-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TyDlcF40qdkipNaY9eZjhUNZFJUNZ68fNaDj4HI0tn98Ay2Urjtp+6aU/Igf0J4u e1LNqR6GuWhr2NUg58fGKg== 0000950134-96-004504.txt : 19960826 0000950134-96-004504.hdr.sgml : 19960826 ACCESSION NUMBER: 0000950134-96-004504 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960823 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960823 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ULTRAK INC CENTRAL INDEX KEY: 0000318259 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 840819156 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09463 FILM NUMBER: 96619713 BUSINESS ADDRESS: STREET 1: 1220 CHAMPION CIRCLE SUITE 100 CITY: CARROLLTON STATE: TX ZIP: 75006 BUSINESS PHONE: 2142809675 MAIL ADDRESS: STREET 1: 1220 CHAMPION CIRCLE STREET 2: SUITE 100 CITY: CARROLLTON STATE: TX ZIP: 75006 8-K 1 FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 AUGUST 23, 1996 (Date of report) ULTRAK, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-9463 75-2626358 (State or other jurisdiction of (Commission (I.R.S. employer incorporation or organization) file number) identification no.) 1220 CHAMPION CIRCLE, SUITE 100, CARROLLTON, TEXAS 75006 (Address of principal executive offices) (214) 280-9675 (Registrant's telephone number, including area code) 2 ULTRAK, INC. AND SUBSIDIARIES ITEM 2: ACQUISITION OF ASSETS On August 7, 1996, the Company acquired 75% of the stock from the founders and current management of Maxpro Systems Pty, Ltd. (Maxpro), a Perth, Australia based privately held company, for approximately US$8.2 million in cash. Additional consideration in the form of Ultrak restricted stock can be earned by the founders if certain pretax net income levels are attained over a two year period beginning July 1, 1996. The selling shareholders of Maxpro are Christopher Paul Davies, Kim Robert Rhodes, Scott Anthony Rhodes and Rhodes Davies & Associates Pty. Ltd. Maxpro is a manufacturer of a computer controlled matrix video switching system that is coupled to a computer controlled alarm input and output network used primarily in casinos, airports, mines, nuclear power plants, prisons and other large closed circuit television applications. The transaction will be accounted for as a purchase and the operations of Maxpro will be included in the Company's consolidated statement of income since the date of acquisition. Goodwill is expected to be amortized over 25 years using the straight line method. 2 3 ULTRAK, INC. AND SUBSIDIARIES ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of businesses acquired The financial statements of Maxpro Systems Pty Ltd. as of and for the years ended June 30, 1996 and 1995 are attached. (b) Pro forma financial information The following unaudited pro forma condensed balance sheets and statements of income assume the acquisition of Maxpro occurred on June 30, 1996 and January 1, 1995, respectively. The unaudited pro forma condensed combined balance sheets combine Ultrak's June 30, 1996 consolidated balance sheet with Maxpro's June 30, 1996 balance sheet. The unaudited pro forma condensed combined statements of income combine Ultrak's consolidated statement of income for the fiscal year ended December 31, 1995 with the corresponding Maxpro statement of income for the twelve months ended December 31, 1995 and Ultrak's consolidated statement of income for the six months ended June 30, 1996 with Maxpro's statement of income for the six months ended June 30, 1996. All financial statements of Maxpro were converted from Australian dollars (Aus D) to US dollars (USD) using the exchange rate as of June 30, 1996 (.7976 to 1.00). The unaudited pro forma combined statements of income are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have occurred if the business combination had been consummated as of January 1, 1995, nor are they necessarily indicative of future operating results. These unaudited pro forma combined financials statements should be read in conjunction with the historical financial statements and the related notes thereto. (c) Exhibits Exhibit 10.1 Stock Purchase Agreement dated August 7, 1996 among Chris Davies, Kim Rhodes, Scott Rhodes, Rhodes Davies & Associates Pty Ltd. and Ultrak, Inc. Exhibit 10.2 Shareholders Deed dated August 7, 1996 between Bajada & Associates Pty Ltd. and Ultrak, Inc. Exhibit 10.3 Consultancy Agreement dated August 7, 1996 between Rhodes Davies & Associates Pty Ltd., Maxpro Systems Pty Ltd. and Ultrak, Inc. 3 4
ULTRAK AND MAXPRO UNAUDITED PRO FORMA CONDENSED USD AUS D USD USD COMBINED BALANCE SHEETS ULTRAK MAXPRO MAXPRO PRO FORMA PRO FORMA AS OF JUNE 30, 1996 JUNE 30, JUNE 30, JUNE 30, ADJUSTMENTS COMBINED ASSETS 1996 1996 1996 --------------- ----------------------------------------------------- Current Assets: Cash and Short term Investments $ 16,627,364 1,470,114 1,172,563 (1) (8,200,000) 9,599,927 Trade Acounts Receivable, net 17,376,018 335,948 267,952 17,643,970 Notes Receivable 288,234 0 0 288,234 Inventories, net 23,211,343 1,057,475 843,442 24,054,785 Advances for Inventory Purchases 5,737,261 0 0 5,737,261 Prepaid Expenses and Other Current Assets 689,480 20,242 16,145 705,625 Deferred Income Taxes 875,292 0 0 875,292 --------------- --------------------------------------------------- Total Current Assets 64,804,992 2,883,779 2,300,102 (8,200,000) 58,905,094 --------------- --------------------------------------------------- Property, Plant and Equipment, net 4,122,825 226,364 180,548 4,303,373 Goodwill, net 2,854,462 0 0 (2) 6,905,510 9,759,972 Notes Receivable, Noncurrent 875,000 0 0 875,000 Other Assets 382,511 47,469 37,861 420,372 --------------- --------------------------------------------------- Total Assets $ 73,039,790 3,157,612 2,518,511 (1,294,490) 74,263,811 =============== =================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable-Trade $ 5,829,329 563,232 449,234 6,278,563 Current Portion of Long-Term Debt 23,841 0 0 23,841 Notes Payable 806,303 0 0 806,303 Accrued Expenses 1,455,973 55,800 44,506 1,500,479 Federal and State Income Taxes Payable 419,499 367,317 292,972 712,471 Other Current Liabilities 857,750 7,287 5,812 863,562 --------------- --------------------------------------------------- Total Current Liabilities 9,392,695 993,636 792,524 0 10,185,219 --------------- --------------------------------------------------- Minority Interest 0 0 0 (3) 431,497 431,497 Stockholders' Equity: Preferred Stock 976,755 0 976,755 Common Stock 103,263 6 5 (3) (5) 103,263 Additional Paid-in Capital 56,139,009 900,029 717,863 (3) (717,863) 56,139,009 Less: Treasury Stock (246,068) 0 0 (3) 0 (246,068) Retained Earnings 6,674,136 1,263,941 1,008,119 (3) (1,008,119) 6,674,136 --------------- --------------------------------------------------- Total Stockholders' Equity 63,647,095 2,163,976 1,725,987 (1,725,987) 63,647,095 --------------- --------------------------------------------------- Total Liabilities and Stockholders' Equity $ 73,039,790 3,157,612 2,518,511 (1,294,490) 74,263,811 =============== ===================================================
Notes to Unaudited Pro Forma Condensed Balance Sheets: - ---------------------------------------------------------------- (1). To reflect consideration given of $8.2 million. (2). To reflect the excess of cost over identifiable assets less liabilities. (3). To eliminate the capital accounts of Maxpro and to record minority interest. 4 5
ULTRAK AND MAXPRO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED 6/30/96 FOR THE SIX MONTHS ENDED -------------------------------- USD AUSD USD USD ULTRAK MAXPRO MAXPRO PRO FORMA PRO FORMa JUNE 30, JUNE 30, JUNE 30, ADJUSTMENTS COMBINED 1996 1996 1996 ------------------------------------------------------------- Net Sales $61,440,469 3,444,458 2,747,300 64,187,769 Cost of Products Sold 43,887,601 1,829,604 1,459,292 45,346,893 Gross Margin 17,552,868 1,614,854 1,288,008 0 18,840,876 Operating Expenses: Selling and Admininstrative 8,682,525 2,000,999 1,595,997 (1) 138,000 10,416,522 Operations and Research 3,611,459 0 0 3,611,459 ------------------------------------------------------------- 12,293,984 2,000,999 1,595,997 138,000 14,027,981 ------------------------------------------------------------- Operating Income 5,258,884 (386,145) (307,989) (138,000) 4,812,895 ------------------------------------------------------------- Other (Income) Expense: Interest Expense 886,803 7,672 6,119 0 892,922 Interest Income 50,276 (141,526) (112,881) 0 (62,605) Minority Interest 0 0 0 (2) (50,832) (50,832) ------------------------------------------------------------- 937,079 (133,854) (106,762) (50,832) 779,485 ------------------------------------------------------------- Income (Loss) before Income Taxes 4,321,805 (252,291) (201,227) (87,168) 4,033,410 Income Taxes 1,516,774 (48,962) (39,052) 0 1,477,722 ------------------------------------------------------------- Net Income (Loss) $ 2,805,031 (203,329) (162,175) (87,168) 2,555,688 ============================================================= Earnings (Loss) per Common Share $ 0.33 $0.28 ============================================================= Shares Used in Computation 8,247,774 (3) 538,411 8,786,185 =============================================================
Notes to Unaudited Pro Forma Condensed Combined Statements of Income: - ----------------------------------------------------------------------------- (1). To reflect goodwill amortization over 25 years. (2). To reflect minority interest. (3). To reflect on a proforma basis the number of shares that would have been issued to raise $8.2 million at the secondary offering price of $16.375 less expenses of 7%. 5 6
ULTRAK AND MAXPRO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE TWELVE MONTHS ENDED 12/31/95 FOR THE TWELVE MONTHS ENDED ------------------------------------ USD AUSD USD USD ULTRAK MAXPRO MAXPRO PRO FORMA PRO FORMA DECEMBER 31, DECEMBER 31, DECEMBER 31, ADJUSTMENTS COMBINED 1995 1995 1995 ----------------------------------------------------------------- Net Sales $101,232,305 11,099,285 8,852,790 110,085,095 Cost of Products Sold 76,319,278 5,559,470 4,434,233 80,753,511 ----------------------------------------------------------------- Gross Margin 24,913,027 5,539,815 4,418,556 0 29,331,583 Operating Expenses: Selling and Admininstrative 13,254,921 3,118,336 2,487,185 (1) 276,000 16,018,106 Operations and Research 5,542,529 0 0 5,542,529 ----------------------------------------------------------------- 18,797,450 3,118,336 2,487,185 276,000 21,560,635 ----------------------------------------------------------------- Operating Income 6,115,577 2,421,479 1,931,372 (276,000) 7,770,949 ----------------------------------------------------------------- Other (Income) Expense: Interest Expense 1,840,489 0 0 0 1,840,489 Interest Income 40,502 (45,441) (36,244) 0 4,258 Minority Interest 0 0 0 (2) 348,092 348,092 ----------------------------------------------------------------- 1,880,991 (45,441) (36,244) 348,092 2,192,840 ----------------------------------------------------------------- Income (Loss) before Income Taxes 4,234,586 2,466,920 1,967,615 (624,092) 5,578,109 ----------------------------------------------------------------- Income Taxes 1,539,529 721,221 575,246 0 2,114,775 ----------------------------------------------------------------- Net Income (Loss) $ 2,695,057 1,745,699 1,392,370 (624,092) 3,463,334 ================================================================= Earnings (Loss) per Common Share $ 0.36 $ 0.44 ================================================================= Shares Used in Computation 7,147,904 (3) 538,411 7,686,315 =================================================================
. Notes to Unaudited Pro Forma Condensed Combined Statements of Income: (1). To reflect goodwill amortization over 25 years. (2). To reflect minority interest. (3). To reflect on a proforma basis the number of shares that would have been issued to raise $8.2 million at the secondary offering price of $16.375 less expenses of 7%. 6 7 MAXPRO SYSTEMS PTY LTD ACN 009 081 467 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1996 8 MAXPRO SYSTEMS PTY LTD DIRECTORS REPORT FOR THE YEAR ENDED 30 JUNE 1996 The directors present the accounts of this company for the year ended 30 June 1996 and in accordance with Section 304(l) of the Corporations Law report as follows:- DIRECTORS The name of the Directors in office at the date of this report: Christopher Paul Davies Selwyn John Bajada Kim Robert Rhodes Scott Anthony Rhodes ACTIVITIES The principal activity of the company during the course of the financial year was the design, manufacture and installation of video surveillance systems. OPERATING RESULTS The profit of the company for the financial year after providing for income tax of $274,405 amounted to $943,154 (1995: $320,037). DIVIDENDS The Directors do not recommend the payment of a dividend and no dividends have been declared or paid since the end of the previous financial year. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR At the date of this report no other matter or circumstance which has arisen since 30 June 1996 that has significantly affected or may significantly affect: a) the operations, in financial years subsequent to 30 June 1996 of the company b) the results of those operations c) the state of affairs, in financial years subsequent to 30 June 1996 of the company DIRECTORS' BENEFITS Since the end of the previous financial year, no Director of the company has received or become entitled to receive any benefit by reason of a contract made by the company or a related body corporate with a Director or a firm of which a Director is a member other than as set out in Note 18 to the financial statements. Page 1 9 SIGNED at PERTH this 7th day of August 1996 In accordance with the Resolution of the Directors /s/ CHRISTOPHER PAUL DAVIES - -------------------------------- Christopher Paul Davies /s/ KIM ROBERT RHODES - -------------------------------- Kim Robert Rhodes Page 2 10 MAXPRO SYSTEMS PTY LTD PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 1996
Note 1996 1995 $ $ OPERATING PROFIT BEFORE INCOME TAX 2 1,217,559 306,036 Income tax attributable to opertaing profit 4 274,405 (14,001) --------- ------- OPERATING PROFIT AFTER INCOME TAX 943,154 320,037 RETAINED PROFITS AT THE BEGINNING OF THE FINANCIAL YEAR 320,787 750 --------- ------- TOTAL AVAILABLE FOR APPROPRIATION 1,263,941 320,787 Dividends provided for or paid - - --------- ------- RETAINED PROFITS AT THE END OF THE FINANCIAL YEAR 1,263,941 320,787 ========= =======
The accompanying notes form part of these financial statements Page 3 11 MAXPRO SYSTEMS PTY LTD BALANCE SHEET AS AT 30 JUNE 1996
Note 1996 1995 $ $ CURRENT ASSETS Cash 1,470,114 508,513 Receivables 5 335,948 874,390 Inventories 6 1,057,475 805,025 Other 7 20,242 3,994 --------- --------- TOTAL CURRENT ASSETS 2,883,779 2,191,922 --------- --------- NON CURRENT ASSETS Plant and equipment 8 226,364 169,144 Other 9 47,469 14,001 --------- --------- TOTAL NON CURRENT ASSETS 273,833 183,145 --------- --------- TOTAL ASSETS 3,157,612 2,375,067 --------- --------- CURRENT LIABILITIES Creditors and borrowings 10 563,232 841,636 Other 12 55,800 283,046 Provisions 13 367,317 29,563 --------- --------- TOTAL CURRENT LIABILITIES 986,349 1,154,245 --------- --------- NON CURRENT LIABILITIES Other 14 7,287 - --------- --------- TOTAL NON CURRENT LIABILITIES 7,287 - --------- --------- TOTAL LIABILITIES 993,636 1,154,245 --------- --------- NET ASSETS 2,163,976 1,220,822 ========= ========= SHAREHOLDERS' EQUITY Share capital 16 6 6 Reserves 15 900,029 900,029 Retained earnings 1,263,941 320,787 --------- --------- TOTAL SHAREHOLDERS' EQUITY 2,163,976 1,220,822 ========= =========
The accompanying notes form part of these financial statements Page 4 12 MAXPRO SYSTEMS PTY LTD STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 1996
Note 1996 1995 $ $ CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations 10,124,757 4,316,767 Cash payments in the course of operations (9,026,253) (4,833,987) Interest received 49,765 16,542 Interest paid (331) (584) ---------- ---------- NET CASH OUTFLOWS FROM OPERATING ACTIVITIES 19(b) 1,147,938 (501,262) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment (122,301) (203,250) Proceeds from sale of plant and equipment - 5,500 ---------- ---------- NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (122,301) (197,750) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares - 900,030 ---------- ---------- NET CASH INFLOWS FROM FINANCING ACTIVITIES - 900,030 ---------- ---------- NET INCREASE IN CASH HELD 1,025,637 201,018 CASH AT BEGINNING OF PERIOD 201,023 5 ---------- ---------- CASH AT END OF PERIOD 19(a) 1,226,660 201,023 ========== ==========
The accompanying notes form part of these financial statements Page 5 13 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996 NOTE I STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The significant policies which have been adopted in the preparation of these financial statements are: a) BASIS OF PREPARATION The financial statements of the company have been drawn up in accordance with applicable Accounting Standards, the Corporations Law and Schedule 5 to the Regulations and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views). They have been prepared on the basis of historical costs and do not take into account changing money values or, except where stated, current valuations of non-current assets. The accounting policies have been consistently applied and, except where there is a change in accounting policy, are consistent with those of the previous year. b) INCOME TAX Tax effect accounting procedures are applied whereby income tax is regarded as an expense and is matched with the accounting profit after allowing for permanent differences between taxable and accounting income. Income tax on net cumulative timing differences is set aside to deferred income tax and future income tax benefit accounts at current rates. Timing differences arise when the period in which items included in determining accounting profit differ from the periods in which they are included in determining taxable income. The future income tax benefit relating to timing differences is carried forward as an asset if there is assurance beyond reasonable doubt of it being realised. The future income tax benefit relating to tax losses are only brought to account when their realisation is virtually certain. c) FIXED ASSETS Fixed asset are recorded at cost. All fixed assets are depreciated over their estimated useful lives commencing from the time the asset is held ready for use. The gain or loss on disposal of all fixed assets, is determined as the difference between the carrying amount of the asset at the time of Page 6 14 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996 disposal and the proceeds of disposal, and is included in the results of the company in the year of disposal. d) INVENTORIES Inventories are valued at the lower of cost and net realisable value. Cost is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing condition and location. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of both variable and fixed costs. Fixed costs have been allocated on the basis of normal operating capacity. Net Realisable Value Net realisable value is determined on the basis of normal selling patterns. Expenses of marketing, selling and distribution to customers are estimated and are deducted to establish net realisable value. e) EMPLOYEE ENTITLEMENTS The provision for employees' entitlements to wages, salaries, annual leave and sick leave represents the amount that the company has a present obligation to pay resulting from employees' services provided up to balance date. The provision has been calculated at nominal amounts based on current wage and salary rates and includes related on-costs. f) NON CURRENT ASSETS The carrying amounts of all non-current assets are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower amount. In assessing recoverable amounts the relevant cash flows have not been discounted to their present value. g) RESEARCH AND DEVELOPMENT COSTS Research and development expenditure is expensed as incurred except to the extent that its recoverability is assured beyond any reasonable doubt, in which case it is deferred and amortised over the shorter of the period in which the related benefits are expected to be realised or five Page 7 15 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996 years. All deferred research and development expenditure is reviewed annually to determine any amounts that are no longer recoverable. All such amounts are written off. h) TRANSLATION OF CONTROLLED FOREIGN ENTITIES The financial statements of overseas controlled entities that are integrated foreign operations are translated using the temporal method. Monetary assets and liabilities are translated into Australian currency at rates of exchange current at balance date, while non-monetary items and revenue and expense items are translated at exchange rates current when the transactions occurred. Exchange differences arising on translation are brought to account in the profit and loss account. i) DOUBTFUL DEBTS AND CREDIT RETURNS The collectability of debts is assessed at year end and specific provision is made for any doubtful accounts and goods to be returned for credit. j) WARRANTIES Provision is made for the estimated liability on all products still under warranty and includes any claims already received. The estimate is based on the experience of warranty costs incurred over previous years. Page 8 16 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996
1996 1995 $ $ NOTE 2 OPERATING PROFIT (A) OPERATING REVENUE AND EXPENSES Operating profit has been arrived at after including: OPERATING REVENUE Sales revenue 9,749,867 4,917,512 Other revenue Interest 49,765 16,542 Government grants 120,113 7,363 Gross proceeds from the sale of non-current assets - 5,500 --------- --------- TOTAL OPERATING REVENUE 9,919,745 4,946,917 ========= ========= OPERATING EXPENSES Interest paid to other persons 331 584 Demonstration equipment - 11,320 Depreciation of plant and equipment 65,081 33,106 Lease rental expense 118,336 49,635 Amounts set aside to provision for: - Employee entitlements 32,552 29,563 - Doubtful debts/credit returns 61,741 - - Warranties 8,000 - Research and development costs written off 976,637 713,243 Foreign exchange transaction loss 7,672 - (B) SALE OF NON-CURRENT ASSETS Profit on sales of property, plant and equipment - 4,500
Page 9 17 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996
1996 1995 $ $ NOTE 3 AUDITOR'S REMUNERATION Amounts received or due and receivable by the Auditors of the company for: Auditing the financial statements 8,000 8,000 ======= ======= NOTE 4 INCOME TAX Prima facie tax expense on operating profit is reconciled to the income tax provided in accounts as follows: a) INCOME TAX EXPENSE Prima facie tax expense on operating profit at 36% (1995: 33%) 438,321 100,991 Less tax effect of: Research and Development at 150% 175,795 117,685 Other non allowable items (13,151) (2,693) Restatement of deferred tax balance due to change in income tax rate 1,272 - ------- ------- Income tax expense 274,405 (14,001) ======= ======= Income tax expense comprises: Current income tax provision 300,586 - Future income tax benefit (33,468) (14,001) Deferred income tax provision 7,287 - ------- ------- Income tax expense 274,405 (14,001) ======= ======= b) PROVISION FOR CURRENT INCOME TAX Balance at beginning of year - - Income tax paid/withheld (3,384) - Current income tax on operating profit 300,586 - ------- ------- Balance at end of year 297,202 - ======= =======
Page 10 18 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996
1996 1995 $ $ c) FUTURE INCOME TAX BENEFIT Provision for doubtful debt/credit returns 22,227 - Provision for warranties 2,880 - Provision for employee entitlements 22,362 9,756 Provision for tax benefits - 4,245 --------- ------- 47,469 14,001 ========= ======= d) PROVISION FOR DEFERRED INCOME TAX Expenditure deductible for tax but deferred for accounting purposes 7,287 - ========= ======= NOTE 5 RECEIVABLES Trade debtors 387,231 869,254 Less: Provision for doubtful debts/credit returns 61,741 - --------- ------- 325,490 869,254 Other debtors 10,458 5,136 --------- ------- TOTAL RECEIVABLES 335,948 874,390 ========= ======= NOTE 6 INVENTORIES Raw materials 379,343 381,160 Work in progress 162,223 295,058 Finished goods 515,909 128,807 --------- ------- TOTAL INVENTORIES 1,057,475 805,025 ========= ======= NOTE 7 OTHER CURRENT ASSETS Prepayments 20,242 3,994 ========= =======
Page 11 19 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996
