ALLIED RESEARCH CORP
INTERNATIONAL DISTRIBUTION AGREEMENT
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>6
<FILENAME>dex1012.txt
<DESCRIPTION>INTERNATIONAL DISTRIBUTION AGREEMENT
<TEXT>
<PAGE>


                                                                   Exhibit 10.12


                      INTERNATIONAL DISTRIBUTION AGREEMENT

         THIS INTERNATIONAL DISTRIBUTION AGREEMENT (this "Agreement") is made
and entered into as of this 25th day of February, 2000, by and between:

         MECAR S.A., a corporation organized and existing under the laws of
Belgium, with its registered office at Rue Grinfaux, 50, 7181 Petit
Roeulx-lez-Nivelles, Belgium ("Supplier"); and

         MECAR, LTD. (E.C.), a corporation organized and existing under the laws
of the Kingdom of Bahrain, with its registered office at P.O. Box 140 14th
Floor, The Tower Sheraton Commercial Complex, Manama, Bahrain ("Distributor").

         WHEREAS, Supplier is engaged in the design, development, manufacture,
marketing, and sale of medium and large caliber ammunition for land-based weapon
systems and of other defense products;

         WHEREAS, Distributor is engaged in the marketing and sale of
ammunition, systems, and other defense products to the governments of certain
countries; and

         WHEREAS, Supplier and Distributor desire that Distributor be authorized
to act as an independent distributor of the Products (as hereinafter defined)
subject to the terms and conditions set forth below;

         NOW, THEREFORE, in consideration of the foregoing and the balance of
the provisions of this Agreement, Supplier and Distributor agree as follows:

                             ARTICLE I - DEFINITIONS

         1.1. Definitions. Except as otherwise specified or as the context may
otherwise require, the following terms have the meaning indicated below for all
purposes of this Agreement and the definitions of such terms are equally
applicable in the singular and plural forms.

              (a) Affiliate. The term "Affiliate" means any company or other
entity that is, directly or indirectly, owned or controlled by either party to
this Agreement or any company, other company, other entity, or person that,
directly or indirectly, owns or controls either party to this Agreement.

              (b) Products. The term "Products" means the products and services
of Supplier that are specified on the Product List set forth in APPENDIX A to
this Agreement.

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              (c) Territory. The term "Territory" means those countries
specified in APPENDIX B to this Agreement.

              (d) Customer. The term "Customer" means any government of a
country, or any political subdivision thereof, within the Territory, including
any ministry, department, agency or instrumentality thereof, or any person or
entity purchasing the Products for use by a Customer within the Territory.

              (e) Trademarks. The term "Trademarks" means Supplier's trademarks,
trade names, service marks or any similar name or any combination thereof, or
any other trademarks, trade names, or service marks owned or claimed by Supplier
or its Affiliates.

                              ARTICLE II - APPOINTMENT

         2.1 Appointment. Supplier hereby appoints Distributor as its exclusive
authorized distributor in the Territory for the sale of Products to Customers,
and Distributor hereby accepts this appointment. Supplier will not appoint
another authorized distributor in the Territory for the sale of Products to
Customers during the term of this Agreement, and Distributor will not sell in
the Territory any products competitive with the Products during the term of this
Agreement without Supplier's prior written consent.

         2.2 Limitations. Distributor agrees that it shall not, directly or
indirectly, market, promote or sell the Products or offer to sell Products
outside of the Territory without Supplier's prior written consent. Distributor
agrees that it will, without compensation, refer to Supplier all inquiries
concerning the Products and received by Distributor from persons or entities
located outside the Territory.

         2.3 Independent Contractor. Distributor shall conduct its business in
the purchase and resale of Products as a principal for its own account and at
its own expense and risk. This Agreement does not in any way create the
relationship of principal and agent, employer and employee, partners, joint
ventures or any similar relationship between the parties. Distributor neither
has nor shall have the power, right or authority to bind Supplier or to assume
or create any obligation or responsibility, express or implied, on behalf of
Supplier or in Supplier's name, and Distributor shall not hold itself out to
others as having such power, right or authority. Distributor has no authority to
appoint an associate distributor or sub-distributor of Products. Nothing in this
Agreement is intended, nor shall it be construed, as reserving to Supplier
control over the business operations of Distributor except as set forth herein.
Nothing herein contained, however, shall restrict Supplier in providing
instruction and guidance to Distributor on order to Maintain Supplier's
standards of representation and service for the Products offered to Customers
under this Agreement and protect the reputation of supplier's business and
goodwill represented by the Trademarks.

