterly on the first
day of each quarter commencing April 1, 1997 and thereafter on each July 1,
October 1 and January 1. All accrued interest shall be payable in full on the
maturity date of this Note.
All payments received by Bank under this Note will be applied first
to payment of amounts advanced by Bank on behalf of Borrowers or which may be
due for insurance, taxes and attorneys' fees or other charges to be paid by
Borrowers pursuant to the Agreement and the Loan Documents (as defined in the
Agreement), then to accrued interest on this Note, then to principal which
will be repaid in the inverse order of maturity.
This Note is a Revolving Note referred to in the Agreement, and is
entitled to the benefits, and is subject to the terms, of the Agreement.
Capitalized terms used but not otherwise defined herein will have the meanings
attributed thereto in the Agreement. The principal of this Note is prepayable
in the amounts and under the circumstances, and its maturity is subject to
acceleration upon the terms, set forth in the Agreement. Except as otherwise
expressly provided in the Agreement, if any payment on this Note becomes due
and payable on a day other than one on which Bank is open for business (a
"Business Day"), the maturity thereof will be extended to the next Business
Day, and interest will be payable at the rate specified herein during such
extension period.
After the occurrence of an Event of Default, all amounts of principal
outstanding as of the date of the occurrence of such Event of Default will
bear interest at the Default Rate, in Bank's sole
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<PAGE> 56
discretion, without notice to Borrowers. This provision does not constitute a
waiver of any Events of Default or an agreement by Bank to permit any late
payments whatsoever.
If any payment of principal is not paid when due (whether by
acceleration or otherwise after the expiration of applicable notice grace and
cure periods, if any), Borrowers agree to pay to Agent for the benefit of Bank
a late payment fee equal to five percent (5%) of the payment amount then due.
In no event will the interest rate on this Note exceed the highest
rate permissible under any law which a court of competent jurisdiction will,
in a final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note
in excess of the highest permissible rate applicable hereto, such excess will
be deemed received on account of, and will automatically be applied to reduce
the amounts due to Bank from Borrowers under this Note, other than interest,
and the provisions hereof will be deemed amended to provide for the highest
permissible rate. If there are no such amounts outstanding, Bank will refund
to Borrowers such excess.
Each Borrower and all endorsers, sureties, guarantors and other
persons liable on this Note hereby waive presentment for payment, demand,
notice of dishonor, protest, notice of protest and all other demands and
notices in connection with the delivery, performance and enforcement of this
Note, and consent to one or more renewals or extensions of this Note.
This Note may not be changed orally, but only by an instrument in
writing. This Note is being executed in Hamilton County, Ohio.
This Note is being delivered in, is intended to be performed in, will
be construed and enforceable in accordance with, and be governed by the
internal laws of, the State of Ohio without regard to principles of conflict
of laws. Each Borrower agrees that the State and Federal courts in Hamilton
County, Ohio or any other court in which Bank initiates proceedings in
accordance with the terms of the Agreement will have exclusive jurisdiction
over all matters arising out of this Note, and that service of process in any
such proceeding will be effective if mailed to a Borrower at its address
described in the Notices section of the Agreement. EACH BORROWER HEREBY WAIVES
THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.
Each Borrower authorizes any attorney of record to appear for it in
any court of record in the State of Ohio, after this Note becomes due and
payable, whether by its terms or upon default, waives the issuance and service
of process, and releases all errors and rights of appeal, and confesses a
judgment against it in favor of the holder of such obligation, for the
principal amount of such obligation plus interest thereon, together with court
costs and attorneys' fees. Stay of execution and all exemptions are hereby
waived. Each Borrower also agrees that the attorney acting for such Borrower
as set forth in this paragraph may be compensated by Bank for such services,
and each Borrower waives any conflict of interest caused by such
representation and compensation
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arrangement. If an obligation is referred to an attorney for collection, and
the payment is obtained without the entry of a judgment, the obligors will pay
to the holder of such obligation its attorneys' fees.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA-HESS & EISENHARDT THE O'GARA COMPANY
ARMORING COMPANY
By: ___________________________ By: ________________________________
Its: ___________________________ Its: ________________________________
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA SATELLITE NETWORKS, INC. O'GARA SATELLITE NETWORKS
LIMITED
By: ___________________________ By: ________________________________
Its: ___________________________ Its: ________________________________
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EXHIBIT 2.2
FORM OF TERM NOTE
$8,000,000 Cincinnati, Ohio
__________, 1997
THE O'GARA COMPANY, O'GARA-HESS & EISENHARDT ARMORING
COMPANY, O'GARA SATELLITE NETWORKS, INC. and O'GARA SATELLITE
NETWORKS LIMITED (collectively and jointly and severally, the "Borrowers" and
individually, a "Borrower") for value received, hereby jointly and severally
promise to pay to the order of __________________________ (the "Bank") at
Agent's office, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, in lawful
money of the United States of America, the principal sum of Eight Million
Dollars ($8,000,000) together with interest as set forth herein. Principal and
interest shall be payable in immediately available funds at the principal
office of Bank. After the occurrence of any Event of Default, this Note shall
bear interest (computed and adjusted in the same manner, and with the same
effect, as interest hereon prior to maturity), payable on demand, at a rate
per annum equal to six percent (6%) above the rate that would otherwise be in
effect, until paid, and whether before or after the entry of judgment hereon
or in the alternative the Bank may impose a fixed charge of $50.00; this
provision does not constitute a waiver of any Events of Default or an
agreement by Bank to permit any late payments whatsoever.
The principal amount of this Note will be payable in 20 quarterly
installments, due on the 1st day of each quarter, as specified in the
Agreement, and the final installment shall be in the amount of the entire
unpaid principal balance and all accrued interest thereon.
This Note is a Term Note referred to in the Credit Agreement to which
the Borrowers and the Bank are parties of even date herewith, as it may be
amended from time to time (the "Agreement"), and is entitled to the benefits,
and is subject to the terms, of the Agreement. Interest on the outstanding
principal balance of this Note will accrue as provided for in the Agreement
and shall be payable on the date of each principal payment. The principal of
this Note is prepayable in the amounts and under the circumstances, and its
maturity is subject to acceleration upon the terms, set forth in the
Agreement. Except as otherwise expressly provided in the Agreement, if any
payment on this Note becomes due and payable on a day other than one on which
Bank is open for business (a "Business Day"), the maturity thereof shall be
extended to the next Business Day, and interest shall be payable at the rate
specified herein during such extension period.
In no event shall the interest rate on this Note exceed the highest
rate permissible under any law which a court of competent jurisdiction shall,
in a final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note
in excess of the highest permissible rate applicable hereto, such excess shall
be deemed received on
53
<PAGE> 59
account of, and shall automatically be applied to reduce the amounts due to
Bank from the Borrowers under this Note, other than interest and discount
charges, in the inverse order of maturity, and the provisions hereof shall be
deemed amended to provide for the highest permissible rate. If there are no
such amounts outstanding, Bank shall refund to Borrowers such excess.
Borrowers and all endorsers, sureties, guarantors and other persons
liable on this Note hereby waive presentment for payment, demand, notice of
dishonor, protest, notice of protest and all other demands and notices in
connection with the delivery, performance and enforcement of this Note, and
one or more extensions and renewals of this Note.
This Note may not be changed orally, but only by an instrument in
writing. This Note is being executed in Hamilton County, Ohio.
This Note is being delivered in, is intended to be performed in,
shall be construed and enforceable in accordance with, and be governed by the
internal laws of, the State of Ohio without regard to principles of conflict
of laws. Each Borrower agrees that the State and federal courts in Hamilton
County, Ohio or any other court in which Bank initiates proceedings in
accordance with the terms of the Agreement have exclusive jurisdiction over
all matters arising out of this Note, and that service of process in any such
proceeding shall be effective if mailed to each Borrower at its address
described in the Notices section of the Agreement. EACH BORROWER HEREBY WAIVES
THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.
Each Borrower authorizes any attorney of record to appear for it in
any court of record in the State of Ohio, after this Note becomes due and
payable, whether by its terms or upon default, waives the issuance and service
of process, and releases all errors and rights of appeal, and confesses a
judgment against it in favor of the holder of such obligation, for the
principal amount of such obligation plus interest thereon, together with court
costs and attorneys' fees. Stay of execution and all exemptions are hereby
waived. Each Borrower also agrees that the attorney acting for such Borrower
as set forth in this paragraph may be compensated by Bank for such services,
and each Borrower waives any conflict of interest caused by such
representation and compensation arrangement. If an obligation is referred to
an attorney for collection, and the payment is obtained without the entry of a
judgment, the obligors will pay to the holder of such obligation its
attorneys' fees.
54
<PAGE> 60
IN WITNESS WHEREOF, Borrowers and Bank have executed this Agreement
by their duly authorized officers as of the date first above written.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA-HESS & EISENHARDT THE O'GARA COMPANY
ARMORING COMPANY
By: _____________________________ By: ______________________________
Its: _____________________________ Its: ______________________________
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA SATELLITE NETWORKS, INC. O'GARA SATELLITE NETWORKS
LIMITED
By: _____________________________ By: ______________________________
Its: _____________________________ Its: ______________________________
55
<PAGE> 61
EXHIBIT 2.4
BORROWING CONFIRMATION
----------------------
Date: ____________________, 19____
The Fifth Third Bank, as agent
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Commercial Loan Department
Re: Credit Agreement dated (the "Credit Agreement")
-----------------------------------------------------
Pursuant to Section ___ of the Credit Agreement, we hereby confirm
that we elect a Pricing Option as follows:
1) Pricing Option selected: LIBOR
--------------
2) Amount of Funds to be subject to Pricing Option:
Revolving Loans $_______________
Term Loan $_______________
3) Starting Date:____________________
4) Duration of Pricing Option Period:___________
5) Roll Over ( ) or New Borrowing ( )
The undersigned hereby certifies that on the date hereof and on the
borrowing date, and after giving effect to the Loan requested hereby, it is
and shall be in compliance with all of the terms, covenants and conditions of
the Credit Agreement, and there exists and there shall exist no Event of
Default under the Credit Agreement.
Sincerely yours,
THE O'GARA COMPANY, as agent
By: __________________________________
Its: __________________________________
56
<PAGE> 62
EXHIBIT 2.6
FORM OF LETTER OF CREDIT NOTE
$2,000,000 Cincinnati, Ohio
__________________, 1997
On Demand, THE O'GARA COMPANY, O'GARA-HESS & EISENHARDT
ARMORING COMPANY, O'GARA SATELLITE NETWORKS, INC. and O'GARA
SATELLITE NETWORKS LIMITED. (collectively and jointly and severally,
"Borrowers" and individually, a "Borrower"), for value received, hereby
jointly and severally promise to pay to the order of _________________________
(the "Bank"), at Agent's offices, located at 38 Fountain Square Plaza,
Cincinnati, Ohio 45263, in lawful money of the United States of America and in
immediately available funds, the principal sum of Two Million and 00/100
Dollars ($2,000,000) or such lesser unpaid principal amount as may be advanced
by Bank pursuant to the terms of the Credit Agreement of even date herewith to
which Borrowers and Bank are parties, as the same may be amended from time to
time (the "Agreement").
Principal amounts outstanding hereunder shall bear interest
commencing on the date of the first advance hereunder at the rate equal to one
percent greater than the Prime Rate (as defined below) as in effect from time
to time. The interest rate charged hereunder will change automatically upon
each change in the Prime Rate. Interest will be payable in immediately
available funds at the principal office of the Agent set forth above on the
first day of each calendar month during the term hereof. Interest will be
calculated based on a 360 day year and charged for the actual number of days
elapsed. After maturity, whether by acceleration or otherwise, this Note will
bear interest (computed and adjusted in the same manner, and with the same
effect, as interest hereon prior to maturity) payable on demand, at a rate per
annum equal to the Default Rate, until paid, and whether before or after the
entry of judgment hereon.
"Prime Rate" shall mean the rate of interest per annum established
from time to time by the Agent at its principal office in Cincinnati, Ohio,
whether or not Agent shall at times lend to borrowers at lower rates of
interest or, if there is no such prime rate, then its base rate or such other
rate as may be substituted by Agent for the prime rate; provided that in no
event shall the Prime Rate exceed the highest rate permitted by law.
The principal amount of each loan made by Bank under this Note and
the amount of each prepayment made by Borrowers under this Note will be
recorded by Bank in the regularly maintained data processing records of Bank.
The aggregate unpaid principal amount of all loans set forth in such records
will be presumptive evidence of the principal amount owing and unpaid on this
Note. However, failure by Bank to make any such entry will not limit or
otherwise affect Borrowers' obligations under this Note or the Agreement.
57
<PAGE> 63
All payments received by Bank under this Note will be applied first
to payment of amounts advanced by Bank on behalf of Borrowers or which may be
due for insurance, taxes and attorneys' fees or other charges to be paid by
Borrowers pursuant to the Agreement and the Loan Documents (as defined in the
Agreement), then to accrued interest on this Note, then to principal which
will be repaid in the inverse order of maturity.
This Note is a Letter of Credit Note referred to in the Agreement,
and is entitled to the benefits, and is subject to the terms, of the
Agreement. Capitalized terms used but not otherwise defined herein will have
the meanings attributed thereto in the Agreement. The principal of this Note
is prepayable in the amounts and under the circumstances, and its maturity is
subject to acceleration upon the terms, set forth in the Agreement. Except as
otherwise expressly provided in the Agreement, if any payment on this Note
becomes due and payable on a day other than one on which Bank is open for
business (a "Business Day"), the maturity thereof will be extended to the next
Business Day, and interest will be payable at the rate specified herein during
such extension period.
After the occurrence of an Event of Default, all amounts of principal
outstanding as of the date of the occurrence of such Event of Default will
bear interest at the Default Rate, in Bank's sole discretion, without notice
to Borrowers. This provision does not constitute a waiver of any Events of
Default or an agreement by Bank to permit any late payments whatsoever.
If any payment of principal is not paid when due (whether by
acceleration or otherwise after the expiration of applicable notice grace and
cure periods, if any), Borrowers agree to pay to Agent for the benefit of Bank
a late payment fee equal to five percent (5%) of the payment amount then due.
In no event will the interest rate on this Note exceed the highest
rate permissible under any law which a court of competent jurisdiction will,
in a final determination, deem applicable hereto. In the event that a court
determines that Bank has received interest and other charges under this Note
in excess of the highest permissible rate applicable hereto, such excess will
be deemed received on account of, and will automatically be applied to reduce
the amounts due to Bank from Borrowers under this Note, other than interest,
and the provisions hereof will be deemed amended to provide for the highest
permissible rate. If there are no such amounts outstanding, Bank will refund
to Borrowers such excess.
Each Borrower and all endorsers, sureties, guarantors and other
persons liable on this Note hereby waive presentment for payment, demand,
notice of dishonor, protest, notice of protest and all other demands and
notices in connection with the delivery, performance and enforcement of this
Note, and consent to one or more renewals or extensions of this Note.
This Note may not be changed orally, but only by an instrument in
writing. This Note is being executed in Hamilton County, Ohio.
58
<PAGE> 64
This Note is being delivered in, is intended to be performed in, will
be construed and enforceable in accordance with, and be governed by the
internal laws of, the State of Ohio without regard to principles of conflict
of laws. Each Borrower agrees that the State and Federal courts in Hamilton
County, Ohio or any other court in which Bank initiates proceedings in
accordance with the terms of the Agreement will have exclusive jurisdiction
over all matters arising out of this Note, and that service of process in any
such proceeding will be effective if mailed to each Borrower at its address
described in the Notices section of the Agreement. EACH BORROWER HEREBY WAIVES
THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE.
Each Borrower authorizes any attorney of record to appear for it in
any court of record in the State of Ohio, after this Note becomes due and
payable, whether by its terms or upon default, waives the issuance and service
of process, and releases all errors and rights of appeal, and confesses a
judgment against it in favor of the holder of such obligation, for the
principal amount of such obligation plus interest thereon, together with court
costs and attorneys' fees. Stay of execution and all exemptions are hereby
waived. Each Borrower also agrees that the attorney acting for such Borrower
as set forth in this paragraph may be compensated by Bank for such services,
and each Borrower waives any conflict of interest caused by such
representation and compensation arrangement. If an obligation is referred to
an attorney for collection, and the payment is obtained without the entry of a
judgment, the obligors will pay to the holder of such obligation its
attorneys' fees.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA-HESS & EISENHARDT THE O'GARA COMPANY
ARMORING COMPANY
By: _____________________________ By: ______________________________
Its: _____________________________ Its: ______________________________
59
<PAGE> 65
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
O'GARA SATELLITE NETWORKS, INC. O'GARA SATELLITE NETWORKS
LIMITED
By: _____________________________ By: ______________________________
Its: _____________________________ Its: ______________________________
60
<PAGE> 66
EXHIBIT 3.3
LITIGATION
O'Gara Protective Services, Inc. and Edward F. O'Gara v. The O'Gara
Company, O'Gara-Hess & Eisenhardt Armoring Company, and Thomas M.
O'Gara, Civil Action C-1-9G-979 pending in U.S. District Court for
Southern District of Ohio.
Jury Phelps, EEOC Matter.
-----------
61
<PAGE> 67
EXHIBIT 3.9
PERMITTED LIENS
1. Subordinated Stock Pledge of all shares of Next Destination
Limited.
2. UCC financing Statements being further described as follows:
DEBTOR: O'Gara-Hess & Eisenhardt
9113 LeSaint Drive
Fairfield, OH 45015
OHIO SECRETARY OF STATE
-----------------------
Secured Party: Scott Leasing Co.
6860 Ashfield Drive
Cincinnati, OH 45242
File Number: AK20536
File Date: 05/22/93
Collateral: Equipment*
Secured Party: Information Leasing Corporation
1023 West 8th Street
Cincinnati, OH 45203
File Number: AK72428
File Date: 01/18/94
Collateral: Equipment*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: AK72429
File Date: 01/18/94
Collateral: Equipment*
Secured Party: Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, OH 45263
File Number: AL60089
File Date: 01/31/95
Collateral: Blanket collateral*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: AM16281
File Date: 09-21-95
Collateral: Equipment*
* as further described in the original financing statement
62
<PAGE> 68
Secured Party: Norstan Financial Services
6900 Wedgewood Lane, #150
Maple Grove, MN 55311
File Number: AM25022
File Date: 10/27/95
Collateral: Equipment*
Secured Party: Cort Furniture Rental
7400 Squire Ct.
West Chester, OH 45069
File Number: AM64538
File Date: 4/12/96
Collateral: furniture and furnishings*
BUTLER COUNTY
-------------
Secured Party: Scot Leasing Co.
6860 Ashfield Drive
Cincinnati, OH 45242
File Number: 93-33928
File Date: 6/20/93
Collateral: Equipment*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 94-00332
File Date: 1/18/94
Collateral: Equipment*
Secured Party: Information Leasing Corporation
1023 West 8th Street
Cincinnati, OH 45203
File Number: 94-00333
File Date: 1/18/94
Collateral: Equipment*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 95-012583
File Date: 9/20/95
Collateral: Equipment*
Secured Party: Cort Furniture Rental
7400 Squire Ct.
West Chester, OH 45069
File Number: 96-03846
File Date: 7/16/96
Collateral: Furniture and furnishings*
* as further described in the original financing statement
63
<PAGE> 69
HAMILTON COUNTY
---------------
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 94-12638
File Date: 1/20/94
Collateral: Equipment*
Secured Party: Information Leasing Corporation
1023 West 8th Street
Cincinnati, OH 45203
File Number: 94-12663
File Date: 1/20/94
Collateral: Equipment*
Secured Party: Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, OH 45263
File Number: 95-12967
File Date: 2/1/95
collateral: Blanket collateral*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 95-146611
File Date: 10/17/95
Collateral: Equipment*
DEBTOR: O'Gara-Hess & Eisenhardt Armoring Company
9113 LeSaint Drive
Fairfield, OH 45014
OHIO SECRETARY OF STATE
-----------------------
Secured Party: PNC Bank, Ohio
400 Central Trust Center
Cincinnati, OH 45202
File Number: X80531
File Date: 9/30/86
Collateral: Blanket collateral*
Secured Party: Central Trust Company
201 E. Fifth Street
Cincinnati, OH 45202
File Number: Y88578
File Date: 1/14/88
Collateral: Blanket collateral*
* as further described in the original financing statement
64
<PAGE> 70
Secured Party: Central Trust Company
201 E. Fifth Street
Cincinnati, OH 45202
File Number: Y88177
File Date: 1/13/88
Collateral: blanket collateral*
Secured Party: General Motors Acceptance Corporation
4506 Duke Drive, Suite 300
Mason, OH 45040
File Number: AK83347
File Date: 03/10/94
Collateral: Inventory of motor vehicles and motor
vehicle chassis*
Secured Party: Scot Leasing Co.
6860 Ashfield Drive
Cincinnati, OH 45242
File Number: AL26371
File Date: 09/06/94
Collateral: Equipment*
Secured Party: Scot Leasing Co.
6860 Ashfield Drive
Cincinnati, OH 45242
File Number: AL81929
File Date: 05/01/95
Collateral: Equipment*
Secured Party: PNC Leasing Corp.
Fifth Avenue & Wood Street
Pittsburgh, PA 15265
File Number: AL45387
File Date: 11/28/94
Collateral: Equipment*
Secured Party: PNC leasing Corp.
Fifth Avenue & Wood Street
Pittsburgh, PA 15265
File Number: AL77181
File Date: 04/12/95
Collateral: Equipment*
Secured Party: AM General Corporation
105 N. Niles Avenue
South Bend, IN 46617
File Number: AM50633
File Date: 02/20/96
Collateral: Equipment*
* as further described in the original financing statement
65
<PAGE> 71
Secured Party: The CIT Group/Equipment Financing, Inc.
P.O. Box 27248
Tempe, AR 85285-7248
File Number: AL63507
File Date: 02/15/95
Collateral: Equipment*
Secured Party: The CIT Group/Equipment Financing, Inc.
P.O. Box 27248
Tempe, AR 85285-7248
File Number: AL63507
File Date: 02/15/95
Collateral: Equipment*
Secured Party: Ikon Capital
P.O. Box 9115
Macon, GA 31208-9115
File Number: AN18367
File Date: 11/15/96
Collateral: Equipment*
BUTLER COUNTY
-------------
Secured Party: The Central Trust Company, N.A.
as Trustee and as letter of Credit Bank
NKA PNC Bank, Ohio, N.A.
400 Central Trust Center
Cincinnati, OH 45202
File Number: 86-20631 - fixture filing
File Date: 9/25/86
Collateral: Personal property and fixtures*
Secured Party: The Central Trust Company, N.A.
The Central Trust Company, N.A., Trustee
Fifth & Main Streets
Cincinnati, OH 45202
File Number: 88-31645
File Date: 01/11/88
Collateral: Receivables, Inventory, Equipment,
General Intangibles, Proceeds and
Products thereof*
Secured Party: The Central Trust Company, N.A.
Central Trust Center
201 East Fifth Street
Cincinnati, OH 45202-4117
File Number: 88-31734
File Date: 1/12/88
Collateral: Receivables, Inventory, Equipment,
General Intangibles, Proceeds and
Products thereof*
* as further described in the original financing statement
66
<PAGE> 72
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 93-35094
File Date: 07/20/93
Collateral: Equipment*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 93-35095
File Date: 07/20/93
Collateral: Equipment*
Secured Party: General Motors Acceptance Corporation
4605 Duke Drive, Suite 300
Mason, OH 45040
File Number: 94-14024
File Date: 03/11/94
Collateral: Inventory of motor vehicles and motor
vehicle chassis*
Secured Party: Scot Leasing Co.
6860 Ashfield Drive
Cincinnati, OH 45242
File Number: 94-4702
File Date: 08/11/94
Collateral: Equipment*
Secured Party: PNC Leasing Corp.
Fifth Avenue & Wood Street
Pittsburgh, PA 15265
File Number: 94-006569
File Date: 11/28/94
Collateral: Equipment*
Secured Party: PNC Leasing Corp.
Fifth Avenue & Wood Street
Pittsburgh, PA 15265
File Number: 95-9370
File Date: 4/14/95
Collateral: Equipment*
Secured Party: Scot Leasing Co.
6860 Ashfield Drive
Cincinnati, OH 45242
File Number: 95-009442
File Date: 4/18/95
Collateral: Equipment*
* as further described in the original financing statement
67
<PAGE> 73
Secured Party: Ikon Capital
P.O. Box 9115
Macon, GA 31208-9115
File Number: 96-06355
File Date: 11/12/96
Collateral: Equipment*
HAMILTON COUNTY
---------------
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 93-125933
File Date: 07/22/93
Collateral: Equipment*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 93-125952
File Date: 07/22/93
Collateral: Equipment*
DEBTOR: O'Gara Satellite Networks, Inc.
1 Brandywine Drive
Deer Park, NY 11729
OHIO SECRETARY OF STATE
-----------------------
Secured Party: Information Leasing Corporation
1023 West 8th Street
Cincinnati, OH 45203
File Number: AL70365
File Date: 03/16/95
Collateral: Equipment*
Secured Party: Star Bank, National Association
425 Walnut Street
Cincinnati, OH 45202
File Number: AM32653
File Date: 11/29/95
Collateral: Equipment*
BUTLER COUNTY
-------------
Debtor: O'Gara Satellite Networks, Inc.
9113 LeSaint Drive
Secured Party: Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, OH 45263
File Number: 95-9355
File Date: 04/13/95
Collateral: Blanket collateral*
* as further described in the original financing statement
68
<PAGE> 74
HAMILTON COUNTY
---------------
Secured Party: Information Leasing Corporation
1023 West 8th Street
Cincinnati, OH 45203
File Number: 95-33266
File Date: 03/17/95
Collateral: Equipment*
Secured Party: Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
File Number: 95-162409
File Date: 11/15/95
Collateral: Equipment*
3. Mortgages granted by O'Gara-Hess & Eisenhardt Armoring
Company in favor of PNC Bank Ohio, N.A. encumbering
9113 LeSaint Drive, Fairfield, Ohio and 10020
Pondwoods, Cincinnati, Ohio 45241.
4. Liens for non-delinquent real estate taxes and installments
of assessments.
69
<PAGE> 75
EXHIBIT 3.12
SUBSIDIARIES AND PARTNERSHIPS
-----------------------------
O'GARA-HESS & EISENHARDT ARMORING COMPANY
9113 LeSaint Drive
Fairfield, Ohio 45014
O'GARA-HESS & EISENHARDT ARMORING COMPANY DE MEXICO
Adromaco 23
Ampliacion Granada
11520 Mexico, D.F.
Ciudad de Mexico
O'GARA-HESS & EISENHARDT ARMORING COMPANY DO BRASIL
Av. Tambore, #1,393
Barueri, S.P. 06454-000
Brasil
O'GARA SECURITY INTERNATIONAL
Krasnopresnenskaya Nab. 14,
Commercial Centre, 3rd. Floor
Moscow, Russia 123100
LAURA-O'GARA AUTOMOTIVE GROUP
Saint-Petersburg
8 Tverskay Street
193C15 Russia
O'GARA FRANCE, SA
LABBE, SA
Z.I. Rue d'Armor
F- 22404 Lamballe Cedex
SOCIETE DE BLINDAGE AND DE SECURITE
47, Route D'Auxerre
F - 89470 Moneteau
NORMANDI CAROSSERI S.A.R.L.
12 rue Andre Ampere
F - 14120 Mondeville
70
<PAGE> 76
HELLIO POIDS-LOURDS
Z.A. La Hazaie
F. - 22950 Tregueux
O'GARA-HESS & EISENHARDT ARMORING COMPANY LIMITED
O'GARA-HESS & EISENHARDT ARMORING SRL (ITALY)
O'GARA SATELLITE NETWORKS LIMITED
One Brandywine Drive
Deer Park, NY 11729
OGM COMMUNICATIONS (IRELAND)
O'GARA SATELLITE NETWORKS INC.
One Brandywine Drive
Deer Park, NY 11729
NEXT DESTINATION LIMITED
Unit 5, Ground Floor Lease of 25
The Clarendon Centre
Salisbury Business Park, Salisbury SP1 2TJ
71
<PAGE> 77
EXHIBIT 7.1(b)
[FORM FOR PARENT - SIMILAR CERTIFICATES REQUIRED FOR EACH BORROWER]
THE O'GARA COMPANY
CERTIFICATE OF BORROWER
re: $33,500,000 Loan Facility
from
THE FIFTH THIRD BANK
and
LaSALLE NATIONAL BANK
The undersigned does hereby certify that he is the duly elected,
qualified and acting Secretary of THE O'GARA COMPANY, an Ohio corporation (the
"Borrower"), and the undersigned does hereby further certify as follows:
1. Attached hereto, marked Attachment A, is a true and correct copy of
the current Articles of Incorporation of Borrower together with all
amendments thereto.
2. Attached hereto, marked Attachment B, is a true and correct copy of
the current Bylaws of Borrower together with all amendments thereto.
3. Attached hereto, marked Attachment C, is a true and correct copy of
certain resolutions of the board of directors of Borrower dated ,
1997, which were duly and lawfully adopted by the board of directors
of Borrower. Such resolutions have not been amended, altered or
rescinded and are in full force and effect on the date hereof.
4. The following persons are the duly elected officers of Borrower,
holding the office set forth opposite their respective names. Each
officer who has executed or will execute any documents in connection
with this loan transaction has set forth his true and customary
signature opposite his name.
Name Title Signature
__________________ ______________________ ____________________
__________________ ______________________ ____________________
__________________ ______________________ ____________________
__________________ ______________________ ____________________
72
<PAGE> 78
5. Each officer whose personal signature appears above has been duly
authorized by resolution of the board of directors of Borrower to
execute any and all instruments or documents which he may deem
necessary or appropriate in connection with this loan transaction.
6. Borrower is in good standing in the state of its incorporation.
Attached hereto, marked Attachment D, is a short-form certificate of
good standing issued within the past 30 days by that state.
IN WITNESS WHEREOF, the undersigned hereby certifies the above to be
true and has executed this certificate this ______ day of
______________________, 1997.
------------------------------
, Secretary
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EXHIBIT 7.1(C)
OPINION OF COUNSEL FOR BORROWER
-------------------------------
The Fifth Third Bank LaSalle National Bank
38 Fountain Square Plaza 135 S. LaSalle Street
Cincinnati, Ohio 45263 Chicago, Illinois 60603
Attention: Metropolitan Lending Department Attention: Commercial Banking
Re: THE O'GARA COMPANY, O'GARA-HESS & EISENHARDT ARMORING
COMPANY, O'GARA SATELLITE NETWORKS, INC. and O'GARA
SATELLITE NETWORKS LIMITED
Gentlemen:
We have acted as general counsel for The O'Gara Company, O'Gara-Hess
& Eisenhardt Armoring Company, O'Gara Satellite Networks, Inc. and O'Gara
Satellite Networks Limited collectively, the "Borrowers" and individually, a
"Borrower"), in connection with the negotiation and execution of the Credit
Agreement of even date herewith between you and Borrowers (the "Credit
Agreement"), four Security Agreements of even date herewith, the Revolving
Note, the Term Note and the Letter of Credit Note of Borrowers, each dated of
even date herewith (collectively the "Notes") and [LIST OTHER COLLATERAL
DOCUMENTS] (all of which will be collectively referred to as the "Loan
Documents"). All capitalized terms not defined herein have the meanings set
forth in the Credit Agreement. As general counsel for Borrowers, we have made
such investigations as we have deemed necessary in connection with the
opinions hereinafter set forth.
Based upon such investigations, it is our opinion that:
1. Each Borrower is a corporation duly organized and validly existing
under the laws of the state of its incorporation, having full
corporate power and authority to execute and deliver and to carry out
and perform its obligations under the Loan Documents;
2. The execution and performance of the Loan Documents have been duly
authorized by all necessary corporate action of Borrowers and the
Loan Documents have been duly executed and delivered by Borrowers and
are valid and binding obligations of Borrowers enforceable in
accordance with their respective terms, except to the extent that
enforcement thereof may be limited by equitable principles or by
bankruptcy, insolvency or other similar laws affecting the rights of
creditors generally;
3. To our knowledge, after due investigation, the execution and
delivery of the Loan Documents and the performance by each Borrower
of its obligations thereunder do not and
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<PAGE> 80
will not conflict with or constitute on the part of such Borrower a
breach of or default under the articles of incorporation or code of
regulations governing each Borrower, any existing law, regulation,
court order or consent decree to which each Borrower is subject, or
any agreement, indenture, note, mortgage, or other obligation or
instrument to which each Borrower is a party or by which it may be
bound;
4. There is not pending, or to our knowledge, after due investigation,
threatened, any action, suit, proceeding (at law or in equity) or
investigation before or by any court, administrative agency, or
public board or body against a Borrower or its properties;
5. To our knowledge, nothing has come to our attention in our
representation of Borrowers under a Borrower's governing instruments
or other documents binding upon such Borrower that would prohibit
Borrowers from granting to Bank a perfectible security interest in
the Collateral;
6. The execution, delivery and performance by Borrowers of the Loan
Documents are not subject to any authorization, consent, approval or
review by any governmental body or regulatory authority not
heretofore obtained or affected; and
7. The Notes are not usurious under the governing laws.
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<PAGE> 81
<TABLE>
<CAPTION>
EXHIBIT 7.2
COLLATERAL REPORT
THE FIFTH THIRD BANK, as agent
<S> <C> <C>
I. Total Accounts as of ____________, 19__ $__________
Less: Accounts Over 90 Days From Invoice $__________
50% Rule $__________
Other (Employee, Contra Accts., Etc.) $__________
Eligible Accounts $__________
Advance Rate X __%
LOAN AVAILABILITY - ACCOUNTS $
==========
II. Total Inventory Collateral as of ________, 19__ $__________
Less: Inventory on Consignment $__________
Customer Deposits $__________
Cost and Estimated Earnings in Excess of Billings
on Uncompleted Contracts $__________
Eligible Inventory $__________
Advance Rate X __%
LOAN AVAILABILITY - INVENTORY $
==========
TOTAL LOAN AVAILABILITY
(Sum of I and II) $
==========
</TABLE>
The terms and conditions of this Collateral Report are governed by Credit
Agreement dated _________, 1997, (hereinafter referred to as the "Agreement")
with The Fifth Third Bank and LaSalle National Bank ("Banks"); all
definitions, undertakings, obligations, covenants and
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<PAGE> 82
warranties applicable to Borrowers under the Agreement including, without
limitation, the assignment by Borrowers to Banks of collateral, are hereby
acknowledged by Borrowers to be in fully force and effect.
The undersigned, agent for the Borrowers, by execution hereof,
warrants and represents the following:
a) There exists no Default or Event of Default, as defined,
pursuant to the Agreement;
b) Borrowers have read and are familiar with the Agreement,
understand each term and condition set forth therein,
undertake to comply therewith and will obtain, if necessary,
from Banks a copy of the Agreement for review of Borrowers'
obligations thereunder;
c) Except for Permitted Liens, there exists no lien,
encumbrance, legal proceeding or other similar act or
condition which would impair, restrict or limit a Bank's
rights with respect to collateral pledged pursuant to the
Agreement, including, without limitation, items of
collateral reported herein;
d) Borrowers represent and warrant that the collateral
balances reported herein are true and correct.
THE O'GARA COMPANY, as agent
Dated: __________, 19___ By: ____________________________________
Its: _____________________________________
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<PAGE> 83
EXHIBIT 8.5
SECURITY AGREEMENT
------------------
[FORM FOR PARENT - SIMILAR DOCUMENT TO BE PROVIDED FOR EACH BORROWER]
THIS SECURITY AGREEMENT is entered into as of the ______ day of
_________, 1997, by and between THE O'GARA COMPANY, an Ohio corporation (the
"Borrower") and THE FIFTH THIRD BANK, an Ohio banking corporation, as agent
(the "Agent") for the Banks that are signatories to the Credit Agreement
(hereinafter defined) (collectively, the "Banks" and individually a "Bank").
Section 1. DEFINITIONS.
1.1. SPECIFIC DEFINITIONS. The following definitions will apply:
(a) "Account Debtors" means Borrower's customers and all
other persons obligated to Borrower on Accounts.
(b) "Accounts" means all accounts, accounts receivable,
contract rights, instruments, documents, chattel paper, and all obligations
in any form including but not limited to those arising out of the sale or
lease of goods or the rendition of services by Borrower; all guaranties,
letters of credit and other security for any of the above; all merchandise
returned to or reclaimed by Borrower; and all books and records (including
computer programs, tapes and data processing software) evidencing an interest
in or relating to the above.
(c) "Equipment" means all machinery, machine tools,
equipment, fixtures, office equipment, furniture, furnishings, motors, motor
vehicles, tools, dies, parts, jigs, goods (including, without limitation,
each of the items of equipment set forth on any schedule which is either now
or in the future attached to Agent's copy of this Agreement), and all
attachments, accessories, accessions, replacements, substitutions, additions
and improvements thereto, and all supplies used or useful in connection
therewith.
(d) "General Intangibles" means all general intangibles,
choses in action, causes of action, obligations or indebtedness owed to
Borrower from any source whatsoever, and all other intangible personal
property of every kind and nature (other than Accounts) including without
limitation patents, trademarks, trade names, service marks, copyrights and
applications for any of the above, and goodwill, trade secrets, licenses,
franchises, rights under agreements, tax refund claims, and all books and
records including all computer programs, disks, tapes, printouts, customer
lists, credit files and other business and financial records, and the
equipment containing any such information.
(e) "Inventory" means any and all goods, supplies, wares,
merchandises and other tangible personal property, including raw materials,
work in process, supplies and
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<PAGE> 84
components, and finished goods, whether held for sale or lease, or furnished
or to be furnished under any contract for service, or otherwise and also
including products of and accessions to inventory, packing and shipping
materials, and all documents of title, whether negotiable or non-negotiable,
representing any of the foregoing.
(f) "Lien" means any security interest, mortgage, pledge,
assignment, lien or other encumbrance of any kind, including interests of
vendors or lessors under conditional sale contracts or capital leases.
(g) "Life Insurance Policy" means a $3,000,000 life
insurance policy on the life of William O'Gara, duly assigned to Agent
pursuant to an acceptable collateral assignment, issued by an entity
acceptable to Agent.
(h) In addition to the foregoing, the definitions of the
terms Accounts, Inventory, Equipment and General Intangibles will have the
meanings attributed thereto in the applicable version of the Uniform
Commercial Code adopted in the jurisdiction where Agent's principal place of
business is located, as such definitions may be enlarged or expanded from
time to time by amendment or judicial decision.
1.2. OTHER DEFINITIONS. Capitalized terms not defined herein
have the meanings set forth in the Credit Agreement of even date herewith to
which Borrower and Agent are parties (the "Credit Agreement"). All other
undefined terms will have the meaning given to them in the Ohio Uniform
Commercial Code. Agent is acting under this Agreement in its capacity as agent
for all Banks specified in the Credit Agreement. All references to Agent in
this Agreement shall refer to Agent, as agent for all Banks.
Section 2. SECURITY.
2.1. SECURITY INTEREST OF AGENT. To induce Banks to make the
Loans, and as security for all Obligations of Borrower to the Agent and the
Banks, Borrower hereby assigns to the Agent (for the ratable benefit of the
Agent and the Banks) as collateral and grants to the Agent (for the ratable
benefit of the Agent and the Banks) a continuing first priority pledge and
security interest in the following property of Borrower (the "Collateral"),
whether now owned or existing or hereafter acquired or arising and regardless
of where it is located:
(a) all Accounts;
(b) all Inventory;
(c) all Equipment;
(d) all General Intangibles;
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<PAGE> 85
(e) all proceeds and products of Collateral and all
additions and accessions to, replacements of, insurance or condemnation
proceeds of, and documents covering Collateral, all tort or other claims
against third parties arising out of damage or destruction of Collateral, all
property received wholly or partly in trade or exchange for Collateral, all
fixtures, all leases of Collateral and all rents, revenues, issues, profits
and proceeds arising from the sale, lease, license, encumbrance, collection,
or any other temporary or permanent disposition, of the Collateral or any
interest therein;
(f) all instruments, chattel paper, documents,
securities, money, cash, letters of credit, warrants, dividends,
distributions, contracts, agreements, contract rights or other property,
owned by Borrower or in which Borrower has an interest, which now or
hereafter are at any time in the possession or control of Agent or in transit
by mail or carrier to or in the possession of any third party acting on
behalf of Agent, without regard to whether Agent received the same in pledge,
for safekeeping, as agent for collection or transmission or otherwise or
whether Agent had conditionally released the same, and the proceeds thereof,
all rights to payment from all claims against Agent, and any deposit accounts
of Borrower with Agent, including certificates of deposit, all demand, time,
savings, passbook or other accounts; and
(g) the Life Insurance Policy.
2.2. Representations in Schedule I. The representations and
warranties in Schedule I attached hereto entitled the Specific Representation
Schedule are true and correct as of this date. Except as otherwise permitted
hereunder, Borrower will not change its name, transfer executive offices or
maintain records with respect to Accounts at any location other than the present
locations specified in that schedule.
2.3. PROVISIONS CONCERNING ACCOUNTS. Borrower represents and
warrants that each Account reflected in Borrower's books and records and on
each Collateral Report submitted to Agent is, or at the time it arises will be
owned by Borrower free and clear of all Liens in favor of any third party,
will be a bona fide existing obligation created by the final sale and delivery
goods or the completed performance of services by Borrower in the ordinary
course of its business, will be for a liquidated amount maturing as stated in
the supporting data covering such transaction, and will not be subject to any
known deduction, offset, counterclaim, return privilege or other condition,
except as reflected on Borrower's books and records and on all Collateral
Reports delivered to Agent. Borrower will not redate any invoices. Any
allowances between Borrower and its customers will be in accordance with the
usual customary practices of Borrower, as they exist at this time.
(a) Any officer, employee or agent of Agent will have the
right, at any time or times hereafter, in the name of Agent or its nominee
(including Borrower), to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, or otherwise. Agent or its
designee may at any time notify Account Debtors that Accounts have been
assigned to Agent or of Agent's security interest therein, and after an Event
of Default hereunder collect the same directly and charge all collection
costs and expenses to Borrower's account.
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<PAGE> 86
(b) If Borrower becomes aware that an Account Debtor
disputes liability or makes any claim with respect to an Account in excess of
$10,000 or that a receivership petition or petition under any chapter of the
federal bankruptcy act is filed by or against an Account Debtor, or that an
Account Debtor dissolves, makes an assignment for the benefit of creditors,
becomes insolvent, fails or goes out of business, or that any other event
occurs which adversely affects the value of any Account owed by a debtor,
Borrower will immediately notify Agent of each such event where such event is
material in nature. After default by Borrower hereunder, Borrower will not
grant any discounts, credit or allowances to any Account Debtor and will not
accept returns of merchandise without Agent's consent. After an Event of
Default hereunder, Agent may settle disputes and claims directly with Account
Debtors, and in such cases, Agent will credit Borrower's account with the net
amounts collected from such disputed Accounts, after expenses of collection.
(c) Borrower appoints Agent or Agent's designee as its
attorney-in-fact to endorse Borrower's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that
may come into Agent's possession; to sign Borrower's name on any invoice or
bill of lading relating to any Accounts or Inventory, on drafts against
Account Debtors, on schedules and assignments of Accounts or Inventory, on
notices of assignment and other public records, on verifications of Accounts
and on notices to Account Debtors; to notify post office authorities to
change the address for delivery of Borrower's mail to an address designated
by Agent, to receive and open all mail addressed to Borrower and to retain
all mail relating to Collateral and forward all other mail to Borrower; to
send requests for verification of accounts to customers or Account Debtors,
and to do all things necessary to carry out or enforce this Agreement.
Borrower ratifies and approves all acts of Agent as attorney-in-fact. Agent
as attorney-in-fact will not be liable for any acts or omissions, or for any
error of judgment or mistake of fact or law except for bad faith. This power,
being coupled with an interest, is irrevocable until all Obligations have
been fully satisfied; provided that Agent will not exercise this power until
after Event of Default has occurred hereunder and is continuing.
(d) If any Accounts will arise out of a contract with the
United States of America or any department, agency, subdivision or
instrumentality thereof, Borrower will promptly notify Agent and will perfect
Agent's Lien in such Accounts under the provisions of the Federal laws on
assignment of claims.
2.4. PROVISIONS CONCERNING GENERAL INTANGIBLES. Borrower
represents and warrants that Borrower owns all of the General Intangibles in
which Borrower grants Agent a Lien, free and clear of any Liens in favor of
any person other than Agent and except for liens permitted under the Credit
Agreement. Borrower will preserve all patents, trademarks, copyrights and the
like which are necessary or which Borrower determines are useful for the
conduct of its business.
2.5. PROVISIONS CONCERNING INVENTORY. Borrower represents
and warrants that each item of Inventory will be valued by Borrower at the
lower of cost or market on a FIFO basis for purpose of reporting to the
Agent. Borrower has informed Agent on Schedule I of all places
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<PAGE> 87
where Borrower currently maintains Inventory or has maintained Inventory at
any time during the past four months, including, without limitations,
facilities leased and operated by Borrower and locations neither owned nor
leased by Borrower. Schedule I indicates whether the premises are those of a
warehouseman or other party. No Inventory will be removed from the current
locations or stored at locations other than the current locations disclosed to
Agent on Schedule I, except (i) for the purpose of sale in the ordinary course
of Borrower's business or (ii) upon 30 days' written notice to Agent, to such
other locations as to which all action required to perfect and protect Agent's
lien in such Inventory has been taken. Inventory may be moved from one current
location to another.
(a) Borrower will keep all Inventory in good order and
condition and will maintain full, accurate and complete books and records
with respect to Inventory at all times.
(b) Borrower may sell Inventory in the ordinary course of
its business (which does not include a transfer in full or partial
satisfaction of indebtedness).
(c) If any material portion of the Inventory is stored
with a bailee, warehouseman or similar party at any time, Borrower so storing
such Inventory will inform Agent of that fact and will take all steps
reasonably requested by Agent so that Agent retains a first priority
perfected Lien in those assets.
(d) Borrower has not purchased any of the Collateral in a
bulk transfer or in a transaction which was outside the ordinary course of
the seller's business, except as set forth on an exhibit attached hereto.
2.6. PROVISIONS CONCERNING EQUIPMENT. Borrower warrants and
represents that Borrower has informed Agent on Schedule I of all places where
any of Borrower's Equipment is currently located or has been located at any
time during the past four months. No Equipment will be moved to any location
not disclosed to Agent on Schedule I but Equipment may be moved from one such
location to another. In addition, Borrower may move Equipment from job site to
job site or to another location provided that Borrower will provide Agent with
prior written notice if any Equipment with a book value in excess of $50,000
is to be moved to and maintained at a particular job site or to another
location for a period in excess of three months.
(a) Borrower will keep and maintain the Equipment in good
operating condition and repair (ordinary wear and tear excepted), make all
necessary replacements so that its value and operating efficiency is
maintained and preserved. Borrower will immediately notify Agent of any
material loss or damage to the Collateral.
(b) Borrower will immediately deliver to Agent all
certificates of title or applications for title or the like for any vehicles
(excluding vehicles consisting of Inventory), ships or airplanes covered by
certificates of title. Borrower will take all steps necessary to perfect
Agent's Lien in such assets.
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<PAGE> 88
(c) Borrower will not permit any item of Equipment to
become a fixture to real estate or accession to other property (unless
subject to a fixture filing in favor of Agent) and the Equipment is now and
except for Equipment subject to a fixture filing will at all times remain and
be personal property, except with the prior written consent of Agent. If any
of the Collateral is or may become a fixture, Borrower will obtain from all
persons with an interest in the relevant real estate such waivers or
subordinations as Agent reasonably requires.
