-----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, LknXvUCELNcIYdshz5TlNUPvOv1Z7qlMDgVP2ydg/Bg+tp8P8CPB5J7I+DF+Vcdg d9yCUQoCpNywN7fmAvmVIg== 0000950134-96-001543.txt : 19960429 0000950134-96-001543.hdr.sgml : 19960429 ACCESSION NUMBER: 0000950134-96-001543 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960426 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09463 FILM NUMBER: 96551479 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 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: MARCH 31, 1996 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-9463 ULTRAK, INC. (Exact name of registrant as specified in its charter) Delaware 75-2626358 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1220 Champion Circle, Suite 100, Carrollton, Texas 75006 (Address of principal executive offices) (Zip Code) (214) 280-9675 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of March 31, 1996: 7,327,500 shares of $.01 par value common stock. 2 ULTRAK, INC. AND SUBSIDIARIES QUARTER ENDED MARCH 31, 1996 INDEX
Part I: Financial Information Page No. --------------------- -------- Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II: Other Information 10 ----------------- Signatures 11
2 3 ULTRAK, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
ASSETS MARCH 31, DECEMBER 31, 1996 1995 (Unaudited) ------------------ ---------------- Current Assets: Cash $ 1,175,931 1,306,482 Trade Accounts Receivable, net 16,836,399 15,619,459 Notes Receivable 620,097 288,968 Inventories, net 23,193,274 21,293,216 Advances for Inventory Purchases 6,160,601 5,038,951 Prepaid Expenses and Other Current Assets 586,238 313,460 Deferred Income Taxes 943,046 943,046 ------------------ -------------- Total Current Assets 49,515,586 44,803,582 ------------------ -------------- Property, Plant and Equipment, net 4,046,338 4,117,899 Goodwill, net 2,438,830 2,470,839 Notes Receivable, Noncurrent 875,901 1,152,048 Other Assets 403,223 410,427 ------------------ -------------- Total Assets $ 57,279,878 52,954,795 ================== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable-Trade $ 9,050,547 6,988,550 Current Portion of Long-Term Debt 180,960 180,960 Notes Payable 26,135,151 24,301,147 Accrued Expenses 1,083,254 1,613,925 Federal and State Income Taxes Payable 562,933 954,716 Other Current Liabilities 1,285,021 884,410 ------------------ -------------- Total Current Liabilities 38,297,866 34,923,708 ------------------ -------------- Long-Term Debt 1,490,798 1,534,548 Stockholders' Equity: Preferred Stock, $5 par value, issuable in series; 2,000,000 shares authorized; Series A, 12% cumulative convertible, 195,351 shares authorized, issued and outstanding 976,755 976,755 Common Stock, $.01 par value; 20,000,000 shares authorized; 7,327,500 and 7,326,935 shares issued and outstanding at March 31, 1996 and December 31, 1995, respectively 73,275 73,269 Additional Paid-in Capital 11,518,795 11,518,801 Less: Treasury Stock, at cost, 35,000 shares at March 31, 1996 (246,067) 0 Retained Earnings 5,168,456 3,927,714 ------------------ -------------- Total Stockholders' Equity 17,491,214 16,496,539 ------------------ -------------- Total Liabilities and Stockholders' Equity $ 57,279,878 52,954,795 ================== ==============
The accompanying notes are an integral part of the consolidated financial statements. 3 4 ULTRAK, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31,1996 MARCH 31,1995 --------------- ----------------- Net sales $ 29,674,027 21,829,162 Cost of sales 21,244,887 16,507,084 --------------- ---------------- Gross profit 8,429,140 5,322,078 Other operating costs: Marketing and sales 4,171,735 2,702,955 General and Administrative 1,710,573 1,010,457 --------------- ---------------- 5,882,308 3,713,412 --------------- ---------------- Operating profit 2,546,832 1,608,666 Other expense (income): Interest expense 565,026 396,829 Other, net 25,144 (19,555) --------------- ---------------- 590,170 377,274 --------------- ---------------- Income before income taxes 1,956,662 1,231,392 Income taxes 686,618 449,459 --------------- ---------------- NET INCOME 1,270,044 781,933 Dividend Requirements on Preferred Stock (29,302) (29,302) --------------- ---------------- Net Income Allocable to Common Stockholders $ 1,240,742 752,631 =============== ================ Net Income Per Common Share $ .16 $ .11 =============== ================ Number of Common Shares Used in Computations 7,635,659 6,821,027 =============== ================
The accompanying notes are an integral part of the consolidated financial statements. 4 5 ULTRAK, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31,1996 MARCH 31,1995 -------------------- ------------------ Cash flows from operating activities: Net income $ 1,270,044 781,933 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 264,167 137,957 Provision for losses on accounts receivable 86,334 28,450 Provision for inventory obsolescence 163,263 98,219 Changes in operating assets and liabilities: Accounts and notes receivable (1,634,403) (442,590) Inventory (2,063,321) (1,247,075) Advances for inventory purchases (1,121,650) 1,596,897 Prepaid expenses and other current assets (272,778) (243,553) Noncurrent notes and other assets 283,351 (129,321) Accounts payable 2,061,997 (585,068) Accrued and other current liabilities (521,843) (45,825) ----------------- -------------- Net cash used in operating activities (1,484,839) (49,976) ----------------- -------------- Cash flows from investing activities: Purchases of property and equipment (160,597) (200,967) Acquisitions, net of cash acquired 0 0 ----------------- -------------- Net cash used in investing activities (160,597) (200,967) ----------------- -------------- Cash flows from financing activities: Net borrowings on notes payable 1,790,254 (361,996) Purchase of treasury stock (246,067) 0 Payment of preferred stock dividends (29,302) (29,302) ----------------- -------------- Net cash provided by financing activities 1,514,885 (391,298) ----------------- -------------- Net decrease in cash (130,551) (642,241) ----------------- -------------- Cash at beginning of the period 1,306,482 642,241 ----------------- -------------- Cash at end of the period $ 1,175,931 0 ================= ==============
The accompanying notes are an integral part of the consolidated financial statements. 5 6 ULTRAK, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation: The accompanying unaudited interim consolidated financial statements include the accounts of Ultrak, Inc. and its subsidiaries ("Ultrak" or "the Company"). All significant intercompany balances and transactions have been eliminated in consolidation. The interim financial statements are prepared on an unaudited basis and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. For further information, refer to the consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 1995 included in the Ultrak Annual Report on Form 10-K. 2. Business Combinations: JAK Pacific Video Warranty and Repair Services, Inc.: Effective April 1, 1994, the Company acquired 56% of the outstanding common stock of JAK Pacific Video Warranty and Repair Services, Inc. ("JAK"), a California corporation, for total cash consideration of $573,000. The transaction was accounted for as a purchase. The operations of JAK have been included in the Company's statements of income beginning April 1, 1994. JAK is engaged in sales, service and warranty repairs of closed circuit television products. During 1995, the Company exercised