1996 1995 $ $ NOTE 8 PLANT AND EQUIPMENT Plant and equipment at cost 292,776 170,475 Accumulated depreciation (82,583) (26,147) ------- ------- 210,193 144,328 ------- ------- Leasehold improvements at cost 31,775 31,775 Accumulated depreciation (15,604) (6,959) ------- ------- 16,171 24,816 ------- ------- Total plant and equipment 324,551 202,250 Total accumulated depreciation (98,187) (33,106) ------- ------- TOTAL PLANT AND EQUIPMENT 226,364 169,144 ======= ======= NOTE 9 NON-CURRENT ASSETS - OTHER Future income tax benefit 47,469 14,001 ======= ======= NOTE 10 CREDITORS AND BORROWINGS CURRENT Bank overdraft 243,457 307,490 Trade creditors and accruals 319,778 534,146 ------- ------- TOTAL CREDITORS AND BORROWINGS 563,232 841,636 ======= =======
Page 12 20 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996
1996 1995 $ $ NOTE 11 FINANCING ARRANGEMENTS The company has access to the following lines of credit Total facilities available: Bank overdraft - 200,000 ======= ======= Facilities utilised at balance date: Bank overdraft - 200,000 ======= ======= Facilities over utilised at balance date: Bank overdraft 243,457 107,490 ======= ======= NOTE 12 OTHER CURRENT LIABILITIES Income in advance 55,800 283,046 ======= ======= NOTE 13 PROVISIONS - CURRENT Employee entitlements 62,115 29,563 Warranties 8,000 - Income tax 297,202 - ------- ------- TOTAL PROVISIONS - CURRENT 367,317 29,563 ======= ======= NOTE 14 NON CURRENT LIABILITIES Provision for deferred income tax 7,287 - ======= =======
Page 13 21 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996
1996 1995 $ $ NOTE 15 RESERVES Share premium 900,029 900,029 ======= ======= MOVEMENTS DURING THE YEAR Balance at beginning of year 900,029 - Add: Premium on ordinary shares issued during the period - 900,029 ------- ------- Balance at end of year 900,029 900,029 ======= ======= NOTE 16 SHARE CAPITAL Authorised Capital 10,000,000 ordinary shares of $0.01 ea. 100,000 100,000 ======= ======= Issued and Paid-up Capital 595 ordinary shares of $0.01 ea. 6 6 ------- ------- 6 6 ======= ======= NOTE 17 COMMITMENTS OPERATING LEASE COMMITMENTS Future operating lease rentals not provided in the financial statements and payable: Not later than one year 10,225 - Later than one year but not later than two years 10,225 - Later than two years but not later than five years 7,669 -
Page 14 22 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996 1996 1995 $ $ NOTE 18 CONTINGENT LIABILITIES The details and estimated maximum amounts of contingent liabilities, classified according to the party from whom the contingent liability arises are set out below. The directors are not aware of any circumstance or information which would lead them to believe that these liabilities will crystallise and consequently no provisions are included in the accounts in respect of these matters. IN RESPECT OF THE COMPANY Bank guarantees have been issued to: Argyle Diamond Mines Pty Ltd 168,118 Hamersley Iron Pty Ltd. 10,653 These guarantees have been secured by personal guarantees by C Davies, K Rhodes and S Rhodes - NOTE 19 CASH FLOW INFORMATION (a) RECONCILIATION OF CASH For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet as follows:
Cash 1,470,114 508,513 Bank overdraft 10 (243,454) (307,490) --------- -------- TOTAL CASH 1,226,660 201,023 ========= =======
Page 15 23 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996
1996 1995 $ $ (b) RECONCILIATION OF NET CASH FLOWS FROM OPERATING ACTIVITIES TO NET INCOME AFTER INCOME TAX Operating profit after income tax 943,154 320,037 Depreciation 65,081 33,106 Gain on sale of equipment - (4,500) Increase in future income tax benefit (33,468) (14,001) Decrease in trade debtors 482,023 (869,254) Increase in inventories (252,450) (805,025) Increase in other debtors (5,322) 11,826 Decrease in other non-current assets - 750 Increase in prepayments (16,248) (3,994) Decrease in trade creditors (214,368) 530,087 Decrease in income in advance (227,246) 283,046 Increase in provisions 399,495 16,660 Increase in provision for deferred tax 7,287 - --------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,147,938 (501,262) ========= ========
(c) FINANCING FACILITIES Refer note 11 NOTE 20 SEGMENTAL REPORTING The company designs, manufactures and installs video surveillance systems and operates predominantly in one geographical segment, Australia. NOTE 21 RELATED PARTY INFORMATION DIRECTORS The names of each person holding the position of Director of the company during the financial year are Messrs C P Davies, K R Rhodes, S A Rhodes and S J Bajada. Other transactions with the company The company has entered into a Management Agreement with Rhodes Davies & Associates Pty Ltd of whom Mr C P Davies, Mr K R Rhodes and Mr S A Rhodes are Directors. Management Fees of $1,016,450 have been paid during the course of the year. Page 16 24 MAXPRO SYSTEMS PTY LTD NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 1996 Mr S J Bajada a director of the company, is Managing Director of Bajada & Associates Pty Ltd, received fees of $43,630, during the course of the year to provide Corporate Advisory Services. The company has entered a rental agreement with Rhodes Davies & Associates Pty Ltd of whom Messrs C P Davies, K R Rhodes and S A Rhodes are Directors to rent the premises known as Unit 1, 25 Irvine Drive, Malaga, Western Australia. Rent of $26,290 has been paid during the course of the year. Page 17 25 MAXPRO SYSTEMS PTY LTD STATEMENT BY DIRECTORS FOR THE YEAR ENDED 30 JUNE 1996 We, Christopher Paul Davies and Kim Robert Rhodes, being two Directors of the company, hereby state that in the opinion of the Directors: 1. a) the financial statements set out on pages 3 to 17, are drawn up so as to give a true and fair view of the results and cash lows for the financial year ended 30 June 1996 and the state of affairs of the company at 30 June 1996; b) at the date of this statement there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due. 2. The financial statements have been made out in accordance with applicable Accounting Standards and other mandatory professional reporting requirements. SIGNED at PERTH this 7th day of August 1996 Signed in accordance with a Resolution of the Directors /s/ CHRISTOPHER PAUL DAVIES - -------------------------------- Christopher Paul Davies /s/ KIM ROBERT RHODES - -------------------------------- Kim Robert Rhodes Page 18 26 [GRANT THORNTON LETTERHEAD] INDEPENDENT AUDIT REPORT TO THE MEMBERS OF MAXPRO SYSTEMS PTY LTD SCOPE We have audited the financial statements of Maxpro Systems Pty Ltd for the financial year ended 30 June 1996 as set out on pages 3 to 18. The company's directors are responsible for the financial statements. We have conducted an independent audit of these financial statements in order to express an opinion on them to the members of the company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial statements are presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements (urgent issues group consensus views) and statutory requirements so as to present a view which is consistent with our understanding of the company's financial position, the results of its operations and its cash flows. The audit opinion expressed in this report has been formed on the above basis. AUDIT OPINION In our opinion, the financial statements of Maxpro Systems Pty Ltd are properly drawn up:- a) so as to give a true and fair view of: i) the company's state of affairs as at 30 June 1996 and its profit and cash flows for the financial year ended on that date; and ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the Corporations Law to be dealt with in the financial statements; b) in accordance with the provisions of the Corporations Law; and c) in accordance with applicable Accounting Standards and other mandatory professional reporting requirements. /s/ GRANT THORNTON - -------------------------------- GRANT THORNTON CHARTERED ACCOUNTANTS /s/ T G WALLACE - -------------------------------- T G WALLACE PARTNER PERTH, WA DATED THIS 7TH DAY OF AUGUST 1996. Page 19 27 ULTRAK, INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements 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. ULTRAK, INC. (Registrant) Date: August 23, 1996 By: /s/ TIM D. TORNO --------------------- Tim D. Torno Principal Financial and Accounting Officer 7 28 INDEX TO EXHIBITS
Exhibit No. Description - ----------- ----------- Exhibit 10.1 Stock Purchase Agreement dated August 7, 1996 among Chris Davies, Kim Rhodes, Scott Rhodes, Rhodes Davies & Associates Pty Ltd. and Ultrak, Inc. Exhibit 10.2 Shareholders Deed dated August 7, 1996 between Bajada & Associates Pty Ltd. and Ultrak, Inc. Exhibit 10.3 Consultancy Agreement dated August 7, 1996 between Rhodes Davies & Associates Pty Ltd., Maxpro Systems Pty Ltd. and Ultrak, Inc.
EX-10.1 2 STOCK PURCHASE AGREEMENT 1 EXHIBIT 10.1 STOCK PURCHASE AGREEMENT THIS AGREEMENT, dated August 7, 1996 (the "Signing Date"), is among Chris Davies ("Davies"), Kim Rhodes ("K. Rhodes"), Scott Rhodes ("S. Rhodes"), Rhodes Davies & Associates Pty. Ltd. (ACN 009 333 788) ("RDA") (Davies, K. Rhodes, S. Rhodes, and RDA are sometimes collectively referred to as the "Signing Shareholders" and individually referred to as a "Signing Shareholder"), and Ultrak, Inc., a Delaware corporation ("Ultrak"). Recitals. Each Signing Shareholder desires to sell all of the outstanding shares of capital stock (the "Maxpro Stock") of Maxpro Systems Pty. Ltd. (ACN 009 081 467), an Australian proprietary limited company ("Maxpro"), owned or to be acquired (in the case of RDA) by him to Ultrak in accordance with the terms of this Agreement and Ultrak desires to acquire all of the outstanding shares of Maxpro Stock owned by the Signing Shareholders (the "Acquisition"). NOW, THEREFORE, in consideration of the foregoing and the terms of this Agreement, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby covenant and agree as follows: ARTICLE I: THE ACQUISITION 1.01. The Purchase. On the terms and subject to the conditions set forth herein, at the Closing (as hereinafter defined) each Signing Shareholder covenants and agrees to sell and deliver to Ultrak, and Ultrak agrees to purchase from each Signing Shareholder, on the Closing Date (as hereinafter defined) the number of shares of the Maxpro Stock set forth opposite each Signing Shareholder's name below:
Name Shares ---- ------ Davies 92 K. Rhodes 92 S. Rhodes 92 RDA 171
The aggregate number of shares of the Maxpro Stock owned by all of the Signing Shareholders is hereinafter referred to as the "Signing Shareholders' Shares". 1.02. Purchase Price. (a) The purchase price to be paid by Ultrak to the Signing Shareholders for the Signing Shareholders' Shares shall be the aggregate of the following: (i) Ten Million Five Hundred Thousand Australian Dollars (A$10,500,000) (the "Cash Purchase Price"), payable by cashier's check or wire transfer at the Closing in the amount set forth below opposite each Signing Shareholder's name below: 2
Name Amount ---- ------ Davies A$______ K. Rhodes A$______ S. Rhodes A$______ RDA A$______
(ii) If the Maxpro Group's (as hereinafter defined) operating profit before interest, income taxes, and Corporate Charges (as hereinafter defined) (the "Formula Profit") is at least Two Million Australian Dollars (A$2,000,000) (the "First Earnout Profit Target") for Maxpro's fiscal year ending June 30, 1997 (the "First Earnout Period"), then Ultrak shall issue the Signing Shareholders that number of unregistered shares of Common Stock of Ultrak ("Ultrak Stock") as is equal to the quotient of (A) Three Hundred Thousand United States Dollars (US$300,000) divided by (B) the closing price on July 1, 1997 of Ultrak Stock as reported for the National Association of Securities Dealers Automated Quotations System ("NASDAQ") in the Wall Street Journal, Southwest Edition. If the Formula Profit for the Maxpro Group for the First Earnout Period is less than the First Earnout Profit Target, then no shares of Ultrak Stock will be issued for the First Earnout Period. The "Maxpro Group" means Maxpro and any wholly-owned subsidiary of Maxpro. The term "Corporate Charges" means costs and expenses of Ultrak that are charged or allocated to Ultrak's subsidiaries or divisions other than for specific services and the term "Corporate Charges" does not include costs and expenses of Ultrak that are charged or allocated on a normal cost recovery basis to the Maxpro Group for services requested by Maxpro and actually performed by Ultrak's corporate office for the Maxpro Group. By way of example and not limitation, an allocation of Ultrak's expenses for services (billing, collection, marketing, etc.) actually performed by Ultrak's corporate office for Maxpro would not be a Corporate Charge and such expenses would be considered in calculating the Formula Profit. (iii) If the Maxpro Group's Formula Profit is at least Six Million Australian Dollars (A$6,000,000) (the "Second Earnout Profit Target") for Maxpro's fiscal year ending June 30, 1998 (the "Second Earnout Period"), then Ultrak will issue the Signing Shareholders that number of unregistered shares of Ultrak Stock as is equal to the quotient of (A) Six Hundred Thousand United States Dollars (US$600,000) divided by (B) the closing price on July 1, 1998 of Ultrak Stock as reported for NASDAQ in the Wall Street Journal, Southwest Edition. If the Formula Profit for the Maxpro Group for the Second Earnout Period is less than the Second Earnout Profit Target, then no shares of Ultrak Stock will be issued for the Second Earnout Period. (b) The Formula Profit for the Maxpro Group for the First Earnout Period and the Second Earnout Period shall, as between the parties hereto, be conclusively determined by the then auditors for Maxpro. The auditors shall issue a certificate as to the amount of the Maxpro Group's Formula Profit as soon as possible following the conclusion of the audit for the Maxpro Group for each of the First Earnout Period and the Second Earnout Period. The certificate shall be conclusive and binding on Ultrak, and the Signing Shareholders. If the certificate of the auditors provides that the Maxpro Group's Formula Profit equalled or exceeded the First Earnout Profit Target for the First Earnout Period, then Ultrak will issue the number of unregistered shares of Ultrak Stock determined in accordance with Section 1.02(a)(ii) within thirty (30) days of the issuance by the auditors of the certificate certifying the Formula Profit for the First Earnout Period. If the certificate of the auditors provides that the Maxpro Group's Formula Profit equalled or exceeded the Second Earnout - 2 - 3 Profit Target for the Second Earnout Period, then Ultrak will issue the number of unregistered shares of Ultrak Stock determined in accordance with Section 1.02(a)(iii) within thirty (30) days of the issuance by the auditors of the certificate certifying the Formula Profit for the Second Earnout Period. The auditors for the Maxpro Group shall be Grant Thornton LLP or such other accountants as are acceptable to Ultrak. The auditors for the Maxpro Group for the Second Earnout Period need not be the same auditors that audited Maxpro's financial statements for the First Earnout Period. The Signing Shareholders acknowledge and agree that the Maxpro Group's research and development expenses in each of the First Earnout Period and the Second Earnout Period will at least equal the Maxpro Group's research and development expenses in fiscal 1996. Ultrak covenants and agrees that, in determining Formula Profits, it will not transfer or direct sales made by the Maxpro Group to Ultrak or other Ultrak subsidiaries. Any subsidiary of Maxpro that is part of the Maxpro Group shall have the same fiscal year as Maxpro. 1.03. Execution and Delivery of Closing Documents. Before the Closing, each party shall cause to be prepared, and at the Closing the parties shall execute and deliver, each agreement and instrument required by this Agreement to be so executed and delivered and not theretofore accomplished. At the Closing, the Signing Shareholders shall deliver the certificate or certificates representing the Selling Shareholders' Shares duly endorsed or accompanied by stock powers executed (with the signature of the endorsing party guaranteed by an appropriate person or entity as required by Ultrak) and in form sufficient to vest title thereto fully in Ultrak, free and clear of all liens, liabilities, claims and encumbrances, against delivery by Ultrak of the Cash Purchase Price. At the Closing, each party also shall execute and deliver, or cause to be executed and delivered, such other appropriate and customary documents as any other party reasonably may request for the purpose of consummating the transactions contemplated by this Agreement. All actions taken at the Closing shall be deemed to have been taken simultaneously at the time the last of any such actions is taken or completed. 1.04. Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at 10:00 o'clock a.m., local time, at such offices as the parties shall agree on August 2, 1996, or on such other date as may be agreed upon by the parties, but in any event not later than August 23, 1996 (the "Termination Date") unless further extended by written agreement of the parties to this Agreement. The day on which the Closing occurs is herein referred to as the "Closing Date." 1.05. Further Assurances. After the Closing, the Signing Shareholders shall execute and deliver such additional documents and take such additional actions as Ultrak may reasonably deem to be practical and necessary or advisable in order to consummate the transactions contemplated by this Agreement and to vest more fully in Ultrak the ownership of the Signing Shareholders' Shares. - 3 - 4 1.06. Effective Date for Accounting Purposes. To the fullest extent possible, the effective date of the Acquisition for accounting purposes will be July 1, 1996 and the effective date of the transfer of control of Maxpro to Ultrak will be July 1, 1996. 1.07. Personal Guarantees of Signing Shareholders. If the Signing Shareholders have guaranteed any indebtedness or obligations of Maxpro, then such guarantees will be disclosed on Schedule 1.08 of the Disclosure Schedule (the "Disclosed Guarantees"). Promptly following the Closing, Ultrak will use all reasonable efforts to have the Signing Shareholders released from the Disclosed Guarantees. To the extent Ultrak cannot obtain any Signing Shareholder's release from a Disclosed Guarantee, Ultrak will agree to fully indemnify such Signing Shareholder from any liability with respect to that Disclosed Guaranty to the extent that the event giving rise to liability occurs subsequent to the Closing. 1.08. Ultrak Products. Following the Closing, Ultrak agrees that, subject to contractual restrictions with third parties, Ultrak will provide the Maxpro Group with access to all products that Ultrak and its subsidiaries produce or distribute. Ultrak agrees to private label Ultrak's products for sale by the Maxpro Group in Australia; provided, however, the Signing Shareholders acknowledge and agree that the Maxpro Group will be charged all internal and external costs of Ultrak associated with causing Ultrak's products to be labelled and packaged with Maxpro's name. 1.09. Ultrak Loans to Signing Shareholders. Following the Closing, Ultrak agrees, upon written request, to loan each Signing Shareholder an amount equal to the Australian income tax payable by such Signing Shareholder solely with respect to the shares of Ultrak Stock issuable pursuant to Sections 1.02(a)(ii) and 1.02(a)(iii). Each Signing Shareholder agrees to make all elections reasonably available under applicable law to reduce his Australian income taxes payable with respect to the shares of Ultrak Stock. Each loan under this Section 1.10 shall [be made only if shares of Ultrak Stock are not earned pursuant to Sections 1.02(a)(ii) and 1.02(a)(iii) and shall] bear interest at a floating rate of interest equal to the total of the LIBOR rate as announced in the Wall Street Journal plus three hundred (300) basis points. The interest rate on the outstanding balance of each loan will automatically adjust with any change in LIBOR. A loan will be made available to a signing Shareholder pursuant to this Section 1.10 upon execution of a promissory note in form and substance reasonably satisfactory to Ultrak. Each loan to a Signing Shareholder pursuant to this Section 1.10 will be repayable in six (6) equal installments spaced six (6) months apart, with the first installment to be paid six (6) months after the loan is advanced to a Signing Shareholder. ARTICLE II: REGISTRATION RIGHTS 2.01. Registration. (a) If, at any time before July 1, 2000, Ultrak proposes to file a registration statement (on any form other than Form S-4 or Form S-8) relating to the Ultrak Stock - 4 - 5 under the Securities Act of 1933, as amended (the "Securities Act"), for sale for its own account, Ultrak will, not less than ten (10) days prior to the initial filing of such registration statement, deliver written notice of such intention to the Signing Shareholders setting forth the intended method of disposition, the maximum proposed offering price, commissions and discounts in connection therewith and other relevant information. Such notice must indicate that the Signing Shareholders have piggyback registration rights pursuant to this Section 2.01(a) with respect to the shares of the Ultrak Stock which are then held by the Signing Shareholders and were acquired pursuant to Section 1.01 hereof (the "Registrable Shares"). If any Signing Shareholder owning Registrable Shares so requests in writing within five (5) days after such notification, Ultrak hereby agrees to include in such registration statement up to all (subject to the terms of this Article II) of the Registrable Shares owned by such Signing Shareholder and to use all reasonable best efforts to register such Registrable Shares so that such Registrable Shares may be sold at such times and in such manner as the holder or holders thereof shall determine. If the proposed registration by Ultrak is, in whole or in part, an underwritten public offering of Ultrak Stock, then any request pursuant to this Section 2.01(a) to register must specify and irrevocably agree that the Registrable Shares of a Signing Shareholder to be included in the underwriting will be included on the same terms and conditions as the shares of the Ultrak Stock otherwise being sold by Ultrak through underwriters under such registration. (b) If a registration pursuant to this Section 2.01 involves an underwritten offering and the managing underwriter of such underwritten offering informs Ultrak and the Signing Shareholders by letter of such managing underwriter's reasonable belief that the effect of including all of the Registrable Shares so requested to be included in the registration statement will materially and adversely affect the sale of the shares of the Ultrak Stock proposed to be sold by Ultrak, then the number of shares of the Ultrak Stock that a holder of Registrable Shares may include in such registration shall be reduced (and the number of shares of the Ultrak Stock to be sold by other selling shareholders shall also be reduced) to a number determined by multiplying (x) the total number of shares held by all selling shareholders having contractual registration rights (including the holders of Registrable Shares) which the managing underwriter is willing to have included in such registration, times (y) a fraction, the numerator of which is the number of Registrable Shares which such Signing Shareholder requested to be included in such registration statement and the denominator of which is the number of all shares (including the Registrable Shares) which all the selling shareholders having contractual registration rights have requested to be included in such registration. (c) Notwithstanding Section 2.01(b), the Signing Shareholders recognize and agree that their rights under this Section 2.01 shall be expressly subject and inferior to the registration rights of Petrus Fund, L.P. ("Petrus") with respect to 100,000 shares of Ultrak Stock with such registration rights expiring on November 30, 1996. - 5 - 6 (d) In connection with any registrations under this Section 2.01, the Signing Shareholders shall cooperate with Ultrak and promptly furnish all information necessary to effect the proper registration of Registrable Shares desired to be sold. 2.02. Costs and Expenses. All costs and expenses in connection with the registration of any Registrable Shares under Section 2.01 of this Agreement or the performance of Ultrak's obligations under Section 2.01 of this Agreement, including, but not limited to, all registration, filing, stock exchange and NASD fees; all fees and expenses of complying with securities or blue sky laws; fees and disbursements of counsel for Ultrak, counsel responsible for qualifying the Registrable Shares under blue sky laws, and of independent accountants and other experts of Ultrak; and all other reasonable expenses of Ultrak in connection with the transfer and delivery of the Registrable Shares, shall be borne by Ultrak; provided, however, that Ultrak shall not be obligated to pay any underwriting commissions or discounts relating to the Registrable Shares and Ultrak shall not be obligated to pay the fees and expenses of any separate legal counsel retained by any Signing Shareholder. 