2.7. LIFE INSURANCE POLICY. Borrower represents and warrants
that it has not borrowed against the Life Insurance Policy, from the issuer
thereof or from any other person. Borrower shall maintain in force the Life
Insurance Policy and pay all premiums thereon when due, and shall not borrow
against or reduce the amount of the death benefit under the Life Insurance
Policy.
2.8. LIENS. Borrower has good and marketable title to its
respective Collateral, and the Liens granted to Agent in this Agreement are
fully perfected first priority Liens in the Collateral with priority over the
rights of every person other than Borrower in the Collateral. Other than
rented items and items for which Borrower is providing services, Borrower is
the owner of all personal property in its possession, and all assets of
Borrower are owned free, clear and unencumbered, except for the Lien of Agent
and except for Liens imposed by law which secure amounts not yet due and
payable and Permitted Liens.
2.9. FURTHER ASSURANCES. Borrower will execute and deliver
to Agent at its request all financing statements, continuation statements and
other documents that Agent may reasonably request, in form satisfactory to
Agent, to perfect and maintain perfected Agent's security interest in the
Collateral and to fully consummate all transactions contemplated under this
Agreement. Borrower hereby irrevocably makes, constitutes and appoints Agent
(and any of Agent's officers, employees or agents designated by Agent) as
Borrower's true and lawful attorney with power to sign the name of Borrower on
any such documents.
(a) If any Collateral, including proceeds, consists of a
letter of credit, advice of credit, instrument, money (excluding funds in
bank accounts other than with Agent), negotiable documents, chattel paper or
similar property (collectively, "Negotiable Collateral") Borrower will,
immediately upon request by Agent, endorse and assign such Negotiable
Collateral over to Agent and deliver actual physical possession of the
Negotiable Collateral to Agent.
(b) Agent may inspect and verify Borrower's books and
records at any time or times hereafter, during usual business hours, in order
to verify the amount or condition of the Collateral, or any other matter
relating to the Collateral or Borrower's financial condition. Borrower will
promptly deliver to Agent copies of all books and records requested by Agent.
2.10. OTHER AMOUNTS DEEMED LOANS. If Borrower fails to pay any
tax, assessment, government charge or levy or to maintain insurance within the
time permitted by this Agreement or the Credit Agreement, or to discharge any
Lien prohibited hereby, or to comply with any other
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obligation, Agent may, but will not be required to, pay, satisfy, discharge or
bond the same of the account of Borrower, and to the extent permitted by law
and all monies so paid out will be secured by the Collateral.
2.11. BORROWER REMAINS LIABLE. Borrower will remain liable under
any contracts and agreements included in the Collateral to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, and Agent will not have any obligation or liability under
such contracts and agreements by reason of this Agreement or otherwise.
2.12. INSURANCE. Borrower will insure the Collateral against loss
or damage of the kinds and in the amounts customarily insured against by
corporations with established reputations engaged in the same or similar
business as Borrower. All such policies will (a) be issued by financially sound
and reputable insurers, (b) name Agent as an additional insured and, where
applicable, as loss payee under a lender loss payable endorsement satisfactory
to Agent, and (c) will provide for thirty (30) days written notice to Agent
before such policy is altered or canceled all of which will be evidenced by a
Certificate of Insurance delivered to Agent by Borrower on the date of execution
of this Agreement.
Section 3. EVENTS OF DEFAULT AND REMEDIES.
3.1. EVENTS OF DEFAULT. Any Event of Default under the Credit
Agreement constitutes an "Event of Default" under this Agreement.
3.2. REMEDIES. If any Event of Default occurs and is continuing,
in addition to the remedies provided in the Credit Agreement:
(a) Agent may resort to the rights and remedies of a secured
party under the Uniform Commercial Code including the right to enter any
premises of Borrower, with or without legal process and take possession of the
Collateral and remove it and any records pertaining thereto and/or remain on
such premises and use it for the purpose of collecting, preparing and disposing
of the Collateral;
(b) Agent may ship, reclaim, recover, store, finish, maintain
and repair the Collateral, and may sell the Collateral at public or private
sale, and Borrower will be credited with the net proceeds of such sale only when
they are actually received by Agent and any requirement of reasonable notice of
any disposition of the Collateral will be satisfied if such notice is sent to
Borrower 10 days prior to such disposition;
(c) Borrower will upon request of Agent assemble the
Collateral and any records pertaining thereto and make them available at a place
designated by Agent; or
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(d) Agent may use, in connection with any assembly or
disposition of the Collateral, any trademark, trade name, tradestyle, copyright,
patent right, trade secret or technical process used or utilized by Borrower.
3.3. NO REMEDY EXCLUSIVE. No remedy set forth herein is exclusive
of any other available remedy or remedies, but each is cumulative and in
addition to every other remedy given under this Agreement or the Credit
Agreement or now or hereafter existing at law or in equity or by statute.
Section 4. MISCELLANEOUS PROVISIONS.
4.1. MISCELLANEOUS. No delay or omission to exercise any right
will impair any such right or be a waiver thereof, and a waiver on one
occasion will be limited to that particular occasion. This Agreement may be
amended only in writing signed by the party against whom enforcement of the
amendment is sought. This Agreement may be executed in counterparts. If any
part of this Agreement is held invalid, the remainder of this Agreement will
not be affected thereby.
4.2. BINDING EFFECT. This Agreement will be binding upon and
inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto; however, Borrower may not assign any of its
rights or delegate any of its obligations hereunder. Agent (and any subsequent
assignee) may transfer and assign this Agreement or may assign partial
interests or participation in the Loans to other persons.
4.3. FINANCING STATEMENT. Borrower hereby authorizes Agent to file
a copy of this Agreement as a Financing Statement under the Uniform Commercial
Code with appropriate county and state government authorities necessary to
perfect the Agent's security interest in the Collateral as set forth herein.
4.4. NOTICES. Any notices under or pursuant to this agreement
will be deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, to the addresses then provided for in
the Notices section of the Credit Agreement.
4.5. GOVERNING LAW; JURISDICTION. This Agreement will be governed
by the domestic laws of the State of Ohio. Borrower agrees that the state and
federal courts in Hamilton County, Ohio or any other court in which Agent
initiates proceedings relating to any Collateral have exclusive jurisdiction
over all matters arising out of this Agreement, and that service of process in
any such proceeding will be effective if mailed to Borrower at its address
described in the Notices section of the Credit Agreement. AGENT AND BORROWER
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, Borrower and Agent have executed this Security
Agreement by their duly authorized officers as of the date first above
written.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT OR ANY OTHER CAUSE.
THE O'GARA COMPANY
By: ____________________________________
Its: ____________________________________
THE FIFTH THIRD BANK, AS AGENT
By: ____________________________________
Its: ____________________________________
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SCHEDULE I
SPECIFIC REPRESENTATIONS
------------------------
1. The exact legal name of Borrower is:__________________________________
2. If Borrower has changed its name since it was incorporated, its past
legal names were:_____________________________________________________
______________________________________________________________________
3. Borrower uses in its business and owns the following trade names:_____
______________________________________________________________________
4. Borrower was incorporated on , under the laws of the State of_________
____________________ , and is in good standing under those laws.
5. Borrower is qualified to transact business in the following states:
______________________________________________________________________
6. Borrower has its chief executive office and principal place of business
at____________________________________________________________________.
Borrower maintains all of its records with respect to its Accounts at
that address.
7. Borrower also has places of business at_______________________________
______________________________________________________________________
8. No inventory, equipment or fixtures owned by Borrower are located at
any other place, nor were they located at any other place within the
past four months. The locations noted in #7 above.
9. In the past five years Borrower has never maintained its chief
executive office or principal place of business or records with
respect to accounts, nor owned personal property, at any locations
except those set forth above and except________________________________
_______________________________________________________________________
10. The following entities (a) have been merged into Borrower, (b) have
sold substantially all of their assets to Borrower outside the
ordinary course of their business since Borrower was incorporated:
______________________________________________________________________
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11. Borrower is not the owner or licensee of any registered patents,
trademarks or copyrights except:______________________________________
______________________________________________________________________
12. Borrower does not have any subsidiaries, or own stock in any other
corporations, or own an interest in any partnerships or joint ventures,
except________________________________________________________________
______________________________________________________________________
13. Borrower is not the owner of any life insurance policies except
______________________________________________________________________
14. If Borrower is incorporated in Kentucky or qualified to do business
there, its registered agent and registered office there as listed on
the Kentucky secretary of state's corporate records are:______________
______________________________________________________________________
15. Borrower is not a plaintiff or defendant in any litigation except as
follows:______________________________________________________________
______________________________________________________________________
88
<PAGE> 94
EXHIBIT A
to
UCC-1 FINANCING STATEMENT
-------------------------
[Form for Parent - Similar Document for Each Other Borrower]
DEBTOR: SECURED PARTY:
The O'Gara Company The Fifth Third Bank, as agent
9113 Le Saint Drive 38 Fountain Square Plaza
Fairfield, Ohio 45014 Cincinnati, Ohio 45263
This UCC-1 Financing Statement covers the following property of
Debtor whether now owned or existing or hereafter acquired or arising
regardless of where it is located (collectively referred to herein as
the"Collateral"):
1. all accounts, accounts receivable, contract rights, instruments,
documents, chattel paper, and all obligations in any form including
but not limited to those arising out of the sale or lease of goods or
the rendition of services by Debtor; all guaranties, letters of
credit and other security for any of the above; all merchandise
returned to or reclaimed by Debtor; and all books and records
(including computer programs, tapes and data processing software)
evidencing an interest in or relating to the above.
2. all equipment, machinery, machine tools, fixtures, office equipment,
furniture, furnishings, motors, motor vehicles, tools, dies, parts,
jigs, goods (including, without limitation, each of the items of
equipment set forth on any schedule which is either now or in the
future attached to Secured Party's copy of this Agreement), and all
attachments, accessories, accessions, replacements, substitutions,
additions and improvements thereto, and all supplies used or useful
in connection therewith.
3. all general intangibles, choses in action, causes of action,
obligations or indebtedness owed to Debtor from any source
whatsoever, and all other intangible personal property of every kind
and nature (other than Accounts) including without limitation
patents, trademarks, trade names, service marks, copyrights and
applications for any of the above, and goodwill, trade secrets,
licenses, franchises, rights under agreements, tax refund claims, and
all books and records including all computer programs, disks, tapes,
printouts, customer lists, credit files and other business and
financial records, and the equipment containing any such information.
4. all inventory, goods, supplies, wares, merchandises and other
tangible personal property, including raw materials, work in process,
supplies and components, and finished goods, whether held for sale or
lease, or furnished or to be furnished under any contract for
service, and also including products of and accessions to inventory,
packing and shipping materials, and all documents of title, whether
negotiable or non-negotiable, representing any of the foregoing.
89
<PAGE> 95
5. all proceeds and products of the Collateral and all additions and
accessions to, replacements of, insurance or condemnation proceeds
of, and documents covering Collateral, all tort or other claims
against third parties arising out of damage or destruction of
Collateral, all property received wholly or partly in trade or
exchange for Collateral, all fixtures, all leases of Collateral and
all rents, revenues, issues, profits and proceeds arising from the
sale, lease, license, encumbrance, collection, or any other temporary
or permanent disposition, of the Collateral or any interest therein.
6. all instruments, chattel paper, documents, securities, money, cash,
letters of credit, warrants, dividends, distributions, contracts,
agreements, contract rights or other property, owned by Debtor or in
which Debtor has an interest, including but not limited to, those which
now are or at any time hereafter will be in the possession or control
of Secured Party or in transit by mail or carrier to or in the
possession of any third party acting on behalf of Secured Party,
without regard to whether Secured Party received the same in pledge,
for safekeeping, as agent for collection or transmission or otherwise
or whether Secured Party had conditionally released the same, and the
proceeds thereof, all rights to payment from, and all claims against
Secured Party, and any deposit accounts of Debtor with Secured Party,
including all demand, time, savings, passbook or other accounts and all
deposits therein.
90
<PAGE> 1
Exhibit 10.6
AWARD/CONTRACT
1. THIS CONTRACT IS A RATED ORDER
UNDER DPAS (15 CFR 700)
RATING
DOA4
PAGE OF PAGES
1
2. CONTRACT (Proc. Inst. Ident.) NO.
DAAE07-97-C-X028
3. EFFECTIVE DATE
17 JAN 1997
4. REQUISITION/PURCHASE REQUEST/PROJECT NO.
5. ISSUED BY CODE W56HZV
TACOM
AMSTA-AQ-MDD /WPN SYS: N5
TONI SPALDING /810-574-7187
WARREN, MICHIGAN 48397-5000
6. ADMINISTERED BY (If other than Item 6) CODE S3605A
DCMC DAYTON
BUILDING 30,
1725 VAN PATTON AVENUE
WRIGHT PATTERSON AFB, OH 45433
SCD B PAS NONE ADP PT SC1010
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, county, State and
ZIP Code)
O GARA-HESS & EISENHARDT ARMORING
CO J
9113 LE SAINT RD
FAIRFIELD OH 45014
CODE 6W728 FACILITY CODE
8. DELIVERY
FOB ORIGIN X OTHER (See Below) SEE SCHEDULE
9. DISCOUNT FOR PROMPT PAYMENT
10. SUBMIT INVOICES
(4 copies unless otherwise specified) ITEM
TO THE ADDRESS SHOWN IN 12
11. SHIP TO/MARK FOR CODE
SEE SCHEDULE
12. PAYMENT WILL BE MADE BY CODE SC1018
DFAS-COLUMBUS CENTER
DFAS-C0/NEW DOMINION DIVISION
PO BOX 182041
COLUMBUS OH 43218-2041
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION:
X 10 U.S.C. 2304(c)(1) 41 U.S.C. 253(c)( )
<PAGE> 2
14. ACCOUNTING AND APPROPRIATION DATA
SEE SECTION G OF THE SCHEDULE
15.A. ITEM NO.
1
15B. SUPPLIES/SERVICES
CONTRACT TYPE: COST-PLUS FIXED FEE
15C. QUANTITY
15D. UNIT
15E. UNIT PRICE
15F. AMOUNT
15G. TOTAL AMOUNT OF CONTRACT $2,509,000.00
16. TABLE OF CONTENTS
(X) SEC DESCRIPTION PAGE(S)
PART I- THE SCHEDULE
X A SOLICITATION/CONTRACT FORM 1
X B SUPPLIES OR SERVICES AND PRICES/COSTS 4
X C DESCRIPTION/SPECS./WORK STATEMENT 4
X D PACKAGING AND MARKING 13
X E INSPECTION AND ACCEPTANCE 4
X F DELIVERIES OR PERFORMANCE 4
X G CONTRACT ADMINISTRATION DATA 17
X H SPECIAL CONTRACT REQUIREMENTS 18
(X) SEC DESCRIPTION PAGE(S)
PART II - CONTRACT CLAUSES
X I CONTRACT CLAUSES 25
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
J LIST OF ATTACHMENTS
PART IV - REPRESENTATIONS AND INSTRUCTIONS
K REPRESENTATIONS, CERTIFICATIONS AND
OTHER STATEMENTS OF OFFERORS
L INSTRS., CONDS., AND NOTICES TO OFFERORS
M EVALUATION FACTORS FOR AWARD
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
17. X CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to
sign this document and return 01 copies to issuing office.)
Contractor agrees to furnish and deliver all items or perform
all the services set forth or otherwise identified above and
on any continuation sheets for the consideration stated
herein. The rights and obligations of the parties to this
contract shall be subject to and governed by the following
documents: (a) this award/contract, (b) the solicitation, if
any, and (c) such provisions, representations, certifications,
and specifications, as are attached or incorporated by
reference herein. (Attachments are listed herein.)
18. AWARD (Contractor is not required to sign this document.) Your
offer on Solicitation Number ________________, including the
additions or changes made by you which additions or changes
are set forth in full above, is hereby accepted as to the
items listed above and on any continuation sheets. This award
consummates the contract which consists of the following
documents: (a) the Government's solicitation and your offer,
and (b) this award/contract. No further contractual document
is necessary.
<PAGE> 3
19A. NAME AND TITLE OF SIGNER (Type or print)
MJ Lennon,
President OHEAC
19B. NAME OF CONTRACTOR
BY /s/ MJ Lennon
--------------------
(Signature of person authorized to sign)
19C. DATE SIGNED
20A. NAME OF CONTRACTING OFFICER
JEFFREY P. HARBOUR
Contracting Officer
20B. UNITED STATES OF AMERICA
BY /s/ Jeffrey P. Harbour
----------------------
(Signature of Contracting Officer)
20C. DATE SIGNED
17 JAN 1997
<PAGE> 4
AWARD/CONTRACT
1. THIS CONTRACT IS A RATED ORDER
UNDER DPAS (15 CFR 700)
RATING
DOA4
PAGE OF PAGES
1
2. CONTRACT (Proc. Inst. Ident.) NO.
DAAE07-97-C-X028
3. EFFECTIVE DATE
4. REQUISITION/PURCHASE REQUEST/PROJECT NO.
5. ISSUED BY CODE W56HZV
TACOM
AMSTA-AQ-MDD /WPN SYS: N5
TONI SPALDING /810-574-7187
WARREN, MICHIGAN 48397-5000
6. ADMINISTERED BY (If other than Item 6) CODE S3605A
DCMC DAYTON
BUILDING 30,
1725 VAN PATTON AVENUE
WRIGHT PATTERSON AFB, OH 45433
SCD B PAS NONE ADP PT SC1012
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, county, State and
ZIP Code)
O GARA-HESS & EISENHARDT ARMORING
CO J
9113 LE SAINT RD
FAIRFIELD OH 45014
CODE 6W728 FACILITY CODE
8. DELIVERY
FOB ORIGIN X OTHER (See Below) SEE SCHEDULE
9. DISCOUNT FOR PROMPT PAYMENT
10. SUBMIT INVOICES
(4 copies unless otherwise specified) ITEM
TO THE ADDRESS SHOWN IN 12
11. SHIP TO/MARK FOR CODE
SEE SCHEDULE
12. PAYMENT WILL BE MADE BY CODE SC1018
DFAS-COLUMBUS CENTER
DFAS-C0/NEW DOMINION DIVISION
PO BOX 182041
COLUMBUS OH 43218-2041
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION:
X 10 U.S.C. 2304(c)(1) 41 U.S.C. 253(c)( )
<PAGE> 5
14. ACCOUNTING AND APPROPRIATION DATA
SEE SECTION G OF THE SCHEDULE
15.A. ITEM NO.
15B. SUPPLIES/SERVICES
CONTRACT TYPE: COST-PLUS FIXED FEE
15C. QUANTITY
15D. UNIT
15E. UNIT PRICE
15F. AMOUNT
15G. TOTAL AMOUNT OF CONTRACT $2,509,000.00
16. TABLE OF CONTENTS
(X) SEC DESCRIPTION PAGE(S)
PART I- THE SCHEDULE
X A SOLICITATION/CONTRACT FORM 1
X B SUPPLIES OR SERVICES AND PRICES/COSTS 4
X C DESCRIPTION/SPECS./WORK STATEMENT 4
X D PACKAGING AND MARKING 13
X E INSPECTION AND ACCEPTANCE 4
X F DELIVERIES OR PERFORMANCE 4
X G CONTRACT ADMINISTRATION DATA 17
X H SPECIAL CONTRACT REQUIREMENTS 18
(X) SEC DESCRIPTION PAGE(S)
PART II - CONTRACT CLAUSES
X I CONTRACT CLAUSES 25
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
J LIST OF ATTACHMENTS
PART IV - REPRESENTATIONS AND INSTRUCTIONS
K REPRESENTATIONS, CERTIFICATIONS AND
OTHER STATEMENTS OF OFFERORS
L INSTRS., CONDS., AND NOTICES TO OFFERORS
M EVALUATION FACTORS FOR AWARD
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
17. X CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to
sign this document and return 01 copies to issuing office.)
Contractor agrees to furnish and deliver all items or perform
all the services set forth or otherwise identified above and
on any continuation sheets for the consideration stated
herein. The rights and obligations of the parties to this
contract shall be subject to and governed by the following
documents: (a) this award/contract, (b) the solicitation, if
any, and (c) such provisions, representations, certifications,
and specifications, as are attached or incorporated by
reference herein. (Attachments are listed herein.)
18. AWARD (Contractor is not required to sign this document.) Your
offer on Solicitation Number ________________, including the
additions or changes made by you which additions or changes
are set forth in full above, is hereby accepted as to the
items listed above and on any continuation sheets. This award
consummates the contract which consists of the following
documents: (a) the Government's solicitation and your offer,
and (b) this award/contract. No further contractual document
is necessary.
<PAGE> 6
19A. NAME AND TITLE OF SIGNER (Type or print)
19B. NAME OF CONTRACTOR
BY /s/
---------------------------
(Signature of person authorized to sign)
19C. DATE SIGNED
20A. NAME OF CONTRACTING OFFICER
20B. UNITED STATES OF AMERICA
BY /s/
---------------------------
(Signature of Contracting Officer)
20C. DATE SIGNED
<PAGE> 7
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 2
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
SECTION A - SUPPLEMENTAL INFORMATION
- ---------
A-1 EXECUTIVE SUMMARY - COST-TYPE SOLICITATION
TACOM (NOV. 1996)
(1) Background and Description of Acquisition:
-----------------------------------------
HMMWV Family of Vehicles (FOV) Systems Technical Support
(STS), detailed in Section C, Scope of Work.
(2) Notice Regarding Fill-ins:
-------------------------
Please note that this solicitation contains several clauses and
provisions in Sections B, E, K, and L which require you to complete a fill-in or
representation. If you don't complete these fill-ins, your offer may be
determined ineligible for award. So please be careful to read and complete each
such clause and provision.
NOTICE REGARDING PROCUREMENT INTEGRITY CERTIFICATION:
------ --------- ----------- --------- -------------
PLEASE NOTE IN PARTICULAR THE NOTICE REGARDING PROCUREMENT INTEGRITY
CERTIFICATION IN SECTION K.
THE SIGNED CERTIFICATE SHALL BE SUBMITTED BY THE SUCCESSFUL OFFEROR
WITHIN THE TIME PERIOD SET BY THE CONTRACTING OFFICER. IF YOU ARE ASKED TO
SUBMIT A SIGNED CERTIFICATE AND FAIL TO DO SO WITHIN THE SPECIFIED PERIOD, YOUR
OFFER SHALL BE REJECTED.
NOTICE REGARDING CAGE CODE:
------ --------- ---- ----
DFARS provision 252.204-7001 requires you to include your Commercial
and Government Entity (CAGE) code in Block 15A on page One (1) of this
solicitation, along with your name and address. If it will not fit in the space
provided in Block 15A please insert it here: ________________________.
(3) Other Key Features or Requirements of This Solicitation:
----- --- -------- -- ------------ -- ---- ------------
(a) Required Copies in Response to This Solicitation:
-------- ------ -- -------- -- ---- ------------
To be considered for award, you must return one signed
original of your offer, completed and properly executed, by the time and date
shown in Block 9 of the Standard Form 33 (SF33).
(b) Notice Regarding Handcarried Offers:
------ --------- ----------- ------
In addition, please be sure to follow the instructions in the
provision entitled HANDCARRIED OFFERS-INCLUDING OFFERS DELIVERED BY EXPRESS
DELIVERY SERVICES (NON-U.S. POSTAL SERVICE MAIL) in Section L. Offers MUST
identify this solicitation number on the face of the mailing or delivery
wrapper, and MUST be addressed to Bid Opening (AMSTA-AQ-DSAB), NOT to the Buyer.
(c) Notice of 9-Digit Zip Code:
------ -- ------- --- ----
Please note that the TACOM Bid Opening Office has been
assigned a special 9-digit ZIP code of 48397-0001. This 9-digit ZIP code
applies ONLY for correspondence and bids/offers addressed to Bid Opening (Block
8 of SF33). Correspondence addressed to any other office at TACOM should cite
TACOM's regular 9-digit ZIP code of 48397-5000.
(d) Required Notification to Subcontractors:
-------- ------------ -- --------------
If awarded the contract, you should advise all potential
suppliers and subcontractors of the DO/DX Rating assigned to ________ resulting
from your subcontracts. The Rating can be found next to Block 1 on the first
line of the SF33.
(e) Acknowledgment of Amendments:
-------------- -- ----------
Please acknowledge any amendments to this solicitation in the
space provided in Block 14 of the SF33. Include the number and date of each
amendment. Acknowledgment of all amendments received is important because
failure to do so may make your offer ineligible for award.
(f) Question/Problem Resolution:
---------------- -----------
Questions regarding this solicitation should be directed to
the buyer identified in Block 10 of the SF33.
<PAGE> 8
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 3
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
(4) Inconsistencies Between the Executive Summary and the
--------------- ------- --- --------- ------- --- ---
Solicitation:
------------
This executive summary has been prepared as an aid to you, the
potential offeror. We have made every attempt to accurately reflect the
requirements and information contained in the balance of this solicitation.
However, if you find any inconsistency between this executive summary and the
solicitation, please contact the buyer identified in Block 10 of the SF33.
(End of clause)
A-2
Notice that Contract Data Requirements (DD 1423) are attached.
Notice that Data Item Descriptions (DD 1664) are attached.
Notice that instructions for Data Item Sheets are attached.
(End of narrative A001)
A-3
In accordance with contract negotiation resolution, reimbursement for JTR and
MI&E expenses are on a cost only bias. Roll-up and G&A, per the Contractor, are
not charged to this line and are therefore unallowable.
(End of narrative A002)
<PAGE> 9
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 4 of 30
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
-NOTICE-
EXCEPT FOR NOTES AND GENERAL
INFORMATION RELATING TO THE SCHEDULE,
SECTIONS B, C, D, E & F ARE
CONSTRUCTED AT CONTRACT LINE ITEM
LEVEL.
0001
SECTION B - Supplies or Services and
Prices/Costs
SECURITY CLASS: UNCLASSIFIED
HMMWV ARMORED VEHICLE STS
(End of narrative B001)
0001AA SERVICES LINE ITEM
PRON: JZ52M431JZ ACRN: AA
NON MILSTRIP
AMS CD: 51103446
SECTION B - Supplies or Services and
Prices/Costs
SECURITY CLASS: UNCLASSIFIED
SECTION C - Description/Specs./Work
Statement
<TABLE>
<CAPTION>
<S> <C> <C>
Basic STS HMMWV Effort Estimated Cost: $2,307,750.00
25,000 Manhours Fixed Fee: $ 201,250.00
January 1997 - December 1997 Total: $2,509,000.00
(End of narrative C0001)
</TABLE>
SECTION E - Inspection and Acceptance
INSPECTION: ORIGIN ACCEPTANCE: ORIGIN
SECTION F - Deliveries or Performance
DLVR SCH PERF COMPL
REL CD DT QUANTITY
-------- ---------- --------
001 97DEC30 0
$2509000.00
<PAGE> 10
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 5
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
<TABLE>
<CAPTION>
ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C>
0001AB SERVICE OPTION
SECTION B - Supplies or Services and
Prices/Costs
SECURITY CLASS: UNCLASSIFIED
SECTION C - Description/Specs./Work
Statement
1st Year Estimated Cost: $2,365,500.00
25,000 Manhours Fixed Fee: $ 206,500.00
January 1997 - December 1998 Total: $2,572,000.00
(End of narrative C001)
SECTION E - Inspection and Acceptance
INSPECTION: DESTINATION ACCEPTANCE: DESTINATION
SECTION F - Deliveries or Performance
DLVR SCH PERF COMPL
REL CD DT QUANTITY
001 98DEC30 0
$ 0.00
</TABLE>
<PAGE> 11
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 6
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
<TABLE>
<CAPTION>
ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C>
0001AC SERVICE OPTION
SECTION B - Supplies or Services and
Prices/Costs
SECURITY CLASS: UNCLASSIFIED
SECTION C - Description/Specs./Work
Statement
2nd Year Estimated Cost: $2,425,500.00
25,000 Manhours Fixed Fee: $ 211,750.00
January 1998 - December 1999 Total: $2,637,250.00
(End of narrative C001)
SECTION E - Inspection and Acceptance
INSPECTION: ORIGIN ACCEPTANCE: ORIGIN
SECTION F - Deliveries or Performance
DLVR SCH PERF COMPL
REL CD DT QUANTITY
-------- ---------- --------
001 99DEC30 0
$ 0.00
</TABLE>
<PAGE> 12
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 7
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
<TABLE>
<CAPTION>
ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
<S> <C> <C> <C> <C> <C>
0001AD SERVICE OPTION
SECTION B - Supplies or Services and
Prices/Costs
SECURITY CLASS: UNCLASSIFIED
SECTION C - Description/Specs./Work
Statement
3rd Year Estimated Cost: $1,983,400.00
20,000 Manhours Fixed Fee: $ 170,400.00
January 1999 - December 2000 Total: $2,153,800.00
(End of narrative C001)
SECTION E - Inspection and Acceptance
INSPECTION: ORIGIN ACCEPTANCE: ORIGIN
SECTION F - Deliveries or Performance
DLVR SCH PERF COMPL
REL CD DT QUANTITY
-------- ---------- --------
001 00DEC29 0
$ 0.00
</TABLE>
<PAGE> 13
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-96-C-X196 8
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
SECTION C - SCOPE OF WORK
- ---------
C-1 SCOPE/BACKGROUND/GENERAL:
The contractor, as an independent Contractor and not as an
agent of the Government, for the period set forth in Section B of this
contract, shall furnish the supplies and services necessary to
accomplish the engineering and related technical support functions for
the Up-Armored Heavy HMMWV series vehicles. The engineering and related
technical support functions will also apply to product improvements.
The supplies and services shall be in accordance with the requirements
set forth herein.
C-1.1 PERFORMANCE:
All work conducted under this contract shall be performed only
as directed by the Contracting Officer's Technical Representative
(COTR). At the time of award the COTR shall issue project requests,
estimated not to exceed 25,000 hours, which will contain a description
of the specific work tasks to be accomplished. Upon receipt of the
request, the Contractor shall determine if the request will require
more than 80 hours for completion. When the request will require less
than 80 hours, the Contractor shall provide the COTR with the project
start date, planned completion date, estimated hours, and Contractor
Point of Contract (POC). The Contractor shall then proceed with the
request, charging time to the applicable general work directives for
that purpose. When the effort is expected to exceed 80 man hours, the
Contractor shall prepare a work directive which includes a scope of
work, milestone chart, and itemized projected manhour and material
expenditures. The Contractor shall seek approval of the project by
submitting a work directive, with cost information attached, to the
COTR prepared in accordance with DI-FNCL-81116.
C-2. REPORTS AND MEETINGS
Submission of all reports and meeting minutes may be processed
by either hard copy or by electronic submission. The contractor will
coordinate with the PCO for applicable electronic addresses.
C-2.1 START OF WORK MEETING:
A post-award meeting shall be convened by the Contractor
within 30 days after contract award with the COTR and the Functional
Technical Representatives (FTR)s), to establish a working relationship.
C-2.2 MONTHLY STATUS MEETINGS:
The Contractor shall host a monthly project status meeting
with the COTR and Functional Technical Representatives. Purpose of the
meeting shall be to review status and progress of all projects. Meeting
location, time and attendance shall be coordinated with the COTR.
Contractor shall prepare meeting minutes in accordance with
DI-ADMS-81250A and will contain the following information:
a. Project information
(1) Project numbers and titles
(2) Start of work date for each project
(3) Original and current scheduled completion date
(4) Project information discussed at meeting
(5) Rationale for change in project completion dates
(6) Contractor's efforts in reporting period
b. Minutes of general discussions not associated with a
specific project.
C-2.3 The Contractor shall, at the end of each quarter, provide the booked
actual's by discipline (e.g., materials, labor, overhead, travel, G&A,
etc.) for the effort completed under each CLIN of this contract per
DI-FNCL-80912 (Tailored).
C-3. SYSTEM ENGINEERING
The Up-Armored Heavy HMMW Vehicle (HHV) series of vehicles is
currently defined by top assembly drawings 87T0015 and 87T0017 and the
associated drawings as referenced therein, effective on the date of
contract award. The Contractor may be required by project request or
approved work directive to undertake one or more of the activities
specified below:
<PAGE> 14
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-96-C-X196 9
Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
C-3.1 Conduct failure analysis to identify root cause for failure
of items identified by the Government. Conduct design and redesign
studies to correct known or potential deficiencies to accomplish
product improvements, to accomplish cost reductions, and to maintain
current the contract item data for serviceability and intended use.
Such studies may be required with respect to proposals for
engineering changes and attendant processes and methods.
C-3.2 Prepare engineering cost estimates, technical reports,
calculations, layouts, drawings, sketches, schematics, charts and
other visual depictions and purchase descriptions, and recommend
engineering change proposals for current and future production
versions of the contract item and modifications thereof.
C-3.3 Modify existing engineering and test versions of the contract
item and fabricate subsystem/components, prototypes, and mock-up's of
future production versions of the contract item.
C-3.4 Technical reports shall be prepared per DI-MGMT-80061A and
submitted to identify results of investigations or evaluations as
required. Reports shall include details of investigation or
evaluation, explanation of tests and results, alternatives researched,
recommendations for future course of action with supporting rationale
and documentation. Documentation to be submitted shall include items
identified in Paragraph C-3.2 to the extent necessary to support all
conclusions made in the report. When the report's recommendation is
for an Engineering Change Proposal, the report will address potential
impact on logistics, technical manuals, safety, and the cost
associated with the change.
C-3.5 Conduct trial installations of component part(s) and
associated testing on the contract item, or modification thereof, and
testing related to processes and methods required to evaluate the
work. Provide parts, materials and supplies required to support and
conduct engineering evaluation, maintenance, rebuild and restoration
of the contract item or modification thereof for items undergoing such
tests. To meet emergency requirements, the Contracting Officer's
Technical Representative may direct the Contractor to ship such parts
by the most expeditious means to specified destinations.
C-3.6 Provide legible brownline's and/or blue line prints of
drawings as requested. All drawings prepared and delivered under this
contract shall be provided to the Government with unlimited rights.
All drawings and other provisioning technical documentation must be in
English translation. Drawings shall be prepared per DI-DRPR-81000.
C-3.7 Provide engineering observer services relating to the
contract item and data at Government specified locations. Such
services shall consist of observations of Government tests, attendance
at technical meetings, and design or field review of deficient or
defective items as required. Such effort shall be undertaken only as
specifically identified in applicable Work Directive or Project
Request. The Contractor shall furnish a copy of all observer and
engineering accomplishment reports, prepared as a result of such
service, in accordance with Data Item Description DI-MGMT-80061A.
C-3.8 Photographic Records and Video
C-3.8.1 Any still Photographic Records provided in support of work
described herein shall be in accordance with Data Item Description
DI-ADMN-80424(T).
C-3.8.2 Any videotape coverage provided in support of work described
herein shall be in accordance with DI-MISC-80738 (Tailored).
C-4 STANDARDIZATION/PARTS CONTROL
The contractor will maintain and make available to the
Government or the HMMWV Family of Vehicle (FOV) STS contractor, all
records and data pertaining to standardization and parts control,
which will provide visibility and traceability of all parts and
associated drawings used in the development of the technical data or
equipment under this contract.
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
C-5 QUALITY ASSURANCE REQUIREMENTS
C-5.1 QUALITY PROGRAM
The STS contractor shall develop, implement and maintain a
quality program for this contract using ISO 9001 as a guideline. In
addition, the QA Program shall include procedures for design control in
accordance with ISO 9001, paragraph 4.4, and corrective and
preventative action procedures in accordance with ISO 9001, paragraph
4.14.
C-5.1.1 Upon government review and acceptance of the Contractor's
quality program, the Contractor's product assurance office shall
become responsible for the coordination of the data from engineering
and any deficiency reports which may affect the adequacy and accuracy
of the QATD which is being developed and maintained under this
contract. Inclusive of the above coordination, the Contractor's
product assurance office will be responsible for the coordination of
all drawings and documentation check sheets and ensuring that they are
included in all engineering drawing packages and QATD packages
submitted for Government review.
C-6 MANPRINT
C-6.1 SAFETY ENGINEERING. The contractor shall integrate system safety
engineering into all system design efforts performed under this
contract.
C-6.1.1 System design activities and operational/maintenance
procedures developed by the contractor shall consider but not
be limited to the following:
C-6.1.1.1 Identifying hazards associated with the system by
conducting safety analyses and hazard evaluations.
Analyses shall include both operational and
maintenance aspects of the vehicle along with
potential interface problems with planned subsystems.
C-6.1.1.2 Controlling identified hazards by either eliminating
or reducing the risk to acceptable levels by
appropriate design and material selection.
C-6.1.1.3 Locating equipment components so that access to them
by personnel during operation and maintenance actions
does not require exposure to hazards such as high
temperature, chemical burns, electrical shock,
cutting edges, sharp objects or concentrations of
temperature, chemical burns, electrical shock,
cutting edges, sharp objects or concentrations of
toxic fumes above established threshold limit values.
All moving parts, mechanical power transmission
devices, exhaust system components, pneumatic
components and hydraulic components which are located
to be a hazard to operators or maintenance personnel,
shall be either enclosed or guarded. Protective
devices shall not impair operational effectiveness.
C-6.1.1.4 Assuring that suitable warning and caution notes are
included in instructions for operation, maintenance,
assembly or repair, and that suitable warning labels
are placed on hazardous components or equipment.
C-6.1.1.5 To the extent specified in Work Directives, changes
made to the vehicle will comply with Department of
Transportation Federal Motor Vehicle Safety
Standards.
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
C-6.1.2 SAFETY ASSESSMENT REPORT.
As a result of safety analysis, hazard evaluation and
Contractor testing, the Contractor shall develop a safety assessment
report in accordance with DI-S AFT-0102A. The safety assessment report
shall be submitted in draft form for Government review. The final
safety assessment report shall be submitted 60 days prior to Government
testing.
C-6.1.3 RADIOACTIVE MATERIAL.
Radioactive Material shall not be used in any items or
material provided to the Government as part of this contract.
C-6.1.4 To assure that the above safety objectives are achieved, the
Contractor shall establish a System Safety Program that will
implement the objectives of MIL-STD 882C.
C-6.2 HUMAN FACTORS ENGINEERING.
C-6.2.1 Any changes or modifications to the existing vehicle (such
as ECP actions) shall be analyzed by qualified personnel to assure
that these modifications do not adversely affect the soldier machine
interface. If any area of this interface is impacted, appropriate
actions will be taken to upgrade that area to previous levels as a
minimum, using MIL-STD-1472D as a guide.
C-7 INTEGRATED LOGISTICS SUPPORT (ILS) PROGRAM.
The contractor shall coordinate with the Government's HMMWV
STS contractor on all issues impacting ILS elements. The ILS coordinate
shall be conducted as an integral part of the development process. ILS
is the management and technical effort to influence design with respect
to logistic support and to identify, integrate, and acquire elements of
support. These elements of support include maintenance planning, supply
support (including initial provisioning), Test Measurement Diagnostic
Equipment (TMDE), packaging, transportation, handling, technical data
(including technical manuals, facilities, manpower and personnel,
training and computer resources support.
C-7.1 The Contractor shall provide the HMMWV Family of Vehicles
(FOV) STS contractor:
a. A listing that includes all new components and
hardware items in part number sequence. The list will
include a description of each part.
b. A drawing, sketch, or photograph for every new
part identified on selection worksheet's with the
Source, Maintenance, and Recoverability (SMR) code of
"P" which is needed to accompany the selection
worksheet.
c. Text and illustration technical manual pages,
impacted, annotated with changes to locate
new/changed component or hardware item.
C-7.2 The Contractor shall establish, maintain, and utilize a
procedure to ensure all data describing the most current vehicle
design configuration flows immediately to the Government's HMMWV
Family of Vehicles (FOV) STS contractor. The contractor shall notify
the HMMWV FOV contractor immediately of all design changes.
C-7.3 The contractor shall provide technical support and dedicated
hardware to accomplish ILS development, reviews, validation, and
verifications to the HMMWV Family of Vehicles (FOV) STS contractor
or the Government.
C-7.4 The contractor shall conduct pre-procurement screening for
standardization of all part numbers selected as repair parts and use
compatible Military/Commercial Standards where applicable.
C-8 DOCUMENT SUMMARY LIST (DSL)
C-8.1 The DSL identifies the applicable documents/standards/
specifications referenced in this acquisition. See Attachment
to Section C.
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
C-9 TRANSPORTABILITY ENGINEERING
C-9.1 TRANSPORTABILITY ASSESSMENT
The Contractor shall perform transportability assessment of
vehicles and prepare design modifications affecting vehicle
transportability that will meet the requirements of MIL-STD-209,
MIL-STD-810, MIL-STD-1792, MIL-STD-669, and MIL-STD-814. The
Contractor shall also prepare a Transportability Report in accordance
with DI-PACK-80880A(T) for any modification which affects the systems
overall weight, dimensions, center of gravity or transportability
capabilities/requirements.
C-9.2 TRANSPORTABILITY TESTING
Transportability testing shall be in accordance with, but not
restricted to MIL-STD-209, MIL-STD-810, MIL-STD-1791, MIL-STD-669, and
MIL-STD-814, if modifications affective vehicle transportability are
incorporated. The Contractor shall complete and submit a
Transportability Test Report in accordance with DI-PACK-80880A(T) upon
completion of testing.
<PAGE> 18
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
SECTION D - PACKAGING AND MARKING
- ---------
D.1 PRESERVATION AND PACKING
D.1.1 Unless otherwise specified elsewhere in the contract, all software and
technical data provided under this contract shall be packaged in accordance with
commercial practices sufficient to provide safe delivery to the address(es)
indicated on the Contract Data Requirements List (CDRL).
D.2 MARKING
D.2.1 Packaging of software and technical data shall be marked with the
name and address of consignee and consignor and shall include the contract
number.
(End of narrative D001)
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
SECTION E - INSPECTION AND ACCEPTANCE
- ---------
E-1 INSPECTION OF SUPPLIES - COST REIMBURSEMENT......52.246-3...(APR. 1984)
E-2 INSPECTION OF SERVICES--COST-REIMBURSEMENT
52-246-5 (APR. 1984)
(a) Definition. SERVICES, as used in this clause, includes services
performed, workmanship, and material furnished or used in performing services.
(b) The Contractor shall provide and maintain an inspection system
acceptable to the Government covering the services under this contract. Complete
records of all inspection work performed by the Contractor shall be maintained
and made available to the Government during contract performance and for as long
afterwards as the contract requires.
(c) The Government has the right to inspect and test all services
called for by the contract, to the extent practicable at all places and times
during the term of the contract. The Government shall perform inspections and
tests in a manner that will not unduly delay the work.
(d) If any of the services performed do not conform with contract
requirements, the Government may require the Contractor to perform the services
again in conformity with contract requirements, for no additional fee. When
defects in services cannot be corrected by reperformance, the Government may (1)
require the Contractor to take necessary action to ensure that future
performance conforms to contract requirements and (2) reduce any fee payable
under the contract to reflect the reduced value of the services performed.
(e) If the Contractor fails to promptly perform the services again or
take the action necessary to ensure future performance in conformity with
contract requirements, the Government may (1) by contract or otherwise, perform
the services and reduce any fee payable by an amount that is equitable under the
circumstances or (2) terminate the contract for default.
(End of clause)
E-3 HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT (MIL-Q-9858 OR ISO
EQUIVALENT) TACOM (JAN 1995)
(a) Definition. Contract date, as used in this clause, means the date
set for bid opening or, if this is a negotiated contract or a modification, the
effective date of this contract or modification.
(b) You shall comply with the specification titled Quality Program
Requirements, MIL-Q-9858, or with Quality Systems - Model for Quality Assurance
in Design, Development, Production, Installation and Servicing ISO 9001, in
effect on the contract date, which is incorporated into this contract.
(End of clause)
E-4 SUPPLEMENTAL STATEMENT OF WORK: FASTENER QUALITY ASSURANCE
REQUIREMENTS TACOM (SEP 1992)
a. This clause establishes quality assurance requirements for all
threaded steel fasteners of Grade 5 and higher (as defined by SAE-J429) and
metric fasteners with strength designations of 8.8 and higher (as defined by
J-1199) that are to be used in items prepared from either a Government or
contractor owned Technical Data Package. It applies to fasteners received (i)
from fastener manufacturers, (ii) from distributors, or (iii) as part of a
subassembly for use in both new and repair items.
b. The contractor shall implement and maintain a fastener quality
assurance program which:
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
(i) Assures the homogeneity of fastener lots. A homogeneous
fastener lot is defined as one in which all of the fasteners are of the same
size, type, grade, plating and manufacturer.
(ii) Ensures that individual fasteners are identified by a fastener
manufacturer symbol (logo). The manufacturer's symbol (logo) shall be listed in
MIL-HDBK 57, dated 29 Sep. 89.
(iii) Provides objective quality evidence that the fasteners to be
furnished under this contract meet all technical requirements.
c. To determine the conformance of the fastener lots with the
homogeneity and identification requirements, a sample from each lot of fasteners
will be taken in accordance with MIL-STD-105, dated 10 May 89, Inspection Level
II, AQL 1.0, or equivalent, except that lots shall be accepted with zero (0)
defects (C=0) and rejected with one (1) or more defects. Each sample shall be
examined for the following:
(i) The grade and manufacturer symbol (logo) for each bolt in the
lot sample shall be the same.
(ii) Threads shall be examined to assure conformity to requirements.
(iii) Plating (when specified) shall be examined to assure complete
coverage.
d. Objective quality evidence that fasteners meet all technical
requirements shall consist of either:
(i) Favorable chemical, core hardness, plating and tensile test
data provided by the manufacturer or supplier of a fastener lot which is
directly traceable to that lot. Chemical tests shall include, as a minimum,
percent by weight of the following elements: carbon, manganese, phosphorus and
sulfur;
or
--
(ii) Favorable results of chemical and core hardness tests performed
by the contractor or a subcontractor on sample(s) taken from the lot. Sampling
for chemical, plating and core hardness testing shall be in accordance with
MIL-STD-105, Level S-2, AQL 1.0 or equivalent. Chemical tests shall include, as
a minimum, percent by weight of the following elements: carbon, manganese,
phosphorus and sulfur.
e. For item(s) procured using a Government Technical Data Package,
Grade 8.1 or 8.2 fasteners are not an acceptable substitute for Grade 8
fasteners.
f. Commercial items, defined as an end item or component of an end item
whose sales volume to the general public is greater than 50% of the items
produced, will be deemed to meet the requirements of this clause if the
contractor has a current vendor control policy with regard to fasteners.
Note: During maintenance or repair, the Government will use Grade 8, zinc plated
bolts from Government stocks as replacements for any Grade 5 or Grade 8.2 bolt
used in commercial items.
(End of clause)
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
SECTION F - DELIVERIES OR PERFORMANCE
- ---------
F-1 STOP-WORK ORDER (AUG 1989) (ALTERNATE I (APR 1984))
52.242-15 (APR 1984)
(a) The Contracting Officer may, at any time, by written order to the
Contractor, require the Contractor to stop all, or any part, of the work called
for by this contract for a period of 90 days after the order is delivered to the
Contractor, and for any further period to which the parties may agree. The order
shall be specifically identified as a stop-work order issued under this clause.
Upon receipt of the order, the Contractor shall immediately comply with its
terms and take all reasonable steps to minimize the incurrence of costs
allocable to the work covered by the order during the period of work stoppage.
Within a period of 90 days after a stop-work order is delivered to the
Contractor, or within any extension of that period to which the parties shall
have agreed, the Contracting Officer shall either --
(1) Cancel the stop-work order; or
(2) Terminate the work covered by the order as provided in the
TERMINATION clause of this contract.
