<PAGE> 1
As filed with the Securities and Exchange Commission May 10, 1995
Registration No.33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ULTRAK, INC.
(Exact name of registrant as specified in its charter)
COLORADO 5065 84-0819156
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
_____________________________
1220 Champion Circle, Suite 100
Carrollton, Texas 75006
(214) 280-9675
(Address, including Zip Code, and telephone number, including area
code, of registrant's principal executive offices)
_____________________________
GEORGE K. BROADY
Chairman of the Board, Chief Executive Officer and President
1220 Champion Circle, Suite 100
Carrollton, Texas 75006
(214) 280-9675
(Name, address, including Zip Code, and telephone number, including area
code, of registrant's agent for service)
Copies to:
RICHARD L. WAGGONER, Esq. MARK B. BARNES, Esq.
LANCE M. HARDENBURG, Esq. Leagre & Barnes
Gardere & Wynne, L.L.P. 9100 Keystone Crossing, Suite 800
3000 Thanksgiving Tower Indianapolis, Indiana 46240
Dallas, Texas 75201
Approximate date of commencement of proposed sale to the public: Upon
consummation of the merger referred to herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is general
compliance with General Instruction G, check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Each Class of Amount to be Maximum Offering Maximum Aggregate Amount of
Securities to be Registered Registered Price Per Unit(1) Offering Price(1) Registration Fee
- --------------------------------------------------------------------------------------------------------------------------
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Common Stock, No Par Value 700,000 shares(2) $4.78 $3,347,900 (3)
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(1) Estimated solely for purposes of calculating the amount of the
registration fee based upon the book value per share of the Common Stock, no
par value, of Diamond Electronics, Inc. as of March 31, 1995, pursuant to the
provisions of Rule 457(f)(2) under the Securities Act of 1933.
(2) Subject to adjustment in accordance with the Agreement and Plan
of Reorganization providing for consummation of the merger referred to herein.
(3) Previously paid.
_____________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
ULTRAK, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
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Heading in
Item Number of Form S-4 Prospectus/Proxy Statement
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front Cover
Page of Prospectus . . . . . . . . . . . . . . . . . . . . . . . Facing Page of Registration Statement;
Cross-Reference Sheet; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus . . . . Inside Front and Outside Back Cover
Pages of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information . . . . . . . . . . . . . . . . . . . . . Prospectus/Proxy Statement Summary;
Risk Factors; Business of Ultrak;
Selected Financial Data of Ultrak;
Ultrak Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business of
Diamond; Selected Financial Data of
Diamond; Diamond Management's
Discussion and Analysis of Financial
Condition and Results of Operations
4. Terms of the Transaction . . . . . . . . . . . . . . . . . . . . Facing Page of Registration Statement;
Outside Front Cover Page of Prospectus;
Prospectus/Proxy Statement Summary
Merger
5. Pro Forma Financial Information . . . . . . . . . . . . . . . . Prospectus/Proxy Statement Summary; Pro
Forma Financial Information
6. Material Contracts with the Company Being Acquired . . . . . . . Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to Be Underwriters . . . . . . . . . Not Applicable
8. Interests of Named Experts and Counsel . . . . . . . . . . . . . Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities . . . . . . . . . Not Applicable
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B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants . . . . . . . . . . Not Applicable
11. Incorporation of Certain Information by Reference . . . . . . . Not Applicable
12. Information with Respect to S-2 or S-3 Registrants . . . . . . . Not Applicable
13. Incorporation of Certain Information by Reference . . . . . . . Not Applicable
14. Information with Respect to Registrants Other Than
S-3 or S-2 Registrants . . . . . . . . . . . . . . . . . . . . . Prospectus/Proxy Statement Summary;
Risk Factors; Business of Ultrak;
Market for Ultrak Common Stock and
Related Shareholder Matters;
Description of Ultrak's Capital Stock;
Selected Consolidated Financial Data of
Ultrak; Ultrak Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Index to
Financial Statements
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies . . . . . . . . . . . Not Applicable
16. Information with Respect to S-2 or S-3 Companies . . . . . . . . Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies . . . . . . . . . . . . . . . . . . . Prospectus/Proxy Statement Summary;
Business of Diamond; Market for Diamond
Common Stock and Related Shareholder
Matters; Selected Consolidated
Financial Data of Diamond; Diamond
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Index to Financial
Statements
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D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations
are to be Solicited . . . . . . . . . . . . . . . . . . . . . . Special Meeting of Diamond
Shareholders; Merger-Appraisal Rights;
Principal Shareholders of Diamond;
Merger-Interests of Certain Persons in
the Merger
19. Information if Proxies, Consents or Authorizations are not to
be Solicited or in an Exchange Offer . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 5
DIAMOND ELECTRONICS, INC.
_____________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY ___, 1995
_____________________
To the Shareholders of
DIAMOND ELECTRONICS, INC.
Notice is hereby given that a Special Meeting of Shareholders of Diamond
Electronics, Inc., an Ohio corporation ("Diamond"), has been called to be held
on May ___, 1995 beginning at ___________ a.m., local time, at
___________________________, Indianapolis, Indiana, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt that
certain Agreement and Plan of Reorganization, dated April 28,
1995, by and among Diamond, Ultrak, Inc., a Colorado
corporation ("Ultrak"), Diamond Purchasing Corp., a Texas
corporation and wholly-owned subsidiary of Ultrak ("Ultrak
Subsidiary"), and the following shareholders of Diamond:
Richard M. Tompkins, John W. Biddinger, Robert N. Davies, H.
Charles Koehler, and William Muirhead, III, pursuant to which
(i) Ultrak Subsidiary would merge (the "Merger") with and into
Diamond, (ii) Diamond would become a wholly-owned subsidiary of
Ultrak, and (iii) each outstanding share of common stock, no
par value, of Diamond would be converted into the right to
receive shares of common stock, no par value, of Ultrak (or
cash for small amounts of stock) pursuant to the formula
described therein; and
2. To transact any other business as may properly come before the
Special Meeting or any adjournment thereof.
Shareholders of record as of the close of business on April 28, 1995 are
entitled to notice of and to vote at the Special Meeting or any adjournment
thereof. The list of shareholders entitled to vote at the Special Meeting will
be available for inspection by any shareholder for any purpose relating to the
Special Meeting during regular business hours at Diamond's corporate office at
4465 Coonpath Road, Carroll, Ohio 43112 for ten days prior to the Special
Meeting.
If the Merger is consummated, the holders of record of Diamond's common
stock who comply with the requirements of Section 1.701.85 of the Ohio Revised
Code, which is attached as Annex B to the Prospectus/Proxy Statement, may
dissent from the Merger and exercise their dissenters' rights in accordance
with Ohio law. See "Merger - Rights of Dissenting Shareholders" in the
attached Prospectus/Proxy Statement for a description of the procedures which
must be followed to perfect such dissenters' rights under the Ohio Revised
Code.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE MARK,
SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE.
By Order of the Board of Directors
Robert N. Davies
Secretary
Carroll, Ohio
May ___, 1995
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PROSPECTUS/PROXY STATEMENT
PROSPECTUS
ULTRAK, INC.
700,000 SHARES
COMMON STOCK, NO PAR VALUE
_______________________
PROXY STATEMENT
DIAMOND ELECTRONICS, INC.
for the Special Meeting of Shareholders
to be held May ____, 1995
This Prospectus/Proxy Statement is being furnished to shareholders of
Diamond Electronics, Inc., an Ohio corporation ("Diamond"), in connection with
the solicitation of proxies by the Board of Directors of Diamond for use at the
Special Meeting of Shareholders of Diamond (the "Special Meeting") to be held
at _____________, local time, on May __, 1995, at ____________________________,
Indianapolis, Indiana.
This Prospectus/Proxy Statement also relates to the Agreement and Plan
of Reorganization, dated April 28, 1995, attached hereto along with Exhibits
1.01(a) and (b) thereto as Annex A (the "Merger Agreement"), among Diamond,
Ultrak, Inc., a Colorado corporation ("Ultrak"), Diamond Purchasing Corp., a
Texas corporation and wholly-owned subsidiary of Ultrak ("Ultrak Subsidiary"),
and the following shareholders of Diamond: Richard M. Tompkins, John W.
Biddinger, Robert N. Davies, H. Charles Koehler, and William Muirhead, III (the
"Signing Shareholders"), which provides for the merger (the "Merger") of Ultrak
Subsidiary with and into Diamond. After the Merger, the separate corporate
existence of Ultrak Subsidiary will cease, and Diamond will continue its
existence as a direct subsidiary of Ultrak. See "Merger-Terms of the Merger
Agreement." If the Merger is consummated, all of the outstanding shares of
common stock, no par value, of Diamond ("Diamond Common Stock"), will be
converted into the right to receive, as of the Effective Date (as defined
herein), up to an aggregate 600,000 shares of common stock, no par value, of
Ultrak ("Ultrak Common Stock") at the rate of 0.125 shares of Ultrak Common
Stock for every share of Diamond Common Stock (the "Conversion Factor"), except
that cash will be distributed in lieu of Ultrak Common Stock pursuant to the
Cash Out (as defined herein) and the exercise of dissenters' rights by the
Diamond Shareholders (as defined herein). See "Merger - Terms of the Merger
Agreement - Conversion Factor" and "- Rights of Dissenting Shareholders."
Pursuant to the Merger Agreement, Ultrak is required to issue up to 100,000
additional shares of Ultrak Common Stock to the Effective Date Shareholders
(as defined herein) unless the average closing price of Ultrak Common Stock
during both of the ten-day trading periods ending on the first trading days
that are six and twelve months, respectively, after the effective date of the
Merger (the "Effective Date") exceeds certain predetermined values. See
"Merger - Adjustments."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE HOLDERS OF THE ULTRAK COMMON STOCK TO BE DISTRIBUTED
PURSUANT TO THE MERGER.
_______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_______________________
The date of this Prospectus/Proxy Statement is May __, 1995
<PAGE> 7
AVAILABLE INFORMATION
Ultrak is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Chicago Regional Office, Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60601; and New York
Regional Office, 75 Park Place, Fourteenth Floor, New York, New York 10007.
Copies of such material may also be obtained at prescribed rates from the
Public Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Ultrak Common
Stock is traded on the Nasdaq National Market ("Nasdaq"), and reports, proxy
and information statements, and other information concerning Ultrak can be
inspected at the Nasdaq offices located at 1735 K Street, N.W., Washington,
D.C. 20006.
This Prospectus/Proxy Statement, which constitutes a part of a
registration statement (the "Registration Statement") filed by Ultrak with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
omits certain of the information set forth in the Registration Statement.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to Ultrak and the Ultrak Common
Stock. Statements contained herein concerning the provisions of such documents
are necessarily summaries of such documents, and each such statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission. Copies of the Registration Statement and the
exhibits thereto are on file at the offices of the Commission and may be
obtained upon payment of the fee prescribed by the Commission, or may be
examined without charge at the public reference facilities of the Commission
described above.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS/PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ULTRAK.
THIS PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON
STOCK TO WHICH IT RELATES OR ANY OFFER TO, OR A SOLICITATION OF, ANY PERSON IN
ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS/PROXY STATEMENT NOR ANY DISTRIBUTION MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF ULTRAK OR THAT INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
2
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_______________________
TABLE OF CONTENTS
_______________________
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AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PROSPECTUS/PROXY STATEMENT SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SPECIAL MEETING OF DIAMOND SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
BUSINESS OF ULTRAK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ULTRAK'S REINCORPORATION IN DELAWARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
MANAGEMENT OF ULTRAK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
PRINCIPAL SHAREHOLDERS OF ULTRAK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
DESCRIPTION OF ULTRAK'S CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
MARKET FOR ULTRAK COMMON STOCK AND RELATED
SHAREHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SELECTED FINANCIAL DATA OF ULTRAK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ULTRAK MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
BUSINESS OF DIAMOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
MARKET FOR DIAMOND COMMON STOCK AND RELATED SHAREHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
PRINCIPAL SHAREHOLDERS OF DIAMOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SELECTED FINANCIAL DATA OF DIAMOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
DIAMOND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
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ANNEXES
ANNEX A - Merger Agreement and Exhibits 1.01(a) and (b) thereto
ANNEX B - Section 1701.85 of the Ohio Revised Code
ANNEX C - Articles of Incorporation of Diamond
ANNEX D - Code of Regulations of Diamond
ANNEX E - Articles of Incorporation of Ultrak, as amended
ANNEX F - Bylaws of Ultrak
ANNEX G - Reincorporation Agreement
ANNEX H - Certificate of Incorporation of Ultrak - Delaware
ANNEX I - Bylaws of Ultrak - Delaware
ANNEX J - Article 113 of Colorado Business Corporation Act
3
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PROSPECTUS/PROXY STATEMENT SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus/Proxy Statement. The summary is necessarily incomplete and
selective and is qualified in its entirety by the more detailed information
contained in this Prospectus/Proxy Statement, including the appendices hereto.
Unless the context indicates otherwise, references in this Prospectus/Proxy
Statement to "Ultrak" and "Diamond" refer respectively to Ultrak, Inc. and its
subsidiaries and predecessors and Diamond Electronics, Inc. and its
subsidiaries and predecessors.
MATTERS TO BE VOTED UPON
At the Special Meeting, the holders of record of Diamond Common Stock
as of the Record Date (as defined herein) (the "Diamond Shareholders") will be
asked to consider and vote upon a proposal to approve and adopt the Merger
Agreement and approve the Merger and to conduct any other business that
properly comes before the Special Meeting.
ULTRAK
Ultrak designs, manufactures, markets, and services video closed
circuit television ("CCTV") products for use in security applications, general
observation, medical and dental equipment, and automated manufacturing systems.
These products include a broad line of cameras, lenses, monitors, switchers,
time lapse recorders, multiplexers, and wireless video transmission systems.
Prior to July 1993, Ultrak's Exxis Technologies, Inc. subsidiary
marketed, sold, and serviced personal computer products, including desktop and
tower computers, disk drives, CD-ROM drives, printers, and monitors sold under
its private brand name, [X] Smart Choice. Ultrak discontinued this business in
July 1993. See "Ultrak Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note I of the Notes to Ultrak's
Consolidated Financial Statements included herein.
Ultrak is a Colorado corporation which was incorporated in 1980.
Ultrak conducts its principal business operations at five locations:
Carrollton (Dallas), Texas; Broomfield (Denver), Colorado; southern California;
Chicago, Illinois; and Annapolis, Maryland; and Ultrak has additional sales
offices in New York, southern Florida, Boston, Atlanta, and Los Angeles.
Ultrak's main executive offices are located at 1220 Champion Circle, Suite 100,
Carrollton, Texas 75006, and its telephone number is (214) 280-9675.
DIAMOND
Diamond manufactures and sells high-speed commercial security and
surveillance systems used by large retailers, metropolitan surveillance systems
for traffic control, and hazardous viewing systems used by industry. Diamond's
commercial security and surveillance systems are utilized in monitoring indoor
and outdoor areas of large retailers. Diamond's industrial viewing systems are
utilized in observing furnace operation, gauge monitoring, smoke stack
monitoring, and tower plant inspection. Diamond's headquarters are housed in a
72,000 square foot building located 20 miles southeast of Columbus, Ohio.
Diamond's main executive offices are located at 4465 Coonpath Road, Carroll,
Ohio 43112, and its telephone number is (614) 756-9222.
MERGER
Terms of the Merger and Conversion Factor. Upon consummation of the Merger in
accordance with the Merger Agreement, Ultrak Subsidiary will be merged with and
into Diamond and the separate corporate existence of Ultrak Subsidiary will
cease, and Diamond will continue its existence as a wholly-owned subsidiary of
Ultrak. See "Merger - Terms of the Merger Agreement -- General." The Merger
Agreement provides that upon the
4
<PAGE> 10
Merger becoming effective, each outstanding share of Diamond Common Stock will
be converted into the right to receive 0.125 shares of Ultrak Common Stock,
subject to subsequent adjustments in certain circumstances, and except that
cash will be distributed in lieu of Ultrak Common Stock to the Diamond
Shareholders who are subject to the Cash Out or who exercise dissenters'
rights. See "Merger - Terms of the Merger Agreement -- Conversion Factor" and
"-- Adjustments."
Management After the Merger. After the Merger, Diamond will become a
wholly-owned subsidiary of Ultrak and it is expected that Diamond will operate
in the same manner as prior to the Merger.
Federal Income Tax Consequences of the Merger. The consummation of the Merger
is conditioned on the receipt by Diamond and Ultrak of a tax opinion of Leagre
& Barnes to the effect that the Merger will constitute a tax-free
reorganization for purposes of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The federal income tax consequences of the
Merger to the Diamond Shareholders are summarized under "Merger - Certain
Federal Income Tax Consequences."
Vote Required. Not less than two-thirds of the outstanding shares of Diamond
Common Stock entitled to vote at the Special Meeting must vote in favor of the
Merger for it to be approved. As of December 31, 1994, the directors and
officers of Diamond, and those persons who may be deemed to be their respective
affiliates and associates, as a group, were entitled to vote approximately 62%
of the outstanding shares of Diamond Common Stock, and each such holder has
indicated his or her intent to vote such shares for approval of the Merger. It
is not necessary for the shareholders of Ultrak to approve the Merger; however,
Ultrak, as the sole shareholder of Ultrak Subsidiary, has approved the Merger
and the Merger Agreement. See "Special Meeting of Diamond Shareholders - Vote
Required; Security Ownership of Diamond's Management" and "Merger - Background
of the Merger and Related Matters."
Rights of Dissenting Shareholders. Subject to certain other conditions, a
Diamond Shareholder who does not vote his or her shares of Diamond Common Stock
in person or by proxy in favor of the Merger will be eligible to make a written
demand on Diamond for payment to him or her of the fair cash value of his or
her Diamond Common Stock within ten days after the Special Meeting. A Diamond
Shareholder who seeks to assert dissenters' rights must take certain other
steps in the manner required by Ohio law. A vote in favor of the Merger, in
person or by proxy, will constitute a waiver of such dissenters' rights. See
"Merger - Rights of Dissenting Shareholders."
Conditions to the Merger; Termination. Consummation of the Merger is subject
to satisfaction or waiver of various conditions, including compliance with the
respective covenants and confirmation of the respective representations and
warranties of the parties in the Merger Agreement. The Merger Agreement also
provides that either party may abandon the Merger if it is not consummated on
or before June 30, 1995. See "Merger - Terms of the Merger Agreement --
Conditions to the Merger" and "-- Termination."
Accounting Treatment. Ultrak intends to account for the Merger as a purchase.
See "Merger - Accounting Treatment."
RISK FACTORS
An investment in the Ultrak Common Stock involves the consideration of
a number of special factors and investment risks. See "Risk Factors" for a
summary of certain of the investment risks to be considered by the Diamond
Shareholders prior to casting their votes, in person or by proxy, for or
against approval of the Merger and the Merger Agreement.
5
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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
The following tables set forth the selected financial information for
Ultrak for each of the five fiscal years in the period ended December 31, 1994,
and for Diamond for each of the five fiscal years in the period ended January
1, 1995. Such information should be read in conjunction with the selected
financial statement information of Ultrak and Diamond and the notes thereto
which are included elsewhere herein. See "Selected Financial Data of Ultrak"
and "Selected Financial Data of Diamond."
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ULTRAK - HISTORICAL
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FISCAL YEAR ENDED DECEMBER 31,
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STATEMENT OF OPERATIONS DATA: 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $78,793,711 $52,411,971 $28,864,478 $18,003,952 $9,765,978
Gross profit 19,444,003 12,858,457 7,367,629 4,613,904 2,494,659
Operating income (loss) 5,109,687 3,655,020 1,278,618 694,728 (318,905)
Net income (loss) from
continuing operations 2,789,512 2,638,860 543,500 470,942 (775,196)
Net Income (loss) per common 0.39 0.37 0.07 0.06 (0.15)
share
Weighted average shares 6,818,999 6,789,872 6,845,550 5,864,399 5,286,561
outstanding
BALANCE SHEET DATA:
Total assets $36,352,690 $25,384,794 $16,198,851 $8,054,270 $4,567,900
Short-term debt 18,244,183 12,875,039 7,134,701 2,218,599 1,140,000
Long-term debt 0 0 285,000 285,000 0
Shareholders' Equity 10,070,388 7,541,339 6,817,683 4,177,044 2,881,847
Cash dividends declared
per common share 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
DIAMOND - HISTORICAL
-----------------------------------------------------------------------------
FISCAL YEAR ENDED
-----------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales $11,774,691 $9,367,799 $8,747,964 $8,554,592 $12,861,108
Gross profit 3,765,223 2,940,844 2,539,546 2,389,684 3,871,562
Operating income (loss) 761,371 523,319 285,679 971,207 350,312
Net income (loss) 325,641 839,969 1,170,805 (1,219,647) (266,357)
Net income (loss) per common 0.07 0.19 0.41 (0.90) (0.20)
share
Weighted average shares 4,652,014 4,420,889 4,384,692 1,349,650 1,349,650
outstanding
BALANCE SHEET DATA:
Total assets $ 6,766,688 $ 5,648,036 $ 5,131,878 $ 5,627,012 $ 7,492,489
Short-term debt 1,273,122 1,238,216 1,432,567 2,064,051 2,556,566
Long-term debt 884,548 592,033 774,660 1,699,948 1,842,430
Stockholders' Equity 3,218,047 3,013,410 2,150,965 (578,662) 640,985
Cash dividends declared
per common share 0 0 0 0 0
</TABLE>
6
<PAGE> 12
ULTRAK AND DIAMOND-UNAUDITED PRO FORMA COMBINED
The summary unaudited pro forma combined information presented below
provides financial information giving effect to the Merger as a purchase for
the period presented. The pro forma information is provided for informational
purposes only and is not necessarily indicative of actual results that would
have been achieved had the Merger been consummated at the beginning of the
period presented or of future results. The pro forma information is derived
from the Pro Forma Financial Information appearing elsewhere herein and should
be read in conjunction with those statements. See "Pro Forma Financial
Information."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, 1994
-----------------------------------
<S> <C>
INCOME STATEMENT DATA:
Net sales $90,568,402
Gross profit 23,209,226
Operating income 5,638,015
Net income from continuing operations 3,090,966
Fully diluted net income per common share 0.39
Fully diluted weighted average shares outstanding 7,886,985
BALANCE SHEET DATA:
Total assets 44,307,331
Long-term debt, less current portion 884,548
Total stockholders' equity 14,320,388
</TABLE>
7
<PAGE> 13
COMPARATIVE PER SHARE DATA
Based upon the Conversion Factor of 0.125 shares of Ultrak Common
Stock for each outstanding share of Diamond Common Stock, the following table
sets forth per common share income from continuing operations, dividends, book
value, and market value of (i) Ultrak Common Stock; (ii) Diamond Common Stock;
and (iii) pro forma equivalent of one share of Diamond Common Stock based on
the Conversion Factor, and (iv) pro forma combined information for Diamond and
Ultrak.
<TABLE>
<CAPTION>
Equivalent
Pro Pro
Forma Forma
Ultrak Diamond Diamond Combined
<S> <C> <C> <C> <C>
Income from continuing operations per common
share:
December 31, 1994 . . . . . . . . . . $ 0.39 $ 0.07 $ 0.05 $ 0.40
Dividends declared per common share:
December 31, 1994 . . . . . . . . . . 0 0 0 0
Book value per common share as of
December 31, 1994 . . . . . . . . . . $ 1.47 $ 0.68 $ 0.18 $ 1.92
Market value per common share as of
December 31, 1994 (1) (2) . . . . . . $ 7.125 (2) $ 0.89 ----
Market value per common share as of
February 9, 1995 (2) (3) . . . . . . $ 6.25 (2) $ 0.78 ----
- -------------------------------
</TABLE>
(1) Based on the closing price of $7.125 per share of Ultrak Common Stock
as reported on Nasdaq.
(2) No active trading exists for Diamond Common Stock.
(3) Based on the closing price of $6.25 per share of Ultrak Common Stock
as reported on Nasdaq on the business day immediately preceding public
announcement of the proposed Merger.
8
<PAGE> 14
PLAN OF DISTRIBUTION
This Prospectus/Proxy Statement may be used by Ultrak for distribution
of up to 700,000 shares of Ultrak Common Stock pursuant to the Merger
Agreement, including up to 100,000 shares issuable upon the occurrence of
certain conditions requiring an adjustment of the Conversion Factor under the
Merger Agreement. See "Merger - Adjustments." Ultrak Common Stock issued under
this Prospectus/Proxy Statement will be freely transferable under the
Securities Act, except for shares issued to persons who may be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act and
Rule 145(c) thereunder. Persons who are deemed to be "affiliates," as that
term is defined in the Securities Act, of Diamond shall be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act if such
persons publicly offer or sell the shares of Ultrak Common Stock received by
such persons pursuant to the Merger Agreement, subject to the exceptions of
Rule 145(d) of the Securities Act. Generally, these are persons who are deemed
to control, to be controlled by, or to be under common control with Diamond.
Thus, Ultrak Common Stock issued in connection with the Merger to persons who
constitute "underwriters" within the meaning of Section 2(11) and Rule 145(c)
may not be publicly reoffered or resold by such persons except pursuant to an
effective registration statement under the Securities Act covering such shares
or, in certain circumstances, pursuant to Rule 145(d) or any other applicable
exemption under the Securities Act. Ultrak does not intend for such persons to
be able to resell the shares of Ultrak Common Stock they receive in the Merger
pursuant to this Prospectus/Proxy Statement, and any representation to the
contrary should be disregarded.
RISK FACTORS
DEPENDENCE ON PRODUCT SUPPLIERS.
Ultrak purchases the products it markets and sells from a limited
number of non-affiliated foreign manufacturers and will continue to depend
substantially upon such manufacturers in the future. Ultrak does not itself
manufacture the products which it markets and sells. Ultrak has in the past
and may in the future experience difficulties obtaining, in a timely manner,
those components which are necessary for its finished products. The loss of
any one supplier of components or an inability of suppliers to provide Ultrak
with the required quantity or quality of components could have a material
adverse effect on Ultrak's business until such time as an alternate source of
supply for such components is found. See "Business of Ultrak - Suppliers and
Distribution."
CONTROL BY PRINCIPAL SHAREHOLDER.
George K. Broady, the Chairman of the Board, President, Chief Executive
Officer, and principal shareholder of Ultrak, is the beneficial owner of
approximately 33% of the Ultrak Common Stock and 100% of the Series A 12%
Cumulative Convertible Preferred Stock, $5.00 par value (the "Series A
Preferred Stock"), of Ultrak. Each share of the Series A Preferred Stock has
voting rights equal to 16.667 shares of Ultrak Common Stock. Mr. Broady
therefore controls over 50% of the votes on all matters which are or may be
submitted to a vote of shareholders of Ultrak, and will continue to control at
least 50% of such votes immediately after the Effective Date. The holders of
shares controlling a majority of the votes of the shareholders of Ultrak can
elect all of the directors of Ultrak and approve or disapprove certain
fundamental corporate transactions, including mergers, liquidation, a "going
private" transaction, the sale of substantially all of Ultrak's assets, and the
authorization, issuance, and sale of new securities of Ultrak, and may delay or
prevent a change in control of Ultrak. See "Principal Shareholders of Ultrak"
and "Description of Ultrak's Capital Stock."
PREFERRED STOCK.
Ultrak's Articles of Incorporation authorize 2,000,000 shares of
Preferred Stock, $5.00 par value, of which 195,351 shares of Series A Preferred
Stock are currently issued and outstanding. Ultrak's Preferred Stock may be
issued in series from time to time with such designation, rights, preferences,
and limitations as the Board of Directors of Ultrak may determine by
resolution. The potential exists, therefore, that additional series of
Ultrak's Preferred Stock might be issued that would grant dividend preferences
and liquidation preferences to preferred shareholders over holders of Ultrak
Common Stock. Unless the nature of a particular transaction and applicable
statutes require otherwise, the Board of Directors has the authority to
issue Preferred Stock without shareholder approval. The issuance of Preferred
Stock may have the effect of delaying
9
<PAGE> 15
or preventing a change in control of Ultrak without any further action by
shareholders. See "Description of Ultrak's Capital Stock."
DEPENDENCE UPON MANAGEMENT AND KEY PERSONNEL.
The ability of Ultrak to continue profitable operations will depend
significantly upon its Chairman of the Board, Chief Executive Officer, and
President, George K. Broady; its Executive Vice President and Chief Operating
Officer, James D. Pritchett; and Tim D. Torno, Ultrak's Secretary-Treasurer and
Chief Financial Officer, and upon certain other key employees of Ultrak. The
loss of the services of Mr. Broady, Mr. Pritchett, Mr. Torno, or any of
Ultrak's other key employees could be expected to have a material adverse
effect upon Ultrak's business and operations. In addition, Ultrak's success
will be dependent upon its ability to recruit and retain qualified personnel.
See "Management of Ultrak."
COMPETITION WITH LARGER COMPANIES.
CCTV systems are being manufactured by numerous concerns, many of
which have substantially greater resources than Ultrak. Moreover, the CCTV
product industry is characterized by rapid technological change, and technology
may be developed which will be more cost effective and advanced than products
which are sold by Ultrak. Ultrak competes with a number of other sellers,
ranging from small local firms to large national and international firms, many
of which have substantially greater financial, management, and marketing
resources than Ultrak. See "Business of Ultrak."
DEPENDENCE UPON MAJOR CUSTOMERS.
Ultrak is dependent upon certain major customers. During 1994, sales
to one customer accounted for 21% of Ultrak's sales. During 1993, sales to the
same customer accounted for 18% of Ultrak's sales. An unexpected decline of
sales to this customer could have a material adverse effect on Ultrak. See
"Business of Ultrak."
NO DIVIDENDS.
Ultrak has not paid any dividends on the Ultrak Common Stock since its
inception. At the present time, Ultrak does not anticipate paying dividends on
Ultrak Common Stock in the foreseeable future. Any future dividends will
depend upon the earnings of Ultrak, its financial requirements, and other
factors. Diamond Shareholders who anticipate the need for immediate dividend
income should not rely on their shares of Ultrak Common Stock obtained pursuant
to the Merger for such income. See "Market for Ultrak Common Stock and Related
Shareholder Matters."
IMPORTATION OF PRODUCTS.
The importation of products into the United States and into other
jurisdictions in which Ultrak's products are sold is subject to numerous risks
including labor strikes or shipping delays, fluctuation in currency exchange
rates, and import duties. There is no assurance that the United States, Korea,
Japan, Hong Kong, or other governments will not in the future impose trade
restrictions which could adversely affect Ultrak's operations. Currently,
there is a 3% to 6% United States duty on imported products, and there are no
United States quotas on the types of products distributed by Ultrak. However,
there can be no assurance that quotas, taxes, or further or greater duties or
taxes will not be imposed in the future. Ultrak imports approximately 60% of
its products. See "Business of Ultrak-Suppliers and Distribution."
TECHNOLOGICAL OBSOLESCENCE.
The CCTV product industry is characterized by rapid technological
change, frequent product introductions, and worldwide research. The ability of
Ultrak to compete will depend in large part on its ability to successfully
adapt to technological changes in the industry. Although Ultrak's products are
currently based on what it considers solid processes and technology, there is
no assurance that patents, products, processes, or computer software produced
by competing companies could not supersede or make obsolete the products
10
<PAGE> 16
sold by Ultrak. The industry is characterized by rapid technological
obsolescence of products and drastic price reductions.
MARKET CONDITIONS; POSSIBLE VOLATILITY OF STOCK PRICE.
There are approximately 4.5 million shares of Ultrak Common Stock held
by public shareholders who are not "affiliates," as that term is defined under
the Securities Act, of Ultrak. The historically low trading volume of Ultrak
Common Stock makes it susceptible to substantial market price swings should
volume of any size and frequency occur in the offering, buying, or selling of
shares of Ultrak Common Stock. Ultrak is not able to predict the effect on
market prices of the distribution of the shares of Ultrak Common Stock covered
by this Prospectus/Proxy Statement. Further, factors such as new product
announcements by Ultrak or its competitors, quarterly fluctuations in Ultrak's
operating results, and general conditions in the securities markets may have a
significant impact on the market price of the Ultrak Common Stock. See "Market
for Ultrak Common Stock and Related Shareholder Matters."
11
<PAGE> 17
SPECIAL MEETING OF DIAMOND SHAREHOLDERS
TIME, DATE, PLACE, AND PURPOSE
The Special Meeting will be held on May __, 1995, at ___________,
local time, at _______________, Indianapolis, Indiana. At the Special Meeting,
Diamond Shareholders will be asked to consider and vote upon a proposal (the
"Merger Proposal") to adopt and approve the Merger Agreement and the Merger and
to conduct any other business that properly comes before the Special Meeting.
RECORD DATE AND SHARES ENTITLED TO VOTE
Only Diamond Shareholders at the close of business on April 28, 1995
(the "Record Date") are entitled to notice of and to vote at the Special
Meeting. As of the Record Date, there were 4,809,219 shares of Diamond Common
Stock issued and outstanding and held by approximately 380 holders of record.
The Diamond Shareholders are entitled to one vote per share on any matter that
may properly come before the Special Meeting.
VOTE REQUIRED; SECURITY OWNERSHIP OF DIAMOND'S MANAGEMENT
The presence in person or by proxy of the holders of a majority of the
shares of Diamond Common Stock outstanding as of the Record Date is necessary
to constitute a quorum for the transaction of business at the Special Meeting.
The affirmative vote of the holders of not less than two-thirds of the shares
of Diamond Common Stock outstanding as of the Record Date voting in person or
by proxy is necessary to approve and adopt the Merger Agreement and the Merger.
Abstentions will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the Special Meeting. In
addition, abstentions with respect to the Merger Proposal, because such shares
are otherwise counted as present and entitled to vote at the Special Meeting,
will be counted as a vote against such proposal.