2.03. Indemnification. (a) Ultrak hereby agrees to indemnify and hold harmless each Signing Shareholder owning Registrable Shares requesting or joining in a registration hereunder and each other person, if any, who controls such holder within the meaning of the Securities Act, against all losses, liabilities, claims, damages, and expenses, joint or several, to which such holder or controlling person may become subject under the Securities Act or otherwise, insofar as such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement of any material fact contained in any registration statement covering the Registrable Shares, any preliminary prospectus, final prospectus or summary prospectus contained therein, or in an amendment or supplement thereto executed by or on behalf of Ultrak or based upon written information furnished by or on behalf of Ultrak filed in any jurisdiction in order to qualify the Registrable Shares under the securities laws thereof or filed with the United States Securities and Exchange Commission (the "SEC"), or arises out of or is based upon the omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that Ultrak shall not be obligated to indemnify a Signing Shareholder in any such case to the extent that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or omission relating to such Signing Shareholder or the Signing Shareholder's method of distributing the Registrable Shares, or otherwise, that was made in reliance upon, and in conformity with, written information duly executed and furnished by such Signing Shareholder specifically for use in the registration statement, or any amendment or supplement thereto, or any application, as the case may be. (b) By requesting Registrable Shares to be covered by any registration statement in accordance with this Agreement, each Signing Shareholder agrees to indemnify and hold harmless Ultrak, each of its directors and each of its officers who - 6 - 7 have signed said registration statement, and each person, if any, who controls Ultrak within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the same extent as the indemnification by Ultrak provided for in Section 2.03(a), but only with respect to untrue statements or omissions, if any, relating to such Signing Shareholder or the Signing Shareholder's method of distributing the Registrable Shares, or otherwise, made in such registration statement, prospectus contained therein, or amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information duly executed and furnished by such Signing Shareholder against whom indemnification is sought to Ultrak specifically for use in the registration statement, in the prospectus contained therein, or any amendment or supplement thereto, or any application, as the case may be. (c) Promptly after the receipt by an indemnified party under Section 2.03(a) or 2.03(b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, if the defendants in any action include both the indemnified party and the indemnifying party and the indemnified party or parties shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel, which, in the case of Section 2.03(a) above, shall be designated by the Signing Shareholder and which, in the case of Section 2.03(b) above, shall be designated by Ultrak). After notice from the indemnifying party to such indemnified party of its election so to assume the defense of any such action, the indemnifying party shall not be liable to such indemnified party under Section 2.03(a) or 2.03(b) above for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the indemnified party shall have employed counsel in accordance with the proviso in the immediately preceding sentence, (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. The indemnification required by this Article II shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or losses, liabilities, claims, damages or expenses are incurred. - 7 - 8 2.04 Termination of Rights. The right of any Signing Shareholder to register Registrable Shares pursuant to Section 2.01 shall automatically terminate as to any Registrable Shares that may be sold under Rule 144 promulgated by the SEC pursuant to the Securities Act. ("Rule 144") without registration (subject only to volume limitations as set forth in Rule 144). 2.05. Exchange Act Registration. Ultrak agrees to maintain registration of the Ultrak Stock under the Exchange Act, to timely file and maintain all required reports and other filings with the SEC, and to take such action as may from time to time be necessary to enable holders of Registrable Shares to be able to sell pursuant to Rule 144, unless otherwise restricted by this Agreement or unless sales can be made without compliance with Rules 144 and 145 promulgated by the SEC under the Securities Act. ARTICLE III: REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS Each Signing Shareholder jointly and severally represents and warrants to Ultrak that the following are true and correct as of the Signing Date and will be true and correct as of the Closing Date as if made on that date: 3.01. Organization, Qualification, and Good Standing. Maxpro is a corporation duly organized, validly existing, and in good standing under Australian law, has the corporate power and authority to own or hold under lease its properties and assets and to carry on its business as it is now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the ownership of its property or the conduct of its business requires such qualification. 3.02. Investments or Subsidiaries. Other than as set forth on Schedule 3.02 of the Disclosure Schedule, Maxpro does not own (nor has it ever owned) the capital stock of any corporation, nor does it have (nor has it ever had) an equity, profit sharing, participation, or other interest in any corporation, partnership, joint venture, or other entity. 3.03. Corporate Records. Copies of the Memorandum of Association (the "Charter") and all amendments thereto and the Articles of Association (the "Bylaws") and all amendments thereto of Maxpro have been delivered to Ultrak and such copies are true, correct, and complete. The minute books of Maxpro contain accurate and complete minutes of all meetings of and accurate and complete consents to all actions taken without meetings by the Board of Directors (and any committee thereof) and the shareholders of Maxpro since the formation of Maxpro. 3.04. No Violation. Except as set forth on Schedule 3.04 of the Disclosure Schedule, neither the execution and delivery of this Agreement by the Signing Shareholders nor the consummation of the transactions contemplated hereby will violate or conflict with, or result in the breach or termination of, or otherwise give any other contracting party the right to terminate, or constitute a default (or an event which, with the lapse of time, or the giving of notice, or both, - 8 - 9 will constitute a default) under, any contract, license, other instrument or commitment to which Maxpro is a party or by which Maxpro is bound, or result in the creation of any lien, charge or encumbrance upon the properties or assets of Maxpro pursuant to the terms of any such contract, license, instrument or commitment. Other than as set forth on Schedule 3.04 of the Disclosure Schedule, no authorization, consent, or approval of, or filing with, any governmental body or authority is necessary for the consummation by Maxpro and the Signing Shareholders of the transactions contemplated herein. 3.05. Authority of Signing Shareholders; No Violation by Signing Shareholders. This Agreement has been duly and validly executed and delivered by each Signing Shareholder and, assuming this Agreement constitutes a valid and binding agreement of Ultrak, this Agreement constitutes a valid and binding agreement of each Signing Shareholder, enforceable against each Signing Shareholder in accordance with its terms. Except as set forth on Schedule 3.05 of the Disclosure Schedule, neither the execution and delivery of this Agreement by any Signing Shareholder nor the consummation of the transactions contemplated hereby by the Signing Shareholders will: (a) violate or conflict with, or result in the breach or termination of, or otherwise give any other contracting party the right to terminate, or constitute a default (or an event which, with the lapse of time, or the giving of notice, or both, will constitute a default) under, any contract, license, other instrument or commitment to which a Signing Shareholder is a party or by which a Signing Shareholder is bound, or result in the creation of any lien, charge or encumbrance upon the properties or assets of Maxpro or the Signing Shareholders' Shares pursuant to the terms of any such contract, license, instrument or commitment, or (b) violate or conflict with any applicable law, regulation, permit, authorization, franchise, license, judgment, order, writ, injunction or decree of any court or governmental body of any jurisdiction. 3.06. Capitalization. The authorized capital stock of Maxpro consists solely of 10,000 shares of Maxpro Stock, 595 shares of which are issued and outstanding. There are no other authorized classes or series of capital stock of Maxpro. All outstanding shares of Maxpro Stock are duly authorized, validly issued, fully paid, and nonassessable and have been offered, issued, sold, and delivered by Maxpro in compliance with applicable securities laws. There are no preemptive rights with respect to the Maxpro Stock. There are no outstanding subscriptions, options, warrants, rights, or other arrangements or commitments, whether express or implied, obligating Maxpro to issue any shares of Maxpro Stock or securities exchangeable for or convertible into Maxpro Stock. Schedule 3.06 of the Disclosure Schedule lists all of the Maxpro Stock as owned or to be owned immediately prior to the Closing Date, the address of each shareholder of Maxpro as shown in Maxpro's books and records, and the number of shares of Maxpro Stock owned by each shareholder of Maxpro or to be owned immediately prior to the Closing Date. As of the Closing Date (prior to the consummation of the transactions contemplated hereby), each Signing Shareholder will be the lawful record and beneficial owner of the shares of Maxpro Stock set forth by his name on Schedule 3.06 of the Disclosure Schedule, free and clear of all liens, liabilities, proxies, claims, and encumbrances of any kind (other than as noted on Schedule 3.06 of the Disclosure Schedule). The transfer as of the Closing Date of the certificates representing the Signing Shareholders' Shares will transfer to Ultrak good and indefeasible title to such shares of Maxpro Stock, free and clear of all liens, liabilities, claims, and encumbrances of every kind, and Maxpro and the Signing Shareholders will forever warrant and defend such title against any claimants thereto. - 9 - 10 3.07. Maxpro Financial Statements. The audited balance sheet of Maxpro as of June 30, 1995 (the "Audited Balance Sheet") and the audited statement of operations, statement of cash flows and statement of changes in shareholders' equity of Maxpro for the fiscal year ended June 30, 1995 (the "Audited Financial Statements"), each certified by KPMG Peat Marwick, independent certified public accountants, whose report thereon is included therein, and the unaudited balance sheet of Maxpro as of April 30, 1996 (the "1996 Balance Sheet") (the Audited Balance Sheet and the Unaudited Balance Sheet are collectively referred to as the "Balance Sheets") and the unaudited statement of operations and statement of cash flows of Maxpro for the 10-month period ended April 30, 1996 (collectively, including the 1996 Balance Sheet, the "Unaudited Financial Statements"), have been prepared in accordance with the books and records of Maxpro, which books and records are complete, maintained on a consistent basis, and correctly reflect its income, expenses, assets and liabilities, are true, complete and accurate and present fairly the financial position of Maxpro as of the dates of Balance Sheets and the results of operations of Maxpro for the periods covered by said statements of operations, in accordance with generally accepted Australian accounting principles ("GAAP") consistently applied, except as otherwise disclosed therein and except, in the case of the Unaudited Financial Statements, for (i) normally recurring year-end adjustments, which adjustments will not be material either individually or in the aggregate, and (ii) the absence of notes required by GAAP. The Audited Financial Statements and the Unaudited Financial Statements are collectively referred to in this Agreement as the "Financial Statements." 3.08. Compliance with Laws. Maxpro has complied with all laws, rules, and/or regulations applicable to it or its business, and has received no notice of any alleged violation of any such laws, rules, or regulations. 3.09. Taxes. Maxpro has duly filed when due all income, excise, corporate, franchise, property, sales, payroll, withholding, and other tax returns and reports required to be filed by it as of the date hereof by Australia, the United States of America, or any state or any political subdivision thereof and has paid or established adequate reserves for all taxes (including penalties and interest) which have or may become due for the tax periods covered by such returns, and any assessments which have been received by it. All such tax returns or reports which are income tax returns or reports fairly reflect the taxable income generated by Maxpro and the taxes of Maxpro for the periods covered thereby. Maxpro is not delinquent in the payment of any tax, assessment, or governmental charge, there is no tax deficiency or delinquency asserted against Maxpro and there is no unpaid assessment, proposal for additional taxes, deficiency or delinquency in the payment of any of the taxes of Maxpro that could be asserted by any taxing authority, nor of any violation of any tax law. There are no waivers or agreements by Maxpro for the extension of time for the assessment of any tax as shown on such returns or reports with respect to Maxpro. No audit of Maxpro with respect to taxes is pending or threatened. All monies required to be withheld or collected by Maxpro from employees or customers for income taxes, social security and unemployment insurance taxes and sales, excise, and use taxes, and the portion of any such taxes to be paid by Maxpro to governmental agencies, have been collected or withheld and either paid to the respective governmental agencies or set aside for such purpose in the manner required by applicable law and are properly reflected in the Financial Statements or on the books and records of Maxpro. - 10 - 11 3.10. Liabilities and Obligations. The Financial Statements reflect all material liabilities or obligations of Maxpro, accrued, contingent, or otherwise (asserted or unasserted), arising out of transactions effected or events occurring on or prior to the Signing Date, other than liabilities and obligations incurred in the ordinary course of business of Maxpro since April 30, 1996, which liabilities and obligations are either (i) set forth on Schedule 3.10 of the Disclosure Schedule or (ii) not, individually or in the aggregate, material to the assets, condition (financial or otherwise), business or operations of Maxpro. All reserves shown in the Financial Statements are appropriate, reasonable, and sufficient to provide for the losses thereby contemplated. Except as set forth in the Financial Statements, Maxpro is not liable upon or with respect to, or obligated in any other way to provide funds in respect of or to guarantee or assume in any manner, any debt, obligation, or liability of any person, corporation, association, partnership, joint venture, trust, or other entity, and Maxpro knows of no basis for the assertion of any other claims, liabilities, or obligations of any nature or in any amount that would be material to the condition (financial or otherwise), business, or operations of Maxpro. 3.11. Employee Benefit Plans and Arrangements; ERISA. Maxpro does not sponsor or maintain and Maxpro is not otherwise a party to, nor has it been in default under, any accrued obligations under any Australian employee benefit law, rule, or regulation or any "employee benefit plan" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (such plans being hereinafter referred to collectively as the "ERISA Plans"), or any other pension, profit sharing, or other retirement plan, fringe benefit plan, health, group insurance or other welfare benefit plan, or other similar plan, agreement, policy or understanding ("Other Plans" and, together with ERISA Plans, the "Plans"), whether formal or informal and whether legally binding or not. Maxpro does not have any commitment to create any such Plan. Maxpro is not now, nor has it been, a part of a controlled group of corporations within the meaning of Section 414(b) of the Code or a group of trades or businesses under common control within the meaning of Section 414(c) of the Code. Maxpro has never sponsored, adopted, maintained or been obligated to contribute to a single employer, multiple employer or multiemployer defined benefit pension plan which is, or ever was, subject to the provisions of Title IV of ERISA. Maxpro is not now, nor has it sponsored, adopted, maintained, or been obligated to contribute to a Plan which is or ever was subject to the minimum funding standards of Section 302 of ERISA and Section 412 of the Code. Maxpro does not have any obligation in connection with any Plan pursuant to the terms of a collective bargaining agreement. To the best of Maxpro's knowledge, no Plan previously sponsored or maintained by Maxpro, or to which Maxpro has otherwise been a party, has resulted in any material liability or obligation for Maxpro other than as reflected on the Financial Statements. 3.12. Absence of Certain Changes. Except as set forth on Schedule 3.12 of the Disclosure Schedule, from and including April 30, 1996, Maxpro has not: (a) suffered any material adverse change in its condition (financial or otherwise), business, or operations; (b) contracted for or paid any single capital expenditure in excess of A$10,000 or total capital expenditures in excess of A$50,000; (c) mortgaged, pledged, or subjected to any lien, lease, security interest, or other charge or encumbrance any of its properties or assets; (d) formed or acquired or disposed of any interest in any corporation, partnership, joint venture, or other entity; - 11 - 12 (e) suffered any damage or destruction to or loss of any assets (whether or not covered by insurance) or lost or terminated employees or suppliers that could or does adversely affect its condition (financial or otherwise), business, or operations; (f) except for the disposal of inventory, machinery, vehicles, and equipment consistent with past practices, acquired or disposed of any assets or incurred, assumed, or guaranteed any indebtedness for borrowed money or other liabilities or obligations to pay money other than trade payables in the ordinary course of business; (g) forgiven, compromised, cancelled, released, permitted to lapse, or waived any rights or claims that are material to the condition (financial or otherwise), business, or operations of Maxpro; (h) entered into, terminated or agreed to any modifications or amendments to any material agreements, leases, or commitments; (i) paid any bonus, granted any benefit, made any payments, or loaned any money to its shareholders, employees, or other affiliates; (j) entered into any employment, compensation, consulting, or collective bargaining agreement with any person or group, or modified or amended the terms of any such existing agreement or entered into, adopted, or amended any Plan; or (k) entered into or terminated any other commitment or transaction or experienced any other event that is material to the condition (financial or otherwise), business, or operations of Maxpro. 3.13. Title and Related Matters. Maxpro has good and marketable title to all assets reflected in the Financial Statements as owned by Maxpro and to those other assets reflected in Maxpro's books and records as being owned (except as they have since been affected by transactions in the ordinary course of business and consistent with past practices), and Maxpro owns such assets free and clear of all mortgages, liens, pledges, charges, or encumbrances of any kind or character, except (a) statutory liens for property taxes that are not yet delinquent and (b) as expressly stated in the Financial Statements or on Maxpro's books and records (except as they have since been affected by transactions in the ordinary course of business and consistent with past practices). 3.14. Insurance. Maxpro is a beneficiary of policies of insurance, issued by insurers of recognized responsibility, providing adequate coverage to insure the properties and businesses thereof against such risks and in such amounts as are prudent and customary in Maxpro's industry. All of such policies are, and will be maintained through the Closing Date, in full force and effect. All premiums due thereon have been paid and no notice of cancellation has been received with respect thereto. 3.15. Patents, Trademarks, Copyrights, Etc. Except as set forth on Schedule 3.15 of the Disclosure Schedule, Maxpro owns all patents, technology, know-how, processes, trademarks, and copyrights, if any, necessary to conduct its business, or possesses adequate licenses or other rights, if any, therefor, without conflict with the rights of others (the "Proprietary Rights"). Except as set forth on Schedule 3.15 of the Disclosure Schedule, Maxpro has the sole and exclusive right to use the Proprietary Rights without infringing or violating the rights of any third parties. No consent of third parties is required for the use thereof by Maxpro, and no claim has been asserted by any person to the ownership of or right to use any Proprietary Right or challenging or questioning the validity or effectiveness of any such license or agreement, and Maxpro does not know of any basis for any such claim. Each of the Proprietary Rights is valid - 12 - 13 and subsisting, has not been cancelled, abandoned, or otherwise terminated and, if applicable, has been duly issued or filed. There is no claim that, or inquiry as to whether, any product, activity or operation of Maxpro infringes upon or involves, or has resulted in the infringement of, any Proprietary Right of any other person, corporation or other entity; and no proceedings have been instituted, are pending or are threatened which challenge the rights of Maxpro with respect thereto. 3.16. Consents. Maxpro possesses all necessary licenses, franchises, permits, and governmental authorizations material to the conduct of its business, and no authorization, consent, approval, permit, or license of, or filing with, any governmental or public body or authority, any lender or lessor or any other person or entity is required to authorize, or is required in connection with, the execution, delivery, and performance of this Agreement or the agreements contemplated hereby on the part of Maxpro, and the execution, delivery, and performance of this Agreement will not with the giving of notice, the lapse of time, or both, terminate such licenses, franchises, permits, and governmental authorizations. 3.17. Labor Relations. Maxpro is not a party to any collective bargaining agreements with any union and no collective bargaining agreement is currently being negotiated by Maxpro. There are no unfair labor practice charges, complaints, or proceedings against Maxpro pending or threatened before any governmental agency or authority. There are no discrimination charges (relating to sex, age, race, national origin, handicap, or veteran status) pending before any governmental agency or authority. There is no pending representation question involving an attempt to organize a bargaining unit including any employees of Maxpro and no labor grievance has been filed. 3.18. Litigation and Claims. Except as set forth on Schedule 3.18 of the Disclosure Schedule, Maxpro is not a party to, and the business and assets of Maxpro are not the subject of or affected by, any pending or threatened suit, claim, action, or litigation by or with any party or any administrative, arbitration, or other governmental proceeding, investigation, or inquiry. Maxpro is not (a) subject to any continuing court or administrative order, writ, injunction, or decree applicable specifically to Maxpro or to its business, assets, operations, or employees, or (b) in default with respect to any such order, writ, injunction, or decree. Maxpro does not know of any basis for any such action, proceeding, or investigation. 3.19. Employees and Consultants. Except as set forth on Schedule 3.19 of the Disclosure Schedule, Maxpro has no direct or indirect, express or implied, obligation to pay severance or termination pay to any officer or employee of Maxpro, or to pay any termination or severance payments to any consultant, agent, or other person or entity. 