<PAGE> 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 period ended JUNE 30, 1995
----------------------------------------
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the transition period from to
---------------- --------------------
Commission File Number: 0-9463
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ULTRAK, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-0819156
------------------------------- ------------------
(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)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 June 30, 1995: 6,560,619 shares of no par value common
stock.
<PAGE> 2
ULTRAK, INC. and SUBSIDIARIES
QUARTER ENDED JUNE 30, 1995
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I: Financial Information
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 9
Part II: Other Information 11
Signatures 13
</TABLE>
2
<PAGE> 3
ULTRAK, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Assets June 30, Dec. 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash deposits $0 642,241
Accounts receivable, net 11,358,601 10,743,091
Inventories, net 15,521,701 14,396,438
Advances for inventory purchases 3,661,966 5,381,437
Prepaid expenses and other current assets 955,612 432,469
Deferred income taxes 362,988 362,988
----------- -----------
Total Current Assets 31,860,868 31,958,664
----------- -----------
Furniture and Equipment, net 2,090,664 1,971,393
Goodwill, net 1,510,834 1,259,969
Notes Receivable, Noncurrent (Note 2) 1,141,000 984,208
Other Assets 132,415 178,456
----------- -----------
Total Assets $36,735,781 36,352,690
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable-trade $5,667,277 6,531,779
Notes payable (Note 3) 18,548,544 18,244,183
Accrued liabilities 530,678 664,740
Other current liabilities 696,335 841,600
----------- -----------
Total Current Liabilities 25,442,834 26,282,302
----------- -----------
Stockholders' Equity:
Preferred Stock, $5.00 par value, issuable in
series;2,000,000 shares authorized; Series A
12% cumulative convertible; 195,351 shares issued
authorized, issued and outstanding 976,755 976,755
Common Stock, 20,000,000 shares authorized;
6,560,619 and 6,555,619 issued and outstanding
at June 30, 1995 and December 31, 1995,
respectively 73,441 73,254
Additional Paid-in Capital 7,227,047 7,213,747
Retained Earnings 3,015,704 1,806,632
----------- -----------
Total Stockholders' Equity 11,292,947 10,070,388
----------- -----------
Total Liabilities and Stockholders' Equity $36,735,781 36,352,690
=========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE> 4
ULTRAK, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
----------- ----------- ----------- -----------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $22,305,871 18,992,246 44,135,033 36,757,219
Cost of Sales 16,983,013 13,973,002 33,490,097 27,565,931
----------- ----------- ----------- -----------
Gross Profit 5,322,858 5,019,244 10,644,936 9,191,288
----------- ----------- ----------- -----------
Other Operating Expenses 4,157,148 3,552,642 7,870,560 6,602,067
----------- ----------- ----------- -----------
Operating Income 1,165,710 1,466,602 2,774,376 2,589,221
----------- ----------- ----------- -----------
Other (Income) Expense:
Other (Income) Expense, Net (11,988) (43,033) (31,543) (48,637)
Interest Expense 414,654 238,143 811,483 443,735
----------- ----------- ----------- -----------
Other Expenses 402,666 195,110 779,940 395,098
----------- ----------- ----------- -----------
Net Income before Income Taxes 763,044 1,271,492 1,994,436 2,194,123
----------- ----------- ----------- -----------
Income Taxes 277,300 445,981 726,759 740,555
----------- ----------- ----------- -----------
Net Income $485,744 825,511 1,267,677 1,453,568
Dividend Requirements on
Preferred Stock 29,302 29,302 58,604 58,604
----------- ----------- ----------- -----------
Net Income Allocable to
Common Stockholders $456,442 796,209 1,209,073 1,394,964
=========== =========== =========== ===========
Income per Share-Primary $.07 $.12 $.18 $.20
===== ===== ===== =====
Income per Share-Assuming
Full Dilution $.07 $.12 $.17 $.20
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
4
<PAGE> 5
ULTRAK, INC. and SUBSIDARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
---------- ----------
1995 1994
---------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $1,267,677 1,453,568
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 285,458 191,406
Changes in operating assets and liabilities:
(Increase), decrease in accounts receivable (615,510) (3,176,125)
(Increase), decrease in inventory (1,125,263) 2,620,124
(Increase), decrease in advances for inventory 1,719,471 (2,380,985)
(Increase), decrease in prepaid expenses (523,143) (248,588)
Increase, (decrease) in trade accounts payable (864,502) 982,871
Increase, (decrease) in accrued liabilities (279,327) 987,878
(Increase), decrease in discontinued operations 0 150,537
---------- ----------
Net cash provided by (used in) operating activities (135,139) 580,686
---------- ----------
Cash Flows from Investing Activities:
Capitial expenditures for furniture and equipment (404,729) (548,549)
Investment in other assets (361,616) (263,438)
---------- ----------
Net cash used in investing activities (766,345) (811,987)
---------- ----------
Cash Flows from Financing Activities:
Issuance of common stock, net of issuance costs 13,486 (29,694)
Changes in notes payable 304,361 583,495
Payment of dividends on preferred stock (58,604) (58,604)
---------- ----------
Net cash provided by financing activities 259,243 495,197
---------- ----------
Net increase (decrease) in cash (642,241) 263,896
---------- ----------
Cash and Cash Equivalents at Beginning of the Period 642,241 500,106
---------- ----------
Cash and Cash Equivalents at End of the Period $0 764,002
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
<PAGE> 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 notes to the
consolidated financial statements for the year ended December 31, 1994 included
in the Ultrak Annual Report on Form 10-K.
2. Notes Receivable-Noncurrent:
Notes receivable-noncurrent consists of the following as of June 30, 1995:
<TABLE>
<S> <C>
$1,000,000 notes receivable, principal payments
due and payable annually beginning in July 1995
until July 1998; interest payable monthly at 10%
per annum, collateralized by substantially all assets
of the maker $750,000
$116,000 note receivable, due and payable on April
21, 1996; interest payable quarterly at prime plus
4%, collateralized by certain assets of the maker 116,000
$275,000 note receivable, principal payments due and
payable on January 14, 1997, interest payable annually
at 8%, partially collateralized by certain assets
of the maker 275,000
----------
$1,141,000
==========
</TABLE>
In connection with the $1,000,000 notes receivable, the Company has received
warrants to purchase up to 59% of the common stock of the maker. The Chairman
of the Board of the Company has guaranteed approximately $470,000 of the notes
and has received approximately 50% of the warrants.
6
<PAGE> 7
ULTRAK, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
3. Notes Payable:
Notes payable consists of the following as of June 30, 1995:
<TABLE>
<S> <C>
$15.0 million revolving line of credit, due upon
demand or September 27, 1995; interest at floating
prime plus .50% payable monthly; collateralized by
substantially all assets (see below) $11,894,448
$7.0 million revolving line of credit, due upon
demand or April 4, 1996; interest at the greater
of 8.5% or floating prime plus 2.0% per annum
payable monthly; collateralized by inventory 6,654,096
-----------
$18,548,544
===========
</TABLE>
Both 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 June 30, 1995, the Company was in
compliance with all of its covenants with its lenders.
At June 30, 1995, the Company had unused available lines of credit totalling
approximately $3.5 million.
On July 18, 1995, the Company's credit facility with its bank was amended as
follows:
* The revolving line of credit facility was increased to $17.5 million from
$15.0 million,
* A new term loan facility secured by real estate and equipment of up to $2.5
million was established with a payout on a ten year amortization and a due
date of July 31, 1997,
* The contract interest rate for both facilities was lowered to floating prime
plus .25% from prime plus .50% with an option at LIBOR plus 2.50%,
* The due date of the revolving line of credit facility was extended to July
31, 1997 from September 27, 1995, and
* Certain financial and operational covenants were modified.
4. Acquisition of Diamond Electronics, Inc.:
On July 13, 1995, shareholders of Diamond Electronics, Inc. ("Diamond"), a Ohio
corporation, voting at a Special Meeting of Shareholders, approved and adopted
the terms of an Agreement and Plan of Reorganization ("the Agreement") with
Diamond, Ultrak, Diamond Purchasing Corp., a Texas corporation and wholly
owned subsidiary of Ultrak, and certain stockholders of Diamond, pursuant to
which (i) Diamond Purchasing Corp. would merge with and into Diamond (ii)
Diamond would become a wholly owned subsidiary of Ultrak and (iii) the
outstanding shares of common stock, no par value, of Diamond would be converted
into the right to receive an aggregate of 600,000 shares of common stock, no
par value, of Ultrak pursuant to the formula described in the Agreement.