As of the Record Date, the executive officers and directors of Diamond
beneficially owned an aggregate of 2,978,523 shares of Diamond Common Stock,
which represents 61.9% of the Diamond Common Stock outstanding as of the Record
Date. Each of these executive officers and directors of Diamond has advised
Diamond that he intends to vote his shares of Diamond Common Stock to approve
and adopt the Merger Agreement and the Merger.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is enclosed with this Proxy Statement/Prospectus. All
shares of Diamond Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated on such proxies. If no instructions are indicated,
such shares will be voted FOR the approval and adoption of the Merger Agreement
and FOR the approval and adoption of the Merger and, in the discretion of the
proxy holder, as to any other matter which may properly come before the Special
Meeting.
Any Diamond Shareholder that has previously delivered a properly
executed proxy may revoke such proxy at any time before its exercise. A proxy
may be revoked either by (i) filing with the Secretary of Diamond prior to the
Special Meeting, at Diamond's principal executive offices, either a written
revocation of such proxy or a duly executed proxy bearing a later date or (ii)
attending the Special Meeting and voting in person. Presence at the Special
Meeting will not revoke a Diamond Shareholder's proxy unless such Diamond
Shareholder votes in person.
12
<PAGE> 18
MERGER
BACKGROUND OF THE MERGER AND RELATED MATTERS
During the months of January and February 1995, Ultrak and Diamond
negotiated the preliminary terms and conditions of the Merger. In general,
these terms and conditions contemplated, among other things, that Ultrak or a
subsidiary of Ultrak would acquire Diamond in a merger transaction in which the
holders of Diamond Common Stock and holders of options, warrants, and other
rights to acquire Diamond Common Stock would receive shares of newly issued and
registered Ultrak Common Stock. These terms and conditions were set forth in a
letter of intent which was executed by the parties on or about February 2,
1995.
Following the execution of the letter of intent, Ultrak conducted a
due diligence review of, among other things, Diamond's financial condition and
results of operations, contracts, leases, litigation, and employee relations.
During the review, Ultrak determined that there were synergistic advantages to
the Merger as to products and marketing.
At a special meeting held on April 26, 1995, the Board of Directors of
Ultrak unanimously determined that the Merger Agreement was in the best
interests of Ultrak and its shareholders and approved and adopted the Merger
Agreement. Approval of the Merger Agreement and the Merger by the shareholders
of Ultrak is not required; however, Ultrak, as the sole shareholder of
Ultrak-Subsidiary, has approved the Merger and the terms of the Merger
Agreement.
In reaching its decision to approve and adopt the Merger Agreement and
to recommend to the Diamond Shareholders that they approve and adopt the Merger
Agreement, the Board of Directors of Diamond, without assigning any relative or
specific weights, considered a number of factors, including, among others, the
following: (i) the historical and current financial condition, results of
operations, and business of Diamond and Ultrak; (ii) the terms of the Merger
Agreement, including, among other things, the consideration to be received by
the Diamond Shareholders in the Merger, the assumption by Ultrak of the
outstanding obligations and liabilities of Diamond in connection with the
Merger, and the conditions to the Merger and Diamond's ability to satisfy such
conditions; (iii) the quality of and risks associated with the Ultrak Common
Stock to be received by the Diamond Shareholders in the Merger; and (iv) the
likelihood that the Merger will be treated as a tax-free reorganization for
federal income tax purposes so that generally no gain or loss will be
recognized by the Diamond Shareholders in connection with the exchange of
Diamond Common Stock for Ultrak Common Stock in the Merger.
TERMS OF THE MERGER AGREEMENT
GENERAL. The Merger Agreement provides that, following approval of
the Merger Agreement by the Diamond Shareholders and the satisfaction or waiver
of the other conditions to the Merger, Ultrak Subsidiary will be merged with
and into Diamond at the Effective Time in accordance with the Ohio Revised Code
(the "ORC") and the Texas Business Corporation Act (the "TBCA"). Diamond will
be the surviving corporation in the Merger. As a result of the Merger, the
separate corporate existence of Ultrak Subsidiary will cease, and Diamond will
become a wholly-owned subsidiary of Ultrak.
CONVERSION FACTOR. Except as set forth below, each share of Diamond
Common Stock issued and outstanding at the time of the Merger (other than
treasury shares and shares held by persons who perfect their appraisal rights
under the ORC) will be converted into the right to receive 0.125 shares of
Ultrak Common Stock. Cash will be paid in lieu of issuing fractional shares of
Ultrak Common Stock in an amount equal to the Determination Price (as defined
herein) of Ultrak Common Stock multiplied by the fraction of a share. Cash
will also be paid in lieu of Ultrak Common Stock to any Diamond Shareholder who
would receive ten (10) or fewer shares of Ultrak Common Stock in the Merger
(the "Cash Out") in an amount equal to the product of (i) the average closing
price of Ultrak Common Stock as reported for Nasdaq in the Wall Street Journal,
Southwest Edition, for each of the ten (10) trading days ending on the trading
day which is five (5) days prior to the Effective Date, multiplied by (ii) the
number of shares of Ultrak Common Stock that such Diamond Shareholder is
entitled to receive pursuant to the Merger Agreement. It is a condition to
13
<PAGE> 19
consummation of the Merger that shares of Ultrak Common Stock be exchanged for
at least 95% of the Diamond Common Stock (subject to certain adjustments).
The "Determination Price" shall mean the following: (i) the
Determination Price on the Effective Date shall be the closing price, as
reported for Nasdaq in the Wall Street Journal, Southwest Edition, on the last
trading day immediately prior to the Effective Date; (ii) the Determination
Price on the First Adjustment Date (as defined herein) shall be the average
closing price, as reported for Nasdaq in the Wall Street Journal, Southwest
Edition, for each of the ten (10) trading days ending on the First Adjustment
Date; and (iii) the Determination Price on the Second Adjustment Date (as
defined herein) shall be the average closing price, as reported for Nasdaq in
the Wall Street Journal, Southwest Edition, for each of the ten (10) trading
days ending on the Second Adjustment Date.
The "Conversion Factor" shall mean 0.125, which is determined by
dividing 600,000 (the aggregate number of shares of Ultrak Common Stock to be
exchanged in the Merger as of the Effective Date) by 4,809,219 (the aggregate
number of shares of Diamond Common Stock to be exchanged in the Merger).
ADJUSTMENTS. If the average closing price of Ultrak Common Stock as
reported for the Nasdaq in the Wall Street Journal, Southwest Edition, for each
of the ten (10) trading days ending on the first trading day (the "First
Adjustment Date") that is six (6) months from the Effective Date is less than
$7.00, then Ultrak shall issue an additional 50,000 shares of Ultrak Common
Stock to the shareholders of Diamond as of the Effective Date (the "Effective
Date Shareholders"), and each Effective Date Shareholder will receive one share
of Ultrak Common Stock for every twelve (12) shares of Ultrak Common Stock
received pursuant to the Merger on the Effective Date.
If the average closing price of Ultrak Common Stock as reported for
Nasdaq in the Wall Street Journal, Southwest Edition, for each of the ten (10)
trading days ending on the first trading day (the "Second Adjustment Date")
(the First Adjustment Date and the Second Adjustment Date are sometimes
collectively referred to herein as the "Adjustment Dates") that is twelve (12)
months from the Effective Date is less than $8.00, then Ultrak shall issue an
additional 50,000 shares of Ultrak Common Stock to the Effective Date
Shareholders, and each Effective Date Shareholder will receive one share of
Ultrak Common Stock for every twelve (12) shares of Ultrak Common Stock
received pursuant to the Merger on the Effective Date.
In the event of any change in the outstanding Ultrak Common Stock by
reason of stock dividends, stock splits, share combinations, mergers,
recapitalization, exchanges of shares, or the like, between the signing date of
the Merger Agreement and an Adjustment Date, then the type of shares subject to
issuance on such Adjustment Date and the price of the Ultrak Common Stock that
determines whether any additional shares are issued on such Adjustment Date,
shall be adjusted appropriately. The right to receive any additional shares of
Ultrak Common Stock pursuant to such adjustments is a personal right of the
Effective Date Shareholders and they may not transfer or assign all or any
portion of their right to receive additional shares of Ultrak Common Stock. No
person or entity, other than the Effective Date Shareholders, shall have the
right to receive any additional shares of Ultrak Common Stock pursuant to such
adjustments.
CONDITIONS TO THE MERGER. The obligations of Ultrak and Diamond to
consummate the Merger are subject to the satisfaction of certain conditions,
including, among others: (i) the approval and adoption of the Merger Agreement
by the Diamond Shareholders; (ii) the absence of any injunction, writ, or
preliminary restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that the Merger may
not be consummated as provided in the Merger Agreement and the absence of any
lawsuit or proceeding (actual or as to which written notice has been received)
by any governmental or regulatory agency for the purpose of obtaining any such
injunction, writ, or preliminary restraining order; and (iii) the effectiveness
of the Registration Statement under the Securities Act and the absence of (a)
any stop order suspending the effectiveness of the Registration Statement or
any proceedings by the Commission (actual or threatened) for such purpose and
(b) the absence of any stop order suspending the effectiveness of any
exemption, qualification, or registration of the Ultrak Common Stock under the
state securities laws or any proceeding by authorities of any such state
(actual or threatened) for such purpose.
14
<PAGE> 20
The obligation of Ultrak to consummate the Merger is subject to
certain additional conditions, including, among others, that: (i) Diamond's
representations and warranties contained in the Merger Agreement shall be true
and correct as of the date of the Merger Agreement and as of the Effective
Date; (ii) Diamond shall have performed in all material respects all covenants
and agreements required to be performed by it under the Merger Agreement; (iii)
there shall have been no material adverse change in Diamond's business,
properties, assets, liabilities, results of operations, or condition, financial
or otherwise; (iv) Ultrak shall have received legal opinions with respect to
various matters; (v) Ultrak shall have received written evidence that an
application for a permit on behalf of Diamond for wastewater and for the paint
booth shall have been properly filed with the Ohio Environmental Protection
Agency; (vi) shares of Ultrak Common Stock shall be exchanged for at least
ninety-five percent (95%) of the Diamond Common Stock (subject to certain
adjustments); (vii) Richard Tompkins shall have executed and delivered an
employment agreement in the form attached to the Merger Agreement; (viii) each
of the officers and directors of Diamond shall have tendered to Ultrak a
resignation letter in form and substance reasonably satisfactory to Ultrak; and
(ix) to the extent rights to acquire stock of Diamond are not exercised within
two (2) business days prior to the Effective Date, Diamond shall deliver to
Ultrak evidence that such options, warrants, or other rights to acquire stock
of Diamond have been cancelled or terminated.
The obligation of Diamond to consummate the Merger also is subject to
certain additional conditions, including, among others, that: (i) Ultrak's
representations and warranties contained in the Merger Agreement shall be true
and correct as of the date of the Merger Agreement and as of the Effective
Time; (ii) Ultrak shall have performed in all material respects all covenants
and agreements required to be performed by it under the Merger Agreement; (iii)
there shall have been no material adverse change in Ultrak's business,
properties, assets, liabilities, results of operations or condition, financial
or otherwise; (iv) Diamond shall have received legal opinions with respect to
various matters; and (v) Diamond shall have received a tax opinion of Leagre &
Barnes with respect to various matters.
AMENDMENT. The Merger Agreement may be amended by the written
agreement of all the parties to the Merger Agreement.
TERMINATION. The Merger Agreement may be terminated (i) by mutual
written consent of the Boards of Directors of Diamond and Ultrak, (ii) by
either Diamond or Ultrak if the Effective Date has not occurred on or before
June 30, 1995, unless such failure of consummation is due to the failure of the
terminating party to perform or observe the covenants, agreements, and
conditions of the Merger Agreement to be performed or observed by it on or
before the Effective Date, or (iii) by either Ultrak or Diamond if the
conditions precedent to the terminating party's obligations to consummate its
obligations under the Merger Agreement have not been satisfied or waived by the
terminating party on or before the Effective Date.
FEES AND EXPENSES. Each of Ultrak and Diamond will pay its own fees
and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby; provided, however, that to the extent
Diamond's legal fees and expenses in connection with the Merger Agreement and
the transactions contemplated thereby exceed $35,000, such excess shall be paid
by the Signing Shareholders.
EXCHANGE OF DIAMOND STOCK CERTIFICATES. As soon as practicable after
the Effective Date, instructions and a letter of transmittal will be furnished
to the Effective Date Shareholders for use in exchanging their stock
certificates for certificates evidencing the shares of Ultrak Common Stock they
will be entitled to receive as a result of the Merger. THE DIAMOND
SHAREHOLDERS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE UNTIL
INSTRUCTIONS AND A LETTER OF TRANSMITTAL ARE RECEIVED.
NO SOLICITATION. The Merger Agreement provides that until the
Effective Date or until the Merger Agreement is terminated in accordance with
its terms, neither Diamond nor its officers, directors, agents, or affiliates,
will, except as required by law or by the Merger Agreement, or by the fiduciary
duties of the Board of Directors of Diamond: (a) directly or indirectly,
encourage, solicit, or initiate discussions or negotiations with any
corporation, partnership, person, or other entity or group concerning any
merger, sale of all or substantially all of the assets, business combination,
sale of shares of capital stock, or similar transactions
15
<PAGE> 21
involving Diamond, whether by providing nonpublic information or otherwise; or
(b) disclose, directly or indirectly, any information not customarily disclosed
to any person concerning its business and properties, afford to any other
person access to its properties, books, or records or otherwise assist or
encourage any person in connection with any of the foregoing. If Diamond
receives any offer or inquiry for a transaction of the type referred to in (a)
above, then the Merger Agreement provides that Diamond will promptly inform
Ultrak and Ultrak Subsidiary as to the relevant terms and conditions of such
offer.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of a certificate of
merger relating thereto with the Secretary of State of Ohio and articles of
merger relating thereto with the Secretary of State of Texas. The Merger
Agreement provides that the parties thereto will cause such certificate of
merger and articles of merger to be filed as soon as practicable after each of
the conditions to consummation of the Merger has been satisfied or waived. The
Merger cannot become effective until the Diamond Shareholders have approved the
Merger Agreement and all required regulatory approvals and actions have been
obtained and taken. See "Merger-Terms of the Merger Agreement--Conditions to
the Merger." Thus, there can be no assurance as to whether or when the Merger
will become effective.
RECOMMENDATION OF THE DIAMOND BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF DIAMOND HAS DETERMINED THAT THE MERGER IS IN
THE BEST INTERESTS OF DIAMOND AND THE DIAMOND SHAREHOLDERS, HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, AND RECOMMENDS THAT THE DIAMOND SHAREHOLDERS
VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT AND THE MERGER.
RIGHTS OF DISSENTING SHAREHOLDERS
DISSENTERS RIGHTS. A Diamond Shareholder who does not vote in favor
of the Merger Proposal at the Diamond Special Meeting has the right under
Section 1701.85 of the ORC to demand the fair cash value for his shares of
Diamond Common Stock. To perfect these dissenters' rights, the dissenting
Diamond Shareholder must deliver to Diamond a written demand for payment to him
of the fair cash value of his shares of Diamond Common Stock, stating in such
notice the amount claimed by him as the fair cash value for such shares. Such
written demand must be delivered to Diamond not later than ten days after the
Special Meeting.
If Diamond and the Dissenting Shareholder do not come to an agreement
on the fair cash value of the shares of Diamond Common Stock, then within three
months of the demand by the dissenting Diamond Shareholder, either party may
file a complaint in the Court of Common Pleas of Fairfield County, Ohio. If
the court finds that the dissenting Diamond Shareholder is entitled to receive
fair value for his shares of Diamond Common Stock, the court may appoint one or
more appraisers to recommend a determination of the amount of the fair cash
value. The court will then render a judgment against Diamond for payment of
the fair cash value, as determined by the court, with interest at such rate and
from such date as the court considers equitable. Court costs, including costs
of the appraisers, will be assessed or apportioned as the Court considers
equitable.
The procedure set forth in Section 1701.85 of the ORC should be
complied with strictly. Failure to follow any of such procedures may result
in the termination or waiver of dissenters' rights. The Diamond Shareholders
should note that failure to execute and return a proxy does not perfect
dissenters' rights. In addition, neither voting against the Merger Proposal
nor abstaining from voting will constitute a demand for payment. However,
voting in favor of the Merger Proposal will waive a Diamond Shareholder's
dissenters' rights. If a Diamond Shareholder returns a signed proxy card but
does not specify a vote, the proxy will be voted in favor of the Merger
Proposal which will have the effect of waiving such Diamond Shareholder's
dissenters' rights.
A condition to the obligation of Diamond to consummate the Merger is
that the shares held by the Diamond Shareholders who have dissented and
demanded fair cash value of their shares pursuant to the ORC
16
<PAGE> 22
plus shares of Diamond Common Stock subject to the Cash Out will not represent
more than five percent of the Diamond Common Stock.
The Diamond Shareholders are advised to review Section 1701.85 of the
ORC, which is reproduced as Annex B to this Prospectus/Proxy Statement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering whether to approve the Merger Agreement, the Diamond
Shareholders should be aware that certain executive officers and directors of
Diamond have certain interests that may present them with potential conflicts
of interests with respect to the Merger.
OWNERSHIP OF DIAMOND COMMON STOCK. As of the Record Date, executive
officers and directors of Diamond beneficially owned an aggregate of 2,978,523
shares of Diamond Common Stock. Subject to subsequent adjustments, the
executive officers and directors of Diamond would therefore be entitled to
receive in the Merger an aggregate of 371,600 shares of Ultrak Common Stock
having an aggregate market value of $3,019,250 (based on the closing price per
share of Ultrak Common Stock reported on the Nasdaq on May 3, 1995). See
"Ownership of Diamond Common Stock."
BONUS AND EMPLOYMENT AGREEMENT. The Merger Agreement contemplates the
execution by Ultrak of a new employment agreement with Diamond's President,
Richard Tompkins. Diamond has paid Mr. Tompkins a bonus of $16,800 for several
reasons, including the following: (i) to recognize his services in negotiating
the terms of the Merger Agreement and (ii) to facilitate the exercise of his
stock options for shares of Diamond Common Stock prior to the execution of the
Merger Agreement.
REGULATORY APPROVALS REQUIRED
Under the Merger Agreement, the obligations of both Ultrak and Diamond
to consummate the Merger are conditioned upon receipt of all required
regulatory approvals (with certain exceptions). Other than the approval of
certain state securities commissions, Ultrak and Diamond believe that no such
regulatory and other approvals are required by applicable law.
ACCOUNTING TREATMENT
For financial reporting purposes, the Merger will be accounted for by
the purchase method of accounting in accordance with generally accepted
accounting principles. Accordingly, the purchase price will be allocated to
the assets and liabilities of Diamond acquired based on their estimated fair
values with the excess of cost over the net assets acquired being allocated to
goodwill.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL. The following is a summary of the intended material federal
income tax consequences of the Merger to the Diamond Shareholders. The summary
is based on the provisions of the Code, the Treasury Regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all as in
effect as of the date hereof. Such laws or interpretations may differ as of
the Effective Date, and relevant facts may also differ.
The tax treatment of the Merger with respect to each Diamond
Shareholder will depend in part upon each such Diamond Shareholder's particular
situation. Special tax consequences not described below may be applicable to
particular classes of taxpayers, including financial institutions,
broker-dealers, persons who are not citizens or residents of the United States
or who are legal entities formed under the laws of jurisdictions outside the
United States, and the Diamond Shareholders who acquired their shares through
the exercise of employee stock options or otherwise as compensation. All
Diamond Shareholders should consult with their own tax advisors as to the
particular tax consequences of the Merger to them, including the applicability
and effect of any state, local, and foreign tax laws.
17
<PAGE> 23
TAX CONSEQUENCES TO DIAMOND SHAREHOLDERS. Pursuant to the terms of
the Merger Agreement, Diamond and Ultrak will receive the opinion of Leagre &
Barnes, dated as of the Effective Date, to the effect that, subject to the
assumptions, qualifications, and limitations set forth therein, the Merger will
be treated as a tax-free reorganization for federal income tax purposes so that
no gain or loss will be recognized by the Diamond Shareholders, except in
respect of cash received in lieu of fractional shares, cash received pursuant
to the Cash Out, or payments received by the Diamond Shareholders exercising
dissenters' rights. However, although the obligations of Ultrak and Diamond to
consummate the Merger are conditioned upon the receipt of the tax opinion of
Leagre & Barnes regarding the intended federal income tax consequences of the
Merger, that opinion is not binding upon the Internal Revenue Service and no
ruling has been sought from the Internal Revenue Service regarding the tax-free
nature of the Merger. If the Merger is consummated, and it is later determined
that the Merger did not qualify as a tax-free reorganization under the Code,
Diamond Shareholders would recognize taxable gain or loss in the Merger equal
to the difference between the fair market value of the Ultrak Common Stock such
Diamond Shareholder received and such Diamond Shareholder's basis in his or her
Diamond Common Stock.
Cash received in the Merger by a Diamond Shareholder in lieu of a
fractional share of Ultrak Common Stock or pursuant to the Cash Out will be
treated under Section 302 of the Code as having been received by the Diamond
Shareholder in exchange for such fractional share, and the Diamond Shareholder
generally will recognize capital gain or loss in such exchange equal to the
difference between the cash received and the Diamond Shareholder's tax basis
allocable to the fractional share or the shares subject to the Cash Out. A
Diamond Shareholder who perfects his dissenters' rights under the ORC and who
receives payment in cash for the "fair cash value" of his Diamond Common Stock
will be treated as having received such payment in a redemption of the Diamond
Common Stock subject to the provisions of Section 302 of the Code. In general,
a dissenting Diamond Shareholder will recognize capital gain or loss measured
by the difference between the amount received by such Diamond Shareholder in
payment for his shares of Diamond Common Stock and the tax basis of such shares
of Diamond Common Stock.
Any gain or loss recognized will be capital gain or loss if the
Diamond Common Stock or Ultrak fractional share interest was a capital asset in
the hands of the Diamond Shareholder, and will be long-term capital gain or
loss if the Diamond Common Stock was held by such Diamond Shareholder for more
than one year. In general, the federal income tax rates applicable to
long-term capital gains and ordinary income (including short-term capital
gains) of taxpayers that are individuals may differ, while for corporations
capital gains and ordinary income are generally taxed at the same rate. The
deductibility of capital losses is subject to limitations for both individuals
and corporations.
THE DISCUSSION SET FORTH ABOVE DOES NOT ADDRESS THE STATE, LOCAL, OR
FOREIGN TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY
EXISTING PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS
THEREUNDER, AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE
FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING
VALIDITY OF THIS DISCUSSION. EACH DIAMOND SHAREHOLDER SHOULD CONSULT HIS OR
HER OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER
TO SUCH DIAMOND SHAREHOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL, AND FOREIGN TAX LAWS.
RESALE OF ULTRAK COMMON STOCK
Shares of Ultrak Common Stock to be issued to the Diamond Shareholders
in connection with the Merger will be freely transferrable under the Securities
Act, except for shares issued to the Signing Shareholders or to any person who,
as of the Effective Date, may be deemed to be an affiliate ("Affiliate") of
Diamond within the meaning of Rule 145 under the Securities Act. In general,
Affiliates of Diamond include certain of its executive officers, each member of
its board of directors, and any other person or entity who controls, is
controlled by, or is under control with, Diamond. Rule 145, among other
things, imposes certain restrictions upon the resale of securities received by
Affiliates in connection with certain reclassifications, mergers,
consolidations, or asset transfers. Ultrak Common Stock received by Affiliates
of Diamond in the Merger will be subject to the applicable resale limitations
of Rule 145.
18
<PAGE> 24
In the Merger Agreement, Diamond has agreed that neither any Affiliate
nor any Signing Shareholder shall (i) sell shares of Ultrak Common Stock for
the forty-five (45) day period immediately prior to the First Adjustment Date
and the Second Adjustment Date or (ii) sell, during the twelve (12) months
immediately following the Effective Date, shares of Ultrak Common Stock
constituting more than one-third of the shares of Ultrak Common Stock received
by such affiliate or Signing Shareholder in the Merger. See "The Merger
- -Adjustments."
Ultrak may place legends on certificates representing shares of Ultrak
Common Stock which are issued to Affiliates of Diamond in the Merger to
restrict transfers in accordance with the foregoing.
COMPARISON OF RIGHTS OF HOLDERS OF DIAMOND COMMON STOCK AND ULTRAK COMMON STOCK
Ultrak is incorporated under the laws of the State of Colorado, and
Diamond is incorporated under the laws of the State of Ohio. Diamond
Shareholders' rights are currently governed by the ORC, Diamond's Articles of
Incorporation, attached hereto as Annex C (the "Diamond Charter"), and
Diamond's Code of Regulations (the "Diamond Regulations"), attached hereto as
Annex D. Upon consummation of the Merger and to the extent they receive shares
of Ultrak Common Stock, the Diamond Shareholders will become shareholders of
Ultrak, and their rights thereafter will be governed by the Colorado Business
Corporation Act (the "CBCA"), Ultrak's Articles of Incorporation, as amended,
attached hereto as Annex E (the "Ultrak Charter"), and the Bylaws of Ultrak
(the "Ultrak Bylaws"), attached hereto as Annex F. The following summary does
not purport to be a complete statement of the rights of the shareholders of
Ultrak and Diamond. Persons needing more specific information should consult
with counsel regarding the Ultrak Charter, the Ultrak Bylaws, the Diamond
Charter, the Diamond Regulations, the CBCA, and the ORC.
AUTHORIZED SHARES. Under the Ultrak Charter, Ultrak is authorized to
issue 20 million shares of Ultrak Common Stock and 2,000,000 shares of
preferred stock, $5.00 par value per share, of which 195,351 shares of Series A
Preferred Stock are currently issued and outstanding. The powers, preferences,
and rights of the Ultrak Common Stock and the Series A Preferred Stock are
identical except that holders of the Series A Preferred Stock are entitled to
quarterly preferential dividends and upon liquidation, dissolution, or winding
up of Ultrak, and the holders of the Series A Preferred Stock are entitled to
receive the original purchase price of $5.00 plus any unpaid dividends accruing
to that date. See "Description of Ultrak's Capital Stock - General."
Under the Diamond Charter, Diamond is authorized to issue 5,000,000
shares of Diamond Common Stock and 100,000 shares of Preferred Stock, par value
$100.00 per share. None of these shares of Preferred Stock of Diamond are
presently issued and outstanding.
AMENDMENTS TO CHARTER AND BYLAWS. Under the ORC, a corporation's
articles of incorporation may be amended by the Board of Directors and by the
affirmative vote of the holders of at least two-thirds of the outstanding
shares entitled to vote or, if the corporation's articles of incorporation so
provide, any other proportion not less than a majority. The Diamond Charter
does not specify a lesser vote to amend the Diamond Charter.
Under the CBCA, a corporation's articles of incorporation may be
amended by the board of directors and by the affirmative vote of the holders of
at least two-thirds of the outstanding shares entitled to vote. The Ultrak
Charter provides that the Ultrak Bylaws may be amended or repealed by the Board
of Directors of Ultrak, subject to the power of the shareholders of Ultrak to
amend or repeal any such change to the Ultrak Bylaws.
SPECIAL MEETINGS OF SHAREHOLDERS. Under the Ultrak Bylaws, a special
meeting of the shareholders of Ultrak may be called by the President, by order
of the Board of Directors, upon the written request of the holders of at least
10% of the outstanding shares of Ultrak Common Stock entitled to vote at such
meeting, or by legal counsel of Ultrak as last designated by resolution of the
Board of Directors. Under the Diamond Regulations, special meetings of the
Diamond Shareholders may be called by the Chairman of the Board or by the Board
of Directors, the President, the Secretary, or by the holders of at least 25%
of all shares outstanding and entitled to vote.
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<PAGE> 25
SHAREHOLDER NOMINATIONS. The Ultrak Bylaws contain no restrictions on
the ability of shareholders to nominate persons for election as a director of
Ultrak. The Diamond Regulations contain no restrictions on the ability of
shareholders to nominate persons for election as a director of Diamond.
SHAREHOLDER PROPOSALS. The Ultrak Bylaws contain no restrictions on
the ability of shareholders to make shareholder proposals. The Diamond
Regulations contain no restrictions on the ability of shareholders to make
shareholder proposals.
BOARD OF DIRECTORS. Under the Ultrak Bylaws, the Board of Directors
of Ultrak consists of such number of directors as determined from time to time
by the Board of Directors, which cannot in any case be less than three. The
Board of Directors of Ultrak currently consists of four members, all of whom
are elected at each annual meeting of shareholders. Under the Ultrak Bylaws,
directors may be removed with or without cause at any time by the holders of a
majority of the outstanding Ultrak Common Stock entitled to vote. Under the
Diamond Regulations, the Board of Directors of Diamond consists of five
directors.
Under the Ultrak Bylaws, the presence of a majority of the total
number of directors currently comprising the Board of Directors is necessary to
constitute a quorum. Under the Diamond Regulations, a majority of the total
number of directors currently comprising the Board of Directors is necessary to
constitute a quorum.
LIMITATION ON PERSONAL LIABILITY OF DIRECTORS. Under the Ultrak
Charter, no director of Ultrak will be personally liable to Ultrak or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except in limited circumstances. The Diamond Charter does not address the
personal responsibility of directors of Diamond for breaches of their fiduciary
duties.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under the Ultrak Charter,
Ultrak is required to indemnify, to the fullest extent permitted by the CBCA,
any person who is involved in any action, suit, or proceeding by reason of the
fact that the person is or was a director, officer, employee, or agent of
Ultrak, provided that such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the interests of Ultrak, and had
no reason to believe his conduct was unlawful. Ultrak may advance the
reasonable expenses to any such director, officer, employee, or agent of Ultrak
provided that, in the case of a director or officer of Ultrak, he or she
delivers the undertaking required by the CBCA.
The Diamond Regulations require that Diamond indemnify any officer or
director of Diamond, to the fullest extent permitted by the ORC, who is
involved in any action, suit, or proceeding by reason of the fact that the
person is or was a director, officer, employee, or agent of Diamond (or of
another corporation while serving at the request of Diamond). Diamond is
required to reimburse the expenses of any officer or director of Diamond who
has been successful on the merits or otherwise in defense of any action, suit,
or proceeding.
DISSENTERS RIGHTS. Subject to certain conditions contained in the
ORC, holders of Diamond Common Stock who do not vote their shares in favor of a
merger or consolidation are eligible to make a written demand on Diamond for
payment of the fair cash value of such shares within ten days after the meeting
at which the proposal for Diamond to engage in a merger or consolidation is
considered. A shareholder seeking to assert appraisal rights under Ohio law
must deliver a written demand for payment to him of the fair cash value of his
shares of stock, stating in such notice the amount claimed by him as the fair
cash value for such shares. Failure to execute and return a proxy does not
perfect dissenters' rights. In addition, if a shareholder of an Ohio
corporation votes in favor of such a proposal, then such shareholder will be
deemed to have waived his dissenters' rights. Also, if a shareholder returns a
signed proxy card but does not specify a vote, the proxy will be voted in favor
of the proposal, which will have the effect of waiving the shareholder's
dissenters' rights.
Shareholders of Ultrak are also entitled under Colorado corporation
law to receive payment for their shares if they dissent from certain corporate
actions, such as a reincorporation, consolidation, merger, or sale of all or
substantially all of Ultrak's assets. Any shareholder of Ultrak wishing to
dissent from such a transaction and obtain cash payment for his shares must
file with Ultrak, prior to the vote on such transaction, a written notice of
his intention to demand that he be paid fair compensation for his shares if the
transaction
20
<PAGE> 26
is effectuated and must refrain from voting his shares in approval of such
transaction. A shareholder who fails to demand payment or fails to deposit his
certificate for payment within 30 days of mailing of such notice by Ultrak will
have no right to receive payment for his shares but will retain all other
rights of a shareholder of Ultrak.
21
<PAGE> 27
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements
assume the Merger is accounted for as a purchase. See "Merger--Terms of the
Merger and Accounting Treatment." The unaudited pro forma condensed combined
financial statements are based on the respective historical financial
statements and the notes thereto of Ultrak and Diamond, included elsewhere
herein. The unaudited pro forma condensed combined balance sheet combines
Ultrak's December 31, 1994 consolidated balance sheet with Diamond's January 1,
1995 consolidated balance sheet. The unaudited pro forma condensed combined
statements of income combine Ultrak's consolidated statement of income for the
fiscal year ended December 31, 1994 with the corresponding Diamond consolidated
statements of operations for the fifty-two weeks ended January 1, 1995. The
amounts included as Diamond historical amounts have been reclassified to
conform to classifications used by Ultrak.
The unaudited pro forma combined information is presented for illustrative
purposes only and is not necessarily indicative of the operating results that
would have occurred if the business combination had been consummated at the
beginning of the period presented, nor is it necessarily indicative of future
operating results or financial position.
These unaudited pro forma combined financial statements should be read in
conjunction with the historical financial statements and the related notes
thereto of Ultrak and Diamond included elsewhere herein.
22
<PAGE> 28
ULTRAK AND DIAMOND
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Ultrak Diamond Pro Forma Pro Forma
12/31/94 1/1/95 Adjustments Combined
-------- ------ ----------- --------
<S> <C> <C> <C> <C>
SALES $ 78,793,711 $ 11,774,691 $ 0 $ 90,568,402
COST OF SALES 59,349,708 8,009,468 0 67,359,176
GROSS PROFIT 19,444,003 3,765,223 0 23,209,226
TOTAL OPERATING EXPENSES 14,334,316 3,197,244 39,651(1) 17,571,211
OPERATING INCOME 5,109,687 567,979 (39,651) 5,638,015
TOTAL OTHER (INCOME) EXPENSE 807,155 28,817 0 835,972
NET INCOME before TAXES 4,302,532 539,162 0 4,841,694
FROM CONTINUING OPERATIONS
INCOME TAXES 1,513,020 213,521 (15,464)(2) 1,711,077
------------ ------------ --------- ------------
NET INCOME after TAXES
FROM CONTINUING OPERATIONS 2,789,512 325,641 0 3,090,966
Dividend Requirements on Preferred Stock (117,210) 0 0 (117,210)
NET INCOME FROM CONTINUING OPERATIONS
ALLOCABLE TO COMMON STOCKHOLDERS $ 2,672,302 $ 325,641 $ (24,187) $ 2,973,751
============ ============ ========== ============
Primary Net Income per Share $ .39 - 0 $ .40
Fully Diluted Net Income per Share $ .39 - 0 $ .39
Primary Weighted Average Shares Outstanding 6,818,999 0 650,000(3) 7,468,999
Fully Diluted Weighted Average Shares 7,236,985 0 650,000(3) 7,886,985
Outstanding
- ------------------------------
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
(1) Adjustment to depreciate property and equipment written up to its fair
value over 30 years ($8,133) and to amortize goodwill over 25 years
($31,518).