its option to acquire the remaining 44% of the common stock of JAK for cash consideration of $500,000. Goodwill is being amortized over 20 years by the straight-line method. Koyo's U.S. CCTV Division: On March 15, 1995, the Company signed an agreement with Koyo International, Inc. of America ("Koyo") to purchase certain assets of Koyo's U.S. CCTV division. Under the agreement, the Company acquired all of Koyo's inventory, patent rights, customer lists and certain tooling for cash of approximately $416,000 plus a $100,000 minimum payment due under a royalty agreement. The agreement provides for royalties of up to 2% of the net selling price of products produced under license from Koyo. Goodwill is being amortized over 20 years by the straight-line method. Diamond Electronics, Inc.: On July 13, 1995, the Company acquired all of the outstanding shares of common stock of Diamond Electronics, Inc. ("Diamond"), in exchange for 600,000 registered shares of the Company's common stock valued at $3,804,000. Costs capitalized in conjunction with the acquisition were approximately $130,000. The shareholders of Diamond are entitled to receive an additional 50,000 shares of the Company's common stock if the market price is less than $8.00 per share for the ten business days prior to July 13, 1996. 6 7 ULTRAK, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (Unaudited) Diamond is a manufacturer of commercial video CCTV security and surveillance systems used by large retailers, and of hazardous viewing systems used by industry and municipalities. The transaction has been accounted for as a purchase, and the operations of Diamond have been included in the Company's statement of income since July 1, 1995. Goodwill is being amortized over 25 years by the straight-line method. G.P.S. Standard U.S.A.: Effective November 29, 1995, the Company acquired 100 percent of the outstanding capital stock of BLC & Associates, Inc., doing business as G.P.S. Standard U.S.A. ("GPS"), for 176,470 shares of registered common stock of the Company. GPS is a manufacturer of surveillance camera housings, pan and tilt devices, matrix switchers and other advanced software driven camera control systems. The transaction was accounted for as a pooling of interests effective December 1, 1995. Results of operations for periods prior to the date of acquisition have not been restated to reflect the combined operations due to immateriality. 3. Notes Payable and Long-Term Debt: Notes payable consists of the following as of March 31, 1996: $20.0 million revolving line of credit from a bank, due July 31, 1997; interest at prime plus .25% or LIBOR plus 2.50% payable monthly; collateralized by substantially all assets $19,487,447 $7.0 million revolving line of credit from an investment company, due September 30, 1996; interest at the greater of 8.5% or prime plus 2.0% payable monthly; collateralized by inventory 6,647,704 ----------- $26,135,151 ===========
At March 31, 1996, the Company had unused available revolving lines of credit totaling approximately $865,000. Long-term debt as of March 31, 1996 consists of a bank loan due on July 31, 1997 which bears interest at prime plus .25% or LIBOR plus 2.50% and is collateralized by real estate and equipment. Principal repayments of $14,583 are due monthly with $1,414,590 due upon maturity. All of the credit facilities are guaranteed in part by the principal stockholder of the Company. The credit agreements contain certain restrictive covenants and conditions, including debt to tangible net worth ratios, current ratios and working capital ratios. At March 31, 1996, the Company was in compliance with all of its covenants with its lenders. 4. Stock-Based Compensation: Statement of Financial Accounting Standard No. 123 (SFAS 123) "Accounting for Stock-Based Compensation", is effective for 1996. As permitted by SFAS 123, the Company has elected to continue to account for stock-based compensation under pre-existing accounting standards. The pro forma disclosures required pursuant to this election, for the three months ended March 31, 1995 and 1996 have not been presented because the effect on net income of the provisions of SFAS 123 is not material. Since the number of stock options that may be granted in the future is not predictable, the effect that SFAS 123 would have on future periods is not known. 7 8 ULTRAK, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Quarter ended March 31, 1996 compared to Quarter ended March 31, 1995 Results of Operations For the quarter ended March 31, 1996, net sales were $29,674,027, an increase of $7,844,865 (36%) over the same period in 1995. This increase was due to the effect of the acquisition of Diamond (50%), increased volume of sales of existing CCTV products to most of the markets served by the Company (35%) and sales of new products introduced during 1996 (15%). Cost of sales were $21,244,887 for the quarter ended March 31, 1996, an increase of $4,737,803 (29%) over the same period in 1995. Gross profit margins on net sales increased to 28.4% in 1996 from 24.4% in 1995. This increase was due to increased relative sales levels of Ultrak branded products by most of the selling divisions, cost reductions realized in 1996 on certain Ultrak branded products, the effect of the acquisition of Diamond (the manufactured products of which carry higher gross profit margins than other products sold by the Company) and higher margins earned on new products introduced during 1996. Marketing and sales expenses were $4,171,735 for the quarter ended March 31, 1996, an increase of $1,468,780 (54%) over the same period in 1995. Marketing and sales expenses for the quarter ended March 31, 1996 were 14.1% of net sales, up from 12.4% for the same period in 1995. This increase was due to the effect of acquisitions during 1995 and the effect in 1996 of hiring additional sales, sales support and marketing personnel in anticipation of new product introductions and resulting sales activities, as well as the increased travel, printing, product literature, advertising and promotion costs associated with the introduction of new products and increased sales activity Company-wide. General and administrative expenses were $1,710,573 for the quarter ended March 31, 1996, an increase of $700,116 (69%) over the same period in 1995. General and administrative costs for the quarter ended March 31, 1996 were 5.8% of net sales, up from 4.6% of net sales for the same period in 1995. This increase was a result of the acquisitions in 1995, increased engineering, research and development costs incurred and the hiring of additional purchasing, operations and other administrative staff to support the anticipated growth in sales. Other expenses were $590,170 for the quarter ended March 31, 1996, an increase of $212,896 (56%) over the same period in 1995. This increase was due primarily to increased interest rates on higher levels of bank and other lender borrowings. Liquidity and Capital Resources The Company had a net decrease in cash for the quarter ended March 31, 1996 of approximately $131,000. Cash used in operating activities for the quarter was approximately $1,485,000, primarily consisting of increases in accounts and notes receivable, inventory and advances for inventory purchases required by the higher sales activity, offset partially by increases in trade accounts payable. Cash used in investing activities was approximately $161,000 consisting of purchases of property and equipment. Cash provided by financing activities was approximately $1,515,000 consisting of borrowings on the Company's bank and other lender revolving lines of credit, offset by the purchase of approximately $246,000 in treasury stock and the payment of preferred stock dividends. 