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                    ARTICLE III - SALES AND WARRANTY SERVICE

         3.1 Promotion of Sales. Distributor shall use its best efforts to sell
and promote the sale of Products within the Territory, and to provide prompt and
competent service to Customers in connection with such sales, both at the time
of and subsequent to delivery of Products to Customers. Distributor shall
contract directly with Customers and Supplier shall not be a party to any such
Customer/Distributor contract. Distributor shall be free to establish its own
resale prices to the Customers without any limitations imposed by Supplier.

         3.2 Facilities. Distributor will provide, staff, equip, and maintain
facilities for the sale of Products in the Territory, and will maintain a sales
staff with an adequate number of trained employees reasonably sufficient to meet
the needs of the Territory.

         3.3 Warranty Service. Distributor will, according to the
recommendations of Supplier, arrange for Supplier's performance of warranty
service where appropriate, both within the Territory and/or at Supplier's
facility in Belgium. In no event will Distributor take any actions to attempt to
obligate Supplier to provide any level of warranty service beyond any warranty
set forth in the applicable purchase order.

                    ARTICLE IV - TERMS AND CONDITIONS OF SALE

         4.1 Shipment. Except as the parties may otherwise hereafter agree in
writing, Distributor shall purchase Products directly from Supplier and Supplier
shall deliver such Products directly to Customers from Supplier's facility in
Belgium.

         4.2 Terms of Sale. Payment, shipping, financing, and warranty terms
shall be agreed upon by the parties prior to Distributor's placing of any
purchase order with Supplier and shall be incorporated into such purchase order.
All payments shall be made in the currency stated in the purchase order.
Warranties shall not apply to any Products that have been altered after delivery
to Distributor or Customers, as the case may be, without the express written
consent of Supplier.

         4.3 Order of Precedence. Any provision of any purchase order placed by
Distributor that is inconsistent with any tern of this Agreement shall be null
and void unless such inconsistent provision is expressly accepted by Supplier in
writing.

         4.4 Acceptance. No purchase order shall be binding on Supplier until
accepted in writing by a duly authorized employee of Supplier. Supplier may
refuse to accept any purchase order for any reason.

         4.5 Compliance with Laws. Distributor shall comply with all applicable
laws and regulations in the conduct of its business and pertaining to the
subject matter of this

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Agreement, including, without limitation, the export laws and regulations of
Belgium. Should Distributor be or become aware of any applicable laws or
regulations that are inconsistent with the provisions of this Agreement,
Distributor shall promptly notify Supplier of such inconsistency. Supplier may,
at its option, either waive the performance of such inconsistent provisions or
terminate this Agreement. Distributor, at its sole expense, shall be responsible
for obtaining and maintaining all licenses, permits, and approvals that are
required by all appropriate governmental authorities with respect to
Distributor's conduct of its business and its performance under this Agreement.
Furthermore, Distributor, at its sole expense, shall comply with any requirement
of such governmental authorities for the registration or recording of this
Agreement and/or for any required product registrations. Distributor shall
furnish to Supplier, upon the latter's request, written evidence from such
governmental authorities of all such licenses, permits, clearances,
authorizations, approvals, registrations, and recordings.

         4.6 Export Licenses. Supplier shall be responsible for obtaining any
necessary export licenses or other export approvals.

         4.7 Force Majeure. Unless otherwise provided in a purchase order,
supplier shall not be liable for any failure to deliver hereunder, where such
failure has been occasioned by fire, embargo, strike, failure to secure
materials from the usual source of supply, or any other circumstance beyond
Supplier's control that prevents Supplier from making deliveries in the normal
course of its business. Supplier shall, however, promptly make the delivery, at
the agreed price, when any such cause or causes interfering with delivery shall
have been removed.