3.20. Books of Account. The books of account of Maxpro have been kept accurately in the ordinary course of business, the transactions entered therein represent bona fide transactions and the revenues, expenses, assets, and liabilities of Maxpro have been properly recorded in such books. - 13 - 14 3.21. Distributions. Since July 1, 1995, no distribution, payment or dividend of any kind has been declared, paid or distributed by Maxpro on or with respect to any of its capital stock at any time. 3.22. Accounts Receivable. The accounts receivable of Maxpro on April 30, 1996, and those existing on the Closing Date: (a) will have arisen out of sales in the ordinary course of business and represent bona fide indebtedness of the applicable account debtor; (b) to the best knowledge of Maxpro and each Signing Shareholder, are and will be collectible in full, net of the reserves therefore set forth on the books of Maxpro, which reserves were calculated consistent with past practices and with GAAP applied consistently with the Audited Financial Statements; and (c) are subject to no claims of offset, counterclaim, recoupment or setoff and, to the best knowledge of Maxpro and each of the Signing Shareholders, there are no facts or circumstances (whether asserted or unasserted) that could give rise to such a claim. Schedule 3.22 of the Disclosure Schedule is a complete and accurate accounts receivable aging report for Maxpro as of a date within thirty (30) days of the date of this Agreement. 3.23. Contracts. (a) Except as set forth on Schedule 3.23 of the Disclosure Schedule, Maxpro is not a party to, or bound by, any material undischarged written or oral: (i) contract of employment for any period of time whatsoever, or restricting the employment, of any employee; (ii) consulting agreement; (iii) collective bargaining agreement; (iv) contract or agreement restricting in any manner Maxpro's right to compete with any other person or restricting Maxpro's right to sell to or purchase from any other person; (v) agreement with any affiliate of Maxpro or person controlled directly or indirectly by an affiliate of Maxpro for or with respect to the borrowing or lending of monies, the purchase or sale of goods or the performance of services; (vi) contract for the payment or receipt of license fees or royalties to or from any person, firm or corporation; - 14 - 15 (vii) contract of agency, representation, distribution or franchise which cannot be canceled without payment or penalty upon notice of thirty (30) days or less; (viii) service contract in an annual amount in excess of A$60,000; (ix) guaranty, performance, bid or completion bond, or surety or indemnification agreement; (x) contract relating to the purchase, sale, ownership, use or license of technology except licenses for third party software generally available to the public; (xi) lease or sublease, either as lessee or sublessee, lessor or sublessor, of real or personal property or intangibles; (xii) contracts relating to the purchase, sale or margining of securities; (xiii) warranty or product service contracts; (xiv) joint venture, partnership or other contracts involving a sharing of profits, losses, costs or liabilities; or (xv) contract not listed above. All material contracts, leases, subleases and other instruments of the type referred to in this Section 3.23 and described on Schedule 3.23 of the Disclosure Schedule (collectively, "Contracts") are in full force and effect and are binding upon Maxpro and, to the best knowledge of Maxpro and each of the Signing Shareholders, are binding on the other parties thereto. Except as set forth on Schedule 3.23 of the Disclosure Schedule, no default by Maxpro and/or each of the Signing Shareholders, no material default by the other contracting parties has occurred thereunder, and no event has occurred which with the giving of notice or the lapse of time, or both, would constitute a material default by Maxpro, Maxpro has delivered to Ultrak true and complete copies of each contract, lease, sublease, or other instrument described on Schedule 3.23 of the Disclosure Schedule. (b) Except as disclosed on Schedule 3.23 of the Disclosure Schedule, Maxpro is not a party to, or bound by, any Contract under the terms of which performance by Maxpro according to the terms of this Agreement will be a default or an event of acceleration, or would otherwise require consent. (c) Schedule 3.23 of the Disclosure Schedule contains a list of every material license, permit or governmental approval, order, directive and agreement applied for, pending, issued, rejected or given to Maxpro with respect to the conduct of its business - 15 - 16 or operations. Maxpro possesses all licenses, permits, and governmental approvals and authorization which are required in order to operate its business as presently conducted and Maxpro is in compliance with all such licenses, permits, approvals and authorizations. (d) Schedule 3.23 of the Disclosure Schedule contains a list of all pending or threatened claims against Maxpro under each Contract (including without limitation, claims for back charges, rebates, price reductions, breaches of product or service warranties or for product or service liability for products manufactured or sold), excluding requests for service in the ordinary course of business which Maxpro is required to perform pursuant to the terms of standard warranties and which are covered by warranty reserves, to the extent such claims, individually or in the aggregate, could have a material adverse effect on the condition (financial or otherwise), business, or operations of Maxpro. 3.24. Corporate Name. There are no actions, suits, or proceedings pending or threatened against or affecting Maxpro which may result in any impairment of the right of Maxpro to use its corporate name. Schedule 3.24 of the Disclosure Schedule lists any former corporate names of Maxpro and any names other than its full corporate name under which Maxpro has conducted business. 3.25. Compliance with Environmental Laws. Maxpro has not obtained and has not been required to have obtained any permits, licenses, or similar authorizations by reason of any applicable environmental laws, rules, or regulations. In connection with the real property leased by Maxpro ("Real Property"), Maxpro has not placed any asbestos-containing thermal insulation or building products or PCB-containing products on the Real Property, and Maxpro has no knowledge that any owner, prior lessee or user has placed any asbestos-containing thermal insulation or building products or PCB-containing products on the Real Property. There is no hazardous waste, solid waste or hazardous substances on the Real Property. Maxpro has not installed or maintained any active or inactive hazardous waste receptacles on the Real Property, and Maxpro does not have any knowledge that any active or inactive hazardous waste receptacles have ever been installed or maintained on the Real Property. There have been no spills, discharges or other releases of hazardous or toxic substances onto or from the Real Property. There are no unperformed environmental obligations of Maxpro or against the Real Property. 3.26. Condition of Fixed Assets. All of the fixed assets owned or leased by Maxpro's are in good condition and repair for the intended use in the ordinary course of business and conform in all material respects with all applicable ordinances, regulations and other laws and there are no known latent defects therein. 3.27. Brokers and Finders. None of Maxpro, the Signing Shareholders, or any of Maxpro' officers, directors, shareholders, and employees has employed any broker, finder, or investment bank or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees, or finders' fees in connection with the transactions contemplated hereby. - 16 - 17 ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF ULTRAK Ultrak represents and warrants to the Signing Shareholders that the following are true and correct as of the Signing Date and will be true and correct as of the Closing Date as if made on that date: 4.01. Organization, Qualification, and Good Standing. Ultrak is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and Ultrak has the corporate power and authority to own or hold under lease its properties and assets and to carry on its business as it is now being conducted. 4.02. Capitalization of Ultrak. The authorized capital stock of Ultrak consists of 20,000,000 shares of Ultrak Stock and 2,000,000 shares of Preferred Stock, $5.00 par value per share, of which 195,351 shares have been designated as Series A 12% Cumulative Convertible Preferred Stock ("Series A Preferred Stock"). As of June 30, 1996, there were issued and outstanding approximately 10,300,000 shares of Ultrak Stock and 195,351 shares of Series A Preferred Stock. 4.03. Corporate Authority Relative to This Agreement; No Violation. Ultrak has the corporate power to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by Ultrak's Boards of Directors and no other corporate proceedings on the part of Ultrak are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Ultrak and, assuming this Agreement constitutes a valid and binding agreement of the other parties hereto, this Agreement constitutes a valid and binding agreement of Ultrak, enforceable against Ultrak in accordance with its terms. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will: (x) violate or conflict with any provision of the Certificate of Incorporation or Bylaws of Ultrak, (y) violate or conflict with, or result in the breach or termination of, or otherwise give any other contracting party the right to terminate, or constitute a default (or an event which, with the lapse of time, or the giving of notice, or both, will constitute a default) under, any contract, license, other instrument or commitment to which Ultrak is a party or by which Ultrak is bound, or result in the creation of any lien, charge or encumbrance upon the properties or assets of Ultrak pursuant to the terms of any such contract, license, instrument or commitment, or (z) violate or conflict with any law, regulation, permit, authorization, franchise, license, judgment, order, writ, injunction or decree of any court or governmental body of any jurisdiction, in each case as such is related to Ultrak or its assets. 4.04. Ultrak SEC Reports and Financial Statements. Ultrak has previously furnished to Maxpro a copy of (i) Ultrak's annual report on Form 10-K filed with the SEC for the year ended December 31, 1995, (ii) Ultrak's quarterly report on Form 10-Q filed with the SEC for the quarter ended March 31, 1996 and (iii) Ultrak's definitive prospectus, dated May 30, 1996, in connection with the public sale of shares of Ultrak Stock (the "SEC Filings"). The audited - 17 - 18 consolidated financial statements and unaudited consolidated interim financial statements (collectively referred to herein as the "Ultrak Financials") included in the SEC Filings (including any related notes and schedules) fairly presented the financial position of Ultrak as of the dates thereof and the results of operations and changes in financial position or other information included therein for the periods or as of the dates then ended, all in accordance with generally accepted accounting principles consistently applied during the periods involved (except as otherwise stated therein). 4.05. Consents. Except for the consent of NationsBank of Texas, N.A. ("NationsBank"), no authorization, consent, approval, permit or license of, or filing with, any governmental or public body or authority, any lender or lessor or any other person or entity is required to authorize, or is required in connection with, the execution, delivery, and performance of this Agreement or the agreements contemplated hereby on the part of Ultrak or. 4.06. Brokers and Finders. Neither Ultrak nor any officer or director of Ultrak has employed any broker, finder, or investment bank or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees, or finders' fees in connection with the transactions contemplated hereby. ARTICLE V: JOINT COVENANTS OF ULTRAK AND THE SIGNING SHAREHOLDERS 5.01. Access. Each of Ultrak and the Signing Shareholders, on behalf of themselves and Maxpro, will afford to one another and to one another's officers, employees, accountants, counsel, and other authorized representatives, full and complete access during normal business hours, throughout the period prior to the Closing Date, to its properties, personnel, contracts, commitments, books, records (including but not limited to tax returns) and reports, schedules or other documents and will use all its reasonable efforts to cause its respective representatives to furnish promptly to the other such additional financial and operating data and other information as to its respective businesses and properties as the other or its duly authorized representatives may from time to time reasonably request. 5.02. Notice of any Material Change. Each of Ultrak and the Signing Shareholders, promptly after the first notice or occurrence thereof, but not later than the Closing Date, shall disclose to the other in writing the occurrence of any event or the existence of any state of facts that: (a) had such event occurred or such facts existed or been known at the date hereof, would have been required to have been set forth in this Agreement; (b) would make any of its representations and warranties in this Agreement untrue in any material respect; or (c) would otherwise constitute a material adverse change in the business, results of operations, working capital, assets, liabilities or condition (financial or otherwise) of Ultrak or Maxpro, as the case may be. No notice hereunder will have any effect for the purpose of determining the satisfaction of or compliance with the conditions to the obligations of the parties set forth elsewhere in this Agreement. - 18 - 19 5.03. Cooperation. Ultrak and the Signing Shareholders, on behalf of themselves and Maxpro, will: (a) cooperate with one another in determining whether any filings are required to be made with or consents, authorizations, clearances and approvals required to be obtained from, any governmental or regulatory authorities in any jurisdiction or any third party prior to the Closing Date in connection with the consummation of the transactions contemplated in this Agreement and cooperate in making any such filings promptly and in seeking timely to obtain any such consents; (b) keep each other informed in connection with the transactions contemplated by this Agreement; (c) cooperate with one another and expend reasonable amounts in order to lift any injunctions or remove any other impediment to the consummation of the transactions contemplated herein; and (d) take such actions as the other party may reasonably request to consummate the transactions contemplated by this Agreement and use all its reasonable efforts to satisfy all conditions precedent to the obligations to close such transactions. 5.04. Confidentiality. Each party to this Agreement will take all reasonable precautions to maintain the confidentiality of any information concerning any other party or any affiliate of any other party provided to or discovered by it or its representatives and will not disclose such information to anyone other than those people directly involved in the investigation and negotiations pertaining to the transactions contemplated hereby. Each party further agrees that in the event the transactions contemplated by this Agreement are not consummated, it will return or destroy all documents and records obtained from any other party during the course of its investigation or negotiations pertaining to the transactions contemplated hereby and will use all its reasonable efforts to cause all information with respect to such other party and its businesses which it obtained pursuant to this Agreement to be kept confidential. 5.05. No Solicitation. Until the Closing Date, each of the Signing Shareholders covenants that neither they nor their officers, directors, agents, or affiliates, will: (a) directly or indirectly, encourage, solicit or initiate discussion or negotiations with any corporation, partnership, person or other entity or group concerning any merger, sale of all or substantially all of the assets, business combination, sale of shares of capital stock or similar transactions involving Maxpro, whether by providing nonpublic information or otherwise; or (b) disclose, directly or indirectly, any information not customarily disclosed to any person concerning its business and properties, afford to any other person access to its properties, books or records or otherwise assist or encourage any person in connection with any of the foregoing. In the event Maxpro receives any offer or inquiry for a transaction of the type referred to in (a) above, the Signing Shareholders will promptly inform Ultrak as to any such offer. 5.06. Public Announcements. Both the Signing Shareholders, on behalf of themselves and Maxpro, and Ultrak will consult with the other before issuing any press release, public announcement, or make any public filing regarding this Agreement, and will not, unless otherwise required by law, issue any such press release prior to such consultation. - 19 - 20 ARTICLE VI: COVENANTS OF THE SIGNING SHAREHOLDERS 6.01 Conduct of Maxpro's Business. Prior to the Closing Date, and except as may be permitted, required or contemplated pursuant to this Agreement or as specifically or as may be consented to in writing by Ultrak, the Signing Shareholders will, and each Signing Shareholder covenants and agrees that he will cause Maxpro to: (a) conduct its operations in the ordinary and usual course of business consistent with past and current practices, and will use all its reasonable efforts to maintain and preserve intact its business organization and goodwill, to retain the service of its key officers and employees, and to maintain satisfactory relationships with customers and those having business relationships with it; (b) not declare or pay any dividends on its outstanding shares of capital stock; (c) not propose or adopt any amendments to its Charter or Bylaws; (d) not issue any shares of its capital stock or effect any stock split or otherwise change its current capitalization; (e) not grant, confer or award any options, warrants, conversion rights or other rights, not existing on the date hereof, to acquire any shares of its capital stock; (f) not purchase or redeem any shares of its capital stock; (g) not make any loan or advance to any shareholder, officer, director, or employee; (h) not increase the compensation of or pay or accrue any bonus to any employee other than in accordance with past established practices; and/or (i) unless otherwise required by law, not agree to take any action that would make any representation or warranty in Article III hereof untrue or incorrect. ARTICLE VII: JOINT CONDITIONS PRECEDENT Except as may be waived by all parties, the obligations of Ultrak and the Signing Shareholders to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions: 7.01. Absence of Litigation. No governmental agency or authority shall have instituted, or threatened in writing to institute, any action or proceeding seeking to delay, restrain, enjoin or prohibit the consummation of the transactions contemplated by this Agreement, and no order, judgment or decree by any court or governmental agency or authority shall be in effect that enjoins, restrains or prohibits the same or otherwise would materially interfere with the operation of the assets and business of Ultrak or Maxpro after the Acquisition. - 20 - 21 ARTICLE VIII: CONDITIONS PRECEDENT TO ULTRAK'S OBLIGATIONS The obligations of Ultrak to consummate the transactions contemplated by this Agreement will be subject to the satisfaction on or before the Closing Date of each of the following conditions: 8.01. Representations and Warranties; Compliance. The representations and warranties of the Signing Shareholders in this Agreement shall have been true and correct in all material respects on and as of the Signing Date and shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, and the covenants and agreements of Maxpro in this Agreement shall have been complied with in all material respects. On the Closing Date, the Signing Shareholders shall have provided Ultrak with a Certificate of Compliance in the form of Exhibit 8.01. 8.02. No Material Adverse Change. There shall have been no material adverse change in Maxpro's business, properties, assets, liabilities, results of operations or condition, financial or otherwise, from the financial information set forth in the Financial Statements. 8.03. Consultancy Agreement. Each party to the Consultancy Agreement, dated September 14, 1994 (the "Prior Consultancy Agreement"), between Rhodes Davies & Associates Pty. Ltd. and Maxpro, shall have executed a new Consultancy Agreement (the "New Consultancy Agreement") among the parties to the Prior Consultancy Agreement in the form of Exhibit 8.03. 8.04. Board Approval. Ultrak's Board of Directors shall have approved, in its discretion, the Acquisition and the terms of this Agreement. 8.05. Approval of the Australian Foreign Investment Review Board. The Australian Foreign Investment Review Board shall have approved the Acquisition. 8.06. Due Diligence. Ultrak shall have reviewed all of the assets, liabilities, contracts, books and records, and other properties of Maxpro that Ultrak determines are necessary or appropriate and Ultrak shall have determined, in its discretion, that its review of the foregoing is acceptable. 8.07. Shareholders Deed. Bajada & Associates, Pty. Ltd. (ACN 059 781 770) ("B&A") shall have consented in writing to the Acquisition and the terms of this Agreement and waived any rights to acquire the Signing Shareholders' Shares under that certain Shareholders' Deed, dated September 14, 1994, among B&A, the Signing Shareholders, and Maxpro and B&A shall have agreed with Ultrak in writing as to mutual rights of first refusal with respect to any subsequent transfer by Ultrak or B&A of shares of the Maxpro Stock. 8.08. NationsBank Approval. NationsBank shall have approved, in writing, the Acquisition. - 21 - 22 8.09. Investment Letter. Each Signing Shareholder shall have executed an Investment Letter in the form of Exhibit 8.09. 8.10. Audit. Grant Thornton LLP or such other accounting firm acceptable to Ultrak shall have completed an audit of the Maxpro Group's financial statements for the year ended June 30, 1996 and the audit report of Grant Thornton LLP or such other accounting firm for such year shall have been furnished to Ultrak and be reasonably acceptable to Ultrak. ARTICLE IX: CONDITIONS PRECEDENT TO THE SIGNING SHAREHOLDERS' OBLIGATIONS The obligations of the Signing Shareholders to consummate the transactions contemplated by this Agreement will be subject to the satisfaction on or before the Closing Date of each of the following conditions: 9.01. Representations and Warranties; Compliance. The representations and warranties of Ultrak in this Agreement shall have been true and correct in all material respects on and as of the Signing Date and shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, and the covenants and agreements of Ultrak in this Agreement shall have been complied with in all material respects. On the Closing Date, Ultrak shall have provided the Signing Shareholders with a Certificate of Compliance in the form of Exhibit 9.01. 9.02. No Material Adverse Change. There shall have been no material adverse change in Ultrak's assets, liabilities, results of operations or condition, financial or otherwise. 9.03 New Consultancy Agreement. The New Consultancy Agreement shall have been executed. ARTICLE X: INDEMNIFICATION 10.01. Indemnification. Each Signing Shareholder jointly and severally covenants and agrees to indemnify Ultrak against any loss, expense, liability, or other damages, including the reasonable costs of investigation, interest, penalties and attorneys' and accountant's fees ("Damages"), incurred (whether or not paid) in connection with or arising from or attributable to any breach or inaccuracy of any representation or warranty made by any Signing Shareholder herein or any breach or failure to perform any agreement or covenant of any Signing Shareholder herein. 10.02. Threshold. The Signing Shareholders shall not be required to make any indemnification payment pursuant to Section 10.1 for any Damages until such time as the total amount of all Damages that have been directly or indirectly suffered or incurred (whether or not paid) by Ultrak or to which Ultrak has become subject exceeds A$50,000 in the aggregate. At - 22 - 23 such time as the total amount of such Damages exceeds US$50,000 in the aggregate, Ultrak shall be entitled to be indemnified against the full amount of such Damages (and not solely the amount that exceeds US$50,000). 