8 9 ULTRAK, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED As of March 31, 1996, the Company had unused available revolving lines of credit totaling approximately $865,000. The Company was in compliance with its loan covenants as of March 31, 1996. Subsequent to March 31, 1996, the Company's revolving line of credit with Petrus Fund, L.P. was extended to September 30, 1996. The Company believes that internally generated funds, available borrowings under the credit facilities, current amounts of cash and the net proceeds from the sales of a proposed stock offering will be sufficient to meet its presently anticipated needs for working capital, capital expenditures and acquisitions, if any, for at least the next 12 months. The NationsBank Financing Agreement requires that the Company obtain the Lender's written consent prior to consummating an acquisition. 9 10 ULTRAK, INC. AND SUBSIDIARIES QUARTER ENDED MARCH 31, 1996 Part II: Other Information Item 1. Legal Proceedings Not Applicable Item 2. Changes in Securities Not Applicable Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits filed with this report: Exhibit 10.1: Third Amendment to Loan Agreement, executed January 11, 1996 to be effective December 29, 1995, by and among Ultrak, Inc., Ultrak Operating, L.P. and Petrus Fund, L.P. Exhibit 10.2: Fourth Amendment to Loan Agreement, dated as of April 4, 1996, by and among Ultrak, Inc., Ultrak Operating, L.P. and Petrus Fund, L.P. Exhibit 10.3: Fourth Amendment to Warrant Purchase Agreement, dated as of April 4, 1996, by and among Ultrak, Inc., George K. Broady and Petrus Fund, L.P. Exhibit 11.1: Computation of Per Share Income for the three months ended March 31, 1996. Exhibit 27: Financial Data Schedule. (b) Reports on Form 8-K. No Form 8-Ks were filed during the quarter ended March 31, 1996. 10 11 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: April 25, 1996 By: ----------------------------------- Tim D. Torno Principal Financial and Accounting Officer 11 12 EXHIBIT INDEX
Exhibit No. Description - ------- ----------- Exhibit 10.1 Third Amendment to Loan Agreement, executed January 11, 1996 to be effective December 29, 1995, by and among Ultrak, Inc., Ultrak Operating, L.P. and Petrus Fund, L.P. Exhibit 10.2 Fourth Amendment to Loan Agreement, dated as of April 4, 1996, by and among Ultrak, Inc., Ultrak Operating, L.P. and Petrus Fund, L.P. Exhibit 10.3 Fourth Amendment to Warrant Purchase Agreement, dated as of April 4, 1996, by and among Ultrak, Inc., George K. Broady and Petrus Fund, L.P. Exhibit 11.1 Computation of Per Share Income for the three months ended March 31, 1996. Exhibit 27 Financial Data Schedule.
EX-10.1 2 3RD AMENDMENT TO LOAN AGREEMENT 1 Exhibit 10.1 THIRD AMENDMENT TO LOAN AGREEMENT THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered into this 11th day of January, 1996, to be effective as of the 29th day of December, 1995, by and among the following: PETRUS FUND, L.P., a Texas limited partnership ("Lender"); ULTRAK, INC., a Delaware corporation ("Ultrak") and the surviving entity of the merger between Ultrak and Ultrak, Inc., a Colorado corporation, which in turn was the surviving entity of the merger between Ultrak, Inc., a Colorado corporation, and Exxis Technologies, Inc., a Texas corporation; and ULTRAK OPERATING, L.P., a Texas limited partnership ("Ultrak Operating"). RECITALS A. Ultrak, CCTV Source International, Inc. ("CCTV"), Loss Prevention Electronics Corporation ("LPEC"), and Lender are parties to that certain Loan Agreement dated July 20, 1992 (the "Original Loan Agreement"). B. Ultrak, CCTV, LPEC, and Lender are parties to that certain First Amendment to Loan Agreement dated as of October 4, 1993 (the "First Amendment"), pursuant to the terms of which, among other things, the revolving line of credit under the Loan Agreement was increased from $3,000,000 to $6,000,000. C. Ultrak and Lender are parties to that certain Second Amendment to Loan Agreement dated as of October 4, 1994 (the "Second Amendment"), pursuant to the terms of which, among other things, the revolving line of credit under the Loan Agreement was increased from $6,000,000 to $8,000,000, and Lender consented to the merger of LPEC and CCTV with and into Ultrak, with Ultrak being the surviving corporation. The Original Loan Agreement, as amended by the First Amendment and the Second Amendment, is referred to herein as the "Loan Agreement". D. In connection with the Second Amendment, Ultrak executed that certain Restated Revolving Credit Note dated October 4, 1994, in the original principal amount of $8,000,000, payable to the order of Lender (the "Restated Revolving Credit Note"). E. Ultrak and Ultrak Operating and have requested that Lender consent to a proposed reorganization pursuant to which the following will occur: THIRD AMENDMENT -- Page 1 2 (1) Ultrak would transfer its assets to Ultrak Operating; and (2) Ultrak GP, Inc., a Delaware corporation and a wholly-owned subsidiary of Ultrak ("Ultrak GP") would own, as sole general partner, a 1% interest in Ultrak Operating; and Ultrak LP, Inc., a Delaware corporation and a wholly-owned subsidiary of Ultrak, would own, as sole limited partner, a 99% interest in Ultrak Operating; F. Lender has agreed to consent to the proposed reorganization subject to the terms of this Amendment. G. Therefore, in connection with the proposed reorganization, Ultrak, Ultrak Operating and Lender desire to amend the Loan Agreement and the Restated Revolving Credit Note in the manner provided below. NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meaning as in the Loan Agreement, as amended hereby. ARTICLE II AMENDMENTS Section 2.01. Amendment. (a) Definition of Borrower. Effective as of the date hereof, and subject to the provisions of Section 2.01(e) below, the Loan Agreement is hereby amended such that any and all references to the words "Borrower", "Borrowers" or words of similar import contained in the Loan Agreement and/or any and all other agreements, documents and instruments by and between Ultrak, CCTV, and/or LPEC, on the one hand, and, or in favor of, Lender, on the other hand (the "Other Agreements") are hereby amended to individually and collectively refer to Ultrak and Ultrak Operating (individually, a "Borrower", and collectively, the "Borrowers"); and all such references shall be deemed to mean and include Ultrak, Ultrak Operating and either of them. (b) Joint and Several Agreements. All representations contained in the Loan Agreement and/or the Other Agreements shall be deemed individually made by each Borrower; and, subject to the provisions of Section 2.01(e) below, each of the covenants, agreements and THIRD AMENDMENT -- Page 2 3 obligations of a "Borrower" set forth in the Loan Agreement and/or the Other Agreements shall be deemed to be joint and separate covenants, agreements and obligations of the Borrowers. Any notice, request, consent, report or other information or agreement delivered to Lender by any Borrower shall be deemed to be ratified by, consented to and also delivered by the other Borrower. Each of Ultrak and Ultrak Operating recognizes and agrees that each covenant and agreement of "Borrower", "Borrowers" in the Loan Agreement and/or the Other Agreements shall create a joint and several obligation