SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Detection Systems, Inc.
-------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Ultrak, Inc.
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
<PAGE>
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------
3) Filing Party:
--------------------------------------------------------------------------
4) Date Filed:
--------------------------------------------------------------------------
-2-
<PAGE>
[Ultrak Letterhead]
October 6, 2000
Dear Fellow Detection Systems Shareholder:
Now that Detection Systems has finally set a date for the belated 2000
Annual Meeting of Shareholders, we are writing to emphasize the importance of
the upcoming election of directors, to set forth our goals in seeking control of
the Detection Systems board and to pass on our observations on recent actions by
the incumbent management and board of directors.
Management Has Been Forced to Set a Meeting Date
The last shareholder meeting was held on August 12, 1999. August 2000 came
and went without Detection Systems' having held or even called the 2000 Annual
Meeting of Shareholders. On September 13, 2000, Ultrak issued a press release
advising that the Detection Systems board was required under New York law to
call a shareholder meeting for the election of directors and that, as permitted
under New York law, if the board failed to call a meeting by September 26, 2000,
Ultrak would formally demand that the meeting be called and would set the date
of the meeting.
Management's Highly Unusual Response
On the last day possible to avoid Ultrak's exercising its statutory
rights, Detection Systems announced that the 2000 Annual Meeting of Shareholders
would be held on December 19, 2000, with a record date of December 1, 2000.
Apart from the long delay before holding the meeting, Detection Systems has set
an extraordinarily short 18-day solicitation period between the record date and
the meeting date. To put this in perspective, for the last 5 annual meetings
Detection Systems has set solicitation periods ranging from 38 days in 1998 to
49 days in 1995. Last year's annual meeting had a 43-day solicitation period.
What does this mean for Detection Systems shareholders?
o Materials sent to holders of record as of December 1, 2000 are
unlikely to reach beneficial owners who hold through banks and
brokerage firms until sometime during the week of Monday,
December 11, and many sets of proxy materials are unlikely to
be received before the end of that week.
o With the meeting held on Tuesday, December 19, many
shareholders who want their votes counted at the Annual
Meeting may have to make their decisions and return their
materials almost immediately, and some shareholders may not
even be able to have their votes counted.
o Ultrak believes that Detection Systems has called a meeting --
which it was forced to do -- in such a way that it will be
difficult to have a quorum present. If a quorum (a majority of
the outstanding shares as of December 1) is not present at the
meeting on December 19, it will not be possible to elect
directors on the day management has chosen for that purpose.
-3-
<PAGE>
Given the long period between now and the scheduled meeting date, Detection
Systems shareholders should ask themselves why management saw fit to set such a
late record date and to risk disenfranchising the owners of the company.
Management Has Given In On Its Golden Parachute Agreements!
Ultrak has strongly criticized management for entering into golden
parachute agreements with two top executives that provide disproportionate
change-in-control benefits in relation to the size of the company. In fact,
Ultrak thought these contracts were so bad for shareholders that it brought suit
in federal court, for the benefit of all Detection Systems shareholders, to
invalidate these contracts for this very reason.
Less than 24 hours before oral arguments were to be held in front of the
federal court on Detection Systems' motion to dismiss Ultrak's lawsuit,
Detection Systems announced to the world that the golden parachute agreements
had been amended and sent a letter to the court arguing that this "very recent
development" rendered Ultrak's lawsuit "moot."
As of the close of business on September 26, 2000, the day before the
revised golden parachute agreements were signed, and based on calculations
included in Ultrak's August 15, 2000 proxy materials for the 2000 Annual
Meeting, the following table summarizes the aggregate economic changes to the
golden parachute provisions for Messrs. Kostusiak and Lederer, Detection
Systems' top two officers and two of the five members of its board of directors:
Old Golden Revised Golden
Parachute Agreements Parachute Agreements
-------------------------------------------
Potential Golden Parachute
Payments $ 7.9 million $2.9 million
-------------------------------------------
Payments as a % of
Company Market Value 13.8% 5.0%
-------------------------------------------
Potential Savings to
Shareholders -- $5.0 million
-------------------------------------------
Because the goal of Ultrak's lawsuit has been achieved, on October 2, 2000,
Ultrak informed the federal court that it intends to submit papers to the court
seeking approval of a voluntary dismissal of the case.
Why You Should Vote for Ultrak's Nominees at the 2000 Annual Meeting
In July 2000, the incumbent management of Detection Systems' announced
that the 2000 Annual Meeting of Shareholders would be delayed because management
was talking with financial advisors "to more fully explore the Company's
strategic alternatives for resolving this proxy contest." In August 2000, all
management was willing or able to report to shareholders
-4-
<PAGE>
was that it had "retained the investment banking firm of FleetBoston Robertson
Stephens to explore a wide range of strategic alternatives designed to enhance
shareholder value."
We have nominated three candidates for election as directors at the 2000
Annual Meeting of Shareholders. At that meeting, five directors are to be
elected, so our nominees would constitute a majority of the Detection Systems
board of directors if elected. Our nominees are independent of Ultrak, and are
committed to hiring an investment banking firm to actively explore a sale of
Detection Systems or any alternative that might produce even greater shareholder
value.
Despite the Company's apparent recent conversion to the program that
Ultrak has long advocated, Ultrak believes that its fellow Detection Systems
shareholders will be better served by electing the Ultrak Nominees than by
re-electing a board that has for so long resisted these steps. Ultrak believes
that the board's actions in setting the record and meeting dates for the 2000
Annual Meeting and in implementing and then dragging its feet in amending
managements' golden parachute agreements speak volumes. The Ultrak Nominees are
prepared to act quickly and decisively to pursue our proposed agenda.
We need your support to elect directors who are committed to maximizing
shareholder value. If elected, our nominees will seek to cause the board of
directors of Detection Systems to retain an investment banking firm, which would
be charged with implementing a sale of the Company or any strategic alternative
that would provide greater value to shareholders. There can be no assurance, of
course, that if elected, Ultrak's nominees will be able to effect a sale of the
Company or an alternative that might produce even greater shareholder value or,
if any such transaction occurs, as to the shareholder value that will be
realized therein.
Sincerely yours,
George K. Broady
Chairman of the Board and Chief Executive Officer
Ultrak, Inc.
--------------------------------------------------------------------------------
If you have any questions about the upcoming election of directors or Ultrak's
goals in supporting the Ultrak Nominees, I encourage you to call me at (972)
353-6650 or to email me at [email protected] with a number where you may
be reached.
You may also contact our proxy firm, Georgeson Shareholder Communications Inc.,
at (800) 223-2064.
--------------------------------------------------------------------------------
-5-