7
<PAGE> 8
ULTRAK, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
The Agreement specifies certain conditions under which up to 100,000 additional
shares of Ultrak stock could be issued. Diamond is a manufacturer of
commercial video CCTV security and surveillance systems used by large retailers
and hazardous viewing systems used by industry and municipalities. The
transaction will be accounted for as a purchase effective as of July 1, 1995.
5. Acquisition of G.P.S. Standard U.S.A.:
On June 14, 1995, the Company signed a letter of intent with BLC & Associates,
Inc., a California corporation doing business as G.P.S. Standard U.S.A. ("GPS")
to purchase 100% of the outstanding stock of GPS for consideration of 176,470
shares of registered Ultrak common stock. For the year ended June 30, 1995,
GPS had unaudited revenues of approximately $1.3 million and unaudited net loss
of approximately $100,000. GPS is a manufacturer of a line of surveillance
camera housings, pan and tilt devices, matrix switchers and other advanced
software driven camera control systems. A definitive agreement is expected to
be signed by August 22, 1995. The transaction is expected to be accounted for
as a pooling of interests.
8
<PAGE> 9
ULTRAK, INC. and SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
For the three and six months ended June 30, 1995, net sales increased
$3,313,625 (17%) and $7,377,814 (20%), respectively, over the comparable 1994
period. This growth was due primarily (90%) to increased volume of sales of
existing closed circuit television (CCTV) products to all of the markets that
the Company serves. New products introduced by the Company during the first
and second quarter of 1995 contributed approximately 10% of the increase in net
sales.
In comparison, for the three and six months ended June 30, 1995, cost of goods
sold increased $3,010,011 (22%) and $5,924,166 (21%), respectively, over the
comparable 1994 period. This increase was essentially in direct relationship to
the overall CCTV increase in net sales.
The overall gross profit percentage decreased to 23.86% for the three months
ended June 30, 1995 from 26.43% for the three months ended June 30, 1994 and
decreased to 24.12% for the six months ended June 30, 1995 from 25.01% for the
six months ended June 30, 1994. The decrease in gross profit percentages was
due primarily to competitive market conditions and a strategic decision by the
Company to be the industry value leader.
For the three and six months ended June 30, 1995, other operating expenses
increased $604,506 (17%) and $1,268,493 (19%), respectively, over the
comparable 1994 period. This increase was primarily due to increased
engineering, product development, sales and marketing costs including
personnel, travel and other related costs commensurate with the overall
increase in sales and the strategic plan to build the market for greater sales
in the future. In addition, new product promotion costs were incurred during
the first and second quarters including advertising, printing, product shows
and other promotional activities.
For the three and six months ended June 30, 1995, other (income) expense
increased $207,556 (106%) and $384,842 (97%), respectively, over the comparable
1994 period because of increased interest expense on higher borrowings due to
greater prime interest rates offset somewhat by interest income on notes
receivable and miscellaneous income.
Liquidity and Capital Resources:
The Company's cash management policy is to directly apply all cash proceeds to
offset bank debt. The Company had a net decrease in cash for the six month
period ended June 30, 1995 of $642,241. Net cash used in operating activities
was $135,139, primarily because of increases in accounts and notes receivable,
prepaid expenses and inventory on hand related to higher sales during the
period and reductions in trade accounts payable offset by net cash profits and
reductions in advances for inventory.
9
<PAGE> 10
ULTRAK, INC. and SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Net cash used in investing activities for the six months ended June 30, 1995
was $766,345 primarily for capital expenditures for office and warehouse
equipment, upgrades to the Company's computer system, leasehold improvements
and increases in noncurrent notes receivable.
Net cash provided by financing activities for the six months ended June 30,
1995 was $259,243 from a net increase during the period in borrowings on the
Company's two lines of credit, offset by payment of dividends on preferred
stock.
As of June 30, 1995, the Company had unused available lines of credit totaling
approximately $3.5 million.
On July 18, 1995, the Company's credit facility with its bank was amended as
follows:
* The revolving line of credit facility was increased to $17.5 million from
$15.0 million,
* A new term loan facility secured by real estate and equipment of up to $2.5
million was established with a payout on a ten year amortization and a due
date of July 31, 1997,
* The contract interest rate for both facilities was lowered to floating prime
plus .25% from prime plus .50% with an option at LIBOR plus 2.50%,
* The due date of the revolving line of credit facility was extended to July
31, 1997 from September 27, 1995, and
* Certain financial and operational covenants were modified.
The Company will continue to be dependent upon its bank and other lender
financing to fund its operations. The Company anticipates that its current
operations and future growth will be financed through increased lines of credit
and internally generated profits. The Company believes such sources of funds
will be adequate for its projected needs for the next twelve (12) months. The
Company may attempt to raise additional equity capital if sales increase faster
than planned or if it is otherwise deemed advantageous to do so.
10
<PAGE> 11
ULTRAK, INC. and SUBSIDIARIES
QUARTER ENDED JUNE 30, 1995
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
On July 13, 1995, shareholders of Diamond Electronics, Inc. ("Diamond"), a Ohio
corporation, voting at a Special Meeting of Shareholders, approved and adopted
the terms of an Agreement and Plan of Reorganization ("the Agreement") with
Diamond, Ultrak, Diamond Purchasing Corp., a Texas corporation and wholly owned
subsidiary of Ultrak, and certain stockholders of Diamond, pursuant to which
(i) Diamond Purchasing Corp. would merge with and into Diamond (ii) Diamond
would become a wholly owned subsidiary of Ultrak and (iii) the outstanding
shares of common stock, no par value, of Diamond would be converted into the
right to receive an aggregate of 600,000 shares of common stock, no par value,
of Ultrak pursuant to the formula described in the Agreement.
The Agreement specifies certain conditions under which up to 100,000 additional
shares of Ultrak stock could be issued. Diamond is a manufacturer of
commercial video CCTV security and surveillance systems used by large retailers
and hazardous viewing systems used by industry and municipalities. The
transaction will be accounted for as a purchase effective as of July 1, 1995.
On July 18, 1995, the Company's credit facility with its bank was amended as
follows:
* The revolving line of credit facility was increased to $17.5 million from
$15.0 million,
* A new term loan facility secured by real estate and equipment of up to $2.5
million was established with a payout on a ten year amortization and a due
date of July 31, 1997,
* The contract interest rate for both facilities was lowered to floating prime
plus .25% from prime plus .50% with an option at LIBOR plus 2.50%,
* The due date of the revolving line of credit facility was extended to July
31, 1997 from September 27, 1995, and
* Certain financial and operational covenants were modified.
11
<PAGE> 12
ULTRAK, INC. and SUBSIDIARIES
QUARTER ENDED JUNE 30, 1995
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report:
Exhibit 10 - Third Amendment to Financing and Security Agreement, dated as
of July 18, 1995, by and among NationsBank of Texas, N.A.,
Ultrak, Inc., Dental Vision Direct, Inc., Diamond Electronics,
Inc., Exxis Technologies, Inc., and JAK Pacific Video Warranty
and Repair Services, Inc.
Exhibit 11 - Computation of Per Share Income for the three and six months
ended June 30, 1995.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
No Form 8-Ks were filed during the quarter ended June 30,1995.
12
<PAGE> 13
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 11, 1995 By: ____________________________
Tim D. Torno
Principal Financial and
Accounting Officer
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
10 Third Amendment to Financing and Security Agreement, dated as
of July 18, 1995, by and among NationsBank of Texas, N.A.,
Ultrak, Inc., Dental Vision Direct, Inc., Diamond Electronics,
Inc., Exxis Technologies, Inc., and JAK Pacific Video Warranty
and Repair Services, Inc.
11 Computation of Per Share Income for the three and six months
ended June 30, 1995.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
NATIONSBANK
NationsBank of Texas, N.A.