10.03. Expiration of Indemnity. Ultrak may make no claim for indemnification for Damages after December 31, 1997 (the "Claims Deadline"). The expiration of the period within which claims may be made shall not affect any rights of Ultrak with respect to claims made prior to the Claim Deadline. 10.04. Fraud. Notwithstanding any provision in this Agreement to the contrary, the liability of a Signing Shareholder for fraud shall be subject only to applicable statutes of limitations, and any claim against any Signing Shareholder alleging fraud need not be presented by the Claim Deadline. 10.05. Survival of Representations and Warranties. Other than disclosures set forth in the Disclosure Schedule hereto or in the Certificate of Compliance to be delivered at Closing pursuant to Section 8.01 hereof, no disclosure by Maxpro or any Signing Shareholder nor any investigation by or on behalf of Ultrak with respect to Maxpro shall be deemed to affect Ultrak's reliance on the representations, warranties, covenants or agreements contained herein or to waive Ultrak's rights to indemnity as provided herein for the breach or inaccuracy or failure to perform or comply with any representation, warranty, covenant or agreement of the Signing Shareholders. The indemnity obligations of the Signing Shareholders under this Article X (and the representations, warranties, covenants and agreements of the Signing Shareholders) shall survive the Closing until the Claim Deadline. ARTICLE XI: WAIVER AND AMENDMENT 11.01. Modification, Amendment and Waiver. This Agreement may not be modified unless such modification is in writing and signed by all parties hereto. No waiver of any term of this Agreement shall be enforceable unless in writing and signed by the party against which it is sought to be changed. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by such other party. ARTICLE XII: REMEDIES 12.01 Equitable Remedies. The parties hereto acknowledge that a refusal by a party to consummate the transactions contemplated hereby will cause irreparable harm to the other parties, for which there may be no adequate remedy at law. A party not in default at the time of such refusal shall be entitled, in addition to other remedies at law or in equity, to specific performance of this Agreement by the party that refused to consummate the transactions contemplated hereby. 12.02 Remedies of Maxpro. After the Closing, Maxpro shall have the same rights and benefits under this Agreement as does Ultrak with respect to the representations, warranties and covenants of the Signing Shareholders contained herein, as fully as if such representations, - 23 - 24 warranties, and covenants had been made to or with Maxpro in lieu or in place of Ultrak as the purchaser of the Signing Shareholders' Shares. In any proceeding by Maxpro to assert or prosecute any claims under, or to otherwise enforce, this Agreement, the Signing Shareholders agree that they shall not assert as a defense or bar to recovery by Maxpro or Ultrak, and hereby waive any right to so assert such defense or bar such recovery, that (a) prior to the Closing, Maxpro shall have had knowledge of the circumstances giving rise to the claim being pursued by it or Ultrak; (b) prior to the Closing, Maxpro engaged in conduct or took action that caused or brought about the circumstances giving rise to its or Ultrak's claim, or otherwise contributed thereto; (c) Maxpro is estopped from asserting or recovering upon its claim by reason of having joined in the representations, warranties and covenants made by the Signing Shareholders in this Agreement; or (d) the Signing Shareholders have a right of contribution from Maxpro to the extent that there is any recovery against them. ARTICLE XIII: MISCELLANEOUS 13.01. Expenses. Each party hereto shall bear its own expenses incurred in connection with this Agreement and the consummation of the transactions contemplated hereby; provided, however, Maxpro's legal fees and expenses in connection with this Agreement and the transactions contemplated hereby shall not exceed A$20,000. To the extent legal fees and expenses of Maxpro exceed A$20,000, then such excess shall be paid by the Signing Shareholders. 13.02. Counterparts. This Agreement may be executed in two or more counterparts, all of which will be considered the same agreement and faxed copies of manually executed signature pages to this Agreement will be fully binding and enforceable without the need for delivery of the manually executed signature page. 13.03. GOVERNING LAW. THE INTERNAL LAWS (AND NOT THE CONFLICTS OF LAWS RULES) OF TEXAS GOVERN THIS AGREEMENT. 13.04. Notices. All notices hereunder will be in writing and will be deemed given if delivered by hand or mailed by registered or certified mail (return receipt requested) to the parties at the addresses set forth opposite each party's name on the signature page of this Agreement (or at such other addresses for a party as will be specified by like notice) and will be deemed given on the date on which so hand-delivered or on the third business day following the date on which so mailed to the address set forth opposite the name and signature block for each party to this Agreement. 13.05. Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof; the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance; and in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as part of this Agreement, a - 24 - 25 provision as similar in its terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable. 13.06. Assignments; Entire Agreement; Headings. This Agreement shall not be assignable by operation of law or otherwise. Any attempted assignment of this Agreement shall be void. This Agreement, the Schedules attached hereto, and the Exhibits attached hereto constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof. All Schedules, Exhibits, and documents and agreements referred to herein or attached hereto are fully and completely incorporated herein effective as of the first reference herein. The headings contained in this Agreement are for reference purposes and will not affect in any way the meaning or interpretation of this Agreement. Use of "herein," "hereof" or similar terms refer to this Agreement as a whole. The reference to any gender shall be construed to include the masculine, feminine, and neuter. [SIGNATURES ON THE FOLLOWING PAGE] - 25 - 26 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. ULTRAK, INC. Address for Ultrak: 1220 Champion Circle By: /s/ GEORGE K. BROADY Suite 100 -------------------------------------- Carrollton, Texas 75006 George K. Broady, President and CEO Attn: George K. Broady Address for each Signing Shareholder: Unit 1 /s/ CHRIS DAVIES 25 Irvine Drive ------------------------------------------ Malaga, Western Australia 6062 CHRIS DAVIES Unit 1 /s/ KIM RHODES 25 Irvine Drive ------------------------------------------ Malaga, Western Australia 6062 KIM RHODES Unit 1 /s/ SCOTT RHODES 25 Irvine Drive ------------------------------------------ Malaga, Western Australia 6062 SCOTT RHODES RHODES DAVIES & ASSOCIATES, PTY. LTD. c/o Complete Business Systems 47A Kirwan Street By: /s/ CHRIS DAVIES Floreat, Western Australia --------------------------------------- Its: Director ----------------------------------- - 26 - 27 EXHIBIT 8.01 Signing Shareholders CERTIFICATE OF COMPLIANCE Each of the undersigned, Chris Davies ("Davies"), Kim Rhodes ("K. Rhodes"), Scott Rhodes ("S. Rhodes"), and Rhodes Davies & Associates Pty. Ltd. ("RDA") (Davies, K. Rhodes, S. Rhodes and RDA are collectively referred to herein as the "Signing Shareholders" and individually referred to as a "Signing Shareholder"), hereby certifies to Ultrak, Inc. ("Ultrak") that: 1. The representations and warranties of such Signing Shareholder in the Stock Purchase Agreement (the "Purchase Agreement"), dated August 7, 1996 (the "Signing Date"), by and among the Signing Shareholders, and Ultrak were true and correct as to such Signing Shareholder in all material respects on and as of the Signing Date and are true and correct in all material respects as of the date hereof. 2. Each of the Signing Shareholders has complied, in all material respects, with all of the undersigned Signing Shareholders' covenants and agreements required by the Purchase Agreement to be performed and complied with by the undersigned Signing Shareholders. DATED: August __, 1996 ------------------------------------- CHRIS DAVIES ------------------------------------- KIM RHODES ------------------------------------- SCOTT RHODES RHODES DAVIES & ASSOCIATES PTY. LTD. By: ---------------------------------- Its: ------------------------------ 28 EXHIBIT 8.03 CONSULTANCY DEED EDWARDS ROBINSON LARK -----Commercial Lawyers----- 23 Ventnor Avenue West Perth WA 6005 Postal Address: PO Box 212 West Perth WA 6872 Phone (09) 481 4774 Fax (09) 481 5370 Our Ref: PGL: 29 THIS DEED is made between the following parties: 1. ULTRAK, INC. a company registered in Delaware USA of 1220 Champion Circle, Suite 100 Carrollton, Texas 75006("Ultrak"). 3. RHODES DAVIES & ASSOCIATES PTY LTD (ACN 009 333 788) of care of Complete Business Systems, 47A Kirwan Street, Floreat, Western Australia ("Consultant") 4. MAXPRO SYSTEMS PTY LTD (ACN 009 081 467) Unit 1, 25 Irvine Drive, Malaga, Western Australia in its capacity as trustee of the Rhodes Davies Trust (the "Company"). RECITALS A. The Executives, Ultrak, the Consultant and the Company have entered into the Stock Agreement and, after consummation of the transactions contemplated by the Stock Agreement, Ultrak and will be the majority holder of the shares in the Company. B. The Company carries on the Business. C. The Executives are directors and employees of the Consultant. D. The Company has agreed to appoint the Consultant as a consultant to provide to the Company the Management Services and the Consultant has agreed to accept the appointment and provide the Management Services to the Company on the terms of this deed. THE PARTIES AGREE, in consideration of, among other things, the mutual promises contained in this deed: 1. DEFINITIONS AND INTERPRETATION in this deed, including the recitals: 1.1 DEFINITIONS "B&A Nominee" means Selwyn Bajada or any person for the time being holding the office of director of Bajada & Associates Pty Ltd ACN 059 781 770 who is nominated by that corporation to replace Selwyn Bajada. "Business" means the electronics security business carried on by the Company in the area of closed circuit television system design, manufacture, supply, installation and commissioning. "Business Day" means every day which is not a Saturday, Sunday or public or bank holiday within the meaning of the Public and Bank Holidays Act 1972 (WA); "Board" means the board of directors from time to time of the Company. "Commencement Date" means 1 July 1996; "Consulting Fee" means the fee payable to the Consultant under Clause 4; "Executives" means Christopher Davies, Kim Rhodes and Scott Rhodes; "Former Deed" means the Consultancy Agreement made between the Company and the Consultant and dated September 14, 1994. "Information" means any information in respect of the Company's business which is not in the public domain and includes, but is not limited to, any document, book, account, process, patent, specification, drawing, design or know-how which is: (a) supplied by the Company to the Consultant or an Executive; or (b) generated by the Consultant or an Executive in the course of performing the Consultant's obligations under this deed; 1 30 "Management Services" means the services to be provided to the Company by the Consultant under Clause 2.2 and in accordance with the terms of this deed, including but not limited to assisting the Company with the management of the Subsidiary; "Shareholders" means Ultrak and any persons who become shareholders in the Company by assignment from Ultrak subsequent to the Commencement Date; "Stock Agreement" means the Stock Purchase Agreement to be entered into among the Executives and Ultrak on August 1996; "Subsidiary" means Maxpro Systems Pty Ltd, a corporation incorporated in the State of Nevada; "Term" means the period of two years commencing on the Commencement Date; "Termination Date" means the last day of the Term; "Ultrak Shares" means the shares in Ultrak which may be earned under Clauses 1.02(a)(ii) & (iii) of the Stock Agreement by the Executives; and "US$" means United States of America dollars. 1.2 INTERPRETATION In this deed, unless the contrary intention appears, the following provisions apply to the interpretation of this deed: (a) Headings, underlining and numbering are for convenience only and do not affect the interpretation of this deed. (b) A reference to a statute, regulation, proclamation, ordinance or by-law includes every statute, regulation, proclamation, ordinance or by-law amending, consolidating or replacing them, and a reference to a statute includes every regulation, proclamation, ordinance and by-law issued under that statute. (c) A reference to a party to this deed or to another document referred to in this deed includes that party's successors and permitted assigns. (d) Where the day on or by which a thing is required to be done is not a Business Day, that thing is to be done or by the succeeding Business Day. 2. ENGAGEMENT 2.1 ENGAGEMENT (a) The Company engages the Consultant for the Term for the purposes of providing to the Company the Management Services and the Consultant accepts such appointment. (b) The Company agrees that it will pay the Consulting Fee to the Consultant. (c) The parties may extend the Term by mutual written consent. 2.2 RESPONSIBILITIES Until the Termination Date the Consultant shall manage the Business in the manner which it best sees fit: (a) with due skill, expertise, diligence and vigour; and (b) in accordance with all applicable laws, regulations, orders and rules. 2.3 TERMINATION OF FORMER DEED This deed terminates the Former Deed with effect from the Commencement Date. 2 31 3. COVENANTS 3.1 EXECUTIVES OF CONSULTANT (a) The Consultant agrees to make the Executives available to the Company to enable the Company to undertake its usual business including the management of the Subsidiary and all overseas operations. (b) The Company and the Shareholders acknowledge that as employees of the Consultant, the Executives are entitled to public holidays, annual leave and sick leave from the Consultant and as a consequence all three Executives will not always be available at the same time to manage the Business. 3.2 PERFORMANCE BY EXECUTIVES The Consultant shall procure that the Executives, whilst they or any of them are employed by the Consultant: (a) perform the Management Services in accordance with the reasonable directions of the Board and in a reasonably competent and expeditious manner; and (b) diligently attend to the Business. 3.3 NO CONFLICT OF INTEREST The Consultant warrants that neither the Consultant nor the Executives will perform services of any type, or provide any advice or assistance to any competitor or potential competitor of the Company either directly or indirectly nor do any other act which may give rise to a conflict with the interests of the Company. 4. OPERATING DETAILS 4.1 SUBSIDIARY Subject always to the directions of the Company as the sole shareholder of the Subsidiary (a) the Executives are at the date of this deed all directors of the Subsidiary and intend to maintain those offices. (b) the Executives and the B&A Nominee shall act as joint Presidents of the Subsidiary. (c) it is likely that Andrew Jackson and Nigel Heard will be appointed as Vice Presidents of the Subsidiary. 4.2 BUDGETS (a) The Executives shall prepare realistic budgets with a view to the Company achieving both earnout profit targets under Clause 1.02(a) of the Stock Agreement on the basis of consolidated accounts (the "Budgets"). (b) Ultrak undertakes to use its best endeavours to accept the Budgets prepared under Clause 4.2(a). (c) Where Ultrak determines that in the opinion of Ultrak it would be appropriate to incur expenditures in addition to those set out in any Budget and requests the Board to consider the merit of those expenditures, provided that the Board agrees to those expenditures, then such expenditures shall not be considered in calculating the earnout profit targets under Clause 1.02(a) of the Stock Agreement. 3 32 4.3 CO-OPERATION BY ULTRAK Ultrak covenants that so long as the Board is managing the Company in accordance with the Budgets and there are no significant commercial or personal difficulties between the executives of Ultrak and any of the Executives that Ultrak will not seek to interfere with the day to day management of the Company or the Board. 4.4 CONSENT OF SHAREHOLDERS The Board shall not without the prior approval of Ultrak and Bajada & Associates Pty Ltd ACN 059 781 770: (a) amend the Memorandum of Association or the Articles of Association of the Company: (b) borrow money from any person other than Ultrak unless the Company is able to obtain money on terms which the Board considers to be more favourable than the terms offered by Ultrak; or (c) issue any shares in the Company or the Subsidiary. 5. CONSULTING FEE (a) The Consulting Fee for the twelve month period commencing from the Commencement Date shall be US$840,000 and for the following twelve month period shall be US$560,000 payable in equal monthly instalments no later than the 15th day of each month into such bank accounts as the Consultant directs. (b) Any monthly instalment of the Consulting Fee which would have been paid by the Commencement Date if this deed had been entered into before the Commencement Date shall be paid promptly upon the signing of this deed; provided, however, that the amount shall be reduced by any payments under the Former Deed. 6. EXPENSES The Company must reimburse the Consultant and the Executives for reasonable out-of-pocket expenses incurred by the Consultant or the Executives, as the case may be, in connection with the Business. 7. APPOINTMENT AS DIRECTORS (a) The Shareholders agree that the Executives will initially comprise the majority of the Board of directors of the Company, but, notwithstanding anything to the contrary in this deed, the Shareholders reserve the right to make changes to the Board as they see fit. 8. DELEGATION AND SUBSTITUTION (a) Subject to Clause 8(b), the Consultant is required to personally perform all of the Management Services and has no right to delegate performance of the Management Services to any employee of the Consultant other than to one or more of the Executives. (b) If any Executive dies or through ill health is unable to perform his services to the Consultant, the Consultant shall be entitled to replace the deceased or ill Executive. (c) The Shareholders acknowledge that they are satisfied with the level of staffing of the Company at the Commencement Date and have no present intentions to reduce it. (d) The Shareholders further acknowledge that if the Consultant determines that the level of activity of the Company or the Subsidiary is sufficient to justify the appointment of any further staff to the Company or the Subsidiary that it will be empowered to arrange any such appointment on terms and conditions of its choosing. 4 33 9. RESPONSIBILITY FOR LEAVE AND OTHER BENEFITS 9.1 NO RESPONSIBILITY Subject to Clause 9.2, the Company is not responsible for the Executives and the Consultant shall not have any claim against the Company for annual Leave, sick leave, long service leave, public holidays, superannuation contributions, redundancy payments, or any other similar benefits that may be owing to the Executives in connection with the Management Services under this deed. 9.2 INDEMNITY (a) Subject to Clause 9.2(b), the Consultant agrees to indemnify the Company in the event that the Company is required to make payments in relation to any of the benefits referred to in sub-Clause 9.1 to the Executives. (b) In the event that any liability to State Payroll tax is assessed to any of the Company or the Consultant in respect of any part of the Consulting Fee paid for the Management Services or remuneration paid by the Consultant to the Executives out of the Consulting Fee, this tax shall be met by the Company. 10. RESPONSIBILITY FOR INCOME TAXES AND INSURANCE 10.1 INCOME TAX The Consultant is responsible for making any income tax deductions or payments required under the Income Tax Assessment Act 1936 (Commonwealth) arising from payment of the Consultancy Fee, and expressly forbids the Company from making any income tax deductions or payments. 10.2 WORKER'S COMPENSATION The Consultant will take out any necessary workers' compensation insurance as required by the Workers' Compensation and Rehabilitation Act 1981 (WA) in connection with the Consultant's engagement under this deed. 10.3 SUPERANNUATION The Consultant is responsible for making any superannuation payments required under the Superannuation Guarantee (Administration) Act 1992 (Commonwealth) in connection with the Consultant's engagement under this deed. 10.4 FRINGE BENEFITS TAX The Consultant must pay any fringe benefit tax payable under the Fringe Benefits Tax Assessment Act 1986 (Cth) in relation to any remuneration or benefit provided by the Company to the Consultant or the Executives under this deed. 11. CONFIDENTIALITY 11.1 CONSULTANT'S OBLIGATIONS The Consultant must: (a) keep any Information secret and confidential, except to the extent that the Consultant or an Executive is required by law to disclose it; (b) take all reasonable and necessary precautions to maintain the secrecy and prevent the disclosure of any information; and (c) procure that each Executive complies with the obligations set out in this clause. 11.2 SURVIVAL OF OBLIGATIONS The Consultant's obligations under this Clause 11 survive the termination of the Consultant's appointment as consultant to the Company. 5 34 12. TERMINATION OF DEED 12.1 TERMINATION Subject to clauses 12.2 and 12.3, this deed shall only terminate on the Termination Date. 12.2 TERMINATION BY NOTICE Either party shall be entitled to terminate this deed, by written notice to the other party; if: (a) an order is made or an effective resolution is approved for the appointment of a provisional liquidator or, for the winding up of the Company or the Consultant (as the case may be); (b) a receiver or manager is appointed for the Company or the Consultant (as the case may be) or any part of the assets of the Company or the Consultant; (c) the Company or the Consultant (as the case may be) proposes to enter into, or enters into, any scheme of arrangement with creditors or any of them; or (d) the Company or the Consultant (as the case may be) calls a meeting of its creditors for the purpose of placing the Consultant under official management and appointing an official manager of the Company or the Consultant (as the case may be). 12.3 TERMINATION WITHOUT PREJUDICE Termination by either party of this deed shall be without prejudice to the rights or obligations of the terminating party in respect of any occurrence prior to such termination. 12.4 ACTION UPON TERMINATION Upon termination of this deed, the Consultant shall: (a) relinquish possession and control to the Company, or as the Company shall direct, of all the Company's assets and moneys held or controlled by the Consultant pursuant to this deed; and (b) deliver to the Company, or as the Company shall direct, all documents, books, confidential information, technical information. intellectual property, accounts and other records relating to the Business, the Information or the performance of the Management Services or its other duties and obligations hereunder. 13. LEGAL RELATIONSHIP (a) The Company and the Consultant agree that the legal relationship between the Company and the Consultant is that of principal and independent contractor and not that of employer and employee and no term of this deed shall be construed as creating a relationship of employer and employee between the Company and the Consultant or any employee or agent of the Consultant. (b) Neither the Consultant nor the Company is liable for the obligations or debts of the other except as set out in this deed. 14. COMPETITION 14.1 UNDERTAKINGS Neither the Consultant nor any of the Executives shall without first obtaining the written consent of the Company: (a) directly or indirectly carry on any business similar to or competitive with the Business in the world for 1 year after the termination of this deed; 6 35 (b) persuade any person or corporation which is a customer or client of the Company, or who was in the twelve month period before the termination of this deed a customer or client of or in respect of the Business, to cease doing business with the Company or reduce the amount of business which the customer or client would normally do in respect of the Business for 1 year after the termination of this deed; (c) For a period of one year after the termination of this deed, induce or attempt to induce any person who at the termination of this deed is an employee of the Company in the Business to terminate his or her employment with the Company. 