                           ARTICLE V - INDEMNIFICATION

         5.1 Indemnification of Distributor. Supplier shall indemnify
Distributor and its affiliates, officers, directors, agents and employees
against, and hold them harmless from, any and all losses, liabilities, claims,
damages, costs and expenses (including reasonable attorneys' fees) in connection
with (i) any breach of this Agreement by Supplier; (ii) any injury to persons or
property arising solely out of a deficit in the design, manufacture or materials
of a Product; and (iii) any claims of trademark or patent infringement or other
violations of intellectual property rights made my third parties in connection
with the Products as sold by Supplier to Distributor.

         5.2 Indemnification of Distributor. Distributor shall indemnify
Supplier and its affiliates, officers, directors, agents and employees against,
and hold them harmless from, any and all losses, liabilities, claims, damages,
costs and expenses (including reasonable attorneys' fees") in connection with
the Products a sold by Supplier to Distributor.

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                             ARTICLE VI - TRADEMARKS

         6.1 Non-Exclusive License. Supplier hereby grants to Distributor a
non-exclusive license to use the trade name "MECAR" as part of its trade name
during the term of this Agreement solely in connection with the sale,
distribution and marketing of the Products within the Territory and only in such
form and manner as has been approved in advance by Supplier in writing. Any such
approval, once given, may be withdrawn by Supplier at any time.

         6.2 Other Trademarks. This Agreement does not license Distributor to
use any other of the Trademarks. Distributor acknowledges and agrees that all
Trademarks and the "MECAR" trade name shall remain the exclusive property of
Supplier. Distributor further agrees that it shall not use any such Trademarks
without the prior written consent of Supplier and, if such consent is granted,
only in the form and manner approved by Supplier in writing. Any such consent,
once granted, may be withdrawn by Supplier at any time.

         6.3 Benefit of Use. Distributor acknowledges that any and all use by
Distributor of the Trademarks, including, but not limited to, the use of "MECAR"
as part of Distributor's trade name, will inure solely to the benefit of
Supplier. Distributor shall not attempt to acquire (by application to register
trademarks or otherwise) or acquire any right to or under any Trademark, patent,
copyright, design, goodwill or other property of Supplier. If any such rights
should become vested in Distributor by operation of law or otherwise,
Distributor will, on Supplier's request, immediately assign any and all such
rights to Supplier.

         6.4 Labels and Markings. All Products shall bear the labels and marks
and be contained in the packaging prescribed by Supplier. Distributor shall not,
without the prior written consent of Supplier, remove or alter any patent
numbers, trade names, trademarks, trademark registration numbers, notices,
serial numbers, labels, tags or other identifying marks, symbols or legends
affixed to any Products, containers or packages, or use any such items other
than in connection with the Products.

         6.5 Termination of Use. Distributor agrees, upon the termination of the
Agreement, for any reason whatsoever, to discontinue immediately any and all use
of the Trademarks and the "MECAR" trade name or Distributor's trade name
incorporating the "MECAR" trade name or close variation thereof.

                      ARTICLE VII - PROPRIETARY INFORMATION

         7.1 Obligation. Each party shall at all times safeguard and protect the
proprietary information of the other party from disclosure to third parties with
the same


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degree of care, which shall be no less than reasonable care, that the such party
uses to safeguard and protect its own proprietary information from disclosure to
third parties.

         7.2. Proprietary Information of Supplier. Without limits the foregoing,
proprietary information of Supplier shall be deemed to include all information
and data relating to the design, development, engineering, demonstration,
manufacture, marketing, and sale of the Products, including, without limitation,
technical, financial, and commercial information and data relating thereto, that
is furnished by Supplier to Distributor for purposes of implementing this
Agreement and that is not in, or does not subsequently become a part of, the
public domain.