THIRD AMENDMENT
to
FINANCING AND SECURITY AGREEMENT
This agreement ("Third Amendment") is executed and entered into by and
among NATIONSBANK OF TEXAS, N.A. ("Lender"), ULTRAK, INC., A Colorado
corporation, DENTAL VISION DIRECT, INC., a Texas corporation, EXXIS
TECHNOLOGIES, INC., a Texas corporation, JAK PACIFIC VIDEO WARRANTY AND REPAIR
SERVICES, INC., a California corporation, and DIAMOND ELECTRONICS, INC., an
Ohio corporation, as follows:
Definitions
The following definitions shall apply throughout this Third Amendment:
"CCTV/LPEC Merger Date" means December 31, 1993.
"Diamond" means Diamond Electronics, Inc., an Ohio corporation.
"JAK" means JAK Pacific Video Warranty and Repair Services, Inc., a
California corporation.
"Effective Date" means July 18, 1995.
"Exxis" means Exxis Technologies, Inc., a Texas corporation.
"Financing and Security Agreement" means the certain Financing and
Security Agreement dated effective as of September 24, 1993 among
Lender, Ultrak, LPEC, CCTV and DVDI, as may be modified, amended,
renewed, extended or restated from time to time.
"Ultrak Parties" collectively means Ultrak, DVDI, Diamond, JAK and
Exxis.
Except as provided otherwise herein, terms defined in the Financing and
Security Agreement are incorporated herein by reference and shall have the same
meanings wherever used herein as are prescribed by the Financing and Security
Agreement, as amended by this Third Amendment.
Recitals
Lender, Ultrak and DVDI are parties to the Financing and Security
Agreement.
Subsequent to execution of the Financing and Security Agreement, CCTV
and LPEC were merged into Ultrak.
It is proposed that each of Diamond, Exxis and JAK become a party to
the Financing and Security Agreement as a Borrower, with all rights,
benefits and obligations of a Borrower thereunder.
NOW THEREFORE, for valuable consideration, the receipt of which hereby is
acknowledged, and in consideration of the mutual agreements and benefits in the
premises, the undersigned parties each hereby agrees as follows:
ARTICLE I. SUPPLEMENTAL AGREEMENTS IN RESPECT OF CCTV/LPEC MERGER
1.1. The Ultrak Parties represent and warrant to Lender that on the
CCTV/LPEC Merger Date, CCTV and LPEC each was merged into Ultrak in a merger
transaction in which Ultrak assumed ownership of all properties (including all
Collateral), and all liabilities (including all Obligations) of CCTV and LPEC,
respectively. Lender consents to such merger (such consent to be deemed
effective as of the CCTV/LPEC Merger Date) subject to the terms of this Third
Amendment.
1.2. Contemporaneously upon execution hereof, Ultrak shall deliver
to Lender a copy of the Certificate of Merger, or comparable document,
certified by the Secretary of State of Colorado and confirming the merger
transaction referenced in paragraph 1.1.
1.3. Ultrak acknowledges that it is directly liable for all
Obligations owing by each of CCTV and LPEC, respectively, as of the CCTV/LPEC
Merger Date. Ultrak represents that all Collateral previously owned by CCTV
and LPEC, respectively, prior to the CCTV/LPEC Merger Date is now owned by
Ultrak, subject to Lender's interests under the Financing and Security
Agreement. On and after the CCTV/LPEC Merger Date, any and all Loan Documents
which at any time have been or are executed in the name of CCTV or LPEC,
respectively, shall be deemed to be the act of Ultrak.
<PAGE> 2
1.4. Ultrak agrees to execute such additional documentation in
connection with the foregoing as Lender may reasonably request in order to
protect and continue Lender's rights under the Loan Documents.
ARTICLE II, SUPPLEMENTAL AGREEMENTS IN RESPECT OF DIAMOND, EXXIS AND JAK
2.1. The Financing and Security Agreement hereby is amended, as of
the Effective Date, to add a new paragraph 1.21a immediately following
paragraph 1.21, a new paragraph 1.27a immediately following paragraph 1.27, and
a new paragraph 1.37a immediately following paragraph 1.37, respectively, each
of which shall read in its entirety as follows:
"1.21a "DIAMOND" means Diamond Electronics, Inc., an Ohio
corporation, whose chief executive office is located at 1220
Champion Circle, Suite 100, Carrollton, Texas 75006."
"1.27a "EXXIS" means Exxis Technologies, Inc., a Texas
corporation, whose chief executive office is located at 1220
Champion Circle, Suite 100, Carrollton, Texas 75006."
"1.37a "JAK" means JAK Pacific Video Warranty and Repair
Services, Inc., a California corporation, whose chief
executive office is located at 1220 Champion Circle, Suite
100, Carrollton, Texas 75006."
2.2. Paragraph 1.7 (definition of "Borrower") hereby is amended to
read in its entirety as follows:
"1.7 "BORROWER" separately and severally means each of
Ultrak, DVDI, JAK, Diamond and Exxis, respectively."
2.3. Paragraph 1.9 (definition of "Borrowers") hereby is amended to
read in its entirety as follows:
"1.9 "BORROWERS" collectively means all of Ultrak, DVDI,
JAK, Diamond and Exxis, collectively together."
2.4. Contemporaneously upon execution hereof, Diamond, Exxis and
JAK each shall deliver to Lender each of the items (pertaining to themselves,
respectively) as are itemized by subparagraphs (a) through (n) of paragraph 4.1
of the Financing and Security Agreement.
2.5. Exhibit 3.4 ("Location of Collateral") to the Financing and
Security Agreement hereby is amended and restated, as of the Effective Date, to
read in its entirety as shown in Exhibit "A" attached hereto which is
incorporated herein by reference. The second sentence of Paragraph 3.4
("Location of Collateral") of the Financing and Security Agreement hereby is
amended and restated as follows:
"Exhibit 3.4 attached hereto correctly identifies the locations where
all Inventory and Equipment will be maintained, and if any such
location is a leased location, the name and address of the owner
thereof."
2.6. Pursuant to paragraph 3.17 of the Financing and Security
Agreement: Each Borrower other than Diamond, Exxis and JAK (i) hereby agrees
that the continuing security interest and lien previously granted to Lender by
such Borrower under such paragraph 3.17 shall secure all Obligations from time
to time owing by each of the other Borrowers, respectively (including without
limitation Diamond, Exxis and JAK), and as additional security, hereby grants
to Lender a continuing security interest and lien in and to all of its right,
title and interest in the Collateral to secure all Obligations from time to
time owing by each of the other Borrowers, respectively (including without
limitation Diamond, Exxis and JAK) (such grant to be governed by, and entitled
to all of the benefits of, the Financing and Security Agreement as provided in
such paragraph 3.17), (ii) each Borrower other than Diamond, Exxis and JAK
shall execute and deliver for the benefit of Lender guaranty agreements
pursuant to which such party shall guarantee to Lender the prompt payment and
performance of all Obligations from time to time owing by Diamond, Exxis and
JAK respectively (such guaranty agreements to be in form and substance
satisfactory to Lender and delivered to Lender contemporaneously upon execution
of this Third Amendment) and (iii) each of Diamond, Exxis and JAK,
respectively, hereby grants to Lender a continuing security interest and lien
in and to all of its right, title and interest in the Collateral to secure all
Obligations of each other Borrower from time to time arising on or after the
Effective Date, respectively (such grants to be governed by, and entitled to
all of the benefits of the Financing and Security Agreement), and each of
Diamond, Exxis and JAK, respectively, shall execute and deliver for the benefit
of Lender a guaranty agreement pursuant to which such party shall guarantee to
Lender the prompt payment and performance of all Obligations of each other
Borrower from time to time arising on or after the Effective Date (such
guaranty agreements to be in form and substance satisfactory to Lender),
provided that it is agreed that (i) such security interest and guaranty
agreements shall not secure any Obligations existing and owing as of the close
of Lender's business on the Business Day preceding the Effective Date (for this
purpose it is agreed that payments applied on or after the Effective Date to
Obligations of any Borrower shall be deemed applied first in reduction of
Obligations of
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<PAGE> 3
such Borrower existing as of the close of Lender's business on the Business Day
preceding the Effective Date). Each Borrower hereby acknowledges that its
agreement to the provisions of this paragraph is in consideration of the
availability of loans to each of the other Borrowers under the Financing and
Security Agreement and is not required by Lender as a condition to the
availability of loans or extensions of credit to such Borrower.