15. MISCELLANEOUS 15.1 NOTICES (a) A notice: (1) to a party to this deed is to be in legible writing and in English addressed to that party at its address set out at the beginning of this deed; (2) is to be signed by the sender or, in the case of a body corporate, is to be signed by an officer of, or under the common seal of, the sender or by its solicitors or agents; (3) is to be regarded as having been given by the sender and received by the addressee; (A) if by delivery in person, when delivered to the addressee; (B) if by post, 3 Business Days from and including the date of postage to the addressee; or (C) if by facsimile transmission, when the sender has a clear transmission report to the addressee, but if the delivery or receipt is on a day which is not a Business Day or is after 4:00 pm (addressee's time) on the following Business Day. (b) A facsimile transmission is to be regarded as legible unless the addressee telephones the sender within 1 Business Day after transmission and informs the sender that it is not legible. (c) A notice can be relied on by the addressee, and the addressee is not liable to another person for the consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender. 15.2 CONTINUING EFFECT The obligations imposed and the benefits conferred on the parties under this deed shall be binding upon and enure to the respective parties and each of their respective permitted successors in title, transferees and permitted assigns. 15.3 COSTS The parties must procure that the Executives pays the costs of Edwards Robinson Lark in relation to the preparation of this deed and any stamp duty assessed on the deed. 15.4 CUMULATIVE REMEDIES All remedies either under this deed, at law, in equity, under statute or otherwise afforded to the Consultant or the Company will be cumulative and not alternative. 7 36 15.5 ENTIRE DEED The terms, covenants, conditions, agreements, provisions, stipulations and obligations, contained in, and implied by, this deed comprise the entire agreement between the parties at the Commencement Date and no other term, covenant, condition, agreement, provision, representation or warranty applies. 15.6 ASSIGNMENT (a) Rights arising out of, or under, this deed are not assignable by one party without the prior written consent of the other party. (b) A breach of sub Clause (a) by one party entitles the other party to terminate this deed. (c) As a condition to the giving of consent by one party to the other to a proposed assignment, the party giving that consent is entitled to require guarantees of directors and/or shareholders of a body corporate to which this deed is to be assigned and a guarantee of this deed of the performance of the proposed assignee. (d) A Shareholder may not transfer all or any of its shares in the Company without first procuring that the transferee enters into a deed to the reasonable satisfaction of the Consultant which contains provisions substantially in the form of the provisions of this deed. 15.7 EXCLUSION OF MORATORIA A statute, moratorium or other governmental order which affects prejudicially the rights, powers or discretions of the parties under this deed does not apply to this deed unless application is mandatory. 15.8 VARIATION A variation of a term of this deed must be in writing and signed by each of the parties to this deed. 15.9 WAIVER (a) A waiver of a breach of this deed or of the rights created by, or arising under, this deed must be in writing and signed by the party giving the waiver. (b) A breach of this deed is not waived by: (1) a failure to exercise; (2) a delay in exercising; or (3) a partial exercise, of a remedy available under this deed or at law or in equity. (c) A right created by, or arising under, this deed is not waived by: (1) a failure to exercise; (2) a delay in exercising; or (3) a partial exercise, of that right. 15.10 GOVERNING LAW AND JURISDICTION (a) This deed is governed by the laws of Western Australia; and 8 37 (b) Each party irrevocably submits to the exclusive jurisdiction of the Courts of Western Australia with respect to this deed; provided, however, such submission shall not cause Ultrak to be subject to taxation in Western Australia or to qualify as a foreign corporation in Western Australia. (c) The parties acknowledge that Ultrak has no physical presence in Australia. 15.11 COUNTERPARTS (a) This deed may be executed in any number of counterparts. (b) All counterparts, taken together, constitute one instrument. (c) A party may execute this deed by signing any counterpart. EXECUTED by the parties as a deed this 7th day of August 1996. ULTRAK, INC. By: George K. Broady, President and CEO THE COMMON SEAL of RHODES RHODES DAVIES & ASSOCIATES PTY LTD DAVIES was hereunto affixed by & ASSOCIATES authority of the directors PTY LTD in the presence of: A.C.N. 009 333 788 COMMON SEAL /s/ KIM RHODES /s/ CHRISTOPHER DAVIES - ------------------------- --------------------------------- Director Director/Secretary KIM RHODES CHRISTOPHER DAVIES - ------------------------- --------------------------------- Name (please print) Name (please print) 9 38 THE COMMON SEAL of MAXPRO MAXPRO SYSTEMS PTY LTD SYSTEMS was hereunto affixed by PTY LTD authority of the directors A.C.N. 009 081 467 in the presence of: COMMON SEAL /s/ KIM RHODES [ILLEGIBLE] - ------------------------- --------------------------------- Director Secretary KIM RHODES [ILLEGIBLE] - ------------------------- --------------------------------- Name (please print) Name (please print) 10 39 Exhibit 8.09 INVESTMENT LETTER Ultrak, Inc. August ___, 1996 1220 Champion Circle Suite 100 Carrollton, Texas 75006 Gentlemen: This Investment Letter (this "Letter") is issued to Ultrak, Inc., a Delaware corporation ("Ultrak"), in connection with the undersigned's acquisition or possible acquisition from Ultrak of certain shares (the "Shares") of Ultrak's Common Stock, $0.01 par value (the "Stock") pursuant to that certain Stock Purchase Agreement, dated August 7, 1996, among Ultrak, the undersigned, and others (the "Agreement"). 1. In connection with the issuance or possible issuance to the undersigned of the Shares, the undersigned hereby acknowledges and understands that the Shares have not been registered under the United States Securities Act of 1933, as amended (the "Federal Act"), the Texas Securities Act, as amended (the "Texas Act"), or any securities acts of any other state or country (the "Other Acts"), that the Shares are being issued to the undersigned in reliance upon one or more exemptions from registration contained in the Federal Act, the Texas Act, and the Other Acts, and that Ultrak's reliance on such exemptions is based in part upon the representations made by the undersigned in this Letter. 2. The undersigned hereby represents to Ultrak that the undersigned is acquiring the Shares solely for the undersigned's own account for investment and not with a view to, or for offer or sale in connection with, the unregistered "distribution" of all or any part of the Shares within the meaning of the Federal Act. The undersigned represents that he has no current intention to sell, convey, dispose, of or otherwise distribute any interest in or risk related to the Shares. The undersigned acknowledges and agrees that this transaction has not been reviewed or approved by the United States Securities and Exchange Commission or any other governmental agency or department. 3. The undersigned hereby acknowledges that the provisions of Rule 144 promulgated under the Federal Act ("Rule 144") are not now available for the public resale of the Shares and that, except as set forth in Article II of the Agreement, the undersigned has no right to have the Shares registered under the Federal Act to permit them to be resold. The undersigned also hereby acknowledges that, as a result of the foregoing, the undersigned must hold the Shares for at least two (2) years from issuance (unless subsequently registered prior to that time under Article II of the Agreement) assuming the entire risk of investment therein for that period of time, until and unless (i) the Shares are subsequently registered under the Federal Act, (ii) the Shares may be sold under Rule 144, or (iii) an exemption from registration is available at the time of resale of the Shares (and in compliance with Sections 6 and 8 of this Letter). The undersigned is aware of the provisions of Rule 144 which permits limited resale of shares 40 purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for such shares, the availability of certain current public information about the issuer of such shares, the resale occurring not less than two years after acquisition, the sale being through a "broker's transaction" or in transactions directly with a "market maker" (as provided by Rule 144(f)) and the number of shares being sold during any three-month period not exceeding specified limitations (unless the sale is within the requirements of Rule 144(k)). 4. The undersigned hereby represents to Ultrak that the undersigned has such knowledge and experience in financial and business matters that the undersigned is capable of evaluating the merits and risks of investing in the Shares and that the undersigned is able to bear the economic risk, including a total loss, of such an investment. The undersigned understands and has fully considered for purposes of this investment the risks of this investment and that, because of the restrictions on transfer, it may not be possible for the undersigned to liquidate his investment in the case of emergency. 5. The undersigned acknowledges and agrees that he is or may be acquiring the Shares without being offered or furnished any offering literature or prospectus other than the SEC Filings (as defined in Article IV of the Agreement). The undersigned hereby acknowledges that the undersigned has had access to all information which the undersigned considers necessary or advisable to enable the undersigned to make an informed decision concerning the acquisition of the Shares. The undersigned is acquiring the Shares based solely on the undersigned's review of the SEC Filings and his investigation of, and satisfaction with, Ultrak's current and anticipated financial condition and assets and not based on any oral representations of any individual. The undersigned confirms that he and his representatives and advisors have been given the opportunity to ask questions of, and to receive answers from, persons acting on behalf of Ultrak concerning the business and prospects of Ultrak and to obtain any additional information, to the extent such persons possess such information or can acquire it without unreasonable effort or expense and without breach of confidentiality obligations, necessary to verify the accuracy of the information set forth in the SEC Filings. 6. The undersigned understands that the undersigned must not, and the undersigned agrees that the undersigned will not, sell, transfer, assign, encumber, or otherwise dispose of the Shares or any interest therein, unless prior thereto the undersigned has delivered to Ultrak, and Ultrak has accepted as satisfactory, an opinion of experienced and competent counsel to the effect that such proposed sale, transfer, assignment, encumbrance, or disposition will not constitute or result in any violation of the Federal Act, the Texas Act, the Other Acts, or any other applicable statute relating to the disposition of securities. 7. Nothing in this Letter shall permit the undersigned to sell any of the Shares in violation of any other agreement between Ultrak and the undersigned or among Ultrak, the undersigned, and others, including but not limited to the Agreement. 8. The undersigned understands and agrees that there may be typed or otherwise printed on the certificates representing the Shares, and any other securities issued in respect of the Shares upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, a legend referring to the foregoing restriction upon disposition, such legend to be substantially in the following form (in addition to any other legends required by applicable law): 41 THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY APPLICABLE STATE LAW, AND SUCH SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH DISPOSITION SHALL THEN BE IN EFFECT OR UNLESS THE PERSON REQUESTING THE TRANSFER OF SUCH SHARES SHALL FURNISH, WITH RESPECT TO SUCH TRANSFER, AN OPINION OF COUNSEL (BOTH COUNSEL AND OPINION TO BE SATISFACTORY TO THE CORPORATION) TO THE EFFECT THAT SUCH SALE, TRANSFER, ASSIGNMENT, OR DISPOSITION WILL NOT INVOLVE ANY VIOLATION OF THE ACT OR ANY APPLICABLE STATE LAW. 9. The undersigned also understands that Ultrak's Transfer Agent, the keeper of Ultrak's stock transfer books and records, has been instructed not to transfer the Shares except upon Ultrak's instructions for the two (2) years from issuance and that Ultrak will take such other steps as Ultrak deems necessary to prevent the transfer of the Shares in the absence of compliance with the foregoing restrictions. Very truly yours, Date: August __, 1996 --------------------------------------- --------------------------------------- If the person signing this Letter is married, then such person's spouse must sign below: I hereby acknowledge that I have read this Letter and fully understand its contents. I further agree that any community property interest or other interest that I have or may in the future have in the Shares shall be subject to this Letter. Date: August __, 1996 --------------------------------------- Signature Printed Name: --------------------------------------- 42 EXHIBIT 9.01 CERTIFICATE OF COMPLIANCE The undersigned, Ultrak, Inc., a Delaware corporation ("Ultrak"), hereby certifies to the Signing Shareholders (as hereinafter defined) that: 1. The representations and warranties of Ultrak in the Stock Purchase Agreement (the "Purchase Agreement"), dated August 7, 1996 (the "Signing Date"), by and among Ultrak and certain shareholders of Maxpro (the "Signing Shareholders") were true and correct in all material respects on and as of the Signing Date and are true and correct in all material respects as of the date hereof. 2. Ultrak has complied, in all material respects, with all of the covenants and agreements required by the Purchase Agreement to be performed and complied with by Ultrak. DATED: August __, 1996 ULTRAK, INC. By: ------------------------------------ Tim D. Torno, Vice President 43 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT THE ACQUISITION SCHEDULE 1.08 - PERSONAL GUARANTEES OF SIGNING SHAREHOLDERS 1. The Signing Shareholders have guaranteed the indebtedness of Maxpro to trade creditors. Attached as Appendix 1.08A is a list of these creditors. 2. The Signing Shareholders have guaranteed Bank Guarantees issued by Maxpro in favour of: Argyle Diamond Mines Pty Ltd (4 October 1995) $168,118.00 Hamersley Iron Pty Ltd (31 July 1995) $ 10,653.00 - -------------------------------------------------------------------------------- 44 MAXPRO SYSTEMS PTY LTD APPENDIX 1.08A - SCHEDULE OF PERSONAL GUARANTEES TO TRADE CREDITORS BY SIGNING SHAREHOLDERS. Abacus ES Rubin Group Pty Ltd Kounis Metal Industries Sands & McDougall Office Products Ademco Australia Seragraph Prints Akai Pty Ltd Sentinal Electrical Services Pty Ltd Alltools WA Pty Ltd FJ Sweetman Allstamps Tang Computers Altronic Distributors P/L Thomsons Ansett Air Freight Transalley Aqua Vital Truesize Engineering Arlec Holdings Tubemakers Metaland Best Copy Service The Type Foundry Braemac Pty Ltd Television Communications Bring Couriers Tyre Torque Tyre Power CDM Australia Venda Serve Cleanway Veltek Interactive Video Security Pty Ltd Venables & Lawrence Coventrys Viking Office Products Custom Plastics Vision Products Pty Ltd Danzas Pty Ltd Avnet EMG D & B Metals Wattyl DHL Worldwide Express Worldwide Electronic Components Electronics Sheetmetal Radix Pty Ltd Farnell Electronic Components BPS Video Services GEC Video Systems Division Discount Freight Express Harbuch Electronics Pty Ltd Ricon Hartec Limited Alcora Pty Ltd Hawthorn Press Pty Ltd Electroplaters Pty Ltd Holman Distributors Johnson Technology Corp Pty Ltd Homewrap Dunlop Flexible Foams Hydair Drives AFC Group Pty Ltd Javelin Electronics Pty Ltd Memo Communications Co Pty Ltd JRL Component Sales Pty Ltd Elect Cables J & S Castlehow Electrical Services Task Office Supplies J. W. Rogers CR Kennedy Co Pty Ltd Laser & Allied Cutting Service Automated Motion Systems Rittal Pty Ltd Fordigraph Office Plus Lawrence & Hanson Beeline Couriers Litton Precision Products Int. Inc Matrix Linx Flexible Drive Agencies Colli & Sons Mitsubishi Electric Australia P/L Designtec Multi-Contact Australia Pty Ltd Sunlec International Pty Ltd Philips Components Pty Ltd Vicon Industries Pty Ltd Philips Scientific & Industrial P/L AAEP Pty Ltd Photoplotting Services Microtouch Australia Pty Ltd Precision Circuits Amcor Fibre Packaging Precision Sheetmetal Allguard Pro-Spec Distributors Australian Amp Pty Ltd Protective Cases Philips Consumer Products PTH Circuits Computronics International QED Pace Assembly Reserve Electronics Bollinger & Co Pty Ltd Rojone Pty Ltd Visual Link CCTV Systems Auto Door Systems Menzel Plastic Traders Pty Ltd 45 RS Components Ferntree Computer Systems Quick Cup All Metal Finishes RVB Products AARQUE Systems Pty Ltd Consolidated Bearing Company Entech Printed Circuits Optical Systems Design Osborne Plating Pty Ltd Upsonic Colortype Press Pak Pacific Data Comm Australia Pty Ltd East Coast Printed Circuits QANTAS Roy Galvin & Co Pty Ltd EDM Supplies WA Kirkside Products Ward Packaging Spunwell Products Liberty Liquors IRT Electronics Ansett Australia John Perkins Metal Products Black Box Catalog Jemal Products Pty Ltd G & S Industries Pty Ltd Gilbert Lodge J G Thomas and Associates Techmetal Industries Pty Ltd SMI Cables Pty Ltd Ausoptic Pty Ltd UPS Company GEC Wholesale BOC Gases X-On Electronic Services Baltimore Instruments Mizco Metals Pty Ltd Leibert Corporation Australia Pty Ltd Audio Video Communications Meneghello Galvinising Service Printex Advanced Drafting Supplies Advanced Assembly JSE Systems Videotronics UWE Bischke Australia Canon Australia Pty Ltd Belrise Pty Ltd Data Comm Pty Ltd Computer Corp Pty Ltd Western Lockservice D E Engineers Jacksons Drawing Supplies Dual Engraving Pty Ltd Peter Austin Agencies Atcom Distributors Professional Powder Coaters Van Jays Electrical Hales Precision Metal Products United Construction Pty Ltd Wards Skyroad Alarmcom Security Pty Ltd 46 - ------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.02 - INVESTMENTS IN SUBSIDIARIES AUSTRALIA (HEAD OFFICE - PARENT COMPANY): Maxpro Systems Pty Ltd (ACN 009 081 467) Unit 1 25 Irvine Drive MALAGA WA 6066 Tel: 619 249 1633 Fax: 619 249 3350 UNITED STATES OF AMERICA (100% SUBSIDIARY COMPANY): Maxpro Systems Pty Ltd (Incorporated State of Nevada 22016-95) 2300 Rock Springs Drive #2059-10 LAS VEGAS NEVADA 89128 Tel: 1 702 243 5741 Fax: 1 702 243 5736 UNITED KINGDOM (BRANCH): Maxpro Systems (Company No: FC018628, Branch No: BR002996) Hill Farm Charndon OXFORDSHIRE OX6 0B1 UNITED KINGDOM Tel: 44 129 673 0268 Fax: 44 129 673 0668 - ------------------------------------------------------------------------------- 47 - ------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.04 - CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT: NO VIOLATION 1. Waiver of rights inter sc with respect to the Shares contained in the "Shareholders' Deed" dated 14th September 1994, by Selwyn Bajada on behalf of Bajada & Associates Pty Ltd as trustee for the Knight Capital Fund. 2. Approval by the Foreign Review Investment Board, to the sale and transfer of shares from the Signing Shareholders to Ultrak Inc. Attached letter from Foreign Investment Review Board dated 19 July 1996 confirms that this matter is being dealt with. - ------------------------------------------------------------------------------- 48 c/- Treasury Building [AUSTRALIA LOGO] Canberra ACT 2600 Telephone (06) 263 2111 Overseas 61-6-263 2111 Fax (06) 263 2940 Foreign Investment Review Board 19 July 1996 Our Ref: FIR 96/3647 Your Ref: L60799BB Mr G Blekkenhorst Maxpro Systems Pty Ltd Unit 1/25 Irvine Drive MALAGA WA 6062 Dear Sir, CONCERNING: ULTRAK INC/MAXPRO SYSTEMS PTY LTD - ACQ OF SHARES. Receipt is acknowledged of the above proposal. Examination of proposals normally takes up to 30 days and a decision will be conveyed to you as soon as possible. Should additional information be required, the action officer for the proposal will contact you as soon as possible. Any correspondence on this matter should quote the file reference number. Our general inquiries telephone number is (06) 263 3795. Yours Faithfully [ILLEGIBLE] Executive Member Foreign Investment Review Board 49 STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS SCHEDULE 3.05 ------------- None 50 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.06 - CAPITALISATION 1. The authorised share capital of Maxpro Systems Pty Ltd is One Hundred Thousand Dollars ($100,000) consisting of Ten Million (10,000,000) ordinary shares divided into 10,000,000 shares of $0.01 each. 2. The issued and paid-up share capital is 595 shares of $0.01 each. 3. Details of Shareholders: Christopher Paul Davies 92 shares 3 Rona Street NORTH BEACH WA 6020 Kim Robert Rhodes 92 shares 28 Merrifield Place MULLALOO WA 6027 Scott Anthony Rhodes 92 shares 17 Moran Place WANNEROO WA 6065 Christopher Paul Davies ) Kim Robert Rhodes ) Jointly 171 shares Scott Anthony Rhodes ) (Addresses as above) These shares are in the process of being transferred to: Rhodes Davies & Associates Pty Ltd. c/- Complete Business Consultants 47 Kirwin Street FLOREAT WA 6014 Bajada & Associates Pty Ltd as trustee for The Knight Capital Fund 148 shares Level 6 111 St George's Tce PERTH WA 6000 - ------------------------------------------------------------------------------- 51 STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS SCHEDULE 3.10 ------------- None 52 STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS SCHEDULE 3.12 ------------- None 53 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.14 - INSURANCE Certificates of currency for insurance policies insuring the business for such risks and in such amounts as are prudent for Maxpro Systems Pty Ltd are attached as Appendix 3.14A, 3.14B and 3.14C. - -------------------------------------------------------------------------------- 54 APPENDIX 3.14C [MERCANTILE MUTUAL LETTERHEAD] U31 25th July 1996 OUR REF: RHODDAV2 CERTIFICATE OF CURRENCY This is to certify that the undermentioned Policy has been renewed and the Insurance is current to the date mentioned. POLICY NO: 70A031994PLB NAME OF INSURED: Maxpro Systems Pty Ltd & Others SITUATION: Anywhere in Australia INTEREST INSURED: Public & Products Liability SUM INSURED: $5,000,000 CURRENT TO: 3rd August 1996 Yours Faithfully, /s/ ILLEGIBLE MERCANTILE MUTUAL INS (AUST) LTD. 55 APPENDIX 3.14B [MERCANTILE MUTUAL LETTERHEAD] U31 25/7/96 OUR REF: RHODDAV2 CERTIFICATE OF CURRENCY This is to certify that the undermentioned Policy has been renewed and the Insurance is current to the date mentioned. POLICY NO: 70W021549WCA NAME OF INSURED: MAXPRO SYSTEMS PTY LTD & OTHERS SITUATION: ANYWHERE IN WESTERN AUSTRALIA INTEREST INSURED: WORKERS COMPENSATION SUM INSURED: AS PER ACT CURRENT TO: 3/10/96 Yours Faithfully, /s/ ILLEGIBLE MERCANTILE MUTUAL INS (AUST) LTD. 56 APPENDIX 3.14A [MERCANTILE MUTUAL LETTERHEAD] U31 CERTIFICATE OF CURRENCY This is to certify that the undermentioned Policy has been renewed and the Insurance is current to the date mentioned. POLICY NO: 70P740104BPK NAME OF INSURED: Maxpro Systems Pty Ltd & Others SITUATION: Unit 1/25 Irvine Street, MALAGA INTEREST INSURED: 1) Buildings 2) Contents SUM INSURED: 1) $154,000 2) $1,250,000 CURRENT TO: 3rd August 1996 Yours Faithfully, /s/ ILLEGIBLE MERCANTILE MUTUAL INS (AUST) LTD. 57 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.15 - PATENTS TRADEMARKS AND COPYRIGHTS Details of ownership and application of patents and trademarks are detailed in the attached letter from Griffith Hack & Co. dated 30 July 1996, and attached as Appendix 3.15A. - ------------------------------------------------------------------------------- 58 APPENDIX 3.15A [GRIFFITH HACK & CO LETTERHEAD] 30 July 1996 Maxpro Systems Pty Ltd Unit 1/25 Irvine Drive MALAGA WA 6062 ATTENTION: MR. G. BLOWERS COMMERCIAL MANAGER Dear Grant, INTERNATIONAL PROPERTY PORTFOLIO IN THE NAME OF MAXPRO SYSTEMS PTY LTD YOUR REF: f60714gb OUR REF: APM:NH:MAXPRO.J30 - ------------------------------------------------------------------------------- I confirm that Maxpro Systems Pty Ltd is the owner and applicant in respect of the following: 1) International application No. PCT/AU95/00457; 2) Australian trade mark application No. 679926; 3) Australian trade mark application No. 679927; 4) Australian trade mark application No. 679928; 5) Australian trade mark application No. 679929; 6) Australian trade mark application No. 679930; and, 7) Australian trade mark application No. 679931. Kindly note, S.A. Rhodes and A.W. Jackson are co-applicants of the above International application for the purposes of U.S.A. only. Nevertheless, from our understanding of the relationship between Messrs Rhodes and Jackson, and Maxpro Systems Pty Ltd, proprietorship of the invention resides with Maxpro Systems Pty Ltd for all countries designated in the International application including the U.S.A. itself. Please do not hesitate to contact me if you require any further information. Kind regards. Yours sincerely, GRIFFITH HACK & CO. A. P. Mizzi 59 STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS SCHEDULE 3.18 ------------- None 60 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.19 - EMPLOYEES AND CONSULTANTS In the event that Mr Tracy Tye, Manager of the United Kingdom Branch, were to terminate his services with Maxpro, there will be a contingent liability. Mr Tye receives a 3% commission on cash receipts from Accounts Receivable customers for sales achieved by him. Payments are made quarterly in arrears. - ------------------------------------------------------------------------------- 61 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.22 - ACCOUNTS RECEIVABLE Attached as Appendix 3.22A is a complete and accurate accounts receivable aging report as at 31 July 1996 at 3:00pm. - ------------------------------------------------------------------------------- 62 APPENDIX 3.22A