of such entities, which may be enforced against Ultrak and Ultrak Operating jointly, or against each such entity separately, subject to the provisions of Section 2.01(e) below. (c) Obligations. Similarly, and subject to the provisions of Section 2.01(e) below, the term "Indebtedness" in the Loan Agreement shall include, without limitation, all obligations, liabilities and indebtedness of Ultrak and Ultrak Operating, or any of them, to Lender, whether such obligations, liabilities and indebtedness shall be joint, several, joint and several, or individual. (d) Pre-Amendment Indebtedness. Notwithstanding the foregoing provisions of this Section 2.01 or anything to the contrary contained in the Loan Agreement and/or the Other Agreements, it is hereby agreed that Ultrak Operating shall not be obligated to Lender under the terms of the Restated Revolving Credit Note (as amended and restated by the Second Restated Revolving Credit Note) for the unpaid principal balance of the Indebtedness that was incurred by Ultrak under the Loan Agreement and/or the Other Agreements prior to the date of this Amendment and outstanding on the date of this Amendment (the "Pre-Amendment Indebtedness"). For purposes of determining on or after the date hereof which Indebtedness then outstanding under the Restated Revolving Credit Note constitutes Pre-Amendment Indebtedness hereunder, all payments received by Lender from Borrowers on account of the Indebtedness under the Restated Revolving Credit Note (as amended and restated by the Second Restated Revolving Credit Note) shall be deemed to be applied first in payment of the Pre-Amendment Indebtedness existing under Restated Revolving Credit Note (as amended and restated by the Second Restated Revolving Credit Note) until such time as the Pre-Amendment Indebtedness shall have been reduced to zero, and thereafter to the Indebtedness in such manner as Lender may deem advisable, at Lender's option. ARTICLE III CONDITIONS Section 3.01. Conditions Precedent. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent, unless specifically waived by Lender in writing: (a) Lender shall have received a Second Restated Revolving Credit Note in the form of Exhibit A attached hereto, dated as of the date of this Amendment, and duly executed by Borrowers; THIRD AMENDMENT -- Page 3 4 (b) Lender shall have received from Ultrak Operating a guaranty of the Pre-Amendment Indebtedness in form and substance reasonably acceptable to Lender, dated as of the date of this Amendment, and duly executed by Ultrak Operating; (c) Lender shall have received a notice regarding the absence of oral agreements in form and substance reasonably acceptable to Lender, dated as of the date of this Amendment, and duly executed by Borrowers and all other persons reasonably required by Lender; (d) Lender shall have received a Secretary's Certificate dated as of the date of this Amendment, in form and substance satisfactory to Lender, certified by the Secretary of Ultrak certifying among other things, (i) that Ultrak's Board of Directors has met and has adopted, approved, consented to and ratified resolutions which authorize the execution, delivery and performance by Ultrak of this Amendment and all such other loan documents to which it is or is to be a party, and (ii) the names of the officers of Ultrak authorized to sign this Amendment and each of such other loan documents to which it is or is to be a party hereunder (including the certificates contemplated herein) together with specimen signatures of such officers; (e) With regard to Ultrak Operating, Lender shall have received a Partner's Certificate dated as of the date of this Amendment, in form and substance satisfactory to Lender, certified by the general partner of Ultrak Operating certifying among other things, (i) that Ultrak Operating's partners have adopted, approved, consented to and ratified resolutions which authorize the execution, delivery and performance by Ultrak Operating of this Amendment and all such other loan documents to which it is or is to be a party, and (ii) the name of the partner of Ultrak Operating authorized to sign this Amendment and each of such other loan documents to which it is or is to be a party hereunder (including the certificates contemplated herein); (f) With regard to each of Ultrak GP and Ultrak LP, Inc., Lender shall have received an Officer's Certificate dated as of the date of this Amendment, in form and substance satisfactory to Lender, signed by the respective Secretary of each certifying among other things, (i) that such corporation's Board of Directors has adopted, approved, consented to and ratified resolutions which authorize the execution, delivery and performance by such corporation of all such loan documents to which it is or is to be a party, and (ii) the names of the officers of such corporation authorized to sign each of such loan documents to which it is or is to be a party hereunder (including the certificates contemplated herein) together with specimen signatures of such officers; (g) Lender shall have received a security agreement and financing statements signed by Ultrak Operating, for the purpose of creating and perfecting Lender's security interests in the Collateral; THIRD AMENDMENT -- Page 4 5 (h) Lender shall have received certificates of insurance covering the assets and properties of Ultrak Operating, naming Lender as loss payee and providing such other endorsements as Lender may reasonably request; (i) Lender shall have received such other certificates, documents, ratifications and amendments to security agreements and intercreditor agreements, validity guaranties, indemnifications and other agreements (including documents evidencing the proposed reorganization and conveyances, and documents evidencing loan transaction with other creditors of Borrowers) as Lender may, at its option, deem reasonably necessary in connection with the proposed reorganization of Ultrak and this Amendment; (j) Lender shall have received an opinion of Borrowers' counsel pertaining to the authority of the Borrowers to enter into this Amendment and the Other Documents contemplated by this Amendment, the enforceability of the Loan Agreement, this Amendment and the Other Documents with regard to the Borrowers and other third parties, and such other matters as Lender may reasonably request; (k) The representations and warranties contained herein, in the Loan Agreement, as amended hereby, and/or in the other documents and agreements relating hereto or thereto (hereinafter individually referred to as a "Loan Document" and collectively referred to as the "Loan Documents") shall be true and correct as of the date hereof as if made on the date hereof; (l) No default shall have occurred under the Loan Agreement or any of the other Loan Documents and be continuing; and no default shall exist under the Loan Agreement, unless such default has been specifically waived in writing by Lender; and (m) All corporate and partnership proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Lender. ARTICLE IV RATIFICATIONS, REPRESENTATIONS, WARRANTIES; JOINT AND SEVERAL LIABILITY Section 4.01. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement are ratified and confirmed and shall continue in full force and effect. Section 4.02. Representations and Warranties. Each Borrower hereby represents and warrants to Lender that (i) the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite corporate or partnership action, as applicable, on the part of such THIRD AMENDMENT -- Page 5 6 Borrower and will not violate the Partnership Agreement, Articles or Certificate of Incorporation or Bylaws, as applicable, of such Borrower, (ii) the representations and warranties contained in the Loan Agreement, as amended hereby, and any other Loan Documents are true and correct on and as of the date hereof as though made on and as of the date hereof, (iii) each Borrower is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended hereby, and (iv) Ultrak has not amended its Articles of Incorporation or Bylaws since the date of execution of this Amendment. Section 4.03 Joint and Several Liability; Rights of Contribution. (a) Each Borrower states and acknowledges that: (i) pursuant to this Amendment, Borrowers desire to utilize their borrowing potential on a consolidated basis to the same extent possible if they were merged into a single entity; (ii) it has determined that it will benefit specifically and materially from the advances of credit contemplated by this Amendment and the Loan Agreement; (iii) it is both a condition precedent to the obligations of Lender hereunder and a desire of Borrowers that each Borrower execute and deliver to Lender this Amendment; and (iv) Borrowers have requested and bargained for the structure and terms of and security for the advances contemplated by this Amendment and the Loan Agreement. (b) Each Borrower hereby irrevocably and unconditionally agrees, subject to the provisions of Section 2.01(e) above: (i) that it is jointly and severally liable to Lender for the full and prompt payment of all the Indebtedness and the full and prompt performance of all obligations of any Borrower under the Loan Agreement or any other Loan Document, notwithstanding anything herein or in any other Loan Document specifying that a particular Borrower is responsible for a given payment or performance; (ii) to fully and promptly perform all of its obligations hereunder and Lender the Loan Agreement with respect to each advance of credit hereunder as if such advance had been made directly to it; and (iii) to indemnify Lender on demand for and against any loss incurred by Lender as a result of any of the obligations of any of the Borrowers being or becoming void, voidable, unenforceable or ineffective for any reason whatsoever, whether or not known to Lender or any Person, the amount of such loss being the amount which Lender would otherwise have been entitled to recover from any Borrower. (c) It is the intent of each Borrower that the indebtedness, obligations and liability under this Amendment, the Loan Agreement and the Second Restated Revolving Credit Note not be subject to challenge on any basis. Accordingly, as of the date hereof, the liability of each Borrower under this Section 4.03, together with all of its other liabilities to all Persons as of the date hereof and as of any other date on which a transfer is deemed to occur by virtue of this Amendment, calculated in amount sufficient to pay its probable net liabilities on its existing Indebtedness as the same become absolute and matured ("Dated Liabilities") is, and is to be, less than the amount of the aggregate of a fair valuation of its property as of such corresponding date ("Dated Assets"). To this end, each Borrower under this Section 4.03 (i) grants to and recognizes in the other Borrower, ratably, rights of subrogation and contribution in the amount, if any, by which the Dated Assets of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Liabilities of such Borrower or, as the THIRD AMENDMENT -- Page 6 7 case may be, and (ii) acknowledges receipt of and recognizes its right to subrogation and contribution ratably from the other Borrower in the amount, if any, by which the Dated Liabilities of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Assets of such Borrower under this Section 4.03. In recognizing the value of the Dated Assets and the Dated Liabilities, it is understood that Borrowers will recognize, to at least the same extent of their aggregate recognition of liabilities hereunder, their rights to subrogation and contribution hereunder. It is a material objective of this Section 4.03 that each Borrower recognizes rights to subrogation and contribution rather than be deemed to be insolvent (or in contemplation thereof) by reason of an arbitrary interpretation of its joint and several obligations hereunder. ARTICLE V MISCELLANEOUS Section 5.01. Survival of Representations and Warranties. All representations and warranties made in the Loan Agreement or any other document or documents relating thereto, including, without limitation, any Loan Document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Lender or any closing shall affect the representations and warranties or the right of Lender to rely upon them. Section 5.02. Reference to Loan Agreement. Each of the Loan Documents, including the Loan Agreement and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby. Section 5.03. Expenses of Lender. Borrowers agree to pay on demand all reasonable costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the reasonable costs and fees of Lender's legal counsel, and all reasonable costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby, or any other Loan Document, including without limitation the reasonable costs and fees of Lender's legal counsel. Section 5.04. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment, and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. THIRD AMENDMENT -- Page 7 8 SECTION 5.05. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN DALLAS, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. Section 5.06. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Lender and Borrowers and their respective successors and assigns, except Borrowers may not assign or transfer any of their rights or obligations hereunder without the prior written consent of Lender. Section 5.07. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. Section 5.08. Effect of Waiver. No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant or condition of the Loan Agreement shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty. Section 5.09. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. Section 5.10 Waiver Of Consumer Rights. EACH BORROWER HEREBY WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWERS' OWN SELECTION, EACH BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. EACH BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT SUCH BORROWER (a) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO LENDER, AND (b) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT. EACH BORROWER HAS READ AND UNDERSTANDS SECTION 5.10: TDT (INITIALS) TDT (INITIALS) 5.11 RELEASE. ULTRAK ACKNOWLEDGES AND AGREES THAT (A) IT HAS NO CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE ORIGINAL LOAN DOCUMENTS AND THE PERFORMANCE OF ITS OBLIGATIONS THEREUNDER, OR (B) IF IT HAS ANY SUCH CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE LOAN AGREEMENT, THE OTHER AGREEMENTS, THIRD AMENDMENT -- Page 8 9 AND/OR ANY TRANSACTION RELATED TO THE ORIGINAL LOAN DOCUMENTS, SAME ARE HEREBY WAIVED, RELINQUISHED AND RELEASED IN CONSIDERATION OF LENDER'S EXECUTION AND DELIVERY OF THIS AMENDMENT. IN WITNESS WHEREOF, Lender and Borrowers have caused these presents to be duly executed as of the day and year first above written. LENDER: PETRUS FUND, L.P. By: Perot Investments, Inc. By: /s/ STEVEN BLASNIK -------------------------------- Steven Blasnik, President BORROWERS: ULTRAK, INC. By: /s/ TIM TORNO ------------------------------------ Name: Tim Torno ---------------------------------- Title: Vice President --------------------------------- ULTRAK OPERATING, L.P. By: Ultrak GP, Inc. its General Partner By: /s/ TIM TORNO ------------------------------------ Name: Tim Torno ---------------------------------- Title: Vice President --------------------------------- Attachments: Exhibit A - Form of Second Restated Revolving Credit Note THIRD AMENDMENT -- Page 9 EX-10.2 3 4TH AMENDMENT TO LOAN AGREEMENT 1 EXHIBIT 10.2 FOURTH AMENDMENT TO LOAN AGREEMENT THIS FOURTH AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered into effective as of the 4th day of April, 1996, by and among the following: PETRUS FUND, L.P., a Texas limited partnership ("Lender"); ULTRAK, INC., a Delaware corporation ("Ultrak") and the surviving entity of the merger between Ultrak and Ultrak, Inc., a Colorado corporation, which in turn was the surviving entity of the merger between Ultrak, Inc., a Colorado corporation, and Exxis Technologies, Inc., a Texas corporation; and ULTRAK OPERATING, L.P., a Texas limited partnership ("Ultrak Operating"). RECITALS A. Ultrak, CCTV Source International, Inc. ("CCTV"), Loss Prevention Electronics Corporation ("LPEC"), and Lender are parties to that certain Loan Agreement dated July 20, 1992 (the "Original Loan Agreement"). B. Ultrak, CCTV, LPEC, and Lender are parties to that certain First Amendment to Loan Agreement dated as of October 4, 1993 (the "First Amendment"), pursuant to the terms of which, among other things, the revolving line of credit under the Loan Agreement was increased from $3,000,000.00 to $6,000,000.00. C. Ultrak and Lender are parties to that certain Second Amendment to Loan Agreement dated as of October 4, 1994 (the "Second Amendment"), pursuant to the terms of which, among other things, the revolving line of credit under the Loan Agreement was increased from $6,000,000.00 to $8,000,000.00, and Lender consented to the merger of LPEC and CCTV with and into Ultrak, with Ultrak being the surviving corporation. D. In connection with the Second Amendment, Ultrak executed that certain Restated Revolving Credit Note dated October 4,1994, in the original principal amount of $8,000,000.00, payable to the order of Lender. E. Ultrak, Ultrak Operating, and Lender are parties to that certain Third Amendment to Loan Agreement dated as of January 11, 1996, to be effective as of December 29, 1995 ("Third Amendment"), pursuant to the terms of which, among other things, the Loan Agreement was amended to reflect the reorganization of Ultrak and to add Ultrak Operating as a borrower. The Original Loan Agreement, as amended by the First Amendment, the Second Amendment and the Third Amendment, is referred to herein as the "Loan Agreement". FOURTH AMENDMENT -- Page 1 2 F. In connection with the Third Amendment, Ultrak and Ultrak Operating executed that certain Second Restated Revolving Credit Note dated December 29, 1995, in the original principal amount of $8,000,000.00, payable to the order of Lender. G. Ultrak, Ultrak Operating, and Lender desire to amend the Loan Agreement as hereinafter set forth. NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meaning as in the Loan Agreement, as amended hereby. Article II AMENDMENTS Section 2.01. Amendment to Subsection (b) of the Definition of "Eligible Inventory" in Section 1.02. Effective as of the date hereof and subject to the provisions of Section 3.01 below, subsection (b) of the definition of "Eligible Inventory" in Section 1.02 of the Loan Agreement is hereby amended to read in its entirety as follows: "(b) if the Inventory is in any Borrowers' possession, the Inventory is segregated in the Fenced Area of the Carrollton Warehouse or in the Poway Warehouse, as the case may be, within forty-eight (48) hours of arriving on Borrowers' premises;" Section 2.02. Amendment to Definition of "Drawdown Termination Date" in Section 1.02. Effective as of the date hereof and subject to the provisions of Section 3.01 below, the definition of "Drawdown Termination Date" in Section 1.02 of the Loan Agreement is hereby amended to read in its entirety as follows: "Drawdown Termination Date" shall mean the earlier of (a) June 30, 1996 or (b) ninety (90) days following the date Lender gives Borrowers' Agent notice of Lender's exercise of its rights to terminate its Commitment pursuant to Section 2.10(b) hereof. Section 2.03. Amendment to Definition of "Revolving Loan Maturity Date" in Section 1.02. Effective as of the date hereof and subject to the provisions of Section 3.01 below, the definition of "Revolving Loan Maturity Date" in Section 1.02 of the Loan Agreement is hereby amended to read in its entirety as follows: FOURTH AMENDMENT -- Page 2 3 "'Revolving Loan Maturity Date' shall mean the earlier of (a) June 30, 1996 or (b) one hundred eighty (180) days following the date Lender gives Borrowers' Agent notice of Lender's exercise of its right to terminate its Commitment pursuant to Section 2.10(b) hereof." Section 2.04. Addition of New Definition to Section 1,02. Effective as of the date hereof, and subject to the provisions of Section 3.01 below, the following additional definition is hereby added to Section 1.02 of the Loan Agreement to read in its entirety as follows: "'Poway Warehouse' shall mean the warehouse of the Borrowers, Dental Vision Direct, Inc., Diamond Electronics, Inc., and JAK Pacific Video Warranty and Repair Services, Inc. at 12851 Maplewood Court, Poway, California 92064, which is denoted as a secure area for Eligible Inventory." Section 2.05. Amendment to Section 2.06. Effective as of the date hereof and subject to the provisions of Section 3.01 below, Section 2.06 of the Loan Agreement is hereby amended to read in its entirety as follows: "Section 2.06 Removal of Inventory. Borrowers shall be entitled to remove Inventory from either the Fenced Area of the Carrollton Warehouse or the Poway Warehouse if, and only if, the following conditions are satisfied: (a) the advance made by Lender for the purchase of the Eligible Inventory (whether such advance was made directly, as contemplated by Section 2.03(a)(iii), or indirectly to reimburse an issuer of a letter of credit, as contemplated by Section 2.0(a)(iv)), has been repaid to Lender in collected funds; and (b) at the time of removal, the Inventory to be removed, when compared to all other Inventory located in the either Fenced Area of the Carrollton Warehouse or the Poway Warehouse, as the case may be, was the first to arrive in either such location, it being the intention of Borrowers and Lender that Inventory shall be removed from either the Fenced Area of the Carrollton Warehouse or the Poway Warehouse, as the case may be, only on a first-in, first-out basis." Section 2.06. Amendment to Section 4.13. Effective as of the date hereof and subject to the provisions of Section 3.01 below, Section 4.13 of the Loan Agreement is hereby amended to read in its entirety as follows: "Section 4.13 Identification and Segregation of Eligible Inventory. Borrower shall segregate and maintain all Eligible Inventory in any Borrower's possession in either the Fenced Area of the Carrollton Warehouse or the Poway FOURTH AMENDMENT -- Page 3 4 Warehouse, as the case may be, apart and distinct from all other Inventory of any Borrower. Borrower shall conspicuously identify all Eligible Inventory in any Borrower's possession as being subject to the lien and security interest of the Lender. All Eligible Inventory shall be physically