2.7. As of the Effective Date, Exhibit 5.6 ("Share Ownership") of
the Financing and Security Agreement hereby is deemed to be amended to read in
its entirety as provided in Exhibit "B" attached hereto.
2.8. Each of Diamond, Exxis and JAK has delivered to Lender its
balance sheet, income statement and statement of cash flow as of its fiscal
year ending December 31, 1994, and its balance sheet and income statement as of
the monthly period ending May 31, 1995. Such financial statements were
prepared in accordance with GAAP, and are correct and complete, and fairly
present the financial condition of such Borrowers as of such dates and the
results of their respective operations for the periods covered thereby. There
has been no material adverse change in the business, properties or financial
condition of Diamond or Exxis since the dates of the foregoing financial
statements, respectively.
2.9. Diamond, Exxis and JAK each hereby represents and warrants to
Lender each of the representations and warranties provided by the following
paragraphs of the Financing and Security Agreement, as though separately set
forth herein: Paragraphs 3.3, 3.4 (as amended by paragraph 2.5 of this Third
Amendment), 3.6 and 3.9, and each of paragraphs 5.1 through 5.5, paragraph 5.6
(as amended by paragraph 2.7 of this Third Amendment), paragraph 5.7 and each
of paragraphs 5.9 through 5.20.
2.10. On and after the Effective Date, each of Diamond, Exxis and
JAK shall be deemed to be a party to the Financing and Security Agreement (as
supplemented by this Third Amendment) as a Borrower for all purposes, and
Diamond, Exxis and JAK each hereby covenants and agrees to perform all
obligations of a Borrower thereunder, subject to the terms of this Third
Amendment.
ARTICLE III. ADDITIONAL AMENDMENTS
3.1 The Financing and Security Agreement hereby is amended to
restate or add, as the case may be, the following definitions in Article 1, as
follows:
"1.00 "ADJUSTED LIBOR RATE" means an interest rate per annum equal
to the quotient of (i) the London Interbank Offered Rate, divided by
(ii) a percentage equal to 100.0% less the Eurodollar Reserve
Percentage.
1.14 "COLLATERAL" means collectively all of the foregoing, now
owned and hereafter acquired: Receivables, Inventory, Equipment, and
all computer programs, applications, discs, software, files and other
records pertaining to any Collateral. Collateral also includes all
proceeds of any of the foregoing at any time arising, including
insurance proceeds."
"1.18 "CONTRACT TERM" means the period specified in the preamble of
this Agreement and continuing through July 31, 1997
"1.19 "CREDIT LIMIT" means the amount of Seventeen Million Five
Hundred Thousand and no/100 DOLLARS ($17,500,000.00)."
"1.24a "EQUIPMENT" means all equipment now owned and hereafter
acquired, including without limitation all machinery, furniture and
other goods used or bought for use in business and all other property
which is properly classified as equipment pursuant to the Code, both
now owned and hereafter acquired.
"1.26a "EURODOLLAR BUSINESS DAY" means any Business Day on which
transactions in United States Dollars are conducted in the London
interbank market.
"1.26b "EURODOLLAR RESERVE PERCENTAGE" shall mean the maximum reserve
requirement (including without limitation, any basic, supplemental,
marginal and emergency reserves) (expressed as a percentage)
applicable to member banks of the Federal Reserve System in respect of
"Eurocurrency Liabilities" under Regulation D of the Board of
Governors of the Federal Reserve System, or such additional,
substituted or amended reserve requirement as may be hereafter
applicable to member banks of the Federal Reserve System."
"1.35a "INTEREST PERIOD" means the period commencing on the first
effective Eurodollar Business Day of a LIBOR Contract Rate election
under paragraph 2.2a and ending one, two, three or six months
thereafter, as designated by a Borrower at the time of such election,
provided that (i) if any Interest Period would otherwise end on a day
which is not a Eurodollar Business Day, then such Interest Period
shall be extended to the next succeeding Eurodollar Business Day
unless to do so would extend such Interest Period into a subsequent
calendar month, in which event such Interest Period shall end on the
next
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<PAGE> 4
preceding Eurodollar Business Day, and (ii) any Interest Period that
begins on the last day of a calendar month, or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period, shall end on the last Eurodollar Business
Day of the last calendar month of such Interest Period, and provided
further, that no Interest Period may end on a day which is after the
last day of the Contract Term."
"1.40a "LIBOR CONTRACT RATE" means the Adjusted LIBOR Rate plus two
and one-half percent (2.50%) per annum."
"1.40b "LIBOR RATE OPTION" means any election by a Borrower, in
accordance with paragraph 2.2a to have any Tranche bear interest
according to the LIBOR Contract Rate."
"1.40c "LONDON INTERBANK OFFERED RATE" means, with respect to any
LIBOR Rate Option for the applicable Interest Period, the rate of
interest per annum (rounded upward, if necessary, to the next higher
1/16th of one percent) determined by Lender, in accordance with its
customary general practice from time to time, to be the rate at which
deposits in immediately available funds in Dollars are or would be
offered or quoted by Lender to major banks in the London interbank
market, as of approximately 11:00 a.m. London time, or as soon
thereafter as practicable, on the second Business Day immediately
preceding the first day of such Interest Period, for a term comparable
to such Interest Period and in an amount equal to the amount of the
Tranche to be the subject of such LIBOR Rate Option. If no such
offers or quotes are generally available for such amount, then Lender
shall be entitled to determine the London Interbank Offered Rate for
any such LIBOR Rate Option by estimating in its reasonable judgment
the per annum rate (described above) that would be applicable if such
quotes or offers were generally available."
"1.41 "LOAN DOCUMENTS" means this Agreement, each Revolving Note,
each Term Note, each Guaranty, the Real Property Collateral Documents
and any other documents or agreements executed in connection
therewith, and also includes any and all renewals, extensions,
modifications or amendments of any of the foregoing."
"1.49a "PRETAX NET INCOME" for any period means net income for such
period prior to accruing for appropriate taxes but otherwise
determined as provided by the definition of "Net Income" in paragraph
6.22(b)."
"1.51a "REAL PROPERTY COLLATERAL" means the certain real property
described within Exhibit 1.51a."
"1.51b "REAL PROPERTY COLLATERAL DOCUMENTS" means the certain
[DESCRIBE DEED OF TRUST OR MORTGAGE] Deed of Trust of even date
herewith executed by Borrower creating a deed of trust lien in the
Real Property Collateral for the benefit of Lender, together with all
affidavits, certificates and other documents executed by Borrower in
connection therewith.
"1.59a "TERM FACILITY" means the loan facility established by this
Agreement pursuant to Article IIA."
"1.59b "TERM FACILITY CREDIT LIMIT" means the maximum amount in
respect of the Term Facility applicable to each respective Borrower,
as follows: (i) $500,000.00 for Ultrak, (ii) $100,000.00 for DVDI,
(iii) $100,000.00 for Exxis, (iv) $1,800,000.00 for Diamond and (v)
$0.00 (zero dollars) for JAK.
"1.59c "TERM FACILITY BORROWING BASE" means (i) with respect to any
Borrower other than Diamond, an amount equal to seventy five percent
(75.0%) of the forced sale liquidation value of Equipment owned by
such Borrower and (ii) with respect to Diamond, an amount equal to the
sum of seventy five percent (75.0%) of the forced sale liquidation
value of Equipment owned by Diamond plus seventy five percent of the
fair market value of the Real Property Collateral. The forced sale
liquidation value of Equipment and the fair market value of the Real
Property Collateral, for purposes of determining the Term Facility
Borrowing Base, shall be as determined by Lender from time to time in
its discretion.
"1.59d "TERM NOTE" shall mean a promissory note executed by a
Borrower payable to the order of Lender evidencing loans to such
Borrower under the Term Facility, as provided in paragraph 2A.1 and in
form satisfactory to Lender, and includes any and all renewals,
extensions, amendments or modifications thereof."
"1.59e "TRANCHE" means any portion of the Revolving Facility the
principal amount of which is subject to election of the LIBOR Contract
Rate in accordance with paragraph 2.2a."