(2) The tax effect of pro forma adjustments to earnings before taxes is based
on the estimated federal and state statutory tax rate.
(3) Includes the shares of Ultrak Common Stock to be issued in the Merger as
well as 50,000 shares contingently issuable if the market price of the
Ultrak Common Stock is not $8.00 per share one year after the Merger.
23
<PAGE> 29
ULTRAK AND DIAMOND
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
Ultrak Diamond Pro forma Pro forma
ASSETS 12/31/94 1/1/95 Adjustments Combined
-------- ------ ----------- ---------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 642,241 $ 30,549 $ 0 $ 672,790
Accounts Receivable, net 10,743,091 2,203,670 0 12,946,761
Notes Receivable 253,771 0 0 253,771
Prepaids and Other Current Assets 541,686 348,619 0 890,305
Inventories, net 14,396,438 2,370,557 0 16,766,995
Advances for Inventory 5,381,437 0 0 5,381,437
----------- ------------ ----------- -----------
Total current assets 31,958,664 4,953,395 0 36,912,059
----------- ------------ ----------- -----------
PROPERTY and EQUIPMENT, NET 1,971,393 1,763,920 400,000 (1) 4,135,313
----------- ------------ ----------- -----------
NOTES RECEIVABLE, NONCURRENT 984,208 0 0 984,208
OTHER ASSETS:
Goodwill, net 1,259,969 0 787,953 (2) 1,891,922
Other Assets 178,456 49,373 0 227,829
----------- ------------ ----------- -----------
Total other assets 1,438,425 49,373 787,953 2,275,751
----------- ------------ ----------- -----------
TOTAL ASSETS $36,352,690 $ 6,766,688 $ 1,187,953 $44,307,331
=========== ============ =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade Accounts Payable $ 6,531,779 $ 875,852 $ 0 $ 7,407,631
Notes Payable 18,244,183 1,167,162 0 19,411,345
Current Portion of Long Term Debt 0 105,960 0 105,960
Accrued Liabilities 664,740 501,915 0 1,166,655
Other Current Liabilities 841,600 13,204 0 854,804
----------- ------------ ----------- -----------
Total current liabilities 26,282,302 2,664,093 0 28,946,395
----------- ------------ ----------- -----------
LONG TERM LIABILITIES 0 884,548 156,000 (3) 1,040,548
STOCKHOLDERS' EQUITY: 0
Preferred Stock 976,755 0 0 976,755
Common Stock 73,254 3,189,084 -3,147,084 (3) 115,254
Additional Paid in Capital 7,213,747 120,000 4,088,000 (3) 11,421,747
Retained Earnings 1,806,632 -91,037 91,037 (3) 1,806,632
----------- ------------ ----------- -----------
Total stockholders' equity 10,070,388 3,218,047 1,031,953 (4) 14,320,388
----------- ------------ ----------- -----------
TOTAL LIABILITIES AND $36,352,690 $ 6,766,688 $ 1,187,953 $44,307,331
STOCKHOLDERS' EQUITY =========== ============ =========== ===========
- --------------------------------------
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
(1) To reflect Diamond's building and land at appraised values.
(2) To reflect the excess of cost over identifiable assets less liabilities.
(3) To reflect a deferred income tax liability for the increase in the
carrying value of Diamond's building and land.
(4) Adjusted to reflect the effects of 600,000 shares of Ultrak Common Stock
issued less the net tangible assets acquired.
24
<PAGE> 30
BUSINESS OF ULTRAK
GENERAL
Ultrak designs, manufactures, markets, and services video closed circuit
television products for use in security applications, general observation,
medical and dental equipment and automated manufacturing systems. These
products include a broad line of cameras, lenses, monitors, switchers, time
lapse recorders, multiplexers, and wireless video transmission systems.
Prior to July 1993, Ultrak's Exxis Technologies, Inc. subsidiary marketed,
sold, and serviced personal computer products, including desktop and tower
computers, disk drives, CD-ROM drives, printers and monitors sold under its
private brand name [X] Smart Choice. Ultrak discontinued this business in July
1993. See "Ultrak Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Note I of Notes to Ultrak's Consolidated
Financial Statements.
Ultrak is a Colorado corporation incorporated in 1980. Ultrak's
headquarters are located at 1220 Champion Circle, Suite 100, Carrollton, Texas
75006. Ultrak conducts its principal business operations at five locations:
Carrollton (Dallas), Texas; Broomfield (Denver), Colorado; Annapolis, Maryland;
southern California and Chicago, Illinois and has additional sales offices in
New York, southern Florida, Boston, Atlanta, and Los Angeles.
RECENT DEVELOPMENTS
Effective April 1, 1994, Ultrak acquired a 56% interest in JAK Pacific
Warranty and Repair Services, Inc., a California corporation ("JAK"), for total
cash consideration of $573,000. JAK is in the business of providing warranty
and repair services for CCTV equipment for a line of products manufactured by a
Korean based company. JAK also has exclusive marketing and sales rights for
certain products in the United States. The operations of JAK were merged with
the existing operations of Ultrak's facility in southern California. The
transaction was accounted for as a purchase. Ultrak has an option to acquire
the remaining 44% of JAK for cash consideration of $500,000, which will expire
on December 31, 1995.
In July 1994, Ultrak exercised its option, in accordance with the terms of
an Option Agreement, to acquire an additional 2.2% of the outstanding stock of
Dental Vision Direct, Inc. ("DVD") from the minority shareholders of DVD,
thereby increasing Ultrak's ownership in DVD from 80% to 82.2%. DVD is in the
business of manufacturing, marketing, and selling an intraoral video hand piece
(sold under the Ultracam trade name) and related accessories used by dentists
in their practices. Effective December 30, 1994, Ultrak acquired the remaining
17.8% interest in DVD from the minority owners for total cash consideration of
$5,000.
On October 31, 1994, Ultrak's revolving line of credit with NationsBank of
Texas, N.A. was increased from $12.0 million to $13.2 million. The NationsBank
revolving line of credit was further increased during February 1995 from $13.2
million to $15.0 million. On October 4, 1994, Petrus Fund, L.P., of which
Perot Investments is the general partner, increased its revolving line of
credit to Ultrak from $6.0 million to $7.0 million and agreed to further
increase Ultrak's line of credit from $7.0 million to $8.0 million upon
Ultrak's achievement of certain net income requirements. In conjunction with
the amendments to both loan agreements, certain financial and operational
covenants were modified. All other terms and conditions of the loan agreements
were unchanged.
On March 10, 1995, the Board of Directors of Ultrak approved a proposal to
change Ultrak's state of incorporation from Colorado to Delaware effective
December 29, 1995, and to submit such proposal to Ultrak's shareholders. At
the Annual Meeting of Shareholders of Ultrak to be held on May 25, 1995 (the
"Annual Meeting"), the shareholders of Ultrak will be asked to consider and
vote upon the proposal to change the state of incorporation of Ultrak from
Colorado to Delaware. The proposed change will be accomplished by merging
Ultrak into a wholly-owned subsidiary of Ultrak incorporated in Delaware that
was formed solely for the purpose of merging with Ultrak. See "Ultrak's
Reincorporation in Delaware." Not less than 50% of the outstanding shares of
Ultrak Common Stock entitled to vote at the Annual Meeting must vote in favor
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of the proposal for it to be approved. NONE OF THE DIAMOND SHAREHOLDERS
RECEIVING SHARES OF ULTRAK COMMON STOCK PURSUANT TO THE MERGER WILL BE ELIGIBLE
TO VOTE THEIR SHARES OF THE ANNUAL MEETING. As of December 31, 1994, the
directors and officers of Ultrak, and their affiliates, as a group, were
entitled to vote in excess of 50% of the outstanding shares of Ultrak Common
Stock, and each such holder has indicated his or her intent to vote such shares
for approval of the proposal. For a summary of certain changes in the rights
of the holders of shares of Ultrak Common Stock as a result of the
reincorporation of Ultrak in Delaware, see "Ultrak's Reincorporation in
Delaware--Significant Differences in Corporate Law of Colorado and Delaware."
CCTV PRODUCTS; INDUSTRY
Ultrak designs, manufactures, markets, and services video CCTV products
for use in security applications, general observation, medical and dental
equipment, and automated manufacturing systems. These products include a broad
line of cameras, lenses, monitors, switchers, time lapse recorders,
multiplexers, and wireless video transmission systems.
Ultrak's target markets are wholesale distributors, installing dealers,
large end-users, mass merchants (for resale), manufacturing companies, system
integrators, and dentists. Each target market is reached through a dedicated
group of telemarketing and regional sales professionals as well as through
catalogs, magazine advertising, and industry trade shows.
Approximately 70% of Ultrak's CCTV products sales carry its own brand
names (Ultrak, Exxis, [X] Smart Choice, Beck, Mobile Video Products, and
Ultracam), with the remainder having brands owned by others such as Mitsubishi,
Sony, Dedicated Micros, Panasonic, and others. Ultrak's own branded products
are manufactured in Korea, Japan, England, Hong Kong, Taiwan, China, and the
United States.
The CCTV industry is a $850 million annual sales component of the $17
billion total U.S. security industry. The CCTV segment of the security
industry has experienced rapid growth since the early 1980s. CCTV sales
represent a significant portion of the total security industry, trailing only
intrusion detection devices and fire detection apparatus in terms of sales.
Included in the CCTV category are CCTV cameras, lenses, monitors, switchers,
time lapse recorders, multiplexers, video transmission systems, and various
types of peripheral equipment used for CCTV installations. Ultrak's business
is not generally seasonal in nature, except that sales in December and January
are typically 15-20% lower than other months.
Ultrak believes that it is an important factor within the CCTV industry
and that it is one of the three largest in terms of CCTV sales in the United
States. However, many of its competitors are divisions of much larger
companies.
Ultrak has trademark registration on its Ultrak, Exxis, [X] Smart Choice,
Beck, Ultracam, the Witness, Video Butler, and BabyWatch trade names. In
addition, Ultrak has been issued a patent on its Ultracam intraoral hand piece
and has patents pending on a multiple operator dental system, the Witness, a
security observation system that records activity upon activation of an
alarming input signal, and several other devices.
SUPPLIERS AND DISTRIBUTION
To date, Ultrak purchases its CCTV products from non-affiliated
manufacturer suppliers. It has been and will continue to be substantially
dependent upon them. Ultrak has exclusive and non-exclusive sales and
marketing rights for certain of the CCTV products it sells, including certain
CCTV cameras and systems manufactured in Japan and Korea. Ultrak has in the
past experienced, and may in the future experience, short-term difficulties in
obtaining some products from some manufacturers. In general, Ultrak's
suppliers are constantly developing new products that advance the state of
technology in security products and offer improved value. Ultrak has in the
past issued letters of credit or placed funds on deposit with its suppliers to
attempt to insure itself a constant and consistent supply of products.
Ultrak believes that it has close relationships with its suppliers. In
some cases, Ultrak is the exclusive or semi-exclusive marketer of its
suppliers' products in the United States. Ultrak's trading agreements with its
suppliers are both written and oral. In most of these relationships, Ultrak
believes that the relationship
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is as important to the supplier as it is to Ultrak. Thus, Ultrak believes that
there is a strong, mutually advantageous basis for the trading relationship to
exist and grow.
Ultrak imports its private branded security products primarily from Korea,
Japan, England, Hong Kong, and Taiwan. Because of foreign production lead
times, Ultrak normally makes purchase commitments to these foreign suppliers
three to six months in advance. Products ordered by Ultrak and manufactured by
others in Asia are shipped to warehouses of Ultrak located in the United States
for subsequent delivery to customers of Ultrak.
Delivery times on these products to the United States vary from one week
to two months, depending on the mode of transportation used. Therefore, it is
necessary for Ultrak to commit to and carry larger levels of inventory than
would be necessary if it used strictly domestic suppliers.
The nature of Ultrak's business is to ship most orders within 24 hours of
receipt of the order. As of December 31, 1994 and 1993, Ultrak had
approximately $3,939,000 and $2,093,000, respectively, in backlog for its
products which it considers to be firm.
Ultrak can ship its CCTV products from one of five warehouse locations
operated by it: Carrollton, Texas; Broomfield, Colorado; Annapolis, Maryland;
southern California; or Chicago, Illinois. Currently over 90% of all shipments
are made from the Carrollton, Texas, centralized warehouse. Inventory,
accounts receivable, purchasing, payroll, and other corporate business
functions are controlled on Ultrak's integrated computer system located in its
Carrollton headquarters. All sales locations are linked real time through a
nationwide network which allows for orders to be entered and shipped from
multiple locations.
Approximately 21% of Ultrak's 1994 sales were to one customer. No other
single customer accounted for more than 10% of total sales in 1994.
PROPERTY
Ultrak does not own any real property or own or operate any production
facilities. Ultrak or its subsidiaries lease office/warehouse space in
Carrollton, Texas; Broomfield, Colorado; Annapolis, Maryland; Boston,
Massachusetts; southern Florida; Atlanta, Georgia; Chicago, Illinois; and
southern California.
In January, 1994, Ultrak amended its existing lease covering approximately
69,000 square feet of office and warehouse space at its headquarters in
Carrollton, Texas. The amended lease extended the lease term until May 1999
and provided a build out allowance of up to $75,000 to be used for office
expansion and compliance with the provisions of the Americans with Disabilities
Act. Monthly lease payments are approximately $19,600 per month.
Ultrak believes it has sufficient space to conduct its current and
anticipated future operations. Although Ultrak believes it could obtain
additional space if needed on short notice, there can be no assurance that such
space will be available at prices which Ultrak currently pays or could pay.
LEGAL PROCEEDINGS
Other than the following matter, Ultrak is not aware of any material
pending or threatened legal proceedings to which Ultrak is or may be a party.
Ultrak knows of no legal proceedings pending or threatened or judgments entered
against any director or officer of Ultrak in their capacity as such.
On July 9, 1993, a lawsuit against Ultrak, George K. Broady, and others,
styled Brokerage Services of America, Inc., Peter N. Streit, Sibylle A. Streit,
and Earnest Blank, Plaintiffs, v. James Crocco, George K. Broady, Mike DeBlock,
Ultrak, Inc. and Exxis Technologies, Inc., Defendants (Cause No. 93-07167-C),
was filed in the 68th Judicial District Court of Dallas County, Texas. The
individual Plaintiffs in this case are the principal officers of Brokerage
Services of America, Inc. ("BSA"). In 1992, these individuals held meetings
with George K. Broady to discuss a possible transaction between Ultrak and BSA.
After conducting a "due diligence" review of BSA, the officers of Ultrak
decided not to engage in any transaction with BSA. The
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Plaintiffs allege that the Defendants breached an oral agreement to merge or
otherwise purchase assets of the Plaintiffs and further allege an action for
civil conspiracy for negligent misrepresentation by and between the Defendants,
and for breach of fiduciary duty. The parties to this proceeding have agreed
to settle this matter, and upon payment of the full settlement amount, the
Plaintiffs will cause the case against Defendants to be dismissed with
prejudice.
EMPLOYEES
As of December 31, 1994, Ultrak had 148 full-time employees employed at
five primary locations and five field sales offices, of which 88 were sales and
support personnel, 17 were warehouse/assembly personnel, 17 were
technical/service personnel, and 26 were administrative and managerial
personnel.
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ULTRAK'S REINCORPORATION IN DELAWARE
GENERAL
On March 10, 1995, the Board of Directors of Ultrak at a special meeting
approved a proposal to change Ultrak's state of incorporation to Delaware
effective as of December 29, 1995, and to submit such proposal to Ultrak's
shareholders. At the Annual Meeting, the shareholders will be asked to
consider and act upon the proposal to change the state of incorporation of
Ultrak from Colorado to Delaware. This change will be accomplished by merging
Ultrak into Ultrak, Inc., a Delaware corporation (herein referred to as
"Ultrak-Delaware" or the "Surviving Corporation"), which is a wholly-owned
Delaware subsidiary of Ultrak formed solely for that purpose.
The merger of Ultrak into Ultrak-Delaware (the "Reincorporation") will be
effected pursuant to the Plan and Agreement of Merger (the "Reincorporation
Agreement") between Ultrak and Ultrak-Delaware attached hereto as Annex G. The
Reincorporation Agreement provides that, when the Reincorporation becomes
effective, Ultrak-Delaware will continue as the Surviving Corporation under the
name "Ultrak, Inc." The description of the Reincorporation contained herein
accurately describes the material effect of the Reincorporation on shareholders
of Ultrak. For a complete description of the terms of the Reorganization,
shareholders of Ultrak should refer to the Reincorporation Agreement.
The affirmative vote of the holders of at least a majority of the votes
represented by all outstanding shares of Ultrak's Common Stock and Series A
Preferred Stock (voting as a single class) entitled to vote as of the Record
Date will be required for the adoption of the Reincorporation proposal.
Because current management controls shares of Common Stock and Series A
Preferred Stock entitled to a majority of the votes to be cast, it is assured
that the Reincorporation proposal will receive the requisite vote of
shareholders of Ultrak needed for approval of the proposal. The
Reincorporation Agreement provides that the Board of Directors has the right to
terminate the Reincorporation Agreement and abandon the Reincorporation for any
reason whatsoever notwithstanding shareholder approval.
Pursuant to the Reincorporation Agreement, the Board of Directors of
Ultrak will become the Board of Directors of the Surviving Corporation. The
management of Ultrak will continue as the management of the Surviving
Corporation. The Reincorporation will not involve any change in the business
or properties of Ultrak. The Surviving Corporation will succeed to all the
assets and be responsible for all the liabilities of Ultrak, including
obligations under Ultrak's 1988 Nonqualified Stock Option Plan. Although the
purposes of the Surviving Corporation set forth in its Certificate of
Incorporation will permit it in the future to enter into any lawful business
activity, no change in the present business of Ultrak is now contemplated,
except as new developments and opportunities may occur.
There are certain differences between the Certificate of Incorporation and
the By-Laws of Ultrak and the Surviving Corporation, as well as differences in
the corporate law of the States of Colorado and Delaware, which will affect
Ultrak and its shareholders. See "- Significant Differences in Corporate Law
of Colorado and Delaware" and "- Certificate of Incorporation and By-Laws."
The Surviving Corporation is authorized to issue 20,000,000 shares of
common stock, $0.01 par value, and 2,000,000 shares of Preferred Stock, $5.00
par value, including 195,351 shares of Series A Preferred Stock. See
"Certificate of Incorporation and By-Laws." Upon the Reincorporation becoming
effective, Ultrak's shareholders will become shareholders of the Surviving
Corporation, and each outstanding share of Ultrak Common Stock will become one
share of Common Stock of the Surviving Corporation and each outstanding share
of Series A Preferred Stock of Ultrak will become one share of Series A
Preferred Stock of the Surviving Corporation. The Common Stock of the
Surviving Corporation will have the same relative rights, preferences,
privileges and restrictions as the Ultrak Common Stock. The Series A Preferred
Stock of the Surviving Corporation will have the same relative rights,
preferences, privileges and restrictions as Ultrak's Series A Preferred Stock.
The Reincorporation will not cause any change in the qualification of Ultrak
Common Stock on Nasdaq. It will not be necessary for holders of Ultrak Common
Stock to exchange their existing certificates for new certificates representing
Common Stock of the Surviving Corporation. It is anticipated that delivery
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of the present stock certificates of Ultrak will constitute "good delivery" for
transactions in shares of Common Stock of the Surviving Corporation after the
effective date of the Reincorporation.
In connection with the Reincorporation, the authorized shares of Ultrak
Common Stock will be converted into shares of the Surviving Corporation's
authorized Common Stock, $0.01 par value.
Shareholders of Ultrak shall, subject to and by complying with Section
7-113-202 of the CBCA, have the right to object to the Reincorporation, which
will result in the right to receive payment for the fair value of their shares
and the other rights and benefits provided by the CBCA (see "--Rights of
Dissenting Shareholders to Receive Payment for Shares").
Ultrak has reserved the right to abandon the Reincorporation either before
or after shareholder approval, if circumstances arise which in the opinion of
the Board of Directors make it inadvisable to proceed.
REASONS FOR REINCORPORATION
The Board of Directors of Ultrak believes that the best interests of
Ultrak and its shareholders will be served by reincorporating in Delaware in
order to have the benefits afforded by a more flexible corporation law.
Delaware has a well-established policy of continuously reviewing and updating
its corporate laws. Consistent with this policy, the corporate laws of
Delaware are frequently revised and Delaware currently has a flexible and
modern statute governing the conduct of corporate affairs.
Thousands of corporations, including a great many of the larger
corporations in this country, are now incorporated in Delaware. The number of
corporations maintaining their domicile in Delaware over the years has resulted
in a judiciary particularly familiar with many phases of corporate matters and
a substantial body of decisions construing its laws and establishing public
policy affecting its corporations. Based on the well developed and predictable
nature of the Delaware corporate law, management believes that the ongoing
operations and business of Ultrak can be carried on to better advantage if
Ultrak is incorporated under the laws of Delaware. See "Significant
Differences in Corporate Law of Colorado and Delaware."
Delaware has in effect an anti-takeover statute that would, following the
Reincorporation, make it difficult for a potential acquirer to effect a
takeover or change in control of Ultrak without management's consent and the
consent of Ultrak's shareholders. Accordingly, the Reincorporation will have
the effect of making it more difficult to remove the existing management of
Ultrak. Colorado does not have a comparable statute. Management is unaware of
any person accumulating Ultrak's voting securities or seeking to take control
of Ultrak, but believes that reincorporation in Delaware is still desirable for
the reasons described above, notwithstanding the anti-takeover effect of the
Reincorporation. Since current management beneficially owns approximately 28%
of the Ultrak Common Stock and 100% of the Series A Preferred Stock,
representing approximately 52% of the votes in matters to be voted upon by the
shareholders of Ultrak, the reincorporation will not have a practical effect on
the likelihood of success of an unfriendly attempt to effect a takeover or
change in control of Ultrak.
BOARD OF DIRECTORS
The Reincorporation Agreement provides that upon the effective date of the
Reincorporation, the Board of Directors of the Surviving Corporation shall be
composed of those members of the Board of Directors of Ultrak who are elected
at the meeting.
CERTIFICATION OF INCORPORATION AND BY-LAWS
The Reincorporation Agreement provides that the Certificate of
Incorporation and the By-Laws of Ultrak-Delaware will be the Certificate of
Incorporation and the By-Laws of the Surviving Corporation. The Certificate of
Incorporation and By-Laws of Ultrak and the Certificate of Incorporation and
By-Laws of the Surviving Corporation are substantially similar; however, some
differences do exist. Among other things, the By-Laws of the Surviving
Corporation contain indemnification provisions, whereas the By-Laws of Ultrak
do not address indemnification (although the Certificate of Incorporation of
each addresses indemnification), and
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the By-Laws of the Surviving Corporation do not have certain provisions
contained in the By-Laws of Ultrak restricting the officers of Ultrak from
entering into certain contracts and incurring certain indebtedness without
board of director approval. See "Ultrak's Reincorporation in Delaware -
Indemnification of Directors and Officers." The Certificate of Incorporation
and By-Laws of the Surviving Corporation are attached hereto as Annexes H and
I, respectively.
SIGNIFICANT DIFFERENCES IN CORPORATE LAW OF COLORADO AND DELAWARE
Management is of the opinion that, except as described below (for example,
written consents of shareholders, appraisal rights of dissenting shareholders,
required vote of shareholders needed to take certain actions, anti-takeover
legislation, etc.), there are no substantial differences relating to the rights
of shareholders between the Certificate of Incorporation and By-Laws of Ultrak
and those of the Surviving Corporation.
There are a number of significant differences between the applicable
corporate laws of the States of Colorado and Delaware. Although no attempt has
been made to summarize all differences in the corporate laws of such states,
management believes the following to be a fair summary of the significant
differences in the corporate laws of the States of Colorado and Delaware which
could affect Ultrak's shareholders:
Preemptive Rights. Under Colorado corporation law, shareholders of Ultrak
are permitted to have preemptive rights to purchase new shares unless
prohibited in the Certificate of Incorporation; the Ultrak Charter does
prohibit such rights. Under Delaware corporation law, shareholders do not
have such preemptive rights unless there is a specific provision granting
such rights in the Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation will not contain such a
provision. Accordingly, the Reincorporation will not have a practical
impact on shareholders as regards preemptive rights. Management of Ultrak
believes that not providing for mandatory preemptive rights in the
Certificate of Incorporation of the Surviving Corporation is desirable to
afford greater flexibility in possible future financings. Although the
Board has no present plans for any financing which would give rise to
preemptive rights, satisfaction of such rights would represent an
undesirable impediment to the use of such financings.
Examination of Books and Records. Under Colorado corporation law, a
person must have been a shareholder for at least three months, or be the
holder of record of at least five percent of all outstanding shares of any
class of stock of a corporation in order to examine certain records of the
corporation, including the minutes of meetings of the board of directors
and board committees, accounting records, and shareholder records. Under
Delaware corporation law, any shareholder with a proper purpose may demand
inspection of the records of the corporation.
Dividends. Under Delaware corporation law, a corporation may pay
dividends to its shareholders either out of surplus (net assets in excess
of stated capital), or in case there is no surplus, out of net profits for
the then current fiscal year and the preceding fiscal year, with certain
limitations. Under Colorado corporation law, dividends may be paid out of
net assets available after providing for satisfaction of preferential
rights of shareholders whose preferential rights are superior to those
receiving the dividend.
Votes of Shareholders. Colorado corporation law provides that because
Ultrak was in existence prior to June 30, 1994, unless the Certificate of
Incorporation provides otherwise, the vote of two-thirds of all
outstanding shares entitled to vote is required to amend the corporate
charter, to dissolve a corporation, to effect a reincorporation or
consolidation, or to sell, lease or exchange all or substantially all of
the corporation's assets. The Ultrak Charter permits such actions to be
taken upon vote of a majority of the outstanding shares entitled to vote.
Under Delaware corporation law and the Certificate of Incorporation of the
Surviving Corporation, the vote of a majority of the outstanding stock
entitled to vote is required to amend the corporate charter, to dissolve a
corporation, to effect a reincorporation or consolidation, or to sell,
lease, or exchange all or substantially all of the corporation's assets.
Under both Colorado and Delaware law, action by the Board of Directors, as
well as the shareholders, is required to amend the corporate charter, to
effect a reincorporation or consolidation, or to sell, lease, or exchange
of its assets. Accordingly, the Reincorporation will not have a practical
impact on shareholders as regards the vote necessary to approve
significant corporate transactions.
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CUMULATIVE VOTING
Delaware corporation law permits a corporation to provide cumulative
voting by including a provision to that effect in its Certificate of
Incorporation. The Certificate of Incorporation of the Surviving
Corporation will not have a provision permitting cumulative voting. Under
Colorado corporation law, shareholders have cumulative voting unless
prohibited in the Certificate of Incorporation. The Ultrak Charter
currently so prohibits cumulative voting; accordingly, the Reincorporation
will not have a practical impact on such rights of shareholders.
ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Under Colorado corporation law, shareholders may take action without
meetings by unanimous written consent of the shareholders entitled to
vote. Under Delaware corporation law, shareholders may take action
without meetings by written consent signed by the holders of outstanding
stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Since Mr. Broady
will own in the aggregate more than a majority of the votes represented by
the Surviving Corporation's Common Stock and Series A Preferred Stock, he
will have the power to act by written consent to authorize any action
which requires shareholder approval, without the vote of any other
shareholders.
ANTI-TAKEOVER LEGISLATION
Delaware has enacted a statute which prevents a "business
combination" between an "interested shareholder" and a Delaware
corporation for a period of three years after such shareholder became an
interested shareholder, unless certain conditions are met. Colorado
corporation law does not contain a parallel provision. The Delaware
statute defines a business combination as any reincorporation or
consolidation, any sale, lease, exchange, or other disposition of 10% or
more of a corporation's assets, or any transaction (subject to certain
exceptions) which results in the transfer of stock of a corporation to the
interested shareholder, increases his proportionate ownership of a
corporation's stock, or results in such interested shareholder receiving
the benefit of any loans, advances, guarantees, pledges, or other
financial benefits provided by or through the corporation. The Delaware
statute defines an interested shareholder as (subject to certain
exceptions) any person who is the owner of 15 percent or more of the
outstanding voting stock of the corporation or a person who is an
affiliate or associate of the corporation who became the owner of 15
percent or more of the outstanding voting stock of the corporation within
the three-year period prior to the date on which it is sought to determine
whether such shareholder is interested. A business combination is exempt
from the effect of the statute if, among other things, either (i) prior to
the date the shareholder became interested, the board of directors
approved either the business combination or the transaction that resulted
in the shareholder becoming interested, (ii) upon consummation of the
transaction that resulted in the shareholder becoming interested, such
shareholder owned at least 85 percent of the corporation's voting stock at
the time the transaction commenced, or (iii) on or after the date the
shareholder becomes interested, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
shareholders by the affirmative vote of at least two-thirds of the
outstanding voting stock not owned by the interested shareholder.
The anti-takeover statute provides that the Certificate of
Incorporation of a Delaware corporation may provide that the corporation
expressly elects not to be governed by the statute. The Certificate of
Incorporation of the Surviving Corporation does not include such a
provision.
The effect of the Reincorporation, and thereby subjecting Ultrak to
the anti-takeover statute, will make it more difficult for a person who
seeks to acquire control of Ultrak or to effect a business combination
with Ultrak, such as a tender offer, to do so without management's
approval, thereby making it more difficult to remove existing management
of Ultrak. The Delaware statute could, therefore, potentially have an
adverse impact on shareholders who wish to participate in any such tender
offer or other transactions even where such transaction may be favorable
to the interests of shareholders.
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The Reincorporation could have the effect of discouraging hostile
tender offers, proxy contests, or other transactions by forcing potential
acquirers to negotiate with incumbent management. The disadvantages to
shareholders of the Reincorporation in Delaware include reducing the
likelihood that a hostile tender offering a premium over market price for
Ultrak's shares will be made. The Reincorporation will have a practical
effect on shareholders by making it more difficult to remove existing
management without such management's approval.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
A significant effect of the Reincorporation will be to broaden the
indemnification protection given to directors and officers. Delaware
permits corporations to adopt much broader rights of indemnification for
management than is available under the CBCA. In recent years, many
corporations have found it increasingly difficult to attract and retain
qualified directors and senior management, due to the increased risks of
lawsuits and related liability. At the same time, it has become
increasingly difficult, and expensive, to obtain insurance protecting
directors and officers from such liabilities. As a result, many
corporations are utilizing expanded rights of indemnification as a means
to attract, retain and protect directors and senior management. In the
past, Ultrak has encountered some difficulty in attracting and retaining
qualified directors because of Colorado's indemnification law. One
current director expressed his concern about Colorado's indemnification
law before agreeing to serve as a director. The Surviving Corporation has
no present intention of entering into separate indemnification agreements
with management, but may do so in the future.
Delaware law makes indemnification available to directors, officers,
employees, and agents of a corporation, whereas Colorado law provides
indemnification only to directors (and officers who are not directors, in
certain cases) of a corporation, although a Colorado corporation may
indemnify officers, employees, or agents of the corporation who are not
directors if provided for by its articles of incorporation, by-laws, a
resolution of its shareholders or directors, or in a contract. In
addition, whereas Colorado's indemnification provisions limit
indemnification rights contained in the articles of incorporation,
by-laws, resolutions, or contracts to such rights as are consistent with
Colorado law, Delaware permits a corporation to provide by agreement,
by-law provision, vote of shareholders or disinterested directors or
otherwise, for indemnification of directors and officers not otherwise
provided by statute, which is a more permissive standard. Under Colorado
law, expenses can be advanced to a director, officer, or employee only
upon, among other things, a written affirmation of his good faith belief
that he has met the applicable standard of conduct for indemnification.
Delaware law contains no such requirements. Delaware law, unlike Colorado
law, also expressly permits indemnification and advancement of expenses to
former officers, employees, or agents of the corporation who were not
directors. Colorado law requires that shareholders be given notice of the
payment of indemnification if such payment arises out of a derivative
suit. Delaware law contains no such requirement. Colorado law limits
indemnification in derivative suits to expenses only, whereas the By-Laws
of Ultrak-Delaware, as permitted by Delaware law, provide indemnification
in derivative suits for fines, judgments, and amounts paid in settlement.
Under Colorado law, a director who is adjudged liable to the corporation
for deriving an improper personal benefit can only be reimbursed for
expenses and only upon determination of a court that indemnification is
proper in Delaware. Such a director would also be indemnified for fines,
judgments, and amounts paid in settlement and a court determination is not
necessary.
The Certificate of Incorporation and By-Laws of Ultrak-Delaware, like
the Ultrak Charter, contain broad indemnification provisions which (i)
obligate Ultrak-Delaware to indemnify any of its officers, directors,
employees, or agents for all expenses (including legal fees) and
liabilities (including fines, judgments, and amounts paid in settlement)
incurred in connection with any pending or completed suit, action, or
proceeding, including derivative suits; provided, however, that such
person is entitled to indemnification only if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interest of Ultrak-Delaware and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful;
(ii) provides for indemnification rights for as long as any such person
shall be subject to any possible claim or threatened suit or proceeding by
reason of the fact that such person was or is a director, officer,
employee, or agent of Ultrak-Delaware; (iii) requires Ultrak-Delaware to
advance expenses to any person entitled to indemnification provided that
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such person undertakes to repay the amount advanced if it is ultimately
determined that he is not entitled to indemnification; (iv) provides for
the determination of whether indemnification is proper because the
requisite standard of conduct has been met to be made by a majority vote
of a quorum of directors who were not parties to such action, suit, or
proceeding, or by independent legal counsel or by the shareholders of
Ultrak-Delaware; and (v) provides that such charter and by-law provisions
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may legally be entitled.