(b) If a stop-work order issued under this clause is canceled or the
period of the order or any extension thereof expires, the Contractor shall
resume work. The Contracting Officer shall make an equitable adjustment in the
delivery schedule, the estimated cost, the fee, or a combination thereof, and in
any other terms of the contract that may be affected, and the contract shall be
modified, in writing, accordingly, if --
(1) The stop-work order results in an increase in the time
required for, or in the Contractor's cost properly allocable
to, the performance of any part of this contract; and
(2) The Contractor asserts its right to the adjustment within
30 days after the end of the period of work stoppage;
PROVIDED, that, if the Contracting Officer decides the facts
justify the action, the Contracting Officer may receive and
act upon any claim submitted at any time before final payment
under this contract.
(c) If a stop-work order is not canceled and the work covered by the
order is terminated for the convenience of the Government, the Contracting
Officer shall allow reasonable costs resulting from the stop-work order in
arriving at the termination settlement.
(d) If a stop work order is not canceled and the work covered by the
order is terminated for default, the Contracting Officer shall allow, by
equitable adjustment or otherwise, reasonable costs resulting from the stop-work
order.
(End of clause)
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
SECTION G - CONTRACT ADMINISTRATION DATA
- ---------
<TABLE>
<CAPTION>
Accounting & Appropriation Data
LINE PRON/ OBLG ACCOUNTING OBLIGATED
ITEM AMS CD ACRN STAT ACCOUNTING CLASSIFICATION STATION AMOUNT
- ---- --- -- ---- ---- ---------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
0001AA JZ52M431JZ AA 1 21 52035 55J5J01P5110 25cz s2011352M431 W56HZV $2,509,000.00
51103446
--------------
TOTAL $2,509,000.00
<CAPTION>
ACCOUNTING OBLIGATED
TOTAL BY ACRN / ACCOUNTING CLASSIFICATION STATION AMOUNT
----- -- ---- ---------- -------------- ------- ------
<S> <C> <C> <C> <C> <C>
AA 21 52035 55J5J01P5110 25cz s2011352M431 W56HZV $2,509,000.00
--------------
TOTAL $2,509,000.00
</TABLE>
<PAGE> 23
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
SECTION H - SPECIAL CONTRACT REQUIREMENTS
- ---------
<TABLE>
<CAPTION>
<S> <C> <C>
1. INTEGRITY OF UNIT PRICES -- ALTERNATE I (APR 1991) 52.215-26 (APR 1987)
2. STATUTORY PROHIBITIONS ON COMPENSATION TO FORMER DEPARTMENT
OF DEFENSE EMPLOYEES 252.203-7000 (NOV 1995)
3. DISPLAY OF DOD HOTLINE POSTER 252.203-7002 (DEC 1991)
4. PROVISION OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS 252.205-7000 (DEC 1991)
5. EXERCISE OF OPTION TO FULFILL FOREIGN MILITARY SALES
COMMITMENTS ALTERNATE I 252.217-7000 (DEC 1991)
6. SAFETY PRECAUTIONS FOR AMMUNITION AND EXPLOSIVES 252.223-7002 MAY 1994)
7. CHANGE IN PLACE OF PERFORMANCE - AMMUNITION AND EXPLOSIVES 252.223-7003 (DEC 1991)
8. BUY AMERICAN ACT AND BALANCE OF PAYMENTS PROGRAM 252.225-7001 (JAN 1994)
9. QUALIFYING COUNTRY SOURCES AS SUBCONTRACTORS 252.225-7002 (DEC 1991)
10. DUTY-FREE-ENTRY--QUALIFYING COUNTRY END PRODUCTS AND
SUPPLIES 252.225-7009 (DEC 1991)
11. DUTY-FREE-ENTRY--ADDITIONAL PROVISIONS 252.225-7010 (DEC 1991)
12. SUPPLEMENTAL COST PRINCIPLES 252.231-7000 (DEC 1991)
13. MATERIAL MANAGEMENT AND ACCOUNTING SYSTEM 252.242-7004 (SEP 1996)
14. MATERIAL INSPECTION AND RECEIVING REPORT 252.246-7000 (DEC 1991)
15. WARRANTY OF DATA 252.246-7001 (DEC 1991)
16. NOTIFICATION OF SUBSTANTIAL IMPACT ON EMPLOYMENT 252.249-7001 (DEC 1991)
17. NOTIFICATION OF PROPOSED PROGRAM TERMINATION OR REDUCTION 252.249-7002 (MAY 1995)
</TABLE>
H-2 CERTIFICATION OF TECHNICAL DATA CONFORMITY
252.227-7036 (MAY 1987)
(a) All technical data delivered under this contract shall be
accompanied by the following written certification:
The Contractor, __________________, hereby certifies that, to the best
of its knowledge and belief, the technical data delivered herewith
under Contract No. DAAEO7- are complete, accurate, and comply with all
requirements of the contract.
------------------- -------------------------------------------
Date Name and Title of Certifying Official
This written certification shall be dated and the certifying official
(identified by name and title) shall be duly authorized to bind the Contractor
by the certification.
(b) The Contractor shall identify, by name and title, each individual
(official) authorized by the Contractor to certify in writing that the technical
data are complete, accurate, and comply with all requirements of the contract.
The Contractor hereby authorizes direct contact with the authorized individual
responsible for certification of technical data. The authorized individual shall
be familiar with the Contractor's technical data conformity procedures and their
application to the technical data to be certified and delivered.
(c) Technical data delivered under this contract may be subject to
reviews by the Government during preparation and prior to acceptance. Technical
data are also subject to reviews by the Government subsequent to acceptance.
Such reviews may be conducted as a function ancillary to other reviews, such as
in-process reviews or configuration audit reviews.
(End of clause)
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Name of Offeror or Contractor O GARA-HESS & EISENHARDT ARMORING
H-3 VALIDATION OF RESTRICTIVE MARKINGS ON TECHNICAL DATA
252.227-7037 (NOV 1995)
(a) DEFINITION. The terms used in this clause are defined in the Rights
in Technical Data--Noncommercial Items clause of this contract.
(b) CONTRACTS FOR COMMERCIAL ITEMS--PRESUMPTION OF DEVELOPMENT AT
PRIVATE EXPENSE. Under a contract for a commercial item, component, or process,
the Department of Defense shall presume that a Contractor's asserted use or
release restrictions are justified on the basis that the item, component, or
process was developed exclusively at private expense. The Department shall not
challenge such assertions unless information the Department demonstrates that
the item, component, or process was not developed exclusively at private
expense.
(c) JUSTIFICATION. The Contractor or subcontractor at any tier is
responsible for maintaining records sufficient to justify the validity of its
marking that impose restrictions on the Government and others to use, duplicate,
or disclose technical data delivered or required to be delivered under the
contract or subcontract. Except under contracts for commercial items, the
Contractor or subcontractor shall be prepared to furnish to the Contracting
Officer a written justification for such restrictive markings in response to a
challenge under paragraph (e) of this clause.
(d) PRECHALLENGE REQUEST FOR INFORMATION.
(1) The Contracting Officer may request the Contractor or
subcontractor to furnish a written explanation for any restriction asserted by
the Contractor or subcontractor on the right of the United States or others to
use technical data. If, upon review of the explanation submitted, the
Contracting Officer remains unable to ascertain the basis of the restrictive
marking, the Contracting Officer may further request the Contractor or
subcontractor to furnish additional information in the records of, or otherwise
in the possession of or reasonably available to, the Contractor or subcontractor
to justify the validity of any restrictive marking on technical data delivered
or to be delivered under the contract or subcontract (e.g., a statement of basis
accompanied with supporting documentation). The Contractor or subcontractor
shall submit such written data as requested by the Contracting Officer within
the time required or such longer period as may be mutually agreed.
(2) If the Contracting Officer, after reviewing the written
data furnished pursuant to paragraph (d)(1) of this clause, or any other
available information pertaining to the validity of a restrictive marking,
determines that reasonable grounds exist to question the current validity of the
marking and that continued adherence to the marking would make impracticable the
subsequent competitive acquisition of the item, component, or process to which
the technical data relates, the Contracting Officer may challenge the validity
of the marking as described in paragraph (e) of this clause.
(3) If the Contractor or subcontractor fails to respond to the
Contracting Officer's request for information under paragraph (d)(1) of this
clause, and the Contracting Officer determines that continued adherence to the
marking would make impracticable the subsequent competitive acquisition of the
item, component, or process to which the technical data relates, the Contracting
Officer may challenge the validity of the marking as described in paragraph (3)
of this clause.
(e) CHALLENGE.
(1) Notwithstanding any provision of this contract concerning
inspection and acceptance, if the Contracting Officer determines that a
challenge to the restrictive marking is warranted, the Contracting Officer shall
send a written challenge notice to the Contractor or subcontractor asserting the
restrictive markings. Such challenge shall --
(i) State the specific ground for challenging the
asserted restriction; (
(ii) Require a response within sixty (60) days
justifying and providing sufficient evidence as to the current validity of the
asserted restriction; and
(iii) State that a DoD Contracting Officer's final
decision, issued pursuant to paragraph (g) of this clause, sustaining the
validity of a restrictive marking identical to the asserted restriction, within
the three-year period preceding the challenge, shall serve as justification for
the asserted restriction if the validated restriction was asserted by the same
Contractor or subcontractor (or any licensee of such Contractor of
subcontractor) to which such notice is being provided; and
(iv) State that failure to respond to the challenge
notice may result in issuance of a final decision pursuant to paragraph (f) of
this clause.
(2) The Contracting Officer shall extend the time for response
as appropriate if the Contractor or subcontractor submits a written request
showing the need for additional time to prepare a response.
<PAGE> 25
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 20
(3) The Contractor's or subcontractor's written response shall
be considered a claim within the meaning of the Contract Disputes Act of 1978
(41 U.S.C. 601 et seq.), and shall be certified in the form prescribed by FAR
33.207, regardless of dollar amount.
(4) A Contractor or subcontractor receiving challenges to the
same restrictive markings from more than one Contracting Officer shall notify
each Contracting Officer of the existence of more than one challenge. The notice
shall also state which Contracting Officer initiated the first in time
unanswered challenge. The Contracting Officer initiating the first in time
unanswered challenge after consultation with the Contractor or subcontractor and
the other Contracting Officers, shall formulate and distribute a schedule for
responding to each of the challenge notices to all interested parties. The
schedule shall afford the Contractor or subcontractor an equitable opportunity
to respond to each challenge notice. All parties will be bound by this schedule.
(f) FINAL DECISION WHEN CONTRACTOR OR SUBCONTRACTOR FAILS TO RESPOND.
Upon a failure of a Contractor or subcontractor to submit an;y response to the
challenge notice, other than a failure to respond under a contract for
commercial items, the Contracting Officer will issue a final decision to the
Contractor or subcontractor in accordance with the disputes clause of this
contract pertaining to the validity of the asserted restriction. This final
decision shall be issued as soon as possible after the expiration of the time
period of paragraph (3)(1)(ii) or (e)(2) of this clause. Following the issuance
of the final decision, the Contracting Officer will comply with the procedure
sin (g)(2)(ii) through (iv) of this clause.
(g) FINAL DECISION WHEN CONTRACTOR OR SUBCONTRACTOR RESPONDS.
(1) If the Contracting Officer determines that the Contractor
or subcontractor has justified the validity of the restrictive markings, the
Contracting Officer shall issue a final decision to the Contractor or
subcontractor sustaining the validity of the restrictive markings, and stating
that the Government will continue to be bound by the restrictive markings. This
final decision shall be issued within sixty (60) days after receipt of the
Contractor's or subcontractor's response to the challenge notice, or within such
longer period that the Contracting Officer has notified the Contractor or
subcontractor that the Government will require. The notification of a longer
period for issuance of a final decision will be made within sixty (60) days
after receipt of the response to the challenge notice.
(2)(i) If the Contracting Officer determines that the validity
of the restrictive marking is not justified, the Contracting Officer shall issue
a final decision to the Contractor or subcontractor in accordance with the
Disputes clause of this contract.233-1. Notwithstanding paragraph (e) of the
Disputes clause, the final decision shall be issued within sixty (60) days after
receipt of the Contractor's or subcontractor's response to the challenge notice,
or within such longer period that the Contracting Officer has notified the
Contractor or subcontractor that the Government will require. The notification
of a longer period for issuance of a final decision will be made within sixty
(60) days after receipt of the response to the challenge notice.
(ii) The Government agrees that it will continue to be bound by
the restrictive marking for a period of ninety (90) days from the issuance of
the Contracting Officer's final decision under (g)(2)(i) of this clause. The
Contractor or subcontractor agrees that, if it intends to file suit in the
United States Claims Court it will provide a notice of intent to file suit to
the Contracting Officer within ninety (90) days from the issuance of the
Contracting Officer's final decision under (g)(2)(i) of this clause. If the
Contractor or subcontractor fails to appeal, file suit, or provide a notice of
intent to file suit to the Contracting Officer within the ninety (90) day
period, the Government may cancel or ignore the restrictive markings, and the
failure of the Contractor or subcontractor to take the required action
constitutes agreement with such Government action.
(iii) The Government agrees that it will continue to be bound by
the restrictive marking where a notice of intent to file suit in the United
States Claims Court is provided to the Contracting Officer within ninety (90)
days from the issuance of the final decision under (g)(2)(i) of this clause. The
Government will no longer be bound, and the Contractor or subcontractor agrees
that the Government may strike or ignore the restrictive markings if the
Contractor or subcontractor fails to file its suit within one (1) year after
issuance of the final decision. Notwithstanding the foregoing, where the head of
an agency determine, on a nondelegable basis, that urgent or compelling
circumstance will not permit waiting for the filing of a suit in the United
States Claims Court, the Contractor or subcontractor agrees that the agency may,
following notice to the Contractor or subcontractor, authorize release or
disclosure of the technical data. Such agency determination may be made at any
time after issuance of the final decision and will not affect the Contractor's
or subcontractor's right to damages against the United States where its
restrictive markings are ultimately upheld or to pursue other relief, if any, as
may be provided by law.
(iv) The Government agrees that it will be bound by the
restrictive marking where an appeal or suit is filed
<PAGE> 26
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 21
puruant to the Contract Disputes Act until final disposition by an agency Board
of Contract Appeals or the United States Claims Court. Notwithstanding the
foregoing, where the head of an agency determines, on a nondelegable basis,
following notice to the Contractor that urgent or compelling circumstances will
not permit awaiting the decision by such Board of Contract Appeals or the United
States Claims Court, the Contractor or subcontractor agrees that the agency may
authorize release or disclosure of the technical data. Such agency determination
may be made at any time after issuance of the final decision and will not affect
the Contractor's or subcontractor's right to damages against the United States
where its restrictive markings are ultimately upheld or to pursue other relief,
if any, as may be provided by law.
(h) FINAL DISPOSITION OF APPEAL OR SUIT.
(1) If the Contractor or subcontractor appeals or files suit
and if, upon final disposition of the appeal or suit, the Contracting Officer's
decision is sustained --
(i) The restrictive marking on the technical data shall
be canceled, corrected, or ignored; and
(ii) If the restrictive marking is found not to be
substantially justified, the Contractor or subcontractor, as appropriate, shall
be liable to the Government for payment of the cost to the Government of
reviewing the restrictive marking and the fees and other expenses (as defined in
28 U.S.C. 2412(d)(2)(A)) incurred by the Government in challenging the marking,
unless special circumstances would make such payment unjust.
(2) If the Contractor or subcontractor appeals or files suit
and if, upon final disposition of the appeal or suit, the Contracting Officer's
decision is not sustained --
(i) The Government shall continue to be bound by the
restrictive marking; and
(ii) The Government shall be liable to the Contractor or
subcontractor for payment of fees and other expenses (as defined in 28 U.S.C.
2412(d)(2)(A)) incurred by the Contractor or subcontractor in defending the
marking, if the challenge by the Government is found not to have been made in
good faith.
(i) DURATION OF RIGHT TO CHALLENGE. The Government may review the
validity of any restriction on technical data, delivered or to be delivered
under a contract, asserted by the Contractor or subcontractor. During the period
within three (3) years of final payment on a contract or within three (3) years
of delivery of the technical data to the Government, whichever is later, the
Contracting Officer may review and make a written determination to challenge the
restriction. The Government may, however, challenge a restriction on the
release, disclosure, of use of technical data at any time if such technical data
(1) are publicly available; (2) have been furnished to the United States without
restriction; or (3) have been otherwise made available without restriction. Only
the Contracting Officer's final decision resolving a formal challenge by
sustaining the validity of a restrictive marking constitutes VALIDATION as
addressed in 10 U.S.C. 2321.
(j) DECISION NOT TO CHALLENGE. A decision by the Government, or a
determination by the Contracting Officer, to not challenge the restrictive
marking or asserted restriction shall not constitute VALIDATION.
(k) PRIVITY OF CONTRACT. The Contractor or subcontractor agrees that
the Contracting Officer may transact matters under this clause directly with
subcontractors at any tier that assert restrictive markings. However, this
clause neither creates not implies privity of contract between the Government
and subcontractors.
(l) FLOWDOWN. The Contractor or subcontractor agrees to insert this
clause in contractual instruments with its subcontractors or suppliers at any
tier requiring the delivery of technical data, except contractual instruments
for commercial items or commercial components.
(End of Clause)
ACQUISITION REFORM INCENTIVE -- DA TEST CLAUSE (96-DEV-4)
1AFARS (JUL 1996)
<PAGE> 27
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 22
(a) General.
(1) The contractor is encouraged to identify
Government-directed processes and requirements that are specified for use in the
performance of this contract, that are over-specified or are otherwise not
cost-effective, and that provide an opportunity to reduce contractor costs of
performance while still meeting contractual performance requirements.
(2) The contractor may submit Acquisition Cost Reduction
Initiative (ACRI) proposals to the Contracting Officer on how these contract
requirement may be reduced, eliminated or changed, and shall share in any net
acquisition savings resulting from accepted ACRI proposals in accordance with
the provisions of this clause.
(3) The contractor should not submit ACRI proposals under this
clause that --
(i) Directly affect the design, form, fit or function
of an item, or the direct performance of a service. Submit such proposals under
the Value Engineering Proposal clause of this contract.
(ii) Would more appropriately be addressed under the
Department of Defense's Singe/Common Process Initiative.
(b) Definitions. As used in this clause:
"Acquisition Savings" means reduced contractor direct and indirect
costs to perform Army contracts as the result of implementing an ACRI, but
excluding both Government and contractor ACRI costs. Acquisition savings
include:
(1) Direct cost savings, which are the total cost reductions
resulting from implementing an ACRI under a specific contract; and
(2) Indirect costs savings, which are the total cost
reductions resulting from reduced requirements in systems and procedures on the
contractor's cost of performing a contract due to the application of an ACRI.
"ACRI Proposal" means a firm contractor proposal that is submitted for
each ACRI or any revisions thereto. ACRI proposals identify proposed reductions,
eliminations or changes in Government-direct processes and requirements
specified for use under this contract that will result in reduced contractor's
costs of performance under this contract, and possibly future contracts, while
still meeting contract performance requirements, including schedule.
"Concurrent contract savings" means those acquisition savings under
Army contracts other than the instant contract that are definitized and ongoing
at the time the ACRI proposal is accepted.
"Contractor's ACRI cost," means contractor development and
implementation costs:
(1) Incurred specifically in developing and testing an ACRI,
and
(2) Incurred to make contractual and/or institutional changes
necessary to implement an ACRI.
"Future contracts" means Army contracts that are affected by an
implemented ACRI and that are affected by an implemented ACRI and that are
awarded to the contractor prior to the completion of the instant contract.
"Government ACRI costs" means those Army costs that result directly
from developing and implementing the ACRI proposals, such as any net increases
in the cost of testing, operations, maintenance, and logistics support. The term
does not include the normal administrative cost of processing the ACRI proposal.
"Implemented ACRIs" means those ACRIs for which a contract modification
has been executed to implement.
"Instant contract" means this contract, under which the ACRI proposal
is submitted and implemented.
"Unit" means the item or task to which the Contracting Officer and the
contractor agree the ACRI applies.
<PAGE> 28
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 23
(c) Sharing rates. The contractor's share in contract savings shall be
fifty percent (50%) for the first year after implementation of the ACRI, forty
percent (40%) for the second year, and thirty percent (30%) for each additional
year, until termination or expiration of the contract.
(d) Calculating contract savings. The example set forth below is
intended to serve as a guideline for calculating and allocating calculation of
contract savings. Actual methodology to determine how savings will be calculated
and allocated between the contractor and the Government will be developed,
applied and mutually agreed to on a case-by-case basis for each ACRI.
(1) Instant contract savings.
(i) Determine the acquisition savings per unit.
(ii) Determine the number of percentage of units
remaining to be completed following implementation of the ACRI.
(iii) Calculate the net contract savings to be
realized from the effect of the ACRI through contract completion. The contract
shall be modified as described in paragraph (3).
Example (Instant Contract)
------- ------- ---------
<TABLE>
<CAPTION>
<S> <C>
A Acquisition savings per unit $1,500
B Units remaining on contract at the time of 800 units
ACRI effectivity
C Contract savings (A x B) $1,200,000
D Contractor's ACRI Costs $200,000
E Government's ACRI Costs $200,000
F Net contract savings $800,000
G Contractor's share (50% x F) $400,000
H Government's share (C-D+E+G)) $400,000
</TABLE>
(2) Concurrent contract savings. Savings and sharing on
concurrent contracts are computed in the same manner as for the instant
contract.
(3) Future contract savings. Additional contractor's share of
savings will be recognized in future Army contracts that are affected by an
implemented ACRI. An amount equal to per-unit acquisition savings times
appropriate contractor sharing rates (paragraph (c)) shall be added to the
negotiated price of units to be delivered during the first three years of
production or performance of future contract, PROVIDED that data submitted by
the contractor for such future contracts demonstrates that the cost savings
resulting from the ACRI are reflected in the contractor's proposal to the
Government. If there are no future contracts, or if they are for fewer than
three years of production or performance, the contractor shall automatically
relinquish any claim to the balance of any ACRI savings applicable to any such
future contracts.
(e) Contract adjustment. The modification authorizing implementation of
the ACRI shall --
(1) Reduce the contract price or estimated cost of affected
contracts by the Government's share as calculated in (d) above. (In the example
above, this would be Line H + Line E.)
(2) Provide the contractor's share of net contract savings
under affected contracts by --
(i) Increasing the unit price under fixed-price
contracts.
(ii) Increasing the contract fee undercost-
reimbursement contracts.
(f) ACRI Proposals. At a minimum, the following information should be
submitted by the contractor for each ACRI proposal. The extent and detail
provided should be proportionate to the complexity and value of the proposed
changed.
<PAGE> 29
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 24
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
(1) A description of the difference between the existing contract
requirement and the proposed change, and the comparative advantages and
disadvantages of each;
(2) Itemized requirements of the contract that must be changed if the
ACRI proposal is adopted, and the proposed revision to the contract for each
such change.
(3) An estimate of the reductions in cost that will result from
adoption of the ACRI proposal;
(4) An evaluation of any effects the proposed change would have on
collateral costs to the Government, such as Government Furnished Property costs,
costs of related items, and costs of maintenance and operation; and
(5) A statement of any effect on the contract completion date or
delivery schedule.
(End of clause)
H-5 STATUS OF FUNDS ON COST REIMBURSEMENT CONTRACTS/CLINS
TACOM (June 1989)
The Contractor shall review the funding as it relates to work performed
on the cost reimbursement Contract Line Item Numbers (CLINs) under this contract
and shall provide to the Procuring Contracting Officer (PCO) a written
determination of what, if any, funds are excess to requirements (leaving a
reasonable amount for final overhead rate negotiations and other reasonably
predicted requirements) and are available for deobligation. This review shall be
coordinated with the Administrative Contracting Officer (ACO) and the written
determination shall be accomplished within 120 days of completion of performance
under the CLIN. The report shall be prepared in terms of dollars available per
Purchase Request Order Number (PRON) unless requested otherwise by the PCO.
(End of clause)
H-6 LOCAL ADDRESS FOR DD FORM 250
TACOM (SEP 1992)
(A) The contractor must send two copies of the material inspection and
receiving report (DD 250) to the following address:
US ARMY Tank Automotive and Armaments Command
Acquisition Center - ATTN: AMSTA-AQ-C
Warren, MI 48397-5000.
(B) These two copies meet the requirements for the Purchasing Office
copy and the Army Inventory Control Manager copy listed in tables 1 and 2 of
DFARS Appendix F.
(end of clause)
<PAGE> 30
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 24a
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
H-6 OPTIONS(S)
TACOM
The Contracting Officer may exercise the option set forth in paragraph
H-6.1 by giving written notice to the Contractor as set forth below after
contract award with the performance thereunder to commence immediately upon the
issuance of Work Directives.
H-6.1 OPTION-SYSTEM TECHNICAL SUPPORT (STS)
The Government shall have the option to increase the level of System
Support (STS) effort by up to a maximum of 70,000 manhours (25,000 per year for
the 1st and 2nd option periods and 20,000 for the 3rd option period) at the
amounts specified below. The amount includes the estimated cost and fixed fee.
The Contracting Officer may exercise this option up to thirty (30) days prior to
contract completion by giving written notice to the Contractor. The option may
be exercised in more than one or partial increments, but the total manhours
added to the contract requirements shall not exceed 25,000 manhours per year in
option years one or two, and 20,000 manhours in option year three. In the event
the Government options an increment of effort not exceeding 25,000 manhours in
the 1st or 2nd option years, and/or 20,000 manhours in the 3rd option years, the
right to exercise the remaining manhours shall be thirty (30) days prior to the
completion of the optioned effort. In no instance shall the performance period
of an optioned effort exceed beyond December 31, 2000.
H-6.1.1 AVAILABLE HOURS: 1st OPTION YEAR/25,000 MANHOURS
<TABLE>
<CAPTION>
25,000 Manhours Less than 25,000 Manhours
--------------- -------------------------
<S> <C> <C>
Estimated Cost: $2,365,500 $94.78 per hour
Fixed Fee: $206,500 $8.10 per hour
TOTAL CPFF: $2,572,000 $102.88 per hour
<CAPTION>
H-6.1.2 AVAILABLE HOURS: 2nd OPTION YEAR/25,000 MANHOURS
25,000 Manhours Less than 25,000 Manhours
--------------- -------------------------
<S> <C> <C>
Estimated Cost: $2,425,500 $97.18 per hour
Fixed Fee: $211,750 $8.31 per hour
TOTAL CPFF: $2,637,250 $105.49 per hour
<CAPTION>
H-6.1.3 AVAILABLE HOURS: 3rd OPTION YEAR/20,000 MANHOURS
25,000 Manhours Less than 25,000 Manhours
--------------- -------------------------
<S> <C> <C>
Estimated Cost: $1,983,400 $99.17 per hour
Fixed Fee: $170,400 $8.52 per hour
TOTAL CPFF: $2,153,800 $107.69 per hour
</TABLE>
H-6.1.4 The total number of hours optioned and scheduled for performance in each
12 month option performance period, as of the end of the 11th month of the
option performance period, shall determine which estimated cost and fixed fee is
applicable. If the complete level-of-effort (25,000 manhours 1st and 2nd years,
20,000 manhours 3rd year) is optioned, in total or by increments, and scheduled
to be performed within the 12 month performance period, the 100 percent option
price shall be applicable for the total option quantity upon exercise of the
last increment. The incremental estimated cost and fixed fee is applicable for
any increment(s) less than the full level of effort.
(end of clause)
<PAGE> 31
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 25
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
PART II - CONTRACT CLAUSES
SECTION I - CONTRACT CLAUSES
This contract incorporates one or more clauses by reference, with the same force
and effect as if they were given in full text. Upon request, the Contracting
Officer will make their full text available.
<TABLE>
<CAPTION>
CLAUSE TITLE REFERENCE DATE
<S> <C> <C> <C>
1. DEFINITIONS 52.202-1 (OCT 1995)
2. GRATUITIES 52.203-3 (APR 1984)
3. COVENANT AGAINST CONTINGENT FEES 52.203-3 (APR 1984)
4. RESTRICTIONS ON SUBCONTRACTOR SALES TO THE GOVERNMENT 52.203-5 (JUL 1995)
5. ANTI-KICKBACK PROCEDURES 52.203-7 (JUL 1995)
6. PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR IMPROPER ACTIVITY 52.203-10 (SEP 1990)
7. LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL
TRANSACTIONS 52.203-12 (JAN 1990)
8. PRINTING/COPYING DOUBLE-SIDED OR RECYCLED PAPER 52.204-4 (JUN 1996)
9. PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING
WITH CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR
DEBARMENT 52.209-6 (JUL 1995)
10. AUDIT AND RECORDS - NEGOTIATIONS 52-215-2 (AUG 1996)
11. PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA 52.215.22 (OCT 1995)
12. PRICE REDUCTION FOR DEFECTIVE COST OR PRICING
DATA - MODIFICATIONS 52.215-23 (OCT 1995)
13. SUBCONTRACTOR COST OR PRICING DATA 52.215-24 (OCT 1995)
14. SUBCONTRACTOR COST OR PRICING DATA - MODIFICATIONS 52.215-25 (OCT 1995)
15. TERMINATION OF DEFINED BENEFIT PENSION PLANS 52.215-27 (MAR 1996)
16. ORDER OF PRECEDENCE 52-215-33 (JAN 1986)
17. REVERSION OR ADJUSTMENT OF PLANS FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSIONS(PRB) 52.215-39 (MAR 1996)
18. NOTIFICATION OF OWNERSHIP CHANGES 52.215-40 (FEB 1995)
19. ALLOWABLE COST AND PAYMENT 52.216-7 (AUG 1996)
20. FIXED FEE 52.216-8 (APR 1984)
21. UTILIZATION OF SMALL, SMALL DISADVANTAGED, AND WOMEN-OWNED
SMALL BUSINESS CONCERNS 52.219-8 (OCT 1995)
22. SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS
SUBCONTRACTING PLAN 52.219-9 (AUG 1996)
23. LIQUIDATED DAMAGES - SUBCONTRACTING PLAN 52.219-16 (OCT 1995)
24. NOTICE TO THE GOVERNMENT OF LABOR DISPUTES 52.222-1 (APR 1984)
25. WALSH-HEALEY PUBLIC CONTRACTS ACT 52.222-20 (APR 1984)
26. EQUAL OPPORTUNITY 52.222-26 (APR 1984)
27. EQUAL OPPORTUNITY PREAWARD CLEARANCE OF SUBCONTRACTS 52.222-28 (APR 1984)
28. AFFIRMATIVE ACTION FOR SPECIAL DISABLED AND VIETNAM ERA
VETERANS 52.222-35 (APR 1984)
29. AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS 52.222-36 (APR 1984)
30. EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS AND
VETERANS OF THE VIETNAM ERA 52.222-37 (JAN 1988)
31. CLEAN AIR AND WATER 52.223-2 (APR 1984)
32. DRUG FREE WORKPLACE 52.223-6 (JUL 1990)
33. REFRIGERATION EQUIPMENT AND AIR CONDITIONERS 52.223-12 (MAY 1995)
34. RESTRICTIONS ON CERTAIN FOREIGN PURCHASES 52.225-11 (OCT 1996)
</TABLE>
<PAGE> 32
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 26
<TABLE>
<CAPTION>
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
<S> <C> <C> <C>
35. UTILIZATION OF INDIAN ORGANIZATIONS AND INDIAN-OWNED
ECONOMIC ENTERPRISES 52.226-1 (SEP 1996)
36. AUTHORIZATION AND CONSENT 52.227-1 (JUL 1995)
37. NOTICE AND ASSISTANCE REGARDING PATIENT AND COPYRIGHT
INFRINGEMENT 52.227-2 (AUG 1996)
38. INSURANCE - LIABILITY TO THIRD PERSONS 52.228-7 (MAR 1996)
39. LIMITATION OF WITHHOLDING OF PAYMENTS 52.232-9 (APR 1984)
40. INTEREST 52.232-17 (JUN 1996)
41. LIMITATION OF COST 52.232-20 (APR 1984)
42. ASSIGNMENT OF CLAIMS 52.232-23 (JAN 1986)
43. PROMPT PAYMENT 52.232-25 (MAR 1994)
44. MANDATORY INFORMATION FOR ELECTRONIC FUNDS TRANSFER PAYMENT 52.232-33 (AUG 1996)
45. DISPUTES 52.233-1 (OCT 1995)
46. PROTEST AFTER AWARD - ALTERNATE I (AUG 1996) 52.233-3 (JUN 1995)
47. NOTICE OF INTENT TO DISALLOW COSTS 52.242-1 (APR 1984)
48. PENALTIES FOR UNALLOWABLE COSTS 52.242-3 (OCT 1995)
49. BANKRUPTCY 52.242-13 (JUL 1995)
50. CHANGES - COST - REIMBURSEMENT 52.243-2 (AUG 1987)
51 NOTIFICATION OF CHANGES 52.243-7 (APR 1984)
52. SUBCONTRACTS (COST-REIMBURSEMENT AND LETTER CONTRACTS) -
ALTERNATE I (MAR 1996) 52.244-2 (AUG 1996)
53. COMPETITION IN SUBCONTRACTING 52.244-5 (JAN 1996)
54. GOVERNMENT PROPERTY (COST-REIMBURSEMENT, TIME-AND-MATERIAL,
OR LABOR-HOUR CONTRACTS) 52.245-5 (JAN 1986)
55. LIMITATION OF LIABILITY 52.246-23 (APR 1984)
56. TERMINATION (COST-REIMBURSEMENT) 52.249-6 (SEP 1996)
57. EXCUSABLE DELAYS 52.249-14 (APR 1984)
58. COMPUTER GENERATED FORMS 52.253-1 (JAN 1991)
59. SPECIAL PROHIBITION ON EMPLOYMENT 252.203-7001 (NOV 1995)
60. CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT 252.204-7003 (APR 1992)
61. ACQUISITION FROM SUBCONTRACTORS SUBJECT TO ON-SITE
INSPECTION UNDER THE INTERMEDIATE-RANGE NUCLEAR FORCES
(INF) TREATY 252.209-7000 (NOV 1995)
62. PRICING ADJUSTMENTS 252.215-7000 (DEC 1991)
63. COST ESTIMATING SYSTEM REQUIREMENTS 252.215-7002 (DEC 1991)
64. SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS
SUBCONTRACTING PLAN (DOD CONTRACTS) 252.219-7003 (NOV 1995)
65. PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES 252.225-7012 (NOV 1995)
66. PREFERENCE FOR DOMESTIC SPECIALTY METALS (ALT 1 - DEC 1991) 252.225-7014 (NOV 1995)
67. RESTRICTION ON ACQUISITION OF BALL AND ROLLER BEARINGS 252.225-7016 (SEP 1996)
68. FOREIGN SOURCE RESTRICTIONS 252.225-7025 (SEP 1996)
69. REPORTING OF CONTRACT PERFORMANCE OUTSIDE THE UNITED STATES 252.225-7026 (NOV 1995)
70. SECONDARY ARAB BOYCOTT OF ISRAEL 252.225-7031 (JUN 1992)
71. TECHNICAL DATA - WITHHOLDING OF PAYMENT 252.227-7030 (OCT 1988)
72. REDUCTION OR SUSPENSION OF CONTRACT PAYMENTS UPON FINDING
OF FRAUD 252.232-7006 (AUG 1992)
73. CERTIFICATION OF CLAIMS AND REQUESTS FOR ADJUSTMENT OR
RELIEF 252.233-7000 (MAY 1994)
I-2 REQUIREMENT FOR CERTIFICATE OF PROCUREMENT INTEGRITY - MODIFICATION
52.203-9 (SEP 1995)
</TABLE>
<PAGE> 33
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 27
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
(a) DEFINITIONS. The definitions set forth in FAR 3.104-4 are hereby
incorporated in this clause.
(b) The Contractor agrees that it will execute the certification set
forth in paragraph (c) of this clause when requested by the Contracting Officer
in connection with the execution of any modification of this contract.
(c) CERTIFICATION. As required in paragraph (b) of this clause, the
officer or employee responsible for the modification proposal shall execute the
following certification. The certification in paragraph (c)(2) of this clause is
not required for a modification which procures commercial items.
CERTIFICATE OF PROCUREMENT INTEGRITY - MODIFICATION (Nov 1990)
(1) I, _________________ (name of certifier), am the officer or
employee responsible for the preparation of this modification proposal and
hereby certify that, to the best of my knowledge and belief, with the exception
of any information described in this certification, I have no information
concerning a violation or possible violation of subsection 27(a), (b), (d), or
(f) of the Office of Federal Procurement Policy Act, as amended * (41 U.S.C.
423), (hereinafter referred to as THE ACT), as implemented in the FAR, occurring
during the conduct of this procurement ________________________________________.
(contract and modification number)
(2) As required by subsection 27(e)(1)(B) of the Act, I further certify
that to the best of my knowledge and belief, each officer, employee, agent,
representative, and consultant of __________________________________ (Name of
Offeror) who has participated personally and substantially in the preparation or
submission of this proposal has certified that he or she is familiar with, and
will comply with, the requirements of subsection 27(a) of the Act, as
implemented in the FAR, and will report immediately to me any information
concerning a violation or possible violation of subsections 27(a), (b), (d), or
(f) of the Act, as implemented in the FAR, pertaining to this procurement.
(3) Violations or possible violations: (CONTINUE ON PLAIN BOND PAPER IF
NECESSARY AND LABEL CERTIFICATE OF PROCUREMENT INTEGRITY - MODIFICATION
(CONTINUATION SHEET), ENTER NONE IF NONE EXISTS).
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Signature of the Officer or Employee Responsible for the Modification Proposal
and date)
________________________________________________________________________________
(Typed name of the Officer or Employee Responsible for the Modification
Proposal)
________________________________________________________________________________
*Subsections 27 (a), (b), and (d) are effective on December 1, 1990. Subsection
27 (f) is effective on June 1, 1991.
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE
UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION
MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001.
(End of Certification)
(d) In making the certification in paragraph (2) of the certificate,
the officer or employee of the competing Contractor responsible for the offer or
bid, may rely upon a one-time certification from each individual required to
submit a certification by the competing Contractor, supplemented by periodic
training. These certifications shall be obtained at the earliest possible date
after an individual required to certify begins employment or association with
the contractor. If a contractor decides to rely on a certification executed
prior to the suspension of section 27 (i.e., prior to December 1, 1989) the
contractor shall ensure that an individual who has so certified is notified that
Section 27 has been reinstated. These certifications shall be
<PAGE> 34
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 28
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
obtained by the Contractor for a period of 6 years from the date a certifying
employee's employment with the company ends or, for an agency, representative,
or consultant, 6 years from the date such individual ceases to act on behalf of
the contractor.
(e) The certification required by paragraph (c) of this clause is a
material representation of fact upon which reliance will be placed in executing
this modification.
(End of clause)
I-3 OZONE-DEPLETING SUBSTANCES
52.223-11 (JUN 1996)
(a) Definition
OZONE-DEPLETING SUBSTANCE, as used in this clause, means any substance
designated as Class I by the Environmental Protection Agency (EPA) (40 CFR Part
82), including but not limited to chlorofluorocarbons, halons, carbon
tetrachloride, and methyl chloroform; or any substance designated as Class II by
EPA (40 CFR Part 82), including but not limited to hydrochlorofluorocarbons.
(b) The Contractor shall label products which contain or are
manufactured with ozone-depleting substances in the manner and to the extent
required by 42 U.S.C. 7671j(b), (c), and (d) and 40 CFR Part 82, Subpart E, as
follows:
WARNING: Contains (or manufactured with, if applicable)
_____________________ * _____________________, a substance(s) which harm(s)
public health and environment by destroying ozone in the upper atmosphere.
*The Contractor shall insert the name of the substance(s).
(End of clause)
I-4 AUTHORIZED DEVIATIONS IN CLAUSES
52.252-6 (APR 1984)
(a) The use in this solicitation or contract of any Federal Acquisition
Regulation (48 CFR Chapter 1) clause with an authorized deviation is indicated
by the addition of (DEVIATION) after the date of the clause.
(b) The use in this solicitation or contract of any DoD FAR Supplement
(DFARS) (48 CFR 2) clause with an authorized deviation is indicated by the
addition of (DEVIATION) after the name of the regulation.
(End of clause)
I-5 PREFERENCE FOR DOMESTIC HAND OR MEASURING TOOLS
252.225-7015 (DEC 1991)
The Contractor agrees to deliver under this contract only hand or
measuring tools produced in the United States or its possessions.
(End of clause)
I-6 TRANSPORTATION OF SUPPLIES BY SEA
252.247-7023 (NOV 1995)
(a) Definitions.
As used in this clause --
(1) COMPONENTS means articles, materials, and supplies
incorporated directly into end products at any level of manufacture,
fabrication, or assembly by the Contractor or any subcontractor.
<PAGE> 35
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 29
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
(2) DEPARTMENT OF DEFENSE (DoD) means the Army, Navy, Air Force,
Marine Corps, and defense agencies.
(3) FOREIGN FLAG VESSEL means any vessel that is not a U.S.-flay
vessel.
(4) OCEAN TRANSPORTATION MEANS any transportation aboard a ship,
vessel, boat, barge, or ferry through international waters.
(5) SUBCONTRACTOR means a supplier, materialman, distributor, or
vendor at any level below the prime contractor whose contractual obligation to
perform results from, or is conditioned upon, award of the prime contract and
who is performing any part of the work or other requirement of the prime
contract. However, effective May 1, 1996, the term does not include a supplier,
materialman, distributor, or vendor of commercial items or commercial
components.
(6) SUPPLIES means all property, except land and interests in
land, that is clearly identifiable for eventual use by or owned by the DoD at
the time of transportation by sea.
(i) An item is clearly identifiable for eventual use by the
DoD if, for example, the contract documentation contains a reference to a DoD
contract number or a military destination.
(ii) SUPPLIES includes (but is not limited to) public works;
buildings and facilities; ships; floating equipment and vessels of every
character, type, and description, with parts, subassemblies, accessories, and
equipment; machine tools; material; equipment; stores of all kinds; end items;
construction materials; and components of the foregoing.
(7) U.S.-FLAG VESSEL means a vessel of the United States or
belonging to the United States, including any vessel registered or having
national status under the laws of the United States.
(b) The Contractor shall employ U.S.-flag vessels in the transportation
by sea of any supplies to be furnished in the performance of this contract. The
Contractor and its subcontractors may request that the Contracting Officer
authorize shipment in foreign-flay vessels, or designate available U.S.-flag
vessels, if the Contractor or a subcontractor believes that --
(1) U.S.-flag vessels are not available for timely shipment;
(2) The freight charges are not inordinately excessive or
unreasonable; or
(3) Freight charges are higher than charges to private persons
for transportation of like goods.
(c) The Contractor must submit any request for use of other than
U.S.-flag vessels in writing to the Contracting Officer at least 45 days prior
to the sailing date necessary to meet its delivery schedules. The Contracting
Officer will process requests submitted after such date(s) as expeditiously
possible, but the Contracting Officer's failure to grant approvals to meet the
shipper's sailing date will not of itself constitute a compensable delay under
this or any other clause of this contract. Requests shall contain at a minimum
- --
(1) Type, weight, and cube of cargo;
(2) Required shipping date;
(3) Special handling and discharge requirements;
(4) Loading and discharge points;
(5) Name of shipper and consignee;
(6) Prime contract number; and
(7) A documented description of efforts made to secure U.S.-flag
vessels, including points of contact (with names and telephone numbers) with at
least two U.S.-flag carriers contacted. Copies of telephone notes, telegraphic
and facsimile message
<PAGE> 36
CONTINUATION SHEET Reference No. of Document Being Continued Page
DAAE07-97-C-X028 29
Name of Offeror of Contractor O GARA-HESS & EISENHARDT ARMORING
letters will be sufficient for this purpose.
(d) The Contractor shall, within 30 days after each shipment covered by
this clause, provide the Contracting Officer and the Division of National Cargo,
Office of Market Development, Maritime Administration, U.S. Department of
Transportation, Washington, DC 20590, one copy of the rated on board vessel
operating carrier's ocean bill of lading, which shall contain the following
information --
(1) Prime contract number;
(2) Name of vessel;
(3) Vessel flag of registry;
(4) Date of loading;
(5) Port of loading;
(6) Port of final discharge;
(7) Description of commodity;
(8) Gross weight in pounds and cubic feet if available;
(9) Total ocean freight in U.S. dollars; and
(10) Name of steamship company.
(e) The Contractor agrees to provide with its final invoice under this
contract a representation that to the best of its knowledge and belief --
(1) No ocean transportation was used in the performance of this
contract;
(2) Ocean transportation was used and only U.S.-flag vessels were
used for all ocean shipments under the contract;
(3) Ocean transportation was used, and the Contractor had the
written consent of the Contracting Officer for all non- U.S.-flag ocean
transportation; or
(4) Ocean transportation was used and some or all of the
shipments were made on non-U.S.-flag vessels without the written consent of the
Contracting Officer. The Contractor shall describe these shipments in the
following format:
ITEM CONTRACT
DESCRIPTION LINE ITEMS QUANTITY
TOTAL
(f) If the final invoice does not include the required representation,
the Government will reject and return it to the Contractor as an improper
invoice for the purposes of the Prompt Payment clause of this contract. In the
event there has been unauthorized use of non-U.S.-flag vessels in the
performance of this contract, the Contracting Officer is entitled to equitably
adjust the contract, based on the unauthorized use.
(g) The Contract shall include this clause, including this paragraph
(g) in all subcontracts under this contract, which exceed the small purchase
limitation of section 13.000 of the Federal Acquisition Regulation.
(End of clause)
<PAGE> 37
DOCUMENT SUMMARY LIST
FOR THE
UP-ARMORED HEAVY HMMWV STS
<TABLE>
<CAPTION>
DOCUMENT NUMBER DOCUMENT TITLE DOCUMENT
(Contract Reference) DATE
APPLICABLE TAILORING
(Sequence Number)
<S> <C> <C> <C>
1.a. DAAE07-97-C-X028 Statement of Work 1996
1.b. DI-MGMT-80061A Engineering and Technical Services 28 Mar 91
(Sec. C.3.4; C.3.7) Accomplishment Report
1.c. DI-FNCL-80912(T) Performance and Cost Report 06 Oct 89
(Sec. C.2.3)
Tailored as follows: Additional statement of Estimated Variance is
included. Actual rates on a year-to-date basis compared to budgeted
rates, and on overall contract-to-date dollar variance.
1.d. DI-ADMN-81250A Conference Minutes 17 Apr 92
(Sec. C.2.2.)
1.e. DI-ADMN-80424(T) Photographic Records of Equipment 26 Aug 87
(Sec. C.3.8.1)
Tailored as follows: If slides provided, 2x2 frame material may be
commercial standard. View requirement may be modified as long as
subject is adequately defined. Photographic prints or slides shall show
excellent detail and shall be color suitable for reproduction; black
and white is no longer accepted format.
1.f. DI-FNCL-81116 Manhour Estimate Technical Cost 19 Dec 90
(Sec. C.1.1) Proposals
- ------------------------------------------------------------------------------------------
2.a. EIA-RS-330 Video Records Format Undated
2.b. EIA-RS-170 Video Records Format Undated
2.c. DI-MISC-80737(T) Magnetic Tape Cartridges Vide Data 17 Jan 89
(Sec. C.3.8.2.) and Voice Records
Tailored as follows: Commercial format and tape size acceptable.
Auxiliary Data Sheet dates will only be prepared if specifically
directed. In Block 10, delete paragraphs 10.2, 10.3.2, and 10.4.2.4
through 10.4.2.12.