                       ARTICLE VIII - STANDARDS OF CONDUCT

         8.1 Warranties and Representations. Distributor represents, warrants
and agrees that now and hereafter, during the term of this Agreement:

             (i) Distributor's performance of business pursuant to this
Agreement does and will not violate the laws, rules, orders, policies or
regulations of Bahrain, Belgium, Switzerland, the United States, and any country
located within the Territory;

             (ii) Neither Distributor nor any of its Affiliates, including their
officers, employees, agents, nor anyone acting for or on their behalf, will
export or re-export products or technology, or products manufactured from or
containing Belgian or United States origin goods or technologies, except as
permitted under Belgian, United States, and applicable local law;

             (iii) Neither Distributor nor any of its Affiliates, including
their officers, employees, agents, nor anyone acting for or on their behalf,
will make use of, disclose, or divulge to any third person any information of a
proprietary, secret, or confidential nature relating to any business of Supplier
or any of its Affiliates;

             (iv) Neither Distributor nor any of its employees are officials of
any government, representatives of any political party, or candidates for public
office; and

             (v) Neither Distributor nor any of its Affiliates, including their
officers, employees and agents, nor anyone acting for or on their behalf, will,
directly or indirectly, make, give, offer, promise, or authorizes the payment or
gift of money or anything of value to any government official or employee or to
any political party or official thereof, or to any candidate for political
office, or to any other person, while knowing or being aware of a high
probability that all or a portion of such payment or gift will be offered,
given, or promised, directly or indirectly, to any such official, employee,
candidate, or political party for the purpose of influencing any act or decision
of such person or party in his or its official capacity, including a decision to
fail to perform

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official duties, or to induce such person or party to use his or its influence
with the government to affect or influence any act or decision of such
government to obtain, retain or direct business to or for Supplier or any of its
Affiliates.

         8.2 Certification. Distributor will from time-to-time, as requested by
Supplier, execute the Standards of Conduct Certification in the form attached as
APPENDIX C to this Agreement.

         8.3 Effect of Breach. Distributor further acknowledges and agrees that
breach of any of the warranties, representations, and agreements contained in
this Article VIII will constitute a material breach of this Agreement. In such
an event, and in addition to any of the remedies to which Supplier may be
entitled under law or this Agreement, (i) Supplier may, notwithstanding any
other provision of the Agreement and at its options and in its sole discretion,
terminate this Agreement immediately by written notice thereof to Distributor
and (ii) Distributor shall indemnify and save Supplier and its Affiliates, and
their respective officers, directors, employees, and agents, harmless from and
against any liability, loss, damages, expenses, or claims of any kind based upon
or arising out of such breach, including but not limited to, legal fees, court
costs, and all other expenses incurred in connection with legal representation
of Supplier's choosing.

                              ARTICLE IX - REPORTS

         9.1. Claims. Distributor shall promptly notify Supplier of each claim
of injury or damage that comes to the attention of Distributor regarding any of
the Products and of any customer complaints regarding any Products. In addition,
Distributor shall promptly notify Supplier of any change in laws or regulations
affecting the transactions or business contemplated in this Agreement.

                        ARTICLE X - TERM AND TERMINATION

         10.1 Term. The initial term of this Agreement shall commence as of the
date first written above and shall continue for a period ending as of December
31, 2002, and shall thereafter be automatically renewed for successive
three-year terms, unless sooner terminated as hereinafter provided.

         10.2 Unilateral Termination. Either party may terminate this Agreement
as of the end of any term by giving notice of intent to terminate at least one
hundred and twenty (120) day prior to the end of such term.

         10.3 Events of Default. Supplier, at its sole option, may terminate
this Agreement immediately without prejudice to any other remedy to which it may
be


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entitled at law, in equity, or otherwise under this Agreement, upon the
occurrence of any of the following events of default by providing written notice
to Distributor:

              (a) Any attempted transfer or assignment of this Agreement or any
right or obligation hereunder by Distributor, or any sale, transfer,
relinquishment, voluntary or involuntary, by operation of law or otherwise, of
any interest in the direct or indirect ownership, control or active management
of Distributor without Supplier's prior written approval; or

              (b) Any dispute, disagreement or controversy between or among
principals, partners, managers, officers or stockholders of Distributor which,
in the opinion of Supplier, may adversely affect the ownership, operation,
management, business or interest of Distributor or Supplier; or

              (c) The conviction of Distributor or any principal officer or
manager of Distributor of any crimes that, in the opinion of Supplier, may
adversely affect the ownership, operation, management, business or interest of
Distributor or Supplier; or

              (d) The failure of Distributor to pay when due any indebtedness
owing by Distributor to Supplier, unless expressly waived in writing by
Supplier; or

              (e) Distributor becomes insolvent, is declared bankrupt, files or
has filed against it a petition for reorganization or bankruptcy, makes an
assignment or composition for the benefit of creditors, or has a receiver
appointed for it; or

              (f) Distributor uses one or more of the Trademarks, the "MECAR"
trade name, or Distributor's trade name incorporating the "MECAR" trade name or
close variation thereof, except as explicitly authorized by MECAR in writing.