Differences include, the Ultrak Charter requires the unanimous vote of
each class of shares entitled to vote to amend the indemnification
provision of the Ultrak Charter, while the Certificate of Incorporation of
Ultrak-Delaware provides that a written request for indemnification should
be responded to within 60 days. No such provision exists in the Ultrak
Charter.
To the knowledge of management of Ultrak, no actions are pending or
threatened which would affect in any way the rights of any person entitled
to indemnification, whether under Colorado or Delaware law.
DISSOLUTION
Under Colorado corporation law and the Ultrak Charter Ultrak can
voluntarily dissolve upon its board of directors adopting a resolution
setting forth a proposal to dissolve which proposal is approved by a
majority of the shareholders entitled to vote thereon. Under Delaware
law, a corporation can voluntarily dissolve if its board of directors and
a majority of the shareholders entitled to vote thereon approve the
dissolution, or without approval of the board of directors if all the
shareholders entitled to vote approve the dissolution.
LIABILITY OF DIRECTORS
Under Delaware law, directors are jointly and severally liable to a
corporation for willful or negligent violations of statutory provisions
relating to the purchase or redemption of a corporation's own shares or
the payment of dividends, for a period of six years from the date of such
unlawful act. A director who was either absent or dissented from the
taking of such action may exonerate himself from liability by causing his
dissent to be entered in the corporation's minutes. Under Colorado law,
directors are jointly and severally liable to the corporation if they vote
for or assent to acts which violate statutory provisions relating to the
purchase of a corporation's own shares, the payment of dividends, the
distribution of assets in liquidation, or any loans or guarantees made to
a director, until the repayment thereof. Under Colorado law, there is no
express standard of conduct which can protect a director from liability
nor any express statute of limitations with respect to any such illegal
acts by a director, as there are under Delaware law, and directors are not
liable as long as they did not vote for or assent to any of the illegal
acts. Colorado law, unlike Delaware law, allows a director who was
present at a meeting which approved an illegal act to avoid liability,
even if he does not register his dissent in the minutes of the meeting by
voting against the illegal act.
RIGHTS OF DISSENTING SHAREHOLDERS
Shareholders of Ultrak are presently entitled under Colorado
corporation law to receive payment for their shares if they dissent from
certain corporate actions, such as reincorporations, consolidations or
sales of all or substantially all of Ultrak's assets. Under Delaware
corporation law, there is no such right to receive payment in a sale of
assets, and there is no such right to receive payment in a reincorporation
or consolidation if the common stock of the surviving corporation in the
reincorporation or consolidation is listed on a national securities
exchange or is held of record by 2,000 or more persons and the only
consideration received by the shareholders in the reincorporation or
consolidation is stock of the corporation resulting from the
reincorporation or consolidation or stock of a listed company with 2,000
or more shareholders, and cash in lieu of fractional shares.
34
<PAGE> 40
RIGHT OF DISSENTING SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES
The following is a summary of appraisal rights available to shareholders
of Ultrak, which summary is not intended to be a complete statement of the
applicable Colorado law. For more detailed information with respect to such
appraisal rights, see Article 113 of the CBCA, set forth in its entirety as
Annex J hereto.
Any shareholder of Ultrak wishing to dissent from the Reincorporation and
obtain cash payment for his shares must file with Ultrak, prior to the vote on
the Reincorporation, a written notice of his intention to demand that he be
paid fair compensation for his shares if the Reincorporation is effectuated and
must refrain from voting his shares in approval of the Reincorporation.
If the Reincorporation is approved by the required vote at the Annual
Meeting, Ultrak will mail within ten days after the consummation of the
Reincorporation a notice to all shareholders who gave due notice of intention
to demand payment and who refrained from voting, providing instructions as to
how to obtain payment for their shares. A shareholder who fails to demand
payment or fails to deposit his certificate for payment within 30 days of
mailing of such notice by Ultrak will have no right to receive payment for his
shares but will retain all other rights of a shareholder of Ultrak and will
become a stockholder of Ultrak-Delaware on the consummation of the
Reincorporation.
Immediately upon effectuation of the Reincorporation or upon receipt of
demand for payment, if the Reincorporation has already been effectuated, Ultrak
will remit (the "Remittance") to a dissenter, who has made demand and who has
deposited his certificates, the amount which Ultrak estimates to be the fair
value of the shares, with accrued interest, if any. The Remittance will be
accompanied by certain financial information of Ultrak and a statement
regarding Ultrak's estimate of the fair value of the shares, together with a
notice of the dissenter's rights to demand supplemental payment and a copy of
the appraisal provisions of the CBCA.
If Ultrak fails to remit payment for the dissenter's shares as required by
the preceding paragraph or if the dissenter believes that the amount remitted
is less than the fair value of his shares or that the interest is not correctly
determined, he may, within thirty days after the date of mailing of the
Remittance, mail to Ultrak his own estimate of the value of the shares or of
the interest and demand payment of the deficiency. If he fails to do so, he
shall be entitled to no more than the Remittance.
If Ultrak's calculation and the dissenting shareholder's calculation of
fair value for the shares remains unsettled, Ultrak shall file in an
appropriate court, within sixty days of the dissenting shareholder's request
for payment, a petition requesting that the fair value of the shares and
interest thereon be determined by the court. Dissenters who have not settled
their demands will be entitled to participate in such proceeding. If Ultrak
fails to file a petition as provided in this paragraph, each dissenter who has
made a demand and who has not already settled his claim against Ultrak shall be
paid by Ultrak the amount demanded by him with interest and may sue therefor in
an appropriate court.
EFFECTIVE DATE OF THE REINCORPORATION
Subject to the satisfaction of the conditions of the Reincorporation, it
is contemplated that the Reincorporation will be made effective as of December
29, 1995.
FEDERAL INCOME TAX CONSEQUENCES
Under current federal income tax law, Ultrak, Ultrak-Delaware and the
shareholders of Ultrak who do not exercise their rights as dissenting
shareholders pursuant to Section 7-113-102 of the CBCA will not, by reason of
the Reincorporation, realize any gain or loss which will be recognized for
federal income tax purposes. With respect to each dissenting shareholders's
shares of Ultrak Common Stock, immediately after the Reincorporation, (i) the
tax basis of such shares will equal the tax basis of such shareholder's shares
immediately before the Reincorporation and (ii) the holding period for such
shares will include the shareholder's holding period for the shares before the
Reincorporation. Any gain or loss realized by shareholders of Ultrak, who
exercise their rights to appraisal, will be recognized for federal income tax
35
<PAGE> 41
purposes. Generally, such recognized gain or loss will be equal to the
difference between a shareholder's tax basis in his shares and the amount he
receives for his shares. However, if a dissenting shareholder continues to own
an interest in Ultrak-Delaware, directly or indirectly, after the
Reincorporation then the amount received upon exercise of appraisal rights
might be taxed as a dividend.
36
<PAGE> 42
MANAGEMENT OF ULTRAK
The directors and executive officers of Ultrak are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ------------------ --- --------
<S> <C> <C>
George K. Broady 56 Chairman of the
Board, Chief
Executive Officer,
and President
James D. Pritchett 48 Director, Executive
Vice President and
Chief Operating
Officer
William C. Lee 55 Director
Charles C. Neal 36 Director
Robert F. Sexton 60 Nominee for Director
Tim D. Torno 37 Secretary-Treasurer
and Chief Financial
Officer
</TABLE>
George K. Broady, Chairman of the Board, Chief Executive Officer, and
President. Mr. Broady became President and Chief Executive Officer of Ultrak
on March 18, 1991. Prior to that date, Mr. Broady was actively involved as the
owner and president of Geneva Merchant Bankers, Dallas, Texas. Until December
1987, he was chairman and chief executive officer of Network Security
Corporation, a company that he founded in 1970. Network Security Corporation
and the publicly held stock of its controlled subsidiary were sold to
Inspectorate International, a Swiss company, in 1987 and 1988 for $165 million.
He received his BS (cum laude) from Iowa State University in 1960. Mr. Broady
devotes substantially all of his executive time to the business and affairs of
Ultrak.
James D. Pritchett, Director, Executive Vice President, and Chief
Operating Officer. Mr. Pritchett joined Ultrak in August 1988 as Chief
Operating Officer. He was promoted to Executive Vice President in October
1991. Mr. Pritchett was appointed to the Board of Directors of Ultrak on
August 14, 1989. From October 1, 1980 to September 1, 1988, Mr. Pritchett was
executive vice president and chief operating officer of Booth, Inc.,
Carrollton, Texas, a manufacturer of electronic equipment. Mr. Pritchett
received his Bachelor of Science Degree in Mechanical Engineering from the
University of Texas at Arlington in 1969, and his Masters in Mechanical
Engineering in 1972 from Southern Methodist University, Dallas, Texas. From
1969 to 1972, he was an engineer with LTV Aerospace and from 1972 to 1978, he
was product manager for Thermalloy, Inc. He was a research and development
engineer with Glitech, Inc. from 1978 to 1980.
Tim D. Torno, Secretary-Treasurer and Chief Financial Officer. Mr.
Torno has been the Secretary - Treasurer and Chief Financial Officer of Ultrak
since August 1988. From May 1980 to August 1988, Mr. Torno was employed by
KPMG Peat Marwick in Denver, New York, and Corpus Christi, Texas, in various
capacities including senior manager. Mr. Torno received a BBA in Accounting
(cum laude) from Texas A & M University, College Station, Texas, in 1979 and a
Masters of Business Administration (with honors) in 1993 from the University of
Phoenix, Denver, Colorado. Mr. Torno is a CPA in the States of Texas and
Colorado, and is a member of the American Institute of CPAs and the Texas
Society of CPAs. He currently serves on the Executive Board of the
Distribution Resources Company Group.
37
<PAGE> 43
William C. Lee, Director. Mr. Lee has served as a Director of Ultrak
since June 1994. Mr. Lee has been the Senior Vice President of the Annuity
Board of the Southern Baptist Convention of Dallas, Texas, a $4.5 billion
dollar pension and insurance management company, since July 1991. Mr. Lee
served as Managing Director of Geneva Merchant Bankers of Dallas, Texas from
1989 until 1991 and as an executive officer and director of several major
southwestern banking companies for the prior 27 years. Mr. Lee earned his BBA
from Texas A & M University in 1962 and his MBA from Southern Methodist
University in 1966. Mr. Lee is a CPA in the State of Texas and a member of the
American Institute of CPAs, the Texas Society of CPAs, the Financial Executives
Institute and the American Institute of Image Management.
Charles C. Neal, Director. Mr. Neal has served as a Director of
Ultrak since June 1994. Mr. Neal has been President of Chas. A. Neal & Company
of Miami, Oklahoma, a company which owns interests in oil and gas properties
and in various corporations in several industries, including banking, since
1989. From 1985 to 1989, Mr. Neal was with Merrill Lynch & Co. in New York
City, performing investment banking, general corporate finance and mergers and
acquisitions services for a variety of clients. Mr. Neal is also a director of
several privately held companies. Mr. Neal received his BA in Economics in
1981 from the University of Oklahoma and a JD/MBA from the University of
Chicago Law School and Graduate School of Business in 1985.
Robert F. Sexton, Nominee for Director at the Annual Meeting. Mr.
Sexton has been President of Bakery Associates, Inc. of Dallas, Texas, a
company which brokers bakery packaging goods, since 1983. From 1973 to 1983,
Mr. Sexton was Executive Vice President and a director of Campbell Taggart,
Inc. of Dallas, Texas, one of the nation's largest baking companies. Campbell
Taggart was listed on the New York Stock Exchange prior to its acquisition by
Anheuser Busch in 1982. Mr. Sexton is also a director of Republic Gypsum
Company, a corporation which manufactures and distributes paperboard. Mr.
Sexton earned his BBA in industrial management in 1956 from the University of
Texas.
All directors of Ultrak hold office until the next annual meeting of the
shareholders and until their successors have been elected and qualified. The
officers of Ultrak are elected by the Board of Directors at its first meeting
after each annual meeting of Ultrak's shareholders and hold office until their
successor is chosen and qualified or until their death or until they shall
resign or have been removed from office.
BOARD OF DIRECTORS AND COMMITTEES
In June 1994, Ultrak established the Audit Committee of the Board of
Directors. The Audit Committee, composed of Messrs. Lee and Neal, is
responsible for (i) reviewing the scope of, and the fees for, the annual audit
of Ultrak, (ii) reviewing with the independent auditors Ultrak's corporate
accounting practices and policies, (iii) reviewing with the independent
auditors their final report, (iv) reviewing with independent auditors overall
accounting and financial controls and (v) being available to the independent
auditors during the year for consultation purposes. The Audit Committee met
twice in 1994.
In June 1994, Ultrak also established the Compensation Committee of
the Board of Directors. The Compensation Committee, composed of Messrs. Lee,
Neal, and Pritchett, is responsible for determining the nature and amount of
compensation for the executive officers of Ultrak, and for granting stock
options under Ultrak's stock option plan. The Compensation Committee met three
times in 1994.
During 1994, there were three regular meetings and one special meeting
of the Board of Directors, and all directors of Ultrak attended at least 75% of
all meetings of the Board of Directors and each of the committees on which they
served.
38
<PAGE> 44
EXECUTIVE COMPENSATION
The following summary sets forth all annual and long-term compensation
paid or accrued to Ultrak's Chief Executive Officer and each of Ultrak's
executive officers earning in excess of $100,000 during 1994 for services
rendered to Ultrak during the fiscal years ended December 31, 1994, 1993, and
1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
---------
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
AWARDS
------
Securities
Name and Other Restricted Underlying
Principal Annual Stock Options/ All Other
Position Year Salary Bonus Compensation Awards SARs (1) Compensation(2)
-------- ---- ------ ----- ------------ ------ -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
George K. 1994 $240,000 $ 54,750 - - - $1,613
Broady, Chief
Executive 1993 $212,762 - - - - $1,104
Officer and
President 1992 $100,000 - - - - -
James D. 1994 $164,000 $ 61,200 - - - $2,737
Pritchett,
Executive Vice 1993 $154,078 $ 38,094 - - - $1,799
President
1992 $125,000 $ 48,202 - - - $ 792
Tim D. Torno, 1994 $105,000 $ 36,000 - - - $1,872
Vice President-
Finance, 1993 $ 86,400 $ 23,700 - - 20,833 $1,322
Secretary,
Treasurer and 1992 $ 75,674 - - - - $ 426
Chief Financial
Officer
</TABLE>
- ----------------------------
(1) SARs is defined as stock appreciation rights.
(2) Ultrak's contribution to employee's 401(k).
39
<PAGE> 45
OPTION/SAR GRANTS
There were no individual grants of stock options (whether or not in
tandem with SARs) and freestanding SARs made during 1994 to the named executive
officers.
Ultrak adopted a Nonqualified Stock Option Plan (the "Plan") on April
15, 1988. A total of 833,333 shares of Ultrak Common Stock are subject to the
Plan (amended November 1, 1991 and December 28, 1993). Options to purchase
such shares may be issued to full-time employees, including officers, chosen by
Ultrak's Board of Directors (which has delegated such authority to the
Compensation Committee). The options vest based upon full-time employment with
Ultrak at the rate of 20% per year over a five-year period. The options expire
ten years from the date of grant. The option exercise price is based upon the
approximate current value of Ultrak Common Stock on the date of grant. Options
which are vested may be exercised at any time thereafter and prior to the
expiration of the option.
The options may be exercised for the entire amount of optioned shares
granted in the event (i) the optionee dies or becomes disabled, (ii) Ultrak is
merged, consolidated, or reorganized, (iii) Ultrak is dissolved or liquidated,
(iv) substantially all property and assets of Ultrak are sold, (v) if more than
50% ownership of Ultrak is transferred, or (vi) if the employee is terminated
for other than cause, and his written employment agreement so provides.
Further, if an employee is dismissed for cause, unexercised options, to the
extent vested, may be exercised for 30 days before automatically expiring.
As of December 31, 1994, options relating to 532,959 shares were
outstanding at exercise prices ranging from $1.20 per share to $7.50 per share.
Of the total outstanding options, options to purchase 313,851 shares were held
by the three executive officers of Ultrak. The option exercise price is set by
the Board of Directors on the date of grant near or at the then verifiable
market price of Ultrak Common Stock. During 1994, 47,500 options were granted
to employees of Ultrak. During 1994, 600 options were exercised by two
employees. In 1994, 14,167 options which had been granted to one former
employee were cancelled.
40
<PAGE> 46
OPTION/SAR GRANTS, EXERCISES AND HOLDINGS
There were no exercises of stock options (or tandem SARs) and
freestanding SARs during 1994 by each of the named executive officers. The
unexercised options owned by the named executive officers as of December 31,
1994 are presented below:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Value Underlying Unexercised In-the-Money
Shares Acquired Realized Options/SARs at 12/31/94 Options/SARs at 12/31/94
Name on Exercise # ($) Exercisable/Unexercisable Exercisable/Unexercisable
------------------- ------------- --------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
George K. Broady - - 83,311/55,540 $413,639/275,756
James D. Pritchett - - 110,000/6,666 $557,499/22,498
Tim D. Torno - - 39,167/16,166 $186,563/27,187
</TABLE>
REPORT ON REPRICING OF OPTIONS/SARS
There were no adjustments or amendments during 1994 to the exercise
price of any stock options or SARs previously awarded to any of the named
executive officers.
LONG-TERM INCENTIVE PLAN (LTIP) AWARDS
There were no awards made to the named executive officers during 1994
under any LTIP. However, Ultrak has adopted a policy to compensate its
executive officers and key employees with annual bonuses. Essentially the
policy is to evaluate, on an annual basis, each officer's or key employee's
entitlement, if any, to a bonus. The Compensation Committee, in its sole
discretion, may award a bonus of up to 50% of an employee's base salary, based
on achievement of certain operating goals, asset management, employee
development, and improvement in other areas considered important and valuable
to Ultrak. For 1994, an executive officer bonus pool was established based on
the weighted average of the bonuses earned by all of Ultrak's sales managers.
Once the executive officer bonus pool was designated, bonuses were awarded to
officers based on subjecting informal criteria applied by the Compensation
Committee.
EMPLOYEE BENEFIT PLANS
Ultrak does not sponsor any defined benefit or actuarial plans.
However, Ultrak does sponsor a 401(k) plan for all eligible employees whereby
Ultrak matched 30% during 1994 of the employees's contribution up to a maximum
matching contribution of 6% of the employee's base salary. In 1994, Messrs.
Broady, Pritchett, and Torno received $1,613, $2,737, and $1,872, respectively,
in matching 401(k) contributions under the program.
During 1994, Ultrak provided a medical insurance program for its
full-time employees of which it paid 50% of the premium. As of December 31,
1994, Ultrak did not have any life insurance or any defined benefit retirement
or pension plans for its employees, officers, or directors other than a key-man
life insurance policy on George K. Broady in the amount of $1.0 million.
Ultrak has a policy that all loans from Ultrak or its subsidiaries to
its officers, directors, and key employees or their affiliates must be approved
by a majority of disinterested directors. There were no loans to officers,
directors, and/or key employees or their affiliates during 1994.
COMPENSATION OF DIRECTORS
Each director of Ultrak serves until the next annual meeting of
Ultrak's shareholders or until his successor is elected and qualified. Each
independent director receives a fee of $1,000 for each Board of Directors'
meeting and $500 for each committee meeting attended, and officers and
directors are generally reimbursed for out-of-pocket expenses incurred in
connection with attendance at Board of Directors and committee meetings.
41
<PAGE> 47
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Messrs. James D. Pritchett, Executive Vice President of Ultrak, and Tim
D. Torno, Secretary-Treasurer and Chief Financial Officer, have entered into
written employment agreements with Ultrak with varying terms and provisions.
Ultrak has no termination of employment or change-in-control arrangements,
except as to the substantive effect of Mr. Broady's stock ownership.
Mr. Pritchett's employment agreement, entered into in 1988, provides
for a two-year term, but automatically extends for one-year periods. Mr.
Torno's employment agreement was also entered into in 1988, but was replaced
with a new agreement in 1990, which is for a one-year term but automatically
extends for one-year periods. The employment agreement set Mr. Pritchett's and
Mr. Torno's base salaries at $90,000 and $80,000, respectively, however, the
Board of Directors and, most recently, the Compensation Committee have decided
to compensate those two at higher rates.
The employment agreements also contain standard provisions relating to
the employee being entitled to participation in Ultrak's 1988 Nonqualified
Stock Option Plan and participation in a bonus program. The agreements provide
that the employee is to be reimbursed for reasonable expenses incurred in
connection with Ultrak's business and certain relocation expenses. The
agreements further provide for standard paid vacations, other health and
accident coverage, and insurance benefits.
Ultrak may terminate the employment agreements if the employee commits
a breach of the agreement, is convicted of a criminal offense, becomes
bankrupt, grossly neglects the performance of his duties, or becomes chemically
addicted to alcohol, drugs, or any controlled substance. If terminated by
Ultrak for any of those reasons, it is considered cause, and upon termination
for cause, all benefits, including all stock options previously granted to the
employee (subject to the thirty-day permitted exercise period), are cancelled
and rendered null and void. If Ultrak terminates the employee without cause,
then all options become exercisable for the full amount of the optioned shares
and the employee is entitled to receive all compensation he would otherwise
have been entitled to receive under the terms of the agreement and all other
benefits. If the employee terminates the agreement for any reason, he is
entitled to exercise only those options which have been fully vested at the
time of termination and he must exercise them within 30 days of the date of
termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In June 1994, the Board of Directors created a Compensation Committee
of the Board of Directors. William C. Lee, Charles C. Neal, and James D.
Pritchett are members of the Compensation Committee. Messrs. Lee and Neal are
independent directors. Mr. Pritchett is the Executive Vice President and Chief
Operating Officer of Ultrak. Prior to the creation of the Compensation
Committee, the entire Board of Directors, then composed of George K. Broady and
Mr. Pritchett, established executive salaries. Mr. Broady is the Chairman of
the Board, Chief Executive Officer, and President of Ultrak.
Since July 1993, Ultrak has provided Veravision, Inc. ("Veravision")
with a working capital line of credit in return for interest on the borrowed
funds and warrants to purchase Veravision's capital stock. On December 30,
1994, Mr. Broady, the Chairman of the Board, Chief Executive Officer, and
President of Ultrak, guaranteed the repayment of certain indebtedness of
Veravision to Ultrak. Prior to Ultrak making the line of credit available to
Veravision, Mr. Broady had no relationship with Veravision. Prior to Mr.
Broady's guarantee, Veravision had granted Ultrak warrants to purchase 59% of
Veravision's capital stock on a fully-diluted basis. Mr. Broady guaranteed
certain amounts due under notes made by Veravision to Ultrak. At December 31,
1994, the amount guaranteed by Mr. Broady was approximately $470,000 and the
total amount of indebtedness of Veravision to Ultrak was $900,000. In
consideration of his guaranty, Ultrak transferred warrants to purchase
approximately 30% of Veravision's capital stock to Mr. Broady. Should the
amount covered by Mr. Broady's guaranty increase, Ultrak would be obligated to
transfer warrants to purchase additional shares of Veravision stock to Mr.
Broady. Veravision is a supplier of certain dental camera products to Ultrak.
Purchases by Ultrak of Veravision products in 1994 totaled $875,000. At
present, Mr. Broady's only relationship with Veravision is in his capacity as a
guarantor of certain debt owed to Ultrak by
42
<PAGE> 48
Veravision (as described above) and as the holder of warrants to acquire
approximately 30% of Veravision's stock. Mr. Broady is neither an officer nor
director of Veravision.
During 1994, Ultrak made purchases of approximately $265,000 from
Ultrak Electronics Limited, a Hong Kong corporation of which Mr. Broady owns
approximately 30% of the outstanding capital stock. Ultrak believes that the
purchases were made at prices and on terms at least as favorable to Ultrak as
those which could have been obtained in an arm's length transaction with an
unaffiliated party.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Prior to June 1994, Ultrak did not have a Compensation Committee.
Consequently, the base salary and the bonus criteria for each of Ultrak's
executive officers for 1994 were established by Ultrak's Board of Directors.
At that time, Ultrak's Board of Directors consisted of George K. Broady and
James D. Pritchett. Compensation of the Chief Executive Officer was determined
by Ultrak's Board of Directors using subjective, informal criteria which were
loosely based on Ultrak's performance and using limitations provided in
Ultrak's Loan Agreement with Petrus Fund, L.P. The increase in salaries and
bonuses for the named executive officers from 1993 to 1994, was determined by
arriving at an appropriate base salary for the Chief Executive Officer based on
a survey published by a big six accounting firm and then determining the other
officers' base salary based on a subjectively determined percentage of the
Chief Executive Officer's salary.
The Board of Directors created the Compensation Committee of the Board
of Directors in June 1994 comprised of Charles C. Neal, William C. Lee, and
James D. Pritchett. The Compensation Committee views executive compensation as
consisting of three main components: base salary and benefits, annual
incentives and long-term incentives. The Compensation Committee's objective is
to attract, retain, and motivate executive officers through this combination to
achieve strategic and financial objectives and to create value for the
shareholders of Ultrak. The Compensation Committee is in the process of
creating a total compensation package which will determine compensation
primarily on performance-based, objective criteria, such as net income, net
income per share, return on equity, and returns to shareholders through
long-term appreciation of Ultrak's stock. The Compensation Committee would
like to encourage ownership of Ultrak stock by the executive officers and to
tie a large portion of the executive officers' compensation to the performance
of Ultrak's stock and hence to align executive officers' interests more closely
with shareholders' interests. The Compensation Committee also wants to have a
discretionary component to reward exceptional individual achievement.
Since June 1994, the Compensation Committee has undertaken a thorough
review of Ultrak's current levels of executive compensation in light of the
Compensation Committee's policy objectives. This review included a
comprehensive survey of compensation in comparable companies, as well as
analysis of specific Ultrak plans. In its review, the Compensation Committee
relied heavily on information provided by Towers Perrin, a nationally
recognized expert in compensation, and, to a lesser extent, on other publicly
available surveys. Based on this review, the Compensation Committee concluded
that the executive officers of Ultrak were undercompensated in 1994 by
comparison with companies of similar size, industry, and performance (the
companies analyzed have no relationship with the peer group used in the
performance graph). To rectify this, the Compensation Committee has adjusted
the base salaries of the executive officers for 1995 to bring such salaries
closer to the median salaries for such positions in comparable companies. In
addition, the Compensation Committee has, effective in 1995, revised the annual
bonus program to make it more dependent on the achievement of the budgeted net
income before taxes of Ultrak. For 1994, an executive officer bonus pool was
established based on the weighted average of the bonuses earned by all of
Ultrak's sales managers. Once the executive officer bonus pool was designated,
bonuses were awarded to officers based on subjective, informal criteria applied
by the Compensation Committee. The Compensation Committee has also requested
the officers of Ultrak to recommend a long- term incentive program for Ultrak
which is based on objective criteria and which encourages long-term ownership
by executive officers of Ultrak stock.
Charles C. Neal
George K. Broady
William C. Lee
James D. Pritchett
43
<PAGE> 49
PERFORMANCE GRAPH
The following chart compares the cumulative total shareholder return on
Ultrak Common Stock during the five fiscal years ended December 31, 1994 with
the cumulative total return on the NASDAQ market index and a peer group index.
The peer group consists of all of the publicly-traded companies with the same
two digit SIC code (wholesale trade - durable goods). A listing of the
companies in the peer group can be obtained without charge by writing Ultrak,
Inc., 1220 Champion Circle, Suite 100, Carrollton, Texas 75006, Attention:
Investor Relations. Ultrak relied upon information provided by the University
of Chicago Center for Research in Securities Prices with respect to the peer
group stock performance. Ultrak did not attempt to validate the information
supplied to it other than to review it for reasonableness. The comparison
assumes $100 was invested on December 29, 1989 in Ultrak Common Stock and in
each of the foregoing indices and assumes reinvestment of dividends, if any.
Adjustments have been made to give retroactive effect to the December 1993
one-for-six reverse stock split.
THE FOLLOWING TABLE REPLACES THE GRAPH PRESENTED IN THIS POSITION IN
THE PAPER FILING OF THE PROXY STATEMENT AND HAS BEEN INSERTED SOLELY FOR THE
PURPOSE OF ULTRAK'S ELECTRONIC FILING:
<TABLE>
<CAPTION>
CRSP TOTAL RETURNS INDEX
FOR: 12/29/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ultrak, Inc. 100.0 34.8 160.9 143.5 165.2 165.2
Nasdaq Stock Market (US 100.0 84.9 136.3 158.6 180.9 176.9
Companies)
NASDAQ Stocks (SIC 5000- 100.0 91.3 155.8 159.6 207.1 180.6
5099 US Companies)
</TABLE>
44
<PAGE> 50
PRINCIPAL SHAREHOLDERS OF ULTRAK
The following table sets forth certain information as to the number of
shares of Ultrak Common Stock beneficially owned as of December 31, 1994, by
(i) each person who is known to Ultrak to own beneficially more than five
percent of the outstanding shares of Ultrak Common Stock or the outstanding
shares of Series A Preferred Stock of Ultrak and their address, (ii) each
executive officer and director, and (iii) all officers and directors as a
group.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
of Ultrak Common Stock (1) of Series A Preferred Stock (1)
-------------------------- -------------------------------
Name Shares Percentage Shares Percentage
---- ------ ---------- ------ ----------
<S> <C> <C> <C> <C>
George K. Broady 2,368,769 (2) 32.55 193,351 (6) 100%
Ultrak, Inc.
1220 Champion Circle
Suite 100
Carrollton, TX 75006
James D. Pritchett 136,396 (3) 1.87 -0- -0-
William C. Lee 26,667 * -0- -0-
Director
Charles C. Neal 154,908 (4) 2.13 -0- -0-
Director
Robert G. Sexton 103,066 1.42 -0- -0-
Nominee for Director
Tim D. Torno 35,290 (5) * -0- -0-
All executive officers 2,825,096 (2)(6) 38.83 193,351 (7) 100%
and directors as a
group (five persons)(4)
</TABLE>
(1) Except as otherwise indicated, the persons named in the table possess
sole voting and investment power with respect to all shares shown as
beneficially owned.
(2) Includes 166,667 shares of Ultrak Common Stock held by a trust for the
benefit of members of Mr. Broady's family, of which Mr. Broady serves
as sole trustee, 138,851 shares of Ultrak Common Stock issuable upon
exercise of stock options held by Mr. Broady and 406,981 shares of
Ultrak Common Stock issuable upon conversion of shares of Series A
Preferred Stock owned by Mr. Broady. See "Description of Capital
Stock." Mr. Broady disclaims beneficial ownership of the shares of
Ultrak Common Stock owned by the trust.
(3) Includes 110,000 shares of Ultrak Common Stock issuable upon exercise
of options held by Mr. Pritchett.
(4) Comprised of 9,650 shares of Ultrak Common Stock owned by Pantheon,
Incorporated, a corporation owned by Mr. Neal and his wife, and
145,258 shares of Ultrak Common Stock owned by Chas. A. Neal & Company,
a corporation of which Mr. Neal is President.
(5) Includes 35,000 shares of Ultrak Common Stock issuable upon exercise of
options held by Mr. Torno.
(6) Includes options to purchase an aggregate of 145,000 shares of Ultrak
Common Stock held by Messrs. Pritchett and Torno.
(7) The Series A Preferred Stock has 16.667 votes per share. Through
ownership of Ultrak Common Stock and Series A Preferred Stock, over 50%
of the voting power of all of the outstanding capital stock of Ultrak
is held by Mr.
Broady.
- ------------------------
* less than 1%
45
<PAGE> 51
CERTAIN TRANSACTIONS
Since July 1993, Ultrak has provided Veravision with a working capital
line of credit in return for interest on the borrowed funds and warrants to
purchase Veravision's capital stock. On December 30, 1994, Mr. Broady, the
Chairman of the Board, Chief Executive Officer and President of Ultrak,
guaranteed the repayment of certain indebtedness of Veravision to Ultrak.
Prior to Ultrak making the line of credit available to Veravision, Mr. Broady
had no relationship with Veravision. Prior to Mr. Broady's guarantee,
Veravision had granted Ultrak warrants to purchase 59% of Veravision's capital
stock on a fully-diluted basis. Mr. Broady guaranteed certain amounts due
under notes made by Veravision to Ultrak. At December 31, 1994, the amount
guaranteed by Mr. Broady was approximately $470,000 and the total amount of
indebtedness of Veravision to Ultrak was $900,000. In consideration of his
guaranty, Ultrak transferred warrants to purchase approximately 30% of
Veravision's capital stock to Mr. Broady. Should the amount covered by Mr.
Broady's guaranty increase, Ultrak would be obligated to transfer warrants to
purchase additional shares of Veravision stock to Mr. Broady. Veravision is a
supplier of certain dental camera products to Ultrak. Purchases by Ultrak of
Veravision products in 1994 totaled $875,000. At present, Mr. Broady's only
relationship with Veravision is in his capacity as a guarantor of certain debt
owed to Ultrak by Veravision (as described above) and as the holder of warrants
to acquire approximately 30% of Veravision's stock. Mr. Broady is neither an
officer nor director of Veravision.
During 1994, Ultrak made purchases of approximately $265,000 from
Ultrak Electronics Limited, a Hong Kong corporation of which Mr. Broady owns
approximately 30% of the outstanding capital stock. Ultrak believes that the
terms of the purchases were made at prices and on terms at least as favorable
to Ultrak as those which could have been obtained in an arm's length
transaction with an unaffiliated party.