</TABLE>
<PAGE> 38
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
3.a. MIL-T-31000 Technical Data Packages General 30 Sep 91
Specification Int. Amend. 2
3.b. DOD-STD-00100D Engineering Drawing Practices 03 Apr 87
3.c. ANSI-Y-14.5M Dimensioning and Tolerancing 01 Jan 82
3.d. DI-DRPR-81000 Product Drawings and Associated 11 Nov 89
(Sec. C.3.6) Lists
- --------------------------------------------------------------------------------------------
4.a. MIL-STD-882C System Safety Program Requirements 19 Jan 93
(Sec. C.6.1.4)
4.b. DI-SAFT-80102A Safety Assessment Report (SAR) 19 Jan 93
(Sec. C.6.1.2)
- --------------------------------------------------------------------------------------------
5. MIL-STD-1472D Human Engineering Design Criteria 10 Feb 94
(Sec. C.6.2.1) for Military Systems Notice 3
Equipment and Facilities
- --------------------------------------------------------------------------------------------
6. MIL-STD-209H Sling and Tiedown Provisions For 28 Jun 91
(Sec. C.9.1, C.9.2) Lifting and Tying Down Military
Equipment
- --------------------------------------------------------------------------------------------
7. MIL-STD-810E Environmental Test Methods 01 Sep 93
(Sec. C.9.1, C.9.2) and Engineering Guidelines Amend. 2
- --------------------------------------------------------------------------------------------
8. MIL-STD-1791 Designing for Internal Aerial Delivery 15 Apr 86
(Sec. C.9.1, C.9.2) In Fixed Wing Aircraft Amend. 1
Notice 1
- --------------------------------------------------------------------------------------------
9. MIL-STD-669B Loading Environmental and Related 27 Mar 92
(Sec. C.9.1, C.9.2) Requirement For Platform Notice 1
</TABLE>
<PAGE> 39
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
10. MIL-STD-814C Requirement for Tiedown Suspension 23 Feb 93
(Sec. C.9.1, C.9.2) and Extraction Provisions on Military
Material for Airdrop
- --------------------------------------------------------------------------------------------
11.a. MIL-T-24960A Truck Lift Diesel Engine Driven 08 Mar 94
Pneumatic Rubber Tires with Top
Handler for Handling Cargo Containers
11.b. MIL-STD-1366C Transportability Criteria 27 Feb 92
11.c. DI-PACK-80880A(T) Transportability Report 15 Jan 93
(Sec. C.9.1; C.9.2)
Tailored as follows: In Block 10, delete paragraph 10.4.7.b, 10.4.7.c,
10.4.7.d; 10.4.8.1a through 10.4.8.1c; 10.4.8.2; 10.4.8.3a through
10.4.8.3c; 10.4.8.4; 10.4.8.5a through 10.4.8.5e; 10.4.8.6a, 10.4.8.6b;
10.4.9; 10.4.10; 10.4.19, 10.4.21.6; 10.4.21.8; 10.4.21.9; 10.4.21.10;
10.4.22; 10.4.23.
- --------------------------------------------------------------------------------------------
12. ISO 9001 Quality System Model for Quality 1994
(Sec. C.5.1; C.5.1.1) Assurance in Design, Development,
Production, Installation, and Servicing
- --------------------------------------------------------------------------------------------
13. MIL-Q-9858(A) Quality Program Requirements 08 Mar 85
(Sec. C.5.1; C.5.1.1) Amend. 2
- --------------------------------------------------------------------------------------------
14. MIL-STD-1840B Automated Interchange Technical 03 Nov 92
(DD Form 2554-I) Information
- --------------------------------------------------------------------------------------------
15. MIL-R-28002B Raster Graphics Representation in 30 Sep 93
(DD Form 2554-I) Binary Format Requirement Amend. 1
- --------------------------------------------------------------------------------------------
END OF DSL
</TABLE>
<PAGE> 40
CONTRACT DATA REQUIREMENTS LIST
A. CONTRACT LINE ITEM NO.
B. EXHIBIT NO.
C. CATEGORY:
TOP___________________ TM____________________ OTHER_________________
D. SYSTEM/ITEM
HMMWV-UP ARMORED
E. CONTRACT/PR. NO.
F. CONTRACTOR
1. DATA ITEM NO.
2. TITLE OF DATA ITEM ENGINEERING AND TECHNICAL SERVICES
ACCOMPLISHMENT REPORTS
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-MGMT-80061A
5. CONTRACT REFERENCE
C.3.4; C.3.7
6. REQUIRING OFFICE
SFAE-TWV-LTV
7. DD 250 REQ
LT
8. APP CODE
9. DIST STATEMENT REQUIRED
10. FREQUENCY
ASREQ
11. AS OF DATE
SEE BLK 16
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SEE BLK 10 & 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
SFAE-TWV-TVL 1 0
AMSTA-TR-E/LTV 1 0
AMSTA-IM-HLA 1 O
15. TOTAL 3 0
<PAGE> 41
1. DATA ITEM NO.
2. TITLE OF DATA ITEM
PERFORMANCE AND COST REPORT
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-FNCL-80912
5. CONTRACT REFERENCE
C.2.3
6. REQUIRING OFFICE
SFAE-TWV-LTV
7. DD 250 REQ
LT
8. APP CODE
9. DIST. STATEMENT
10. FREQUENCY
MTHLY
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SEE BLK 10 & 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
SFAE-TWV-TVL 1 0
AWTA-_____-___ 1 0
15. TOTAL 1 0
16. REMARKS
REPORT IS REQUIRED MONTHLY AS SOON AS POSSIBLE AFTER THE CLOSE OR END
OF THE MONTH AND WILL BE FURNISHED EACH MONTH THROUGH THE DURATION OF
THE CONTRACT; AND WHEN SPECIFIED BY AUTHORIZED WORK DIRECTIVE.
1. DATA ITEM NO.
2. TITLE OF DATA ITEM
CONFERENCE MINUTES
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-ADMN-81250A
<PAGE> 42
5. CONTRACT REFERENCE
C.2.2
6. REQUIRING OFFICE
SFAE-TWV-LTV
7. DD 250 REQ
LT
8. APP CODE
9. DIST STATEMENT
REQUIRED
10. FREQUENCY
MTHLY
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SEE BLK 10 & 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
SFAE-TWV-TVL 1 0
SEE BLK 16
15. TOTAL 1 0
16. REMARKS
MINUTES DUE WITHIN 5 WORKING DAYS FOLLOWING THE MONTHLY
PROJECT STATUS MEETING* THE CONTRACTOR SHALL PROVIDE 1 COPY OF
THE MEETING MINUTES TO THE COTR AND EACH GOVERNMENT ATTENDEE.
1. DATA ITEM NO.
2. TITLE OF DATA ITEM
PHOTOGRAPHIC RECORDS OF EQUIPMENT
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-ADMN-80424(T)
5. CONTRACT REFERENCE
C.3.8.1
6. REQUIRING OFFICE
SFAE-TWV-LTV
7. DD 250 REQ
LT
<PAGE> 43
8. APP CODE
9. DIST STATEMENT
REQUIRED
10. FREQUENCY
ASREQ
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SEE BLK 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
SFAE-TWV-TVL 1 0
15. TOTAL 1 0
16. REMARKS
AS AUTHORIZED BY WORK DIRECTIVE AND PROJECT REQUEST. TAILORING
IF SLIDES PROVIDED, 2X2 FRAME MATERIAL MAY BE COMMERCIAL
STANDARD. VIEW REQUIREMENT MAY BE MODIFIED AS LONG AS SUBJECT
IS ADEQUATELY DEFINED.
G. PREPARED BY
JAMIE YOUNG
/S/ JAMIE YOUNG
-----------------
H. DATE
29 APR 96
I. APPROVED BY
ANTHONY A. SHAW
/S/ ANTHONY A. SHAW
--------------------
J. DATE
12 JULY 96
<PAGE> 44
CONTRACT DATA REQUIREMENTS LIST
A. CONTRACT LINE ITEM NO.
B. EXHIBIT NO.
C. CATEGORY:
TDP___________________ TM____________________ OTHER__________________
D. SYSTEM/ITEM
HMMWV-UP ARMORED
E. CONTRACTOR/PR MO.
F. CONTRACTOR
1. DATA ITEM NO.
2. TITLE OF DATA ITEM MAGNETIC TAPE CARTRIDGES, VIDEO DATA AND VOICE
RECORDS
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-misc-80738(T)
5. CONTRACT REFERENCE
C.3.8.2
6. REQUIRING OFFICE
SFAE-TWV-LTV
7. DD 250 REQ
LT
8. APP CODE
9. DIST STATEMENT REQUIRED
REQUIRED
10. FREQUENCY
ASREQ
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SUBMISSION SEE BLK 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
SFAE-TWV-LTV 0 1
0 0
15. TOTAL 0 1
<PAGE> 45
1. DATA ITEM NO.
2. TITLE OF DATA ITEM
MANHOUR ESTIMATE TECHNICAL COST PROPOSAL
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-FNCL-81116
5. CONTRACT REFERENCE
C.1.1
6. REQUIRING OFFICE
SFAE-TWV-LTV
7. DD 250 REQ
LT
8. APP CODE
9. DIST. STATEMENT
10. FREQUENCY
ASREQ
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SEE BLK 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
SFAE-TWV-TVL 1
15. TOTAL 1
16. REMARKS
AS AUTHORIZED BY WORK DIRECTIVE. WHEN THE EFFORT IS EXPECTED TO EXCEED
80 MAN HOURS.
1. DATA ITEM NO.
2. TITLE OF DATA ITEM
PRODUCT DRAWINGS AND ASSOCIATED LIST
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-DRPR-81000
<PAGE> 46
5. CONTRACT REFERENCE
C.3.6
6. REQUIRING OFFICE
AMSTA-TR-E/TVL
7. DD 250 REQ
DO
8. APP CODE
9. DIST STATEMENT
REQUIRED
10. FREQUENCY
ASREQ
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SEE BLK 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
AMSTA-TR-E/TVL 1 1 1
15. TOTAL 1 1 1
16. REMARKS
AS AUTHORIZED BY WORK DIRECTIVE. SEE ATTACHED FORM 2554-1.
1. DATA ITEM NO.
NOT USED
2. TITLE OF DATA ITEM
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
5. CONTRACT REFERENCE
6. REQUIRING OFFICE
7. DD 250 REQ
8. APP CODE
9. DIST STATEMENT
REQUIRED
10. FREQUENCY
<PAGE> 47
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
13. DATE OF SUBSEQUENT SUBMISSION
SUBMISSION
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
0
15. TOTAL 0
16. REMARKS
G. PREPARED BY
JAMIE YOUNG
/S/ JAMIE YOUNG
------------------
H. DATE
29 APR 96
I. APPROVED BY
ANTHONY A. SHAW
/S/ ANTHONY A. SHAW
-------------------
J. DATE
12 JULY 96
<PAGE> 48
CONTRACT DATA REQUIREMENTS LIST
A. CONTRACT LINE ITEM NO.
B. EXHIBIT NO.
C. CATEGORY:
TDP___________________ TM____________________ OTHER_________________
D. SYSTEM/ITEM
HMMWV-UP ARMORED
E. CONTRACTOR/PR MO.
F. CONTRACTOR
1. DATA ITEM NO.
2. TITLE OF DATA ITEM SAFETY ASSESSMENT REPORT
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-SAFT-80102A
5. CONTRACT REFERENCE
C.6.1.2
6. REQUIRING OFFICE
AMSTA-CS-CZ
7. DD 250 REQ
LT
8. APP CODE
A
9. DIST STATEMENT REQUIRED
REQUIRED
10. FREQUENCY
ASREQ
11. AS OF DATE
SEE BLK 16
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SUBMISSION SEE BLK 10 & 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
AMSTA-CS-CZ 1 1 0
<PAGE> 49
15. TOTAL 1 1 0
16. REMARKS
REQUIRED ONLY IF GOVERNMENT TESTING IS AUTHORIZED. DRAFT DUE WITHIN 30
DAYS OF NOTIFICATION. GOVERNMENT WILL REVIEW WITHIN 30 DAYS. FINAL DUE
WITHIN 60 DAYS PRIOR TO NOTIFICATION OF SCHEDULED TESTING.
<PAGE> 50
1. DATA ITEM NO.
2. TITLE OF DATA ITEM
TRANSPORTABILITY REPORT
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
DI-PACK-80880A(T)
5. CONTRACT REFERENCE
C.9.1; C.9.2
6. REQUIRING OFFICE
AMSTA-TR-E/LTV
7. DD 250 REQ
LT
8. APP CODE
9. DIST. STATEMENT
10. FREQUENCY
ASREQ
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
SEE BLK 16
13. DATE OF SUBSEQUENT SUBMISSION
SUBMISSION SEE BLK 10 & 16
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
AMSTA-TR-E/LTV 1 0
15. TOTAL 1 0
16. REMARKS
TAILORING: AS REQUIRED BY WORK DIRECTIVE. IN BLOCK 10 DELETE PARAGRAPHS
10.4.7.b, a, and d, 10.4.8.1a, b, and c, 10.4.8.2, 10.4.8.3 a, b, and
c, 10.4.8.4, 10.4.8.5a through e, 10.4.8.6a and b, 10.4.9, 10.4.10,
10.4.19, 10.4.21.6, 10.4.21.8, 10.4.21.9, 10.4.21.10, 10.4.22, 10.4.23
<PAGE> 51
1. DATA ITEM NO.
NOT USED
2. TITLE OF DATA ITEM
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
5. CONTRACT REFERENCE
6. REQUIRING OFFICE
7. DD 250 REQ
8. APP CODE
9. DIST STATEMENT
REQUIRED
10. FREQUENCY
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
13. DATE OF SUBSEQUENT SUBMISSION
SUBMISSION
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
15. TOTAL
16. REMARKS
<PAGE> 52
1. DATA ITEM NO.
NOT USED
2. TITLE OF DATA ITEM
3. SUBTITLE
4. AUTHORITY (Data Acquisition Document No.)
5. CONTRACT REFERENCE
6. REQUIRING OFFICE
7. DD 250 REQ
8. APP CODE
9. DIST STATEMENT
REQUIRED
10. FREQUENCY
11. AS OF DATE
12. DATE OF FIRST SUBMISSION
13. DATE OF SUBSEQUENT SUBMISSION
SUBMISSION
14. DISTRIBUTION
A. ADDRESSEE B. COPIES
DRAFT REG REPR
15. TOTAL
16. REMARKS
G. PREPARED BY
JAMIE YOUNG
/S/ JAMIE YOUNG
----------------
H. DATE
29 APR 96
I. APPROVED BY
ANTHONY A. SHAW
/S/ ANTHONY A. SHAW
-------------------
J. DATE
12 JULY 96
<PAGE> 53
DATA ITEM DESCRIPTION
1. TITLE
Engineering and Technical Services Accomplishment Report
2. IDENTIFICATION NUMBER
DI-MGMT-80061A
3. DESCRIPTION/PURPOSE
3.1 The Engineering and Technical Services Accomplishment
Report records progress on engineering tasks, services, and
contractor internal control schedules utilized to manage and
control the Engineering Services Activities.
3.2 The report provides advice, instruction, or training on
how to install, maintain, and operate weapons, equipments and
systems in a high state of readiness.
4. APPROVAL DATE
(YYMMDD) 91/03/28
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
A/MICON
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID shall be used in conjunction with DI-MISC-80748,
Engineering Services Memorandum.
7.3 This DID supersedes DI-MGMT-800061 and DI-MGMT-80893.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A6091
10. PREPARATION INSTRUCTIONS
10.1 FORMAT. The Performance and Cost Report format shall be
contractor selected. Unless effective presentation would be
degraded, the initially used format arrangement shall be used
for all subsequent submissions.
10.2 CONTENT. The Engineering and Technical Services
Accomplishment Report shall (a) cover the progress on each
active Engineering Services Memorandum (ESM) and (b) delineate
the following:
10.2.1 Contract number.
10.2.2 Contract services authority date and serial number.
10.2.3 Location where services were performed.
10.2.4 Names of contractor personnel performing the
services.
10.2.5 Date services were performed and number of man days
or manhours experienced.
10.2.6 Name of the procuring activity's technical
representative (or designated technical representative)
present during performance of the services.
<PAGE> 54
10.2.7 Table of Contents (List all ESMs).
10.2.8 A statement of each ESM summarizing the work
accomplished and objectives attained to the last day of the
reporting period. This statement shall also reflect progress
versus planned milestone objectives and projections of work
accomplishment.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A:
Approved for public release; distribution is unlimited
<PAGE> 55
CONTINUATION SHEET
Reference No. of Document Being Continued
DAAE07-97-C-X028
Page 23 of 30
Name of Offeror or Contractor
O'GARA-HESS & EISENHARDT ARMORING
"Government ACRI costs" means those Army costs that result directly
from developing and implementing the ACRI proposals, each as any net increases
in the cost of testing, operations, maintenance, and logistics support. The term
does not include the normal administrative costs of processing the ACRI
proposal.
"Implemented ACRIs" means those ACRIs for which a contract modification
has been executed to implement.
"Instant contract" means this contract, under which the ACRI proposal
is submitted and implemented.
"Unit" means the item or task to which the Contracting Officer and the
contractor agree the ACRI applies.
(c) Sharing rates. The contractor's share in contract savings shall be
fifty percent (50%) for the first year after implementation of the ACRI, forty
percent (40%) for the second year, and thirty percent (30%) for each additional
year, until termination or expiration of the contract.
(d) Calculating contract savings. The example set forth below is
intended to serve as a guideline for calculating and allocating calculation of
contract savings. Actual methodology to determine how savings will be calculated
and allocated between the contractor and the Government will be developed,
applied and mutually agreed to on a case-by-case basis for each ACRI.
(1) Instant contract savings.
(i) Determine the acquisition savings per unit.
(ii) Determine the number or percentage of units
remaining to be completed following
implementation of the ACRI.
(iii) Calculate the net contract savings to be
realized from the effect of the ACRI through
contract completion.
The contract shall be modified as described in paragraph (e).
<TABLE>
<CAPTION>
Example (Instant Contract)
------- ------- --------
<S> <C> <C>
A Acquisition savings per unit $1,500
B Units remaining on contract at time of 800 units
ACRI effectivity
C Contract savings (A x B) $1,200,000
D Contractor's ACRI Costs $200,000
E Government's ACRI Costs $200,000
F Net contract savings $800,000
G Contractor's share (50: x F) $400,000
H Government's share (C-(D+E+G)) $400,000
</TABLE>
(2) Concurrent contract savings. Savings and sharing on
concurrent contracts are computed in the same manner as for the instant
contract.
(3) Future contract savings. Additional contractor's share of
savings will be recognized in future Army contracts that are affected by an
implemented ACRI. An amount equal to per-unit acquisition savings times
appropriate contractor sharing rates (paragraph (c)) shall be added to the
negotiated price of units to be delivered during the first three years of
production or performance of future contracts, PROVIDED that data submitted by
the contractor for such future contracts demonstrates that the cost savings
resulting from the ACRI are reflected in the contractor's proposal to the
Government. If there are no future
<PAGE> 56
contracts, or if they are for fewer than three years of production or
performance, the contractor shall automatically relinquish any claim to the
balance of any ACRI savings applicable to any such future contracts.
(e) Contract adjustment. The modification authorizing
implementation of the ACRI shall--
(1) Reduce the contract price or estimated cost of
affected contracts by the Government's share as calculated in (d)
<PAGE> 57
DATA ITEM DESCRIPTION
1. TITLE
Engineering and Technical Services Accomplishment Report
2. IDENTIFICATION NUMBER
DI-MGMT-80061A
3. DESCRIPTION/PURPOSE
3.1 The Engineering and Technical Services Accomplishment
Report records progress on engineering tasks, services, and
contractor internal Control schedules utilized to manage and
Control the Engineering Services Activities.
3.2 The report provides advice, instruction, or training on
how to install, maintain, and operate weapons, equipments and
systems in a high state of readiness.
4. APPROVAL
(YYMMDD) 91/03/28
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
A/MICON
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID shall be used in conjunction with DI-MISC-80748,
Engineering Services Memorandum.
7.3 This DID supersedes DI-MGMT-80061 and DI-MGMT-80893.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A6091
10. PREPARATION INSTRUCTIONS
10. PREPARATION INSTRUCTIONS
10.2.9 A statement as to whether any change to the item or
procedures under consideration will necessitate changes
another system hardware or other procedures. Any changes to
other system hardware or procedures, which are necessitated by
the proposed change, shall identify the item(s) or procedures
affected, the estimated cost, the part number and all other
pertinent information.
10.2.10 A summary of the work objectives and work to be
accomplished during the next reporting period.
10.2.11 A statement on the reasons for any delay of work which
occurred and the effect of the delay on the overall program.
Whenever delays occur, this statement shall furnish a revised
completion date and cost of the ESM.
10.2.12 A statement of significant problems encountered and
corrective action taken or recommended.
10.2.13 Recommendations, if any.
<PAGE> 58
10.2.14 Remarks.
10.2.15 A listing of trips made during the reporting period in
conjunction with fulfilling the requirements of this contract.
This listing shall state where and when the trip was made, who
was contacted, state the objectives of each trip and the
degree of accomplishment of each objective.
10.2.16 A summary of any recommended change revisions to
existing technical manuals and plans. Describe the
contractor's technical efforts and list any required spare
parts installed in the repair or adjustment of any equipment
or system.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A:
Approved for public release; distribution is unlimited
<PAGE> 59
DATA ITEM DESCRIPTION
1. TITLE
Engineering and Technical Services Accomplishment Report
2. IDENTIFICATION NUMBER
DI-MGMT-80061A
3. DESCRIPTION/PURPOSE
3.1 The Engineering and Technical Services Accomplishment
Report records progress on engineering tasks, services, and
contractor internal control schedules utilized to manage and
control the Engineering Services Activities.
3.2 The report provides advice, instruction, or training on
how to install, maintain, and operate weapons, equipments and
systems in a high state of readiness.
4. APPROVAL DATE
(YYMMDD) 91/03/28
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
A/MICON
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID shall be used in conjunction with DI-MISC-80748,
Engineering Services Memorandum.
7.3 This DID supersedes DI-MGMT-80061 and DI-MGMT-80893.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A6091
10. PREPARATION INSTRUCTIONS
10.2.17 When an ESM contains repetitive work (e.g.,
preparation or revision of new drawings or specifications,
packaging data sheets, Engineering change Proposals (ECP),
etc., a summary of work units, by relative major and minor
effort shall be included in the report for such ESMs. The
summary shall provide the number of units received and
completed during the reporting period, and the cumulative
number of units completed to date.
10.2.18 When an ESM is completed or cancelled, the Engineering
and Technical Services Accomplishment Report shall state that
this completes all effort under this ESM.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A:
Approved for public release; distribution is unlimited
<PAGE> 60
DATA ITEM DESCRIPTION
1. TITLE
Performance and Cost Report
2. IDENTIFICATION NUMBER
DI-FNCL-80912
3. DESCRIPTION/PURPOSE
3.1 The Performance and Cost Report provides current status
and projected requirements of funds, manhours, and work
completion.
3.2 The report is used for evaluation of contractor progress.
4. APPROVAL DATE
(YYMMDD) 89/10/06
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
A/MICON
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID supersedes DI-F-1208A.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A4845
10. PREPARATION INSTRUCTIONS
10.1 FORMAT. The Performance and Cost Report format shall be
contractor selected. Unless effective presentation would be
degraded, the initially used format arrangement shall be used
for all subsequent submissions.
10.2 CONTENT. The Performance and Cost Report shall contain
the following:
10.2.1 MANHOURS. Total manhours expended by technical
categories or program tasks, cumulative total manhours to
date, and percentages of total manhours spent to date. State
whether or not remaining hours are sufficient to complete the
task.
10.2.2 FUNDS. Total funds expended, by task, for the month;
cumulative total funds spent to date: and percentage of total
contract funds spent to date. State whether or not remaining
funds are sufficient to complete the task.
10.2.3 WORK COMPLETION. Percentage for work completed, by
tasks during the month, and cumulative percentage of total
contract work completed to date.
Monthly requirement that report of Year to Date
actuals by, Rate Pool, summarized pools, allowables,
unallowables, budgeted, actual, and allowable.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A:
Approved for public release; distribution is unlimited
<PAGE> 61
DATA ITEM DESCRIPTION
1. TITLE
Conference Minutes
2. IDENTIFICATION NUMBER
DI-ADMN-81250A
3. DESCRIPTION/PURPOSE
3.1 Conference minutes provide documentation of technical
information provided, and decisions and agreements reached at
meetings.
4. APPROVAL DATE
(YYMMDD) 93/10/01
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
F/ESC/EN-4
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID supersedes DI-ADMN-B1250.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
F6969
10. PREPARATION INSTRUCTIONS
10.1 FORMAT. Contractor format is acceptable.
10.2 CONTENT. The minutes shall include the following information:
a. A title page containing:
(1) Title - type of meeting and date,
(2) Identification of the acquisition (system,
equipment, contract number) for which the
meeting was held,
(3) Space for signatures of the designated
representatives of the contractor and
acquisition activity,
(4) The name of the contractor and address to
which the acquisition activity should
acknowledge receipt of comments.
b. The purpose and objective of the conference.
C. The conference location.
d. A summary of the discussions, decisions, agreements
reached, and directions of the conference or
individual subcommittees thereof.
e. A list of attendees by name, rank, rate, grade or
position, activity represented, activity code, and
phone numbers as appropriate.
f. Action items resulting from the conference.
11. DISTRIBUTION STATEMENT
<PAGE> 62
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 63
DATA ITEM DESCRIPTION
2. TITLE
PHOTOGRAPHIC RECORDS OF EQUIPMENT
1. IDENTIFICATION NUMBER
DI-ADMN-80424(t)
3. DESCRIPTION/PURPOSE
3.1 This data consists of photographic prints or slides which
provide a pictorial medium for exchange of technical
information between developing Agency and users and becomes a
permanent historical and legal record by recording equipment
configuration during the course of program development.
4. APPROVAL DATE
(YYMMDD) 87/08/26
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
N/FAC-DS02
6a. DTIC APPLICABLE
6b. GIDIP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This DID contains the format and content preparation
instructions for the data product generated by the specific
and discrete task requirement as delineated in the contract.
7.2 Deliverable data covered by this DID is required as a
visual record of equipment acquired under the contract.
7.3 This DID supersedes DI-V-24003B.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
N4197
10. PREPARATION INSTRUCTIONS
10.1 FORMAT AND CONTENT: The photographs shall be standard
8x10 inch prints; or slides shall be in 2x2 inch cardboard
frames and shall depict the following:
10.1.1 The prints or slides shall depict equipment after the
registration number has been affixed to the equipment.
10.1.2 Views shall include a front oblique showing front and
side view, and a rear oblique showing rear and opposite view.
10.1.3 Background of photographs shall be void of unrelated
objects.
10.1.4 Interior views shall be in sufficient quantity to show
arrangement and layout of installed equipment. Unique assembly
or disassembly features shall also be shown.
10.1.5 Photographic prints or slides shall show excellent
detail and shall be color suitable for reproduction.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 64
DATA ITEM DESCRIPTION
1. TITLE
Magnetic Tape Cartridges, Video Data and Voice Records
2. IDENTIFICATION NUMBER
DI-MISC-80738(T)
3. DESCRIPTION/PURPOSE
3.1 The Magnetic Tape Cartridges, Video Data and Voice Records
provides evidence of tests performed.
3.2 The data is used to analyze and evaluate the results of
the effort performed.
4. APPROVAL DATE
(YYMMDD) 89/01/17
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
A/AMC-MI
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete requirement as
delineated in the contract.
7.2 This DID supersedes DI-T-1926.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A4608
10. PREPARATION INSTRUCTION
10.1 REFERENCE DOCUMENTS. The applicable issue of the
documents cited herein, including their approval dates and
dates of any applicable amendments, notices and revisions
shall be as specified in the contract.
10.3 MEDIA. The video records media shall be a magnetic video
tape recorder.
10.3.1 Verbal comments of test personnel shall be recorded on
audio channel.
10.4 CONTENT. The Magnetic Tape Cartridges, Video Data and
Voice Records shall contain the following:
10.4.1 AUXILIARY DATA. Auxiliary data to be inserted on the
video shall include the following:
(Continued on Page 2)
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A:
Approved for public release; distribution is unlimited.
<PAGE> 65
DI-MISC-80738(T)
Block 10, Preparation Instructions (Continued)
10.4.1.1 Date.
10.4.1.2 Time.
10.4.1.3 Range to target.
10.4.1.4 Run number.
10.4.2 AUXILIARY DATA SHEET. An auxiliary data sheet shall be prepared and shall
accompany each video tape cartridge which provides the record of each test run
or series of tests with the following data:
10.4.2.1 Date.
10.4.2.2 Time.
10.4.2.3 Run number.
Page 2 of 2 Pages
<PAGE> 66
DATA ITEM DESCRIPTION
1. TITLE
Manhour Estimate, Technical Cost Proposals
2. IDENTIFICATION NUMBER
DI-FNCL-81116
3. DESCRIPTION/PURPOSE
3.1 The Manhour Estimate, Technical Cost Proposals describes
the contractor's manpower and cost estimate to implement the
Statement of Work (SOW) tasking provided via delivery order or
task order.
4. APPROVAL DATE
(YYMMDD) 90/12/19
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
ASOB/SEP-A
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID may be used on any contract which is delivery
order or task order oriented.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A6002
10. PREPARATION INSTRUCTIONS
10.1 FORMAT. The proposal shall be submitted in a contractor
devised and Government approved format which conforms to the
following:
10.1.1 IDENTIFICATION. The proposal shall identify the
contractor's name, contract number, title and number of the
delivery or task order, security classification of the
proposal, name of contract monitor, and the Government office
issuing the tasking.
10.1.2 PAGE SIZE. The proposal shall be typewritten or printed
on 8-1/2x11 inch paper. The pages shall be sequentially
numbered and securely hound together. As necessary, graphic
material may be one-way foldouts. All attachments shall be
identified and referenced in the text. Each section and
paragraph shall be numbered.
10.1.3 LEGIBILITY. The document shall be legible and
reproducible.
10.2 CONTENT. The proposal shall provide the detailed
information necessary to evaluate the contractor's proposed
cost for completing the delivery or task order.
10.2.1 RESOURCE BREAKOUT: The proposal shall include a
resource breakout that identifies:
a. The contractor's total proposed manhours and
cost.
b. Manhours and cost per month for each
subtask identified in the delivery
or task order. Proposed monthly
subtask manhours shall be broken out
by labor category in support of the
delivery or task order.
continued... _____________
11. DISTRIBUTION STATEMENT
<PAGE> 67
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 68
DATA ITEM DESCRIPTION
1. TITLE
Manhour Estimate, Technical Cost Proposals
2. IDENTIFICATION NUMBER
DI-FNCL-81116
3. DESCRIPTION/PURPOSE
3.1 The Manhour Estimate, Technical Cost Proposals describes
the contractor's manpower and cost estimate to implement the
Statement of Work (SOW) tasking provided via delivery order or
task order.
4. APPROVAL DATE
(YYMMDD) 90/12/19
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
ASOB/SEP-A
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID may be used on any contract which is delivery
order or task order oriented.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A6002
10. PREPARATION INSTRUCTIONS
10.2.2 TRAVEL. The proposal shall include a list of the travel
requirements. It shall include the total cost for travel and
the following data for each trip:
a. Company or Government agency visited
b. Location
c. Number of travellers by labor category
d. Trip duration
e. Cost
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 69
DATA ITEM DESCRIPTION
1. TITLE
Product Drawings and Associated Lists
2. IDENTIFICATION NUMBER
DI-DPRPR-81000
3. DESCRIPTION/PURPOSE
3.1 Product Drawings and associated lists provide engineering
data to support competitive procurement and maintenance for
items substantially identical to original items. These
drawings represent the highest level of design disclosure.
4. APPROVAL DATE
(YYMMDD) 89/09/11
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
DO
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for product drawings and
associated lists resulting from the task requirement as
described by 3.6.3 of MIL-T-31000.
7.2 This DID is applicable to the acquisition of military
systems, equipments and components. It is intended for
acquiring drawings and associated lists primarily at the end
of Full Scale Development and during subsequent phases of the
DoD material life-cycle.
7.3 It is not intended that all the requirements contained
herein should be applied to every program. This DID should be
tailored to the minimum data requirements of the applicable
contract or purchase order.
continued...
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
D4816
10. PREPARATION INSTRUCTIONS
10.1 REFERENCE DOCUMENTS. The applicable issue of the
documents cited herein, including their approval dates and the
dates of applicable amendments and revisions, shall be as
cited in the contract or purchase order.
10.2 GENERAL. Product drawings and associated lists shall meet
the requirements of MIL-T-31000 and the DD Form 2554-1
incorporated into the contract or purchase order. Product
drawings and associated lists shall provide the design
disclosure information necessary to enable a manufacturer of
similar products at the same or similar state of the art to
produce and maintain quality control of item(s) so that the
resulting physical and performance characteristics duplicate
those of the original design. These drawings shall:
a. Reflect the end-product at its current level
of design maturity.
b. Provide the engineering data for Logistics
Support products.
c. Provide the necessary data to permit
competitive acquisition of items identical to
the original item(s).
<PAGE> 70
10.3 FORMAT. Product Drawings and associated lists shall be in
either the contractor's format or Government's format as
specified on the DD Form 2554-I incorporated into the contract
or purchase order.
10.4 CONTENT. Product drawings and associated lists shall
conform to the requirements of DOD-STD-100. They shall
document directly or by reference the following:
a. Details of unique processes, i.e., not published
or generally available to industry, when essential to
design and manufacture.
continued...
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 71
DATA ITEM DESCRIPTION
1. TITLE
Product Drawings and Associates Lists
2. IDENTIFICATION NUMBER
DI-DPRPR-81000
3. DESCRIPTION/PURPOSE
3.1 Product Drawings and associated lists provide engineering
data to support competitive procurement and maintenance for
items substantially identical to original items. These
drawings represent the highest level of design disclosure.
4. APPROVAL DATE
(YYMMDD) 89/09/11
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
DO
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.4 This DID supersedes DI-E-7031 and DI-CMAN-80779.
7.5 This DID is related to DI-DRPR-81001, DI-DRPR-81002, and
DI-81003.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
D4816
10. PREPARATION INSTRUCTIONS
10.4 CONTENT cont'd
b. Performance ratings
c. Dimensional and tolerance data
d. Critical manufacturing processes and assembly
sequences
e. Toleranced input and output characteristics
f. Diagrams
g. Mechanical and electrical connections
h. Physical characteristics, including form and
finish
i. Details of material identification, including
heat treatment and protective coatings
j. Inspection, lest and evaluation criteria
k. Equipment calibration requirements
l. Quality assurance requirements
continued...
11. DISTRIBUTION STATEMENT
<PAGE> 72
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 73
DATA ITEM DESCRIPTION
1. TITLE
Product Drawings and Lists
2. IDENTIFICATION NUMBER
DI-DPRPR-81000
3. DESCRIPTION/PURPOSE
3.1 Product Drawings and associated lists provide engineering
data to support competitive procurement and maintenance for
items substantially identical to original items. These
drawings represent the highest level of design disclosure.
4. APPROVAL DATE
(YYMMDD) 89/09/11
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
DO
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.4 This DID supersedes DI-E-7031 and DI-CMAN-80779.
7.5 This DID is related to DI-DRPR-81O01, DI-DRPR-81002, and
DI-81003.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
D4816
10. PREPARATION INSTRUCTIONS
10.4 CONTENT cont'd
m. Hardware marking requirements
n. Requirements for reliability, maintainability,
environmental conditioning, shock and vibration
testing and other operational or functional tests.
o. Vendor substantiation data when required by the
contract or purchase order.
10.5 ITEM DEFINITION. All parameters required to define each unit, assembly,
subassembly, part or material shall be presented on the applicable drawing. This
includes data such as:
a. All necessary mechanical dimensions to fully
define fabrication, acceptance, interface or
installation of the item depicted.
b. All necessary electrical parameters to fully
define fabrication, acceptance, interface or
installation of the item depicted.
c. All other necessary physical parameters to fully
define fabrication. acceptance, interface or
installation of the item depicted, i.e., weight,
pressure, viscosity, etc.
d. All necessary environmental conditions which
units, assemblies, subassemblies, parts and materials
must meet to perform effectively in the end item,
such that the end item will meet its specification
requirements.
continued...
<PAGE> 74
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 75
DATA ITEM DESCRIPTION
1. TITLE
Product Drawings and Associated Lists
2. IDENTIFICATION NUMBER
DI-DPRPR-81000
3. DESCRIPTION/PURPOSE
3.1 Product Drawings and associated lists provide engineering
data to support competitive procurement and maintenance for
items substantially identical to original items. These
drawings represent the highest level of design disclosure.
4. APPROVAL DATE
(YYMMDD) 89/09/11
5. OFFICE OF PRIMARY RESPONSIBILITY (OPRI)
DO
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.4 This DID supersedes DI-E-7031 and DI-CMAN-80779.
7.5 This DID is related to DI-DRPR-81001, DI-DRPR-81002, and DI-81003.
8. APPROVAL LIMITATION
9. APPLICABLE FORMS
9b. AMSC NUMBER
D4816
10. PREPARATION INSTRUCTIONS
10.6 CAGE CODE AND DOCUMENT NUMBERS. Product Drawings and
associated lists will be identified with the contractor's CAGE
Code and contractor document numbers or with a Government CAGE
Code and document numbers as specified in the DD Form 2554-1
incorporated in the contract or purchase order.
10.7 SELECTION OF DRAWINGS. The types and quantity of drawings
required will vary according to the complexity of the contract
end item. The DD Form 2554-1 incorporated in the contract or
purchase order will specify whether the contractor or the
Government is responsible for selecting the types and
quantities or drawings and lists.
10.8 LIMITED RIGHTS-IN-DATA ITEMS. Product Drawings for items
which the government does not have unlimited rights in data
shall specify the form, fit and function requirements of the
item and conform to 200.4 of DOD-STD-100.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 76
DATA ITEM DESCRIPTION
1. TITLE
Safety Assessment Report (SAR)
2. IDENTIFICATION NUMBER
DI-SAFT-80102A
3. DESCRIPTION/PURPOSE
3.1 The Safety Assessment Report is a comprehensive evaluation
of the safety risks being assumed prior to test or operation
of the system or at contract completion. It identifies all
safety features of the system, design, and procedural hazards
that may be present in the system being acquired, and specific
procedural controls and precautions that should be followed.
4. APPROVAL DATE
(YYMMDD) 93/01/19
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
F/AFMC-SE
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for that data generated by
Task 301, or Task 401, or Task 402 of MIL-STD-882C.
7.2 Data items which relate to this DID are DI-SAFT-80100A,
System Safety Program Plan; DI-SAFT-80101A, System Safety
Hazard Analysis Report; DI-SAFT-80103A, Engineering Change
Proposal System Safety Report; DI-SAFT-80104A, Waiver or
Deviation System Safety Report; DI-SAFT-80105A, System Safety
Program Progress Report; and, DI-SAFT- 80106A, Health Hazard
Assessment Report.
7.3 This DID supersedes DI-SAFT-80102.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
F6864
10. PREPARATION INSTRUCTIONS
10.1 SOURCE DOCUMENT. The applicable issue of the documents
cited herein, including their approval dates and dates of any
applicable amendments and revisions, shall be as reflected in
the contract.
10.2 CONTENTS. The Safety Assessment Report (SAR) shall
include the following information:
10.2.1 INTRODUCTION. State, in narrative form, the purpose of
the safety assessment report.
10.2.2 SYSTEM DESCRIPTION. This section may be developed by
referencing other program documentation such as technical
manuals, System Program Plan, System Specification, etc., and
shall include the following:
a. The purpose and intended use of the system
b. A brief historical summary of system development
c. A brief description of the system and its
components. Include name, type, model number, and
general physical characteristics of the overall
system and its major subsystems and components.
Software and its roles shall be included in this
description.
<PAGE> 77
d. As applicable, a description of any other
system(s) which will be tested or operated in
combination with this system.
e. As applicable, either photos, charts,
flow/functional diagrams, sketches, or schematics to
support the system description, test, or operation.
continued...
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 78
DATA ITEM DESCRIPTION
1. TITLE
Safety Assessment Report (SAR)
2. IDENTIFICATION NUMBER
DI-SAFT-80102A
3. DESCRIPTION/PURPOSE
3.1 The Safety Assessment Report is a comprehensive evaluation
of the safety risks being assumed prior to test or operation
of the system or at contract completion. It identifies all
safety features of the system, design, and procedural hazards
that may be present in the system being acquired, and specific
procedural controls and precautions that should be followed.
4. APPROVAL DATE
(YYMMDD) 93/01/19
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
F/AFMC-SE
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for that data generated by
Task 301, or Task 401, or Task 402 of MIL-STD-882C.
7.2 Data items which relate to this DID are DI-SAFT-80100A,
System Safety Program Plan; DI-SAFT-80101A, System Safety
Hazard Analysis Report; DI-SAFT-80103A, Engineering Change
Proposal System Safety Report; DI-SAFT-80104A, Waiver or
Deviation System Safety Report; DI-SAFT-80105A, System Safety
Program Progress Report; and, DI-SAFT- 80106A, Health Hazard
Assessment Report.
7.3 This DID supersedes DI-SAFT-80102.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
F6864
10. PREPARATION INSTRUCTIONS
10.2.3 SYSTEMS OPERATIONS
a. A description or reference of the procedures for
operating, testing and maintaining the system.
Discuss the safety design features and controls
incorporated into the system as they relate to the
operating procedures.
b. A description of any special safety procedures
needed to assure safe operations, test and
maintenance, including emergency procedures.
c. A description of anticipated operating
environments, and any specific skills required for
safe operation, test, maintenance, transportation or
disposal.
d. A description of any special facility requirements
or personal equipment to support the system.
10.2.4 SYSTEMS SAFETY ENGINEERING. This section shall
include:
a. A summary or reference of the safety criteria and
methodology used to classify and rank hazardous
conditions.
<PAGE> 79
b. A description of or reference to the analyses and
tests performed to identify hazardous conditions
inherent in the system.
(1) A list of all hazards by subsystem or
major component level that have been
identified and considered from the inception
of the program in an appendix to this SAR.
continued...
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 80
DATA ITEM DESCRIPTION
1. TITLE
Safety Assessment Report (SAR)
2. IDENTIFICATION NUMBER
DI-SAFT-80102A
3. DESCRIPTION/PURPOSE
3.1 The Safety Assessment Report is a comprehensive evaluation
of the safety risks being assumed prior to test or operation
of the system or at contract completion. It identifies all
safety features of the system, design, and procedural hazards
that may be present in the system being acquired, and specific
procedural controls and precautions that should be followed.
4. APPROVAL DATE
(YYMMDD) 93/01/19
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
F/AFMC-SE
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for that data generated by
Task 301, or Task 401, or Task 402 of MIL-STD-882C.
7.2 Data items which relate to this DID are DI-SAFT-80100A,
System Safety Program Plan; DI-SAFT-80101A, System Safety
Hazard Analysis Report; DI-SAFT-80103A, Engineering Change
Proposal System Safety Report; DI-SAFT-80104A, Waiver or
Deviation System Safety Report; DI-SAFT-80105A, System Safety
Program Progress Report; and, DI-SAFT- 80106A, Health Hazard
Assessment Report.
7.3 This DID supersedes DI-SAFT-80102.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
F6864
10. PREPARATION INSTRUCTIONS
(a) A discussion of the hazards and the actions that
have been taken to eliminate or control these items.
(b) A discussion of the effects of these controls on
the probability of occurrence and severity level of
the potential mishaps.
(c) A discussion of the residual risks that remain
after the controls are applied or for which no
controls could be applied.
(2) A discussion of or reference to the
results of tests conducted to validate safety
criteria requirements and analyses.
10.2.5 CONCLUSIONS AND RECOMMENDATIONS. This section shall
include:
a. A short assessment of the results of the safety
program efforts. A list of all significant hazards
along with specific safety recommendations or
precautions required to ensure the safety of
personnel and property. The list of hazards will be
categorized as to whether or not they may be expected
under normal or abnormal operating conditions.
<PAGE> 81
b. For all hazardous materials generated by or used
in the system:
(1) Material identification as to type,
quantity, and potential hazards.
(2) Safety precautions and procedures
necessary during use, storage,
transportation, and disposal
(3) A copy of the Material Safety Data Sheet
(OSHA Form 20 or DD Form 1813) as required.
continued...
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 82
DATA ITEM DESCRIPTION
1. TITLE
Safety Assessment Report (SAR)
2. IDENTIFICATION NUMBER
DI-SAFT-80102A
3. DESCRIPTION/PURPOSE
3.1 The Safety Assessment Report is a comprehensive evaluation
of the safety risks being assumed prior to test or operation
of the system or at contract completion. It identifies all
safety features of the system, design, and procedural hazards
that may be present in the system being acquired, and specific
procedural controls and precautions that should be followed.
4. APPROVAL DATE
(YYMMDD) 93/01/19
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
F/AFMC-SE
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for that data generated by
Task 301, or Task 401, or Task 402 of MIL-STD-882C.
7.2 Data items which relate to this DID are DI-SAFT-80100A,
System Safety Program Plan; DI-SAFT-80101A, System Safety
Hazard Analysis Report; DI-SAFT-80103A, Engineering Change
Proposal System Safety Report; DI-SAFT-80104A, Waiver or
Deviation System Safety Report; DI-SAFT-80105A, System Safety
Program Progress Report; and, DI-SAFT- 80106A, Health Hazard
Assessment Report.
7.3 This DID supersedes DI-SAFT-80102.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
F6864
10. PREPARATION INSTRUCTIONS
c. A statement that the system does not contain or
generate hazardous materials (i.e., explosive, toxic,
radioactive, carcinogenic, etc.)
d. A statement signed by the contractor system safety
manager and the program manager stating that all
identified hazards have been eliminated or controlled
and that the system is ready to test, operate, or
proceed to the next acquisition phase. In addition,
include recommendations applicable to the safe
interface of this system with the other system(s).
10.2.6 REFERENCE. A list of all pertinent references such as
test reports, preliminary operating manuals and maintenance
manuals.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 83
DATA ITEM DESCRIPTION
1. TITLE
Transportability Report
2. IDENTIFICATION NUMBER
DI-PACK-80880A
3.1 This report is required to obtain tactical and strategic
mobility data of developmental items (RDT&E); Non-
Developmental Items (NDIs); Material Change Management Items
(formerly Product Improvement Program (PIP)); rebuys;
military-adapted commercial equipment;
(Continued on Page 2)
4. APPROVAL DATE
(YYMMDD) 93/01/15
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
MT
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for data resulting from the
work task described by 4.4 of MIL-STD-1366C.
7.2 This DID is applicable to all developmental items (RDT&E);
NDIs; Material Change Management Items (formerly Product
Improvement)
(Continued on Page 2)
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A6871
10. PREPARATION INSTRUCTIONS
10.1 REFERENCE DOCUMENTS. The applicable issue of the
documents cited herein, including their approval dates and
dates of any applicable amendments, notices, and revisions,
shall be as specified in the contract.
10.2 GENERAL. The transportability report shall document (in
detail) all information necessary to perform a comprehensive
transportability engineering analysis of transportability
problem items, and the need for peculiar or special
transportation.
10.3 FORMAT. Contractor format is acceptable for the report
provided all required information cited herein is provided by
the contractor.