3.2 The first sentence of paragraph 1.17 (definition of
"Contract Rate") of the Financing and Security Agreement hereby is amended to
read as follows:
"CONTRACT RATE" means, on any day, a floating annual rate of interest
calculated on the basis of actual days elapsed but computed as if each
year consists of 360 days, equal to
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<PAGE> 5
the sum of the Prime Rate effective as of the first day of the
calendar month in which such day falls plus (i) in the case of the
Revolving Facility, one-quarter of one percent (0.25%) and (ii) in the
case of the Term Facility, one-quarter of one percent (0.25%)."
3.3 Paragraph 1.21 (definition of "Eligible Accounts") of the
Financing and Security Agreement hereby is amended to add the following,
immediately after the existing last sentence thereof:
"At Lender's discretion, Lender may consider for eligibility accounts
owing by account debtors located outside the United States, provided,
that the aggregate unpaid amount (in United States dollars) (i) of all
such accounts at no time exceeds $200,000.00 and (ii) for all such
accounts owing by any single account debtor at no time exceeds
$100,000.00, and provided further, that the determination of whether
to include any such accounts as Eligible Accounts shall at all times
be and remain in Lender's sole discretion."
3.4 The Financing and Security Agreement hereby is amended to add
Exhibit 1.52a entitled "Real Property Collateral" in the form attached as
Exhibit "C" attached hereto.
3.5 In paragraph 1.4 (definition of "Aggregate Borrowing Base")
and paragraph 1.16 (definition of "Company Borrowing Base"), the dollar
amount "$5,000,000.00" hereby is amended, in each case, to read "$8,750,000.00".
3.6 The Financing and Security Agreement is amended to add a new
paragraph 2.2a (entitled "LIBOR Option") and a new paragraph 2.2b (entitled
"Interest Rate Reduction"), respectively, immediately following paragraph 2.1,
each of which shall read in its entirety as follows:
"2.2a LIBOR OPTION. Subject to the terms and provisions of
this Agreement, and in lieu of the interest rate otherwise applicable
under paragraph 2.1, each Borrower shall have the option to elect a
rate per annum equal to the lesser of (i) the LIBOR Contract Rate or
(ii) the Maximum Rate as being applicable to any Tranche during any
Interest Period, provided, that any such Tranche shall be in the
minimum amount of $1,750,000.00, and no more than four (4) separate
Tranches may exist in the aggregate at any one time. Any Borrower may
make such election at any time by written notice, in form satisfactory
to Lender, delivered to Lender no later than two (2) Eurodollar
Business Days prior to the beginning of the Interest Period to which
such election shall be applicable, therein stating (i) the Interest
Period selected, and the date such Interest Period is to begin, and
(ii) the principal amount of the Tranche to be subject to such
election. Any such written notice of election shall be irrevocable.
Accrued interest on the principal amount of each Tranche shall be
payable monthly in arrears on the last day of each calendar month and
on the last day of the Interest Period applicable to such Tranche.
If, with respect to any election under this paragraph, Lender
determines that deposits in United States Dollars, in applicable
amounts, are not being offered to Lender, or other major United States
banks of comparable size to Lender, in the London interbank Eurodollar
market for the applicable Interest Period, or Lender determines that
the LIBOR Contract Rate will not adequately and fairly reflect the
cost to Lender of maintaining or funding the applicable portion of the
Loans relative to such election for such Interest Period, then at
Lender's option, Lender may give notice to Borrowers and thereby
suspend the option to elect the LIBOR Contract Rate, pending any
subsequent reinstatement in Lender's discretion, and with respect to
any such election then applicable to any portion of the Loans, require
that such portion either be repaid in full (in which event any amounts
otherwise payable in the event of prepayment of a Tranche as provided
below shall not be applicable) or converted to bear interest according
to the interest rate provided in paragraph 2.1. All unpaid principal,
if any, of loans with respect to which no such election is made, as
provided herein, shall automatically be deemed to be subject to, and
shall accrue interest at, the interest rate as provided by paragraph
2.1. Except as results from application of proceeds of Receivables as
provided by paragraph 3.8, prepayment of a Tranche shall not be
permitted without the prior written consent of Lender. Should any
prepayment of a Tranche, or any portion thereof, occur (whether as a
result of such applications or by consent of Lender, or otherwise),
then within fifteen (15) days of Lender's request therefor, Borrowers
shall pay to Lender any loss or expense which Lender may incur or
sustain as a result of any such prepayment. Lender's statement of the
amount of such loss or expense, prepared in reasonable detail by
Lender, shall be conclusive and binding for all purposes, absent
manifest error or gross negligence, Calculation of such amounts shall
be made as though Lender shall have actually funded or committed to
fund the relevant Tranche through the purchase of an underlying
deposit in an amount equal to the amount of such Tranche and having a
maturity comparable to the related Interest Period (provided, however,
that it is understood that Lender may fund, or make provision for
funding, any Tranche in any manner as Lender may determine in its
discretion)."
"2.2b INTEREST RATE REDUCTION. The interest rate(s)
otherwise applicable to the Revolving Facility under paragraph 2.2a or
paragraph 2.2b, as the case may be, shall be subject to reduction on
the conditions, and in specified amounts, as follows:
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<PAGE> 6
<TABLE>
<S> <C> <C>
CONDITIONS AMOUNT OF RATE
REDUCTION
No Event of Default exists, and:
Contract Rate LIBOR
Contract Rate
Tangible Net Worth at December 31, 1995
equals or exceeds $16,000,000.00 and
One-quarter One-half
Pretax Net Income at for fiscal year ending of of
December 31, 1995 equals or exceeds one percent one percent
$6,000,000.00 and (0.25%) (0.5%)
Leverage Ratio at December 31, 1995 does
not exceed 2.50 to 1.00.
</TABLE>
Once achieved, any such reduction shall be permanent, subject to the
other terms and conditions of this Agreement. Compliance with the
above conditions shall be measured and determined according to the
annual audited financial statements delivered to Lender under
paragraph 6.5. Any such reduction shall be deemed effective as of the
first day of the calendar month next following the calendar month in
which such financial statements are delivered to Lender."
3.7 Paragraph 2.5 ("Early Termination of Revolving Facility by
Borrower") hereby is amended and restated to read in its entirety as follows:
"EARLY TERMINATION OF REVOLVING FACILITY. Borrowers
acknowledge that termination of the Revolving Facility at any time
prior to expiration of the Contract Term would result in the loss by
Lender of benefits under this Agreement, and that the damages incurred
by Lender as a result of such termination would be difficult and
impractical to ascertain. Therefore, in the event of termination of
the Revolving Facility at any effective time prior to expiration of
the Contract Term, then, for the privilege of any such termination and
as a condition to the effectiveness thereof, Borrowers jointly and
severally agree to pay to Lender a sum certain, as liquidated damages,
equal to the following Applicable Percentage (herein defined) of the
Revolving Credit Limit, which amount Borrowers and Lender acknowledge
to be the best estimate of the amount necessary to fairly and
reasonably compensate Lender for its damages resulting from such
termination. As used herein, "Applicable Percentage" means one percent
(1.0%), provided, that the Applicable Percentage shall automatically
reduce by fifty-five one-thousandths percent (0.055%) beginning on
January 18, 1996 and by like amounts on the numerically corresponding
day of each subsequent calendar month thereafter. No such payment
will be applicable with respect to (i) any reduction under the
Revolving Facility which is a result of proceeds received by a
Borrower through capital contributions or which does not result in
early termination and total repayment of the Revolving Facility, (ii)
renewal or refinancing of the Obligations by Lender, (iii) early
termination of the Revolving Facility and total payment of the
Obligations following any reduction in the advance rate generally
applicable for determining the Company Borrowing Base or the Aggregate
Borrowing Base (a) in respect of Eligible Accounts to an amount less
than eighty percent (80%) or (b) in respect of Eligible Inventory to
an amount less than forty-five percent (45%), provided that Borrowers
notify Lender in writing of such intended termination within thirty
(30) days following the effective date of any such reduction, and such
termination and total payment are consummated within ninety (90) days
after such effective date of reduction or (iv) early termination of
the Revolving Facility and total payment of the Obligations following
any notification by Lender of suspension of the LIBOR Option as
provided by paragraph 2.2a, provided, that Borrowers notify Lender in
writing of such intended termination within thirty (30) days following
the effective date of any such suspension, and such termination and
total payment are consummated within ninety (90) days after such
effective date of suspension."