         10.4 Material Breach. Without limiting any other right set forth in
this Agreement, either party may terminate this Agreement upon written notice to
the other in the event that such other party shall have defaulted in any of its
material obligations under this Agreement, and such default shall have continued
uncured for thirty (30) days after receipt by such other party of written notice
of such default.

         10.5 Obligations upon Termination. From and after the date of
termination:

         (a)  Supplier will have no obligation to make further sales to
              Distributor;

         (b)  Distributor shall immediately pay to Supplier all amounts due in
              connection with this Agreement; and




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         (c)  Distributor shall immediately return to Supplier all copies of any
              documents or other materials containing any proprietary
              information of Supplier as described in Article VII, Proprietary
              Information, of this Agreement.

         10.6 Waiver of Certain Claims. Distributor hereby waives any and all
claims for compensation or damages of any kind whatsoever, including any claims
based in whole or in part upon the contention that Distributor is entitled to
receive any compensation for its expense and/or efforts in connection with this
Agreement or any establishment or development of markets for the Products in the
Territory hereunder.

                           ARTICLE XI - MISCELLANEOUS

         11.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, Distributor may not assign or otherwise transfer
its rights hereunder or any interest therein without the prior written consent
of Supplier.

         11.2 Governing Law. This Agreement shall be deemed to have been
executed and entered into at Geneva, Switzerland, and shall be governed by and
construed in accordance with the substantive laws of Switzerland without regard
to its conflict-of-law provisions. The parties expressly exclude the application
of the United Nations Convention on Contracts for the International Sale of
Goods to this Agreement or any sale or purchase made pursuant hereto.

         11.3 Arbitration. Any and all disputes arising out of or in connection
with this Agreement shall be finally settled in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce then in
effect by an arbitration tribunal consisting of three arbitrators and judgment
upon the award rendered may entered in any court having jurisdiction thereof.
The place of arbitration shall be Geneva, Switzerland. The language of
arbitration shall be English. Nationality shall not be grounds for the
disqualification of an arbitrator. In the event of a dispute, an aggrieved party
may seek interim judicial relief to prevent irreparable harm and such action
shall not be considered a waiver of this arbitration clause. In any proceeding
initiated by either party, the prevailing party shall be entitled to recover
from the other party reasonable attorneys' fees in addition to any other relief
that may be awarded.

         11.4 English Language. The official language of this Agreements is
expressly stipulated to be the English language, and any notices, reports or
other communications that are required to be provided hereunder shall be in
English.

         11.5 Consequential Damages. In no event shall Supplier be liable for
any indirect, special, incidental or consequential damages resulting from
Supplier's


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performance or failure to perform under this Agreement, or for the furnishing,
performance or use of any goods or services sold pursuant hereto, whether due to
a breach of contract, breach of warranty, the negligence of Supplier, statutory
liability, or otherwise and whether or not Supplier has been advised of the
possibility of damages.

         11.6 Notices. All notices or other documents under this Agreement shall
be in writing and delivered personally or mailed by certified mail, postage
prepaid, addressed to the party at the address set forth at the beginning of
this Agreement or at such other address as a party may designate by giving
notice as provided herein.

         11.7 Survival. Paragraphs 5.1, 5.2, 10.5, and 10.6, and all of Articles
VII, VIII, and XI of this Agreement shall survive and remain in full force and
effect even after the termination of this Agreement for any reason whatsoever.

         11.8 Headings. Article and paragraph headings are used for convenience
only, and shall not be considered to define, limit or affect the interpretation
or construction of this Agreement.

         11.9 Waiver. No failure to enforce any provision of this Agreement
shall be a continuing waiver of such provision or a waiver of any subsequent
breach thereof.