10.4 CONTENT. The report shall include the following:
10.4.1 TITLE. TRANSPORTABILITY REPORT.
(Continued on Page 2)
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 84
Block 3, Description/Purpose (Continued)
and commercial equipment, which may impede their efficient transport and
deployment. The principal use of the report is to: (a) provide advance data to
DID logistics planners. on transportability problem items, (b) effect
coordination with DOD single transportation system managers, and (c) identify
transportability deficiencies during either the traditional or streamlined
acquisition processes.
- --------------------------------------------------------------------------------
Block 7, Application/Interrelationship (Continued)
7.2 Program (PIP)); rebuys; military-adapted commercial equipment; and
commercial equipment that meet the criteria of a transportability problem item
as described by 4.3 of MIL-STD-1366C.
7.3 This DID also applies to subsystems, support equipment, and modifications
that add to, delete from, or are required to be transported with a system that
has been determined to be a transportability problem item.
7.4 For developmental items, this DID should be applied no later than 120 days
prior to the Milestone I decision review, with updated DID'S 120 days prior to
Milestone II and III reviews. For NDIs, the DID should be applied no later than
120 days prior to the Milestone I decision review, with updated DID's 60 days
prior to awarding a production contract and again at completion of the first
article testing (or initial production testing)
7.5 This DID supersedes DI-PACK-80880.
- --------------------------------------------------------------------------------
Block 10, Preparation Instructions (Continued)
10.4.2 CONTRACT NUMBER. The assigned contract number and the latest
modification number, if applicable.
10.4.3 CONTRACTOR NAME AND LOCATION.
10.4.4 TRANSPORTABILITY REPORT NUMBER AND DATE.
10.4.5 OFFICIAL NOMENCLATURE.
10.4.6 NATIONAL STOCK NUMBER (IF ASSIGNED).
10.4.7 BRIEF DESCRIPTION.
a. Intended use.
10.4.8 MODE(S) OF TRANSPORTATION.
a. Self-propelled?
b. Towed?
c. Transported by truck or semitrailer? What is the model
number of required transporter(s) (e.g., M818/M172A1, M911/M747, M985)?
a. Will item be shipped overseas in volume (unit) movements?
b. Is on-deck storage permissible?
c. Type(s) of ship(s) (e.g., breakbulk, container,
roll-on/roll-off, LASH, SEABEE, waterway barge or boat) required to transport
item.
a. Identification of the type(s) of fixed-wing aircraft transport required.
(Current Air Force aircraft are C-130, C-141, and C-5.) (Future Air Force
aircraft is C-17.) (Current Civil Reserve Air Fleet (CRAF) cargo aircraft are
B-707, B-747, DC-8, and DC-10.)
b. Identification of the model number(s) of cargo
helicopter(s) required. (Current Army utility/cargo helicopters are the UH-1,
UH-60, and CH-47.) (Current Marine Corps helicopters are the CH-46 and CH-53.)
c. Is internal or external helicopter airlift (or both)
required? External airlift includes aerial recovery of damaged and undamaged
items of equipment (vehicles or aircraft).
d. What are the helicopter mission requirements (time and
distance of mission, atmospheric condition requirements - 95 degrees F at 4,000
feet, 59 degrees F at sea level, etc.)?
e. Is internal or external airlift (or both) required by
tiltrotor aircraft? External airlift includes aerial recovery of damaged and
undamaged items of equipment (vehicles or aircraft).
a. Length of the container(s) required (e.g., 10, 20, 24, 30,
35, 40, or 45 feet).
b. American National Standards Institute/International
Organization of Standardization (ANSI/ISO) designation of container(s) required.
<PAGE> 85
10.4.11 SHOCK AND VIBRATION. Description of any fragility, shock, and vibration
considerations.
10.4.12 SPECIAL REQUIREMENTS. Identification of any special considerations,
including where relevant:
a. Temperature limits.
b. Pressure limits.
c. Power source required during shipment.
d. Humidity control.
e. Protective service/sensitive/classified.
f. Other requirements.
10.4.13 HAZARDOUS MATERIALS. For each item classified as hazardous material,
identification of the following are required:
a. The class of hazardous material as specified in: Title 49,
Code of Federal Regulations (49 CFR), Parts 100- 179, Transportation; AFR 71-4,
Preparing Hazardous Materials for Military Air Shipments; International Maritime
Organization (IMO), International Maritime Dangerous Good (IMDG) code; or
International Civil Aviation Organization (ICAO) Technical Instruction for the
Safe Transportation of Dangerous Goods by Air.
b. DOT proper shipping name.
c. Net explosive weight (DOT class A or B explosives only).
d. venting requirements.
e. Grounding requirements.
f. Any other than above.
10.4.14 REGULATORY REQUIREMENTS. Identification of data to show compliance with
regulatory requirements 49 CFR, AFR 71-4, IMO Code, and ICAO Technical
Instructions.
10.4.15 SECTIONALIZATION. Can item be sectionalized, folded, or reduced for
transport? All data specified in this report that are required for the
operational problem item are required for each component(s) or subassembly that
exceeds the criteria outlined in 4.3 of MIL-STD-1366C. Also, for all components
or subassemblies:
a. Time required to disassemble at departure site and
reassemble at destination (Time: in work hours and clock hours).
b. Special equipment or tools required for sectionalization
(e.g., cranes, forklifts, wrecker trucks, pallets, nitrogen, hand tools,
calibration equipment, or fixtures).
10.4.16 MANUFACTURER LOCATION. The following information is required, if
different from 10.4.3 above:
a.Location of manufacturer.
b.Location of final assembly.
c.Required modes of transport.
10.4.17 SPECIAL MATERIALS HANDLING EQUIPMENT (MHE). Description of any
specialized MHE required to support movement (e.g., spreader bars, slings,
forklifts, or cargo loaders).
10.4.18 TRANSPORTABILITY TESTS. A copy of test report(s) (or test plan and
scheduled date(s) if not completed) shall be made a part of this report, when
available.
10.4.20 SHIPPING DATA. A paper copy of shipping data plate that will be secured
to the vehicle shall be made a part this report, when available (see
MIL-STD-209).
10.4.21 TRANSPORT CONFIGURATION FOR WHEELED VEHICLES. Two sets of data for
wheeled vehicles are required: one for the fully operational configuration
(includes fuel, lubricants, water, etc.), and one for the shipping (reduced or
sectionalized) configuration.
10.4.21.1 DRAWINGS. Identification of top, plan, side, and end view
configurations on a DOD-D-1000 or similar engineering drawing(s). Drawings must
include all data as shown in Figure 1 (length, width, height, and location of
Center of Gravity (CG)) on all three views.
10.4.21.2 WEIGHT. Identification of four weights (operational empty, operational
loaded (Maximum Gross Vehicle Weight (MGVW)) shipping empty, and shipping
loaded).
10.4.21.3 WEIGHT RATINGS. Identification of the gross vehicle weight rating
(GVWR).
10.4.21.4 LIFTING AND TIEDOWN PROVISIONS. Identification of the number, location
and strength (yield and ultimate) of lifting (including aerial recovery) and
tiedown provisions for the item and major components removed for transport.
Identification of the location of hardpoint lifting provisions provided for
aerial recovery. Do the lifting provisions meet criteria of MIL-STD-209 and
interface with all standard aerial recovery and sling component? Dimensional
location of lifting and tiedown provisions (with respect to the CG) shall be
shown in each view in Figure 1.
<PAGE> 86
10.4.21.5 PROJECTIONS. The dimensions and locations of any significant
projections (e.g. environmental control units, ladders, antennas, shelters,
etc.).
10.4.21.7 AXLE LOADS. The axle loads for each axle for the following:
a. Empty vehicle.
b. Loaded vehicle.
10.4.21.11 CREST ANGLE. The angle (in degrees) connecting two horizontal
surfaces that the vehicle can pass (crest) without interference (see Figure 3).
10.4.21.12 AXLE TRACKING WIDTH. The tracking width of each axle (see Figure 4).
10.4.21.13 VEHICLE TURNING DIAMETER. The vehicle turning diameter for the
following:
a. Wall-to-wall.
b. Curb-to-curb.
10.4.21.14 LOAD CLASSIFICATION NUMBER. The military load classification number
(for military bridges, see chapters 2 and 4, and Appendix C of FM 5-36):
a. Load classification number - empty weight.
b. Load classification number - loaded weight.
10.4.22.1 DRAWINGS. Identification of top, side, and end view configurations on
a DOD-D-1000 or similar engineering drawing(s). Drawings must include all data
as shown in Figure 5 (length, width, height, and location of CG) on all three
views.
10.4.22.2 WEIGHT. Identification of two weights (shipping and combat loaded
(MGVW)).
10.4.22.3 LIFTING AND TIEDOWN PROVISIONS. Identification of the number,
location, and strength (yield and ultimate) of lifting and tiedown provisions
for the item and major components removed for transport. Dimensional location of
lifting and tiedown provisions (with respect to the CG) shall be shown in each
view in Figure 5.
10.4.22.4 PROJECTIONS. The dimensions and locations of any significant
projections (e.g., antennas, gun tubes, weapon mounts, etc.).
10.4.22.5 TRACK PADS. The area and number of track shoe pads actually in contact
with the ground (see Figure 6).
10.4.22.6 GROUND PRESSURE. The ground pressure created by the heaviest pad
(pounds per square inch). Identification of the weight supported by each road
wheel.
10.4.22.7 LOAD CLASSIFICATION NUMBER. Identification of the military load
classification number (for military bridges, see chapters 2 and 4, and Appendix
C of FM 5-36):
a. Load classification number - shipping weight
b. Load classification number - combat-loaded weight
10.4.23.1 DRAWINGS. Identification of top, side, and end view configurations on
a DOD-D-1000 or similar engineering drawing(s) Drawings must include all data as
shown in Figure 7 (length, width, height, and location of CG) on all three
views.
10.4.23.2 WEIGHT. Identification of two weights (shipping and operational
(Maximum Gross Weight (MGW))). Operational (MGW) weight includes fuel,
lubricants, water, and so forth.
10.4.23.3 LIFTING AND TIEDOWN PROVISIONS. Identification of the number,
location, and strength (yield and ultimate) of lifting and tiedown provisions
for the item and major components removed for transport. Dimensional location of
lifting and tiedown provisions (with respect to the CG) shall be shown in each
view in Figure 7.
10.4.23.4 PROJECTIONS. The dimensions and locations of any significant
projections (e.g., air conditioner units or other externally mounted items).
10.4.23.5 SKIDS. Information on skids shall include the following:
a. Number of skids.
b. Dimensions of all skid areas actually in contact with the
ground.
10.4.24 TRANSPORT CONFIGURATION FOR ALL OTHER EQUIPMENT. Two sets of data for
the equipment (other than wheeled, tracked or skid- mounted equipment) are
required: one for the fully operational (unpackaged) configuration and one for
the shipping (packaged) configuration.
<PAGE> 87
10.4.24.1 DRAWINGS. Identification of top, side, and end view configurations on
a DOD-D-1000 or similar engineering drawing(s). Drawings must include data, as
applicable, in figures 1, 5, and 7 (length, width, height, and location of CG
(or center of balance) on all three views.
10.4.24.2 WEIGHT. Identification of two weights (shipping (packaged) and
operational (MGW) (unpackaged)).
10.4.24.3 LIFTING AND TIEDOWN PROVISIONS. Identification of the number,
location, and strength (yield and ultimate) of lifting and tiedown provisions
for the item and major components removed for transport. Dimensional location of
lifting and tiedown provisions (with respect to the CG or center of balance)
shall be shown in each view (see Figures 1, 5, and 7).
10.4.24.4 PROJECTIONS. The dimensions and locations of any significant
projections (e.g., air conditioner units or other externally mounted items).
10.4.25 SUBSYSTEMS OR MODIFICATIONS. For subsystems, support equipment, and
modifications identified in 7.3 above, this report shall contain all information
pertaining to the applicable subsystem and identification of the primary
system(s) affected.
10.4.26 IDENTIFICATION. The name, title, organization, and department of
individual preparing the report and the date of preparation.
<PAGE> 88
FIGURE 1. WHEELED VEHICLE DIMENSIONS
[Graphic Omitted]
<PAGE> 89
FIGURE 2. TIRE FOOTPRINT LOCATIONS AND DIMENSIONS
[Graphic Omitted]
<PAGE> 90
FIGURE 3. RAMP CREST ANGLE
[Graphic Omitted]
<PAGE> 91
FIGURE 4. TRACKING WIDTH
[Graphic Omitted]
<PAGE> 92
FIGURE 5. TRACKED VEHICLE DIMENSIONS
[Graphic Omitted]
<PAGE> 93
FIGURE 6. TRACK SHOE AND PAD DIMENSIONS (FOOTPRINT DATA)
[Graphic Omitted]
<PAGE> 94
FIGURE 7. SKID MOUNTED ITEM DIMENSIONS
[Graphic Omitted]
<PAGE> 95
DATA ITEM DESCRIPTION
1. TITLE
Performance and Cost Report
2. IDENTIFICATION NUMBER
DI-FNCL-80912 (T)
3. DESCRIPTION/PURPOSE
3.1 The Performance and Cost Report provides current status
and projected requirements of funds, manhours, and work
completion.
3.2 The report is used for evaluation of contractor progress.
4. APPROVAL DATE
(YYMMDD) 89/10/06
5. OFFICE OF PRIMARY RESPONSIBILITY (OPR)
A/MICON
6a. DTIC APPLICABLE
6b. GIDEP APPLICABLE
7. APPLICATION/INTERRELATIONSHIP
7.1 This Data Item Description (DID) contains the format and
content preparation instructions for the data product
generated by the specific and discrete task requirement as
delineated in the contract.
7.2 This DID supersedes DI-F-1208A.
8. APPROVAL LIMITATION
9a. APPLICABLE FORMS
9b. AMSC NUMBER
A4845
10. PREPARATION INSTRUCTIONS
10.1 FORMAT. The Performance and Cost Report format shall be contractor
selected. Unless effective presentation would be degraded, the initially used
format arrangement shall be used for all subsequent submissions.
10.2 CONTENT. The Performance and Cost Report shall contain the following:
10.2.1 MANHOURS. Total manhours expended by technical categories or program
tasks, cumulative total manhours to date, and percentages of total manhours
spent to date. State whether or not remaining hours are sufficient to complete
the task.
10.2.2 FUNDS. Total funds expended, by task, for the month; cumulative total
funds spent to date; and percentage of total contract funds spent to date. State
whether or not remaining funds are sufficient to complete the task.
10.2.3 WORK COMPLETION. Percentage of work completed, by tasks during the month,
and cumulative percentage of total contract work completed to date.
10.2.4 ESTIMATED VARIANCE. Actual rates on a Year to Date basis compared to
budgeted rates, and on overall Contract to Date dollar variance.
11. DISTRIBUTION STATEMENT
DISTRIBUTION STATEMENT A: Approved for public release; distribution is
unlimited.
<PAGE> 1
Exhibit 10.22
ASSET PURCHASE AGREEMENT ENTERED INTO BY AND BETWEEN PALMER ASSOCIATES, S.C.
(HEREINAFTER REFERRED TO AS "Associates"), AND MR. MORTON N. PALMER (HEREINAFTER
REFERRED TO AS "PALMER") (Palmer AND Associates ARE HEREINAFTER JOINTLY REFERRED
TO AS THE "Seller"), PARTY OF THE FIRST PART, AND O'GARA-HESS & EISENHARDT
ARMORING COMPANY DE MEXICO, S.A. DE C.V., (HEREINAFTER REFERRED TO AS THE
"Buyer"), PARTY OF THE SECOND PART, PURSUANT TO THE FOLLOWING REPRESENTATIONS
AND CLAUSES:
R E P R E S E N T A T I O N S
I. SELLER HEREBY REPRESENTS:
A. That Associates is a company duly organized and validly existing under
Mexican Law as per public instrument No. 35952, dated 13 November, 1995,
certified by Lic. Antonio Franeoz Rigalt, notary public No. 17 for the
Tlaneplantla District and recorded with the Public Registry of Commerce of the
State of Mexico, under number 20857, volume 527.
B. That the authority of Associates' attorney-in-fact is embodied in public
instrument No. 35952, dated 13 November, 1995, certified by Lic. Antonio
Franeoz, notary public No. 17 for the Tlaneplantla District and recorded with
Public Registry of Commerce of the State of Mexico, under No. 20857, volume 527.
C. That for everything pertaining to this agreement, it designates as its
address Palo Santo 12-4, Lomas Altas, Delegacion Miguel Hidalgo, 11950 Mexico,
D.F., Mexico, and declares that it is recorded with the Federal Taxpayer
Registry under No. PAS 920729 EK3.
D. That Associates is in the business of providing security consulting services
(the "Business"), and it is owner of the furniture and office equipment related
to the Business, (hereinafter the "Assets").
E. That it wishes to sell the Assets to Buyer pursuant to the terms herein
contained, as its shareholders have agreed to such sale and that Seller should
engage in activities other than those it has conducted up to now.
II. BUYER HEREBY REPRESENTS:
A. That it is a company duly organized and validly existing under the Mexican
Corporation Law as per public instrument No. 19569, dated September 6, 1995,
certified by Mr. Roberto Teutli Otero, notary public No. 161 for the Federal
District and recorded with the Public Registry of Commerce of Mexico City, under
number 203998, Federal District.
<PAGE> 2
B. That the authority of its attorney-in-fact is embodied in the public
instrument mentioned in the preceding paragraph.
C. That, for everything pertaining to this agreement, it designates as its
address Andromaco #23, Colonia Ampliacion Granada, 11520 Mexico, D.F., Mexico.
D. That it wishes to acquire the Business and Assets owned by the Seller
according to the terms and conditions hereof.
IN VIEW OF THE ABOVE, the parties agree as follows:
C L A U S E S:
SECTION 1. Seller hereby sells to Buyer and Buyer hereby purchases from Seller
all of its Assets, including but not limited to (a) the furniture and equipment
listed in EXHIBIT "1" hereto; (b) all contracts (as hereinafter defined) and (c)
the unbilled accounts set forth on EXHIBIT "2". Buyer does not acquire hereby
the accounts payable or the accounts receivable of Associates, which accounts
Associates explicitly retains.
SECTION 2. Seller transfers the Assets free of any charge and encumbrance and
without limitation as to title thereto. The Seller undertakes a covenant of
title and guarantees any obligation assumed hereunder during a five (5) year
term counted from the date of execution hereof.
Seller represents that all the Assets are transferred to Seller in good
condition and satisfactory operation, with all operating and use permits,
including import licenses and declarations necessary to evidence the legal
introduction of the Assets into Mexico. Seller further represents that all
Contracts, including client contracts, are enforceable and can be transferred to
Buyer without approval from such clients, or that such approval shall be
obtained without additional consideration.
SECTION 3.
A. In consideration for the transfer of the Assets mentioned in Section 1 above,
the Buyer shall pay Seller the amount of US$ 50,000.00, plus value added tax.
Buyer shall deliver to Seller its check in the amount of US$ 50,000.00 within
three days of the initial public offering of Buyer's affiliate, The O'Gara
Company, in the United States (the "Closing").
B. On or before the Closing, Seller shall deliver to Buyer any and all invoices
and documentation evidencing title to the Assets.
- 2 -
<PAGE> 3
SECTION 4. Seller hereby agrees to indemnify and hold Buyer harmless from and
against: a) any of Seller's liabilities not expressly assumed hereby in Buyer,
including any claims by Associate's shareholders, and b) any losses, damages,
charges, claims, expenses, liabilities or obligations, including but not limited
to attorney's fees and legal expenses arising from Seller's failure to comply
with any representation made or obligation assumed hereunder.
SECTION 5. REPRESENTATIONS OF SELLER.
Seller jointly and severally represent as follows, intending that Buyer may rely
on the same in consummating the transactions herein contemplated:
A. Associates is a sociedad civil duly organized, validly existing and in good
standing under the laws of Mexico with full power to own, lease and operate its
properties and assets to engage into the Business as presently conducted; the
sale of the assets by Associates has been duly authorized and approved, together
with the performance of all of its obligations hereunder, and execution of any
other instruments necessary to consummate the transactions contemplated hereby.
B. Associates is the absolute owner of the Assets, free and clear of all liens
or encumbrances, except to the extent that such Assets are disclosed on EXHIBIT
"1" as being leased or encumbered by liens or security interests.
C. All returns for federal income tax, property taxes, social security dues,
withholding taxes, value added taxes, and any other applicable taxes or
governmental charges of Associates for all prior and completed fiscal periods
have been duly prepared and filed, and all taxes shown thereon have been duly
paid.
D. All taxes and assessments which Associates is required by law to withhold or
collect have been and will be duly withheld, collected and paid to the proper
governmental authorities.
E. No dispute or controversy concerning the terms and conditions of employment
exists with any employee or contractor of Associates; Associates is a party to
no collective bargaining agreement; there is no outstanding claim by any
employees for recognition of any union; and there is no existing written
contract of employment with any individual employee or with any independent
contractor.
F. No litigation or adverse claim of any nature is pending against Associates,
and none has been threatened, including, without limitation, any investigation,
proceedings or audit by any governmental agency.
- 3 -
<PAGE> 4
G. The office equipment and furniture to be transferred hereunder to Buyer is in
good working order.
H. Associates has conducted and is now conducting the Business in a manner that
is not in violation of the rights of any other person or in violation of any
applicable law or regulations, including without limitation, laws and
regulations relating to the environment and employee health and safety.
I. The services rendered in connection with billings set forth on EXHIBIT "2"
have been performed, can be billed as indicated, and are collectable by Buyer as
indicated.
J. The data contained in the financial statements of September 30, 1996,
attached hereto as EXHIBIT "3", is accurate and fully reflects all liabilities
and contingent liabilities of Associates required to be reflected therein as at
the date thereof, and fairly sets forth the financial position, the results of
operations, the changes in equity and the source and use of funds of Associates
as of the date thereof and the period covered thereby.
K. Associates has heretofore delivered to Buyer a true and complete copy of all
contracts and agreements relating to the Business to which it is a party and
which are listed in EXHIBIT 4" hereof (the "Contracts"), including leases.
Associates has performed all of the obligations on its part to be performed
under the Contracts, and all of the Contracts are in full force and effect; no
event has occurred which constitutes a breach of or default under any of the
Contracts.
L. Seller has no knowledge of any impending proposed legislation, decree or
regulation or of any other event the existence of which would have a material
adverse effect upon the Business or the prospects of the Business.
M. EXHIBIT "5" constitutes a full and complete list or description of all
licenses, permits and approvals issued by any government agency, whether
federal, state or municipal, relating to the Business, and all such items are in
full force and effect; no other registration or approval from any governmental
agency is required in connection with the execution and performance of this
Agreement by Associates. There exists no event which constitutes or which, would
result in the cancellation of any such license, permit or approval.
N. EXHIBIT "6" contains a full and complete list of all employees of Associates
as of the date hereof, indicating position, present salary, and seniority of
each of said employees.
O. No statement contained herein or in any document furnished or to be furnished
by Seller to Buyer pursuant to or in
- 4 -
<PAGE> 5
connection with the transactions contemplated hereby, contains or will contain
any untrue statement or omission of any material fact necessary in order to make
the statement therein not misleading.
SECTION 6. REPRESENTATIONS OF BUYER.
Buyer represents as follows:
A. The execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate action of Buyer.
B. This Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms (subject to bankruptcy and other laws
affecting the rights of creditors generally).
SECTION 7. SURVIVAL OF REPRESENTATIONS.
The above stated representations by Buyer and Seller shall continue in full
force and effect after the consummation of the transactions contemplated by this
Agreement.
SECTION 8. All notices to be given hereunder shall be given in writing and
delivered in an unquestionable manner at the addresses of the parties mentioned
in the Representations hereof.
SECTION 9. For the interpretation of and compliance with this agreement, the
parties expressly submit to the jurisdiction of the courts for Hamilton County,
Ohio, United States of America, hereby waiving any other jurisdiction that may
correspond to them by reason of their present or future domiciles.
SECTION 10. INSURANCE.
Associates currently maintains no insurance policies in connection with the
Business.
SECTION 11. SUPPLEMENTAL DELIVERIES OF INSTRUMENTS.
At the request of Buyer, Associates and Palmer shall at or after the date hereof
execute and deliver to Buyer supplementary instruments of transfer or assignment
or such other documents as may be necessary or desirable to consummate the
transactions contemplated herein or to take any action with any government
agencies that may request information or documents in regard to the Assets.
SECTION 12. LIABILITIES; INDEMNIFICATION.
A. The parties agree that all claims presented to Buyer by customers on account
of goods sold by or services performed by
- 5 -
<PAGE> 6
Associates prior to the date hereof shall be referred to Associates for
settlement which shall be responsible and pay for any settlement therefor.
B. Associates shall pass on to Buyer any value added tax arising out of the
transfer of the Assets.
C. Buyer shall not assume any liabilities of any nature or any kind whatsoever,
other than as set forth in section 2 hereof.
D. Seller shall jointly and severally indemnify, defend and hold Buyer and its
affiliates harmless from (a) all liabilities of Associates not expressly assumed
by Buyer hereunder, including any claims made by the other shareholders of
Associates not expressly assumed by Buyer hereunder, including any claims made
by the other shareholders of Associates and (b) any and all losses, damages,
charges, claims, expense, liabilities, indebtedness or obligations, including,
without limitation, attorneys' fees and court costs, as a result of any breach
by Seller of any of the representations made in or obligations assumed under
this Agreement or in any of the transactions contemplated hereunder.
SECTION 13. NONCOMPETITION.
A. For a term of four (4) years from the date hereof, Associates shall not,
except with the prior written consent of Buyer, engage, directly or indirectly,
in any security business from any location within Mexico. Without limiting and
generality of the foregoing, Associates shall not:
(a) directly or indirectly, on its own account or as a lender or consultant to a
third party, or as an independent contractor or agent for any person,
corporation, partnership, or otherwise engage in or have any interest in any
business which is competitive with or substantially similar to the business of
Buyer or its affiliates;
(b) solicit or attempt to divert business from Buyer or its affiliates or any of
their customers or employees; or,
(c) assist third parties to do any of the foregoing.
B. Associates agrees that in the event of breach of this section, Buyer and its
affiliates would sustain irreparable injury, and Seller recognizes that money
damages for breach of this section would be difficult or impossible to
ascertain. Seller therefore agrees that Buyer and its affiliates shall be
entitled, in addition to any other remedies, to liquidated damages from
Associates, in an amount equal to the Mexican peso equivalent of four hundred
thousand dollars (U.S. $400,000.00) to restrain the violation of the provisions
of this section, if
- 6 -
<PAGE> 7
within 3 calendar days after written notice is given, any such violation is not
cured.
SECTION 14. BINDING AGREEMENT.
A. This Agreement shall be binding upon and inure to the benefit of the parties
their respective heirs, executors, administrators and assigns. The foregoing
notwithstanding, no party shall assign his or its rights or delegate its duties
hereunder.
B. In the event that any section or clause of this Agreement is held or declared
to be void or illegal for any reason, the offending section or clause shall be
stricken and all other sections or clauses of this Agreement shall nevertheless
remain in full force and effect.
All notices and communications hereunder shall be in writing and sent by fax,
courier, express mail service or otherwise delivered in an unquestionable
manner, addressed as follows:
To Buyer: O'Gara-Hess & Eisenhardt Armoring Co.
de Mexico, S.A. de C.V.
Andromaco #23
Colonia Ampliacion Granada
11520 Mexico, D.F., Mexico
With a copy to: Taft, Stettinius & Hollister
1800 Star Bank Center
Cincinnati, OH 45202 USA
Attn: Ross E. Wales, Esq.
To Seller: Palmer Associates, S.C.
Polo Santo 12-4, Lomas Altos
Delegation Miguel Hidalgo
11950 Mexico, D.F., Mexico
Said addresses may be changed from time to time by notices similarly given.
SECTION 15. GOVERNING LAW.
This Agreement is of a commercial nature and for any dispute the parties agree
that the laws of the State of Ohio, U.S.A. shall apply and the matter shall be
submitted to the courts sitting in Hamilton County, Ohio.
- 7 -
<PAGE> 8
apply and the matter shall be submitted to the courts sitting in
Hamilton County, Ohio.
The parties expressly waive any other jurisdiction to which they may be entitled
by virtue of their present domicile or otherwise.
THIS AGREEMENT is executed this October 29, 1996.
THE "SELLER" THE "BUYER"
PALMER ASSOCIATES, S.C. O'GARA-HESS & EISENHARDT
ARMORING COMPANY DE
MEXICO, S.A. DE C.V.
By: /s/ Morton M. Palmer By: /s/ Nicholas P. Carpinello
------------------------------ --------------------------------
Mr. Morton M. Palmer Mr. Nicholas P. Carpinello
Attorney-in-fact Attorney-in-fact
Morton Palmer
/s/ Morton M. Palmer
--------------------
- 8 -
<PAGE> 9
Exhibit "1"
FURNITURE AND EQUIPMENT
<TABLE>
<CAPTION>
Replacement
Cost &/or
Purchase Price
<S> <C>
1985 FOR TOPAZ $ 4,480.00
MACINTOSCH SE 30 computer $ 3,200.00
Hewlet Packard Printer $ 800.00
Hewlet Packard Printer $ 230.00
Mac 165c Power Book - lap top computer $ 2,000.00
Power Macintosh Performa 6115 CD $ 2,300.00
Power Macintosh Performa 6115 CD $ 2,200.00
Computer Programs $ 3,480.00
SHARP copier $ 1,000.00
9 Telephones and 2 SHARP fax machines $ 1,680.00
7 cellular telephones $ 3,275.00
Mac Power Book 5300 cs $ 2,999.00
Two Cameras $ 300.00
Mac 145 Power Book - lap top computer $ 1,200.00
Swintec 1146 electric typewriter $ 400.00
Office Furniture - six desks, eight chairs, $ 2,850.00
sofa, coffee table, Conference Table $ 3,950.00
w/eight chairs ---------
CURRENT TOTAL ASSETS $36,344.00
</TABLE>
All items owned (none leased) free and clear by Associates.
- 9 -
<PAGE> 10
Exhibit "2"
UNBILLED ACCOUNTS
- 10 -
<PAGE> 11
Exhibit "3"
FINANCIAL STATEMENTS
(as of September, 1996)
- 11 -
<PAGE> 12
Exhibit "4"
CONTRACTS
- 12 -
<PAGE> 13
Exhibit "5"
LICENSES, PERMITS AND APPROVALS
- 13 -
<PAGE> 14
Exhibit "6"
LIST OF EMPLOYEES
Name Date of Birth Monthly Wage
(U.S.)
Enrique Gonzalez 1 August 1990 $ 500
Oswaldo Mar 1 December 1990 $ 900
Edgar Ross 1 February 1991 $ 700
Irwin Ross 1 February 1994 $ 700
Diarmuid Hurley 1 June 1994 $5,000
Jorge Navarro 1 November 1994 $1,600
Dora de Cima 1 May 1995 $1,600
Lynch Grattan 1 June 1995 $5,000
- 14 -
<PAGE> 1
Exhibit 10.23
ASSET PURCHASE AGREEMENT ENTERED INTO BY AND BETWEEN PALMER ASSOCIATES, LTD.
(HEREINAFTER REFERRED TO AS "Seller"), PARTY OF THE FIRST PART, AND O'GARA-HESS
& EISENHARDT ARMORING COMPANY (HEREINAFTER REFERRED TO AS THE "Buyer"), PARTY OF
THE SECOND PART, PURSUANT TO THE FOLLOWING REPRESENTATIONS AND CLAUSES:
R E P R E S E N T A T I O N S
I. SELLER HEREBY REPRESENTS:
A. That Seller is an international business company duly organized and validly
existing under the laws of the Bahamas
B. That Seller is the owner of certain data bases described on EXHIBIT "1"
hereto, which data bases (the "Data Bases") were acquired from its affiliate
Palmer Associates, S.C., of Mexico.
C. That Seller is also the owner of a client list as set forth in EXHIBIT "2"
attached hereto (the "Client List").
D. That Seller wishes to sell the Data Bases and Client List to Buyer pursuant
to the terms herein contained, as its shareholders have agreed to such sale.
II. BUYER HEREBY REPRESENTS:
A. A. That it is a company duly organized and validly existing under Delaware
Law.
B. That it wishes to acquire the Data Base and Client List according to the
terms and conditions hereof.
IN VIEW OF THE ABOVE, the parties agree as follows:
C L A U S E S:
SECTION 1. Seller hereby sells to Buyer, and Buyer hereby purchases from Seller,
the Data Bases and Client List.
SECTION 2. Seller transfers the Data Bases and Client List free of any charge
and encumbrance and without limitation as to title thereto. The Seller
undertakes a covenant of title and guarantees any obligation assumed hereunder
during a 5 (five) year term counted from the date of execution hereof.
Seller represents that the information on the Data Bases are accurate and can be
used as described on EXHIBIT "1".
<PAGE> 2
SECTION 3.
A. In consideration for the transfer of the Data Bases and Client List, the
Buyer shall pay Seller the amount of Nine Hundred Fifty Thousand Dollars in
United States currency ($ 950,000.00) as follows:
i- by check in the amount of $ 450,000.00 that Buyer shall
deliver to Seller on a date (the "Closing Date") within three
days of the initial public offering of Buyer's affiliate, The
O'Gara Company, in the United States;
ii- by a promissory note in the face amount of $500,000.00
delivered on the Closing Date, payable as set forth on
EXHIBIT "3".
B. On or before the Closing, Seller shall deliver to Buyer any and all invoices
and documentation evidencing title to the Assets.
SECTION 4. Seller hereby agrees to indemnify and hold Buyer harmless from and
against: a) any of Seller's liabilities not expressly assumed hereby in Buyer,
including any claims by Associate's shareholders, and b) any losses, damages,
charges, claims, expenses, liabilities or obligations, including but not limited
to attorney's fees and legal expenses arising from Seller's failure to comply
with any representation made or obligation assumed hereunder.
SECTION 5. REPRESENTATIONS OF SELLER.
Seller represents as follows, intending that Buyer may rely on the same in
consummating the transactions herein contemplated:
A. Seller is a corporation duly organized, validly existing and in good standing
under the laws of the Bahamas with full power to own, lease and operate its
properties and assets to engage in its business as presently conducted; the sale
of the Data Bases and Client List by Seller has been duly authorized and
approved, together with the performance of all of its obligations hereunder, and
execution of any other instruments necessary to consummate the transactions
contemplated hereby.
B. Seller is the absolute owner of the Data Bases and Client List, free and
clear of all liens or encumbrances.
C. All taxes and assessments which Seller is required by law to pay, withhold or
collect have been and will be duly withheld, collected and paid to the proper
governmental authorities.
D. No dispute or controversy concerning the terms and conditions of employment
exists with any employee or contractor of Seller.
- 2 -
<PAGE> 3
E. No litigation or adverse claim of any nature is pending against Seller, and
none has been threatened, including, without limitation, any investigation,
proceedings or audit by any governmental agency.
F. No statement contained herein or in any document or furnished or to be
furnished by Seller to Buyer pursuant to or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement or omission
of any material fact necessary in order to make the statement therein not
misleading.
SECTION 6. REPRESENTATIONS OF BUYER.
Buyer represents as follows:
A. The execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate action of Buyer.
B. This Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms (subject to bankruptcy and other laws
affecting the rights of creditors generally);
SECTION 7. SURVIVAL OF REPRESENTATIONS.
The above stated representations by Buyer and Seller shall survive the date
hereof and continue in full force and effect after the consummation of the
transactions contemplated by this Agreement.
SECTION 8. All notices to be given hereunder shall be given in writing and
delivered in an unquestionable manner at the addresses of the parties mentioned
in the Representations hereof.
SECTION 9. For the interpretation of and compliance with this agreement, the
parties expressly submit to the jurisdiction of the courts of Hamilton County,
Ohio, USA, hereby waiving any other jurisdiction that may correspond to them by
reason of their present or future domiciles.
SECTION 10. SUPPLEMENTAL DELIVERIES OF INSTRUMENTS.
At the request of Buyer, Seller shall hereafter execute and deliver to Buyer
supplementary instruments of transfer or assignment or such other documents as
may be necessary or desirable to consummate the transactions contemplated
herein.
SECTION 12. LIABILITIES; INDEMNIFICATION.
A. The parties agree that all claims presented to Buyer by customers on account
of services performed by Seller prior to the
- 3 -
<PAGE> 4
date hereof shall be referred to Seller for settlement; Seller shall be
responsible and pay for any settlement therefor.
B. Buyer shall not assume any liabilities of any nature or any kind whatsoever.
C. Seller shall indemnify, defend and hold Buyer and its affiliates harmless
from (a) all liabilities of Seller not expressly assumed by Buyer hereunder,
including any claims made by the other shareholders of Seller and (b) any and
all losses, damages, charges, claims, expense, liabilities, indebtedness or
obligations, including, without limitation, attorneys' fees and court costs, as
a result of any breach by Seller of any of the representations made in or
obligations assumed under this Agreement or in any of the transactions
contemplated hereunder.
SECTION 13. BINDING AGREEMENT.
A. This Agreement shall be binding upon and inure to the benefit of the parties
their respective heirs, executors, administrators and assigns. The foregoing
notwithstanding, no party shall assign his or its rights or delegate its duties
hereunder.
B. In the event that any section or clause of this Agreement is held or declared
to be void or illegal for any reason, the offending section or clause shall be
stricken and all other sections or clauses of this Agreement shall nevertheless
remain in full force and effect.
All notices and communications hereunder shall be in writing and sent by fax,
courier, express mail service or otherwise delivered in an unquestionable
manner, addressed as follows:
To Buyer: O'Gara-Hess & Eisenhardt Armoring
Company
9113 Lesaint Drive
Fairfield, Ohio 45014
With a copy to: Taft, Stettinius & Hollister
1800 Star Bank Center
Cincinnati, OH 45202 USA
Attn: Ross E. Wales, Esq.
To Seller: Morton M. Palmer
% Palmer Associates, S.C.
Polo Santo 12-4, Lomas Altos
Delegation Miguel Hidalgo
11950 Mexico, D.F., Mexico
- 4 -
<PAGE> 5
SECTION 14. GOVERNING LAW.
This Agreement is of a commercial nature and for any dispute the parties agree
that the laws of the State of Ohio, U.S.A. shall apply.
B. The parties expressly waive any other jurisdiction to which they may be
entitled by virtue of their present domicile or otherwise.
THIS AGREEMENT is executed this October 29, 1996.
THE "SELLER" THE "BUYER"
O'GARA-HESS & EISENHARDT
ARMORING COMPANY
By:/s/ Morton M. Palmer By:/s/ Nicholas P. Carpinello
-------------------------- -------------------------------
Mr. Morton M. Palmer Nicholas P. Carpinello
Executive Vice President
Morton Palmer
/s/ Morton M. Palmer
--------------------
- 5 -
<PAGE> 6
Exhibit "1"
DATA BASES
1. KIDNAP (for ransom) data bases from January 1993 to present. We have roughly
1,200 names in this data base.
These have 7 fields: full name
age/sex
State of the Republic
date of capture-date of release
Amount Demanded - amount paid
Status (releases unharmed, killed)
Comments on circumstances
(such as captures on open road;
taken out of their home or office;
e.g. kidnapper modus operandi)
To the best of our knowledge, this is the only such data base on Mexican
kidnaps. The possession of this data base enables us, iter alia, to counsel
clients on kidnap profile, kidnapper modus operandi and how to avoid kidnap.
The immediate applicability to O-H&E is this information enabled us to press for
an ability to armor pick-up trucks - since the majority of kidnaps in Mexico are
occurring on the open road while the victims (ranchers and farmers) are en route
to their farms. Additionally, these same persons are natural buyers for the
ComSat capabilities that O-H&E is selling through O'Gara Satellite Services.
2. Truck Driver Hijackings
A. These have 7 fields with roughly 1,800 names of hijacked drivers. The point
is that a majority of hijacks have driver complicity. We were also looking for
same driver involvement in multiple incidents. This information has enabled us
to brief clients and to built toward an overall "secure trucking" program.
date of hijack
full name of driver
date of birth (when available)
location of hijack
name of transportation company
product identification
comments on modus operandi and or
possible driver complicity.
B. These have only 4 fields with roughly 300 names of individuals arrested for
cargo truck hijacking - as a natural meld with the foregoing.
- 6 -
<PAGE> 7
full name
date of birth
date of arrest
any details
With the addition of QUALCOM and/or other O-H&E technical competence, we should
be able to make expanded use of this capability. Our ambition is to dramatically
expand this data base with cooperation from various local and international
insurance companies. We are in the throes of a major project with AETNA's joint
venture partner (Seguros Monterrey/Aetna) based largely on the information that
we were able to pull out of these data bases.
3. BOARD OF DIRECTORS OF MEXICO'S PUBLICLY HELD COMPANIES:
The Mexican Stock Exchange (BMV) produces a tome each year - listing all of the
publicly held companies. The companies are not listed in alphabetical order and
this large (1,400 pages) book is very difficult to use. Each listing contains
some economic information (Believe it at your peril!) and also contains a list
of the boards of directors of each company. Some pages have as many as twelve
companies on each page.
Since no one in Mexico has bothered to retrieve, much less sort) the names, we
did. This data base has 4 fields, as follows:
full names
name of company
page in the BMV book
Chairmen of the Board are in CAPS
We find this data base invaluable as we begin reputational due diligence
research projects - to see which if any boards the individual is on and to see
who else is on the same boards and other forms of inter-relationships.
- 7 -
<PAGE> 8
Exhibit "2"
CLIENT LIST
- 8 -
<PAGE> 9
Exhibit "3"
$ 500,000.00 November __, 1996
Cincinnati, Ohio
PROMISSORY NOTE
---------------
For value received, O'GARA-HESS & EISENHARDT ARMORING COMPANY, a
Delaware corporation, whose address is 9113 LeSaint Drive, Fairfield, Ohio 45014
("Debtor"), promises to pay to the order of PALMER ASSOCIATES, LTD, a Bahamian
corporation ("Payee"), whose address is ________, or at such other place as
Payee may from time to time designate in writing, the principal sum of Five
Hundred Thousand Dollars ($500,000.00), payable in two annual principal
installments, of Two Hundred Fifty Thousand Dollars ($250,000.00) each, on
December 31, 1997 and 1998, plus interest at seven percent (7%), also paid
annually.
Failure of Debtor to make payment within thirty (30) days of the date
on which any installment is due as more particularly set forth above shall be
deemed to be an event of default. On the occurrence of an event of default,
Payee may declare the entire amount due hereunder immediately due and payable,
and the interest rate hereunder shall be increased from and after such default
to ten percent (10%).
This Note has been delivered by Debtor pursuant to the terms and
provisions of an Asset Purchase Agreement entered into this date, by which Payee
transferred to Debtor, for this and other valuable consideration, certain assets
described therein.
This Note and any installment payment due hereunder may be prepaid at
any time without charge or penalty, provided that any prepayment shall be
applied against the last installment(s) due. This note shall be binding upon
Debtor and Debtor's legal representatives, successors and assigns.
This Note shall be governed by the laws of the State of Ohio and may
not be changed or terminated orally.
Witnessed by: O'GARA-HESS & EISENHARDT
ARMORING COMPANY
By:
- ----------------------------- --------------------------
--------------------------
- ----------------------------
- 9 -
<PAGE> 1
Exhibit 10.24
DATED 4TH FEBRUARY 1997
-----------------------
(1) THE O'GARA COMPANY
- AND -
(2) PASCAL MARIE CHARLES PETIT
- AND -
(3) ALEXANDER AGNEW STEWART WHITE
- AND -
(4) MARK BRIAN WHITE
-----------------------------------------
AGREEMENT
FOR THE ACQUISITION OF SHARES IN
NEXT DESTINATION LIMITED
-----------------------------------------
GARRETT & CO
180 STRAND
LONDON
WC2R 2NN
REF: LJF/JMH
<PAGE> 2
CONTENTS
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PROVISION/CLAUSE NO.
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Parties and Recitals
1. Definitions
2. Interpretation
3. Sale of Shares
4. Consideration
5. Completion
6. Operation of the Company and its Business Pending Completion
7. Warranties
8. Purchaser's Obligations
9. Restrictions on the Vendors
10. Survival of Provisions
11. Costs
12. Entire Agreement
13. Waivers
14. Assignment
15. Further Assurance
16. Invalidity
17. Counterparts
18. Notices
19. Governing Law and Process Agent
20. Rights of Access
Schedule 1
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Part 1: The Company
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Part 2: Directors
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Part 3: Particulars of Shares etc.
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Part 4: Provisions applying to the Consideration Shares
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Part 5: Provisions applicable to the Loan Notes
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Schedule 2
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The Properties
Schedule 3
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The Warranties
Schedule 4
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Documents in the agreed terms
Schedule 5
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Prospectus issued by the Purchaser dated 12 November 1996
<PAGE> 3
THIS AGREEMENT is made on 4th February 1997
B E T W E E N:-
(1) THE O'GARA COMPANY a company incorporated in Ohio, whose registered
office is at 9113 Le Saint Drive, Fairfield, Ohio 45014, U.S.A. (the
"Purchaser");
(2) PASCAL MARIE CHARLES PETIT of 17 Route De Bron, 49260 Le Coudray,
Macouard, France ("P. Petit");
(3) ALEXANDER AGNEW STEWART WHITE of The Old Chapel, Fantley Lane, Zeals,
Warminster, Wiltshire, BA12 6NX ("A. White"); and
(4) MARK BRIAN WHITE of Evergreen Cottage, Wittensford Brook, Lyndhurst,
Hampshire SO43 7JA ("M. White").
RECITALS
- --------
(A) The Vendors wish to sell and the Purchaser wishes to purchase the
entire issued share capital of Next Destination Limited (the "Company")
upon the terms and conditions of this Agreement.
(B) The Company was incorporated in England with registered number 2856264
and has an authorised share capital of (pound)10,000 divided into
10,000 ordinary shares of (pound)1 all of which have been issued and
are fully paid or credited as fully paid.
(C) Each of the Vendors is the registered and beneficial owner of the
shares in the Company shown against his name in column (2) of Part 3 of
Schedule 1.
(D) The Company has no subsidiaries.
(E) Details of the Company are set out in Part 1 of Schedule 1.