46
<PAGE> 52
DESCRIPTION OF ULTRAK'S CAPITAL STOCK
GENERAL
COMMON STOCK. The Ultrak Charter authorizes 50,000,000 shares of
Common Stock with no par value. Effective as of December 28, 1993, the Ultrak
Charter was amended to, among other things, eliminate the Class A Non-Voting
Stock. None of these shares are issued and outstanding. Each record holder of
shares of Ultrak Common Stock is entitled to one vote for each share held of
record on all matters properly submitted to the shareholders of Ultrak for
their vote. Cumulative voting is not authorized by the Articles of
Incorporation. A quorum at any shareholders meeting consists of more than a
majority of the stock outstanding and entitled to vote at such meeting.
PREFERRED STOCK. The Ultrak Charter authorizes 2,000,000 shares of
Preferred Stock, $5.00 par value. As of December 28, 1993, there was one
series of Preferred Stock designated: Series A Preferred Stock. The
Series A Preferred Stock is entitled to 16.667 votes per share. As of December
31, 1994, there were 195,351 shares of Series A Preferred Stock issued and
outstanding and all of such shares are owned by Mr. Broady. Holders of the
Series A Preferred Stock are entitled to preferential dividends payable
quarterly and accruing at a rate of 12% per annum on the original purchase
price of $5.00 per share. Upon liquidation, dissolution, or winding up of
Ultrak, holders of the Series A Preferred Stock are entitled to receive the
original purchase price of $5.00 plus any unpaid dividends (the "Liquidation
Value") accruing to that date in preference to holders of Ultrak Common Stock.
Each share of Series A Preferred Stock is convertible into 2.083 shares of
Ultrak Common Stock at the option of the holder. Ultrak's Preferred Stock may
be issued in series from time to time with such designation, rights,
preferences, and limitations as the Board of Directors of Ultrak may determine
by resolution. The potential exists, therefore, that additional Preferred
Stock might be issued which would grant dividend preferences and liquidation
preferences to preferred shareholders over holders of Ultrak Common Stock.
Unless the nature of a particular transaction and applicable statutes require
such approval, the Board of Directors has the authority to issue Preferred
Stock without shareholder approval. The issuance of Preferred Stock may have
the effect of delaying or preventing a change in control of Ultrak without any
further action by shareholders.
DIVIDENDS
Holders of Ultrak Common Stock are entitled to receive dividends when
and as declared by Ultrak's Board of Directors out of legally available funds
after all dividends to holders of Ultrak's Preferred Stock have been paid. Any
such dividends may be paid in cash, property, or shares of Ultrak Common Stock.
MISCELLANEOUS RIGHTS AND PROVISIONS
The shares of Ultrak Common Stock have no preemptive or conversion
rights, no redemption or sinking fund provisions, and are not liable to further
call or assessment. The outstanding shares of Ultrak Common Stock are, and any
shares of Ultrak Common Stock issued pursuant to the Merger will be, fully paid
and nonassessable. Each share of Ultrak Common Stock is entitled to share
ratably in any asset available for distribution to holders of Ultrak Common
Stock upon liquidation of Ultrak after holders of Ultrak's Preferred Stock have
received the liquidation value of their shares.
REPORTS TO SHAREHOLDERS
Ultrak is subject to the reporting requirements of the Exchange Act and
therefore makes available annual reports to its shareholders containing audited
financial statements reported upon by its independent auditors. In addition to
Ultrak's reporting obligations under the Exchange Act, Ultrak intends to
release unaudited quarterly or other interim reports to its shareholders as it
deems appropriate.
TRANSFER AGENT AND REGISTRAR
Securities Transfer Corporation, 16910 Dallas Parkway, Suite 100,
Dallas, Texas 75248 is the transfer agent and registrar for Ultrak Common
Stock.
47
<PAGE> 53
MARKET FOR ULTRAK COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
PRICE RANGE OF ULTRAK COMMON STOCK.
Ultrak Common Stock became listed on the Nasdaq on January 18, 1994.
Prior to that time, Ultrak Common Stock was traded in the over-the-counter
market and price quotations for the two-year period shown below were reported
on Nasdaq under the symbol "ULTK." The quotations shown below, which are the
range of the high and low bid prices, were compiled by Ultrak from Monthly
Statistical Reports supplied by Nasdaq. All quotes represent inter-dealer
quotations, without retail markup, mark-down, or commission and may not
necessarily represent actual transactions in the Ultrak Common Stock. All
prices in 1993 have been retroactively restated to reflect the one-for-six
reverse stock split, which was effected on December 28, 1993.
<TABLE>
<CAPTION>
High bid Low bid
-------- -------
<S> <C> <C>
1993*
First quarter $7.50 $4.31
Second quarter 9.75 5.64
Third quarter 9.00 5.25
Fourth quarter 7.62 5.63
1994
First quarter $8.88 $5.50
Second quarter 8.13 4.38
Third quarter 7.50 6.25
Fourth quarter 8.50 6.25
</TABLE>
*Retroactively restated to reflect the one-for-six reverse stock split, which
was effected on December 28, 1993.
The total number of holders of Ultrak Common Stock as of February 28, 1995, was
approximately 3,200, comprised of approximately 1,500 shareholders of record
and approximately 1,700 not of record.
ULTRAK'S DIVIDEND POLICY.
Ultrak has never paid any dividends to its common shareholders.
Currently, it is the intention of Ultrak not to pay any dividends to the
holders of Ultrak Common Stock in the foreseeable future. Management of Ultrak
intends to reinvest earnings available to common shareholders in the
development and expansion of Ultrak's business. The declaration in the future
of any cash dividends on Ultrak Common Stock will be at the discretion of the
board of directors and will depend upon the earnings, capital requirements and
financial position of Ultrak, general economic conditions, and other pertinent
factors. Ultrak's loan and security agreements with its financial institutions
require the lender's prior written consent to Ultrak's payment of cash
dividends on Ultrak Common Stock. To the extent allowed by Ultrak's loan
agreements, Ultrak does intend to pay dividends on its shares of Series A Stock
all of which are owned by George K. Broady, the Chairman of the Board, Chief
Executive Officer, and President of Ultrak. Annual preferred stock dividends
in the amount of $117,210 were paid to Mr. Broady during each of 1994, 1993,
and 1992.
48
<PAGE> 54
SELECTED FINANCIAL DATA OF ULTRAK
The following table sets forth for the periods and the dates
indicated, selected financial and operating data for Ultrak. This information
should be read in conjunction with the financial statements of Ultrak included
elsewhere in this Prospectus/Proxy Statement and "Ultrak Management's
Discussion and Analysis of Financial Condition and Results of Operations" which
are included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1994 1993 1992* 1991 1990
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA
- ---------------
Net sales $78,793,711 $52,411,971 $28,864,478 $18,003,952 $9,765,978
=========== =========== =========== =========== ==========
Gross profit $19,444,003 $12,858,457 $ 7,367,629 $ 4,613,904 $2,494,659
=========== =========== =========== =========== ==========
Operating income (loss) $ 5,109,687 $ 3,655,020 $ 1,278,618 $ 694,728 $ (318,905)
=========== =========== =========== =========== ==========
Income from continuing
operations before income
taxes $ 4,302,532 $ 3,020,403 $ 569,843 $ 470,942 $ (775,196)
Income taxes 1,513,020 381,543 26,343 - -
----------- ----------- ----------- ----------- ----------
Income (loss) from
continuing
operations 2,789,512 2,638,860 543,500 470,942 (775,196)
Discontinued operations (190,000) (1,834,370) 294,255 - -
----------- ----------- ----------- ----------- ----------
Net income (loss) 2,599,512 804,490 837,755 470,942 (775,196)
Dividend requirements on
preferred stock 117,210 117,210 117,210 117,210 -
----------- ----------- ----------- ----------- ----------
Net income (loss) allocated
to common shareholders $ 2,482,302 $ 687,280 $ 720,545 $ 353,732 $ (775,196)
=========== =========== =========== =========== ==========
Income (loss) per common
share from continuing
operations $ .39 $ .37 $ .07 $ .06 $ (0.15)
=========== =========== =========== =========== ==========
Net income (loss) per common
share $ .36 $ .10 $ .11 $ .06 $ (0.15)
=========== =========== =========== =========== ==========
BALANCE SHEET DATA
- ------------------
Total assets $36,352,690 $25,384,794 $16,198,851 $ 8,054,270 $4,567,900
Short-term debt 18,244,183 12,875,039 7,134,701 2,218,599 1,140,000
Long-term debt - - 285,000 285,000 -
Shareholder's equity 10,070,388 7,541,339 6,817,683 4,177,044 2,881,847
Cash dividends declared
per common share - - - - -
</TABLE>
*Reclassified to reflect discontinued operations; see Note I of Notes to
Consolidated Financial Statements.
49
<PAGE> 55
ULTRAK MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
Results of Operations - Continuing Operations. For the year ended
December 31, 1994, sales from continuing operations were $78,793,711, an
increase of $26,381,740 (50%) over 1993. This growth was due primarily (70%)
to increased volume of sales of existing CCTV products to all of the markets
that Ultrak serves. New products introduced by Ultrak during 1994 contributed
approximately 30% of the increase in sales.
In comparison, cost of sales were $59,349,708 for the year ended
December 31, 1994, an increase of $19,796,194 (50%) over 1993. This increase
was in a virtual direct relationship to the overall CCTV increase in sales.
Gross margins on sales increased to 24.68% in 1994 from 24.53% in 1993,
primarily because of new product sales at higher margins, offset by competition
in the CCTV market and a strategic decision by Ultrak to be an industry value
leader.
Marketing and sales expenses were $11,201,460 for the year ended
December 31, 1994, an increase of $4,175,946 (59%) over 1993. This increase
was due to additional CCTV sales and sales support staff and related costs
incurred to support the increased level of CCTV sales, travel, and related
costs and increased marketing, advertising, and promotional costs.
General and administrative expenses were $3,132,857 for the year ended
December 31, 1994, an increase of $954,934 (44%) from 1993 due to additional
administrative staff and related costs necessary to support the increase in
sales.
Other expenses were $807,155 for the year ended December 31, 1994, an
increase of $172,538 (27%) over 1993. This increase was due primarily to
increased interest costs on borrowings offset by interest income on notes
receivable.
Results of Operations - Discontinued Operations. On July 22, 1993,
Ultrak announced that it would discontinue its personal computer ("PC")
products business segment and concentrate its resources on the CCTV business
segment. As a result of this decision, the operations and net assets of the PC
business segment have been classified as discontinued operations for all
periods presented.
During the year ended December 31, 1994, Ultrak recorded an additional
provision of $190,000, net of income tax benefit, to reflect costs of
dissolution of the business as well as provision for expected settlement costs
of the remaining lawsuit relating to the discontinued operations.
Sales included in discontinued operations for the year ended December
31, 1994, 1993, and 1992 were $110,720, $19,232,836 and $9,677,585,
respectively (not included in net sales reported from continuing operations
above).
Liquidity and Capital Resources. Ultrak had a net increase in cash
for the year ended December 31, 1994 of approximately $142,000. Cash used in
operating activities during 1994 was approximately $4,095,000, primarily
because of increases in accounts receivable, inventory, and advances for
inventory required by the significantly higher sales volume. Cash used in
investing activities was approximately $1,346,000 for capital expenditures for
furniture, fixtures, tooling, leasehold improvements, and other fixed assets.
Cash provided by financing activities was approximately $5,584,000, consisting
of net borrowings from Ultrak's bank and other lenders.
As of December 31, 1994, Ultrak had unused available lines of credit
totaling approximately $1,956,000.
50
<PAGE> 56
On October 31, 1994, Ultrak's revolving line of credit with
NationsBank of Texas, N.A. was increased from $12.0 million to $13.2 million.
The NationsBank revolving line of credit was further increased during February
1995 from $13.2 million to $15.0 million. On October 4, 1994, Petrus Fund,
L.P., of which Perot Investments is the general partner, increased its
revolving line of credit to Ultrak from $6.0 million to $7.0 million and
provided for the further increase of the line of credit from $7.0 million to
$8.0 million upon Ultrak achieving certain net income requirements. In
conjunction with the amendments to both loan agreements, certain financial and
operational covenants were modified. All other terms and conditions of the
loan agreements were unchanged.
Concurrently with the amendment to the Petrus loan agreement, the
warrant issued to Petrus to acquire Ultrak Common Stock was amended to reflect
that the warrant exercise price was reduced from $9.00 per share to $8.00 per
share, and the number of Shares of Ultrak Common Stock subject to the warrant
was increased from 154,762 to 200,000.
Ultrak will continue to be dependent upon its bank and other lender
financing to fund its operations. Ultrak anticipates that its current
operations and future growth will be financed primarily through increased lines
of credit and internally generated profits. Ultrak believes such sources of
funds will be adequate for its projected needs for the next twelve (12) months.
Ultrak may attempt to raise additional equity capital if sales increase faster
than planned or if it is otherwise deemed advantageous to do so.
YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992
Results of Operations - Continuing Operations. For the year ended
December 31, 1993, sales from continuing operations were $52,411,971, an
increase of $23,547,493 (82%) over 1992. This growth was due to increased
sales of CCTV products to all of the markets that Ultrak serves.
In comparison, cost of sales were $39,553,514 for the year ended
December 31, 1993, an increase of $18,056,665 (84%) over 1992. This increase
was due to overall CCTV sales increases, new product sales, and new mass retail
outlet sales. Gross margins on sales decreased to 24.5% in 1993 from 25.5% in
1992, primarily because of competition in the CCTV market and a strategic
decision by Ultrak to be an industry value leader.
Marketing and sales expenses were $7,025,514 for the year ended
December 31, 1993, an increase of $2,446,861 (53%) over 1992. This increase
was due to additional CCTV sales and sales support staff and related costs
incurred to support the increased level of CCTV sales, marketing costs to
support sales, and increased advertising and promotional costs.
General and administrative expenses were $2,177,923 for the year ended
December 31, 1993, an increase of $667,565 (44%) from 1992 due to additional
administrative staff and related costs necessary to support the increase in
sales.
Other expenses were $634,617 for the year ended December 31, 1993, a
decrease of $74,158 (10%) over 1992. This decrease was due primarily to
interest income on notes receivable offset by increased interest costs.
During the fourth quarter of 1993, Ultrak determined it was more
likely than not that a portion of its deferred tax valuation allowance was
realizable. This determination was a result of the profits from continuing
operations in 1993 and the forecasted profits for 1994. A deferred tax
valuation allowance still remains for deferred tax assets related to net
operating loss carryforwards, use of which are limited by Section 382 of the
Code.
51
<PAGE> 57
BUSINESS OF DIAMOND
Diamond manufactures and sells high-speed commercial security and
surveillance systems used by large retailers, metropolitan surveillance systems
for traffic control, and hazardous viewing systems used by industry. Diamond's
commercial security and surveillance systems are utilized in monitoring indoor
and outdoor areas of large retailers. Diamond's industrial viewing systems are
utilized in observing furnace operation, gauge monitoring, smoke stack
monitoring and tower plant inspection. Diamond's headquarters are housed in a
72,000 square foot building located 20 miles southeast of Columbus, Ohio in
Carroll, Ohio. Diamond employs approximately 100 people.
MARKET FOR DIAMOND COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Diamond Common Stock is held of record by approximately 380
shareholders. There is no established trading market for Diamond Common Stock.
Diamond has not declared any cash dividends on its common stock since the time
of acquisition of Diamond by an investor group in 1986, and it is expected by
Diamond's Board of Directors that no dividends will be declared or paid in the
foreseeable future.
52
<PAGE> 58
PRINCIPAL SHAREHOLDERS OF DIAMOND
The following table sets forth certain information as to the number of
shares of Diamond Common Stock beneficially owned as of April 28, 1995, by (i)
each person who is known to Diamond to own beneficially more than five percent
of the outstanding shares of Diamond Common Stock and their address, (ii) each
executive officer and Director of Diamond, and (iii) all executive officers and
Directors of Diamond as a group.
<TABLE>
<CAPTION>
Name Shares Percentage
---- ------ ----------
<S> <C> <C>
John W. Biddinger 1,018,003(1) 21.2%
Director
7491 Albert Tillinghast Drive
Sarasota, FL 34240
Computer Products, Inc. 625,667 13.0%
7900 Glade Road
Boca Raton, FL 33434
Robert N. Davies 367,475 7.6%
Director
3307 Bay Road North
Indianapolis, IN 46240
H. Charles Koehler 634,801 13.2%
Director
4511 Briarwood Drive
Indianapolis, IN 46250
William Muirhead, III 653,120 13.6%
Director
304 Long Cove Drive
Hilton Head, SC 29928
Richard M. Tompkins 305,124 6.3%
Director and Executive Officer
6171 Zachary Woods Lane
Columbus, OH 43232
All Directors and Executive 2,978,523 61.9%
Officers as a Group (5 persons)
- ----------------------------
</TABLE>
(1) Includes 637,637 shares of Diamond Common Stock owned by Mr. Biddinger's
spouse, Margaret H. Biddinger, as to which Mr. Biddinger is deemed to be
the beneficial owner under the rules and regulations of the Commission.
53
<PAGE> 59
SELECTED FINANCIAL DATA OF DIAMOND
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------------------------
01/01/95 01/02/94 01/03/93 12/29/91 12/30/90
------------ ----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Statement of
Operations Date
- ---------------
Net Sales $11,774,691 $ 9,367,799 $ 8,747,964 $ 8,554,592 $ 12,861,108
=========== =========== =========== ============ ============
Gross Profit $ 3,765,223 $ 2,940,844 $ 2,539,546 $ 2,389,684 $ 3,871,562
=========== =========== =========== ============ ============
Operating Income (loss) $ 761,371 $ 523,319 $ 285,679 ($ 971,207) $ 341,348
=========== =========== =========== ============ ============
Income (loss) from continuing
operations before income
taxes $ 539,162 $ 384,145 ($ 29,664) ($1,219,647) ($ 266,357)
Income taxes 213,521 154,276 72,011 0 0
----------- ----------- ----------- ------------ ------------
Income (loss) from
continuing operations 325,641 229,869 ( 101,675) ( 1,219,647) ( 266,357)
Extraordinary items 0 0 1,272,480 0 0
Cumulative effect adjustment 0 610,100 0 0 0
----------- ----------- ----------- ------------ ------------
Net Income (loss) $ 325,641 $ 839,969 $ 1,170,805 $( 1,219,647) ( 266,357)
Income (loss) per common share
from continuing operations $ 0.07 $ 0.05 $( 0.03) $( 0.90) $( 0.20)
=========== =========== =========== ============ ============
Income (loss) per common
share $ 0.07 $ 0.19 $ 0.41 $( 0.90) $( 0.20)
=========== =========== =========== ============ ============
Balance Sheet Data
- ------------------
Total assets $ 6,766,688 $ 5,648,036 $ 5,131,878 $ 5,627,012 $ 7,492,489
Short-term debt 1,273,122 1,238,216 1,432,567 2,064,051 2,556,566
Long-term debt 884,548 592,033 774,660 1,699,948 1,842,430
Stockholders' equity (deficit) 3,218,047 3,013,410 2,150,965 ( 578,662) 640,985
Cash dividends declared
per common share 0 0 0 0 0
</TABLE>
54
<PAGE> 60
DIAMOND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR ENDED JANUARY 1, 1995 (1994) COMPARED TO YEAR ENDED JANUARY 2, 1994 (1993)
Results of Operations - Continuing Operations. For the year ended
January 1, 1995, sales from continuing operations were $11,774,691, an increase
of $2,406,892 (26%) over 1993. The growth was mostly (75%) due to increased
volume of sales to existing CCTV markets. The remainder of the increase (25%)
related to Diamond's penetration into new markets.
Cost of goods sold for the year ended January 1, 1995, was $8,009,468,
an increase of $1,582,513 (24.6%) over 1993. This increase was almost directly
proportional to the increase in sales. Gross margin on sales increased to
32.0% in 1994 versus 31.4% in 1993. Higher material, labor, and certain
overhead costs due to inflation were offset by efficiency and overhead
absorption improvements due to increased sales volume. Sales and marketing
expenses were $1,882,860 for the year ended January 1, 1995 (1994), an increase
of $489,020 (35%) over 1993. This increase was due to increased personnel,
travel, advertising, and promotional activities required to support the sales
volume increase.
General and administrative expenses were $936,488 for the year ended
January 1, 1995 (1994), an increase of $52,265 (6%) over 1993. Administrative
controls and systems in place allowed significant sales volume growth without a
corresponding increase in expenses.
To enable Diamond to supply competitive products to an ever more
sophisticated marketplace, research and development expenses were $184,504 for
the year ended January 1, 1995 (1994), an increase of $45,042 (32%) over 1993.
Research and development were increased on a planned basis.
Interest expense was $193,392 for the year ended January 1, 1995
(1994), a decrease of $6,124 (3%) over 1993. Increased rates of interest on
the revolving line of credit were offset by reduced borrowings during 1994
versus 1993. Increased borrowings on the term loan were offset by reduced
interest rates obtained on refinancing.
Other expenses were $28,817 for the year ended January 1, 1995 (1994),
an increase of $89,159 over 1993.
Liquidity and Capital Resources. Diamond had a net decrease in cash
for the year ended January 1, 1995 of approximately $8,000. Cash provided by
operating activities during 1994 was approximately $138,000, consisting of a
net cash flow from net income before depreciation and amortization of
approximately $517,000 offset by a cash outflow of approximately $379,000 for
increased net working capital to support higher sales volume. Cash used by
investing activities was approximately $202,000 for capital expenditures for
machinery and equipment and other assets. Cash provided by financing
activities was approximately $56,000, consisting of net borrowings from the
Diamond's bank and other lenders of approximately $327,000 offset by a net
equity redemption of approximately $271,000.
As of January 1, 1995, Diamond had an unused available line of credit
on its revolving credit facility of approximately $1,270,000 and an unused
capital expenditure note facility of $100,000. Diamond will continue to be
dependent on its bank to fund its working capital needs and to maintain the
existing term loan facility. Diamond's current operations and future sales
volume expansion will be funded by its lender and by its operating profits.
Diamond believes its sources of financing for the next twelve (12) months will
be adequate.
55
<PAGE> 61
YEAR ENDED JANUARY 2, 1994 (1993) COMPARED TO YEAR ENDED JANUARY 3, 1993 (1992)
Results of Operations -- Continuing Operations. For the year ended
January 2, 1994, sales from continuing operations were $9,367,799, an increase
of $619,835 (7%) over that of 1992. The growth was mostly due to increased
volume of sales to existing CCTV markets.
Cost of goods sold for the year ended January 2, 1994, was $6,426,955,
an increase of $218,537 (3.5%) over that of 1992. This increase was less than
the increase in sales. Gross margin on sales increased to 31.4% in 1993 versus
29.4% in 1992. Manufacturing efficiency improvements, better overhead
absorption, and reduced warranty costs more than offset cost increases due to
inflation.
Sales and marketing expenses were $1,393,840 for the year ended
January 2, 1994 (1993), an increase of $64,826 (5%) over 1992. This increase
was due primarily to increased costs due to inflation.
General and administrative expenses were $884,223 for the year ended
January 2, 1994 (1993), an increase of $108,238 (14%) over 1992. Increased
cost due to inflation, management performance bonuses, and personnel staff
increases all contributed to the increase.
Research and development expenses were $139,462 for the year ended
January 2, 1994 (1993), a decrease of $9,406 (6%) over that of 1992. Research
and development decreased on a planned basis due to austerity reasons.
Interest expense was $199,516 for the year ended January 2, 1994
(1993), a decrease of $27,890 (12%) over that of 1992. Increased rates of
interest on the revolving line of credit offset reduced borrowings during 1993
versus 1992.
Other Income was $60,342 for the year ended January 2, 1994 (1993), a
decrease of $5,651 over that of 1992.
Reorganization Item expense was $0 for this year ended January 2, 1994
(1993), a decrease of $153,930 over that of 1992. The absence of Chapter 11
legal and professional fees in 1993 caused the change.
Extraordinary Item income was $0 for the year ended January 2, 1994
(1993), a decrease of $1,272,480 over that of 1992. This resulted from the
absence of both a $947,143 gain on Chapter 11 debt restructuring and a $325,337
tax operating loss carryforward in 1993 that was present in 1992.
Cumulative Effect Adjustment income was $610,100 for the year ended
January 2, 1994 (1993), an increase of $610,100 over that of 1992. Diamond
adopted the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109) in 1993
requiring the first time recognition of deferred tax assets.
56
<PAGE> 62
LEGAL MATTERS
The validity of the shares of Ultrak Common Stock offered hereby has
been passed upon for Ultrak by Gardere & Wynne, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements and schedules of Ultrak as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994, included herein and elsewhere in the Registration
Statement, have been audited by Grant Thornton LLP, independent certified
public accountants, as set forth in their reports appearing elsewhere herein,
and are included upon the authority of that firm as experts in accounting and
auditing.
The consolidated financial statements and schedules of Diamond as of
January 1, 1995, and January 2, 1994, and for each of the years in the two
years ended January 1, 1995, included herein and elsewhere in the Registration
Statement, have been included in reliance upon the reports of Norman, Jones,
Enlow & Co., independent certified public accountants, appearing elsewhere
herein, and given on the authority of that firm as experts in accounting and
auditing.
57
<PAGE> 63
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ULTRAK, INC. AND SUBSIDIARIES PAGE
----
<S> <C>
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets at December 31, 1994 and 1993 F-3
Consolidated Statements of Income for the years
ended December 31, 1994, 1993, and 1992 F-5
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 1994, 1993, and 1992 F-6
Consolidated Statements of Cash Flows for the years
ended December 31, 1994, 1993, and 1992 F-7
Notes to Consolidated Financial Statements F-8
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
Independent Auditors' Report F-18
Consolidated Balance Sheets F-19
At January 1, 1995 and January 2, 1994
Consolidated Statements of Income
for the 52 weeks ended January 1, 1995
and the 52 weeks ended January 2, 1994 F-20
Consolidated Statements of Changes in
Shareholders' Equity
for the 52 weeks ended January 1, 1995
and the 52 weeks ended January 2, 1994 F-21
Consolidated Statements of Cash Flows
for the 52 weeks ended January 1, 1995
and the 52 weeks ended January 2, 1994 F-22
Notes to Consolidated Financial Statements F-23
</TABLE>
F-1
<PAGE> 64
Report of Independent Certified Public Accountants
We have audited the accompanying consolidated balance sheets of Ultrak, Inc.
and Subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Ultrak, Inc. and
Subsidiaries as of December 31, 1994 and 1993, and the consolidated results of
their operations and their consolidated cash flows for each of the three years
in the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
Dallas, Texas
February 17, 1995
F-2
<PAGE> 65
Ultrak, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
ASSETS 1994 1993
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 642,241 $ 500,106
Trade accounts receivable, less allowance for
doubtful accounts of $323,772 and $213,607
at December 31, 1994 and 1993,
respectively (Note C) 10,743,091 7,804,844
Notes receivable (Note C) 253,771 18,619
Inventories (Note C) 14,396,438 11,088,019
Advances for inventory purchases (Note C) 5,381,437 2,510,096
Prepaid expenses and other current assets (Note C) 178,698 256,895
Deferred income taxes (Note G) 362,988 434,000
Net assets of discontinued operations (Note I) - 197,125
----------- -----------
Total current assets 31,958,664 22,809,704
FURNITURE AND EQUIPMENT, at cost (Note C) 2,966,619 1,620,250
Less accumulated depreciation (995,226) (591,675)
----------- -----------
1,971,393 1,028,575
GOODWILL, net of accumulated amortization
of $135,467 and $91,738 at December 31, 1994
and 1993, respectively (Note B) 1,259,969 669,503
DEFERRED INCOME TAXES (Note G) - 156,000
NOTES RECEIVABLE (Note H) 984,208 520,000
OTHER ASSETS 178,456 201,012
----------- -----------
$36,352,690 $25,384,794
=========== ===========
</TABLE>
F-3
<PAGE> 66
Ultrak, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS - CONTINUED
December 31,
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable - trade $ 6,531,779 $ 4,407,294
Notes payable (Note C) 18,244,183 12,590,039
Current maturities of long-term debt (Note C) - 285,000
Accrued liabilities 664,740 341,504
Other current liabilities 841,600 219,618
----------- -----------
Total current liabilities 26,282,302 17,843,455
COMMITMENTS AND CONTINGENCIES (Note F) - -
STOCKHOLDERS' EQUITY (Note D)
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
20,000,000 shares authorized; 6,555,619
and 6,538,352 shares issued and
outstanding at December 31, 1994 and
1993, respectively, at stated value 73,254 72,489
Additional paid-in capital 7,213,747 7,167,765
Retained earnings (accumulated deficit) 1,806,632 (675,670)
----------- -----------
Total stockholders' equity 10,070,388 7,541,339
----------- -----------
$36,352,690 $25,384,794
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 67
Ultrak, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31,
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Net sales (Note E) $78,793,711 $52,411,971 $28,864,478
Cost of sales 59,349,708 39,553,514 21,496,849
----------- ----------- -----------
Gross profit 19,444,003 12,858,457 7,367,629
Other operating costs
Marketing and sales 11,201,460 7,025,514 4,578,653
General and administrative 3,132,857 2,177,923 1,510,358
----------- ----------- -----------
14,334,316 9,203,437 6,089,011
----------- ----------- -----------
Operating profit 5,109,687 3,655,020 1,278,618
Other expense (income)
Interest expense, net 1,091,400 693,655 449,523
Other, net (284,245) (59,038) 259,252
----------- ----------- -----------
807,155 634,617 708,775
----------- ----------- -----------
Income from continuing operations
before income taxes 4,302,532 3,020,403 569,843
Income taxes (Note G) 1,513,020 381,543 26,343
----------- ----------- -----------
Income from continuing operations 2,789,512 2,638,860 543,500
Discontinued operations, net of tax
effects (Note I)
Income (loss) from operations - (289,489) 294,255
Provision for loss on disposal (190,000) (1,544,881) -
----------- ----------- -----------
(190,000) (1,834,370) 294,255
----------- ----------- -----------
NET INCOME 2,599,512 804,490 837,755
Dividend requirements on preferred
stock (Note D) (117,210) (117,210) (117,210)
----------- ----------- -----------
Net income allocable to common
stockholders $ 2,482,302 $ 687,280 $ 720,545
=========== =========== ===========
Income per common share
Continuing operations $ .39 $ .37 $ .07
=========== =========== ===========
Net income $ .36 $ .10 $ .11
=========== =========== ===========
Number of weighted average common and
common equivalent shares outstanding 6,818,999 6,789,872 6,845,550
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 68
Ultrak, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31,
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
COMMON STOCK (Note D)
Beginning of year $ 72,489 $ 70,968 $ 40,654
Issuance of common stock in private
placement offering - - 30,000
Exercise of stock options and warrants 765 1,521 314
---------- ----------- ------------
End of year $ 73,254 $ 72,489 $ 70,968
========== =========== ============
ADDITIONAL PAID-IN CAPITAL (Note D)
Beginning of year $7,167,765 $ 7,132,910 $ 4,357,915
Issuance of common stock in private
placement offering, net of costs - - 2,743,872
Exercise of stock options and warrants,
net of costs 45,982 34,855 31,123
---------- ----------- ------------
End of year $7,213,747 $ 7,167,765 $ 7,132,910
========== =========== ============
COMMON STOCK SUBSCRIBED (Note D)
Beginning of year $ - $ - $ 885,215
Net proceeds of common stock subscribed - - 1,888,657
Issuance of common stock in private
placement offering, net of costs - - (2,773,872)
---------- ----------- ------------
End of year $ - $ - $ -
========== =========== ============
RETAINED EARNINGS (ACCUMULATED DEFICIT) (Note D)
Beginning of year $ (675,670) $(1,362,950) $ (2,083,495)
Preferred stock dividends (117,210) (117,210) (117,210)
Net income 2,599,512 804,490 837,755
---------- ----------- ------------
End of year $1,806,632 $ (675,670) $ (1,362,950)
========== =========== ============
COMMON SHARES
Beginning of year 6,538,352 6,495,848 5,800,014
Issuance of common shares in private
placement offering - - 666,667
Exercise of stock options and warrants 17,267 42,504 29,167
---------- ----------- ------------
6,555,619 6,538,352 6,495,848
========== =========== ============
PREFERRED SHARES
Beginning and end of year 195,351 195,351 195,351
========== =========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 69
Ultrak, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 2,599,512 $ 804,490 $ 837,755
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation and amortization 447,280 252,275 155,966
Provision for losses on accounts receivable 532,344 368,814 287,669
Provision (reduction) for inventory obsolescence 52,408 102,295 (6,252)
Deferred income taxes - (590,000) -
Changes in operating assets and liabilities
Increase in accounts and notes receivable (3,705,743) (3,753,654) (1,454,061)
Increase in inventories (3,360,827) (5,216,355) (4,001,847)
Increase in advances for inventory purchases (2,871,341) (182,169) (1,447,845)
Decrease in prepaid expenses and
other current assets 149,209 21,132 170,497
Increase in noncurrent notes and other assets (919,847) (617,489) (27,420)
Increase in accounts payable 2,124,485 3,019,574 219,295
Decrease in other notes payable (285,000) (5,543) (24,356)
Increase (decrease) in accrued liabilities
and other current liabilities 945,218 (12,625) 368,545
Decrease (increase) in net assets of
discontinued operations 197,125 642,103 (839,228)
----------- ----------- -----------
Net cash used in operating activities (4,095,177) (5,167,152) (5,761,282)
Cash flows from investing activities
Purchases of furniture and equipment (1,346,369) (699,311) (254,747)
(Increase) decrease in net assets of
discontinued operations - 163,563 (163,563)
----------- ----------- -----------
Net cash used in investing activities (1,346,369) (535,748) (418,310)
Cash flows from financing activities
Net borrowings on note payable to bank 5,654,144 5,460,881 4,940,458
Net proceeds from sale or subscription of common stock 46,747 36,376 1,920,094
Payment of preferred stock dividends (117,210) (117,210) (117,210)
----------- ----------- -----------
Net cash provided by financing
activities 5,583,681 5,380,047 6,743,342
----------- ----------- -----------
Net increase (decrease) in cash 142,135 (322,853) 563,750
Cash at beginning of year 500,106 822,959 259,209
----------- ----------- -----------
Cash at end of year $ 642,241 $ 500,106 $ 822,959
=========== =========== ===========
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 1,109,361 $ 684,933 $ 450,541
=========== =========== ===========
Income taxes $ 804,158 $ 91,269 $ 25,605
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE> 70
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Consolidation
The accompanying consolidated financial statements include the accounts of
Ultrak, Inc. and its subsidiaries (the Company). All significant
intercompany balances and transactions have been eliminated in
consolidation.