3.8 A new Article IIA (entitled "Term Loan Facility") hereby is
added to the Financing and Security Agreement, immediately following the
conclusion of Article II ("Revolving Credit Facility"), which shall read in its
entirety as follows:
"ARTICLE IIA. TERM FACILITY
2A.1 LOANS. Subject to and on the terms and conditions
provided in this Agreement, Lender hereby approves a loan in favor of
each Borrower, secured by the Collateral, in an aggregate amount up to
the lesser of (i) the Term Facility Borrowing Base applicable to each
such Borrower or (ii) the Term Facility Credit Limit applicable to
each such Borrower, respectively, provided, that the aggregate
principal amount loaned to all Borrowers under the Term Facility shall
not at any time exceed Two Million Five Hundred Thousand and no/100
dollars ($2,500,000.00). Each loan to a Borrower under the Term
Facility, and all accrued interest thereon, shall be payable as
provided in this Agreement
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<PAGE> 7
and additionally evidenced by a Term Note executed by such Borrower.
Each loan to a Borrower under the Term Facility shall be funded upon
request of such Borrower and upon satisfaction of all requirements
prescribed by paragraph 4.3 or at such other time as may be determined
by mutual agreement.
2A.2 INTEREST. The unpaid principal from day to day outstanding
under the Term Facility shall bear interest at the lesser of (i) the
Contract Rate or (ii) the Maximum Rate, provided, however that,
subject to the provisions of paragraph 9.10, in the event that the
Contract Rate shall exceed the Maximum Rate at any time and thereafter
the Contract Rate shall be less than the Maximum Rate, the rate of
interest applicable hereunder shall remain at the Maximum Rate until
the aggregate accrued interest to date under the Term Facility equals
the amount that would have accrued had the Contract Rate at all times
remained in effect. Interest shall be calculated on a 360 day/year
basis, subject to the Maximum Rate. All past due principal and all
past due accrued interest under the Term Facility shall accrue
interest at the Maximum Rate.
2A.3 REPAYMENT TERMS AND MATURITY. Accrued interest under
the Term Facility shall be paid monthly on the last day of each
calendar month during the time any loan thereunder is outstanding.
Principal of each loan under the Term Facility shall be payable as
follows: (i) equal monthly installments in an amount equal to the
amount required to fully amortize the face principal amount of the
Term Note evidencing same over the remaining term of a hypothetical
amortization period of 120 months commencing on September 1, 1995,
such monthly payments to begin on the later of September 1, 1995 or
the first day of the calendar month next following the calendar month
in which such Term Note is made effective, and continuing on the first
day of each calendar month thereafter through and including July 1,
1997, (ii) followed by a final installment of all remaining unpaid
principal on the last day of the Contract Term. Subject to Lender's
rights under Article VIII, the Term Facility shall terminate and all
outstanding principal, unpaid accrued interest and other obligations
thereunder shall be due and payable in full on July 31, 1997. To the
extent that any accrued interest or principal payment owing by any
Borrower under the Term Facility is not paid on its due date as
specified above, Lender may at its option (but with no obligation to
do so), add the amount thereof to the unpaid principal due by such
Borrower under the Revolving Facility, in which event such amount due
under the Term Facility will be deemed paid and the aggregate amount
thereof shall be treated as a loan to such Borrower under the
Revolving Facility.
2A.4 MANDATORY INTERIM PRINCIPAL PAYMENTS. If at any time,
from time to time, the unpaid principal amount outstanding and owing
by a Borrower under the Term Facility exceeds the Term Facility
Borrowing Base applicable to such Borrower then, within thirty (30)
days following written request or demand by Lender, such Borrower
shall make an immediate payment of principal in reduction of its loan
under the Term Facility in an amount not less than the amount
necessary to eliminate such excess as of the time of such payment.
All such amounts, if any, payable by such Borrower shall be deemed to
be payable on demand (subject to such thirty (30) day period), and
Lender shall have the right at any time (after the expiration of such
thirty (30) day period) (but no obligation) to charge such amount as a
loan to such Borrower under the Revolving Facility, or offset same
against any amount owing by Lender to such Borrower, without prior
notice. If at any time, from time to time, the aggregate unpaid
principal amount outstanding and owing by all Borrowers under the Term
Facility exceeds the aggregate amount of $2,500,000.00, Borrowers
jointly and severally agree to make an immediate payment of principal
under the Term Facility in an amount not less than the amount of such
excess, which may be applied by Lender in reduction of the Term
Facility in Lender's discretion. All such amounts, if any, shall be
deemed to be payable on demand, and Lender shall have the right (but
no obligation) to charge such amount as a loan to any Borrower under
the Revolving Facility, or offset same against any amount owing by
Lender to any Borrower, without prior notice.
2A.5 AUTOMATIC MATURITY AND REQUIRED PAYMENT.
Notwithstanding the foregoing, each loan under the Term Facility shall
automatically mature and be due and payable in full, without notice,
upon the earlier of (i) expiration of the Contract Term or (ii) any
earlier termination of the Revolving Facility, in which event each
Borrower agrees to pay all of its Obligations under Term Facility in
full.
2A.6 PREPAYMENT. Any Borrower shall have the right at any
time and from time to time to make prepayments on the principal amount
borrowed under the Term Facility, in whole or in part, provided, that
(i) all partial prepayments shall be applied in such manner as Lender
may determine.
2A.7 Purpose and Use of Funds. The Term Facility shall be
used for the following purpose: Refinancing of existing indebtedness.
3.9 The first sentence of paragraph 3.6 ("Collateral Reports") is
amended to read as follows:
"At such times and according to such frequency as may be determined by
mutual agreement, and at such other times as Lender may request, each
Borrower shall execute
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<PAGE> 8
and deliver to Lender, in form satisfactory to Lender, a collateral
report setting forth a certification of Eligible Accounts and Eligible
Inventory, and calculation of its Company Borrowing Base, in form
prescribed by Lender."
3.10 The Financing and Security Agreement hereby is amended to add
a new paragraph 3.9a (entitled "Real Property Collateral"), immediately
following paragraph 3.9, which shall read in its entirety as follows:
"3.9a REAL PROPERTY COLLATERAL. Diamond shall grant a deed of trust
lien or mortgage for the benefit of Lender covering the Real Property
Collateral, which at all times shall be maintained as a first priority
deed of trust lien or mortgage in favor of Lender, securing all of the
Obligations, as provided in the Real Property Collateral Documents.
Prior to funding under the Term Facility with respect to any Real
Property Collateral, Diamond shall provide Lender, at Borrower's
expense, with (i) an environmental site assessment, prepared by a
credentialed environmental site consultant acceptable to Lender and in
form satisfactory to Lender, confirming to Lender the status of
compliance with Environmental Requirements with respect to such Real
Property Collateral, (ii) a mortgagee's policy of title insurance
written by a title insurance company acceptable to Lender and in form
satisfactory to Lender, containing no exceptions other than as are
acceptable to Lender and (iii) a boundary survey, performed and
certified to Lender by a credentialed registered surveyor acceptable
to Lender, and in form satisfactory to Lender. As promptly as
possible, Lender shall obtain an updated appraisal of the Real
Property Collateral, on a valuation basis acceptable to Lender,
prepared by a credentialed appraiser acceptable to Lender, and
complying with applicable law and in form satisfactory to Lender.
Lender may obtain an updated appraisal with respect to the Real
Property Collateral at such times as Lender may request in order to
comply with applicable law or internal policy requirements. Diamond
shall pay all reasonable costs and expenses incurred by Lender in
obtaining any and all such updated appraisals."
3.11 Paragraph 3.10 ("Guaranty") hereby is amended and restated to
read in its entirety as follows:
"3.10 GUARANTY. Guarantor shall execute and deliver to
Lender a guaranty agreement, in form and substance satisfactory to
Lender, pursuant to which Guarantor shall guarantee prompt payment and
performance when due of all Obligations; provided, that in the event
Borrowers meet the conditions for interest rate reduction prescribed
by paragraph 2.2b, such guaranty shall be deemed released and
discharged, in which event, upon Guarantor's written request and
certification to Lender that Borrowers have met such conditions,
Lender will execute and deliver to Guarantor a written release of such
guaranty."