IT IS AGREED as follows:
1. DEFINITIONS
-----------
1.1 In this Agreement (including the Schedules), except where the
context otherwise requires, the words and phrases set out
opposite to them in the first column have the meanings set out
in the second column:-
ACCOUNTS the unaudited management accounts in
the agreed terms relating to the
Company for the financial period
ended on 31st December 1996;
ACCOUNTS DATE 31 August 1996;
ACT the Companies Act 1985, as amended
by the Companies Act 1989;
<PAGE> 4
AGREED TERMS any document, the terms of which
have been agreed between the parties
to this Agreement and which, for the
purposes of identification, has been
initialled by them or on their
behalf (a list of documents in the
agreed terms being set out in
Schedule 4);
AUDITED ACCOUNTS the audited balance sheet of the
Company as at the Accounts Date and
the audited profit and loss account
of the Company for the financial
year of the Company ended on the
Accounts Date, the notes to the
accounts, the relative directors'
report and auditor's report and all
other documents annexed to such
accounts or which are or would be
required by law to be annexed to
them;
AUDITORS Langdowns Chartered Accountants of 5
Abbey Walk, Church Street, Romsey,
Hampshire;
BUSINESS DAY any day (other than a Saturday or a
Sunday) on which the London clearing
banks are open for business;
COMPLETION completion of the sale and purchase
of the shares pursuant to Clause 5;
CONSIDERATION the aggregate amount payable to the
Vendors by the Purchaser in
accordance with Clause 4;
CONSIDERATION SHARES the shares of common stock of 1 cent
each in the Purchaser to be allotted
to the Vendors in accordance with
Clause 4 which, without limitation,
shall be subject to the provisions
set out in Part 4 of Schedule 1;
DEED OF INDEMNITY the tax deed of indemnity in the
agreed terms to be entered into
pursuant to this Agreement;
DIRECTORS the persons whose names are set out
in Part 2 of Schedule 1 and who are
the only directors of the Company;
DISCLOSURE LETTER the letter in the agreed terms dated
the same date as this Agreement from
the Vendors to the Purchaser;
EMG AGREEMENT the agreement dated the same date as
this Agreement between Euro Marine
Group Limited and O'Gara Satellite
Networks, Inc. in the agreed terms;
<PAGE> 5
INTELLECTUAL PROPERTY registered trade and service marks,
letters patent,
RIGHTS utility models, registered designs,
unregistered trade and service
marks, trade and business names
(including rights in any get-up or
trade dress), copyright,
unregistered design rights and all
other similar proprietary rights
which may subsist in any part of the
world (but excluding Know-How)
including any registration of any
such rights and applications and any
rights to make applications for any
of the foregoing;
KNOW-HOW all industrial and commercial
information and techniques which is
or are not in the public domain
including (but not limited to) that
information concerned with the
operation of any process; the
manufacture, design or development
of any products; the marketing of
any products or services (including
customer and supplier lists, sales
statistics, survey reports and
market share data); the selection
and purchase of any component, part
or raw materials and the
construction, repair or maintenance
of any product, plant or equipment
existing in whatever form; and any
engineering and chemical data,
specification, formulae, experience,
drawings, manuals, component lists,
instructions, designs and circuit
diagrams;
LOAN NOTES the 6% subordinated Loan Stock 2000
of the Purchaser to be constituted
by the loan note instrument in the
agreed terms and which shall
incorporate, without limitation, the
provisions set out in Part 5 of
Schedule 1;
NASDAQ NATIONAL MARKET National Association of Securities
Dealers Automated Quotations System;
PROPERTIES the properties referred to in
Schedule 2;
PROPERTY any one of the Properties;
PURCHASER'S GROUP any of:
(i) the Purchaser;
(ii) any holding company of the
Purchaser;
(iii) any subsidiary of the
Purchaser or of any such
holding company;
<PAGE> 6
and "holding company" and
"subsidiary" shall have the
meanings respectively given by
Section 736 of the Act;
PURCHASER'S SOLICITORS Garrett & Co of 180 Strand, London
WC2R 2NN;
SHARES the 10,000 issued ordinary shares
of(pound)1 each in the Company;
TAX has the meaning given to it in the
Deed of Indemnity;
TAXATION AUTHORITY has the meaning given to it in the
Deed of Indemnity;
1988 TAXES ACT the Income and Corporation Taxes Act
1988;
1970 TAXES ACT the Income and Corporation Taxes Act
1970;
TCGA the Taxation of Chargeable Gains Act
1992;
VAT United Kingdom Value Added Tax;
VATA Value Added Tax Act 1994;
VENDORS' SOLICITORS Philip Kirkland & Co, Market
Chambers, 21A Market Place, Romsey,
Hampshire;
WARRANTIES the representations, warranties and
undertakings on the part of the
Vendors which are set out in Clause
7 and Schedule 3 and all
representations, covenants and
acknowledgements on the part of the
Vendors which are set out in Clause
4.5 and Part 4 of Schedule 1.
2. INTERPRETATION
--------------
2.1 MODIFICATION OF ENACTMENTS
--------------------------
Any reference to an enactment (or subordinate legislation or
any rule made by any authority and having the effect of law)
is a reference to it as amended or re-enacted from time to
time and includes a reference to any repealed statutory
provision which it may re-enact with or without amendment.
2.2 SUBORDINATE LEGISLATION
-----------------------
Any reference to a statutory provision shall include any
subordinate legislation made from time to time under that
provision.
<PAGE> 7
2.3 INTERPRETATION AND REFERENCES
-----------------------------
2.3.1 The Interpretation Act 1978 shall apply to this
Agreement in the same way that it applies to an
enactment.
2.3.2 References to this Agreement shall include any
Schedules to it and references to Recitals, Clauses,
sub-clauses and Schedules are to Recitals, Clauses and
sub-clauses of, and Schedules to, this Agreement.
2.3.3 A reference to a English legal term for a legal
concept or thing (including, without limitation, any
action, remedy, method of judicial proceeding or legal
document) shall, in respect of a jurisdiction other
than England, be deemed to include the concept or
thing in that jurisdiction which most closely
resembles the relevant English legal term.
2.3.4 All obligations given or undertaken by more than one
person are given or undertaken by them jointly and
severally.
2.4 HEADINGS
--------
The headings in this Agreement shall not affect its
interpretation.
2.5 COMPANIES ACT 1985
------------------
The words "company", "subsidiary", "holding company" and
"subsidiary undertaking" shall have the same meanings in this
Agreement as in the Act.
2.6 SSAP AND FRS
------------
A reference to a "SSAP" means a statement of standard
accounting practice as published by The Institute of Chartered
Accountants of England and Wales and a reference to a "FRS"
means a financial reporting standard issued by the Accounting
Standards Board.
2.7 INFORMATION
-----------
A reference to any information or to any books, ledgers,
accounts, records, documents or other material or materials
shall include that information or those books/ledgers,
accounts, records, documents and material(s) in whatever form
or media held.
3. SALE OF SHARES
--------------
3.1 SALE AND PURCHASE
-----------------
Each of the Vendors with full title guarantee, shall sell, or
procure the sale of, and the Purchaser shall purchase, the
full legal and beneficial interest in the number of Shares
shown opposite that Vendor's name in column (3) of Part 3 of
Schedule 1.
<PAGE> 8
3.2 NO LIENS ETC.
-------------
The Purchaser shall acquire good title to the Shares free from
all charges, liens, encumbrances, equities and claims of any
kind and together with all rights which now are or at any time
after the date of this Agreement may become attached to them
including any dividend or other distribution declared, paid,
made or created after 1st September 1996 save for the
dividends declared on 31 August 1995 of (pound)80,000 (net) in
total and 31 August 1996 of (pound)50,000 (net) in total.
3.3 PRE-EMPTION RIGHTS
------------------
Each of the Vendors hereby waives all rights of pre-emption
under the Articles of Association of the Company or otherwise
in respect of the transfer of the Shares to the Purchaser or
its nominees under this Agreement (or shall procure that all
such rights are waived).
4. CONSIDERATION
-------------
4.1 AMOUNT OF CONSIDERATION
-----------------------
The total consideration for the purchase of the Shares shall
be US$3,500,000 which shall be satisfied in accordance with
the following provisions of this Clause.
4.2 DIVISION OF CONSIDERATION
-------------------------
4.2.1 US$1,750,000 of the Consideration shall be satisfied
by the allotment and issue to each Vendor of that
number of Consideration Shares (excluding fractions)
whose value, ascertained as set out in clause 4.3,
shall be nearest to the amount set out opposite such
Vendor's name in column (4) of Part 3 of Schedule 1.
The Consideration Shares shall be subject to the
provisions set out in Part 4 of Schedule 1.
4.2.2 The balance of the consideration (being the sum of
US$1,750,000) shall be satisfied by the issue on
Completion to each Vendor of Loan Notes, credited as
fully paid, with nominal value as set out opposite
such Vendor's name in column (5) of Part 3 of Schedule
1 and on the terms referred to in Part 5 of Schedule
1.
4.3 VALUE OF CONSIDERATION SHARES
-----------------------------
The value attributed to each Consideration Share shall be the
sum equal to the average closing price of the shares of common
stock of 1 cent of the Purchaser on the NASDAQ National Market
as listed in the Wall Street Journal during the five Business
Days ending on the Business Day which is four Business Days
Prior to Completion.
4.4 ADJUSTMENT TO CONSIDERATION
---------------------------
The parties agree that any payment by any party pursuant to
Clause 7 shall be made by way of an adjustment to the
Consideration.
<PAGE> 9
4.5 PROVISIONS RELATING TO CONSIDERATION
------------------------------------
The parties agree that the provisions set out in Parts 4 and 5
of Schedule 1, including all acknowledgements, representations
and covenants set out therein, shall apply as if set out in
the main body of this Agreement.
5. COMPLETION
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5.1 DATE AND PLACE
--------------
The sale and purchase of the Shares shall be completed at the
offices of the Purchaser's Solicitors or at such other place
and/or on such other date as may be agreed prior to such date
between the Vendors and the Purchaser.
5.2 VENDORS' OBLIGATIONS
--------------------
At Completion each of the Vendors will deliver (or procure the
delivery of) or make available to the Purchaser or the
Purchaser's Solicitors:-
5.2.1 duly executed transfers into the name of the Purchaser
(or its nominee or as the Purchaser may direct) in
respect of such of the Shares as are shown opposite
such Vendor's name in column (3) of Part 3 of Schedule
1 together with definitive certificates for them (or
an express indemnity in a form satisfactory to the
Purchaser in the case of any certificate found to be
missing);
5.2.2 an engrossment of the Deed of Indemnity executed by
such Vendor or on such Vendor's behalf;
5.2.3 any other documents which may be required to give good
title to the Shares or otherwise to give effect to the
terms of this Agreement (including all waivers or
consents and all irrevocable powers of attorney which
may be reasonably necessary to enable the Purchaser to
exercise all rights incidental to ownership of the
Shares or under which any document required to be
delivered under this Clause has been executed or
signed, in each case in such form as the Purchaser may
reasonably require);
5.2.4 the certificate of incorporation, the certificate of
incorporation on change of name, the common seal (if
any), all minute books, share registers, share
certificate books (with any unissued share
certificates) and other statutory books (duly written
up to date) and cheque books and other books and
records of the Company;
5.2.5 all deeds and documents (including plans and consents
and certificates of title acceptable to the Purchaser)
relating to the Properties and up to date rent and
service charge receipts in respect of any leasehold
Property and all other documents of title relating to
all investments of the Company;
5.2.6 all the financial and accounting books and records of
the Company;
<PAGE> 10
5.2.7 letters signed on behalf of the Company to its bankers
varying in such manner as the Purchaser may specify
all existing bank mandates and authorities;
[5.2.8 Deleted]
5.2.9 written confirmation in the agreed terms to the
Purchaser that the agreements between (i) the Company
and Euro Marine Group Limited relating to the
provision of the consultancy services of Mark White
and Christine White; (ii) the Company and Vision
Navigation Systems Limited; (iii) the Company and
Intersat France S.a.r.l. have all been terminated;
5.2.10 written letters of resignation in the agreed terms
from each of A. White and P. Petit resigning from
their directorships in and all other offices and
positions with the Company (save for A. White who
shall remain employed as sales manager following
Completion), with effect from Completion and
confirming that they have no claim against the
Company;
5.2.11 a written letter of resignation from the auditors of
the Company resigning from their position with effect
from Completion, confirming that they have no claim
against the Company and containing the statement
referred to in section 394 of the Act to the effect
that there are no circumstances connected with their
resignation which they consider should be brought to
the notice of the members or creditors of the Company;
5.2.12 a service agreement in agreed terms duly executed by
M. White;
5.2.13 an agreement with Vision Navigation Systems Limited
upon agreed terms and conditions satisfactory to the
Purchaser pursuant to which the Company will with
effect from Completion become the exclusive
distributor of all products manufactured or sold by
Vision Navigation Systems Limited during the term of
such agreement;
5.2.14 an agreement with Intersat France S.a.r.l. upon agreed
terms and conditions satisfactory to the Purchaser
pursuant to which Intersat France S.a.r.l. will with
effect from Completion become the exclusive agent of
the Company's products in France and other French
speaking territories.
5.2.15 three Standby and Subordination Agreements in the
agreed terms between The Fifth Third Bank, the
Purchaser, O'Gara-Hess Eisenhardt Armoring Company,
O'Gara Satellite Networks, Inc, O'Gara Satellite
Networks, Ltd and each of the Vendors;
5.2.16 three Subordinated Stock Pledge Agreements on the
agreed terms between the Purchaser and each of the
Vendors.
<PAGE> 11
5.3 DIRECTORS' RESOLUTIONS
----------------------
On Completion, the Vendors shall procure that resolutions are
passed by the Directors of the Company:-
5.3.1 approving for registration the transfers mentioned in
Clause 5.2.1 (subject only to their being duly
stamped);
5.3.2 approving and authorising the signing of the letters
to the bankers referred to in Clause 5.2.7;
5.3.3 approving the Deed of Indemnity and authorising the
execution of the same;
5.3.4 accepting the resignations of the directors P. Petit
and A. White referred to in Clause 5.2.10 and
appointing Mr William O'Gara and Mr Neil Saldin
instead;
5.3.5 accepting the resignation referred to in Clause 5.2.11
and appointing Arthur Andersen instead;
5.3.6 approving the agreements referred to in Clause 5.2.12,
5.2.13 and 5.2.14 above; and
5.3.7 changing the accounting reference date of the Company
to 31st December;
and the Vendors shall deliver to the Purchaser certified
copies of all such resolutions passed in accordance with the
preceding provisions of this Clause 5.3.
5.4 PURCHASER'S OBLIGATIONS
-----------------------
5.4.1 At Completion the Purchaser will deliver (or procure
the delivery of) to the Vendors or the Vendors'
Solicitors a copy of the Purchaser's resolutions
authorising the allotment and issue of the
Consideration Shares.
5.4.2 Within 10 Business Days of Completion the Purchaser
will deliver (or procure the delivery of) to the
Vendors the Share Certificates in respect of the
Consideration Shares.
5.4.3 At Completion the Purchaser will procure that O'Gara
Satellite Networks, Inc. enters into the EMG
Agreement.
5.5 SATISFACTION OF CONSIDERATION
-----------------------------
The Purchaser shall, against compliance with the preceding
provisions, on Completion satisfy the Consideration in the
manner specified in Clause 4.
6. INDEMNITIES
-----------
<PAGE> 12
6.1 The Vendors jointly and severally covenant to hold the
Purchaser indemnified against any liability, claim, or for any
costs or expenses incurred or that become payable by the
Company or the Purchaser in connection with any failure by the
Company to comply with the provisions of the Data Protection
Act 1984 and all regulations made under it in respect of any
matter or act done or omitted to be done prior to Completion.
6.2 The Vendors agree to jointly and severally indemnify and keep
indemnified the Purchaser in respect of all liabilities, costs
and expenses arising out of any claim made by any of the
employees of the Company:
(a) where such claim relates to a term of any of the
Company's employees' contracts of employment, whether
express or implied, which term had not been notified
to the Purchaser by the Vendors in the Disclosure
Letter at Completion; or
(b) where such claim relates to a failure by the Vendors
to supply full and proper written particulars of
employment to such employees.
6.3 The Vendors jointly and severally covenant to hold the
Purchaser indemnified against any loss, liability or claim and
any costs or expenses that may be incurred or become payable
by the Company or the Purchaser in relation to:-
(i) any inaccuracies or discrepancies or errors in any of
the Company's accounts, books, ledgers, financial and
other records including the Company's statutory books
or in respect of the stamping or failure or delay in
stamping any documents relating to the transfer of
any shares in the Company or any other documents
relating to the business or assets of the Company;
(ii) any claim made by or in relation to any employees of
or persons engaged in the business of Intersat
S.a.r.l. and, in particular but without limitation,
any claim that may arise in relation to national
insurance and/or social security costs that are or
become payable in relation to those employees or
persons in any country;
(iii) any information relating to the Company which has
been supplied to the Commissioners of Inland Revenue
by or on behalf of the Vendors or the Company in
their applications made for the purposes of section
703 of the 1988 Taxes Act and section 137 (1) of the
TCGA being inaccurate, untrue, incomplete or
misleading in any respect;
(iv) any claim made by any taxation authority in France or
in any French speaking territory against Intersat
France S.a.r.l. or the Company;
(v) any omission by the Company or Intersat France
S.a.r.l. or any of their respective agents,
consultants or employees, in the course of the
business of the Company or Intersat France S.a.r.l.
to comply with all legal and regulatory requirements
in any country.
<PAGE> 13
6.4 For the purposes of Clauses 6.1, 6.2 and 6.3 the maximul
liability of the vendors shall not exceed in aggregate the
value of the consideration.
7. WARRANTIES
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7.1 WARRANTIES
----------
The Vendors jointly and severally warrant and represent to and
undertake with the Purchaser (which is for this purpose
contracting for itself and as a trustee for the Company and
any successors in title or assignees of the Purchaser or of
the Company) on the terms of this Agreement and acknowledge
that they have done so with the intention of inducing the
Purchaser to enter into this Agreement. The Vendors further
acknowledge that the Purchaser has entered into this Agreement
in full reliance upon, (amongst other things) the Warranties.
7.2 UPDATING TO COMPLETION
----------------------
The Warranties shall be deemed made at Completion with
reference to the facts then existing.
7.3 QUALIFICATIONS
--------------
The Warranties are given subject to:-
7.3.1 the information expressly disclosed in the Disclosure
Letter; and
7.3.2 any matter expressly referred to in the Audited
Accounts or expressly provided for under the terms of
this Agreement.
7.4 WARRANTIES TO BE SEPARATE
-------------------------
Each of the Warranties shall be separate and independent and
(save where expressly provided otherwise) shall not be limited
or restricted by reference to or inference from any other
Warranty or any other provision of this Agreement or the Deed
of Indemnity. Subject to the preceding provisions of this
Clause, claims may be made whether or not the Purchaser, prior
to signing this Agreement, could have discovered (whether by
any investigation made by it or on its behalf or otherwise)
that any Warranty had not been complied with or carried out or
was otherwise untrue or misleading.
7.5 KNOWLEDGE, INFORMATION AND BELIEF
---------------------------------
Where any of the Warranties is qualified by the expression "to
the best of the knowledge, information and belief of the
Vendors" or "so far as the Vendors are aware" or any similar
expression, that Warranty is deemed to include an additional
statement that it has been made after due, diligent and
careful enquiry.
<PAGE> 14
7.6 CLAIMS AGAINST OFFICERS
-----------------------
7.6.1 Any information supplied at any time before Completion
by or on behalf of the Company to the Vendors or their
agents or accountants, solicitors or other advisers in
connection with the Warranties and the Deed of
Indemnity or the exceptions and information disclosed
in the Disclosure Letter or otherwise in relation to
the business and affairs of the Company shall not
constitute a representation, warranty or guarantee by
the Company or any of its officers or employees, other
than any of the Vendors, of its accuracy.
7.6.2 Each of the Vendors hereby waives and releases any
claims which such Vendor might have against the
Company or any of its officers or employees, other
than the other Vendors, in respect of any information
supplied at any time before Completion to the
Purchaser and or its agents, accounts, solicitors or
other advisers in connection with this Agreement, the
Deed of Indemnity or the Disclosure Letter and the
Purchaser hereby accepts such release for itself and
as trustee for the Company and its officers and
employees but so that such release shall not apply in
any case of fraud or deliberate deception. Each of the
Vendors agrees with the Purchaser for itself and as
trustee for the Company and its respective officers,
employees and agents to assign to the Purchaser any
rights or claims which such Vendor may have in respect
of any misrepresentation in or omission from any
information or advice supplied or given by the Company
or its officers, employees or agents, other than the
other Vendors, and on which the Vendors, or any of
them, have relied in giving the Warranties, preparing
the Disclosure Letter and entering into the Deed of
Indemnity.
7.6.3 This Clause 7.6 shall not restrict or limit in any way
Clause 7.5.
7.7 POTENTIAL BREACH
----------------
If any of the Vendors acquires any knowledge of any event or
matter (whether or not occurring or existing before the
signing of this Agreement) which is or might be or might
reasonably be expected to lead to a breach of, or be
inconsistent with, any of the Warranties or might give rise to
a claim under the Deed of Indemnity or which results or might
result in any of the Warranties being unfulfilled, incorrect,
untrue or misleading or which would or might entitle the
Purchaser to rescind this Agreement or claim damages under it,
such Vendor shall at once disclose in writing to the Purchaser
all that such Vendor knows about the event or matter in
question. The Vendors shall make any investigations concerning
the event or matter which the Purchaser may require.
7.8 LIMITATION OF LIABILITY
-----------------------
The Vendors shall not be liable in respect of any breach of
the Warranties if and to the extent that the loss caused by or
arising from such breach has been recovered under any other
provision of this Agreement or the Deed of Indemnity.
<PAGE> 15
7.9 In the event that any Vendor is liable to the Purchaser (or
any person to whom the Purchaser has assigned the benefit of
this Agreement, including the Warranties given to it, pursuant
to the terms of Clause 13, and/or the Deed of Indemnity (an
"Assignee")) in respect of a claim under the Warranties or any
other provision of this Agreement or the Deed of Indemnity
then:
7.9.1 at the option of the Purchaser, a sum equal to the
amount payable by such Vendor in respect of such
claim, or any part of such amount, shall be offset by
the Purchaser against the Loan Notes then in issue
(as extinguished or reduced pursuant to their terms)
and held by the relevant Vendor; or
7.9.2 to the extent, if any, that such sum has not been off
set against the Loan Notes pursuant to sub-clause
7.9.1 above, such Vendor shall pay to the Purchaser
or such Assignee a sum in cash equal to the
outstanding amount payable by such Vendor in respect
of such claim; and
7.9.3 to the extent that a Vendor does not satisfy (whether
by payment in cash or by way of set-off under the
Loan Stock pursuant to sub-clauses 7.9.1 and 7.9.2
above) any liability to the Purchaser under this
Agreement and the Deed of Indemnity, such sum or any
part of such sum, may be satisfied, at the option of
the Purchaser, pursuant to the following provisions,
provided that the Purchaser shall not be under an
obligation to elect that such sum shall be so
satisfied:-
(a) if the Purchaser so elects, the Purchaser
shall calculate the number of Consideration
Shares which would be required to be
transferred to the Purchaser to satisfy the
amount, or any part of such amount, payable
to the Purchaser by such Vendor in respect
of such claim and shall notify the Vendor
that it requires the sum, or part of such
sum, to be satisfied by the repurchase or
cancellation by the Purchaser of the
relevant number of Consideration Shares held
by such Vendor to satisfy such claim, in
whole or in part; provided that the
Purchaser may only repurchase or cancel
Consideration Shares that have not be
registered under the United States
Securities Act of 1933, as amended with the
US Securities and Exchange Commission. For
the purpose of this sub-clause 7.9.3(a) the
transfer value of a Consideration Share
shall be deemed to be US$10.28 per
Consideration Share (the "Consideration
Share Price"); and
(b) if and to the extent that any payment is to
be offset against the Loan Notes pursuant to
the provisions of this Clause, the Vendors
and the Purchaser shall take such action as
may be required pursuant to the terms of the
Loan Notes to record the extent to which
such sum is offset against the Loan Notes;
and
(c) to the extent that the Purchaser elects for
the whole or any part of any sums payable
under this Agreement or the Deed of
<PAGE> 16
Indemnity by a Vendor to be satisfied
pursuant to sub-clause 7.9.3 above, such
Vendor shall deliver (or procure the
delivery of) such documentation to the
Purchaser as may be required for the
Purchaser to repurchase or cancel the
required number of Consideration Shares.
Provided that no provision of this Agreement
shall require the Purchaser to repurchase or
cancel the Consideration Shares in breach of
any laws or regulations (including
compliance with the rules or codes of
practice of any securities exchange).
7.10 The Purchaser shall not have any claim insofar as it relates
to the Warranties if, and to the extent that, the subject
matter of the claim is fairly disclosed in the Disclosure
Letter.
7.11 The Vendors shall not be liable for any claim:
7.11.1 unless they have received written notice from the
Purchaser giving reasonable details of the claim and,
if practicable, the Purchaser's estimate of the
amount involved on or before 30 June 2000 or, in the
case of any claim relating to Tax, not later than 6
years from the end of the Company's current
accounting period and proceedings in respect of such
claim are issued and served on the Vendors no later
than 9 months after the date of such notice;
7.11.2 unless the amount of the claim, when aggregated with
all other claims made on the same occasion or
previously, is equal to or exceeds (pound)35,000 (in
which case the Vendors shall be liable for the whole
amount and not simply the excess);
7.11.3 unless the amount of any individual claim is equal to
or exceeds (pound)7,500 (in which case the Vendors
shall be liable for the whole amount and not simply
the excess);
7.11.4 to the extent that:
(i) it exceeds the Consideration;
(ii) the Purchaser has actual knowledge of any
matter which could give rise to a claim on
or before Completion;
(iii) an allowance, provision or reserve in
respect of any liability the subject of such
claim was made or taken into account, or
payment or discharge of which was taken into
account, in or in preparing the Audited
Accounts;
(iv) it is attributable to or arises as a result
of:
(a) any voluntary act or omission of
the Purchaser (or any person
deriving title from it) after
Completion outside the ordinary
course of business and other than
pursuant to a legally binding
obligation entered into by the
Company before Completion;
<PAGE> 17
(b) the retrospective imposition of Tax
or any increase in rates of
Taxation or by a change in the law
(whether retrospectively or not)
occurring after Completion or the
withdrawal after Completion of any
published concession or general
practice previously made by a
Taxation Authority;
(c) any change after Completion in the
bases upon which the audited
accounts of the Company are
prepared or any change in
accounting practice or principles
unless such change is made to
rectify a breach of the Warranty
contained in paragraph 2 (Accounts)
of Schedule 3; or
(d) any change after Completion in the
date to which the Company makes up
its audited accounts;
(v) the Purchaser is indemnified against any
loss or damage suffered by it under the
terms of any insurance policy for the time
being in force.
7.12 The Purchaser shall not be entitled to reimbursement or
restitution more than once in respect of any one claim.
8. PURCHASER'S OBLIGATIONS
-----------------------
8.1 PURCHASER'S WARRANTIES
----------------------
The Purchaser warrants to the Vendors that:-
8.1.1 it has full power and authority to enter into and
perform this Agreement and the Deed of Indemnity and
the provisions of this Agreement and the Deed of
Indemnity;
8.1.2 the execution and delivery of, and the performance by
the Purchaser of its obligations under, this
Agreement and the Deed of Indemnity will neither:-
(a) result in a breach of any provision of its
Articles of Incorporation or Code of
Regulation; nor
(b) result in a breach of any order, judgement
or decree of any court or of any
governmental agency to which the Purchaser
is a party or by which the Purchaser is
bound;
8.1.3 the information contained in the Prospectus issued by
the Purchaser dated 12 November 1996, a copy of which
is annexed to this Agreement as Schedule 5, was
accurate as at 12 November 1996.
8.2 The Purchaser acknowledges that it has entered into this
Agreement in reliance only upon the representations,
warranties or promises incorporated in this Agreement the
Disclosure Letter and the Deed of Indemnity and that it
<PAGE> 18
is not aware of any matter which may give rise to a claim,
and, save as expressly set out in this Agreement and the Deed
of Indemnity the Vendors shall have no liability in respect of
any other representation, warranty or promise made prior to
the date of this Agreement unless it was made fraudulently or
with intent to wilfully deceive.
8.3 NO RELIANCE ON REPRESENTATIONS OF PURCHASER ETC.
------------------------------------------------
Each of the Vendors confirms that it has not relied on any
warranty, representation, covenant or undertaking or
inducement of any kind of the Purchaser or its directors,
officers or employees other than the warranties given by the
Purchaser to the Vendors in this Clause.
9. RESTRICTIONS ON VENDORS
-----------------------
9.1 RESTRICTIONS
------------
M. White undertakes with the Purchaser as trustee for itself
and the Company that he will not, during the period from the
date of this Agreement to the third anniversary of Completion
(the "Restraint Period"), whether alone or jointly with
another and whether directly or indirectly, carry on, be
engaged or concerned in, or (except as the owner for
investment of securities dealt in on a recognised stock
exchange which do not exceed three per cent. in nominal value
of the securities of that class) be interested in, any
business which competes with any business now carried on by
the Company.
9.2 NO SOLICITATION OF CUSTOMERS
----------------------------
M. White shall not before the expiry of the Restraint Period,
whether on his own account or otherwise and whether directly
or indirectly, solicit or entice the custom (in relation to
any goods or services supplied by the Company) of any person
with whom he had dealings or who was a customer of or in the
habit of dealing with the Company at any time during the
period ending on the third anniversary of Completion.
9.3 NO SOLICITATION OF EMPLOYEES
----------------------------
M. White shall before the expiry of the Restraint Period
directly or indirectly solicit or endeavour to entice away,
offer employment to or employ, or offer or conclude any
contract for services with, any person who was employed by the
Company at the date of this Agreement.
9.4 NO DISCLOSURE OF CONFIDENTIAL INFORMATION
-----------------------------------------
Except so far as may be required by law, none of the Vendors
shall at any time disclose to any person any confidential
information of a technical, trade or any other character which
he has acquired in the course of or as a result of his
employment by, or directorship of, the Company or his
ownership of the Shares.
9.5 NO USE OF CONFIDENTIAL INFORMATION
----------------------------------
<PAGE> 19
None of the Vendors shall at any time use to the detriment of
the Company any confidential information of a technical, trade
or other character which he has acquired in the course of or
as a result of his employment by or directorship of the
Company or his ownership of the Shares.
9.6 NO HOLDING OUT
--------------
After Completion, none of the Vendors shall in any way hold
himself out or permit himself to be held out as being
interested in or in any way connected with the Company save
pursuant to their contracts of employment or Service
Agreements with the Company.
9.7 REASONABLENESS OF RESTRICTIONS
------------------------------
Each of the Vendors acknowledges that:-
9.7.1 each of the preceding sub-clauses of this Clause
constitutes an entirely separate and independent
restriction on him; and
9.7.2 the duration, extent and application of each of the
restrictions are no greater than is necessary for the
protection of the goodwill of the businesses of the
Company and the value of the Shares.
9.8 MODIFICATIONS
-------------
If any of the restrictions contained in this Clause are found
to be void but would be valid if some part were deleted or the
period or area of application reduced, that restriction shall
apply with any modification necessary to make it valid and
effective.
9.9 RESTRICTIVE TRADE PRACTICES ACT
-------------------------------
Notwithstanding any other provision of this Agreement, no
provision of this Agreement which might make this Agreement
liable to registration under the Restrictive Trade Practices
Act 1976 shall take effect until the day after that on which
particulars of it have been furnished to the Director General
of Fair Trading pursuant to that Act. For the purposes of this
Clause 9.9, the term "Agreement" shall include every other
agreement which forms part of the same arrangement.
10. SURVIVAL OF PROVISIONS
----------------------
Notwithstanding Completion, the provisions of this Agreement and the
Deed of Indemnity shall, except insofar as then implemented or
performed, remain in full force and effect and shall continue to bind,
and to be enforceable by, the Purchaser or its successors or assigns
or, as the case may be, the Vendors and shall not be extinguished or
affected by any other event or matter except a specific and duly
authorised written waiver or release from the Purchaser or, as the case
may be, the Vendors.
<PAGE> 20
11. COSTS
-----
EACH PARTY TO BEAR OWN COSTS
----------------------------
Each of the parties shall pay its own legal and accountancy and other
costs, charges and expenses connected with the negotiation, preparation
and implementation of this Agreement and the Deed of Indemnity. The
Purchaser shall pay all stamp duty on the transfer of the Shares and
the agreed fees of J. Jeffrey Brausch & Company..
12. ENTIRE AGREEMENT
----------------
12.1 WHOLE AGREEMENT
---------------
This Agreement, when taken together with any document in the
agreed terms (or the executed engrossments of them) and any
other documents to be entered into pursuant to this Agreement,
constitutes the entire agreement and understanding between the
parties with respect to all matters referred to in this
Agreement, to the exclusion of any terms implied by law which
may be excluded by contract.
12.2 VARIATION
---------
No variation of this Agreement or of any document in the
agreed terms or any other documents to be entered into
pursuant to this Agreement shall be effective unless it is in
writing and signed by or on behalf of each of the parties.
13. WAIVERS
-------
13.1 RELEASE AND INDULGENCE BY PURCHASER
-----------------------------------
Notwithstanding any rule of law or equity to the contrary, the
Purchaser may at its absolute discretion waive, release,
compromise or allow any time or other indulgence in respect of
any liability or obligation of any Vendor without thereby
prejudicing or in any way affecting its rights in respect of
either any other liability or obligation of that Vendor or any
liability or obligation, whether of a similar or a different
kind, of any other of the Vendors and whether or not such
liabilities or obligations are joint and several. Any act or
omission of the Purchaser pursuant to this Clause shall in no
way prejudice any rights which one of the Vendors may have
against any other of the Vendors, whether in relation to joint
and several liability or otherwise.
13.2 NO WAIVER
---------
No failure of the Purchaser to exercise, and no delay by it in
exercising, any right, power or remedy in connection with this
Agreement will operate as a waiver of the same, nor will any
single or partial exercise of any such right, power or remedy
preclude any other or further exercise of the same or of any
other such right, power or remedy. Any express waiver of any
breach of this Agreement shall not be deemed to be a waiver of
any subsequent breach.
<PAGE> 21
14. ASSIGNMENT
----------
The Purchaser may assign all its rights, and causes of action arising,
under or pursuant to this Agreement to any other company within the
Purchaser's Group and, after any such assignment, this Agreement will
be binding on and will continue for the benefit of such Company within
the Purchaser's Group. Accordingly references in this Agreement (or in
any document entered into pursuant to this Agreement) to the Purchaser
shall, following any such assignment and unless the context otherwise
requires, mean the assignee or assignees for the time being. If the
Purchaser wishes to assign such rights, the other parties shall, on
request, execute a deed in favour of the assignee substantially in the
terms of the draft deed in the agreed terms.
15. FURTHER ASSURANCE
-----------------
At any time (whether before or after Completion) the Vendors shall (at
their cost and expense) do and execute or procure to be done and
executed all necessary acts, documents and things reasonably requested
of all or any of them by the Purchaser to give effect to this Agreement
and the transactions contemplated in or by it and to take any action
(if requested to do so by the Purchaser) which may be reasonably
considered necessary by the Purchaser to rectify any acts or omissions
of the Company, its officers, directors or shareholders prior to
Completion.
16. INVALIDITY
----------
If any provision in this Agreement is held to be illegal, invalid or
unenforceable, in whole or in part, under any enactment or rule of law,
such provision or part shall, to that extent, be deemed not to form
part of this Agreement but the legality and enforceability of the
remainder of this Agreement shall not be affected.
17. COUNTERPARTS
------------
This Agreement may be entered into in any number of counterparts, all
of which taken together shall constitute one and the same instrument.
Any party may enter into this Agreement by signing any such
counterpart.
18. NOTICES
-------
18.1 NOTICE IN WRITING
-----------------
Any notice, claim or demand to be given in connection with or
under this Agreement shall be in writing and signed by or on
behalf of the party giving it (a "Notice").
18.2 SERVICE OF NOTICE
-----------------
A Notice may be served by letter or fax; each letter
containing such Notice shall be left or sent by pre-paid
recorded delivery or registered post or by courier:-
18.2.1 in the case a notice to all of the Vendors, at or to
the Vendor's Solicitors on behalf of all the Vendors;
and
<PAGE> 22
18.2.2 in the case of a notice to an individual Vendor at or
to such Vendor at his or her address shown in
Schedule 1 or any other address in England which he
or she shall have notified in writing to the
Purchaser; and
18.2.3 in the case of the Purchaser, at or to its registered
office for the time being.
18.3 TIME OF SERVICE
---------------
A Notice sent by personal delivery, by post or by courier
shall be deemed to have been duly served upon delivery at the
address of the relevant party, and in proving such service, it
shall be sufficient to prove that the notice was properly
addressed and a Notice sent by fax shall be deemed served when
despatched.
18.4 DEATH OF INDIVIDUAL
-------------------
If any individual Vendor dies, until the party giving a Notice
has received notice in writing of the grant of probate of his
will or letters of administration of his estate (or
equivalent) any Notice given to such individual Vendor in
accordance with the provisions of this Clause shall be as
effective as if he were still living.
19. GOVERNING LAW AND PROCESS AGENT
-------------------------------
19.1 This Agreement and (save as expressly stated in) any document
to be entered into pursuant to this Agreement shall be
governed by and construed in accordance with English law and
the parties irrevocably submit to the non-exclusive
jurisdiction of the English courts to settle any disputes
which may arise out of or in connection with this Agreement or
any such document.
19.2 PROCESS AGENT
-------------
The Vendors irrevocably appoint the Vendors' Solicitors of
Market Chambers, 21A Market Place, Romsey, Hampshire as the
agent for each Vendor to accept service of process in England
in any legal action or proceedings arising out of or in
connection with this Agreement or any document to be entered
into pursuant to this Agreement, service upon whom shall be
deemed completed whether or not forwarded to or received by
each of the Vendors. If such process agent ceases to be able
to act as such or to have an address in England, the Vendors
irrevocably agree to appoint a new process agent in England
acceptable to the Purchaser and to deliver to the Purchaser
within fourteen days a copy of a written acceptance of
appointment by the process agent.
The Purchaser irrevocably appoints the Purchaser's Solicitors
of 180 Strand, London, WC2R 2NN as the agent for the Purchaser
to accept service of process in England in any legal action or
proceedings arising out of or in connection with this
Agreement or any document to be entered into pursuant to this
Agreement, service upon whom shall be deemed completed whether
<PAGE> 23
or not forwarded to or received by such party. If such process
agent ceases to be able to act as such or to have an address
in England, the Purchaser irrevocably agrees to appoint a new
process agent in England acceptable to the Vendors and to
deliver to the Vendors within fourteen days a copy of a
written acceptance of appointment by the process agent.
Nothing in this Agreement shall affect the right to serve
process in any manner permitted by law.
20 RIGHTS OF ACCESS
----------------
20.1 PURCHASER'S ACCESS
------------------
Until the sixth anniversary of Completion, each of the Vendors
shall permit and allow, upon reasonable notice and during
business hours, the Purchaser and/or its agents, accountants
and other professional advisers access to all books, records
and documents in the possession or under the control of such
Vendor insofar as they concern or deal with the Company in
respect of the period prior to Completion and the right to
inspect and make copies of the same (at the Purchaser's
expense). Each of the Vendors shall procure that all such
books, records and documents are preserved until the sixth
anniversary of Completion.
20.2 ACCESS TO INFORMATION
---------------------
If any information or book, ledger account, record, document
or other material or materials is or are not held, kept or
stored in printed form, the party required or requested to
produce or allow access to or copies of the same must do so in
a form or media which:-
20.2.1 is reasonably convenient to the party requiring or
requesting the same;
20.2.2 does not require that party to incur unreasonable
expense; and
20.2.3 will permit that party to see, have access to, read
and, where appropriate, to make copies of the same.
This Agreement was signed by the parties or their duly authorised
representatives on the date set out at the beginning of this Agreement.
<PAGE> 24
SCHEDULE 1
----------
PART 1
------
(THE COMPANY)
<TABLE>
<CAPTION>
THE COMPANY
- -----------
<S> <C>
Name of Company: Next Destination Limited
Registered Number: 2856264
Authorised Share Capital: (pound)10,000 divided into 10,000 ordinary shares of (pound)1 each
Issued Share Capital: 10,000 ordinary shares of (pound)1 each, fully paid or credited
as fully paid
Date and Place of Incorporation: 23rd September 1993, England
Registered Office: 5 Abbey Walk, Church Street, Romsey, Hampshire SO51 8BT
Directors: Pascal Marie Charles Petit
Alexander Agnew Stewart White
Mark Brian White
Secretary: Christine Elizabeth White
Members: Pascal Marie Charles Petit, Alexander Agnew Stewart
White, Mark Brian White
Accounting Reference Date: 31 August
VAT Number: 631688817
Tax District and Reference No: Southampton 5 Ref No. 6741251324447
Auditors: Langdowns Chartered Accountants, 5 Abbey Walk, Church
Street, Romsey, Hampshire
</TABLE>
<PAGE> 25
SCHEDULE 1
----------
PART 2
------
(DIRECTORS)
<TABLE>
<CAPTION>
Full name Usual address
- --------- -------------
<S> <C>
Pascal Marie Charles Petit 17 Route De Bron
49260 Le Coudray
Macouard
France
Alexander Agnew Stewart White The Old Chapel
Fantley Lane
Zeals
Warminster
Wiltshire
BA12 6NX
Mark Brian White Evergreen Cottage
Wittensford Brook
Lyndhurst
Hampshire
SO43 7JA
</TABLE>
<PAGE> 26
SCHEDULE 1
----------
PART 3
------
(PARTICULARS OF SHARES ETC.)
<TABLE>
<CAPTION>
(1) (2) (3) (4) [(5)]
Names and No. of No. of Value in US$ and Value in US$
addresses of Ordinary Shares held Ordinary Shares to number of of Loan Notes
Vendors in the Company be sold Consideration to be received
Shares to be
received
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pascal Marie Charles Petit, 714 714 Value: US$125,000 124,995.20
17 Route De Bron, No of Shares:
49260 Le Coudray, 12,160
Macouard,
France
Alexander Agnew 714 714 Value: US$125,000 124,995.20
Stewart White, No of Shares:
The Old Chapel, 12,160
Fantley Lane,
Zeals,
Warminster,
Wiltshire BA12 6NX
Mark Brian White, 8,572 8,572 Value: 1,500,004.08
Evergreen Cottage, US$1,500,000
Wittensford Brook, No of Shares:
Lyndhurst, 145,914
Hampshire SO43 7JA
</TABLE>
<PAGE> 27
SCHEDULE 1
----------
PART 4
------
(PROVISIONS APPLYING TO THE CONSIDERATION SHARES)
1.1 U.S. Securities Law Restrictions
--------------------------------
The Purchaser and each of the Vendors acknowledge and represent to each
other that the shares of stock of the Purchaser issued pursuant to
Clause 4.2.1. ("Consideration Shares") have not been registered under
the United States Securities Act of 1933, as amended (the "1933 Act"),
or under the securities law of any other jurisdiction, and that the
issue of the Consideration Shares is being made in reliance upon and in
compliance with an exemption from registration provided by the 1933
Act.
1.2 Vendors' Representations
------------------------
Each of the Vendors covenants and agrees with the Purchaser and
represents and warrants to the Purchaser as follows:
1.2.1 Foreign Laws
------------
The country of origin and current principal place of business
of each Vendor is either the United Kingdom or France and the
Vendors' acquisition of, and the Purchaser's issue to the
Vendors of, the Consideration Shares does not violate any laws
of the United Kingdom or France.
1.2.2 Access to Information
---------------------
Each of the Vendors acknowledge that the Vendors have been
provided with and have reviewed copies of the Prospectus dated
12 November, 1996 (annexed hereto as Schedule 5), for the
Purchaser's initial public offering and quarterly report on
Form 10-Q for the period ended 30 September, 1996; that the
Vendors have been supplied with such additional information
concerning Purchaser and the Consideration Shares as Vendors
have reasonably requested; and that, by reason of each of the
Vendor's business and financial experience, the Vendors have
the capacity to evaluate the merits and risks of an investment
in the Consideration Shares.
1.2.3 Investment Intent
-----------------
The Vendors are acquiring the Consideration Shares for their
own account as an investment and not with a view to, or for
resale in connection with, any distribution or public
offering, and the Vendors have no agreement, understanding or
arrangement to sell, assign or transfer any portion of the
Consideration Shares to any other person or entity.
<PAGE> 28
1.2.4 Restrictions on Resale
----------------------
The Consideration Shares are "restricted securities" as
defined in Rule 144 under the 1933 Act. The Vendors will not
offer, sell, transfer, assign, exchange or otherwise dispose
of any of the Consideration Shares at any time unless the
Consideration Shares are (i) registered under the 1933 Act or
(ii) offered, sold or otherwise disposed of in compliance with
an exemption from the registration requirements of the 1933
Act (as evidenced by an opinion of counsel satisfactory to the
Purchaser that such an exemption is available to the Vendors).
1.2.5 Legended Shares
---------------
The Vendors understand and agree that the certificates for the
Consideration Shares will bear a restrictive legend stating
that the transfer of the Consideration Shares is prohibited
except in accordance with the provisions of this Agreement and
that Purchaser is entitled to refuse to register any transfer
of the Consideration Shares not made in accordance with the
provisions of this Agreement.
1.3 Piggyback Rights
----------------
If the Purchaser registers any additional shares of its common stock
for sale subsequent to Completion, pursuant to the 1933 Act, and if (i)
any shares of the current shareholders of the Company ("Current
Shareholders") which are then restricted as to holding period, or
volume of sale under the U.S. Securities and Exchange Commission Rule
144 are included in the registration, and (ii) the resale of the
Consideration Shares by any of the Vendors are then restricted as
holding period, or volume of sale under U.S. Securities and Exchange
Act Rule 144, then the Purchaser will accord to each of the Vendors the
opportunity, on a pro rata basis with the other selling shareholders,
to include in such registration statement Consideration Shares of the
Purchaser, on the same terms and conditions and subject to the same
limitations as shall apply to the selling shareholders. Notwithstanding
the foregoing, the number of shares that any of the Vendors shall be
entitled to register shall not exceed the greatest number of shares
registered by any of the selling shareholders.
<PAGE> 29
SCHEDULE 1
----------
PART 5
------
(PROVISIONS APPLICABLE TO THE LOAN NOTES)
-----------------------------------------
1. The Loans Notes shall bear interest at the rate of 6 per cent per
annum, such interest shall be payable annually.
2. The principal amount of the Loan Notes shall be repaid on 31st January
2000.
3. The Purchaser agrees that it shall procure that the Company shall not
declare or pay any dividend until the earlier of:
(i) the principal amount of the Loan Notes being repaid in full,
to the extent that they have not been extinguished or reduced
pursuant to their terms and the provisions of this Agreement,
together with all interest due thereon at the date of such
repayment; and
(ii) the date on which the net assets of the Company are increased
to (pound)184,857.00 provided that the payment of any dividend
so declared will not, at the date of payment, cause the net
assets of the Company to reduce below (pound)184,857.00.
<PAGE> 30
SCHEDULE 2
----------
(THE PROPERTIES)
----------------
LEASEHOLDS
----------
<TABLE>
<CAPTION>
Property Parties Current rent and Current tenant Length of term
- -------- ------- ---------------- -------------- --------------
review dates (including options
------------ ------------------
to break and renew
------------------
<S> <C> <C> <C>
Lease of 25, The Parford Estates (pound)13,750 pa the Company 5 years from
Clarendon Centre, (Epsom) Limited and 24.6.1996. Tenant
Salisbury Business the Company has option to break
Park, Salisbury 24.6.1999 on 23.6.1999
SP1 2TJ
Underlease of Unit 5, Objective Science (pound)5,750 pa the Company 3 years from
Ground Floor, Barnack Group Limited and 1.8.1995. Tenant
Business Centre, the Company has option to
Blakey Road, No review determine on
Salisbury, SP1 2LP 31.7.1997
</TABLE>
<PAGE> 31
SCHEDULE 3
----------
(WARRANTIES)
Index to Warranties
- -------------------
1. Disclosure of Material Facts
2. Accounts
3. Properties
4. Other Assets
5. Intellectual Property Rights
6. Insurances
7. Directors, Employees and Pensions
8. Borrowings
9. Commercial Arrangements
10. Arrangements with Connected Person
11. Litigation and Offences
12. Licences and Fair Trading
13. Subsidiaries and Associates
14. Corporate Organisation
15. Insolvency
16. The Agreement
17. Business since Accounts Date
18. Tax
<PAGE> 32
1. DISCLOSURE OF MATERIAL FACTS
----------------------------
1.1 Accuracy and Adequacy of Information
------------------------------------
All the information contained in this Agreement (including the recitals
and Schedules) and in the Disclosure Letter and all other information
which has been given by or on behalf of any one or more of the Vendors
or by any of the directors or officials of the Company or any of their
respective professional advisers to the Purchaser or any of the
directors or officials or professional advisers of the Purchaser in the
course of the negotiations leading to this Agreement was, when given,
true, complete and accurate and, after making due and careful
enquiries, none of the Vendors is aware of any fact, matter or
circumstance not disclosed in writing which renders any such
information untrue, misleading or inaccurate or the disclosure of which
might reasonably affect the willingness of the Purchaser to purchase
the Shares or the price or terms on which the Purchaser would be
willing to purchase them.