         11.10 Severability. If any provision (or portion thereof) of this
Agreement is held invalid or unenforceable, the remainder of this Agreement will
be read as if the invalid or unenforceable provision (or portion thereof) were
omitted; provided that, the operation of this sentence shall not materially
frustrate the intent and purposes of the parties as evidenced in this Agreement.

         11.11 Entire Agreement. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter, and supersedes
any prior or contemporaneous written or oral agreements and understandings are
expressly canceled.

         11.12 Amendment. This Agreement may not be altered, modified,
terminated or discharged except by a writing signed by the party against whom
such alteration, modification, termination or discharge is sought. Without
limiting the generality of the foregoing, no modification of or addition to this
Agreement shall be effected by Supplier's shipment of Products following receipt
of a purchase order or any other document from Distributor containing terms and
conditions conflicting with or in addition to the terms and conditions contained
in this Agreement.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized representatives in duplicate originals, one such
original being delivered to each of the parties.

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MECAR, LTD.                                 MECAR, S.A.



By:  ________________________              By:  ________________________

Typed Name:  ________________              Typed Name:  ________________

Title:  _____________________              Title:  _____________________

and                                        and

By: _________________________              By: _________________________

Typed Name:  ________________              Typed Name:  ________________

Title:  _____________________              Title:  _____________________


<PAGE>

                                   APPENDIX A

                                  PRODUCT LIST

         1. Except as provided in Paragraph 2 of this APPENDIX A, the Products
shall include all ammunition, systems, and other defense products and services,
whether manufactured by Supplier or by a third party, that are offered for sale
by Supplier during the term of this Agreement.

         2. Notwithstanding Paragraph 1 of this APPENDIX A, ammunition, systems,
and other defense products and services, whether manufactured by Supplier or by
a third party, when offered for sale or sold by Supplier to Customers within the
Territory through the Foreign Military Sales system of the United States
Department of Defense, are excluded from the scope of this Agreement.

         3. This APPENDIX A may be modified only in accordance with Paragraph
11.12 of this Agreement.

<PAGE>

                                         APPENDIX B

                                         TERRITORY

         1. The following three countries shall comprise the Territory:

            (a) The Kingdom of Saudi Arabia;

            (b) The State of Kuwait;

            (c) The State of Qatar.

         2. This APPENDIX B may be modified only in accordance with Paragraph
11.12 of this Agreement.

<PAGE>

                                   APPENDIX C

                     STANDARDS OF CONDUCT CERTIFICATION

         1. In the connection with the performances of the Services under the
International Marketing & Sales Agreement between MECAR S.A. ("Supplier"), and
MECAR, LTD. (E.C.) ("Distributor"), and the business resulting therefrom,
Distributor hereby certifies that


            (a) Distributor is not owned by a government or government official
or government employee or by a political party or party official or candidate
for political office and does not retain or employ any such official, employee
or candidate;

            (b) Distributor has complied and will comply with all applicable
laws;

            (c) In accordance with the policy of Supplier and its Affiliates,
neither Distributor nor any of its Affiliates including their officers,
employees, agents, and anyone acting for or on their behalf, will, directly or
indirectly, make, give, offer, promise, or authorize the payment or gift of
money or anything of value to any government official or employee or to any
political party or official thereof, or to any candidate for political office,
or to any other person, while knowing or being aware of a high probability that
all or a portion of such payment or gift will be offered, given, or promised,
directly or indirectly, to any such official, employee, candidate, or political
party for the purpose of influencing any act of decision of such person or party
is his or its official capacity, including a decision to fail to perform
official duties, or to induce such person or party to use his or its influence
with the government to affect or influence any act or decision of such
government to obtain, retain, or direct business to or for Supplier or any of
its Affiliates; and

            (d) Distributor will immediately advise Supplier if future
developments cause this Certification and the information reported herein to be
no longer accurate or complete.

<PAGE>

         2. By affixing his signature to this Certification, the undersigned
certifies that he is authorized to sign this Certification on behalf of
Distributor.



                         _______________________________
                                    Signature



______________________________________                     _____________________
         Typed Name and Title                                      Date

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