Inventories
Inventories are comprised of goods held for resale, which are valued at the
lower of cost (first-in, first-out) or market.
Advances for Inventory
Advances for inventory represents payments in advance for goods purchased
primarily from the Far East. Upon receipt, the advances are classified as
inventories.
Furniture and Equipment and Depreciation
Furniture and equipment are carried at cost. The provision for depreciation
is computed using the straight-line method over the estimated useful lives
of the assets ranging from three to ten years.
Goodwill and Amortization
Goodwill resulting from acquisitions is being amortized using the
straight-line method over periods ranging from twenty to forty years. On an
ongoing basis, management reviews the valuation and amortization of goodwill
to determine possible impairment by comparing the carrying value to the
undiscounted future cash flows of the related business unit.
Income Taxes
Deferred income taxes are determined using the liability method, under which
deferred tax assets and liabilities are determined based on differences
between financial accounting and tax bases of assets and liabilities.
F-8
<PAGE> 71
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with original maturities of three months or less to
be cash equivalents. As of December 31, 1994 and 1993, there were no cash
equivalents.
Income Per Common Share
Income per common share is computed by dividing net income by the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares result from the assumed issuance of shares
under the Company's incentive stock option plan, warrants and convertible
preferred stock, if dilutive.
Reclassifications
Certain reclassifications have been made to prior years to conform with the
1994 presentation.
NOTE B - ACQUISITION OF 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.
The purchase price was allocated to the acquired assets and assumed
liabilities based upon their respective fair values. The excess of cost over
the net tangible assets acquired is included in the accompanying balance
sheet as goodwill and is being amortized over twenty years.
The Company has an option to acquire the remaining 44% of the common stock of
JAK in increments of a minimum of 4% per month over the period from January
17, 1995 to December 31, 1995.
The cash consideration for each 4% incremental interest is $45,455 (total
aggregate of $500,000). Amounts unpaid after January 17, 1995 accrue
interest at 8% per annum.
During February, 1995, the Company exercised its option to acquire an
additional 4% of the common stock of JAK.
F-9
<PAGE> 72
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE C - NOTES PAYABLE AND LONG-TERM DEBT
Notes payable consist of the following notes:
<TABLE>
<CAPTION>
December 31,
------------------------
1994 1993
----------- ----------
<S> <C> <C>
$13.2 million revolving line of credit, due
upon demand or September 27, 1995; interest
at floating prime (8.25% at December 31,
1994) plus 1/2% payable monthly;
collateralized by substantially all assets $11,735,392 $ 8,649,820
$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 6,508,791 3,940,219
----------- -----------
$18,244,183 $12,590,039
=========== ===========
</TABLE>
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 December 31, 1994,
the Company did not meet certain of these covenants and has obtained waivers
of the violations.
As of December 31, 1994, the Company had unused available lines of credit
totaling approximately $1,956,000.
Current maturities of long-term debt at December 31, 1993 consisted of a
promissory note due to the former majority stockholder of CCTV Source, Inc.
for repayment of cash advances subsequent to the effective date of the
Company's acquisition of CCTV Source, Inc. The note was paid in full during
1994.
Subsequent to December 31, 1994, the $13.2 million revolving line of credit
was increased to $15.0 million under essentially the same terms and
conditions.
The weighted average interest rate for notes payable for the years ended
December 31, 1994 and 1993 was 8.16% and 6.19%, respectively.
F-10
<PAGE> 73
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE D - STOCKHOLDERS' EQUITY
The stockholders of Ultrak, Inc., voting at a special meeting of
stockholders held December 17, 1993, approved, effective December 28, 1993,
an amendment to the Company's Articles of Incorporation and a concurrent
one-for-six reverse stock split of shares of the Company's common stock.
Accordingly, all share and per share amounts have been restated to reflect
the reverse stock split.
The amendment to the Company's Articles of Incorporation changed the number
of authorized shares of the Company's common stock from 50,000,000 shares
(before the reverse stock split) to 20,000,000 shares (after the reverse
stock split); eliminated the authorization of the Company's Class A
Non-Voting Common Stock, $.01 par value, Series A 8% Cumulative Convertible
Preferred Stock and Senior Series B 8% Cumulative Convertible Preferred
Stock (none of which was outstanding); amended the rights and preferences of
the outstanding Series A Preferred Stock to, among other things, increase
the relative voting rights of holders of that Series, and made other changes
in the rights and preferences of that Series to give effect to the reverse
stock split.
Preferred Stock
The Company's Amended Articles of Incorporation authorize issuance in series
of up to 2,000,000 shares of $5 par value preferred stock, of which 195,351
shares have been designated as Series A, 12% cumulative convertible
preferred stock.
The Series A Preferred Stock earns dividends at the rate of 12% per annum,
beginning January 1, 1991, payable quarterly. All dividends accrue whether
or not such dividends have been declared and whether or not there are
profits, surplus, or other funds of the Company legally available for
payment.
The Company may at any time redeem all or any portion of the Series A
Preferred Stock then outstanding at the liquidation value of $5 plus unpaid
dividends. A holder of Series A Preferred Stock may convert all or any of
the shares into shares of the Company's Common Stock at any time at a
conversion rate equal to the original purchase price of $5.00 plus any
unpaid dividends divided by $2.40.
Holders of Series A Preferred Stock are entitled to vote on all matters
submitted to a vote of stockholders. Each Series A Preferred Share is
entitled to voting rights equal to 16.667 shares of common stock.
F-11
<PAGE> 74
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE D - STOCKHOLDERS' EQUITY - Continued
Nonqualified Stock Option Plan
The 1988 Nonqualified Stock Option Plan provides for options to be granted
covering 833,334 shares of common stock. Shares under grant generally
become exercisable in five equal annual installments beginning one year
after the date of grant, and expire after ten years.
Option exercise prices are set by the Board of Directors on the date of
grant at the market price of the Company's common stock.
Details of stock options are as follows:
<TABLE>
<CAPTION>
Number of Option
shares price
--------- ------------
<S> <C> <C>
Options outstanding - December 31, 1992 498,560 $ .60 -$7.50
Granted 108,333 6.00
Forfeited (93,334) 2.40 - 7.50
Exercised (13,333) .60 - 7.50
------- ------------
Options outstanding - December 31, 1993 500,226 1.20 - 7.50
Granted 47,500 4.50 - 6.88
Forfeited (14,167) 3.75 - 6.00
Exercised (600) 2.40
------- ------------
Options outstanding - December 31, 1994 532,959 $1.20 - 7.50
======= ============
Options exercisable - December 31, 1994 334,109 $1.20 - 7.50
======= ============
</TABLE>
Stock Warrants
In connection with the $7.0 million line of credit (Note C), the Company
granted to the lender warrants to purchase a total of 200,000 shares of
restricted common stock at a price of $8 per share, subject to certain
adjustments. The warrant agreement expires in April 1996 and no warrants
have been exercised to date.
F-12
<PAGE> 75
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE E - MAJOR CUSTOMERS AND SUPPLIERS
Revenue in excess of 10% of total sales was received from one customer in
each of the three years ended December 31, 1994 as follows:
<TABLE>
<S> <C>
1994 $16,279,000
1993 9,596,000
1992 5,633,000
</TABLE>
The Company's purchases from one vendor in Korea represented approximately
45% of total cost of goods sold in 1994.
NOTE F - COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries have entered into operating leases for
office and warehouse space and data processing equipment.
Minimum future rental payments for all long-term, noncancelable operating
leases is presented below:
<TABLE>
<CAPTION>
Year ending
December 31,
------------
<S> <C>
1995 $ 472,000
1996 431,000
1997 338,000
1998 258,000
1999 98,000
----------
$1,597,000
==========
</TABLE>
Total rent expense charged to operations is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C>
$473,502 $266,717 $235,501
======== ======== ========
</TABLE>
The Company is a defendant in one lawsuit arising out of the ordinary course
of business. In the opinion of management, the lawsuit will not have a
material adverse effect upon the Company's business or financial position.
F-13
<PAGE> 76
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE G - INCOME TAXES
The provisions for taxes on income from continuing operations consists of the
following:
<TABLE>
<CAPTION>
Year ended
December 31,
---------------------------------------
1994 1993 1992
--------- -------- --------
<S> <C> <C> <C>
Federal
Current $1,081,435 $ 613,105 $ 11,979
Deferred 227,012 (266,892) -
State 204,573 35,330 14,364
---------- --------- --------
$1,513,020 $ 381,543 $ 26,343
========== ========= ========
</TABLE>
The Company's effective income tax rate from continuing operations differed
from the Federal statutory rate as follows:
<TABLE>
<CAPTION>
Year ended
December 31,
------------------------
1994 1993 1992
----- ----- ----
<S> <C> <C> <C>
U.S. Federal statutory rate 34.0% 34.0% 34.0%
Reduction in deferred tax asset
valuation allowance (1.4) (4.5) -
Net operating loss carryforward - (18.4) (33.5)
Other, net 2.6 1.6 4.1
----- ----- -----
35.2% 12.7% 4.6%
===== ===== =====
</TABLE>
Deferred tax assets and liabilities are comprised of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
1994 1993
--------- ---------
<S> <C> <C>
Deferred tax assets
Inventory $ 156,854 $ 181,835
Bad debts 156,416 160,671
Accrual for estimated expenses 98,489 103,869
Net operating loss carryforward 177,026 398,123
--------- ---------
588,785 844,498
Deferred tax liabilities
Depreciation (78,331) (47,664)
Other (13,662) (12,240)
--------- ---------
496,792 59,904
Valuation allowance (133,804) (194,594)
--------- ---------
$ 362,988 $ 590,000
========= =========
</TABLE>
F-14
<PAGE> 77
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE G - INCOME TAXES - Continued
As of December 31, 1994, the Company has available net operating loss
carryforwards of approximately $520,000 which are available to reduce future
taxable income by approximately $60,000 per year through 2002. A valuation
allowance of $133,804 has been recognized to offset a portion of the
deferred tax assets related to those carryforwards.
NOTE H - NOTES RECEIVABLE
Notes receivable - noncurrent consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1994 1993
-------- --------
<S> <C> <C>
$750,000 notes receivable, principal payments
due and payable annually as follows:
July 1995, $300,000; July 1996, $100,000;
July 1997, $100,000; upon maturity
July 1998, $200,000; interest payable monthly
at 10% per annum, collateralized by
substantially all assets of the maker $700,000 $420,000
$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 116,000 100,000
$200,000 note receivable, principal payments
due and payable on January 14, 1997, interest
payable annually at 8%, partially collateralized
by certain assets of the maker 168,208 -
-------- --------
$984,208 $520,000
======== ========
</TABLE>
In connection with the $750,000 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 Company's warrants.
NOTE I - DISCONTINUED OPERATIONS
On July 22, 1993, the Company announced that it would discontinue its
personal computers products (PC) business segment and concentrate its
resources on the CCTV business segment. As a result of this decision, the
operations and net assets of the PC business segment are classified as
discontinued operations for all periods presented.
F-15
<PAGE> 78
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE I - DISCONTINUED OPERATIONS - Continued
Sales included in discontinued operations for the years ended December 31,
1994, 1993 and 1992 were $110,720, $19,232,836 and $9,677,585, respectively.
The loss (income) from discontinued operations is net of tax benefits of
$145,106 in 1993 and tax expense of $14,262 in 1992, and the provision for
loss on disposal in 1994 and 1993 is net of tax benefits of $98,000 and
$774,368, respectively.
Net assets of discontinued operations is comprised of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1994 1993
-------- ---------
<S> <C> <C>
Accounts receivable, net $30,000 $ 241,038
Inventories, net - 117,293
Accounts payable - (5,306)
Other liabilities and reserves, net (30,000) (155,900)
------- ---------
Net assets of discontinued operations $ - $ 197,125
======= =========
</TABLE>
NOTE J - UNAUDITED QUARTERLY OPERATING RESULTS AND UNUSUAL ITEMS
Unaudited quarterly operating results for the years ended December 31, 1994
and 1993 are as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1994
Sales $17,808,683 $19,032,217 $21,524,735 $20,428,076
Gross profit 4,164,245 4,928,373 5,278,902 5,072,483
Income (loss) from
Continuing operations 628,057 825,511 999,428 336,516
Discontinued operations - - (190,000) -
----------- ----------- ----------- -----------
Net income 628,057 825,511 809,428 336,516
=========== =========== =========== ===========
Net income per share $ .09 $ .12 $ .11 $ .04
=========== =========== =========== ===========
1993 (1)
Sales $10,472,526 $12,242,154 $15,670,925 $14,217,644
Gross profit 2,605,022 3,120,365 3,882,816 3,192,797
Income (loss) from
Continuing operations 764,848 939,503 1,113,862 (179,353)
Discontinued operations (26,920) (707,674) (1,758,593) 658,817
----------- ----------- ----------- ----------
Net income (loss) 737,928 231,829 (644,731) 479,464
=========== =========== =========== ==========
Net income (loss) per share $ .10 $ .03 $ (.10) $ .07
=========== =========== =========== ==========
</TABLE>
(1) Reclassified to reflect discontinued operations; see Note I of Notes to
Consolidated Financial Statements.
F-16
<PAGE> 79
Ultrak, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1994, 1993 and 1992
NOTE J - UNAUDITED QUARTERLY OPERATING RESULTS AND UNUSUAL ITEMS - Continued
During the second, third and fourth quarters of 1993, the Company made
provisions for expected losses on liquidation of its PC business segment and
incurred operating losses in the amount of $2,464,000. Net assets of
discontinued operations as of December 31, 1993 were $197,125, consisting
primarily of collectible accounts receivable and saleable inventory.
During the fourth quarter of 1993, the Company reduced its deferred tax
valuation allowance by $590,000 and recorded a tax benefit in the amount of
$329,000 related to its discontinued PC business segment and additional tax
expense related to its continuing operations of $290,000. The Company
incurred a loss during the fourth quarter of 1993 in its continuing
operations primarily because of approximately $577,000 in losses associated
with delays in production of its new dental product and advance marketing
and promotion costs associated with the new dental product.
NOTE K - SUBSEQUENT EVENT
On February 9, 1995, the Company signed a letter of intent with Diamond
Electronics, Inc. (Diamond), a Ohio corporation, to purchase 100% of the
outstanding common stock of Diamond for consideration of 600,000 shares of
registered Ultrak common stock. Diamond had unaudited revenues of
$11,775,000 and unaudited net income of approximately $328,000 in 1994. The
letter of intent 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. Diamond's products include a patented high speed dome which
permits manipulation of the camera and lense from a remote location either
automatically or with a joy stick. The transaction will be accounted for as
a purchase.
F-17
<PAGE> 80
(Norman Jones Enlow & Co. LETTERHEAD)
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Diamond Electronics, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of Diamond
Electronics, Inc. and Subsidiary as of January 1, 1995 and January 2, 1994, and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Diamond
Electronics, Inc. and Subsidiary as of January 1, 1995 and January 2, 1994, and
the consolidated results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ NORMAN, JONES, ENLOW & CO.
Columbus, Ohio
March 17, 1995
(LETTERHEAD Addresses)
F-18
<PAGE> 81
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JANUARY 1, 1995 AND JANUARY 2, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 30,549 $ 38,291
Trade accounts receivable - net 2,203,670 1,349,055
Inventories 2,370,557 1,910,908
Prepaid expenses and other 32,529 63,492
Deferred income tax benefit 316,090 482,100
------------ ------------
TOTAL CURRENT ASSETS 4,953,395 3,843,846
PROPERTY, PLANT AND EQUIPMENT - net 1,763,920 1,795,405
OTHER ASSETS 49,373 8,785
------------ ------------
TOTAL ASSETS $ 6,766,688 $ 5,648,036
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,167,162 $ 1,122,217
Current portion of long-term debt 105,960 115,999
Accounts payable 875,852 485,659
Accrued payroll and taxes 148,952 125,320
Accrued commissions 130,891 90,075
Accrued expenses 222,072 83,023
------------ ------------
TOTAL CURRENT LIABILITIES 2,650,889 2,022,293
LONG-TERM DEBT, less current portion 884,548 592,033
DEFERRED INCOME TAXES 13,204 20,300
------------ ------------
TOTAL LIABILITIES 3,548,641 2,634,626
SHAREHOLDERS' EQUITY
Convertible preferred stock, par value $100
per share; authorized - 4,000 shares, issued
and outstanding - 0- and 4,000 shares -- 400,000
Common stock, no par value; authorized - 11,996,000
shares, issued and outstanding - 4,706,326 and
4,476,267 shares 3,189,084 3,010,088
Paid-in capital 120,000 20,000
Retained earnings (deficit) (91,037) (416,678)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 3,218,047 3,013,410
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,766,688 $ 5,648,036
============ ============
Book value per common share $ .68 $ .58
============ ============
</TABLE>
See notes to financial statements
F-19
<PAGE> 82
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the 52 Weeks Ended January 1, 1995 and
the 52 Weeks Ended January 2, 1994
<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
NET SALES $11,774,691 $9,367,799
COST OF GOODS SOLD 8,009,468 6,426,955
----------- ---------
GROSS PROFIT 3,765,223 2,940,844
OPERATING EXPENSES
Selling 1,882,860 1,393,840
General and administrative 936,488 884,223
Research and development 184,504 139,462
Interest 193,392 199,516
----------- ---------
3,197,244 2,617,041
----------- ---------
INCOME FROM OPERATIONS 567,979 323,803
OTHER INCOME (EXPENSES) (28,817) 60,342
----------- ---------
INCOME BEFORE INCOME TAXES, AND CUMULATIVE EFFECT ADJUSTMENT 539,162 384,145
INCOME TAXES
Currently payable 54,622 5,976
Deferred 158,899 148,300
----------- ---------
213,521 154,276
----------- ---------
INCOME BEFORE CUMULATIVE EFFECT ADJUSTMENT 325,641 229,869
CUMULATIVE EFFECT ADJUSTMENT, for the change in income tax
accounting -- 610,100
----------- ---------
NET INCOME $ 325,641 $ 839,969
=========== =========
Earnings per common share:
Income (loss) before cumulative effect adjustment $ .07 $ .05
Cumulative effect adjustment -- .14
----------- ---------
Net income $ .07 $ .19
=========== =========
</TABLE>
See notes to financial statements
F-20
<PAGE> 83
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the 52 Weeks Ended January 1, 1995 and
the 52 Weeks Ended January 2, 1994
<TABLE>
<CAPTION>
Common Stock Shareholders'
Preferred Common Purchase Paid-in Accumulated Equity
Stock Stock Warrants Capital Deficit (Deficit)
--------- --------- ------------ -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 29, 1991 $ 44,450 $1,784,340 $ 20,000 $ -- $(2,427,452) $ (578,662)
Common stock warrants expired 12/31/92 (20,000) 20,000 --
Existing preferred stock canceled in
Chapter 11 reorganization plan (44,450) (44,450)
New convertible preferred stock issued in
Chapter 11 reorganization plan 400,000 400,000
New common stock issued in Chapter 11
reorganization plan 1,203,272 1,203,272
Net income for the year 1,170,805 1,170,805
--------- ---------- --------- -------- ---------- ----------
BALANCE JANUARY 3, 1993 400,000 2,987,612 -- 20,000 (1,256,647) 2,150,965
Issuance of common stock 22,476 22,476
Net income for the year 839,969 839,969
--------- ---------- --------- -------- ---------- ----------
BALANCE JANUARY 2, 1994 400,000 3,010,088 -- 20,000 (416,678) 3,013,410
Redemption of convertible preferred stock (400,000) 100,000 (300,000)
Issuance of common stock for stock grants 29,000 29,000
Issuance of common stock 149,996 149,996
Net income for the year 325,641 325,641
--------- ---------- --------- -------- ---------- ----------
BALANCE JANUARY 2, 1995 $ -- $3,189,084 $ -- $120,000 $ (91,037) $3,218,047
========= ========== ========= ======== ========== ==========
</TABLE>
See notes to financial statements.
F-21
<PAGE> 84
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the 52 Weeks Ended January 1, 1995 and
the 52 Weeks Ended January 2, 1994
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income less extraordinary items $325,641 $839,969
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 174,433 174,899
Amortization 17,000 --
Loss on sale of equipment 1,936 --
(Increase) decrease in:
Trade accounts receivable (854,615) 88,909
Inventories (459,649) (562,974)
Other current assets 30,963 30,569
Deferred income tax benefit 166,010 (482,100)
Increase (decrease) in:
Accounts payable 390,193 86,213
Accrued payroll and taxes 23,632 53,128
Accrued commissions 40,816 (7,276)
Other current liabilities 289,045 (121,674)
Deferred income taxes (7,096) 20,300
-------- --------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 138,309 119,963
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (146,539) (59,769)
Acquisition of other assets (57,587) --
Proceeds from sale of equipment 1,655 --
-------- --------
NET CASH (USED) BY INVESTING ACTIVITIES (202,471) (59,769)
CASH FLOWS FROM FINANCING ACTIVITIES
Additional borrowings (repayments) under short-term revolving line of credit
(post-petition) $ 44,945 $(146,767)
Principal payments on bank term loan (93,184) (169,052)
Principal payments on other notes payable (32,429) (61,159)
Increase term loan on bank refinancing 408,088 --
Issuance of common stock options and grants 29,000 --
Redemption of convertible preferred stock (300,000) --
-------- --------
NET CASH (USED) BY FINANCING ACTIVITIES 56,420 (354,502)
-------- --------
NET INCREASE (DECREASE) IN CASH (7,742) (294,308)
CASH AT BEGINNING OF YEAR 38,291 332,599
-------- --------
CASH AT END OF YEAR $ 30,549 $ 38,291
======== ========
SUPPLEMENTAL DISCLOSURES
Interest paid $190,239 $193,989
======== ========
Income taxes paid $ 17,664 $ 10,756
======== ========
</TABLE>
See notes to financial statements
F-22
<PAGE> 85
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Diamond Electronics, Inc. and Subsidiary (the Company) manufactures, sells
and installs closed circuit television (CCTV) systems. The CCTV systems are
used primarily for surveillance in retail and environmental settings.
Basis of Accounting
The Company's policy is to prepare its financial statements on the accrual
basis of accounting in accordance with generally accepted accounting
principles. In preparing the financial statements, management is required
to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and revenues and
expenses for the period. Actual results could differ from those estimates.
Depreciation
The cost of property, plant and equipment is depreciated over the estimated
useful lives of the related assets. Depreciation is computed on the
straight-line method for financial reporting purposes and on the Modified
Accelerated Cost Recovery System for income tax purposes.
Accounting Year
The Company determines its fiscal year on a 52-53 week basis. The fiscal
year ends on the Sunday closest to December 31.
Goodwill
Goodwill represents the excess of the cost of companies acquired over the
fair value of their net assets at dates of acquisition and is being
amortized on the straight-line method over periods of five to seven years.
Amortization expense charged to operations for the years ended January 1,
1995 and January 2, 1994 was $-0- and $-0-, respectively.
Components of goodwill are as follows:
<TABLE>
<CAPTION>
January 1, January 2,
1995 1994
---------- ----------
<S> <C> <C>
Goodwill -- Diamond $ 103,751 $ 103,751
Goodwill -- Polymatrix 240,394 240,394
---------- ----------
344,145 344,145
Accumulated amortization (344,145) (344,145)
---------- ----------
$ -- $ --
========= =========
</TABLE>
Non-Compete Agreement
This agreement represents the amount paid for non-competition by the
sellers of Alpha Electronics, Inc. The company wrote off the original
amount of $10,000 during the period ended January 1, 1995, due to no future
benefit.
Warranty Cost
The Company accrues product warranty costs based upon sales levels,
warranty terms and actual experience. Product warranty expense was $156,299
and $29,816 for the years ended January 1, 1995 and January 2, 1994,
respectively. The accrued product warranty liability was $77,000 and
$27,000 at January 1, 1995 and January 2, 1994, respectively.
Research and Development
The costs associated with new product research and development are expensed
as incurred. Research and development expense was $184,504 and $139,462 for
the years ended January 1, 1995 and January 2, 1994, respectively.
F-23
<PAGE> 86
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED:
Revenue Recognition
The Company recognizes revenues on contracts as shipments are made.
Basis of Consolidation
The accompanying consolidated statements include the accounts of Diamond
Electronics, Inc. and its wholly owned subsidiary, Alpha CCTV, Inc. All
intercompany accounts and transactions have been eliminated in
consolidation.
Inventories
Inventories are stated at the lower of cost (determined by first-in,
first-out method) or market.
Book Value and Earnings Per Share
Book value per share is based upon the number of common shares outstanding
at January 1, 1995 and January 2, 1994. Earnings per share are based upon
the weighted average number of common shares outstanding during the year.
2. ACCOUNTS RECEIVABLE
The following is a summary of receivables:
<TABLE>
<CAPTION>
January 1, January 2,
1995 1994
---------- ----------
<S> <C> <C>
Trade accounts $2,337,785 $1,588,055
Allowance for doubtful accounts (134,115) (239,000)
---------- ----------
$2,203,670 $1,349,055
========== ==========
</TABLE>
At January 1, 1995 and January 2, 1994, all accounts receivable were
pledged as collateral in connection with bank loans.
3. INVENTORIES
Inventories consist of:
<TABLE>
<CAPTION>
January 1, January 2,
1995 1994
---------- ----------
<S> <C> <C>
Raw materials and component parts $1,213,785 $ 688,633
Work in process 1,156,772 1,222,275
---------- ----------
$2,370,557 $1,910,908
========== ==========
</TABLE>
At January 1, 1995 and January 2, 1994, all inventories were pledged as
collateral in connection with bank loans.
F-24
<PAGE> 87
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
4. PROPERTY, PLANT AND EQUIPMENT
The following is a summary of property, plant and equipment:
<TABLE>
<CAPTION>
January 1, January 2,
1995 1994
----------- -----------
<S> <C> <C>
Land $ 58,600 $ 58,600
Buildings 2,138,654 2,138,654
Machinery and equipment 1,434,672 1,292,935
Furniture and fixtures 32,354 32,354
----------- -----------
3,664,280 3,522,543
Accumulated depreciation (1,900,360) (1,727,138)
----------- -----------
$ 1,763,920 $ 1,795,405
=========== ===========
</TABLE>
Depreciation expense charged to operations was $174,433 and $174,899 in
1994 and 1993, respectively.
All property, plant and equipment is pledged as collateral for bank loans.
The useful lives of property, plant and equipment for purposes of computing
depreciation are:
<TABLE>
<S> <C>
Buildings 10 - 30 years
Machinery and equipment 3 - 7 years
Furniture and fixtures 3 - 7 years
</TABLE>
5. NOTES PAYABLE
Short-term notes payable consist of the following:
<TABLE>
<CAPTION>
January 1, January 2,
1995 1994
---------- ----------
<S> <C> <C>
Revolving credit agreement $1,167,162 $1,122,217
========== ==========
</TABLE>
The revolving credit agreement and note payable are with a bank, have the
same collateral pledged, and are subject to the same loan covenants as the
note payable to the bank as further described in note 6 with a balance of
$966,667 at January 1, 1995. The revolving credit agreement bears interest
at 1/4% above the prime rate with interest payable monthly, with the
outstanding balance due June 30, 1997. The revolving credit agreement
provides for borrowings up to $2,500,000 limited to a borrowing base. At
January 1, 1995, the borrowing base of $2,437,102 was computed as the sum
of 85% of eligible receivables, plus the lesser of $1,000,000 or a percent
of inventory ranging from 25%-55%.
At January 1, 1995, the Company had $1,269,940 of unused line of credit
with a bank to be drawn upon as needed with interest at 1/4% above the
prime rate.
F-25
<PAGE> 88
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
6. LONG-TERM DEBT
The following is a summary of long-term debt:
<TABLE>
<CAPTION>
January 2, January 3,
1994 1993
---------- ----------
<S> <C> <C>
Note payable to bank in monthly installments of $8,550,
including interest at 10.5% through June 1, 1994. On June 15,
1994 the unpaid balance of the note plus accrued interest is
due. $ -- $ 651,762
Note payable to taxing agencies due at various dates (six years
from assessment date) in equal quarterly installments with
interest at the statutory rate. 23,841 56,270
Note payable to bank in monthly installments of $8,333,
including interest at prime plus 1/2% through August 1,
2001. At January 1, 1995, the prime rate was 8.5%. 966,667 --
--------- ---------
990,508 708,032
Current maturities included in current liabilities (105,960) (115,999)
--------- ---------
$ 884,548 $ 592,033
========= =========
</TABLE>
The revolving credit agreement, the note payable to bank above, and the
note payable to bank described in note 5, have the first mortgage on real
estate and substantially all other assets of the Company pledged as
collateral.
Following are maturities of long-term debt for each of the next five years:
<TABLE>
<CAPTION>
Year Amount
--- ------
<S> <C>
1995 $105,960
1996 105,960
1997 105,960
1998 105,961
1999 99,996
Thereafter 466,671
--------
$990,508
========
</TABLE>
F-26
<PAGE> 89
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
7. INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes (SFAS 109). SFAS 109 is an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. In estimating future
tax consequences, SFAS 109 generally considers all expected future events
other than enactments of changes in the tax law or rates. Previously, the
Company used the Accounting Principles Board Opinion No. 11 "Accounting
For Income Taxes" (APB 11) income statement approach that focused on
calculating deferred tax expense. Under APB 11, recognition of deferred
tax assets was not permitted. Effective January 4, 1993, the Company
adopted SFAS 109. The cumulative effect of the change in accounting
principle is included in determining net income for the year ended January
2, 1994. Financial statements for prior years have not been restated.
Deferred tax liabilities (assets) are comprised of the following:
<TABLE>
<CAPTION>
January 1, January 2,
1995 1994
---------- ----------
<S> <C> <C>
Inventory $ (214,746) $ (252,800)
Bad debts (51,902) (97,000)
Warranties (39,474) (10,400)
Loss carryforwards -- (121,600)
Other (9,968) (300)
---------- ----------
Net current deferred
tax assets (316,090) (482,100)
---------- ----------
Capital lease -- (14,700)
Depreciation 13,204 35,000
---------- ----------
Net long-term deferred
tax liabilities 13,204 20,300
---------- ----------
$ (302,886) $ (461,800)
========== ==========
</TABLE>
The information above is presented to show the composition of the deferred
tax liabilities (assets) for the years ended January 1, 1995 and January 2,
1994.
The Company's income tax expense differs from the amount computed if the
federal statutory rate were applied to income from continuing operations
primarily because of expenses deductible for financial reporting purposes
that are not deductible for tax purposes.
At January 1, 1995, the Company has available unused operating loss
carryforwards of $-0-.
8. CONVERTIBLE PREFERRED STOCK
The convertible preferred stock is noncumulative, nonparticipating and is
convertible into shares of common stock at the option of the holder. There
were 4,000 shares authorized, -0- and 4,000, issued and outstanding at
January 1, 1995 and January 2, 1994, respectively. The shares were redeemed
during the year by the Company.
F-27
<PAGE> 90
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
11. PLAN OF REORGANIZATION -- CONTINUED
Priority Tax Claims
Payroll, withholding and real and personal property taxes of $67,738 are
payable in equal quarterly installments commencing March 15, 1993, through
December 15, 1998 with interest at the statutory rate.
Unsecured Promissory Note
The holder of $1,000,000 unsecured promissory note received 4,000 shares of
$100 par noncumulative, nonparticipating, preferred stock, convertible into
19% of the new outstanding common stock.
General Unsecured
The holders of approximately $1,511,000 of general unsecured claims
received the following for their claims: (a) cash in the amount of $0.10
for each dollar of their claim; or (b) shares of common stock in the amount
of 1/3 share for each dollar of their claim. Total cash payable and shares
issued for these claims were $77,607 and 245,042 shares, respectively.
Post-petition Financing
The pledgers of $199,000 of post-petition financing received 1,990,000
shares of the new issue outstanding common stock.
Common Stock
The holders of approximately 1,350,000 outstanding shares of the Company's
existing common stock retain their shares and receive a right to buy one
new share of common stock for every share owned for $.25 per share. Each
share purchased will carry two warrants which expire December 15, 2002. The
exercise price of the warrants shall be $.50 and $.75 callable by the
Company with 90 days notice at $.05 per warrant.
Preferred Stock
The holder of 2,100 outstanding shares of the Company's existing preferred
stock received 500,000 shares of the new issue outstanding common stock.
Board of Directors
The six members of the Board of Directors of the Company who have provided
services to the Company relating to the Chapter 11 case received 300,000
shares of the new outstanding common stock and 300,000 options to buy
shares of common stock. There were no options exercised in 1994 or 1993.
Unsecured Wages and Benefits
The holders of the $48,738 unsecured wages and benefits received the
following for their claims: (a) $11,574 cash payment on December 15, 1992;
(b) $37,164 cash payment in August of 1991.
The Company did not meet the criteria for fresh start accounting.
Therefore, the Company accounted for the reorganization as follows:
- All liabilities are stated at the post-petition amount as allowed by the
Court, if applicable.
- Income, expense, realized gains and losses directly associated with the
reorganization were segregated and presented as reorganization items or
extraordinary items in the statement of operations.
F-28
<PAGE> 91
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
11. PLAN OF REORGANIZATION -- CONTINUED
Priority Tax Claims
Payroll, withholding and real and personal property taxes of $67,738 are
payable in equal quarterly installments commencing March 15, 1993, through
December 15, 1998 with interest at the statutory rate.
Unsecured Promissory Note
The holder of $1,000,000 unsecured promissory note received 4,000 shares of
$100 par noncumulative, nonparticipating, preferred stock, convertible into
19% of the new outstanding stock.