1.2 Disclosure Letter
-----------------
There are fully and accurately disclosed in the Disclosure Letter all
matters, information and documents which are or could on reasonable
enquiry be known to the Vendors or any of them and:-
1.2.1 which are necessary to qualify the following paragraphs of
this Schedule in order for such statements when so qualified
to be fair, accurate and not misleading; or
1.2.2 which might materially or adversely affect the present or
future value of the Shares.
2. ACCOUNTS
--------
2.1 General
-------
The Audited Accounts (complete and accurate copies of which have been
initialled by or on behalf of the Vendors for the purpose of
identification):-
2.1.1 give a true and fair view of the state of affairs of the
Company as at the Accounts Date and of the profits and losses
for the financial period ended on that date;
2.1.2 have been prepared in accordance with good accounting
principles and practice (including all applicable SSAP's)
generally accepted at the date of this Agreement in the United
Kingdom and on a basis consistent with that used in preparing
the audited accounts for the Company for all financial periods
preceding that ended on the Accounts Date;
2.1.3 comply with the requirements of all relevant laws; and
2.1.4 are not affected by any extraordinary, exceptional or
non-recurring item.
<PAGE> 33
2.2 Provision for Liabilities etc.
------------------------------
2.2.1 The Audited Accounts make full provision for all actual
liabilities and make proper provision for (or note in
accordance with good accountancy practice) or otherwise
disclose all unquantified or disputed liabilities and capital
commitments of the Company outstanding at the Accounts Date
(including contingent liabilities and any deferred Taxation)
and make adequate provision or reserve for all bad or doubtful
debts.
2.2.2 No amount included in the Audited Accounts in respect of any
asset, whether fixed or current, exceeds its purchase price or
production cost or (in the case of current assets) its net
realisable value on the Accounts Date.
2.3 Profits
-------
2.3.1. The profits shown in the Audited Accounts and in audited
accounts of the Company for each of the financial periods
immediately preceding the period ended on the Accounts Date
have not (except as disclosed in any such accounts) to a
material extent been affected by any extraordinary,
exceptional or non-recurring item or by any other factor
rendering such profits for all or any of such periods
unusually high or low.
2.3.2 The net loss of the Company for the period between the
Accounts Date and 31 December 1996, after charging
depreciation and all expenses but] charging or providing for
any Taxation and any extraordinary item(s), will not be
greater than (pound)27,000 (Twenty Seven Thousandpounds).
2.4 Stock Valuation
---------------
The Company's stock in trade and work in progress has been valued in
accordance with the relevant SSAP and on a basis in all respects
consistent with the methods and bases of valuation adopted in the
audited accounts of the Company for all financial periods ended on the
Accounts Date. All redundant or obsolete stock has been wholly
written-off and the value attributed to the remaining stock does not
exceed the lower of cost or net realisable value as at the Accounts
Date.
2.5 Management Accounts
-------------------
A true copy of the Accounts for the period ended on 31 December 1996 is
annexed to the Disclosure Letter. The Accounts have been prepared in
accordance with the Company's normal practice and with accounting
policies consistent with those used in preparing the Audited Accounts.
The Vendors do not consider them misleading and are not aware of any
fact or circumstance which might render them misleading.
2.6 Provisions
----------
THE ALLOWANCES PROVISIONS AND RESERVES SPECIFIED IN THE DOCUMENT IN THE
DISCLOSURE LETTER ENTITLED "PROVISIONS INCLUDED IN THE ACCOUNTS AS AT
31ST AUGUST 1996" ARE THE ONLY SUCH ALLOWANCES, PROVISIONS AND RESERVES
MADE OR TAKEN INTO ACCOUNT IN OR IN PREPARING THE AUDITED ACCOUNTS.
3. PROPERTIES [ AWAITING PROPERTY DEPARTMENT COMMENTS]
---------------------------------------------------
<PAGE> 34
3.1 Title to the Properties
-----------------------
3.1.1 The Properties are the only properties in which the Company
has any right, title or interest or which the Company uses or
occupies.
3.1.2 Title to each Property is properly constituted by documents of
title which are in the possession or under the control of the
Company and which are properly stamped and (where appropriate)
adjudicated. The Company has a good and marketable title to
the whole of each Property and to all the proceeds of sale of
each such Property.
3.2 Matters affecting the Properties
--------------------------------
3.2.1 The Properties and their relative proceeds of sale are free
from any exceptions, reservations, mortgages, charges, liens,
leases, tenancies, licences or other rights of occupation,
from any options, rights of pre-emption, covenants,
restrictions, stipulations, easements, rights, privileges or
any other encumbrances (including encumbrances arising under
statutory powers and overriding interests) and from any
agreement or commitment to grant, create or give any of the
same.
3.2.2 The Properties and all buildings, fixtures and fittings on
them are in good repair and condition and fit for the purposes
for which they are presently used.
3.2.3 Each Property is occupied exclusively by the Company and the
Company occupies and uses that Property for the purpose of
conducting its business only.
3.2.4 Access to each Property is over roads which are maintainable
at the public expense. Each Property drains into a public
sewer and is served by water, electricity and gas utilities.
3.2.5 The Company has complied with all covenants, conditions and
obligations binding upon it in relation to each Property. The
Company has received no notice or complaint which remains
outstanding in respect of any breach or alleged breach of any
such covenant, condition or obligation.
3.2.6 There are no outstanding actions, disputes, claims or demands
between the Company and any third party or any local authority
affecting any Property or any neighbouring property.
3.2.7 All policies of insurance relating to tenants fixtures and
fittings and contents in each Property are current and valid
and are not subject to any special or unusual terms or
restrictions. The Company has not done or omitted to do
anything which would make any such policy void or voidable.
<PAGE> 35
3.3 Consents and User
-----------------
The present user of each Property is its permanent and unconditional
permitted user under the Town and Country Planning Acts and all
regulations, orders or bylaws made under them.
3.4 Notices etc.
------------
3.4.1 No notice that may affect any Property or the rights of the
Company in relation to any Property has been served by any
individual or company or by any government or governmental
agency or any local or public authority; no circumstances
exist which are or would on reasonable enquiry be known to the
Company by virtue of which the service of such a notice is
warranted or likely.
3.4.2 So far as each of the Vendors is aware, no proposals or orders
exist or are contemplated (whether statutory or other
proposals) whereby the value of any Property or its use by the
Company might be prejudiced.
3.5 Matters Affecting Leasehold Properties
--------------------------------------
3.5.1 Each leasehold Property is held under a legal tenancy which is
in full force and effect and has not become void or voidable.
The Company has complied with the terms of such tenancy and
has not received any complaint from the landlord of any breach
of those terms
3.5.2 All rents and other sums reserved by the lease under which a
leasehold Property is vested in the Company have been fully
paid up to date and unqualified receipts are held by the
Company for the most recent of those payments. No landlord has
refused to accept rent.
3.5.3 The Company is not actually or contingently liable as
guarantor of an original contracting party to any lease of
property.
4. OTHER ASSETS
------------
4.1 Title
-----
The Company is the sole beneficial owner of, has in its
possession or under its control, and has good and marketable
title with full title guarantee to, all the assets (other than
the Properties) included in the Audited Accounts (including
all book debts owed to the Company) and to all other such
assets acquired by the Company since the Accounts Date and to
all other assets used by the Company, free from any option,
charge, lien, encumbrance, equity, factoring agreements, bill
of sale, leasing agreement, hire purchase agreement, agreement
for payment on deferred terms or conditional or credit sale
agreement or rental agreement.
4.2 Plant and Machinery etc.
------------------------
<PAGE> 36
4.2.1 All the plant, machinery, equipment and vehicles of,
or used in connection with the business of, the
Company are in a good state of repair and working
order and have been regularly and properly maintained
and, where appropriate, will on Completion be
adequately licensed and insured.
4.2.2. The assets listed in the [accounts depreciation
schedule] referred to in the Disclosure Letter
contains a complete and accurate record of each asset,
other than the Properties, owned or possessed or used
by the Company which has a value of (pound)1,000 or
more and there are no outstanding commitments for
capital expenditure in excess of (pound)5,000 in
aggregate other than replacements and normal purchases
of plant and equipment in the ordinary course of
business.
4.3 Net Asset Value
---------------
The net tangible assets of the Company, other than the
Properties, as at 31st December 1996 valued on the same basis
as that adopted in the Audited Accounts will not be less than
(pound)96,000.
4.4 Debts
-----
4.4.1 No debt included in the Audited Accounts, or which has
subsequently arisen, has been outstanding for more
than three months from the due date for payment, has
arisen other than in the normal course of business or
is for more than (pound)100,000.
4.4.2 No debtor has been released by the Company on terms
that such debtor pays less than the book value of his
debt and no debt owing to the Company has been
deferred, subordinated or written off or has proved
irrecoverable.
4.5 Stock
-----
The Company's stock-in-trade is in good condition and there
have been no abnormal losses in the stock of the Company
through theft, breakages, damage or otherwise. All stock has
been stored in suitable conditions for stock of its kind and
not left outside or exposed to the weather and the Company's
stock-in-trade is capable of being sold by the Company in the
ordinary course of its business in accordance with its current
price list without rebate or allowance to a purchaser.
4.6 Sufficiency of Assets
---------------------
The assets owned or leased by the Company comprise all the
assets necessary or convenient for the carrying on of business
(as presently conducted) of the Company.
<PAGE> 37
5. INTELLECTUAL PROPERTY RIGHTS
----------------------------
5.1 Ownership etc.
--------------
The Company does not have any legal or beneficial ownership of
any Intellectual Property Rights or Know-How now used by, or
likely to be used by, the Company in its business.
5.2 No Royalties etc.
-----------------
The Company does not pay any royalty or other payment to any
third party (whether pursuant to sections 40 and 41 of the
Patents Act 1977 or otherwise) or require the permission of
any third party in relation to the sale of any product or the
use of any process or the provision of any service and those
processes and products or services do not use, embody or
infringe any Intellectual Property Rights or Know-How of any
third party.
5.3 No Breach of Confidentiality
----------------------------
The Company is not in breach of any duty of confidentiality
owed to any person through its ownership or use of any
Intellectual Property Rights.
5.4 No Disputes Affecting Licences
------------------------------
All Intellectual Property Rights used or likely to be used by
the Company in its business are used under licences or other
authorities which are in full force and effect and are not
subject to any notice of termination nor has there been any
default under such licences or authorities. The transactions
contemplated by this Agreement will not crystallise any right
of termination of or under such licences or other authorities
and there are no disputes, current or reasonably foreseeable,
in respect of any of them. True and complete copies of all
such licences and other authorities have been supplied to the
Purchaser.
6. INSURANCES
----------
6.1 Adequacy of Insurances
----------------------
The Company has at the date of this Agreement, and, at all
material times has had, valid, adequate and proper insurances
in respect of its assets and business against all risks
(including, without limitation, loss of 12 months' profits)
which are normally insured against by other companies owning
or possessing similar assets or carrying on similar businesses
for the full replacement value of such assets and, in respect
of its business, for amounts that would, in the circumstances,
be prudent for those other companies. The Company is at the
date of this Agreement, and has at all material times been,
adequately covered against accident, third party injury and
other risks normally covered by insurance by such companies.
6.2 Validity of Insurances
----------------------
On Completion, the Company will be the beneficiary under and
will have in full force and effect the policies of insurance
(details of which, together with
<PAGE> 38
details of all premiums payable or paid and any special or
unusual terms or restrictions, have been delivered to the
Purchaser). The Company has not done or omitted to do or
suffered anything to be done or not to be done which has or
might render any policies of insurance taken out by it void or
voidable, there are no current claims under any of those
insurances and, to the best of the knowledge, information and
belief of each of the Vendors, there are no circumstances
which would or might give rise to any claim under any of those
policies. Pending Completion the Company shall effect all
additional insurances which the Purchaser may reasonably
request.
7. DIRECTORS, EMPLOYEES AND PENSIONS
---------------------------------
7.1 General
-------
The employees named in the Disclosure Letter are all the
employees engaged by the Company.
7.2 Terms and Conditions
--------------------
7.2.1 Complete and accurate details of all remuneration and
expenses and other benefits payable to each director,
officer and employee of the Company, and their job
titles, terms of employment, length of service and
notice periods are set out in the Disclosure Letter.
There have been no increases in the emoluments payable
to any director or other employee of the Company and
there have been no changes in the terms of service of
any director or other employee of the Company and no
changes have been proposed since the Accounts Date. No
notice terminating their contract of employment has
been given to any directors or employees of the
Company and no employee has left employment of his own
accord or indicated his intention of so doing.
7.2.2 Full details of all consultancy arrangements with the
Company are set out in the Disclosure letter and all
such arrangements can be terminated by three months'
notice or less without giving rise to a claim for
damages or compensation.
7.3 Disputes
--------
7.3.1 Neither the Company nor any of its employees is
involved in any industrial or trade dispute and there
are no facts known to the Vendors which might suggest
that there may be any trade union or industrial
dispute involving the Company or that the sale of the
Shares may lead to any trade union or industrial
dispute.
7.3.2 The Company has not recognised any trade union nor
entered into any kind of collective agreement or
arrangement and no trade union has a level of
membership among any employees of the Company likely
to entitle that trade union to recognition (of any
kind) by the Company.
<PAGE> 39
7.4 Legislation and Regulations Affecting Employees
-----------------------------------------------
7.4.1 The Company has complied in all material respects with
all laws, regulations and codes of conduct and
practice, collective agreements and customs and
practices including, but not limited to, each of the
Employment Rights Act 1996 (as amended), the Equal Pay
Act 1970, the Sex Discrimination Act 1975, the Race
Relations Act 1976, Article 119 of the Treaty of Rome
and all applicable European Community Directives. So
far as each of the Vendors is aware, there are no
circumstances which could reasonably be expected to
give rise to a claim against the Company under any of
those statutes, the treaty or any applicable European
Community Directive.
7.4.2 No orders or recommendations have been made by the
Equal Opportunities Commission, any industrial
tribunal or any court under the Equal Pay Act 1970,
the Sex Discrimination Act 1975 the Race Relations Act
1976 or the Disability Discrimination Act 1995 which
directly or indirectly involve the Company, nor have
any investigations under those Acts been carried out
nor, so far as each of the Vendors is aware, are any
pending into the affairs of the Company nor, so far as
each of the Vendors is aware, are any complaints or
proceedings pending against the Company under any of
those Acts.
7.5 Redundancy
----------
The Company has no liability to any of its employees the
length of whose employment for the purposes of redundancy
payments would include any employment by any other person,
firm or company before their employment by the Company. In the
twelve months' period ending with the date of this Agreement,
the Company has not given notice of any redundancies.
7.6 Pensions
--------
The Company does not operate a pension scheme and is under no
legal or moral obligation to make any payment to any Vendor,
officer or employee of the Company or to any other person in
respect of pension arrangements for any such Vendor, officer
or employee.
7.7 Leaving the Company
-------------------
No senior employee of the Company has ceased to be employed by
the Company during the twelve months before the date of this
Agreement and none of the Vendors has any reason to believe
that any senior employees intend or are likely to leave their
employment otherwise than through normal retirement within the
twelve months following Completion.
7.8 Commissions, Liabilities etc.
-----------------------------
7.8.1 There are no agreements, arrangements or schemes in
operation by or in relation to the Company under which
any of its employees or officers is entitled to shares
or a commission or remuneration of any
<PAGE> 40
kind calculated by reference in whole or in part
to turnover, profits or sales.
7.8.2 The Company does not have in existence and is not
proposing to introduce any share incentive scheme,
share option scheme or profit sharing scheme for all
or any of its directors or employees.
7.8.3 The Company is not liable to pay any industrial
training levy nor has outstanding any undischarged
liability to pay any governmental or regulatory
authority in any jurisdiction any taxation,
contribution or other impost arising in connection
with the employment or engagement by it of employees
or directors or consultants.
7.8.4 No present, future or contingent liability has been
incurred by the Company for breach of any employment
contract, consultancy agreement or contract for
services or for redundancy payments, payments in
compensation for (or in connection with) unlawful,
wrongful or unfair dismissal or for the actual or
proposed termination, suspension or a variation of the
terms, of any employment, office, consultancy or
contract for services in respect of any present or
former director or employee and no sums in respect of
any such liability have been paid since the Accounts
Date.
7.8.5 No gratuity payment has been made by the Company in
connection with the sale of the Shares. Except in
respect of normal accruals of remuneration or
emoluments of employment, no sum is payable to or for
the benefit of any employee or director.
7.9 Loans to Employees
The Vendors have not made any loan or advance to any officer
or employee or any future officer or employee which is
outstanding.
8. BORROWINGS
----------
8.1 Bank Accounts
-------------
A statement of all the bank accounts of the Company and of the
credit or debit balances on those accounts as at a date not
more than 7 days before the date of this Agreement is annexed
to the Disclosure Letter. The Company has no other bank or
deposit accounts (whether in credit or overdrawn) and, since
that statement, there have been no payments out of any of
those accounts except for routine payments and the balances on
current account are not now substantially different to the
balances shown on those statements.
8.2 Borrowings
----------
The amounts borrowed by the Company do not exceed any
limitation on its borrowing contained in its Articles of
Association or in any debenture or other document binding upon
it. The Company has not engaged in financing or borrowing of a
type which would not require to be shown or reflected in
<PAGE> 41
audited accounts. Details of all borrowings or indebtedness in
the nature of borrowings are contained or referred to in the
Disclosure Letter.
8.3 Repayment
---------
The Company has received no notice to repay under any
agreement relating to any of its borrowing or indebtedness in
the nature of borrowing which is repayable on demand and there
has not occurred any event of default under any agreement
relating to any other borrowing or indebtedness in the nature
of borrowing by the Company or any event which, with the
giving of notice and/or the lapse of time and/or any relevant
determination, would constitute an event of default. The
change in ownership of the Company which will result from this
Agreement will not permit any lender to the Company to
withdraw any lending or change any terms and conditions
applicable to such lending.
9. COMMERCIAL ARRANGEMENTS
-----------------------
9.1 Material Contracts
------------------
The Company has not entered into any contracts, transactions
or commitments which are unusual, of more than one year's
duration or involve obligations of a nature or magnitude
calling for special mention.
9.2 Material Capital Commitments
----------------------------
The Company has no capital commitments involving capital
expenditure of over (pound)5,000.
9.3 Other Contracts
---------------
9.3.1 In relation to the Company, there is not outstanding:-
(a) any option, right to acquire, mortgage,
charge, pledge, lien, encumbrance or equity
on the whole or any part of its undertaking,
property or assets or any agreement or
commitment to give or create any of the
foregoing nor has any claim been made by any
person to be entitled to any of the same;
(b) any sale or purchase option or similar
agreement or arrangement by which it is bound
affecting any assets owned by or used by it;
(c) any agreement or arrangement where it is a
party to any joint venture, consortium or
partnership or profit or income sharing
arrangement or agreement;
(d) any liability or obligation (statutory or
otherwise) of it to any person who is or has
been a director or employee;
<PAGE> 42
(e) any contract for hire or rent, hire-purchase
or purchase by way of credit sale or
periodical payment in respect of its movable
or personal property;
(f) any guarantee, indemnity, performance bond,
suretyship or comfort (whether or not legally
binding), whether entered into by the Company
in respect of any debt, liability or
obligation of any Director, Vendor, officer,
employee or any other person or by any
Director, Vendor, officer employee or any
other person in respect of the Company's
obligations;
(g) any contract for agency or any
distributorship, marketing, manufacturing,
purchasing or licensing agreement or
arrangement;
(h) any agreement, contract or arrangement
entered into by it otherwise than by way of
bargain at arm's length;
(i) any agreement, contract or arrangement
entered into by it which cannot be fulfilled
or performed, in accordance with its terms,
more than 12 months after the date on which
it was entered into or undertaken or which
cannot be terminated in accordance with its
terms, by the Company on 60 days' notice or
less; or
(j) any security or arrangement similar to
security given by or binding upon the Company
or any of its assets, present or future.
9.3.2 No party with whom the Company has entered into any
agreement or arrangement is in default under such
agreement or arrangement and there are no
circumstances which are likely to give rise to such a
default.
9.4 Powers of Attorney
------------------
There are not outstanding any powers of attorney given by the
Company or any other authority (express, implied or
ostensible) which is still outstanding or effective to any
person to enter into any contract or commitment or do anything
on its behalf.
9.5 Substantial Customers and Suppliers
-----------------------------------
9.5.1 All outstanding agreements and arrangements between
the Company and any material supplier of the Company
are set out or referred to in the Disclosure Letter.
There are no disputes between the Company and any
material supplier or customer of the Company.
10. ARRANGEMENTS WITH CONNECTED PERSONS
-----------------------------------
There is not outstanding:-
<PAGE> 43
10.1 any loan made by the Company to, or debt owing to the Company
by, any of the Vendors or any Director or any officer or
employee of the Company or any person connected with any of
them as described in section 839 of the 1988 Taxes Act or any
security for any such loans or debts; or
10.2 any agreement or arrangement (whether legally binding or not)
to which the Company is a party and in which any of the
Vendors or any Director or officer or employee or any person
connected with any of them, as mentioned in paragraph 10.1
above, is interested.
11. LITIGATION AND OFFENCES
-----------------------
11.1 General
-------
11.1.1 Apart from normal debt collection, the Company is not
engaged in any litigation or arbitration or
administrative proceedings which are in progress nor
are any such litigation, arbitration or administrative
proceedings threatened or pending by or against or
likely to involve the Company or any of its assets and
none of the Vendors is aware of any facts which are
likely to give rise to any litigation or arbitration
or administrative proceedings in which the Company
might become involved.
11.1.2 Neither the Company nor any of its officers or
employees by any act or default has committed:-
(a) any criminal or unlawful act in connection
with the business of the Company other than
minor road traffic offences;
(b) any breach of trust in relation to the
business or affairs of the Company; or
(c) any breach of contract or statutory duty or
any tortious act which could entitle any
third party to terminate any contract to
which the Company is party or could lead to a
claim against the Company for damages or an
injunction.
11.2 Conduct of Business
-------------------
The Company has carried on and is carrying on its business in
all respects in accordance with all applicable laws,
regulations and other requirements of the United Kingdom and
any relevant foreign country. No governmental or official
investigation or enquiry concerning the Company is in progress
or threatened and, so far as each of the Vendors is aware,
there are no circumstances which are likely to give rise to
any such investigation or enquiry.
<PAGE> 44
12. LICENCES AND FAIR TRADING
-------------------------
12.1 General
-------
All licences, permissions and consents required for the
carrying on of the business of the Company have been obtained
and are in full force and effect and all conditions applicable
to any such licence, permission or consent have been and are
being complied with. None of the Vendors is aware of any
circumstances indicating that any of those licences,
permissions or consents are likely to be suspended, modified,
revoked or not renewed.
12.2 Fair Trading
------------
12.2.1 The Company is not concerned in any arrangement which
infringes or which has or should have been registered
or notified under the Monopolies and Mergers Acts, the
Restrictive Trade Practices Acts 1956 and 1976, the
Fair Trading Act 1973, Consumer Credit Act 1974, the
Resale Prices Act 1976, the Competition Act 1980 or
Article 85 or Article 86 of the Treaty of Rome or any
regulation or other enactment giving effect to either
Article or any other anti-trust, fair trading,
consumer protection or similar legislation and the
Company is not in default under or in contravention of
the provisions of any of those Acts or treaties,
regulations, enactments or legislation.
12.2.2 The Company has not received (nor has any director or
officer received) any process, notice or
communication, formal or informal, by or on behalf of
the Office of Fair Trading or the European Commission
or any other authority of any country or union, or any
political or administrative subdivision of the same,
having jurisdiction in anti-trust matters in relation
to any aspect of any business of the Company, or any
agreement, arrangement or concerted practice to which
the Company is, or is alleged to be, a party. So far
as each of the Vendors is aware, neither the Company
nor any Director or officer is likely to receive any
such process, notice or communication.
13. SUBSIDIARIES AND ASSOCIATES
---------------------------
13.1 General
-------
Since the date of its incorporation, the Company has had no
subsidiaries and has never been a subsidiary of any other
company. The Company does not own, nor has it agreed to
acquire, any shares or stock in the capital of, or any
beneficial interest in, any other company or business
organisation. The Company does not control or take part (nor
has it agreed to control or take part) in the management of
any other company or business organisation nor is the Company
(nor has it agreed to become) a member of any partnership or
unincorporated company or association.
13.2 Management fees etc.
--------------------
The Company is not under any obligation or liability (whether
legally binding or not) to pay to any of the Vendors any fee,
commission or charge for or in
<PAGE> 45
connection with the provision, supply or purchase of finance,
goods, services or other facilities to, by or from the Company
or for or generally in relation to its affairs. No amounts are
due from the Company to or by any of the Vendors or any other
person otherwise than in the ordinary course of trading and on
normal commercial terms.
14. CORPORATE ORGANISATION
----------------------
14.1 Share Capital
-------------
Part 1 of Schedule 1 contains true particulars of the
authorised and issued share capital of the Company and all
shares shown there as issued are in issue, fully paid, and are
beneficially owned and registered as set out, free from any
claim, charge, lien, equity or encumbrance. The Shares
constitute the whole of the issued share capital of the
Company and there is no option, right to acquire, mortgage,
charge, pledge, lien or other form of security or encumbrance
over the Shares nor any agreement to create any of the same.
14.2 Options etc.
------------
No person has the right (whether exercisable now or in the
future and whether contingent or not) to call for the
allotment, issue, sale or transfer of any share or loan
capital of the Company or any other security giving rise to a
right over the capital of the Company under any option or
other agreement (including conversion rights and rights of
pre-emption).
14.3 Memorandum and Articles
-----------------------
The copy of the memorandum and articles of association of the
Company annexed to the Disclosure Letter is true, accurate and
complete in all respects and has embodied in it or annexed to
it a copy of every resolution or agreement referred to in
section 380 of the Act and neither the Company nor any class
of its members has passed any resolution other than
resolutions relating to ordinary business at annual general
meetings.
14.4 Company Accounts and Records
----------------------------
14.4.1 All accounts, books, ledgers, financial and other
records, including the fixed assets register of the
Company:-
(a) have been fully, properly and accurately
maintained and are up to date, in the
possession of the Company and contain true
and accurate records of all matters required
by law to be entered in them; and
(b) give a true and fair view of matters which
ought to appear in them and do not contain or
reflect any material inaccuracies or
discrepancies.
14.4.2 The Company has received no notice or allegation that
any of its accounts, books, ledgers, financial and
other records is incorrect or should be rectified.
<PAGE> 46
14.4.3 Where any of the records are kept on computer, the
Company is owner of all hardware and all software
licences necessary to enable it to use the records as
they have been used in the business prior to the date
of this Agreement and the Company does not share any
hardware or software relating to those records with
any person.
14.5 General
-------
The Company:-
14.5.1 does not use on its stationery or vehicles, or
otherwise carry on business under, any name other than
its corporate name; and
14.5.2 does not have any branch or place of business outside
England or any permanent establishment outside the
United Kingdom.
14.6 Returns
-------
The Company has complied with the provisions of the Act and
the European Communities Act 1972 and all returns,
particulars, resolutions and other documents required under
any legislation to be delivered by or on behalf of the Company
to the Registrar of Companies or to any other authority have
been properly made and/or delivered.
15. INSOLVENCY
----------
15.1 Winding-Up Petition etc.
------------------------
No order has been made, petition presented, resolution passed
or meeting convened for the winding-up of the Company nor has
any distress, execution or other process been levied against
the Company or action taken to repossess goods in the
Company's possession. The Company has not stopped any payment
nor is insolvent or unable to pay its debts for the purposes
of the Insolvency Act 1986. No petition has been presented for
an administration order to be made in relation to the Company
nor has any such order been made.
15.2 Receivership and Administration
-------------------------------
No receiver (including an administrative receiver), trustee or
administrator has been appointed of the whole or any part of
the assets or undertaking of the Company and none of the
Vendors is aware of any circumstances likely to give rise to
the appointment of any such receiver, trustee or
administrator.
15.3 Transactions At An Undervalue
-----------------------------
The Company has not been a party to any transaction with any
third party or parties which would, if any such third party
went into liquidation or had a bankruptcy or administration
order made in relation to it, constitute (in whole or in part)
a transaction at an undervalue, preference or invalid floating
<PAGE> 47
charge or otherwise would or might constitute any other
transaction or transfer at an undervalue or involving an
unauthorised reduction of capital.
16. THE AGREEMENT
-------------
16.1 Capacity
--------
Each of the Vendors has full power and authority to enter into
and perform their respective obligations under this Agreement
and the Deed of Indemnity and this Agreement constitutes, and
the Deed of Indemnity when executed will constitute, valid and
binding obligations on each Vendor in accordance with their
respective terms.
16.2 Compliance
----------
Compliance with the terms of this Agreement will not and does
not:-
16.2.1 relieve any person of any obligation owed to the
Company or enable any person to determine any such
obligation or result in the creation, imposition,
crystallisation or enforcement of any encumbrance on
any asset of the Company; or
16.2.2 contravene any agreement or arrangement entered into
or binding on the Company or give any third party the
right of termination or any option so to terminate; or
16.2.3 result in any present or future indebtedness of the
Company becoming due and payable prior to its stated
maturity; or
16.2.4 result in a breach of any order, judgement or decree
of any court or governmental agency to which any or
all of the Vendors is a party or by which any of the
Vendors or their respective assets are bound."
16.3 No Consents Required
--------------------
Each of the Vendors is entitled to sell and transfer to the
Purchaser the full legal and beneficial ownership of the
Shares set opposite such Vendor's name in column (3) of Part 3
of Schedule 1 on the terms of this Agreement without the
consent of any third party.
16.4 Finder's Fees
-------------
No person is entitled to receive from the Company any finder's
fees, brokerage or other commission in connection with the
purchase of the Shares.
16.5 all consents, authorisations, orders, grants, confirmations,
permissions and approvals necessary for or in respect of the
acquisition contemplated by this Agreement have been obtained
from all relevant or appropriate governments or governmental,
supranational or trade agencies or regulatory bodies without
the imposition of any conditions or restrictions, and such
consents, authorisations, orders, grants, confirmations,
permissions and approvals remain in full force and effect;
<PAGE> 48
17. BUSINESS SINCE ACCOUNTS DATE
----------------------------
Since the Accounts Date:-
17.1 the Company has carried on business in the ordinary and usual
course [without entering into any transaction, assuming or
incurring any liability or making any payment which is not in
the ordinary course of its business and without any
interruption or alteration in the nature, scope or manner of
conducting its business and so as to maintain the same as a
going concern];
17.2 the Company has not borrowed or lent any money or taken any
financial facility;
17.3 the Company has not entered into, or agreed to enter into, any
unusual, long term or onerous contracts or commitments;
17.4 the Company has not allotted or issued, or agreed to allot or
issue, any share or loan capital or any other security giving
a right over any such capital;
17.5 the Company has not declared or paid out any dividend or other
distribution and no distribution of capital within the meaning
of sections 209, 210 or 418 of the 1988 Taxes Act has been
made or agreed to be made in respect of any of its share
capital;
17.6 no management charge has been or is to be levied against the
Company;
17.7 no loan (otherwise than in the ordinary course of day to day
business) or loan capital has been repaid in whole or in part
and no payment for group relief has been made by the Company;
17.8 the Company has not redeemed or purchased, nor agreed to
redeem or purchase, any of its share capital; and
17.9 there has been no material adverse change in the Company's
financial or trading position or prospects.
18. TAX
---
18.1 Returns, Claims and Disputes
----------------------------
18.1.1 The Company has properly and punctually made, or
caused to be made, all computations and returns, given
all notices, supplied all relevant information
required to be supplied and submitted all claims and
disclaimers assumed to have been made for the purposes
of the Audited Accounts (including for this purpose
the accounts for any earlier financial period) to the
relevant Taxation Authority.
18.1.2 All such information, computations, returns and
notices were and remain complete and accurate in all
material respects.
<PAGE> 49
18.1.3 There is no dispute, or any facts or circumstances
likely to give rise to any dispute, with any Taxation
Authority as regards either the liability to Tax
(whether actual or contingent and including the amount
of any fine, penalty or interest) of the Company or
the availability of any relief or right to repayment
of Tax to the Company.
18.1.4 The Company retains sufficient records to calculate
the Tax liability or relief arising on any disposal or
realisation of any asset owned at the Accounts Date or
acquired since that date.
18.1.5 To the best of the knowledge of each of the Vendors,
no event has occurred or is likely to occur which
could give rise to a claim under the Deed of
Indemnity.
18.1.6 the Company has not nor is it liable to incur any
expenditure or pay any rent, interest, annual payment
or other sum which is not wholly deductible in
computing the taxable profits of the Company.
18.2 Penalties and Interest
----------------------
18.2.1 The Company has duly and punctually paid all Tax for
which it is liable and is under no liability to pay
any fine, penalty, interest or other charge in
connection with any non-payment or claim for Tax.
18.2.2 The Company has not made any claim or application to
pay any Tax by instalments or to defer payment of any
Tax.
18.3 Capital Duty, Stamp Duty and Stamp Duty Reserve Tax
---------------------------------------------------
18.3.1 All documents in the possession or control of the
Company or in respect of which the Company has any
interest have been duly and properly stamped.
18.3.2 The Company has not made any claim for relief from
Stamp Duty under section 55 Finance Act 1927, section
42 Finance Act 1930, section 78 Finance Act 1985 or
sections 75 to 77 Finance Act 1986 or for capital duty
relief under Part III Schedule 19 Finance Act 1973.
18.3.3 The Company has not entered into any agreement whereby
it is or may become liable to Stamp Duty Reserve Tax.
18.3.4 The Company has promptly and duly paid all capital
duty and loan capital duty for which it is liable.
18.4 VAT
---
18.4.1 The Company is a registered and taxable person for the
purpose of VATA and has fully complied with all
provisions, regulations, orders and directions
relating to VAT. So far as the Vendors are aware all
input VAT incurred by the Company is fully recoverable
by The Company.
<PAGE> 50
18.4.2 The Company has neither applied nor been treated as
belonging to a group of companies for the purpose of
section 43 VATA.
18.4.3 There are no outstanding notices from the
Commissioners of Customs and Excise in respect of any
late submission of VAT returns or late payment of VAT
by the Company.
18.4.4 All VAT and duties payable in respect of any assets
(including trading stock) imported or owned by the
Company have been paid in full.
18.4.5 Full particulars have been disclosed in the Disclosure
Letter of any claim by the Company for bad debt relief
under section 22 of the Value Added Tax Act 1983 or
section 36 VATA and the regulations pursuant to the
same.
18.4.6 No circumstances exist whereby the Company would or
might become liable for VAT as an agent or otherwise
under section 47 VATA.
18.4.7 The Company has not been required to give security
under paragraph 4 Schedule 11 VATA.
18.4.8 The Company has not made an election under paragraph 2
Schedule 10 VATA in respect of any property nor has
the Company received notice of such an election from
the holder or any interest immediately superior to
that held by the Company in respect of any property.
18.4.9 Since 1 April 1989, the Company has not occupied or
otherwise had any interest in a building or civil
engineering works within the meaning of paragraph (a)
Item 1 Group 1 Part II Schedule 9 VATA.
18.4.10 There are no circumstances in which the provisions of
paragraph 6 Schedule 10 VATA or the provisions of the
Value Added Tax (General Amendment) (No. 4)
Regulations 1989 may apply to the Company.
18.5 Income Tax and Withholding Tax
------------------------------
18.5.1 The Company has complied promptly and in full with all
legislation and regulations relating to PAYE and the
taxation of employee benefits including (without
limitation) income tax in relation to sub-contractors
tax deduction scheme and casual labour and relating to
National Insurance Contributions (including employers
contributions).
18.5.2 The Company has made in full all deductions in respect
of any Tax from any payments made by it which it is
obliged or entitled to make and has accounted in full
to the appropriate Taxation Authority in respect of
the same.
<PAGE> 51
18.6 Capital Gains
-------------
18.6.1 The Company has not acquired any asset otherwise than
at market value as at the time of acquisition and
there are no circumstances in which the Company has
incurred or may incur loss or liability pursuant to
sections 17, 30, 31, 32, 176 or 177 TCGA.
18.6.2 The Company has not made any claim or election under:-
(a) section 24 TCGA (assets of negligible value);
(b) section 279 TCGA (assets situated outside the
United Kingdom);
(c) section 162 TCGA (transfer of a business to a
company);
(d) section 152 or 153 TCGA (replacement of
business assets).
18.6.3 The Company has not been a party to any transaction
involving securities or shares to which section 106
TCGA applies or may apply.
18.7 Groups and Reorganisations
--------------------------
18.7.1 Full particulars have been disclosed in the Disclosure
Letter of any claim, election or surrender made by the
Company under any of the following:-
(a) section 247 1988 Taxes Act (dividends paid by
one member of a group to another);
(b) section 152 or 153 TCGA (replacement of
business assets);
(c) section 239 or 240 1988 Taxes Act (set-off of
surplus ACT);
(d) section 402 1988 Taxes Act (surrender of
relief);
(e) section 171 TCGA (groups of companies).
18.7.2 The Company has not been a party to any transactions
falling within sections 135, 136, 139, 140, 171 or 173
TCGA or sections 116, 395 or 410 1988 Taxes Act.
18.7.3 The Company has not ceased to be a member of a group
of companies for the purposes of section 178 or 179
TCGA (otherwise than as part of a merger to which
section 181 TCGA applies).
18.8 Losses
------
18.8.1 Full details have been disclosed in the Disclosure
Letter of:-
(a) all losses (whether trading or capital
losses) carried forward by the Company; and
<PAGE> 52
(b) all unrelieved advance corporation tax or
excess franked investment income available to
the Company.
18.8.2 During the period since incorporation of the Company:-
(a) there has been no major change in the nature
or conduct of a trade carried on by the
Company; or
(b) the scale of activities of any trade carried
on by the Company has not been small or
negligible within the meaning of sections 245
or 768 ICTA.
18.9 Close Companies
---------------
18.9.1 The Company is not liable to Tax under sections 419 or
422 1988 Taxes Act in respect of any loan to a
participator and there is no loan outstanding to the
Company on which any interest paid would be a
distribution.
18.9.2 The Company is not, nor has been, a close investment
company within the meaning of section 13A 1988 Taxes
Act.
18.10 Capital Allowance
-----------------
18.10.1 Full disclosure has been made to the Purchaser of all
capital expenditure qualifying for capital allowances
and all balancing adjustments pursuant to the Capital
Allowances Act 1990 in respect of any accounting
period (as defined in section 12 1988 Taxes Act) of
the Company ended on or before the Accounts Date.
18.10.2 Save as disclosed in the Audited Accounts, since the
end of the last such accounting period referred to in
paragraph 18.10.1, the Company has not done, omitted
to do, agreed to do or permitted to be done any act as
a result of which there may be made either a balancing
charge in respect of such capital expenditure or any
recovery of excess relief within the provisions of the
Capital Allowances Act 1990.
18.10.3 On the disposal by the Company of any asset owned by
it at the date of this Agreement at the value at which
that asset is stated in the Audited Accounts, neither
a chargeable gain nor a balancing charge under the
Capital Allowances Act 1990 would arise (and for the
purpose of this paragraph 18.10.3 any relief or
allowance available to the Company, other than a sum
falling to be deducted under section 38 TCGA, shall be
disregarded).
18.11 Distributions
-------------
18.11.1 The Company has not made any distribution within the
meanings of sections 209, 210 or 418 1988 Taxes Act
save as provided in its audited accounts.
<PAGE> 53
18.11.2 The Company has not made a capital distribution within
the meaning of section 122(5) TCGA or to which section
189 TCGA applies.
18.12 Inheritance Tax
---------------
18.12.1 The Company has not made any transfer of value within
the meaning of sections 94 or 99 Inheritance Tax Act
1984.
18.12.2 No person has by virtue of section 212 Inheritance Tax
Act 1984 any power of sale, mortgage or charge in
respect of any share in or asset of the Company.
18.12.3 There is no outstanding Inland Revenue charge under
section 237 Inheritance Tax Act 1984 over the assets
or the shares in the Company.
18.13 Miscellaneous
-------------
18.13.1 The Company has not been a party to any transaction to
which section 56 1988 Taxes Act applies or may apply.
18.13.2 The Company has not issued nor acquired any deep
discount securities as defined by Schedule 4 paragraph
1(1) 1988 Taxes Act or disposed of a corporate bond in
circumstances to which sections 64(5) or 64(6) Finance
Act 1984 applies or may apply.
18.13.3 The Company is not entitled to the benefit of any debt
other than as original creditor.
18.13.4 The Company has not lost nor will it lose any
entitlement to relief under sections 37, 87 or 399
1988 Taxes Act.
18.13.5 The Company has not made any claim under sections 584
or 585 1988 Taxes Act.
18.13.6 The Company has not received nor knows of any
circumstances under which it may receive payment of
any enterprise allowance within the meaning of section
127 1988 Taxes Act.
18.13.7 Full details have been disclosed of any charities
payroll deduction scheme within the meaning of section
202 1988 Taxes Act or any qualifying donation within
the meaning of section 339 1988 Taxes Act operated or
made by the Company.
18.14 Residency
---------
18.14.1 The Company does not have dual residency for Tax
purposes.
18.14.2 No event has occurred which could give rise to the
Company suffering a liability under sections 765 to
767 or 770 1988 Taxes Act.
<PAGE> 54
18.15 Anti Avoidance
--------------
18.15.1 The Company has not been a party to or otherwise
involved in any scheme or arrangement designed wholly
or mainly for the purpose of avoiding or deferring Tax
liability.
18.15.2 The Company has not been concerned in any transaction
in which any of the following provisions have been or
could be applied except where all applicable
clearances (based on the full disclosure of all
material facts) have been obtained and disclosed in
the Disclosure Letter:-
(a) sections 35 to 36 1988 Taxes Act;
(b) sections 213 to 218 1988 Taxes Act;
(c) sections 219 to 229 1988 Taxes Act;
(d) section 703 1988 Taxes Act;
(e) sections 729 to 745 1988 Taxes Act;
(f) sections 757 to 760 1988 Taxes Act;
(g) sections 774 to 776 1988 Taxes Act;
(h) sections 779 to 786 1988 Taxes Act;
(i) sections 135 to 137 TCGA; and
(j) section 192 TCGA.
<PAGE> 55
SCHEDULE 4
----------
(DOCUMENTS IN THE AGREED TERMS)
1 Service agreement between the Company and M. White.
2 Subordinated Loan Stock Instrument.
3 Exclusive distributor agreement between the Company and Vision
Navigation Systems Limited.
4. Accounts.
5. Disclosure Letter.
6. EMG Agreement.
7. Agreement with Intersat France S.a.r.l.
8. Subordinated Stock Pledge Agreement.
9. Standby and Subordination Agreement.
10. Personal Guaranty.
11. Memorandum of Deposit.
<PAGE> 56
Signed by )
for and on behalf of )
THE O'GARA COMPANY )
in the presence of )
Signed by PASCAL MARIE )
CHARLES PETIT in the )
presence of:- )
..................................................
Name:
Address:
..................................
..................................
Occupation:..................................
<PAGE> 57
Signed by ALEXANDER )
AGNEW STEWART WHITE )
in the presence of:- )
..................................................
Name:
Address:
..................................
..................................
Occupation:..................................
Signed by MARK BRIAN )
WHITE in the presence of:- )
..................................................
Name:
Address:
..................................
..................................
Occupation:..................................
<PAGE> 1
Exhibit 10.26
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("AGREEMENT") is made as of March 24,
1997, by O'Gara Hess & Eisenhardt Armoring Company, a Delaware corporation
("BUYER"), and Jerome E. Hoffman, Gerald O. Smith, Rosemary Smith and Katharine
L. Kropp (collectively, "SELLERS").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "SHARES") of capital stock of International
Training Incorporated, a Virginia corporation (the "COMPANY"), for the
consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES"--the Company and its subsidiaries, including any
entity that owns assets used in the Company's training or interactive video
businesses.
"AUTOMOTIVE PRODUCTS"--nominal quantities of motor oil, transmission
fluid, radiator coolant and other automotive products used in the ordinary
course of the Company's business.
"BUYER"--as defined in the first paragraph of this Agreement.
"CASINGS"--bullets and other ammunition used in the ordinary course of
the Company's business.
"CLOSING"--as defined in Section 2.3.
"CLOSING DATE"--the date and time as of which the Closing actually
takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES"--as defined in Section 5.2.
"DISCLOSURE SCHEDULE"--the disclosure schedule delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"EMPLOYMENT AGREEMENTS"--as defined in Section 2.4(a)(ii).
<PAGE> 2
"ENCUMBRANCE"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata, surface waters,
groundwaters, drinking water supply, stream sediments, ambient air, plant and
animal life, and any other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (b) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions required by applicable Environmental Law or Occupational Safety and
Health Law and for any natural resource damages; or (d) any other compliance,
corrective, investigative, or remedial measures required under Environmental Law
or Occupational Safety and Health Law. The terms "removal," "remedial," and
"response action," include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq., as amended ("CERCLA").
"ENVIRONMENTAL LAW"--any legal requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of intended or
actual releases of pollutants or hazardous substances or materials, violations
of discharge limits, or other prohibitions and of the commencements of
activities that could have significant impact on the Environment; (b) preventing
or reducing to acceptable levels the release of pollutants or hazardous
substances or materials into the Environment; (c) reducing the quantities,
preventing the release, or minimizing the hazardous characteristics of wastes
that are generated; (d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of; (e) reducing to acceptable
levels the risks inherent in the transportation of hazardous substances,
pollutants, oil, or other potentially harmful substances; (f) cleaning up
pollutants that have been released, preventing the threat of release, or paying
the costs of such clean up or prevention; or (g) making responsible parties pay
private parties, or groups of them, for damages done to their health or the
Environment, or permitting self-appointed representatives of the public interest
to recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"FACILITIES"--any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company and any
buildings, plants, structures, or equipment (including motor vehicles) currently
or formerly owned or operated by any Acquired Company.
<PAGE> 3
"FINANCIAL STATEMENTS"--as defined in Section 3.4.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling,
manufacturing, processing, production, release, storage, transportation,
treatment, or use of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act, business
or operation that increases the danger or poses an unreasonable risk of harm to
persons or property on or off the Facilities, or that may affect the value of
the Facilities or the Acquired Companies other than the use and storage of
Automotive Products and Casings on the Property.
"HAZARDOUS MATERIALS"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law.
"INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.22.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"MARKET VALUE"--the average closing price of the TOG Shares on the
NASDAQ National Market as listed in the Wall Street Journal during the five
business days ending on the business day which is four business days prior to
the Closing Date.
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any legal requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or governmental body.
"SECURITIES ACT"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this Agreement.
"SHARES"--as defined in the Recitals of this Agreement.
<PAGE> 4
"SUBORDINATED NOTES"--as defined in Section 2.4(b)(iii).
"TOG"--The O'Gara Company, an Ohio corporation.
"TOG SHARES"--as defined in Section 2.4(b)(i) of this Agreement.