3.12 The Financing and Security Agreement hereby is amended to add
a new paragraph 4.3 (entitled "Loans Under Term Facility"), immediately
following paragraph 4.1, which shall read in its entirety as follows:
"4.3 LOANS UNDER TERM FACILITY. As a condition to each
loan to a Borrower under the Term Facility, each of the following
requirements must be satisfied in Lender's discretion: (a) such
Borrower shall be current with respect to the delivery of all items as
required under paragraph 4.1, (b) the amount outstanding to such
Borrower under the Term Facility, immediately following funding of the
amount of loan requested, will not exceed the Term Facility Credit
Limit or the Term Facility Borrowing Base applicable to such Borrower,
and the aggregate amount outstanding to all Borrowers under the Term
Facility shall not exceed $2,500,000.00, (c) Lender shall have
received the Real Property Collateral Documents, and the items with
respect thereto required by paragraph 3.9a, in form satisfactory to
Lender, (d) all representations and warranties contained in Article
III and Article V hereof shall be true, correct and complete in all
material respects (as determined by Lender in its sole discretion),
and (e) no Event of Default shall have occurred and be continuing, or
shall result from such loan and no other event or condition which
would be the subject of a required notice under paragraph 6.13 shall
be in existence. Any request for funding under the Term Facility at a
time when any of the foregoing requirements is not satisfied may be
declined by Lender without prior notice."
3.13 Subparagraph (a) of paragraph 6.22 ("Financial Covenants")
hereby is amended to add, or modify, the following, as noted:
(a) Subparagraph (a)1 ("Tangible Net Worth") is amended to add the
following, immediately after the last line thereof:
"DECEMBER 31, 1995 $12,000,000.00
DECEMBER 31, 1996 $16,000,000.00"
(b) Subparagraph (a)2 ("Leverage Ratio") is amended to add the
following, immediately after the last line thereof:
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<PAGE> 9
"December 31, 1995 2.75 to 1.0
December 31, 1996 2.50 to 1.0
All subsequent periods 2.25 to 1.0"
(c) Subparagraph (a)3 ("Capital Expenditures") is amended to add
the following, immediately after the last line thereof:
"Fiscal year ending December 31, 1995 $1,500,000.00
Fiscal year ending December 31, 1996 $2,000,000.00
Fiscal quarter ending July 31, 1997 $2,000,000.00"
(d) Subparagraph (a)4 ("Interest Coverage Ratio") is amended to
add the following, immediately after the last line thereof:
"December 31, 1995 4.25 to 1.0
December 31, 1996 4.50 to 1.0"
(e) Subparagraph (a)5 ("Net Income") is amended to add the
following, immediately after the last line thereof:
"Fiscal year ending December 31, 1995 $3,000,000.00
Fiscal year ending December 31, 1996 $4,000,000.00"
3.14 Subparagraph (h) and subparagraph (i) of paragraph 7.1 ("Event
of Default") of the Financing and Security Agreement hereby are amended and
restated to read in their entirety, respectively, as follows:
"(h) The filing or commencement of any attachment,
sequestration, garnishment, execution or other action against
or with respect to any of the Collateral or the Real Property
Collateral involving an amount in controversy in excess of
$50,000.00;"
"(i) The filing or commencement of any attachment,
sequestration, garnishment, execution or other action against
or with respect to any Borrower's property not included within
the Collateral or the Real Property Collateral if the amount
in controversy is excess of $100,000.00 or if the outcome,
pendency or effect thereof is reasonably expected to result in
or cause a Material Adverse Effect;"
3.15 Paragraph 9.1 ("Effective Date; Termination") of the Financing
and Security Agreement hereby is amended and restated to read in its entirety
as follows:
"9.1 EFFECTIVE DATE; TERMINATION. This Agreement shall
become effective upon acceptance by Lender, as of the effective date
specified in the preamble of this Agreement and, subject to all other
provisions of the Loan Documents, shall continue in full force and
effect through expiration of the Contract Term at which time the
Revolving Facility and the Term Facility each shall terminate without
further notice. Notwithstanding any termination or notice of
termination, the Obligations and all rights and remedies of Lender
hereunder with respect thereto, including without limitation all
rights and remedies with respect to the Collateral shall remain in
full force and effect until the Obligations have been paid in full."
3.16 The amendments specified in this Article III are in addition
to, and shall be deemed to become effective simultaneously with, those
specified in Article II.
ARTICLE IV. GENERAL
4.1 In consideration of this Third Amendment and increase of the
Credit Limit as provided herein, Borrowers jointly and severally agree to pay
to Lender a Credit Limit increase fee in the amount of $12,500.00 [which is
calculated by multiplying the sum of (i) the aggregate amount of increase of
the Credit Limit hereunder by one-half of one percent (.005%)], which shall be
payable upon execution hereof.
4.2. Contemporaneously upon execution of this Third Amendment, each
of the Ultrak Parties shall deliver to Lender: (i) a copy of corporate
resolutions (in form satisfactory to Lender) approving this Third Amendment,
authorizing the transactions contemplated hereby, and authorizing and directing
a named officer or officers to execute and deliver this Third Amendment and any
related documents contemplated hereby to be executed by such party, duly
adopted by the board of directors, accompanied by the certificate of the
corporate secretary, dated as of the Effective Date, that such copy is a true
and complete copy of resolutions duly adopted by the board of directors, and
that such resolutions have not been amended, modified, or revoked in any
respect and are in full force and effect as of the date hereof, (ii) an opinion
of counsel in form satisfactory to Lender and (iii) such related documents as
Lender may reasonably request in connection with this Third Amendment.
9
<PAGE> 10
4.3 Each of the Ultrak Parties represents that, as of the
Effective Date, ownership of the Ultrak Parties is as reflected in Exhibit "B"
attached hereto, each of the Ultrak Parties is in compliance with all
requirements under the Financing and Security Agreement and that no Event of
Default exists thereunder.
4.4 The Ultrak Parties and Lender each represents to the other
that all necessary corporate action has been taken to authorize its execution
and performance of this Third Amendment.
4.5 The Loan Documents, supplemented as provided herein, hereby
are ratified and confirmed as being and remaining valid and in full force and
effect in accordance with their respective terms, as so supplemented. As of
the Effective Date, all references in the Loan Documents to the Financing and
Security shall mean the Financing and Security Agreement as amended by this
Third Amendment.
4.6 This Third Amendment (i) shall be deemed effective
prospectively as of the Effective Date, (ii) contains the entire agreement
among the parties and may not be amended or modified except in writing signed
by all parties, (iii) shall be governed and construed according to the laws of
the State of Texas and (iv) may be executed in any number of counterparts, each
of which shall be valid as an original and all of which shall be one and the
same agreement. A telecopy of any executed counterpart shall be deemed valid
as an original.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED and made effective as of the Effective Date.
ULTRAK, INC.
By: /s/ TIM D. TORNO
Tim D. Torno
Vice President
DENTAL VISION DIRECT, INC.
By: /s/ TIM D. TORNO
Tim D. Torno
Vice President
JAK PACIFIC VIDEO WARRANTY AND REPAIR
SERVICES, INC.
By: /s/ TIM D. TORNO
Tim D. Torno
Vice President
DIAMOND ELECTRONICS, INC.
By: /s/ TIM D. TORNO
Tim D. Torno
Vice President
EXXIS TECHNOLOGIES, INC.
By: /s/ TIM D. TORNO
Tim D. Torno
Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ FORREST W. MCCOLLUM
Forrest W. McCollum
Vice President
10
<PAGE> 11
CONSENT BY GUARANTOR
The undersigned hereby consents to the foregoing Third Amendment to Financing
and Security Agreement and confirms that the certain Guaranty by Individual
dated September 23, 1993 previously executed by the undersigned for the
benefit of Lender hereby is amended and restated as evidenced by the certain
Amended and Restated Guaranty by Individual of even date herewith executed by
the undersigned for the benefit of Lender.
/s/ GEORGE K. BROADY
---------------------------------
George K. Broady, individually
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Forrest W. McCollum, known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said NATIONSBANK OF TEXAS, N.A., and that he executed the same
for the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.
My Commission Expires:
03/14/96
Sherri D. Bender
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said ULTRAK, INC. and that he executed the same for the purposes and
considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.