General Unsecured
The holders of approximately $1,511,000 of general unsecured claims
received the following for their claims: (a) cash in the amount of $0.10
for each dollar of their claim; or (b) shares of common stock in the amount
of 1/3 share for each dollar of their claim. Total cash payable and shares
issued for these claims were $77,607 and 245,042 shares, respectively.
Post-petition Financing
The pledgers of $199,000 of post-petition financing received 1,990,000
shares of the new issue outstanding common stock.
Common Stock
The holders of approximately 1,350,000 outstanding shares of the Company's
existing common stock retain their shares and receive a right to buy one
new share of common stock for every share owned for $.25 per share. Each
share purchased will carry two warrants which expire December 15, 2002.
The exercise price of the warrants shall be $.50 and $.75 callable by the
Company within 90 days notice at $.05 per warrant.
Preferred Stock
The holder of 2,100 outstanding shares of the Company's existing preferred
stock received 500,000 shares of the new issue outstanding common stock.
Board of Directors
The six members of the Board of Directors of the Company who have provided
services to the Company relating to the Chapter 11 case received 300,000
shares of the new outstanding common stock and 300,000 options to buy
shares of common stock. There were no options exercised in 1993 or 1992.
Unsecured Wages and Benefits
The holders of the $48,738 unsecured wages and benefits received the
following for their claims: (a) $11,574 cash payment on December 15, 1992;
(b) $37,164 cash payment in August of 1991.
The Company did not meet the criteria for fresh start accounting.
Therefore, the Company accounted for the reorganization as follows:
- All liabilities are stated at the post-petition amount as allowed by the
Court, if applicable.
- Income, expense, realized gains and losses directly associated with the
reorganization were segregated and presented as reorganization items or
extraordinary items in the statement of operations.
F-29
<PAGE> 92
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
12. LEASES
The Company leases office equipment, manufacturing equipment and delivery
vehicles under operating leases expiring in various years through 1996.
Minimum future rental payments under noncancelable operating leases having
remaining terms in excess of one year as of January 1, 1995, for each of
the next five years and in the aggregate are:
<TABLE>
<CAPTION>
Amount
-------
<S> <C>
1995 $22,332
1996 4,934
-------
Total minimum future rental payments $27,266
=======
</TABLE>
Rental expense under all operating leases was $55,795 and $45,364 for 1994
and 1993, respectively.
Certain operating leases provide for renewal options for periods of one
year at their fair rental value at the time of renewal in the normal course
of business, operating leases are generally renewed or replaced by other
leases.
13. RELATED PARTY TRANSACTIONS
A certain shareholder has guaranteed bank obligations under a standby
letter of credit as follows:
<TABLE>
<CAPTION>
Period
-------
<S> <C>
December 16, 1992 through June 15, 1993 $40,000
June 16, 1993 through December 15, 1993 $25,000
Thereafter $ --
</TABLE>
A corporation which provides the Company with management services is owned
by a member of the board of directors. The Company paid management fees of
approximately $44,557 and $31,000 during 1994 and 1993, respectively.
14. SUBSEQUENT EVENT
On February 9, 1995, NASDAQ-Listed Ultrak, Inc. and Diamond Electronics,
Inc. signed a letter of intent whereby Ultrak, Inc. would acquire all the
outstanding common stock of Diamond Electronics, Inc. The purchase price
would be 600,000 shares of newly issued registered Ultrak, Inc. common
stock, plus additional shares if certain future Ultrak, Inc. closing stock
prices are met. It is intended that the stock of Diamond Electronics, Inc.
be exchanged on a tax-free basis pursuant to a reorganization described in
Section 368 of the Internal Revenue Code.
Diamond Electronics, Inc.'s Board of Directors and Shareholders are
expected to approve the transaction in order to allow both Ultrak, Inc. and
Diamond Electronics, Inc. to have executed a definitive merger agreement by
April 15, 1995.
15. STOCK WARRANTS
In connection with a rights offering in March 1993, stockholders received
two warrants for each share purchased. There are warrants to purchase
48,893 shares with an exercise price of $.50 and warrants to purchase
another 48,893 shares with an exercise price of $.75. The warrant agreement
expires December 2002 and no warrants have been exercised. The warrants are
callable at $.05 per warrant on a 90 day notice.
F-30
<PAGE> 93
DIAMOND ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
16. STOCK OPTIONS
Under the terms of its stock option plan, options to purchase shares of the
company's common stock are granted at a price equal to the market price of
the stock at the date of the grant. Following is a summary of transactions:
<TABLE>
<S> <C>
Options outstanding -- January 3, 1993
Granted during the year 71,000
Forfeited during the year --
Exercised during the year (at a price of $.25 per share) (41,000)
--------
Options outstanding -- January 2, 1994 30,000
Granted during the year 50,000
Forfeited during the year --
Exercised during the year (at a price of $.58 per share) (50,000)
--------
Options outstanding -- January 1, 1995 30,000
========
Options exercisable -- January 1, 1995 30,000
========
</TABLE>
17. CASH FLOWS
Cash flows from operations not disclosed on the face of the cash flow
statement were as follows:
<TABLE>
<S> <C>
Customer deposits converted to common stock $149,996
========
Cost of equipment $ 4,801
Less: accumulated depreciation (1,210)
--------
Net book value 3,591
Proceeds from sale of equipment 1,655
--------
Loss on sale of equipment $ 1,936
========
</TABLE>
F-31
<PAGE> 94
ANNEXES
ANNEX A - Merger Agreement and Exhibits 1.01(a) and (b) thereto
ANNEX B - Section 1701.85 of the Ohio Revised Code
ANNEX C - Articles of Incorporation of Diamond
ANNEX D - Code of Regulations of Diamond
ANNEX E - Articles of Incorporation of Ultrak, as amended
ANNEX F - Bylaws of Ultrak
ANNEX G - Reincorporation Agreement
ANNEX H - Certificate of Incorporation of Ultrak - Delaware
ANNEX I - Bylaws of Ultrak - Delaware
ANNEX J - Article 113 of Colorado Business Corporation Act
<PAGE> 95
ANNEX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as
of April 28, 1995 (the "Signing Date"), is among Diamond Electronics, Inc., an
Ohio corporation ("Diamond"), the shareholders of Diamond signing this
Agreement (the "Signing Shareholders"), Ultrak, Inc., a Colorado corporation
("Ultrak"), and Diamond Purchasing Corp., a Texas corporation and wholly-owned
subsidiary of Ultrak ("Newco").
W I T N E S S E T H:
Recitals. The Boards of Directors of Diamond, Ultrak, and Newco deem
it advisable and in the best interests of their respective shareholders that a
merger (the "Merger") is consummated whereby Newco is merged with and into
Diamond pursuant to a reorganization hereafter provided for. Diamond, the
Signing Shareholders, Ultrak, and Newco desire to set forth the terms and
conditions upon which they are willing to consummate the Merger. Ultrak, as
the sole shareholder of Newco, has approved the terms of the Merger and the
execution, delivery, and performance of this Agreement. The Signing
Shareholders constitute the Board of Directors of Diamond.
NOW, THEREFORE, in consideration of the foregoing and the agreements,
provisions, and covenants in this Agreement, and for other consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby covenant and agree as follows:
ARTICLE I: THE MERGER
1.01. The Merger. Upon the performance of all covenants and
obligations of the parties contained herein and upon the fulfillment (or
waiver) of all conditions to the obligations of the parties contained herein,
on the Effective Date (as hereinafter defined) and pursuant to the provisions
of the Texas Business Corporation Act (the "Texas Act") and the Ohio General
Corporation Law (the "Ohio Act"), Newco will be merged with and into Diamond,
which will be the surviving corporation (the "Surviving Corporation"), in
accordance with Articles of Merger to be filed in Texas and the Certificate of
Merger to be filed in Ohio in the forms attached hereto as Exhibits 1.01(a) and
1.01(b), respectively (collectively, the "Certificates of Merger"). As used in
this Agreement, the "Effective Date" shall mean such date as agreed upon by
Diamond, Newco, and Ultrak, on which the Certificates of Merger shall be filed
in accordance with the Texas Act and the Ohio Act, and the date the Merger will
become effective in accordance with the terms of the Certificates of Merger.
<PAGE> 96
1.02. Effect on Stock. As a result of the Merger, on the Effective
Date and without any action on the part of Diamond, Ultrak, or Newco, or any
holder of any of the following securities, the following will occur:
(a) Except as provided in Sections 1.04 and 1.10 hereof,
each share of Common Stock, no par value per share, of Diamond
("Diamond Common Stock" ) issued and outstanding immediately prior to
the Effective Date will cease to be outstanding and will be converted
into the right to receive such number of fully paid and nonassessable
shares of Common Stock, no par value per share, of Ultrak (the "Ultrak
Common Stock") as is equal to the quotient of (i) 600,000 divided by
(ii) the total number of issued and outstanding shares of Diamond
Common Stock as of the Effective Date. If all shares of Diamond
Common Stock issued and outstanding on the Effective Date are
converted into shares of Ultrak Common Stock, then the maximum number
of shares of Ultrak Common Stock that will be issued under this
Subsection 1.02(a) will be 600,000.
(b) Any shares of Diamond Common Stock held in the
treasury of Diamond will be cancelled and retired and cease to exist.
No cash, securities, or other consideration will be paid or delivered
in exchange for such treasury shares, under this Agreement.
(c) Each share of Common Stock, no par value, of Newco
("Newco Common Stock") issued and outstanding immediately prior to the
Effective Date will cease to be outstanding and will be converted into
the right to receive one share of Common Stock, no par value, of the
Surviving Corporation.
1.03. Adjustments.
(a) If the average closing price of Ultrak Common Stock
as reported for the National Association of Securities Dealers Automated
Quotations System ("NASDAQ") in the Wall Street Journal, Southwest Edition, for
each of the ten (10) trading days ending on the first trading day (the "First
Adjustment Date") that is six (6) months from the Effective Date is less than
$7.00, then Ultrak shall issue an additional 50,000 shares of Ultrak Common
Stock to the shareholders of Diamond as of the Effective Date (the "Effective
Date Shareholders"), and each of the Effective Date Shareholders will receive
one share of Ultrak Common Stock for every twelve (12) shares of Ultrak Common
Stock received pursuant to Subsection 1.02(a).
(b) If the average closing price of Ultrak Common Stock
as reported for NASDAQ in the Wall Street Journal, Southwest Edition, for each
of the ten (10) trading days ending on the first trading day (the "Second
Adjustment Date") (the First Adjustment Date and the Second Adjustment Date are
sometimes collectively
2
<PAGE> 97
referred to herein as the "Adjustment Dates") that is twelve (12) months from
the Effective Date is less than $8.00, then Ultrak shall issue an additional
50,000 shares of Ultrak Common Stock to the Effective Date Shareholders, and
each of the Effective Date Shareholders will receive one share of Ultrak Common
Stock for every twelve (12) shares of Ultrak Common Stock received pursuant to
Subsection 1.02(a).
(c) In the event of any change in the outstanding Ultrak
Common Stock by reason of stock dividends, stock splits, share combinations,
mergers, recapitalizations, exchanges of shares or the like, between the
Signing Date and an Adjustment Date, then the type of shares subject to
issuance on such Adjustment Date and the price of the Ultrak Common Stock that
determines whether any additional shares are issued on such Adjustment Date,
shall be adjusted appropriately.
(d) The right to receive any additional shares of Ultrak
Common Stock pursuant to this Section 1.03 is a personal right of the Effective
Date Shareholders and they may not transfer or assign all or any portion of
their right to receive additional shares of Ultrak Common Stock. No person or
entity, other than the Effective Date Shareholders, shall have the right to
receive any additional shares of Ultrak Common Stock pursuant to this Section
1.03.
1.04. Diamond Common Stock Subject to Cash Out. Notwithstanding
anything to the contrary contained in this Agreement, any Shareholder (as
hereinafter defined) who would otherwise receive ten (10) or fewer shares of
Ultrak Common Stock shall receive the Diamond Price (as defined in the
following sentence) per share of Diamond Common Stock and shall not have the
right to receive shares of Ultrak Common Stock. The Diamond Price shall equal
the product of (i) the average closing price of Ultrak Common Stock as reported
for NASDAQ in the Wall Street Journal, Southwest Edition, for each of the ten
(10) trading days ending on the trading day which is five (5) days prior to the
Effective Date multiplied by the (ii) Conversion Factor.
1.05. Exchange and Cancellation of Certificates.
(a) Ultrak shall authorize Securities Transfer Corp. to serve as
exchange agent hereunder (the "Exchange Agent"). Promptly after the Effective
Date, Ultrak shall deposit or shall cause to be deposited in trust with the
Exchange Agent certificates representing the number of whole shares of Ultrak
Common Stock to which the holders of Diamond Common Stock (other than holders
of Dissenting Shares and the holders of shares subject to Section 1.04) are
entitled pursuant to this Article I, together with cash sufficient to pay for
(i) fractional shares then known to Ultrak and (ii) shares subject to Section
1.04 (such cash amounts and certificates being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions
3
<PAGE> 98
received from Ultrak, deliver the number of shares of Ultrak Common Stock and
pay the amounts of cash provided for in this Article I out of the Exchange
Fund. Additional amounts of cash, if any, needed from time to time by the
Exchange Agent to make payments for fractional shares and/or shares subject to
Section 1.04 shall be provided by Ultrak and shall become part of the Exchange
Fund. The Exchange Fund shall not be used for any other purpose, except as
provided in this Agreement, or as otherwise agreed to by Ultrak, Newco, and
Diamond prior to the Effective Date.
(b) As soon as practicable after the Effective Date, the Exchange
Agent shall mail and otherwise make available to each record holder (other than
holders of Dissenting Shares) who, as of the Effective Date, was a holder of an
outstanding certificate or certificates which immediately prior to the
Effective Date represented shares of Diamond Common Stock (the "Certificates"),
a form of letter of transmittal and instructions for use in effecting the
surrender of the Certificates for payment therefor and conversion thereof,
which letter of transmittal shall comply with all applicable rules of the
NASDAQ. Delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and the form of letter of transmittal duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor (i) one
or more certificates as requested by the holder (properly issued, executed, and
countersigned, as appropriate) representing that number of whole shares of
Ultrak Common Stock to which such holder of Diamond Common Stock shall have
become entitled pursuant to the provisions of this Article I, (ii) as to any
fractional share, a check representing the cash consideration to which such
holder shall have become entitled pursuant to Section 1.08, and the
Certificates so surrendered shall forthwith be cancelled, and (iii) as to any
shares to be cashed out pursuant to Section 1.04, a check representing the cash
consideration to which such holder shall have become entitled pursuant to
Section 1.04, and the Certificates so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on the cash payable upon surrender of the
Certificates. Ultrak shall pay any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Ultrak Common Stock;
provided, however that such certificate is issued in the name of the person in
whose name the Certificate surrendered in exchange therefor is registered;
provided further, however, that Ultrak shall not pay any transfer or other
taxes if the obligation to pay such tax under applicable law is solely that of
the Shareholder or if payment of any such tax by Ultrak otherwise would cause
the Merger to fail to qualify as a tax free reorganization under the Internal
Revenue Code of 1986, as amended (the "Code"). If any portion of the
consideration to be received pursuant to this Article I upon exchange of a
Certificate (whether a certificate representing shares of Ultrak Common Stock
or a check representing payment for a fractional share or for shares subject to
Section 1.04) is to be issued or paid to a person other than the person in
4
<PAGE> 99
whose name the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such issuance and payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such exchange shall pay in advance any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Ultrak Common Stock or a check representing payment for a fractional
share or for shares subject to Section 1.04 to such other person, or establish
to the satisfaction of the Exchange Agent that such tax has been paid or that
no such tax is applicable. From the Effective Date until surrender in
accordance with the provisions of this Section 1.05, each Certificate (other
than Certificates representing treasury shares of Diamond, Certificates
representing Dissenting Shares, and Certificates representing shares subject to
Section 1.04) shall represent for all purposes only the right to receive the
consideration provided in this Article I. No dividends that are otherwise
payable on Ultrak Common Stock will be paid to persons entitled to receive
Ultrak Common Stock until such persons properly surrender their Certificates
and a duly executed letter of transmittal. After such surrender, there shall
be paid to the person in whose name the Ultrak Common Stock shall be issued any
dividends on such Ultrak Common Stock that shall have a record date on or after
the Effective Date and prior to such surrender. If the payment date for any
such dividend is after the date of such surrender, such payment shall be made
on such payment date. In no event shall the persons entitled to receive such
dividends be entitled to receive interest on such dividends. All payments in
respect of shares of Diamond Common Stock that are made in accordance with the
terms hereof shall be deemed to have been made in full satisfaction of all
rights pertaining to such securities.
(c) In the case of any lost, mislaid, stolen, or destroyed
Certificates, the holder thereof may be required, as a condition precedent to
the delivery to such holder of the consideration described in this Article I,
to deliver to the Exchange Agent a bond in such reasonable sum as Ultrak or the
Exchange Agent may direct as indemnity against any claim that may be made
against Ultrak or the Exchange Agent with respect to the Certificate alleged to
have been lost, mislaid, stolen, or destroyed.
(d) After the Effective Date, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of Diamond
Common Stock that were outstanding immediately prior to the Effective Date.
If, after the Effective Date, Certificates are presented to the Surviving
Corporation for transfer, they shall be cancelled and exchanged for the
consideration described in this Article I.
(e) Any portion of the Exchange Fund that remains unclaimed by the
Shareholders for six (6) months after the Effective Date shall be returned to
Ultrak, upon demand by Ultrak, and any holder
5
<PAGE> 100
of Diamond Common Stock who has not theretofore complied with this Section 1.05
shall thereafter look only to Ultrak for issuance of the number of shares of
Ultrak Common Stock and other consideration to which such holder has become
entitled pursuant to this Article I; provided, however, that neither the
Exchange Agent nor any party hereto shall be liable to a holder of shares of
Diamond Common Stock for any amount required to be paid to a public official
pursuant to any applicable abandoned property, escheat, or similar law.
1.06. S-4 Registration Statement; Proxy Statement; Blue Sky Laws.
Ultrak and Diamond acknowledge that the transactions contemplated hereby are
subject to the provisions of the Securities Act of 1933, as amended (the
"Securities Act"). Diamond, Ultrak, and their respective affiliates will (a)
cooperate in the preparation and filing of a Registration Statement on Form S-4
(the "Registration Statement" ), which will include a proxy
statement/prospectus to be delivered to Diamond's shareholders (the "Proxy
Statement") with respect to the transactions contemplated by this Agreement,
and (b) use all their reasonable efforts to have the Registration Statement
declared effective by the Securities and Exchange Commission (the "SEC") and
the Proxy Statement therein cleared by the SEC as promptly as possible.
Diamond and Ultrak will each use all their reasonable efforts to obtain and
respond to any comments of the SEC or its staff on the Registration Statement.
Each of Diamond, Ultrak, and Newco agrees to provide promptly to the other such
information concerning its business and financial statements and affairs as, in
the reasonable judgment of the other party or its counsel, may be required or
appropriate for inclusion in the Registration Statement, or in any amendments
or supplements thereto, and to cause its counsel and auditors to cooperate with
the other's counsel and auditors in the preparation of the Registration
Statement. Diamond and Ultrak agree to take all reasonable actions as may be
required to be taken by them under state blue sky or securities laws in
connection with the transactions contemplated by this Agreement. Each of the
affiliates of Diamond ("Affiliates"), as the term "affiliates" is defined
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall be, as the case may be, restricted by Rule 145(d) promulgated
pursuant to the Securities Act in connection with the resale of the shares of
Ultrak Common Stock acquired pursuant to the Merger. Notwithstanding anything
to the contrary contained herein, neither any Affiliate nor any Signing
Shareholder shall (i) sell shares of Ultrak Common Stock for the forty-five
(45) day period immediately prior to the First Adjustment Date and the Second
Adjustment Date and/or (ii) sell, during the twelve (12) months immediately
following the Effective Date, shares of Ultrak Common Stock constituting more
than one-third of the shares of Ultrak Common Stock received in the Merger.
1.07. Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section
6
<PAGE> 101
368(a)(2)(E) of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
1.08. Fractional Shares. No scrip or fractional shares of Ultrak
Common Stock shall be issued in the Merger. All fractional shares of Ultrak
Common Stock to which a holder of Diamond Common Stock immediately prior to the
Effective Date would otherwise be entitled at the Effective Date shall be
aggregated. If a fractional share results from such aggregation, such
shareholder shall be entitled, after the Effective Date, the First Adjustment
Date, and the Second Adjustment Date, as the case may be, to receive from
Ultrak an amount in cash in lieu of such fractional share, based on the
Determination Price (as defined in Section 1.09). Ultrak will make available to
the Exchange Agent the cash necessary for the purpose of paying cash for
fractional shares.
1.09. Determination Price.
(i) The Determination Price on the Effective Date shall be
the closing price, as reported for NASDAQ in theWall Street Journal,
Southwest Edition, on the last trading day immediately prior to the
Effective Date;
(ii) The Determination Price on the First Adjustment Date
shall be the closing price, as reported for NASDAQ in theWall Street
Journal, Southwest Edition, on the last trading day immediately prior
to the First Adjustment Date;
(iii) The Determination Price on the Second Adjustment Date
shall be the closing price, as reported for NASDAQ in theWall Street
Journal, Southwest Edition, on the last trading day immediately prior
to the Second Adjustment Date.
1.10. Dissenting Shares. To the extent that appraisal rights are
available under the Ohio Act, shares of Diamond Common Stock that are issued
and outstanding immediately prior to the Effective Date and that have not been
voted for adoption of the Merger and with respect of which appraisal rights
have been properly demanded in accordance with the applicable provisions of the
Ohio Act ("Dissenting Shares") shall not be converted into the right to receive
the consideration provided for in this Article I at or after the Effective Date
unless and until the holder of such shares withdraws his demand for such
appraisal (in accordance with the applicable provisions of the Ohio Act) or
becomes ineligible for such appraisal. If a holder of Dissenting Shares
withdraws his demand for such appraisal (in accordance with the applicable
provisions of the Ohio Act) or becomes ineligible for such appraisal, then, as
of the Effective Date or the occurrence of such event, whichever later occurs,
such holder's Dissenting Shares shall cease to be Dissenting Shares and shall
be converted into and represent the right to receive the consideration provided
for in
7
<PAGE> 102
this Article I. If any holder of Diamond Common Stock shall assert the right
to be paid for the fair value of such Diamond Common Stock as described above,
Diamond shall give Ultrak notice thereof and Ultrak shall have the right to
participate in all negotiations and proceedings with respect to any such
demands. Diamond shall not, except with the prior written consent of Ultrak,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. After the Effective Date, Ultrak will cause the
Surviving Corporation to pay its statutory obligations to holders of Dissenting
Shares.
1.11. Signing Shareholders' Approval. The Signing Shareholders agree
to the terms of the Merger and agree to vote all of their shares of Diamond
Common Stock in favor of the Merger.
ARTICLE II:
REPRESENTATIONS AND WARRANTIES OF DIAMOND
Diamond represents and warrants to each of Ultrak and Newco that the
following are true and correct as of the Signing Date and will be true and
correct as of the Effective Date as if made on that date:
2.01. Organization, Qualification, and Good Standing. Diamond is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio, has the corporate power and authority to own or hold
under lease its properties and assets and to carry on its business as it is now
being conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification. A list of all jurisdictions where
Diamond is qualified as a foreign corporation is attached as Schedule 2.01.
2.02. Investments or Subsidiaries. Except as set forth on Schedule
2.02, Diamond does not own (nor has it ever owned) the capital stock of any
corporation, nor does it have (nor has it ever had) an equity, profit sharing,
participation, or other interest in any partnership, joint venture or other
entity. No such corporation, partnership, joint venture or other entity has
any liabilities and Diamond does not have any liabilities, contingent or
otherwise, relating to any such corporation, partnership, joint venture or
other entity. No representation set forth in this Agreement relating to
Diamond would be untrue if it related to any such corporation, partnership,
joint venture or other entity.
2.03. Corporate Records. Copies of the Articles of Incorporation and
all amendments thereto and the Bylaws of Diamond have been delivered to Ultrak
and Newco and such copies are true, correct, and complete. The minute books of
Diamond, copies of which have been delivered to Ultrak and Newco, contain
accurate and
8
<PAGE> 103
complete minutes of all meetings of and accurate and complete consents to all
actions taken without meetings by the Board of Directors (and any committee
thereof) and the shareholders of Diamond since the formation of Diamond.
2.04. Corporate Authority Relative to This Agreement; No Violation.
Diamond has the corporate power to enter into this Agreement and the
Certificates of Merger and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Certificates
of Merger and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by Diamond's Board of Directors
and, except for the approval of the Shareholders, no other corporate
proceedings on the part of Diamond are necessary to authorize this Agreement or
the Certificates of Merger or the transactions contemplated hereby and thereby.
This Agreement has been, and the Certificates of Merger will be, duly and
validly executed and delivered by Diamond and, assuming this Agreement and the
Certificates of Merger constitute valid and binding agreements of the other
parties hereto and thereto, this Agreement and the Certificates of Merger
constitute valid and binding agreements of Diamond, enforceable against Diamond
in accordance with their terms except that (a) such enforcement may be subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
or other similar laws now or hereafter in effect relating to creditors' rights,
(b) the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought,
and (c) the enforceability of indemnification and contribution provisions may
be limited by the United States federal or state securities laws or the public
policies underlying such laws. Neither the execution and delivery of this
Agreement and the Certificates of Merger nor the consummation of the
transactions contemplated hereby or thereby (including without limitation the
Merger) will: (x) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Diamond, (y) violate or conflict with, or result in
the breach or termination of, or otherwise give any other contracting party the
right to terminate, or constitute a default (or an event which, with the lapse
of time, or the giving of notice, or both, will constitute a default) under,
any contract, license, other instrument or commitment to which Diamond is a
party or by which Diamond is bound, or result in the creation of any lien,
charge or encumbrance upon the properties or assets of Diamond pursuant to the
terms of any such contract, license, instrument or commitment, or (z) violate
or conflict with any law, regulation, permit, authorization, franchise,
license, judgment, order, writ, injunction or decree of any court or
governmental body of any jurisdiction, in each case as such is related to
Diamond or its assets. Other than in connection with or in compliance with the
provisions of the Ohio Act, the Securities Act, the Exchange Act, and the
securities or blue sky laws of the various states, no
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authorization, consent, or approval of, or filing with, any governmental body
or authority is necessary for the consummation by Diamond of the transactions
contemplated herein.
2.05. Capitalization.
(a) The authorized capital stock of Diamond consist of 11,996,000
shares of Diamond Common Stock, 4,809,219 shares of which are issued and
outstanding.
(b) All outstanding shares of Diamond Common Stock are duly
authorized, validly issued, fully paid and nonassessable and have been offered,
issued, sold, and delivered by Diamond in compliance with applicable federal
and state securities laws. There are no preemptive rights in respect of the
capital stock of Diamond.
(c) Except as set forth on Schedule 2.05(c) hereto, there are no
outstanding subscriptions, options, warrants, rights, or other arrangements or
commitments, whether express or implied, obligating Diamond to issue any shares
of its capital stock or securities exchangeable for or convertible into its
capital stock.
(d) Schedule 2.05(d) is a list of all of the Shareholders, the
address of each Shareholder as shown in Diamond's books and records, and the
number of shares of Diamond Common Stock owned by each Shareholder.
2.06. Diamond Financial Statements.
(a) Diamond has previously furnished to Ultrak and Newco true and
complete copies of audited balance sheets of Diamond as of January 1, 1995 and
January 2, 1994, and the statements of income, shareholders' equity and cash
flows for the fiscal years then ended, including the notes thereto, in each
case examined by and accompanied by the report of Norman Jones & Company
(collectively, the "Financial Statements") fairly presented the financial
position of Diamond as of the dates thereof and the results of operations and
changes in financial position or other information included therein for the
periods or as of the dates then ended, all in accordance with generally
accepted accounting principles consistently applied during the periods involved
(except as otherwise stated therein).
2.07. Compliance with Applicable Laws. Diamond has complied with all
judicial, governmental, and regulatory laws applicable to it or to the
operation of its business, the non-compliance with which would have a material
adverse effect on Diamond, and Diamond has received no notice of any alleged
violation of any such applicable laws.
2.08. Taxes. Except as set forth on Schedule 2.08, Diamond has duly
filed when due all income, excise, corporate, franchise,
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property, sales, payroll, withholding, and other tax returns and reports
required to be filed by it as of the date hereof by the United States of
America or any state or any political subdivision thereof and has paid or
established adequate reserves for all taxes (including penalties and interest)
which have or may become due for the tax periods covered by such returns, and
any assessments which have been received by it. All such tax returns or
reports which are income tax returns or reports fairly reflect the taxable
income generated by Diamond and the taxes of Diamond for the periods covered
thereby. Diamond is not delinquent in the payment of any tax, assessment, or
governmental charge, there is no tax deficiency or delinquency asserted against
the Diamond and there is no unpaid assessment, proposal for additional taxes,
deficiency or delinquency in the payment of any of the taxes of Diamond that
could be asserted by any taxing authority, nor of any violation of any tax law.
There are no waivers or agreements by Diamond for the extension of time for the
assessment of any tax as shown on such returns or reports with respect to
Diamond. No audit of Diamond by any governmental agency having jurisdiction
with respect to taxes imposed on Diamond or on its income, properties, sales,
franchises, or operations is pending or threatened. All monies required to be
withheld or collected by Diamond from employees or customers for income taxes,
social security and unemployment insurance taxes and sales, excise, and use
taxes, and the portion of any such taxes to be paid by Diamond to governmental
agencies, have been collected or withheld and either paid to the respective
governmental agencies or set aside for such purpose in the manner required by
applicable law and are properly reflected in the Financial Statements or on the
books and records of Diamond.
2.09. Liabilities and Obligations. The Financial Statements reflect
all material liabilities or obligations of Diamond, accrued, contingent, or
otherwise (asserted or unasserted), arising out of transactions effected or
events occurring on or prior to the Signing Date, other than liabilities and
obligations incurred in the ordinary course of business of Diamond since
January 1, 1995, which liabilities and obligations are not either individually
or in the aggregate, material to the condition (financial or otherwise),
business or operations of Diamond and as set forth on Schedule 2.09. All
reserves shown in the Financial Statements are appropriate, reasonable, and
sufficient to provide for the losses thereby contemplated. Except as set forth
in the Financial Statements, Diamond is not liable upon or with respect to, or
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation, or liability of any person,
corporation, association, partnership, joint venture, trust, or other entity,
and Diamond knows of no basis for the assertion of any other claims,
liabilities, or obligations of any nature or in any amount that would be
material to the condition (financial or otherwise), business, or operations of
Diamond.
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2.10. Employee Benefit Plans and Arrangements; ERISA.
(a) Except for the 401(k) salary savings plan and the
stock option plan described on Schedule 2.10 hereto, and except for those other
plans, agreements, policies, or understandings that are described in Diamond's
employee handbook or have been disclosed to Ultrak in writing in connection
with Ultrak's due diligence review of Diamond, Diamond does not currently
sponsor or maintain and Diamond is not otherwise a party to, nor has it been in
default under, any accrued obligations under any "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (such plans being hereinafter referred to
collectively as the "ERISA Plans"), or any other pension, profit sharing, or
other retirement plan, fringe benefit plan, health, group insurance or other
welfare benefit plan, or other similar plan, agreement, policy or understanding
("Other Plans" and, together with ERISA Plans, the "Plans"), whether formal or
informal and whether legally binding or not. Diamond does not have any
commitment to create any such Plan. Since the time of sale by Arvin
Industries, Inc. of Columbus, Indiana ("Arvin Industries, Inc.") of Diamond,
Diamond is not now, nor has it been, a part of a controlled group of
corporations within the meaning of Section 414(b) of the Code or a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Code.
(b) Since the time of sale by Arvin Industries, Inc. of
Diamond, Diamond has never sponsored, adopted, maintained or been obligated to
contribute to a single employer, multiple employer or multiemployer defined
benefit pension plan which is, or ever was, subject to the provisions of Title
IV of ERISA. Since the time of sale by Arvin Industries, Inc. of Diamond,
Diamond is not now, nor has it sponsored, adopted, maintained, or been
obligated to contribute to a Plan which is or ever was subject to the minimum
funding standards of Section 302 of ERISA and Section 412 of the Code. Diamond
does not have any obligation in connection with any Plan pursuant to the terms
of a collective bargaining agreement.
(c) To the best of Diamond's knowledge, no Plan
previously sponsored or maintained by Diamond, or to which Diamond has
otherwise been a party, has resulted in any material liability or obligation
for Diamond other than as reflected on the Diamond Financial Statements.
2.11. Absence of Certain Changes. Except as otherwise contemplated
by or provided for or permitted in this Agreement or as set forth on Schedule
2.11 hereto, and except for the hiring of legal counsel as authorized by
Section 11.01, since January 1, 1995, Diamond has not: (a) suffered any
material adverse change in its condition (financial or otherwise), business,
or operations; (b) contracted for or paid any single capital expenditure
in excess of $10,000 or total capital expenditures in
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excess of $30,000; (c) mortgaged, pledged, or subjected to any lien, lease,
security interest, or other charge or encumbrance any of its properties or
assets; (d) formed or acquired or disposed of any interest in any corporation,
partnership, joint venture, or other entity; (e) suffered any damage or
destruction to or loss of any assets (whether or not covered by insurance) or
lost or terminated employees or suppliers that could or does adversely affect
its condition (financial or otherwise), business, or operations; (f) except for
the disposal of inventory, machinery, vehicles, and equipment consistent with
past practices, acquired or disposed of any assets or incurred, assumed, or
guaranteed any indebtedness for borrowed money or other liabilities or
obligations to pay money other than trade payables in the ordinary course of
business; (g) forgiven, compromised, cancelled, released, permitted to lapse,
or waived any rights or claims that are material to the condition (financial or
otherwise), business or operations of Diamond; (h) entered into, terminated or
agreed to any modifications or amendments to any material agreements, leases,
or commitments; (i) paid any bonus, granted any benefit, made any payments, or
loaned any money to its shareholders, employees, or other affiliates; (j)
entered into any employment, compensation, consulting, or collective bargaining
agreement with any person or group, or modified or amended the terms of any
such existing agreement or entered into, adopted, or amended any Plan; or (k)
entered into or terminated any other commitment or transaction or experienced
any other event that is material to the condition (financial or otherwise),
business, or operations of Diamond.