2. SALE AND TRANSFER OF SHARES; CLOSING
------------------------------------
2.1 SHARES
------
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Sellers.
2.2 PURCHASE PRICE
--------------
The purchase price for the Shares will be $2,531,513, payable as set
forth in Section 2.4(b) below.
2.3 CLOSING
-------
The purchase and sale (the "CLOSING") provided for in this Agreement
will take place at the offices of the Company at 5:00 p.m. on March 24, 1997, or
at such other time and place as the parties may agree.
2.4 CLOSING OBLIGATIONS
-------------------
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange, for transfer
to Buyer;
(ii) employment agreements in the form of Exhibit 2.4(a)(ii),
executed by Jerome E. Hoffman, Gerald O. Smith and Clarence D. Beedle
(collectively, "EMPLOYMENT AGREEMENTS"); and
(iii) the opinion of Hudson and Bondurant, P.C., counsel to
Sellers, in the form of Exhibit 2.4(a)(iii).
(b) Buyer will deliver to Sellers:
(i) that number of shares of the common stock of Buyer
("TOG SHARES") having an aggregate Market Value of Eight Hundred Thousand
Dollars ($800,000), allocable to Jerome E. Hoffman, Gerald O. Smith,
Rosemary Smith and Katharine L. Kropp, respectively, in the following amounts:
$320,000.00, $320,000.00, $80,000.00 and $80,000.00;
(ii) Five Hundred Thousand Dollars ($500,000.00) by bank
cashier's or certified checks payable to the order of Jerome E. Hoffman,
Gerald O. Smith, Rosemary
<PAGE> 5
Smith and Katharine L. Kropp, respectively, in the following amounts:
$200,000.00, $200,000.00, $50,000.00 and $50,000.00;
(iii) promissory notes in the aggregate principal amount of
$1,231,513.00, subordinated to the interest of The Fifth Third Bank and
guaranteed by TOG and payable to Jerome E. Hoffman, Gerald O. Smith, Rosemary
Smith and Katharine L. Kropp, respectively, in the principal amounts of
$492,605.00, $492,605.00, $123,151.00 and $123,151.00, in the form of Exhibit
2.4(b)(iii) (the "SUBORDINATED NOTES");
(iv) the Employment Agreements, executed by Buyer; and
(v) the opinion of Abram S. Gordon, as General Counsel to
Buyer, in the form of Exhibit 2.4(b)(v).
2.5 INTERACTIVE VIDEO BUSINESS ASSETS
---------------------------------
Sellers hereby transfer, convey and assign to the Company all of their
right, title and interest in and to the interactive video business which they
have conceived and developed which will allow security training to be performed
by interactive video and/or CD ROM. Buyer shall pay Jerome E. Hoffman and Gerald
O. Smith a royalty for such interactive video in accordance with the letter
attached hereto as Exhibit 2.5 and incorporated herein.
<PAGE> 6
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers jointly and severally represent and warrant to Buyer as
follows:
3.1 ORGANIZATION AND GOOD STANDING
------------------------------
(a) Section 3.1 of the Disclosure Schedule contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do business, and
its capitalization (including the identity of each stockholder and the number of
shares held by each). Each Acquired Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted and to own or use the properties and assets that it
purports to own or use. Each Acquired Company is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation
of Sellers, enforceable against Sellers in accordance with its terms. Upon the
execution and delivery by Sellers of the Employment Agreements (collectively,
the "Sellers' Closing Documents"), the Sellers' Closing Documents will
constitute the legal, valid, and binding obligations of Sellers, enforceable
against Sellers in accordance with their respective terms. Sellers have the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Sellers' Closing Documents and to perform their
obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Section 3.2 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the transactions contemplated hereby will, directly or
indirectly (with or without notice or lapse of time);
(i) contravene, conflict with, or result in a violation or
breach of (A) any provision of the Organizational Documents of the Acquired
Companies, (B) any resolution adopted by the board of directors or the
shareholders of any Acquired Company, (C) any legal requirement or any order to
which any Acquired Company, any Seller, or any of the assets owned or used by
any Acquired Company, may be subject, (D) any governmental authorization that is
held by any Acquired Company or that otherwise relates to the business of, or
any of the assets owned or used by, any Acquired Company, or (E) any Contract to
which any Acquired Company is a party or by which any Acquired Company or its
assets is bound or affected;
(ii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by any Acquired Company.
<PAGE> 7
Except as set forth in Section 3.2 of the Disclosure Schedule, no
Seller or Acquired Company is or will be required to give any notice to or
obtain any consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the transactions
contemplated hereby.
(c) Sellers acknowledge that neither the Subordinated Notes nor the TOG
Shares have been registered under the Securities Act, or under the securities
law of any state, and that the sale of the Subordinated Notes and the TOG Shares
is being made in reliance upon and in compliance with an exemption from
registration provided by the Act.
(d) Sellers have been provided with and have reviewed copies of the
Prospectus dated November 12, 1996, for TOG's initial public offering and
quarterly report on Form 10- Q for the period ended September 30, 1996. Sellers
have been supplied with such additional information concerning TOG, the
Subordinated Notes and the TOG Shares as Sellers have reasonably requested, and,
by reason of Sellers' business and financial experience, Sellers have the
capacity to evaluate the merits and risks of an investment in the TOG Shares and
the Subordinated Notes.
(e) Sellers are acquiring the TOG Shares and the Subordinated Notes for
their own account as an investment and not with a view to, or for resale in
connection with, any distribution or public offering, and Sellers have no
agreement, understanding or arrangement to sell, assign or transfer any portion
of the TOG Shares to any other person or entity.
(f) The TOG Shares are "restricted securities" as defined in Rule 144
under the Act. Sellers will not offer, sell, transfer, assign, exchange or
otherwise dispose of any of the TOG Shares at any time unless the TOG Shares 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 TOG that such an exemption is
available to Sellers).
(g) Sellers understand and agree that the certificates for the TOG
Shares will bear a restrictive legend stating that transfer of the TOG Shares is
prohibited except in accordance with the provisions of this Agreement and that
TOG is entitled to refuse to register any transfer of the TOG Shares not made in
accordance with the provisions of this Agreement.
3.3 CAPITALIZATION
--------------
The authorized equity securities of the Company consist of 10,000
shares of common stock, $.01 par value, of which 100 shares are issued and
outstanding and constitute the Shares. Sellers are the record and beneficial
owners and holders of the Shares, free and clear of all Encumbrances. Jerome E.
Hoffman owns 40 of the Shares, Gerald O. Smith owns 40 of the Shares, Rosemary
Smith owns 10 of the shares and Katharine L. Kropp owns 10 of the Shares. With
the exception of the Shares (which are owned by Sellers), all of the outstanding
equity securities and other securities of each Acquired Company are owned of
record and beneficially by one or more of the Acquired Companies, free and clear
of all Encumbrances. No legend or other reference to any purported Encumbrance
appears upon any certificate representing equity securities of any Acquired
Company. All of the outstanding equity securities of each Acquired Company have
been duly authorized and validly issued and are fully paid and nonassessable.
There
<PAGE> 8
are no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of any Acquired Company. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of the Securities Act or any other legal requirement. No Acquired
Company owns, or has any Contract to acquire, any equity securities or other
securities of any Person (other than Acquired Companies) or any direct or
indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
--------------------
(a) For purposes of this Agreement: "FINANCIAL STATEMENTS" shall mean
the unaudited balance sheet of the Company dated as of December 31, 1996, and
the related statements of income, stockholders' equity and cash flows for the
year then ended, and the income statement for the 12 months ended that date;
(b) The Financial Statements, which are incorporated herein by
reference, (i) have been prepared on a basis consistent with that of preceding
accounting periods, (ii) fully reflect all liabilities and contingent
liabilities of the Company required to be reflected therein on such basis as at
the date thereof, and (iii) fairly present the financial position of the Company
as of the respective dates of the balance sheets included in the Financial
Statements and the results of its operations for the respective periods
indicated.
3.5 BOOKS AND RECORDS
-----------------
Except as disclosed in Section 3.5 of the Disclosure Schedule, the
books of account and other records of the Acquired Companies, all of which have
been made available to Buyer, are complete and correct and have been maintained
in accordance with GAAP. Except as disclosed in Section 3.5 of the Disclosure
Schedule, the minute books of the Acquired Companies contain accurate and
complete records of all meetings held of, and corporate action taken by, the
shareholders, the Boards of Directors, and committees of the Boards of Directors
of the Acquired Companies. At the Closing, all of those books and records will
be in the possession of the Acquired Companies.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
---------------------------------
Section 3.6 of the Disclosure Schedule contains a complete and accurate
list of all real property, leaseholds, or other interests therein owned by any
Acquired Company. Sellers have delivered or made available to Buyer copies of
the deeds and other instruments by which the Acquired Companies acquired such
real property and interests, and copies of all title insurance policies,
environmental audits, and surveys in the possession of Sellers or the Acquired
Companies and relating to such real property or interests. Section 3.6 of the
Disclosure Schedule also contains a complete and accurate list of all licensed
vehicles owned or leased by any Acquired Company and the fixed assets used in
the business of any Acquired Company and carried on its books for tax purposes.
Except as set forth on Section 3.6 of the Disclosure Schedule, the Acquired
Companies own (with good and marketable title in the case of real property,
subject only to the matters permitted by the following sentence) all the
properties and assets located in the facilities owned or operated by the
Acquired Companies or reflected as owned in the books and records of the
Acquired Companies, including all of the properties and assets reflected in the
Financial Statements. All material properties and assets reflected in the
Financial Statements are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances,
<PAGE> 9
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) liens for current taxes not yet due, and (b) with
respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of any
Acquired Company, and (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
-----------------------------------
To the knowledge of Sellers, the buildings, vehicles, and equipment of
the Acquired Companies are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, vehicles or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. To the knowledge of Sellers and the Acquired Companies, the
buildings, vehicles and equipment of the Acquired Companies are sufficient for
the continued conduct of the Acquired Companies' businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
-------------------
All accounts receivable of the Acquired Companies that are reflected on
the Financial Statements or on the accounts receivable ledger of the Acquired
Companies as of the Closing Date (collectively, the "Accounts Receivable")
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. The Accounts Receivable
are current and collectible. As of the date of this Agreement, there has been no
contest or claim, nor is there any right of set-off under any Contract with any
obligor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Section 3.8 of the Disclosure Schedule contains a complete
and accurate list of all accounts receivable of the Acquired Companies as of
March 17, 1997, which list sets forth the aging of such accounts receivable.
3.9 [RESERVED]
----------
3.10 NO UNDISCLOSED LIABILITIES
--------------------------
Except as set forth in Section 3.10 of the Disclosure Schedule, the
Acquired Companies have no liabilities or obligations of any nature (whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Financial Statements and
current liabilities incurred in the ordinary course of business since the
respective dates thereof.
3.11 TAXES
-----
The Acquired Companies have properly and timely filed all federal,
state and local tax returns and have paid all taxes, assessments and penalties
due and payable. All such tax returns were correct in all respects as filed, and
no claims have been assessed with respect to such returns. The provisions made
for taxes on the balance sheets of the Acquired Companies included in the
Financial Statements are sufficient in all respects for the payment of all taxes
whether disputed or not that are due or are hereafter found to have been due
with respect to the conduct of the business of the Acquired Companies up to and
through the date of such Financial Statements. There are no present disputes as
to
<PAGE> 10
taxes of any nature payable by the Acquired Companies, nor any tax liens whether
existing or inchoate on any of the assets of the Acquired Companies, except for
current year taxes not presently due and payable. The federal income tax returns
of the Acquired Companies have never been audited. No IRS or foreign, state,
county or local tax audit is currently in progress. The Acquired Companies have
not waived the expiration of the statute of limitations with respect to any
taxes.
3.12 NO MATERIAL ADVERSE CHANGE
--------------------------
Since December 31, 1996, to the knowledge of Sellers, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of any Acquired Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.13 EMPLOYEE BENEFITS
-----------------
(a) Except as set forth in Section 3.13 of the Disclosure
Schedule, none of the Acquired Companies nor any corporation or business which
is now or at the relevant time was a member of a controlled group of companies
or trades or businesses including any of the Acquired Companies, within the
meaning of section 414 of the IRC ("Related Company"), maintains, contributes to
or has any liability under, or at any time maintained, contributed to or had any
liability under, nor do the employees of any of the Acquired Companies or any
Related Company receive or expect to receive as a condition of employment (A)
any non-qualified deferred compensation or retirement plans or arrangements; (B)
any defined contribution retirement plans or arrangements; (C) any qualified
defined benefit pension plan; (D) any other plan, program, agreement or
arrangement under which former employees of any of the Acquired Companies or
their beneficiaries are entitled, or current employees of the Acquired Companies
will be entitled following termination of employment, to medical, health or life
insurance or other benefits other than pursuant to benefit continuation rights
granted by state or federal law; or (E) any other employee benefit, health,
welfare, medical, disability, life insurance, severance pay, stock, stock
purchase or stock option plan, program, agreement, arrangement or policy. All
such plans shall be referred to collectively as "Plans," and any such plans
which are employee pension benefit plans within the meaning of section 3(2) of
ERISA shall be referred to as "Pension Plans" and any such plans which are
employee welfare benefit plans within the meaning of section 3(1) of ERISA shall
be referred to as "Welfare Plans."
(b) Sellers have furnished to the Buyer true and complete
copies of (A) the Plan documents and any related trusts or funding vehicles,
policies or contracts and the related summary plan descriptions with respect to
each Plan; and (B) copies of all corporate resolutions or other documents
pertaining to the adoption of the Plans or any amendments thereto or to the
appointment of any fiduciaries thereunder.
(c) Each Plan complies in all material respects with ERISA,
the IRC, and all other applicable laws and administrative or government rules or
regulations. All required reports, notices and descriptions with respect to the
Plans have been appropriately filed or distributed. The cost of administering
the Plans, including fees for the trustees and other service providers which are
customarily paid by the Acquired Companies, have been paid prior to the date
hereof. No plan is maintained in connection with any trust described in section
501(c)(9) of the IRC. There are no actions, suits or claims pending or
threatened (other than routine claims for benefits) with respect to any Plan. No
prohibited transactions described in section 406 of ERISA or section 4975 of the
Code have occurred. Each Plan has been operated in compliance with its terms.
The Acquired Companies have complied
<PAGE> 11
in all material respects with the health care continuation requirements of part
6 of Title I of ERISA.
(d) With respect to all other Plans, all required or
recommended (in accordance with plan terms and past practice) payments,
premiums, contributions, reimbursements or accruals for all periods ending prior
to or as of the date hereof have been made or properly accrued on the financial
statements. All of the Welfare Plans are fully insured.
(e) None of the Acquired Companies nor any Related Company
contributes or in the past six years has contributed to a "multi-employer plan"
(as defined in section 3(37) or 4001(a)(2) of ERISA or section 414(f) of the
IRC).
3.14 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
-------------------------------------------------
(a) Except as set forth in Section 3.14 of the Disclosure Schedule, the
Acquired Companies are in compliance with all laws, regulations, orders,
ordinances, judgments and decrees affecting the business or operations of the
Acquired Companies, including, without limitation, federal, state and local: (i)
Environmental Laws; (ii) Occupational Safety and Health Laws; and (iii)
securities laws, rules and regulations. None of the Acquired Companies has been
charged with violating, nor to the knowledge of Sellers, threatened with a
charge of violating, nor, to the knowledge of Sellers, are any of the Acquired
Companies under investigation with respect to a possible violation of, any
provision of any federal, state or local law, order or administrative ruling or
regulation relating to any of their assets or properties or any aspect of their
business.
(b) Section 3.14 of the Disclosure Schedule contains a complete and
accurate list of each governmental authorization, license or permit that is held
by any Acquired Company or that otherwise relates to the business of, or to any
of the assets owned or used by, any Acquired Company. Each governmental
authorization listed or required to be listed in Section 3.14 of the Disclosure
Schedule is valid and in full force and effect.
3.15 LEGAL PROCEEDINGS
-----------------
(a) Except as set forth in Section 3.15 of the Disclosure Schedule, to
the knowledge of Sellers, there is no pending claim, action, investigation,
arbitration, litigation or other proceeding ("PROCEEDING"):
(i) that has been commenced by or against any Acquired Company
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated hereby.
To the knowledge of Sellers and the Acquired Companies, (1) no such
Proceeding has been threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. Sellers have made available to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Section 3.15 of the Disclosure Schedule. The Proceedings listed in Section 3.15
of the Disclosure Schedule will not have a material adverse effect on the
business, operations, assets, condition, or prospects of any Acquired Company.
<PAGE> 12
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
-------------------------------------
Except as set forth in Section 3.16 of the Disclosure Schedule, since
December 31, 1996, the Acquired Companies have conducted their businesses only
in the ordinary course of business and there has not been any:
(a) declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the ordinary course of business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(c) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
(d) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
(e) entry into, termination of, or receipt of notice of termination of
any Contract or transaction involving a total remaining commitment by or to any
Acquired Company of at least $5,000;
(f) sale, lease, or other disposition of any asset or property of any
Acquired Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of any Acquired Company;
(g) cancellation or waiver of any claims or rights with a value to any
Acquired Company in excess of $5,000;
(h) material change in the accounting methods used by any Acquired
Company; or
(i) agreement, whether oral or written, by any Acquired Company to do
any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
----------------------
(a) Section 3.17(a) of the Disclosure Schedule contains a complete and
accurate list, and Sellers have delivered to Buyer true and complete copies, of:
(i) each Contract that involves performance of services or
delivery of goods or materials by one or more Acquired Companies of an amount or
value in excess of $5,000;
(ii) each Contract that involves performance of services or
delivery of goods or materials to one or more Acquired Companies of an amount or
value in excess of $5,000;
(iii) each lease, license, and other Contract affecting any
leasehold or other interest in, any real or personal property;
<PAGE> 13
(iv) each licensing agreement or other Contract with respect
to patents, trademarks, copyrights, trade secrets or other intellectual
property, including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any
intellectual property;
(v) each collective bargaining agreement and other Contract to
or with any labor union or other employee representative of a group of
employees;
(vi) each joint venture, partnership, and other Contract
involving a sharing of profits, losses, costs, or liabilities by any Acquired
Company with any other Person;
(vii) each Contract containing covenants that in any way
purport to restrict the business activity of any Acquired Company or any Seller
or limit the freedom of any Acquired Company or any Seller to engage in any line
of business or to compete with any Person;
(viii) each power of attorney that is currently effective and
outstanding; and
(ix) each Contract for capital expenditures in excess of
$10,000.
(b) Except as set forth in Section 3.17(b) of the Disclosure Schedule,
no Seller has or may acquire any rights under, and no Seller has or may become
subject to any obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, any Acquired Company; and
(c) Except as set forth in Section 3.17(c) of the Disclosure Schedule,
to the knowledge of Sellers, each Contract identified or required to be
identified in Section 3.17(a) of the Disclosure Schedule is in full force and
effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Section 3.17(d) of the Disclosure Schedule:
(i) to the knowledge of Sellers, each Acquired Company is in
full compliance with all applicable terms and requirements of each Contract
under which such Acquired Company has or had any obligation or liability or by
which such Acquired Company or any of the assets owned or used by such Acquired
Company is or was bound;
(ii) to the knowledge of Sellers and the Acquired Companies,
each other person that has or had any obligation or liability under any Contract
under which an Acquired Company has or had any rights is in full compliance with
all applicable terms and requirements of such Contract; and
(iii) no event has occurred or, to the knowledge of Sellers,
circumstance exists that (with or without notice or lapse of time) may result in
a violation or breach of any Contract.
3.18 INSURANCE
---------
Section 3.18 of the Disclosure Schedule sets forth the premium payments
and describes all the insurance policies of the Acquired Companies, which
policies are now in full force and effect in accordance with their terms and
expire on the dates shown on such Schedule. There has been no default in the
payment of premiums on any of such policies, and, to the knowledge of Sellers,
there is no ground for cancellation or avoidance of any
<PAGE> 14
such policies, or any increase in the premiums thereof, or for reduction of the
coverage provided thereby. Such policies insure the Acquired Companies in
amounts and against losses and risks normal and sufficient for businesses
similar to that of the Acquired Companies, and, to the knowledge of Sellers,
such policies shall continue in full force and effect up to the expiration dates
shown in Section 3.18 of the Disclosure Schedule. True and correct copies of all
insurance policies listed in Section 3.18 have been previously furnished to
Buyer.
3.19 ENVIRONMENTAL MATTERS
---------------------
Except as set forth in part 3.19 of the Disclosure Schedule:
(a) To the knowledge of Sellers, each Acquired Company is, and at all
times has been, in full compliance with, and has not been and is not in
violation of or liable under, any Environmental Law. No Seller or Acquired
Company has any basis to expect, nor has any of them or, to the knowledge of
Sellers, any other Person for whose conduct they are or may be held to be
responsible received, any actual or threatened order, notice, or other
communication from (i) any governmental body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets in which Sellers or
any Acquired Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
transferred, used, or processed by Sellers, any Acquired Company, or any other
Person for whose conduct they are or may be held responsible.
(b) There are no pending or, to the knowledge of Sellers and the
Acquired Companies, threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets in which Sellers or any
Acquired Company has or had an interest.
(c) No Seller or Acquired Company has knowledge of any basis to expect,
nor has any of them or, to the knowledge of Sellers, any other Person for whose
conduct they are or may be held responsible, received, any inquiry, notice,
order, or other communication that relates to Hazardous Activity, Hazardous
Materials, or any violation or failure to comply with any Environmental Law, or
of any obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets in which Sellers or any Acquired Company had an interest,
or with respect to any property or facility to which Hazardous Materials
generated, manufactured, transferred, used, or processed by Sellers, any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, or handled.
(d) To the knowledge of Sellers, no Seller or Acquired Company, or any
other Person for whose conduct they are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to any other properties and assets in which Sellers or any Acquired
Company (or any predecessor), has or had an interest, or at any property
adjoining the Facilities or any such other property or assets.
(e) To the knowledge of Sellers, there are no Hazardous Materials
present on or in the Environment at the Facilities other than Automotive
Products and Casings. No Seller,
<PAGE> 15
Acquired Company, to the knowledge of Sellers, any other Person for whose
conduct they are or may be held responsible, or to the knowledge of Sellers and
the Acquired Companies, any other Person, has permitted or conducted, or is
aware of, any Hazardous Activity conducted with respect to the Facilities or any
other properties or assets in which Sellers or any Acquired Company has or had
an interest except in full compliance with all applicable Environmental Laws.
(f) To the knowledge of Sellers, other than through the use of Casings,
there has been no release or, to the knowledge of Sellers and the Acquired
Companies, threat of release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, transferred, produced, used, or processed from or by
the Facilities, or from or by any other properties and assets in which Sellers
or any Acquired Company has or had an interest, or to the knowledge of Sellers
and the Acquired Companies any adjoining property, whether by Sellers, any
Acquired Company, or any other Person. the Company has taken reasonable measures
to collect used Casings.
(g) Sellers are not aware of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers or any Acquired Company pertaining
to Hazardous Materials or Hazardous Activities in, on, or under the Facilities,
or concerning compliance by Sellers, any Acquired Company, or any other Person
for whose conduct they are or may be held responsible, with Environmental Laws.
3.20 EMPLOYEES
---------
(a) Section 3.20 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee of the Acquired
Companies: name; job title; current compensation; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under any
Acquired Company's pension, or other employee benefit plan of any nature.
(b) No employee or director of any Acquired Company is a party to, or
is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person that in any way adversely affects or
will affect (i) the performance of his duties as an employee, officer, or
director of the Acquired Companies, or (ii) the ability of any Acquired Company
to conduct its business. To Sellers' knowledge, no director, officer, or other
key employee of any Acquired Company intends to terminate his employment with
such Acquired Company.
3.21 LABOR RELATIONS
---------------
No Acquired Company has been or is a party to any collective bargaining
or other labor Contract. There has not been, there is not presently pending or
existing, and to Sellers' knowledge there is not threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
proceeding against or affecting any Acquired Company relating to the alleged
violation of any legal requirement pertaining to labor relations or employment
matters, organizational activity, or other labor or employment dispute against
or affecting any of the Acquired Companies or their premises.
3.22 INTELLECTUAL PROPERTY
---------------------
(a) INTELLECTUAL PROPERTY ASSETS--The term "Intellectual Property
Assets" includes: (i) the name "International Training," all fictional business
names, trading names, registered
<PAGE> 16
and unregistered trademarks, service marks, and applications (collectively,
"MARKS"); (ii) all patents, patent applications, and inventions and discoveries
that may be patentable (collectively, "PATENTS"); (iii) all copyrights in both
published works and unpublished works, including training manuals and videos
(collectively, "COPYRIGHTS"); and (iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, plans,
drawings, and blue prints (collectively, "TRADE SECRETS"); owned, used, or
licensed by any Acquired Company as licensee or licensor.
(b) AGREEMENTS--Section 3.22(b) of the Disclosure Schedule contains a
complete and accurate list and summary description, including any royalties paid
or received by the Acquired Companies, of all Contracts relating to the
Intellectual Property Assets to which any Acquired Company is a party or by
which any Acquired Company is bound.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS--The Intellectual Property
Assets are all those necessary for the operation of the Acquired Companies'
businesses as they are currently conducted. One or more of the Acquired
Companies is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all Encumbrances and has the
right to use without payment to a third party all of the Intellectual Property
Assets.
(d) TRADEMARKS--(i) Section 3.22(d) of Disclosure Schedule contains a
complete and accurate list of all Marks; (ii) one or more of the Acquired
Companies is the owner of all right, title, and interest in and to each of the
Marks, free and clear of all Encumbrances; (iii) all Marks that have been
registered with the United States Patent and Trademark Office are currently in
compliance with all formal legal requirements and are valid and enforceable;
(iv) no Mark is infringed or, to Sellers' knowledge, has been challenged or
threatened in any way. None of the Marks used by any Acquired Company infringes
or is alleged to infringe any trade name, trademark, or service mark of any
third party.
(e) COPYRIGHTS--(i) Section 3.22(e) of the Disclosure Schedule contains
a complete and accurate list of all Copyrights; (ii) one or more of the Acquired
Companies is the owner of all right, title, and interest in and to each of the
Copyrights, free and clear of all Encumbrances; (iii) all the Copyrights have
been registered and are currently in compliance with formal legal requirements,
and are valid and enforceable; (iv) no Copyright is infringed or, to Sellers'
knowledge, has been challenged or threatened in any way; (v) none of the subject
matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party; and (vi) all works encompassed by the Copyrights have been marked
with the proper copyright notice.
(f) TRADE SECRETS--(i) Sellers and the Acquired Companies have taken
all reasonable precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets; and (ii) to the knowledge of Sellers, one or more of the
Acquired Companies has good title and an absolute right to use the Trade
Secrets. The Trade Secrets, to Sellers' knowledge, have not been used, divulged,
or appropriated either for the benefit of any Person (other than one or more of
the Acquired Companies) or to the detriment of the Acquired Companies. No Trade
Secret is subject to any adverse claim or has been challenged or threatened in
any way.
(g) USE OF INTELLECTUAL PROPERTY ASSETS -- Jerome E. Hoffman and Gerald
O. Smith shall be entitled to use those of the Intellectual Property Assets that
they have contributed to the Company, other than the name of the Company, upon
the termination of any confidentiality or non-competition agreements contained
in the Employment Agreements. The preceding shall not impair at any time the
rights of the Company to utilize such Intellectual Property Rights
<PAGE> 17
3.23 CERTAIN PAYMENTS
----------------
No Acquired Company or director, officer, agent, or employee of any
Acquired Company, or to Sellers' knowledge any other Person associated with or
acting for or on behalf of any Acquired Company, has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence payment, kickback,
or other payment to any Person, private or public, regardless of form, whether
in money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of any Acquired Company or any affiliate of an Acquired Company, or
(iv) in violation of any legal requirement, or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Acquired Companies.
3.24 DISCLOSURE
----------
(a) No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Schedule omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) There is no fact known to any Seller that has specific application
to any Seller or any Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as any Seller can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Acquired Companies (on a
consolidated basis) that has not been set forth in this Agreement or the
Disclosure Schedule.
3.25 RELATIONSHIPS WITH RELATED PERSONS
----------------------------------
Except as set forth in Section 3.25 of the Disclosure Schedule, no
Seller, nor any officer, director or employee of any Acquired Company, nor any
spouse or child of any of them ("RELATED PERSON") has any interest in any
property used in or pertaining to the Acquired Companies' businesses. No Seller
or any Related Person has owned an equity interest or any other financial or
profit interest in, a Person that has (i) had business dealings with any
Acquired Company, or (ii) engaged in competition with any Acquired Company.
Except as set forth in Section 3.25 of the Disclosure Schedule, no Seller or any
Related Person is a party to any Contract with, or has any claim or right
against, any Acquired Company.
3.26 BROKERS OR FINDERS
------------------
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
3.27 DEPOSIT ACCOUNTS
----------------
Section 3.27 of the Disclosure Schedule contains a complete and
accurate list of (a) the name of each financial institution in which any
Acquired Company has an account or safe deposit box, (b) the names in which each
account or box is held, (c) the type account, and (d) the name of each person
authorized to draw on or have access to each account or box.
<PAGE> 18
3.28 CUSTOMER RELATIONSHIPS
----------------------
To the knowledge of Sellers, there are no facts or circumstances that
are likely to result in the loss of any customer of the Acquired Companies or a
material change in the relationship of the Acquired Companies with such a
customer.
4.0 REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
------------------------------
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
4.2 AUTHORITY; NO CONFLICT
----------------------
(a) This Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Employment Agreements and the
Subordinated Notes (collectively, the "Buyer's Closing Documents"), the Buyer's
Closing Documents will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents.
(b) Except for the consent of The Fifth Third Bank, neither the
execution and delivery of this Agreement by Buyer nor the consummation or
performance by Buyer of any of the transactions contemplated hereby will give
any Person the right to prevent, delay, or consent to any of the transactions
contemplated hereby pursuant to: (i) any provision of Buyer's Organizational
Documents; (ii) any resolution adopted by the board of directors or the
shareholders of Buyer; (iii) any legal requirement or order to which Buyer may
be subject; or (iv) any Contract to which Buyer is a party or by which Buyer may
be bound.
4.3 TOG SHARES
----------
The TOG Shares delivered to Sellers at the Closing have been duly
authorized, and upon issuance of such shares as provided in the Agreement, will
be validly issued, fully paid and nonassessable.
4.4 PIGGYBACK RIGHTS
----------------
If TOG registers any additional shares of its common stock for sale
subsequent to the Closing, pursuant to the Act, and if (i) any shares of the
current shareholders of TOG ("CURRENT SHAREHOLDERS") which are then restricted
as to holding period, or volume of sale under the U.S. Securities and Exchange
Commission Rule 144 are included in the registration, and (ii) the resale of the
TOG Shares by any of the Sellers is then restricted as to holding period, or
volume of sale under U.S. Securities and Exchange Act Rule 144, then TOG will
accord to each of the Sellers the opportunity, on a pro rata basis with the
other Current Shareholders, to include in such registration statement shares of
TOG, on the same terms and conditions and subject to the same limitations as
shall apply to the Current Shareholders. Notwithstanding the foregoing, the
number of shares that any of the of the Sellers shall be entitled to register
shall not exceed the greatest number of shares registered by any of the Current
Shareholders.
<PAGE> 19
4.5 BROKERS OR FINDERS
------------------
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement except
for fees payable to G. Jeffrey Brausch and Company.
5.0 INDEMNIFICATION; REMEDIES
-------------------------
5.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
------------------------------------------------------------
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired by Buyer
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
-------------------------------------------------
Sellers, jointly and severally, will indemnify and hold harmless Buyer,
the Acquired Companies, and their respective representatives, stockholders,
controlling persons, and affiliates (collectively, the "INDEMNIFIED PERSONS")
for, and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"DAMAGES"), arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Sellers in
this Agreement, the Disclosure Schedule, or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) any breach by any Seller of any covenant or obligation of such
Seller in this Agreement or in the Employment Agreements;
(c) the operation of the business of any Acquired Company prior to the
Closing Date;
(d) (i) the issuance by the Company and the acquisition by the Company
or any of the Sellers of the preferred shares of stock of the Company, (ii) any
failure by the Company to pay any dividends on the preferred shares of stock of
the Company, (iii) the failure to acquire and retire all of the outstanding
preferred shares of stock of the company on or prior to the Closing Date (the
rights of the Buyer under this subparagraph shall not be impaired for any
reason, including, but not limited to Buyer closing on the acquisition of the
Acquired Companies with the knowledge that all of the outstanding preferred
shares of stock have not been retired); and
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any
<PAGE> 20
such Person with any Seller or any Acquired Company in connection with the
transactions contemplated hereby.
The remedies provided in this Section 5.2 will not be exclusive of or
limit any other remedies that may be available to Buyer or the other Indemnified
Persons.
5.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--ENVIRONMENTAL
----------------------------------------------------------------
MATTERS
-------
In addition to the provisions of Section 5.2, Sellers, jointly and
severally, will indemnify and hold harmless Buyer, the Acquired Companies, and
the other Indemnified Persons for, and will pay to Buyer, the Acquired
Companies, and the other Indemnified Persons the amount of, any Damages arising,
directly or indirectly, from or in connection with:
(a) any Environmental, Health, and Safety Liabilities arising out of or
relating to: (i) any Hazardous Materials or other contaminants, wherever
located, that were, or were allegedly, generated, transported, stored, treated,
released, or otherwise handled by Sellers or any Acquired Company or by any
other Person for whose conduct they are or may be held responsible at any time
on or prior to the Closing Date, or (ii) any Hazardous Activities that were, or
were allegedly, conducted by Sellers or any Acquired Company or by any other
Person for whose conduct they are or may be held responsible; or
(b) any bodily injury, personal injury, property damage, or other
damage of or to any Person, in any way arising from or allegedly arising from
any Hazardous Activity conducted or allegedly conducted by Sellers or any
Acquired Company or by any other Person for whose conduct they are or may be
held responsible with respect to the Facilities or the operation of the Acquired
Companies prior to the Closing Date, or from Hazardous Material that was
released or allegedly released by Sellers or any Acquired Company or any other
Person for whose conduct they are or may be held responsible, at any time on or
prior to the Closing Date.
5.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
-----------------------------------------------
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers
the amount of any Damages arising, directly or indirectly, from or in connection
with (a) any breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer in connection with the
transactions contemplated hereby.
5.5 RIGHT OF SET-OFF
----------------
Upon notice to Sellers specifying in reasonable detail the basis for
such set-off, Buyer may set off any amount to which it may be entitled under
this Section 5 against principal payments otherwise payable under the
Subordinated Notes. The exercise of such right of set-off by Buyer in good
faith, whether or not ultimately determined to be justified, will not constitute
an event of default under the Subordinated Notes; provided, however, that if it
is ultimately determined that set-off was not justified, then within five (5)
business days of such determination, Buyer shall pay the requisite amount
together with interest as set forth in the Subordinated Notes. Neither the
exercise of nor the failure to exercise such right of set-off will constitute an
election of remedies or limit Buyer in any manner in the
<PAGE> 21
enforcement of any other remedies that may be available to it. If Buyer
exercises such right of set-off, (a) the amounts set-off will be deemed to
reduce the principal amount of the Subordinated Notes as of the Closing and will
be applied to reduce the principal installments due in the order in which they
are due, (b) the interest due on the Subordinated Notes will be retroactively
recalculated based on such set-off, and (c) Buyer may further set-off any
previous overpayment of interest as a result of such recalculation against
future payments of interest under the Subordinated Notes.
5.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
-------------------------------------------------
Promptly after receipt by an indemnified party of notice of the
commencement of any proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnified party's failure to give such notice.
5.7 NOTICE OF OTHER CLAIMS
----------------------
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
6.0 GENERAL PROVISIONS
------------------
6.1 EXPENSES
--------
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement, including all fees
and expenses of agents, representatives, counsel, and accountants. Sellers will
cause the Acquired Companies not to incur any out-of-pocket expenses in
connection with this Agreement.
6.2 PUBLIC ANNOUNCEMENTS
--------------------
Unless required by law or by the NASDAQ National Market, any public
announcement or similar publicity with respect to this Agreement, the Closing,
or the transactions contemplated hereby will be issued, if at all, at such time
and in such manner as Buyer determines with the concurrence of the Company.
Unless disclosure is consented to by Buyer in advance or required by law,
Sellers shall, and shall cause the Acquired Companies to, keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Sellers and Buyer will consult with each other concerning the means by
which the Acquired Companies' employees, customers, and suppliers and others
having dealings with the Acquired Companies will be informed of this Agreement,
the Closing and the transactions contemplated hereby, and Buyer may at its
option be present for any such communication.
6.3 NOTICES
-------
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by fax (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when
<PAGE> 22
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and fax
numbers set forth below (or to such other addresses and fax numbers as a party
may designate by notice to the other parties):
Sellers: International Training, Incorporated
West Point Municipal Airport
P.O. Box 1400
West Point, VA 23181
Attention: Mr. Jerome E. Hoffman
Fax No.: (804) 785-2719
with a copy to: B. Elliott Bondurant, Esq.
Hudson and Bondurant , P.C.
826 Main Street
West Point, VA 23181
Fax No: (804) 843-4946
Buyer: O'Gara Hess & Eisenhardt Armoring Company
9113 Le Saint Drive
Fairfield, OH 45014
Attention: Wilfred T. O'Gara
Fax No.: (513) 874-1262
with a copy to: Abram S. Gordon
Vice President & General Counsel
The O'Gara Company
9113 Le Saint Drive
Fairfield, OH 45014
Fax No.: (513) 874-1262
6.4 JURISDICTION; SERVICE OF PROCESS
--------------------------------
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Ohio, County of Hamilton, or, the United
States District Court for the Southern District of Ohio, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein.
6.5 FURTHER ASSURANCES
------------------
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
<PAGE> 23
6.6 WAIVER
------
Neither the failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right, power, or privilege.
6.7 ENTIRE AGREEMENT AND MODIFICATION
---------------------------------
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including any correspondence between Buyer and
Sellers) and constitutes (along with the documents referred to in this
Agreement) the entire agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
6.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
--------------------------------------------------
Neither party may assign any of its rights under this Agreement without
the prior written consent of the other parties except that Buyer may assign any
of its rights, but not its obligations, under this Agreement to any subsidiary
or affiliate of Buyer. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement.
6.9 SEVERABILITY
------------
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part will remain in full force and effect to the extent
not held invalid or unenforceable.
6.10 SECTION HEADINGS, CONSTRUCTION
------------------------------
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
6.11 GOVERNING LAW
-------------
This Agreement will be governed by the laws of the State of Ohio
without regard to conflicts of law principles, except that Virginia law shall
govern all corporate organizational and governance issues with respect to the
Company.
6.12 COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Buyer: Sellers:
O'GARA HESS & EISENHARDT
ARMORING COMPANY
By: /s/ Abram S. Gordon /s/ Jerome E. Hoffman
------------------------- --------------------------------
Jerome E. Hoffman
Title: Vice President and General Counsel
---------------------------------- /s/ Gerald O. Smith
--------------------------------
Gerald O. Smith
/s/ Rosemary Smith
--------------------------------
Rosemary Smith
/s/ Katherine L. Kropp
--------------------------------
Katharine L. Kropp
<PAGE> 25
EXHIBITS
--------
2.4(a)(ii) Form of Employment Agreement
2.4(a)(iii) Opinion of Sellers' counsel
2.4(b)(iii) Form of Subordinated Notes
2.4(b)(v) Opinion of Buyer's counsel
<PAGE> 26
EXHIBIT 2.4(a)(iii)
Opinion of Counsel to Sellers
1. The Agreement, the Employment Agreements, and the Noncompetition
Agreements are valid, binding and enforceable against the Sellers in
accordance with the respective terms of such Agreements.
2. The authorized capital stock of the Company consists of ____
shares of common stock, _____ par value, of which __________ shares are
outstanding. Sellers own all of the outstanding Shares of record and
beneficially, free and clear of all liens, claims or encumbrances. As a result
of the delivery of certificates to Buyer and the payment to Sellers being made
at the Closing, Buyer is acquiring ownership of all of the outstanding Shares,
free and clear of all liens, claims or encumbrances.
3. Each Acquired Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation as set forth in Section 3.1 of the Disclosure Schedule, with
full corporate power and authority to own its properties and to engage in its
business as presently conducted or contemplated, and is duly qualified and in
good standing as a foreign corporation under the laws of each other
jurisdiction in which it is authorized to do business as set forth in Section
3.1 of the Disclosure Schedule. All of the outstanding capital stock of each
subsidiary of the Company is owned of record and beneficially by the Company,
free and clear of all adverse claims. All of the outstanding shares of capital
stock of each Acquired Company have been duly authorized and validly issued
and are fully paid and nonassessable and were not issued in violation of the
preemptive rights of any Person.
4. Neither the execution and delivery of the Agreement, the
Employment Agreements, and the Noncompetition Agreements, nor the consummation
of any or all of the transactions contemplated thereby: (a) breaches or
constitutes a default (or an event that, with notice or lapse of time or both,
would constitute a default) under any agreement or commitment known to me to
which any Seller is party or (b) violates any statute, law, regulation or
rule, or any judgment, decree or order of any court or other governmental body
known to me to be applicable to any Seller.
5. Neither the execution and delivery of the Agreement nor the
consummation of any or all of the transactions contemplated thereby (a)
violates any provision of the certificate of incorporation or code of
regulations of any Acquired Company, (b) breaches or constitutes a default (or
an event that, with notice or lapse of time or both, would constitute a
default) under, or results in the termination of, or accelerates the
performance required by, or excuses performance by any Person of any of its
obligations under, or causes the acceleration of the maturity of any debt or
obligation pursuant to, or results in the creation or imposition of any lien,
claim or encumbrance upon any property or assets of any Acquired Company
under, any agreement or commitment known to me to which any Acquired Company
is a party or by which any of their respective properties or assets are bound,
or to which any of the properties or assets of any Acquired Company are
subject, or (c) violates any statute, law, regulation, or rule, or any
judgment, decree or order of any court or other governmental body known to me
to be applicable to any Acquired Company.
6. No consent, approval or authorization of, or declaration, filing
or registration with, any governmental body is required in connection with the
execution, delivery and
<PAGE> 27
performance of the Agreement or the consummation of the transactions
contemplated thereby.
7. Except as set forth in Section 3.15 of the Disclosure Schedule,
there is no Proceeding by or before any court or governmental body pending or
threatened against or involving any Acquired Company or that questions or
challenges the validity of the Agreement or any action taken or to be taken by
any Acquired Company pursuant to the Agreement or in connection with the
transactions contemplated thereby, and none of the Acquired Companies is
subject to any judgment, order or decree having prospective effect.
<PAGE> 28
EXHIBIT 2.4(b)(v)
Opinion of Counsel to Buyer
1. The Agreement, the Employment Agreements, the Subordinated Notes
and the Noncompetition Agreements are valid, binding and enforceable against
Buyer in accordance with the respective terms of such agreements.
2. Neither the execution and delivery of the Agreement, the
Subordinated Notes, the Employment Agreements and the Noncompetition
Agreements, nor the performance of Buyer's obligations thereunder: (a)
violates any provision of the articles of incorporation or code of regulations
of Buyer, (b) breaches or constitutes a default (or an event that, with notice
or lapse of time or both, would constitute a default) under any agreement or
commitment known to me to which Buyer is party or (c) violates any statute,
law, regulation or rule, or any judgment, decree or order of any court or
governmental body known to me to be applicable to Buyer.
3. The ________ TOG Shares that are being issued pursuant to the
Agreement have been duly authorized and validly issued and are fully paid and
non-assessable.
<PAGE> 1
Exhibit 11
THE O'GARA COMPANY
COMPUTATION OF PRO FORMA EARNINGS PER COMMON SHARE
For the Year Ended December 31, 1996
(unaudited)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Weighted Average Pro Forma
Number of Common Pro Forma Earnings per
Shares Outstanding Net Income Common Share
------------------ ---------- ------------
<S> <C> <C> <C>
Year Ended December 31, 1996
Shares outstanding January 1, 1996...................... 4,490,383 $ - $ -
Dilutive stock options outstanding prior
to exercise........................................ 77,989 - -
Issuance of common stock upon exercise
of options......................................... 43,474 - -
Newly issued shares necessary to fund payment
of certain indebtedness and AAA distributions
(1,809,015 shares at $7.29 per share
net proceeds to fund $13,181,658).................. 1,561,882 - -
Initial public offering of common stock................. 273,224
Issuance of shares through underwriter's
exercise of over-allotment option.................. 2,098
Pro forma net income.................................... - 4,449 -
--------- ---------- ------------
6,449,050 $ 4,449 $ 0.69
========= ========== ============
</TABLE>
<PAGE> 1
EXHIBIT 21
<TABLE>
<CAPTION>
- ------------------------------------------------------ -----------------------------------------------------
SUBSIDIARIES OF THE REGISTRANT JURISDICTION OF INCORPORATION
- ------------------------------------------------------ -----------------------------------------------------
<S> <C>
O'Gara-Hess & Eisenhardt Armoring Company Delaware
- ------------------------------------------------------ -----------------------------------------------------
O'Gara Satellite Networks Limited Ireland
- ------------------------------------------------------ -----------------------------------------------------
O'Gara Satellite Networks, Inc. Delaware
- ------------------------------------------------------ -----------------------------------------------------
Next Destination, Limited United Kingdom
- ------------------------------------------------------ -----------------------------------------------------
</TABLE>
-29-
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
We, the undersigned directors of the O'Gara Company (the "Company") hereby
appoint Wilfred T. O'Gara and Nicholas P. Carpinello or either of them, with
full power of substitution, our true and lawful attorneys and agents, to do any
and all acts and things in our names and on our behalf as directors of the
Company which said attorneys and agents, or either of them, may deem necessary
or advisable to enable the Company to comply with the Securities Act of 1934, as
amended, and as the rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the filing of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 including,
without limitation, signing for us or any of us, in our names as directors of
the Company, such Form 10-K any and all amendments thereto, and we hereby ratify
and conform all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1934, as amended, and
the rules and regulations thereunder, this Power of Attorney has been signed
below by the following persons in the capacities indicated as of the 24th day of
March 1997.
Signature Title
- -------- -----
/s/ Thomas M. O'Gara Director
- ----------------------------------
Thomas M. O'Gara
/s/ Wilfred T. O'Gara Director
- ----------------------------------
Wilfred T. O'Gara
/s/ Raymond E. Mabus Director
- ----------------------------------
Raymond E. Mabus
/s/ Hugh E. Price Director
- ----------------------------------
Hugh E. Price
/s/ Jerry E. Ritter Director
- ----------------------------------
Jerry E. Ritter
/s/ William S. Sessions Director
- ----------------------------------
William S. Sessions
-30-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND CONSOLIDATED STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRERY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,454
<SECURITIES> 0
<RECEIVABLES> 24,437
<ALLOWANCES> 211
<INVENTORY> 8,734
<CURRENT-ASSETS> 35,091
<PP&E> 9,215
<DEPRECIATION> 4,290
<TOTAL-ASSETS> 43,938
<CURRENT-LIABILITIES> 30,814
<BONDS> 0
<COMMON> 67
0
0
<OTHER-SE> 12,589
<TOTAL-LIABILITY-AND-EQUITY> 43,938
<SALES> 82,788
<TOTAL-REVENUES> 82,788
<CGS> 61,523
<TOTAL-COSTS> 61,523
<OTHER-EXPENSES> 12,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,300
<INCOME-PRETAX> 7,177
<INCOME-TAX> 518
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,659
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