Debtor Trial Balance 31/07/96 31/07/96 - 15:22 Maxpro Systems Pty Ltd Page : 1 Debtor Balance ------------------------Aged Balances------------------------- Code Debtor Name Todate Current 30 Days 60 Days 90 Days 120 Days =============================================================================================================================== MD0021 THE ADELAIDE CASINO 317.44 317.44 MD0032 ARGYLE DIAMOND SALES 221288.96 50461.36 10750.25 160077.35 MD0042 ASCO SECURITY SYSTEMS PTY LTD 146.40 146.40 MD0107 AUSTRALIAN GEOPHYSICAL SERVICES 1750.00 1750.00 MD0022 BURSWOOD RESORT CASINO 6631.92 6631.92 MD0001 CHUBB - WA 128221.20 124582.80 1698.40 1940.00 MD0106 CHUBB TASMANIA 297.48 297.48 MD0008 CHUBB - VICTORIA 16018.80 5167.92 5112.00 5738.88 MD0023 CHUBB NSW 9290.50 8543.50 747.00 MD0092 CHUBB SECURITY HOLDINGS 634.32 -2688.00 1000.00 2538.32 -216.00 MF0063 CHUBB SOUTH AFRICA 89014.70 76462.70 12552.00 MD0065 DARLING HARBOUR AUTHORITY 289.37 289.37 MF0002 DEFENCE SECURITY SYSTEMS 3078.00 3078.00 MD0044 FIRE FIGHTING ENTERPRISES -69.40 -69.40 MD0039 GEC VIDEO SYSTEMS - OLD 16164.00 16164.00 MD0049 GEC VIDEO SYSTEMS DIVISION WA 102.00 102.00 MD0007 HAMERSLEY IRON 5914.00 7547.00 -3480.00 -3480.00 5327.00 MD0068 HONEYWELL LIMITED NSW 44038.80 306.00 5294.80 34990.00 3448.00 MD0089 HONEYWELL PROTECTION SERVICES 1606.56 1200.00 751.52 -344.96 MD0004 HONEYWELL LTD - VIC 19097.88 19097.68 MD0056 HONEYWELL QUEENSLAND 58496.00 49316.00 5670.00 2320.00 1190.00 MD0062 HONEYWELL LIMITED 70824.00 32876.00 6027.00 31921.00 MF0100 INTERNATIONAL ELECTRONIC PROTECTION 488695.46 488695.46 MD0105 INTER SECURITY SYSTEMS 19297.96 19297.96 MD0030 JAMES HARDIE BUILDING AUTOMATION 295.00 295.00 MD0066 JAMES HARDIE BUILDING SERVICES 13912.84 11975.00 327.44 1610.40 MD0047 KALBOORLIE CONSOLIDATED GOLD MINE 17946.76 17946.76 MD0096 MAXPRO SYSTEMS - PROJECTS 3265.00 3265.00 MF0080 MAXPRO SYSTEMS UK 8694.00 8694.00 MF0102 MAXPRO SYSTEMS USA 24655.10 24655.10 MD0086 MGM GRAND CASINO DARWIN 46195.92 28051.68 18144.24 MD0053 MISCELLANEOUS DEBTORS 8489.16 1950.00 6047.47 491.69 MD0051 CITY OF PERTH 11798.25 9338.00 2460.25 MF0090 RESORTS WORLD BHD 124577.20 124577.20 MD0081 RSJ ELECTRICAL SERVICES PTY LTD 2658.00 2658.00 MD0012 SACON ENGINEERING SERVICES 820.00 820.00 MD0091 SATCHWELL CONTROL SYSTEMS 1010.00 820.00 190.00 MD0052 SECURITY WAREHOUSE 34067.28 32859.48 1207.80 MF0003 ST ELECTRONIC & ENGINEERING LIMITED 40470.00 18300.00 120.00 22050.00 MD0025 SENSORMATIC INDUSTRIAL SYDNEY AUST -2628.50 -2628.50 MD0026 TELECOM AUSTRALIA 1234.90 1234.90 MD0104 TOWNSVILLE CITY COUNCIL 2057.00 2057.00 MD0040 WORMALDS - GLD 580.00 580.00 MD0103 WORMALD SOUTH AUSTRALIA 32522.00 31394.00 1128.00 MD0009 WORMALD SECURITY - NSW 2110.50 2307.70 120.00 372.00 -689.20 MD0033 YUMAX COMMUNICATIONS 11926.98 3067.80 439.10 896.40 6413.68 1110.00 =============================================================================================================================== Grand Total Balance Todate 1587803.74 % Of Total Current 1203229.92 75% 30 Days 31103.95 2% 60 Days 40793.64 3% 90 Days 50235.93 3% 120 Days 262440.30 17%
63 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.23 - CONTRACTS 1. Maxpro Systems Pty Ltd has issued bank guarantees in favour of: Argyle Diamond Mines Pty Ltd (4 October 1995) $168,118.00 Hamersley Iron Pty Ltd (31 July 1995) $ 10,653.00 The above are secured by personal guarantees by Christopher Paul Davies, Kim Robert Rhodes and Scott Anthony Rhodes. 2. The following staff are employed at salaries and benefits in excess of A$60,000: G G Blekkenhorst Accountant $68,250 G Blowers Executive Asst $70,571 B O'Connell Contracts Manager $65,120 W Rhodes Technical Officer $60,880 N Heard Operations Manager $94,500 C Wright Systems Applications Manager $72,591 D Marshall Production Manager $60,844 A Jackson President - USA $82,999 plus fully maintained motor vehicle and rental subsidy of $20,000 per year. R McCarter USA US$70,000 3. An unregistered Lease Agreement is held with JW Rogers Pty Ltd for the lease of 44 Irvine Drive, Malaga, Western Australia, 6062. The lease expires on 31 January 1998. JW Rogers Pty Ltd hold a bond of $4,000.00 (Four Thousand Dollars). There is a three year option at expiration of the first term. 4. An unregistered Lease Agreement is held with Christopher Paul Davies, Kim Robert Rhodes and Scott Anthony Rhodes for the lease of Unit 1, 25 Irvine Drive, Malaga, Western Australia, 6062. 5. Maxpro Systems Pty Ltd has entered into a "Consultancy Agreement" with Rhodes Davies & Associates Pty Ltd of whom Mr C P Davies, Mr K R Rhodes and Mr S A Rhodes are Directors. Consultancy Fees of $1,016,450 have been paid for the 1995/96 financial year. - -------------------------------------------------------------------------------- 64 MAXPRO SYSTEMS PTY LTD - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.23 - CONTRACTS (continued) 6. Mr S J Bajada a Director of Maxpro Systems Pty Ltd, is Managing Director of Bajada & Associates Pty Ltd, received fees of $43,630, for the 1995/96 financial year, to provide Corporate Advisory Services. Currently this fee does not exceed $60,000 per annum. - -------------------------------------------------------------------------------- Page 2 65 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS SCHEDULE 3.24 - CORPORATE NAME 1. Radcom Australia Pty Ltd was incorporated on 1st December 1983. 2. On 20th January 1987 Radcom Australia Pty Ltd changed its name to Cyber Systems Australia Pty Ltd. 3. On 23rd September 1994 Cyber Systems Australia Pty Ltd changed its name to Maxpro Systems Pty Ltd. - -------------------------------------------------------------------------------- EX-10.2 3 SHAREHOLDERS DEED 1 EXHIBIT 10.2 SHAREHOLDERS' DEED THIS SHAREHOLDERS' DEED is made on the 7th day of August 1996 between: 1. BAJADA & ASSOCIATES PTY LTD ACN 059 781 770 for and on behalf of the Knights Capital Fund of 6th Floor, 111 St Georges Terrace, Perth, Western Australia ("B&A"); and 2. ULTRAK, INC, a Delaware corporation ("Ultrak") RECITALS: A. There are 595 ordinary Shares in the capital of the Company, of which B&A holds 148 Shares and the remainder are held by other Shareholders, defined as the "Original Shareholders". B. B&A and the Original Shareholders are parties to a Shareholders Agreement dated 14 September 1994, which confers upon B&A certain rights with respect to the Company. C. Ultrak wishes to purchase the Shares held by the Original Shareholders, and has entered into the Stock Purchase Agreement and the Consultancy Deed in connection with the purchase. D. B&A has agreed to waive its pre-emptive right in respect of the proposed purchase, and to terminate the Shareholders Agreement referred to in Recital B, subject to the agreements set out in this Agreement. THE PARTIES AGREE as follows: - -------------------------------------------------------------------------------- 1 DEFINITIONS In this Agreement: "AFFILIATE" means, in relation to any party, a corporation, where 50% or more of the issued shares in the corporation are owned by that party or by another Affiliate of that party, or where 50% or more of the issued shares in that party are owned by the corporation or by an Affiliate of that corporation. "ASSOCIATE" means, in relation to any party, an Affiliate of that party or any other person with whom that party has a material association, however arising. "B&A NOMINEE DIRECTOR" means from time to time the nominee of B&A appointed as a Director under clause 7.2. "BUSINESS" means the electronics security business carried on by the Company conducted as at the date of this Agreement in the area of closed circuit television system design, manufacture, supply, installation and commissioning. "COMPANY" means MaxPro Systems Pty Ltd ACN 009 081 467 of Unit 1, 25 Irvine Drive, Malaga, Western Australia. "CONSULTANCY DEED" means a deed between Ultrak, Rhodes Davies & Associates Pty Ltd and the Company, to be dated the same date as the Stock Purchase Agreement. "DIRECTOR" means a director of the Company. "MAXPRO TECHNOLOGY" means the technology which is currently used by the Company in connection with its Business or which is subsequently developed by - -------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 1 2 2 Effective Date the Company in connection with its Business. The Maxpro Technology shall include all improvements and innovations which are reasonably based upon then existing Maxpro Technology. "UTLRAK ASSOCIATE" means Ultrak and any Associate of Ultrak. "SHAREHOLDER" means a registered holder of Shares. "SHARES" means issued shares in the capital of the Company. "STOCK PURCHASE AGREEMENT" means an agreement to be entered into between the Original Shareholders and Ultrak, for the sale by the Original Shareholders to Ultrak of all of the issued shares in the Company held by the Original Shareholders. "ULTRAK NOMINEE DIRECTOR" means a Director which Ultrak nominates or otherwise causes to be appointed as a Director. "WORKING CAPITAL FACILITY" means a $4 million working capital facility from Ultrak to the Company, which has been approved by B&A prior to the date of this Agreement, and any extensions of the term of such facility. - -------------------------------------------------------------------------------- 2 EFFECTIVE DATE (a) This Agreement shall become effective on the date on which Closing occurs under the Stock Purchase Agreement. (b) In the event that the provisions of the Stock Purchase Agreement and the Consultancy Deed referred to in Recital C are inconsistent with or contrary to any of the provisions of this Agreement, the provisions of this Agreement shall prevail and take precedence to the extent of such inconsistency or contradiction. - -------------------------------------------------------------------------------- 3 TERMINATION OF ORIGINAL SHAREHOLDERS AGREEMENT On and from the date on which this Agreement becomes effective, the Shareholders Agreement referred to in Recital B shall be terminated. - -------------------------------------------------------------------------------- 4 WAIVER OF PRE-EMPTIVE RIGHTS In consideration for the terms set out in this Agreement, B&A hereby waives its pre-emptive rights under the Shareholders Agreement referred to in Recital B and under the Articles of Association of the Company, in respect of the acquisition by Ultrak of the Shares held by the Original Shareholders pursuant to the Stock Purchase Agreement. - -------------------------------------------------------------------------------- 5 RESTRICTION ON ASSIGNMENT OF SHARES 5.1 MEANING OF "ASSIGN" In this Part, to "ASSIGN" an interest means to sell, assign or otherwise dispose of the whole or a part of that interest. - -------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 2 3 5 Restriction on assignment of Shares 5.2 DEED OF COVENANT A Shareholder shall not assign any part of its Shares in the Company unless the proposed assignee has first delivered to the other Shareholders a binding undertaking to be bound by the terms of this Agreement with respect to the Shares to be assigned. 5.3 RIGHT OF FIRST REFUSAL A Shareholder ("assignor") may not assign any part of its Shares in the Company without first offering the Shares in writing to the other Shareholders, on the following basis: (a) In its offer to the other Shareholders, the assignor shall state the consideration and all of the other material terms upon which it is prepared to sell the Shares. (b) The other Shareholders shall have a period of 30 days after receipt of the offer in which to accept the offer. (c) If any of the other Shareholders accepts the offer, then the Transferor shall assign the Shares to that Shareholder on the terms offered and accepted. If more than one of the other Shareholders accepts the offer, then the assignor shall assign the Shares to those Shareholders pro rata to their relative percentage Shareholdings, or otherwise as those Shareholders may agree. (d) If none of the other Shareholders accepts the offer within the 30 day period, the assignor may, subject to any other restrictions imposed under this Agreement, assign the Shares to any third party upon terms no more favorable to the third party than those offered to the other Shareholders. If the assignment is not completed within 120 days after the expiration of the 30 day period, the assignor may not assign the Shares to any third party without first having offered the Shares again to the other Shareholders in accordance with this clause. 5.4 ASSIGNEE TO BE APPROVED Except for an assignment to an Affiliate, a Shareholder may not assign any of its Shares to any third party unless the identity of the proposed assignee has been approved by the remaining Shareholders, approval not to be unreasonably withheld. 5.5 ASSIGNMENT OF INTERESTS IN KNIGHTS CAPITAL FUND (a) Ultrak acknowledges that B&A holds its Shares as Manager for and on behalf of the Knights Capital Fund. (b) The restrictions on assignment of Shares will not apply to any assignment resulting from an assignment by an investor in the Knights Capital Fund of its interest in the Fund. (c) The restrictions on assignment of Shares will not apply to any assignment resulting from a distribution of assets of the Knights Capital Fund to the Investors of the Fund, provided that the assignee must enter into a deed of covenant with the remaining Shareholders under which it binds itself, in a form acceptable to the remaining Shareholders, to all the provisions of this Agreement. - -------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 3 4 6 Issues of shares 5.6 ASSIGNMENT TO AN AFFILIATE A Shareholder may assign its Shares to an Affiliate without complying with clause 5.3 provided that the assigning Shareholder and its Affiliate enter into a deed of covenant with the remaining Shareholders under which they agree that: (a) if the Affiliate subsequently ceases to be an Affiliate of the assigning Shareholder, it must re-assign the Shares to the assigning Shareholder; and (b) the Affiliate binds itself, in a form acceptable to the remaining Shareholders, to all the provisions of this Agreement. - -------------------------------------------------------------------------------- 6 ISSUES OF SHARES Except with the prior approval of all Shareholders, the Company may not issue any further Shares or other securities with rights to convert to Shares. - -------------------------------------------------------------------------------- 7 DIRECTORS 7.1 MAXIMUM NUMBER The maximum number of Directors of the Company shall be 5 unless otherwise agreed by all of the Shareholders. 7.2 B&A NOMINEE AND ULTRAK NOMINEE (a) B&A and Ultrak shall each from time to time be entitled to nominate 1 person to be appointed as a non-paid non-executive Director. (b) The Shareholders shall cause the nominees from time to time of B&A and Ultrak under paragraph (a) to be appointed as Directors. 7.3 MEETINGS AT LEAST QUARTERLY The Directors must meet at least once a quarter unless otherwise agreed by all of the Directors. The Directors may meet by telephone conference call or similar means. 7.4 MAJOR DECISIONS TO BE APPROVED BY DIRECTORS (a) All major decisions affecting the Company or the Business, must be approved by all of the Directors. Major decisions will not include operational matters arising in the ordinary course of business. (b) Ultrak and B&A acknowledge the provisions of clause 4.3 of the Consultancy Deed. Ultrak and B&A agree that paragraph (a) above will be subject to the provisions of clause 4.3 of the Consultancy Deed. - -------------------------------------------------------------------------------- 8 DEALINGS WITH ASSOCIATES OF ULTRAK 8.1 CERTAIN DEALINGS WITH ULTRAK ASSOCIATES PROHIBITED Except with the prior approval of B&A, the Company shall not: (a) guarantee any obligations of any Ultrak Associate; or (b) advance any moneys to any Ultrak Associate; or - -------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 4 5 8 Dealings with associates of Ultrak (c) borrow any moneys from any Ultrak Associate, other than the Working Capital Facility; or (d) give any security over its assets for the benefit of any Ultrak Associate; or (e) give any undertaking for the performance of any obligation of any Ultrak Associate; (f) sell to any Ultrak Associate any material asset, including without limitation: (1) the shares in any subsidiary company; or (2) any part of the Business worldwide; (3) the right to carry out the Business in any part of the world; (4) the right to use or otherwise exploit the Company's technology in any part of the world; (g) purchase any material asset from any Ultrak Associate. 8.2 COMMERCIAL DEALINGS TO BE AT ARMS-LENGTH All commercial dealings and transactions between the Company and any Ultrak Associate shall be on an arms'-length basis and on terms no less favorable to the Company than those that would be available from other sources considering all elements of the dealings and transactions (including without limitation volume of purchases, sales, marketing and distribution support, sales referrals, introduction to new dealers and markets, and warehousing). 8.3 MAXPRO TECHNOLOGY (a) Except with the prior approval of all Directors, Ultrak shall ensure that no Ultrak Associate, other than the Company and wholly-owned subsidiaries of the Company, will use or exploit the Maxpro Technology. It is acknowledged however that Ultrak Associates may provide services to the Company consistent with clause 8.2. (b) It is Ultrak's intent to initially sell through Ultrak's distribution channels products manufactured by the Company and or wholly-owned subsidiaries of the Company. (c) With the prior consent of B&A, Ultrak may subsequently cause Ultrak Associates to manufacture products using the Maxpro Technology, which will be the subject of further agreement between Ultrak and the Company consistent with clause 8.2. The consent of B&A to such an arrangement will not be unreasonably withheld, where it can be demonstrated by Ultrak that the proposed arrangement will be in the best interests of the Company. 8.4 EMPLOYEES Ultrak shall not make any offer to any employee of the Company that would cause the employee to cease being an employee of the Company, or otherwise take any action which has the purpose of likely effect of causing any employee of the Company to cease being an employee of the Company. - -------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 5 6 9 Conduct of Directors and Ultrak - -------------------------------------------------------------------------------- 9 CONDUCT OF DIRECTORS AND ULTRAK 9.1 DEVELOPMENT OF BUSINESS AND COMPANY The Directors must: (a) diligently attend to the development of the Business of the Company; (b) use their best skills and endeavours to maximise the prospects and profitability of the Company. 9.2 JUST AND FAITHFUL Ultrak and each Director which Ultrak has caused to be appointed shall at all times act bona fide and in the best interests of the Company and in good faith towards all of the Shareholders. 9.3 KEEP OTHER SHAREHOLDERS INFORMED The Directors shall: (a) promptly advise B&A of any material matter or information concerning the Company's business; (b) at all times gives to B&A a full and proper account of any significant action the Directors propose to take in respect of the Company. - -------------------------------------------------------------------------------- 10 CERTAIN MATTERS REQUIRING CONSENT OF ALL DIRECTORS 10.1 RESTRICTION ON CERTAIN ACTIVITIES The Company shall not, without the prior consent of all Directors: (a) sell or dispose of any material part of the Business or its assets; (b) grant any mortgage, charge or other encumbrance over any material part of its Business or its assets, except for the Working Capital Facility or other necessary working capital requirements; (c) change the nature of the Business; (d) change the structure of the Business or the direction in which the Business is conducted. 10.2 DIVIDEND POLICY The dividend policy of the Company from year to year shall require the prior approval of all Directors. - -------------------------------------------------------------------------------- 11 ACCOUNTING RECORDS 11.1 COMPANY TO KEEP FULL ACCOUNTING RECORDS The Company shall keep in Perth, Western Australia, full and complete accounting records in accordance with the accounting standards required under the Corporations Law and otherwise the standards generally adopted in Australia. 11.2 INSPECTION The Company's accounting records shall at all times be made available for inspection and copying by B&A and Ultrak. - -------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 6 7 12 Accounts - ------------------------------------------------------------------------------- 12 ACCOUNTS 12.1 COMPANY TO KEEP PROPER ACCOUNTS (a) The Company shall prepare full and complete accounts without delay as at 30 June each year, in accordance with the accounting standards required under this Agreement. The annual accounts shall include: (1) a balance sheet reflecting all the Company's assets and liabilities; (2) a profit and loss account; and (3) a collation of the documents which show the Company's compliance with tax laws. (b) The Company shall provide to B&A a copy of the annual accounts. (c) The Company shall prepare appropriate management accounts at the end of each month. The Company shall provide a copy of the management accounts to each Director. - ------------------------------------------------------------------------------- 13 CONDUCT OF DIRECTORS 13.1 B&A NOMINEE B&A shall cause the B&A Nominee Director to comply with the obligations imposed on Directors under this Agreement, and also to act consistently with and not do anything that would constitute a breach of the obligations of B&A or the Company under this Agreement. 13.2 ULTRAK NOMINEES Ultrak shall cause each Ultrak Nominee Director to comply with the obligations imposed on Directors under this Agreement, and also to act consistently with and not do anything that would constitute a breach of the obligations of Ultrak or the Company under this Agreement. - ------------------------------------------------------------------------------- 14 WINDING UP Each Shareholder agrees that it shall not in any manner procure or attempt to procure the winding up of the Company. - ------------------------------------------------------------------------------- 15 ARTICLES OF ASSOCIATION 15.1 THIS AGREEMENT TO HAVE PRIORITY In the event that the provisions of the articles of association of the Company are inconsistent with or contrary to any of the provisions of this Agreement, the provisions of this Agreement shall prevail and take precedence to the extent of such inconsistency or contradiction. 