My Commission Expires:
03/14/96
Sherri D. Bender
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said DENTAL VISION DIRECT, INC., and that he executed the same for the
purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.
MY Commission Expires:
03/14/96
Sherri D. Bender
NOTARY PUBLIC, STATE OF TEXAS
11
<PAGE> 12
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC., and that he
executed the same for the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.
My Commission Expires:
03/14/96
Sherri D. Bender
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said DIAMOND ELECTRONICS, INC. and that he executed the same for the
purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.
My Commission Expires:
03/14/96
Sherri D. Bender
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said EXXIS TECHNOLOGIES, INC., and that he executed the same for the
purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.
My Commission Expires:
03/14/96
Sherri D. Bender
NOTARY PUBLIC, STATE OF TEXAS
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
GEORGE K. BROADY, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.
My Commission Expires:
10/1/97
Jeanette Courtright
NOTARY PUBLIC, STATE OF TEXAS
12
<PAGE> 13
EXHIBIT "A"
to
THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT
-------------------------------------------
EXHIBIT 3.4
FINANCING AND SECURITY AGREEMENT
among
NATIONSBANK OF TEXAS, N.A.
ULTRAK, INC.,
DENTAL VISION DIRECT INC.,
DIAMOND ELECTRONICS, INC.,
EXXIS TECHNOLOGIES, INC., and
JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.
Locations of Collateral
All Inventory and Equipment owned by each Borrower is located at the following
locations:
<TABLE>
<S> <C> <C>
ADDRESS OF LOCATION COUNTY OWNED OR LEASED
(If leased, name of landlord)
ULTRAK, INC.
1220 Champion Circle, Suite 100 Dallas Leased
Carrollton, Texas 75006 Champion Circle/TCEP II
Joint Venture
2400 Industrial Lane Boulder LEASED
Broomfield, Colorado 80020 Superior Investments I, Inc.
913 Commerce Drive Anne Arundel Leased
Annapolis, Maryland 21401 Annapolis Commerce Park
Limited Partnership
1323 Butterfield Road, Suite 110 DuPage Leased
Downers Grove, Illinois 60515 Gottlieb Properties, Inc.
DENTAL VISION DIRECT, INC.
1220 Champion Circle, Suite 100 Dallas Leased
Carrollton, Texas 75006 Champion Circle/TCEP II
Joint Venture
DIAMOND ELECTRONICS, INC.
4465 Coonpath Road Fairfield Owned
Carroll, Ohio 43112
EXXIS TECHNOLOGIES, INC.
1220 Champion Circle, Suite 100 Dallas Leased
Carrollton, Texas 75006 Champion Circle/TCEP II
Joint Venture
JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.
2300 Stowe Drive, Suite C San Diego Leased
Poway, CA 92064 Poway Industrial Park
</TABLE>
13
<PAGE> 14
EXHIBIT "B"
to
THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT
-------------------------------------------
EXHIBIT 5.6
FINANCING AND SECURITY AGREEMENT
among
NATIONSBANK OF TEXAS, N.A.
ULTRAK, INC.,
DENTAL VISION DIRECT INC.,
DIAMOND ELECTRONICS, INC.,
EXXIS TECHNOLOGIES, INC., and
JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.
Share Ownership
Ownership:
Ultrak, Inc. is publicly owned. Thirty two and 38/100 percent (32.38%) of the
Voting Stock of Ultrak, Inc. and one hundred percent (100%) of the convertible
preferred stock are owned of record and beneficially by George K. Broady.
One hundred percent (100%) OF the Voting Stock of Diamond Electronics, Inc. is
owned of record and beneficially by Ultrak, Inc.
One hundred percent (100%) of the Voting Stock of Dental Vision Direct, Inc. is
owned of record and beneficially by Ultrak, Inc.
Eighty percent (80%) of the Voting Stock of JAK Pacific Video Warranty and
Repair Services, Inc. is owned of record and beneficially by Ultrak, Inc. The
balance of such Voting Stock is owned by Abeer Risheq, an individual.
Stock options, warrants, etc.:
Ultrak, Inc:
1. Non-qualified Employee Stock Option Plan - up to 833,334
shares of no par common stock at varying exercise prices.
2. Convertible Preferred Stock - convertible into 406,981 shares
of no par common stock.
3. Petrus Warrants - pursuant to the 1992 loan agreement, as
amended, 200,000 warrants issued to the Petrus Fund, Ltd.,
convertible into 200,000 shares of no par common stock
14
<PAGE> 15
EXHIBIT "C"
to
THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT
-------------------------------------------
EXHIBIT 1.51a
FINANCING AND SECURITY AGREEMENT
among
NATIONSBANK OF TEXAS, N.A.
ULTRAK, INC.,
DENTAL VISION DIRECT INC.,
DIAMOND ELECTRONICS, INC.,
EXXIS TECHNOLOGIES, INC., and
JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.
Real Property Collateral.
15
<PAGE> 16
EXHIBIT "A"
The Land
Parcel I: Situated in the State of Ohio, County of Fairfield, in the Township
of Greenfield:
Being Lot Number Two (2), in AMENDED PLAT OF GREENFIELD CROSSROADS, as
the same is numbered and delineated upon the recorded Plat thereof, of
record in Plat Book 11, Page 4, Recorder's Office, Fairfield County,
Ohio.
Parcel II: Situated in the State of Ohio, County of Fairfield, in the Township
of Greenfield:
Being Lot Number Five (5), in AMENDED PLAT OF GREENFIELD CROSSROADS,
as the same is numbered and delineated upon the recorded Plat thereof,
of record in Plat Book II, Page 4, Recorder's Office, Fairfield
County, Ohio.
Parcel III:
Easement from the County Commissioners of Fairfield County, Ohio, to
Arvin Industries, Inc., dated June 24, 1974, received for record June
26, 1974, at 1:50 a.m., and recorded in Volume 439, Page 240, records
of Deeds, Fairfield County, Ohio.
<PAGE> 1
Exhibit 11
ULTRAK, INC. and SUBSIDIARIES
Computation of Per Share Income
For the Three and Six Months ended June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Six
Months Months
--------- ----------
<S> <C> <C>
Computation of Income per Share-Primary:
----------------------------------------
Net income $485,744 $1,267,677
Less: Dividend requirements on preferred
stock (29,302) (58,604)
--------- ----------
Net income allocable to common stockholders $456,442 $1,209,073
========= ==========
Weighted average number of common shares
outstanding during the period 6,555,841 6,513,617
Net effect of dilutive stock options and
warrants based on the treasury method using
average market price 349,634 349,634
--------- ----------
Shares used for computation 6,905,475 6,863,251
========= ==========
Income per share-primary $.07 $.18
========= ==========
Computation of Income per Share-Assuming
-----------------------------------------
Full Dilution:
--------------
Net income $485,744 $1,267,677
Less: Dividend requirements on preferred
stock - -
--------- ----------
Net income allocable to common stockholders $485,744 $1,267,677
========= ==========
Weighted average number of common shares
outstanding during the period 6,555,841 6,513,617
Net effect of dilutive stock options and
warrants based on the treasury method using
the greater of average or ending price 349,634 358,162
Net effect of preferred stock conversion 406,981 406,981
--------- ----------
Shares used for computation 7,312,456 7,278,760
========= ==========
Income per share-assuming full dilution $.07 $.17
===== =====
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 11,669,687
<ALLOWANCES> 311,086
<INVENTORY> 15,521,701
<CURRENT-ASSETS> 31,860,868
<PP&E> 3,371,348
<DEPRECIATION> 1,280,684
<TOTAL-ASSETS> 36,735,781
<CURRENT-LIABILITIES> 25,442,834
<BONDS> 0
<COMMON> 73,441
0
976,755
<OTHER-SE> 10,242,751
<TOTAL-LIABILITY-AND-EQUITY> 36,735,781
<SALES> 22,305,871
<TOTAL-REVENUES> 22,305,871
<CGS> 16,983,013
<TOTAL-COSTS> 16,983,013
<OTHER-EXPENSES> 4,157,148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 414,654
<INCOME-PRETAX> 763,044
<INCOME-TAX> 277,300
<INCOME-CONTINUING> 485,744
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485,744
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