located in either the Fenced Area of the Carrollton Warehouse or the Poway Warehouse within forty-eight (48) hours after such Eligible Inventory arrives at either the location commonly known as 1220 Champion Circle, Carrollton, Texas or the location commonly known as 12851 Maplewood Court, Poway, California, as the case may be." Section 2.07. Addition of New Subsection (c) to Section 5,07. Effective as of the date hereof and subject to the provisions of Section 3.01 below, the following additional Subsection (c) is hereby added to Section 5.07 of the Loan Agreement to read in its entirety as follows: "and (c) leases and lease agreements for the real property at 12851 Maplewood Court, Poway, California, not to exceed in the aggregate $500,000.00 in any fiscal year of the Borrowers." Section 2.08. Amendment to Section 7.01(r). Effective as of the date hereof and subject to the provisions of Section 3.01 below, Section 7.01(r) of the Loan Agreement is hereby amended to read in its entirety as follows: "(r) Segregation of Inventory. The failure of any Eligible Inventory to be located at all times within either (i) the Fenced Area of the Carrollton Warehouse within forty-eight (48) hours after the arrival of such Eligible Inventory at the premises commonly known as 1220 Champion Circle, Carrollton, Texas or (ii) the Poway Warehouse within forty-eight (48) hours after the arrival of such Eligible Inventory at the premises commonly known as 12851 Maplewood Court, Poway, California." ARTICLE III CONDITIONS Section 3.01. Conditions Precedent. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent, unless specifically waived by Lender in writing: (a) Lender shall have received from the owner of the Poway Warehouse at 12851 Maplewood Court, Poway, California, a Landlord's Subordination and Consent Agreement in form and substance reasonably acceptable to Lender, dated as of the date of this Amendment, and duly executed by the owner of the Poway Warehouse; (b) Lender shall have received a notice regarding the absence of oral agreements in form and substance reasonably acceptable to Lender, dated as of the date of FOURTH AMENDMENT -- Page 4 5 this Amendment, and duly executed by Borrowers and all other persons reasonably required by Lender; (c) Lender shall have received the Fourth Amendment to Warrant Purchase Agreement ("Fourth Amendment to Warrant Agreement") in form and substance reasonably acceptable to Lender, dated as of the date of this Amendment, and duly executed by Ultrak, Inc., Lender and all other persons reasonably required by Lender; (d) Lender shall have received an opinion of Borrowers' counsel pertaining to the authority of the Borrowers to enter into this Amendment and the Other Documents contemplated by this Amendment, the enforceability of the Loan Agreement, this Amendment, the Fourth Amendment to Warrant Agreement and the Other Documents with regard to the Borrowers and other third parties, and such other matters as Lender may reasonably request; (e) The representations and warranties contained herein, in the Loan Agreement, as amended hereby, and/or in the other documents and agreements relating hereto or thereto (hereinafter individually referred to as a "Loan Document" and collectively referred to as the "Loan Documents") shall be true and correct as of the date hereof as if made on the date hereof; (f) No default shall have occurred under the Loan Agreement or any of the other Loan Documents and be continuing; and no default shall exist under the Loan Agreement, unless such default has been specifically waived in writing by Lender; and (g) All corporate and partnership proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Lender. ARTICLE IV RATIFICATIONS, REPRESENTATIONS, WARRANTIES; JOINT AND SEVERAL LIABILITY Section 4.01. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Agreement are ratified and confirmed and shall continue in full force and effect. Section 4.02. Representations and Warranties. Each Borrower hereby represents and warrants to Lender that (i) the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite corporate or partnership action, as applicable, on the part of such Borrower and will not violate the Partnership Agreement, Articles or Certificate of Incorporation or Bylaws, as applicable, of such Borrower, (ii) the representations and warranties contained in the Loan Agreement, as amended hereby, and any other Loan Documents are true and correct on FOURTH AMENDMENT -- Page 5 6 and as of the date hereof as though made on and as of the date hereof, (iii) each Borrower is in full compliance with all covenants and agreements contained in the Loan Agreement, as amended hereby, and (iv) Ultrak has not amended its Articles of Incorporation or Bylaws since the date of execution of this Amendment. ARTICLE V MISCELLANEOUS Section 5.01. Survival of Representations and Warranties. All representations and warranties made in the Loan Agreement or any other document or documents relating thereto, including, without limitation, any Loan Document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Lender or any closing shall affect the representations and warranties or the right of Lender to rely upon them. Section 5.02. Reference to Loan Agreement. Each of the Loan Documents, including the Loan Agreement and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby. Section 5.03. Expenses of Lender. Borrowers agree to pay on demand all reasonable costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the reasonable costs and fees of Lender's legal counsel, and all reasonable costs and expenses incurred by Lender in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby, or any other Loan Document, including without limitation the reasonable costs and fees of Lender's legal counsel. Section 5.04. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment, and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. SECTION 5.05. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN DALLAS, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. Section 5.06. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Lender and Borrowers and their respective successors and assigns, except FOURTH AMENDMENT -- Page 6 7 Borrowers may not assign or transfer any of their rights or obligations hereunder without the prior written consent of Lender. Section 5.07. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. Section 5.08. Effect of Waiver. No consent or waiver, express or implied, by Lender to or for any breach of or deviation from any covenant or condition of the Loan Agreement shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty. Section 5.09. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. Section 5.10 Waiver Of Consumer Rights. EACH BORROWER HEREBY WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWERS' OWN SELECTION, EACH BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. EACH BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT SUCH BORROWER (a) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO LENDER, AND (b) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT. EACH BORROWER HAS READ AND UNDERSTANDS SECTION 5.10: TDT (INITIALS) TDT (INITIALS) 5.11 RELEASE. ULTRAK ACKNOWLEDGES AND AGREES THAT (A) IT HAS NO CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE ORIGINAL LOAN DOCUMENTS AND THE PERFORMANCE OF ITS OBLIGATIONS THEREUNDER, OR (B) IF IT HAS ANY SUCH CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE LOAN AGREEMENT, THE OTHER AGREEMENTS, AND/OR ANY TRANSACTION RELATED TO THE ORIGINAL LOAN DOCUMENTS, SAME ARE HEREBY WAIVED, RELINQUISHED AND RELEASED IN CONSIDERATION OF LENDER'S EXECUTION AND DELIVERY OF THIS AMENDMENT. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] FOURTH AMENDMENT -- Page 7 8 IN WITNESS WHEREOF, Lender and Borrowers have caused these presents to be duly executed as of the day and year first above written. LENDER: PETRUS FUND, L.P. By: Perot Investments, Inc. its General Partner By: /s/ STEVEN L. BLASNIK ------------------------------- Steven L. Blasnik, President BORROWERS: ULTRAK, INC. By: /s/ TIM TORNO ----------------------------------- Name: Tim Torno --------------------------------- Title: Vice President - Finance -------------------------------- ULTRAK OPERATING, L.P. By: Ultrak GP, Inc. its General Partner By: /s/ TIM TORNO ------------------------------- Name: Tim Torno ----------------------------- Title: Vice President - Finance ---------------------------- FOURTH AMENDMENT -- Page 8 EX-10.3 4 4TH AMENDMENT TO WARRANT PURCHASE AGREEMENT 1 EXHIBIT 10.3 FOURTH AMENDMENT TO WARRANT PURCHASE AGREEMENT FOURTH AMENDMENT TO WARRANT PURCHASE AGREEMENT (the "Fourth Amendment") made as of April 4, 1996, by and among Ultrak, Inc., a Delaware corporation (the "Company"), George K. Broady (the "Shareholder"), and Petrus Fund, L.P., a Texas limited partnership (the "Purchaser"). R E C I T A L S: 1. Purchaser, Shareholder and the Company have made and entered into that certain Warrant Purchase Agreement dated July 20, 1992 (as amended, the "Warrant Purchase Agreement"), as amended by that certain First Amendment to Warrant Purchase Agreement (the "First Amendment") dated November 30, 1992, that certain Second Amendment to Warrant Purchase Agreement (the "Second Amendment") dated October 4, 1993, and that certain Third Amendment to Warrant Purchase Agreement (the "Third Amendment") dated October 4, 1994, pursuant to which the Company issued to Purchaser a warrant to purchase an aggregate of Two Hundred Thousand (200,000) shares of Common Stock, in accordance with the terms and conditions of the Warrant Purchase Agreement and pursuant to the provisions set forth therein. 2. Purchaser and the Company desire to amend the Warrant Purchase Agreement as follows: (a) extend the exercise date of the Warrant from April 4, 1996 to August 31, 1996, (b) acknowledge the assignment to Sherry Richardson Pate of the rights of Purchaser with respect to 7,540 shares of Common Stock of the Company, and (c) reflect certain other corporate reorganizations affecting the Company, which took effect as of December 31, 1995. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained in this Fourth Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Purchaser, the Shareholder and the Company, intending to be legally bound, agree as follows: Article I Definitions As used in this Fourth Amendment, capitalized terms not otherwise defined in this Fourth Amendment shall have the meanings given them in the Warrant Purchase Agreement. FOURTH AMENDMENT TO WARRANT PURCHASE AGREEMENT - Page 1 2 Article II Amendments 2.01 Amendment 40 Section 2.04(a). Section 2.04(a) of the Warrant Purchase Agreement is amended and restated hereby by replacing the date "April 4, 1996", which is made in reference to the last day upon which the Warrant may be exercised, with the date "August 31, 1996". 2.02. Amendment to Definition of "Subsidiary" in Article I. The definition of "Subsidiary" in Article I of the Warrant Purchase Agreement is amended hereby to read in full as follows: "Subsidiary. Ultrak GP, Inc., a Delaware corporation ("Ultrak GP"), Ultrak LP, Inc., a Delaware corporation ("Ultrak LP"), and each other Person of which or in which the Company or its other Subsidiaries own directly or indirectly 50% or more of (i) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors or equivalent body of such Person, if it is a corporation; (ii) the capital interest or profits interest of such Person, if it is a partnership, joint venture or similar entity or (iii) the beneficial interest of such Person, if it is a trust, association, or other unincorporated organization." 2.03. Amendment to Section 7.01(a). Section 7.01(a) of the Warrant Purchase Agreement is amended hereby by replacing all references to "LPEC, ETI and CCTV" with "Ultrak GP and Ultrak LP." 2.04. Amendment to Section 8.04(c). Section 8.04(c) of the Warrant Purchase Agreement is amended hereby by replacing all references to "LPEC, ETI and CCTV" with "Ultrak GP and Ultrak LP." 2.05. Amendment to Section 10.07. Section 10.07 of the Warrant Purchase Agreement is amended hereby to reflect the address of Purchaser as follows: Petrus Fund, L.P. 1700 Lakeside Square 12377 Merit Drive Dallas, Texas 75251 FAX: 214-788-3097 Attn: H. Hays Lindsley FOURTH AMENDMENT TO WARRANT PURCHASE AGREEMENT - Page 2 3 Article III Acknowledgment and Covenant 3.01 Assignment to Sherry Richardson Pate. The parties acknowledge and consent to the assignment by Purchaser to Sherry Richardson Pate of the rights of Purchaser under the Warrant with respect to Seven Thousand Five Hundred Forty (7,540) shares of Common Stock of the Company. The Company covenants to take all necessary and appropriate action to register this assignment on its books and records. Article IV Miscellaneous 4.01 Force and Effect. Except as specifically amended hereby, the Warrant Purchase Agreement remains in full force and effect. IN WITNESS WHEREOF, the parties have executed and delivered this Fourth amendment as of the date first above written. PETRUS FUND, L.P. By: Perot Investments, Inc. its General Partner By: /s/ STEVEN L. BLASNIK ------------------------------- Steven L. Blasnik, President ULTRAK, INC. By: /s/ TIM D. TORNO ----------------------------------- Tim D. Torno Chief Financial Officer /s/ GEORGE K. BROADY --------------------------------------- George K. Broady, Individually FOURTH AMENDMENT TO WARRANT PURCHASE AGREEMENT - Page 3 EX-11.1 5 COMPUTATION OF PER SHARE INCOME 1 Exhibit 11.1 ULTRAK, INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996 (Unaudited) Computation of Income per Share-Primary: Net income $1,270,044 Less: Dividend requirements on preferred stock (29,302) ---------- Net income allocable to common stockholders $1,240,742 ========== Weighted average number of common shares outstanding during the period 7,293,557 Net effect of dilutive stock options and warrants based on the treasury method using average market price 342,102 ---------- Shares used for computation 7,635,659 ========== Income per share-primary $ .16 ========== Computation of Income per Share-Assuming Full Dilution: Net income $1,270,044 Less: Dividend requirements on preferred stock -- ---------- Net income allocable to common stockholders $1,270,044 ========== Weighted average number of common shares outstanding during the period 7,293,557 Net effect of dilutive stock options and warrants based on the treasury method using the greater of average or ending price 437,849 Net effect of preferred stock conversion 406,981 ---------- Shares used for computation 8,138,387 ========== Income per share-assuming full dilution $ .16 ==========
EX-27 6 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1996 1,175,931 0 17,482,214 645,815 23,193,274 49,515,586 5,969,607 1,923,269 57,279,878 38,297,866 0 73,275 0 976,755 16,441,184 57,279,878 29,674,027 29,674,027 21,244,887 21,244,887 5,882,308 0 565,026 1,956,662 686,618 1,270,044 0 0 0 1,270,044 .16 .16
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