15.2 AMENDMENT OF ARTICLES The parties shall, if requested by any of the Shareholders, as soon as practicable following the discovery of any inconsistency between the provisions of this Agreement and the Articles of Association, cause a general meeting of the Company to convene and shall pass at that general meeting such resolutions or - ------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 7 8 16 Relationship between the Parties special resolutions (as the case may be) as are necessary to amend the Articles of Association in a manner so that the Articles of Association are consistent with the provisions of this Agreement. - ------------------------------------------------------------------------------- 16 RELATIONSHIP BETWEEN THE PARTIES Nothing in this Agreement shall be construed to constitute any Shareholder the agent or representative of any other Shareholder or to create any trust or partnership at law for any purposes whatsoever. - ------------------------------------------------------------------------------- 17 AFFILIATES OF ULTRAK Ultrak enters into this Agreement on behalf of itself and all of its Affiliates from time to time. - ------------------------------------------------------------------------------- 18 GOVERNING LAW AND JURISDICTION (a) Subject to paragraph (b), this Agreement is governed by and construed in accordance with the laws of the State of Western Australia and each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of that State and courts of appeal from them. (b) B&A may by notice to Ultrak elect that the governing law and jurisdiction referred to in paragraph (a) will be the law of Delaware, and such election will take effect in accordance with its terms - ------------------------------------------------------------------------------- 19 FURTHER ASSURANCES (a) Each Shareholder must do all things and execute all further documents necessary to give full effect to this Agreement (b) Each Shareholder shall vote its Shares and exercise its other rights in such a manner as to procure that the Company complies with all of its obligations under this Agreement - ------------------------------------------------------------------------------- 20 GENERAL 20.1 VARIATION No modification, variation or amendment of this Agreement shall be of any force or effect unless such modification, variation or amendment is in writing and signed by all the parties hereto. 20.2 ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties in relation to its subject matter and supersedes any (if at all) previous agreements, proposals, representations, correspondence, negotiations and discussions in connection therewith. 20.3 COUNTERPARTS This Agreement may be executed in counterparts. - ------------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 8 9 20 General EXECUTED by the parties as a deed. SIGNED by and on behalf of BAJADA & ASSOCIATES PTY LTD by its Managing Director in the presence of: /s/ PETER GEOFFREY LAMB /s/ SELWYN BAJADA - ----------------------------------- ----------------------------------- Witness Managing Director PETER GEOFFREY LAMB SELWYN BAJADA - ----------------------------------- ----------------------------------- Name (please print) Name (please print) SIGNED by and on behalf of ULTRAK, INC. by its President and Chief Executive Officer in the presence of: /s/ ASHLEY WOJAN /s/ GEORGE K. BROADY - ----------------------------------- ----------------------------------- Witness George K. Broady President and Chief Executive Officer ASHLEY WOJAN GEORGE K. BROADY - ----------------------------------- ----------------------------------- Name (please print) Name (please print) - ---------------------------------------------------------------------------- Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 9 EX-10.3 4 CONSULTANCY DEED 1 EXHIBIT 10.3 CONSULTANCY DEED EDWARDS ROBINSON LARK --Commercial Lawyers--- 23 Ventnor Avenue West Perth WA 6005 Postal Address: PO Box 212 West Perth WA 6872 Phone (09) 481 4774 Fax (09) 481 5370 Our Ref: PGL: 2 THIS DEED is made between the following parties: 1. ULTRAK, INC. a company registered in Delaware USA of 1220 Champion Circle, Suite 100 Carrollton, Texas 75006("Ultrak"). 3. RHODES DAVIES & ASSOCIATES PTY LTD (ACN 009 333 788) of care of Complete Business Systems, 47A Kirwan Street, Floreat, Western Australia ("Consultant") 4. MAXPRO SYSTEMS PTY LTD (ACN 009 081 467) Unit 1, 25 Irvine Drive, Malaga, Western Australia in its capacity as trustee of the Rhodes Davies Trust (the "Company"). RECITALS A. The Executives, Ultrak, the Consultant and the Company have entered into the Stock Agreement and, after consummation of the transactions contemplated by the Stock Agreement, Ultrak and will be the majority holder of the shares in the Company. B. The Company carries on the Business. C. The Executives are directors and employees of the Consultant. D. The Company has agreed to appoint the Consultant as a consultant to provide to the Company the Management Services and the Consultant has agreed to accept the appointment and provide the Management Services to the Company on the terms of this deed. THE PARTIES AGREE, in consideration of, among other things, the mutual promises contained in this deed: 1. DEFINITIONS AND INTERPRETATION In this deed, including the recitals: 1.1 DEFINITIONS "B&A Nominee" means Selwyn Bajada or any person for the time being holding the office of director of Bajada & Associates Pty Ltd ACN 059 781 770 who is nominated by that corporation to replace Selwyn Bajada. "Business" means the electronics security business carried on by the Company in the area of closed circuit television system design, manufacture, supply, installation and commissioning. "Business Day" means every day which is not a Saturday, Sunday or public or bank holiday within the meaning of the Public and Bank Holidays Act 1972 (WA); "Board" means the board of directors from time to time of the Company. "Commencement Date" means 1 July 1996; "Consulting Fee" means the fee payable to the Consultant under Clause 4; "Executives" means Christopher Davies, Kim Rhodes and Scott Rhodes; "Former Deed" means the Consultancy Agreement made between the Company and the Consultant and dated September 14, 1994. "Information" means any information in respect of the Company's business which is not in the public domain and includes, but is not limited to, any document, book, account, process, patent, specification, drawing, design or know-how which is: (a) supplied by the Company to the Consultant or an Executive; or (b) generated by the Consultant or an Executive in the course of performing the Consultant's obligations under this deed; 1 3 "Management Services" means the services to be provided to the Company by the Consultant under Clause 2.2 and in accordance with the terms of this deed, including but not limited to assisting the Company with the management of the Subsidiary; "Shareholders" means Ultrak and any persons who become shareholders in the Company by assignment from Ultrak subsequent to the Commencement Date; "Stock Agreement" means the Stock Purchase Agreement to be entered into among the Executives and Ultrak on August 1996; "Subsidiary" means Maxpro Systems Pty Ltd, a corporation incorporated in the State of Nevada; "Term" means the period of two years commencing on the Commencement Date; "Termination Date" means the last day of the Term; "Ultrak Shares" means the shares in Ultrak which may be earned under Clauses 1.02(a)(ii) & (iii) of the Stock Agreement by the Executives; and "US$" means United States of America dollars. 1.2 INTERPRETATION In this deed, unless the contrary intention appears, the following provisions apply to the interpretation of this deed: (a) Headings, underlining and numbering are for convenience only and do not affect the interpretation of this deed. (b) A reference to a statute, regulation, proclamation, ordinance or by-law includes every statute, regulation, proclamation, ordinance or by-law amending, consolidating or replacing them, and a reference to a statute includes every regulation, proclamation, ordinance and by-law issued under that statute. (c) A reference to a party to this deed or to another document referred to in this deed includes that party's successors and permitted assigns. (d) Where the day on or by which a thing is required to be done is not a Business Day, that thing is to be done or by the succeeding Business Day. 2. ENGAGEMENT 2.1 ENGAGEMENT (a) The Company engages the Consultant for the Term for the purposes of providing to the Company the Management Services and the Consultant accepts such appointment. (b) The Company agrees that it will pay the Consulting Fee to the Consultant. (c) The parties may extend the Term by mutual written consent. 2.2 RESPONSIBILITIES Until the Termination Date the Consultant shall manage the Business in the manner which it best sees fit: (a) with due skill, expertise, diligence and vigour; and (b) in accordance with all applicable laws, regulations, orders and rules. 2.3 TERMINATION OF FORMER DEED This deed terminates the Former Deed with effect from the Commencement Date. 2 4 3. COVENANTS 3.1 EXECUTIVES OF CONSULTANT (a) The Consultant agrees to make the Executives available to the Company to enable the Company to undertake its usual business including the management of the Subsidiary and all overseas operations. (b) The Company and the Shareholders acknowledge that as employees of the Consultant, the Executives are entitled to public holidays, annual leave and sick leave from the Consultant and as a consequence all three Executives will not always be available at the same time to manage the Business. 3.2 PERFORMANCE BY EXECUTIVES The Consultant shall procure that the Executives, whilst they or any of them are employed by the Consultant: (a) perform the Management Services in accordance with the reasonable directions of the Board and in a reasonably competent and expeditious manner; and (b) diligently attend to the Business. 3.3 NO CONFLICT OF INTEREST The Consultant warrants that neither the Consultant nor the Executives will perform services of any type, or provide any advice or assistance to any competitor or potential competitor of the Company either directly or indirectly nor do any other act which may give rise to a conflict with the interests of the Company. 4. OPERATING DETAILS 4.1 SUBSIDIARY Subject always to the directions of the Company as the sole shareholder of the Subsidiary (a) the Executives are at the date of this deed all directors of the Subsidiary and intend to maintain those offices. (b) the Executives and the B&A Nominee shall act as joint Presidents of the Subsidiary. (c) it is likely that Andrew Jackson and Nigel Heard will be appointed as Vice Presidents of the Subsidiary. 4.2 BUDGETS (a) The Executives shall prepare realistic budgets with a view to the Company achieving both earnout profit targets under Clause 1.02(a) of the Stock Agreement on the basis of consolidated accounts (the "Budgets"). (b) Ultrak undertakes to use its best endeavours to accept the Budgets prepared under Clause 4.2(a). (c) Where Ultrak determines that in the opinion of Ultrak it would be appropriate to incur expenditures in addition to those set out in any Budget and requests the Board to consider the merit of those expenditures, provided that the Board agrees to those expenditures, then such expenditures shall not be considered in calculating the earnout profit targets under Clause 1.02(a) of the Stock Agreement. 3 5 4.3 CO-OPERATION BY ULTRAK Ultrak covenants that so long as the Board is managing the Company in accordance with the Budgets and there are no significant commercial or personal difficulties between the executives of Ultrak and any of the Executives that Ultrak will not seek to interfere with the day to day management of the Company or the Board. 4.4 CONSENT OF SHAREHOLDERS The Board shall not without the prior approval of Ultrak and Bajada & Associates Pty Ltd ACN 059 781 770: (a) amend the Memorandum of Association or the Articles of Association of the Company; (b) borrow money from any person other than Ultrak unless the Company is able to obtain money on terms which the Board considers to be more favorable than the terms offered by Ultrak; or (c) issue any shares in the Company or the Subsidiary. 5. CONSULTING FEE (a) The Consulting Fee for the twelve month period commencing from the Commencement Date shall be US$840,000 and for the following twelve month period shall be US$560,000 payable in equal monthly instalments no later than the 15th day of each month into such bank accounts as the Consultant directs. (b) Any monthly instalment of the Consulting Fee which would have been paid by the Commencement Date if this deed had been entered into before the Commencement Date shall be paid promptly upon the signing of this deed; provided, however, that the amount shall be reduced by any payments under the Former Deed. 6. EXPENSES The Company must reimburse the Consultant and the Executives for reasonable out-of-pocket expenses incurred by the Consultant or the Executives, as the case may be, in connection with the Business. 7. APPOINTMENT AS DIRECTORS (a) The Shareholders agree that the Executives will initially comprise the majority of the Board of directors of the Company, but, notwithstanding anything to the contrary in this deed, the Shareholders reserve the right to make changes to the Board as they see fit. 8. DELEGATION AND SUBSTITUTION (a) Subject to Clause 8(b), the Consultant is required to personally perform all of the Management Services and has no right to delegate performance of the Management Services to any employee of the Consultant other than to one or more of the Executives. (b) If any Executive dies or through ill health is unable to perform his services to the Consultant, the Consultant shall be entitled to replace the deceased or ill Executive. (c) The Shareholders acknowledge that they are satisfied with the level of staffing of the Company at the Commencement Date and have no present intentions to reduce it. (d) The Shareholders further acknowledge that if the Consultant determines that the level of activity of the Company or the Subsidiary is sufficient to justify the appointment of any further staff to the Company or the Subsidiary that it will be empowered to arrange any such appointment on terms and conditions of its choosing. 4 6 9. RESPONSIBILITY FOR LEAVE AND OTHER BENEFITS 9.1 NO RESPONSIBILITY Subject to Clause 9.2, the Company is not responsible for the Executives and the Consultant shall not have any claim against the Company for annual leave, sick leave, long service leave, public holidays, superannuation contributions, redundancy payments, or any other similar benefits that may be owing to the Executives in connection with the Management Services under this deed. 9.2 INDEMNITY (a) Subject to Clause 9.2(b), the Consultant agrees to indemnify the Company in the event that the Company is required to make payments in relation to any of the benefits referred to in sub-Clause 9.1 to the Executives. (b) In the event that any liability to State Payroll tax is assessed to any of the Company or the Consultant in respect of any part of the Consulting Fee paid for the Management Services or remuneration paid by the Consultant to the Executives out of the Consulting Fee, this tax shall be met by the Company. 10. RESPONSIBILITY FOR INCOME TAXES AND INSURANCE 10.1 INCOME TAX The Consultant is responsible for making any income tax deductions or payments required under the Income Tax Assessment Act 1936 (Commonwealth) arising from payment of the Consultancy Fee, and expressly forbids the Company from making any income tax deductions or payments. 10.2 WORKER'S COMPENSATION The Consultant will take out any necessary workers' compensation insurance as required by the Workers' Compensation and Rehabilitation Act 1981 (WA) in connection with the Consultant's engagement under this deed. 10.3 SUPERANNUATION The Consultant is responsible for making any superannuation payments required under the Superannuation Guarantee (Administration) Act 1992 (Commonwealth) in connection with the Consultant's engagement under this deed. 10.4 FRINGE BENEFITS TAX The Consultant must pay any fringe benefit tax payable under the Fringe Benefits Tax Assessment Act 1986 (Cth) in relation to any remuneration or benefit provided by the Company to the Consultant or the Executives under this deed. 11. CONFIDENTIALITY 11.1 CONSULTANT'S OBLIGATIONS The Consultant must: (a) keep any Information secret and confidential, except to the extent that the Consultant or an Executive is required by law to disclose it; (b) take all reasonable and necessary precautions to maintain the secrecy and prevent the disclosure of any Information; and (c) procure that each Executive complies with the obligations set out in this clause. 11.2 SURVIVAL OF OBLIGATIONS The Consultant's obligations under this Clause 11 survive the termination of the Consultant's appointment as consultant to the Company. 5 7 12. TERMINATION OF DEED 12.1 TERMINATION Subject to clauses 12.2 and 12.3, this deed shall only terminate on the Termination Date. 12.2 TERMINATION BY NOTICE Either party shall be entitled to terminate this deed, by written notice to the other party; if: (a) an order is made or an effective resolution is approved for the appointment of a provisional liquidator or, for the winding up of the Company or the Consultant (as the case may be); (b) a receiver or manager is appointed for the Company or the Consultant (as the case may be) or any part of the assets of the Company or the Consultant; (c) the Company or the Consultant (as the case may be) proposes to enter into, or enters into, any scheme of arrangement with creditors or any of them; or (d) the Company or the Consultant (as the case may be) calls a meeting of its creditors for the purpose of placing the Consultant under official management and appointing an official manager of the Company or the Consultant (as the case may be). 12.3 TERMINATION WITHOUT PREJUDICE Termination by either party of this deed shall be without prejudice to the rights or obligations of the terminating party in respect of any occurrence prior to such termination. 12.4 ACTION UPON TERMINATION Upon termination of this deed, the Consultant shall: (a) relinquish possession and control to the Company, or as the Company shall direct, of all the Company's assets and moneys held or controlled by the Consultant pursuant to this deed; and (b) deliver to the Company, or as the Company shall direct, all documents, books, confidential information, technical information, intellectual property, accounts and other records relating to the Business, the Information or the performance of the Management Services or its other duties and obligations hereunder. 13. LEGAL RELATIONSHIP (a) The Company and the Consultant agree that the legal relationship between the Company and the Consultant is that of principal and independent contractor and not that of employer and employee and no term of this deed shall be construed as creating a relationship of employer and employee between the Company and the Consultant or any employee or agent of the Consultant. (b) Neither the Consultant nor the Company is liable for the obligations or debts of the other except as set out in this deed. 14. COMPETITION 14.1 UNDERTAKINGS Neither the Consultant nor any of the Executives shall without first obtaining the written consent of the Company: (a) directly or indirectly carry on any business similar to or competitive with the Business in the world for 1 year after the termination of this deed. 6 8 (b) persuade any person or corporation which is a customer or client of the Company, or who was in the twelve month period before the termination of this deed a customer or client of or in respect of the Business, to cease doing business with the Company or reduce the amount of business which the customer or client would normally do in respect of the Business for 1 year after the termination of this deed: (c) For a period of one year after the termination of this deed, induce or attempt to induce any person who at the termination of this deed is an employee of the Company in the Business to terminate his or her employment with the Company. 15. MISCELLANEOUS 15.1 NOTICES (a) A notice: (1) to a party to this deed is to be in legible writing and in English addressed to that party at its address set out at the beginning of this deed; (2) is to be signed by the sender or, in the case of a body corporate, is to be signed by an officer of, or under the common seal of, the sender or by its solicitors or agents; (3) is to be regarded as having been given by the sender and received by the addressee; (A) if by delivery in person, when delivered to the addressee; (B) if by post, 3 Business Days from and including the date of postage to the addressee; or (C) if by facsimile transmission, when the sender has a clear transmission report to the addressee, but if the delivery or receipt is on a day which is not a Business Day or is after 4:00 pm (addressee's time) on the following Business Day. (b) A facsimile transmission is to be regarded as legible unless the addressee telephones the sender within 1 Business Day after transmission and informs the sender that it is not legible. (c) A notice can be relied on by the addressee, and the addressee is not liable to another person for the consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender. 15.2 CONTINUING EFFECT The obligations imposed and the benefits conferred on the parties under this deed shall be binding upon and enure to the respective parties and each of their respective permitted successors in title, transferees and permitted assigns. 15.3 COSTS The parties must procure that the Executives pays the costs of Edwards Robinson Lark in relation to the preparation of this deed and any stamp duty assessed on the deed. 15.4 CUMULATIVE REMEDIES All remedies either under this deed, at law, in equity, under statute or otherwise afforded to the Consultant or the Company will be cumulative and not alternative. 7 9 15.5 ENTIRE DEED The terms, covenants, conditions, agreements, provisions, stipulations and obligations, contained in, and implied by, this deed comprise the entire agreement between the parties at the Commencement Date and no other term, covenant, condition, agreement, provision, representation or warranty applies. 15.6 ASSIGNMENT (a) Rights arising out of, or under, this deed are not assignable by one party without the prior written consent of the other party. (b) A breach of sub Clause (a) by one party entitles the other party to terminate this deed. (c) As a condition to the giving of consent by one party to the other to a proposed assignment, the party giving that consent is entitled to require guarantees of directors and/or shareholders of a body corporate to which this deed is to be assigned and a guarantee of this deed of the performance of the proposed assignee. (d) A Shareholder may not transfer all or any of its shares in the Company without first procuring that the transferee enters into a deed to the reasonable satisfaction of the Consultant which contains provisions substantially in the form of the provisions of this deed. 15.7 EXCLUSION OF MORATORIA A statute, moratorium or other governmental order which affects prejudicially the rights, powers or discretions of the parties under this deed does not apply to this deed unless application is mandatory. 15.8 VARIATION A variation of a term of this deed must be in writing and signed by each of the parties to this deed. 15.9 WAIVER (a) A waiver of a breach of this deed or of the rights created by, or arising under, this deed must be in writing and signed by the party giving the waiver. (b) A breach of this deed is not waived by: (1) a failure to exercise; (2) a delay in exercising; or (3) a partial exercise, of a remedy available under this deed or at law or in equity. (c) A right created by, or arising under, this deed is not waived by: (1) a failure to exercise; (2) a delay in exercising; or (3) a partial exercise, of that right. 15.10 GOVERNING LAW AND JURISDICTION (a) This deed is governed by the laws of Western Australia; and 8 10 (b) Each party irrevocably submits to the exclusive jurisdiction of the Courts of Western Australia with respect to this deed; provided, however, such submission shall not cause Ultrak to be subject to taxation in Western Australia or to qualify as a foreign corporation in Western Australia. (c) The parties acknowledge that Ultrak has no physical presence in Australia. 15.11 COUNTERPARTS (a) This deed may be executed in any number of counterparts. (b) All counterparts, taken together, constitute one instrument. (c) A party may execute this deed by signing any counterpart. EXECUTED by the parties as a deed this 7 day of August 1996. ULTRAK, INC. By: George K. Broady, President and CEO RHODES THE COMMON SEAL of DAVIES RHODES DAVIES & ASSOCIATES PTY LTD & ASSOCIATES was hereunto affixed by PTY LTD authority of the directors A.C.N. 009 333 788 in the presence of: COMMON SEAL /s/ K. RHODES /s/ C. DAVIES - -------------------------------- ------------------------------ Director Director/Secretary KIM RHODES CHRISTOPHER DAVIES - -------------------------------- ------------------------------- Name (please print) Name (please print) 9 11 THE COMMON SEAL of MAXPRO MAXPRO SYSTEMS PTY LTD SYSTEMS was hereunto affixed by PTY LTD authority of the directors A.C.N. 009 081 467 in the presence of: COMMON SEAL /s/ K. RHODES /s/ [ILLEGIBLE] - -------------------------------- ------------------------------ Director Secretary KIM RHODES [ILLEGIBLE] - -------------------------------- ------------------------------- Name (please print) Name (please print) 10 12 STOCK PURCHASE AGREEMENT EXHIBIT 8.07: CONSENT BY BAJADA & ASSOCIATES Bajada & Associates Pty Ltd (ACN 059 781 770) hereby consents to the Acquisition and the terms of the Agreement. SIGNED for and on behalf of Bajada & Associates Pty Ltd by its Managing Director /s/ BAJADA - --------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----