2.12. Title and Related Matters. Diamond has good and marketable
title to all assets reflected in the Financial Statements as owned by Diamond
and to those other assets reflected in Diamond's books and records as being
owned (except as they have since been affected by transactions in the ordinary
course of business and consistent with past practices), and Diamond owns such
assets free and clear of all mortgages, liens, pledges, charges, or
encumbrances of any kind or character, except (a) statutory liens for property
taxes that are not yet delinquent and (b) as expressly stated in the Financial
Statements or on Diamond's books and records (except as they have since been
affected by transactions in the ordinary course of business and consistent with
past practices).
2.13. Insurance. Diamond is a beneficiary of policies of insurance,
issued by insurers of recognized responsibility, providing adequate coverage to
insure the properties and businesses thereof against such risks and in such
amounts as are prudent and customary in Diamond's industry. All of such
policies are, and will be maintained through the Effective Date, in full force
and effect. All premiums due thereon have been paid and no notice of
cancellation has been received with respect thereto.
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2.14. Patents, Trademarks, Copyrights, Etc.
(a) Except as set forth on Schedule 2.14, Diamond owns
all patents, technology, know-how, processes, trademarks, and copyrights, if
any, necessary to conduct its business, or possesses adequate licenses or other
rights, if any, therefor, without conflict with the rights of others (the
"Proprietary Rights").
(b) Diamond has the sole and exclusive right to use the
Proprietary Rights without infringing or violating the rights of any third
parties. No consent of third parties is required for the use thereof by
Diamond, and no claim has been asserted by any person to the ownership of or
right to use any Proprietary Right or challenging or questioning the validity
or effectiveness of any such license or agreement, and Diamond does not know of
any basis for any such claim. Each of the Proprietary Rights is valid and
subsisting, has not been cancelled, abandoned, or otherwise terminated and, if
applicable, has been duly issued or filed.
(c) There is no claim that, or inquiry as to whether, any
product, activity or operation of Diamond infringes upon or involves, or has
resulted in the infringement of, any Proprietary Right of any other person,
corporation or other entity; and no proceedings have been instituted, are
pending or are threatened which challenge the rights of Diamond with respect
thereto.
2.15. Consents. Diamond possesses all necessary licenses,
franchises, permits, and governmental authorizations material to the conduct of
its business, and no authorization, consent, approval, permit, or license of,
or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required
in connection with, the execution, delivery, and performance of this Agreement
or the agreements contemplated hereby on the part of Diamond, and the
execution, delivery, and performance of this Agreement will not with the giving
of notice, the lapse of time, or both, terminate such licenses, franchises,
permits, and governmental authorizations.
2.16. Labor Relations.
(a) Diamond is not a party to any collective bargaining
agreements with any union and no collective bargaining agreement is currently
being negotiated by Diamond.
(b) There are no unfair labor practice charges,
complaints, or proceedings against Diamond pending or threatened before the
National Labor Relations Board.
(c) Other than as set forth on Schedule 2.16(c), there
are no discrimination charges (relating to sex, age, race, national
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origin, handicap, or veteran status) pending before any federal or state agency
or authority.
(d) There is no pending representation question involving
an attempt to organize a bargaining unit including any employees of Diamond and
no labor grievance has been filed.
2.17. Litigation and Claims. Except as set forth on Schedule 2.17,
Diamond is not a party to, and the business and assets of Diamond are not the
subject of or affected by, any pending or threatened suit, claim, action or
litigation by or with any party or any administrative, arbitration, or other
governmental proceeding, investigation, or inquiry. Diamond is not (a) subject
to any continuing court or administrative order, writ, injunction or decree
applicable specifically to Diamond or to its business, assets, operations or
employees, or (b) in default with respect to any such order, writ, injunction
or decree. Diamond does not know of any basis for any such action, proceeding,
or investigation.
2.18. Employees and Consultants. Diamond has no direct or indirect,
express or implied, obligation to pay severance or termination pay to any
officer or employee of Diamond, or to pay any termination or severance payments
to any consultant, agent, or other person or entity.
2.19. Books of Account. The books of account of Diamond have been
kept accurately in the ordinary course of business, the transactions entered
therein represent bona fide transactions and the revenues, expenses, assets,
and liabilities of Diamond have been properly recorded in such books in
accordance with accepted accounting practices.
2.20. Distributions. Except as set forth on Schedule 2.20, since
January 1, 1995, no distribution, payment or dividend of any kind has been
declared, paid or distributed by Diamond on or with respect to any of its
capital stock at any time.
2.21. Corporate Name. There are no actions, suits, or proceedings
pending or threatened against or affecting Diamond which may result in any
impairment of the right of Diamond to use its corporate name. The use of the
corporate name of Diamond does not infringe the rights of any third party nor
is it confusingly similar with the corporate name of any third party. Except
as set forth on Schedule 2.21, no person or business entity other than Diamond
is authorized, directly or indirectly, to use the corporate name of Diamond, or
any name confusingly similar thereto.
2.22. Compliance with Environmental Laws. Diamond has provided
Ultrak and Newco with all environmental studies, records, and reports in
Diamond's possession or control conducted by independent contractors or Diamond
and all correspondence with any governmental entities concerning environmental
conditions of the
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Real Property, or which identify underground storage tanks, or otherwise relate
to contamination of the soil or groundwater of the Real Property. Except as
disclosed in the August Mack reports dated June 9, 1994, August 3, 1994, and
April 27, 1995:
(a) Diamond has not obtained and has not been required to
have obtained any permits, licenses or similar authorizations to occupy,
operate or use any buildings, improvements, fixtures or equipment forming a
part of any of the real property currently or heretofore owned or leased by
Diamond ("Real Property") by reason of any applicable federal or state
environmental laws, rules or regulations.
(b) Diamond has no knowledge that any underground storage
tanks were placed on the Real Property by any person or entity.
(c) Diamond has not placed any asbestos-containing
thermal insulation or building products or PCB-containing products on the Real
Property, and Diamond has no knowledge that any owner, prior lessee or user has
placed any asbestos-containing thermal insulation or building products or
PCB-containing products on the Real Property.
(d) Diamond has not ever been refused, nor do they have
any knowledge of any owner, prior lessee or user ever being refused, insurance
coverage, and no insurance coverage has ever been cancelled, as a result of the
presence of hazardous waste, solid waste or hazardous substances on the Real
Property.
(e) Diamond has not installed or maintained any active or
inactive hazardous waste receptacles on the Real Property, and Diamond does not
have any knowledge that any active or inactive hazardous waste receptacles have
been installed or maintained on the Real Property by any owner, prior lessee or
user.
(f) There have been no spills, discharges or other
releases of hydrocarbons or hazardous or toxic substances onto or from the Real
Property and Diamond does not have any knowledge of any spills, discharges, or
releases by any owner, prior lessee, or user of the Real Property.
(g) There are no plans or documents, whether or not
government approved, including, but not limited to, contingency plans, closure
and post-closure plans, which impose environmental obligations specifically on
Diamond or against the Real Property, and Diamond does not have any knowledge
of any such documents prepared by any owner, prior lessee, or user of the Real
Property.
(h) There are no environmental liens or security
interests against the Real Property nor are there any environmental liens or
actions pending or threatened which would result in the
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creation of any lien relating to environmental conditions of the Real Property.
2.23. Condition of Fixed Assets. Except as set forth on Schedule
2.23, all of the fixed assets owned or leased by Diamond are in good condition
and repair for the intended use in the ordinary course of business and conform
in all material respects with all applicable ordinances, regulations and other
laws and there are no known latent defects therein.
2.24. Registration Statement; Other Information. None of the
information with respect to Diamond or the Merger supplied by Diamond to be
included in the Registration Statement or any amendments thereof or supplements
thereto, at the time of effectiveness, at the time of the filing of the
Registration Statement and any amendments thereof or supplements thereto, at
the time of the meeting of Shareholders to be held in connection with the
transactions contemplated herein and on the Effective Date, will contain any
untrue statement of a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading. No representation is made by Diamond with
respect to any forward looking information which may have been supplied to
Ultrak. Notwithstanding anything to the contrary herein, Richard Tompkins
("Tompkins") will be allowed to review the Registration Statement or any
amendments thereof or supplements thereto, prior to the filing of the
Registration Statement or any amendments thereof or supplements thereto.
2.25. Brokers and Finders. Neither Diamond nor any of its officers,
directors, and employees has employed any broker, finder, or investment bank or
incurred any liability for any investment banking fees, financial advisory
fees, brokerage fees, or finders' fees in connection with the transactions
contemplated hereby.
ARTICLE III:
SPECIAL REPRESENTATIONS AND WARRANTIES
OF SIGNING SHAREHOLDERS
Each Signing Shareholder severally represents and warrants to each of
Ultrak and Newco that the following are true and correct as of the Signing Date
and true and correct as of the Effective Date as if made on that date:
3.01. Miscellaneous Representations. Such Signing Shareholder does
not have any actual knowledge of (i) any material error in the Financial
Statements, (ii) any material liability or obligation of Diamond that is not
disclosed in the Financial Statements or in a Schedule to this Agreement, (iii)
any trend, demand, commitment, event, or uncertainty that will materially
adversely impact, or that is reasonably likely to materially
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adversely impact, Diamond's liquidity, capital resources, and/or results of
operations, (iv) any pending or threatened suit, claim, action, proceeding,
investigation, or inquiry against Diamond that is reasonably likely to be
material to the condition (financial or otherwise), business, or operations of
Diamond, and/or (v) any customer or supplier material to the condition
(financial or otherwise), business, or operations of Diamond that has indicated
it will no longer purchase from or sell to Diamond. None of the Signing
Shareholders, other than Tompkins, shall have any duty independently to
investigate or verify the accuracy or adequacy of disclosures provided to
Ultrak by Diamond pursuant to the Disclosure Schedule or this Agreement;
provided, however, Tompkins' duty to investigate shall not include a duty to
investigate matters or events occurring prior to May 15, 1991, and shall not
include Schedule 2.05(d). Notwithstanding anything to the contrary herein,
Tompkins shall be the only Signing Shareholder with any responsibility under
this Section 3.01 for responsibility with respect to Section 2.22 and Tompkins'
responsibility with respect to Section 2.22 shall only be with respect to
events or occurrences after May 15, 1991. Tompkins' duty to investigate shall
only require him to conduct a reasonable inquiry, based on his actual
knowledge, of material matters or events.
3.02. Stock Ownership. As of the date hereof, such Signing
Shareholder is the lawful record and beneficial owner of the shares of Diamond
Common Stock set forth by his name on Schedule 3.02 hereto, free and clear of
all proxies, claims, voting agreements, options, and rights of first refusal of
any kind.
The representations and warranties of the Signing Shareholders will
survive for one year from the Effective Date.
ARTICLE IV:
REPRESENTATIONS AND WARRANTIES OF
ULTRAK AND NEWCO
Each of Ultrak and Newco jointly and severally represents and warrants
to Diamond that the following are true and correct as of the Signing Date and
will be true and correct as of the Effective Date as if made on that date:
4.01. Organization, Qualification, and Good Standing. Ultrak is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Colorado, and Newco is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Texas,
and each of Ultrak and Newco has the corporate power and authority to own or
hold under lease its properties and assets and to carry on its business as it
is now being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its
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property or the conduct of its business requires such qualification.
4.02. Corporate Records. The copies of the Articles of Incorporation
and all amendments thereto and the Bylaws of both Ultrak and Newco that have
been delivered to Diamond are true, correct, and complete copies thereof. The
minute books of Ultrak and Newco, copies of which have been delivered to
Diamond, contain accurate and complete minutes of all meetings of and accurate
and complete consents to all actions taken without meetings by the Board of
Directors (and any committee thereof) and the shareholders of Ultrak and Newco
since the formation of both Ultrak and Newco.
4.03. Capitalization of Ultrak.
(a) The authorized capital stock of Ultrak consists of 20,000,000
shares of Ultrak Common Stock and 2,000,000 shares of Preferred Stock, $5.00
par value per share, of which 195,351 shares have been designated as Series A
12% Cumulative Convertible Preferred Stock ("Series A Preferred Stock"). As of
December 31, 1994, there were issued and outstanding 6,555,619 shares of Ultrak
Common Stock and 195,351 shares of Series A Preferred Stock.
(b) All outstanding shares of Ultrak Common Stock are duly
authorized, validly issued, fully paid and nonassessable and have been offered,
issued, sold, and delivered by Ultrak in compliance with applicable federal and
state securities laws. There are no preemptive rights in respect of the
capital stock of Ultrak.
(c) All outstanding shares of capital stock of Newco are validly
issued, fully paid and nonassessable and are owned by Ultrak directly, free and
clear of all liens, claims, charges, or encumbrances.
(d) As of December 31, 1994, there were options and warrants
outstanding (the "Outstanding Options") entitling the holders thereof to
acquire 732,959 shares of Ultrak Common Stock. The Outstanding Options are set
forth in the Annual Report (as hereinafter defined).
(e) Except for the Outstanding Options, there are no outstanding
subscriptions, options, warrants, rights, or other arrangements or commitments,
whether express or implied, obligating Ultrak to issue any shares of its
capital stock or securities exchangeable for or convertible into its capital
stock. There are no outstanding subscriptions, options, warrants, rights or
other arrangements or commitments whether express or implied, obligating Newco
to issue any shares of its capital stock or securities exchangeable for or
convertible into its capital stock.
4.04. Corporate Authority Relative to This Agreement; No Violation.
Ultrak and Newco have the corporate power to enter into
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this Agreement and the Certificates of Merger and to carry out their respective
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Certificates of Merger and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by Ultrak's and Newco's Boards of Directors and no other corporate
proceedings on the part of Ultrak or Newco are necessary to authorize this
Agreement or the Certificates of Merger or the transactions contemplated hereby
and thereby. This Agreement and the Certificates of Merger have been duly and
validly executed and delivered by Ultrak and Newco and, assuming this Agreement
and the Certificates of Merger constitute valid and binding agreements of the
other parties hereto and thereto, this Agreement and the Certificates of Merger
constitute valid and binding agreements of Ultrak and Newco, enforceable
against Ultrak in accordance with their terms except that (a) such enforcement
may be subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, (b) the remedy of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought, and (c) the enforceability of indemnification and
contribution provisions may be limited by the United States federal or state
securities laws or the public policies underlying such laws. Neither the
execution and delivery of this Agreement nor of the Certificates of Merger nor
the consummation of the transactions contemplated hereby or thereby (including
without limitation the Merger) will: (x) violate or conflict with any
provision of the Articles of Incorporation or Bylaws of Ultrak or the Articles
of Incorporation or Bylaws of Newco, (y) violate or conflict with, or result in
the breach or termination of, or otherwise give any other contracting party the
right to terminate, or constitute a default (or an event which, with the lapse
of time, or the giving of notice, or both, will constitute a default) under,
any contract, license, other instrument or commitment to which Ultrak or Newco
is a party or by which Ultrak or Newco is bound, or result in the creation of
any lien, charge or encumbrance upon the properties or assets of Ultrak or
Newco pursuant to the terms of any such contract, license, instrument or
commitment, or (z) violate or conflict with any law, regulation, permit,
authorization, franchise, license, judgment, order, writ, injunction or decree
of any court or governmental body of any jurisdiction, in each case as such is
related to Ultrak or Newco or their assets. Other than in connection with or
in compliance with the provisions of the Texas Act, the Ohio Act, the
Securities Act, the Exchange Act, and the securities or blue sky laws of the
various states, no authorization, consent, or approval of, or filing with, any
governmental body or authority is necessary for the consummation by Ultrak and
Newco of the transactions contemplated herein.
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4.05. Ultrak Reports and Financial Statements. Ultrak has
previously furnished to Diamond true and complete copies of the following (the
"SEC Filings"):
(i) Ultrak's annual report on Form 10-K filed with the
SEC for the year ended December 31, 1993;
(ii) Ultrak's quarterly reports on Form 10-Q filed with
the SEC for the quarters ended March 31, 1994, June
30, 1994, and September 30, 1994;
(iii) Ultrak's definitive proxy statement filed with the
SEC with respect to the Annual Meeting of Ultrak's
stockholders on June 3, 1994; and
(iv) Ultrak's annual report on Form 10-K filed with the
SEC for the year ended December 31, 1994 (the "Annual
Report).
The audited consolidated financial statements and unaudited consolidated
interim financial statements (collectively referred to herein as the "Ultrak
Financials") included in the SEC Filings (including any related notes and
schedules) fairly presented the financial position of Ultrak as of the dates
thereof and the results of operations and changes in financial position or
other information included therein for the periods or as of the dates then
ended, all in accordance with generally accepted accounting principles
consistently applied during the periods involved (except as otherwise stated
therein). Ultrak has timely filed all reports, registration statements and
other filings required to be filed with the SEC under the rules and regulations
of the SEC.
4.06. Compliance with Applicable Laws. Each of Ultrak and
Newco, to its knowledge, has complied with all judicial, governmental, and
regulatory laws applicable to it or to the operation of its business, the
non-compliance with which would have a material adverse effect on Ultrak or
Newco, as the case may be, and neither Ultrak nor Newco has received notice of
any alleged violation of any such applicable laws.
4.07. Liabilities and Obligations. The Ultrak Financials reflect
all material liabilities or obligations of Ultrak, accrued, contingent or
otherwise (asserted or unasserted), arising out of transactions effected or
events occurring on or prior to the date hereof, other than liabilities and
obligations incurred in the ordinary course of business of Ultrak since
December 31, 1994, which liabilities and obligations are not either
individually or in the aggregate, material to the condition (financial or
otherwise), business or operations of Ultrak. All reserves shown in the Ultrak
Financials are appropriate, reasonable, and sufficient to provide for the
losses thereby contemplated. Except as set forth in the Ultrak Financials,
Ultrak is not liable upon or with respect to, or
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<PAGE> 116
obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or liability of any person,
corporation, association, partnership, joint venture, trust or other entity,
and Ultrak knows of no basis for the assertion of any other claims, liabilities
or obligations of any nature or in any amount that would be material to the
condition (financial or otherwise), business or operations of Ultrak.
4.08. Absence of Certain Changes. Except as otherwise contemplated
by or provided for or permitted in this Agreement or as set forth on Schedule
4.08 hereto, since December 31, 1994, Ultrak has not: (a) suffered any
material adverse change in its condition (financial or otherwise), business, or
operations; (b) contracted for or paid any single capital expenditure in excess
of $50,000 or total capital expenditures in excess of $150,000; (c) mortgaged,
pledged, or subjected to any material lien, lease, security interest, or other
charge or encumbrance any of its properties or assets; (d) formed or acquired
or disposed of any interest in any corporation, partnership, joint venture, or
other entity; (e) suffered any damage or destruction to or loss of any assets
(whether or not covered by insurance) or lost or terminated employees or
suppliers that could or does materially adversely affect its condition
(financial or otherwise), business, or operations; (f) except for the disposal
of inventory, machinery, vehicles, and equipment consistent with past
practices, acquired or disposed of any material assets or incurred, assumed, or
guaranteed any indebtedness for borrowed money or other liabilities or
obligations to pay money other than trade payables in the ordinary course of
business; (g) forgiven, compromised, cancelled, released, permitted to lapse or
waived any rights or claims that are material to the condition (financial or
otherwise), business, or operations of Ultrak; (h) entered into, terminated or
agreed to any modifications or amendments to any agreements, leases or
commitments material to the conditions (financial or otherwise), business, or
operations of Ultrak; (i) paid any bonus, granted any benefit, made any
payments or loaned any money to its shareholders, employees or other
affiliates; (j) entered into any employment, compensation, consulting, or
collective bargaining agreement with any person or group, or modified or
amended the terms of any such existing agreement or entered into, adopted, or
amended any employee benefit plan; or (k) entered into or terminated any other
commitment or transaction or experienced any other event that is material to
the condition (financial or otherwise), business or operations of Ultrak.
4.09. Title and Related Matters. Ultrak has good and marketable
title to all assets reflected in the Ultrak Financial as owned by Ultrak and to
those other assets reflected in Ultrak's books and records as being owned,
(except as they have since been affected by transactions in the ordinary course
of business and consistent with past practices), and Ultrak owns such assets
free
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<PAGE> 117
and clear of all mortgages, liens, pledges, charges, or encumbrances of any
kind or character, except (a) statutory liens for property taxes that are not
yet delinquent; and (b) as expressly stated in the Ultrak Financials.
4.10. Consents. Ultrak possesses all necessary licenses,
franchises, permits, and governmental authorizations material to the conduct of
its business, and no authorization, consent, approval, permit or license of, or
filing with, any governmental or public body or authority, any lender or lessor
or any other person or entity is required to authorize, or is required in
connection with, the execution, delivery, and performance of this Agreement or
the agreements contemplated hereby on the part of Ultrak or Newco.
4.11. Registration Statement; Other Information. None of the
information with respect to Ultrak, Newco or the Merger to be included in
the Registration Statement or any amendments thereof or supplements thereto, at
the time of effectiveness, at the time of the filing of the Registration
Statement and any amendments thereof or supplements thereto, will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation is made by
Ultrak with respect to information supplied by Diamond. No representation is
made by Ultrak with respect to any forward looking information which may have
been supplied to Diamond.
4.12. Brokers and Finders. Neither of Ultrak, Newco nor any officer
or director of Ultrak has employed any broker, finder, or investment bank or
incurred any liability for any investment banking fees, financial advisory
fees, brokerage fees, or finders' fees in connection with the transactions
contemplated hereby.
ARTICLE V: JOINT COVENANTS OF ULTRAK AND DIAMOND
5.01. Access. Each of Ultrak and Diamond will afford to one another
and to one another's officers, employees, accountants, counsel, and other
authorized representatives, full and complete access during normal business
hours, throughout the period prior to the earlier of the Effective Date or the
Termination Date (as hereinafter defined), to its and, in the case of Ultrak
also Newco's, properties, personnel, contracts, commitments, books, records
(including but not limited to tax returns) and reports, schedules or other
documents (including but not limited to reports, schedules and documents
relating to environmental matters and employee medical examinations and
condition and those filed or received by it pursuant to the requirements of the
federal or state
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<PAGE> 118
securities laws) and will use all its reasonable efforts to cause its
respective representatives to furnish promptly to the other such additional
financial and operating data and other information as to its and, in the case
of Ultrak, also Newco's, respective businesses and properties as the other or
its duly authorized representatives may from time to time reasonably request.
5.02. Notice of any Material Change. Each of Ultrak and Diamond,
promptly after the first notice or occurrence thereof, but not later than the
Effective Date, shall disclose to the other in writing the occurrence of any
event or the existence of any state of facts that: (a) had such event occurred
or such facts existed or been known at the date hereof, would have been
required to have been set forth in this Agreement; (b) would make any of its
representations and warranties in this Agreement untrue in any material
respect; or (c) would otherwise constitute a material adverse change in the
business, results of operations, working capital, assets, liabilities or
condition (financial or otherwise) of Ultrak (or Newco) or Diamond, as the case
may be. No notice hereunder will have any effect for the purpose of
determining the satisfaction of or compliance with the conditions to the
obligations of the parties set forth elsewhere in this Agreement.
5.03. Cooperation. Ultrak and Diamond will: (a) cooperate
with one another in determining whether any filings are required to be made
with or consents, authorizations, clearances and approvals required to be
obtained from, any governmental or regulatory authorities in any jurisdiction
or any third party prior to the Effective Date in connection with the
consummation of the transactions contemplated in this Agreement and cooperate
in making any such filings promptly and in seeking timely to obtain any such
consents; (b) keep each other informed in connection with the transactions
contemplated by this Agreement; (c) cooperate with one another and expend
reasonable amounts in order to lift any injunctions or remove any other
impediment to the consummation of the transactions contemplated herein; and (d)
take such actions as the other party may reasonably request to consummate the
transactions contemplated by this Agreement and use all its reasonable efforts
to satisfy all conditions precedent to the obligations to close such
transactions.
5.04. Confidentiality. Each party to this Agreement will
take all reasonable precautions to maintain the confidentiality of any
information concerning any other party or any affiliate of any other party
provided to or discovered by it or its representatives and will not disclose
such information to anyone other than those people directly involved in the
investigation and negotiations pertaining to the transactions contemplated
hereby. Each party further agrees that in the event the transactions
contemplated by this Agreement are not consummated, it will return or destroy
all documents and records obtained from any other party during the course of
its investigation or negotiations pertaining to the
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<PAGE> 119
transactions contemplated hereby and will use all its reasonable efforts to
cause all information with respect to such other party and its businesses which
it obtained pursuant to this Agreement to be kept confidential.
Notwithstanding the foregoing, the obligation of any party to maintain
confidentiality with respect to information received by it will not apply to
any disclosure of information required to be disclosed in the Registration
Statement or that is required to be disclosed by applicable state blue sky
statutes or other applicable law in connection with the transactions described
in the Registration Statement.
5.05. No Solicitation. Until the Termination Date, Diamond
covenants that neither it nor its officers, directors, agents, or affiliates,
will, except as required by law or by this Agreement, or by the fiduciary
duties of the Board of Directors of Diamond: (a) directly or indirectly,
encourage, solicit or initiate discussion or negotiations with any corporation,
partnership, person or other entity or group concerning any merger, sale of all
or substantially all of the assets, business combination, sale of shares of
capital stock or similar transactions involving Diamond, whether by providing
nonpublic information or otherwise; or (b) disclose, directly or indirectly,
any information not customarily disclosed to any person concerning its business
and properties, afford to any other person access to its properties, books or
records or otherwise assist or encourage any person in connection with any of
the foregoing. In the event Diamond receives any offer or inquiry for a
transaction of the type referred to in (a) above, such party will promptly
inform Ultrak and Newco as to any such offer.
5.06. Public Announcements. Other than the Press Releases
dated on or about February 10, 1995, on or about February 22, 1995, and on or
about April 21, 1995, Ultrak and Diamond will consult with each other before
issuing any press release, public announcement, or make any public filing
regarding this Agreement and the Merger, and will not, unless otherwise
required by law, issue any such press release prior to such consultation.
5.07. Issuance of Stock or Rights Below Market. Between the date
hereof and the Effective Date, Ultrak shall not, without the prior written
consent of Diamond, issue (or commit to issue) (i) warrants, options, or other
rights to acquire Ultrak Common Stock by purchase, exchange, conversion, or
otherwise (collectively, "Convertible Securities") or (ii) shares of Ultrak
Common Stock at a price per share of Ultrak Common Stock that is less than the
market price of Ultrak Common Stock on the date of issue of such Convertible
Securities or Ultrak Common Stock or the date of entering into the commitment
to issue such Convertible Securities or Ultrak Common Stock. Notwithstanding
the preceding sentence, Ultrak may issue shares of Ultrak Common Stock without
Diamond's consent upon conversion or exercise of Convertible Securities
outstanding on the date hereof and/or issue Convertible Securities
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<PAGE> 120
representing the unexercised or unconverted balance of Convertible Securities
outstanding on the date hereof that are converted or exercised.
ARTICLE VI:
COVENANTS OF DIAMOND
6.01 Conduct of Business by Diamond. Prior to the Effective Date
or, if earlier, the Termination Date, and except as may be permitted, required
or contemplated pursuant to this Agreement or as specifically or as may be
consented to in writing by Ultrak, Diamond:
(a) will conduct its operations in the ordinary and usual
course of business consistent with past and current practices, and
will use all its reasonable efforts to maintain and preserve intact
its business organization and goodwill, to retain the service of its
key officers and employees, and to maintain satisfactory relationships
with customers and those having business relationships with it;
(b) will not declare or pay any dividends on its
outstanding shares of capital stock;
(c) will not propose or adopt any amendments to its
Articles of Incorporation or Bylaws;
(d) will not issue any shares of its capital stock or
effect any stock split or otherwise change its current capitalization
except pursuant to existing stock options described on Schedule
2.05(c);
(e) will not grant, confer or award any options,
warrants, conversion rights or other rights, not existing on the date
hereof, to acquire any shares of its capital stock;
(f) will not purchase or redeem any shares of its capital
stock; and/or
(g) unless otherwise required by law, will not agree to
take any action that would make any representation or warranty in
Article II hereof untrue or incorrect.
ARTICLE VII:
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by all parties, the obligations of Ultrak,
Newco, and Diamond to consummate the transactions contemplated by this
Agreement shall be subject to the
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satisfaction, on or before the Effective Date, of each of the following
conditions:
7.01. Shareholder Approval. The stockholders of Diamond
shall have duly approved the Merger and the Certificates of Merger, in
accordance with the applicable provisions of the Texas Act or the Ohio Act, as
the case may be.
7.02. Absence of Litigation. No governmental agency or
authority shall have instituted, or threatened in writing to institute, any
action or proceeding seeking to delay, restrain, enjoin or prohibit the
consummation of the transactions contemplated by this Agreement, and no order,
judgment or decree by any court or governmental agency or authority shall be in
effect that enjoins, restrains or prohibits the same or, in the sole judgment
of Ultrak, otherwise would materially interfere with the operation of the
assets and business of Newco and Ultrak after the Merger.
7.03. Effectiveness of Registration Statement; Distribution
of Proxy Statement; No Stop Order. The Registration Statement shall have been
declared effective and the Proxy Statement contained therein will have been
distributed to the Diamond stockholders in accordance with the Ohio Act and the
rules and regulations promulgated under the Exchange Act and no stop order
shall have been issued with respect thereto.
7.04 Shares Exchanged. There will be Ultrak Common Stock
exchanged for at least ninety-five percent (95%) of the Diamond Common Stock on
the Effective Date (after giving effect to Sections 1.05, 1.09, and 1.11).
ARTICLE VIII:
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF ULTRAK AND NEWCO
The obligations of Ultrak and Newco to consummate the transactions
contemplated by this Agreement will be subject to the satisfaction on or before
the Effective Date of each of the following conditions:
8.01. Representations and Warranties; Compliance. The
representations and warranties of Diamond and the Signing Shareholders in this
Agreement shall have been true and correct in all material respects on and as
of the Signing Date and shall be true and correct in all material respects as
of the Effective Date as though made on and as of the Effective Date, and the
covenants and agreements of Diamond in this Agreement shall have been complied
with in all material respects. On the Effective Date, Diamond will provide
Ultrak with a Certificate of Compliance in the form of Exhibit 8.01-A and a
certificate of the Signing Shareholders to such effect in the form of Exhibit
8.01-B.
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<PAGE> 122
8.02. No Material Adverse Change. There shall have been no
material adverse change in Diamond's business, properties, assets, liabilities,
results of operations or condition, financial or otherwise.
8.03. Opinion. Ultrak shall have received the opinion of
Dagger, Johnston, Miller, Ogilvie & Hampson, counsel for Diamond, dated as of
the Effective Date, in substantially the form attached hereto as Exhibit 8.03.
8.04. Environmental Permit Filing. Ultrak shall have
received written evidence that an application for a permit on behalf of Diamond
for wastewater and for the paintbooth shall have been properly filed with the
Ohio Environmental Protection Agency.
8.05. Employment Agreement. Richard Tompkins shall have
executed an Employment Agreement with Ultrak in the form attached as Exhibit
8.05.
8.06. Resignations. Each of the officers and directors of Diamond
shall have tendered to Ultrak a resignation letter in form and substance
reasonably satisfactory to Ultrak; provided, however, John Biddinger shall not
be required to resign as a director of Diamond and Tompkins shall not be
required to resign as President and as a director of Diamond.
ARTICLE IX:
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF DIAMOND
The obligations of Diamond to consummate the transactions contemplated
by this Agreement will be subject to the satisfaction on or before the
Effective Date of each of the following conditions:
9.01. Representations and Warranties; Compliance. The
representations and warranties of Ultrak in this Agreement shall have been true
and correct in all material respects on and as of the Signing Date and shall be
true and correct in all material respects as of the Effective Date as though
made on and as of the Effective Date, and the covenants and agreements of
Ultrak in this Agreement shall have been complied with in all material
respects. On the Effective Date, Ultrak will provide Diamond with a
Certificate of Compliance to such effect in a form reasonably satisfactory to
Diamond.
9.02. No Material Adverse Change. There shall have been no
material adverse change in Ultrak's assets, liabilities, results of operations
or condition, financial or otherwise.
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<PAGE> 123
9.03. Opinion. Diamond shall have received the opinion of
Gardere & Wynne, L.L.P., dated as of the Effective Date, in substantially the
form attached hereto as Exhibit 9.03.
9.04. Tax Opinion. Diamond shall have received the opinion of
Leagre & Barnes, dated as of the Effective Date, to the effect that, if the
Merger is consummated in accordance with the terms set forth in this Agreement,
(a) the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code; (b) no gain or loss will be recognized to the holders of
shares of Diamond Common Stock upon receipt of the Merger consideration (except
for cash received in lieu of fractional shares or pursuant to the cash out of
Section 1.04); (c) the basis of the Ultrak Common Stock received by the
Shareholders will be the same as the basis of Diamond Common exchanged
therefor; and (d) the holding period of the shares of Ultrak Common Stock
received by the Shareholders will include the holding period of the shares of
Diamond Common Stock exchanged therefor, provided such shares were held as
capital assets as of the Effective Date.
9.05. Diamond Options and Warrants. To the extent rights to acquire
stock of Diamond are not exercised within two (2) business days prior to the
Effective Date, Diamond shall deliver to Ultrak evidence that such options,
warrants, or other rights to acquire stock of Diamond have been cancelled or
terminated.
ARTICLE X:
TERMINATION, WAIVER, AND AMENDMENT
10.01. Termination or Abandonment. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may be terminated and
abandoned at any time before the Effective Date, whether before or after
approval of this Agreement by the respective stockholders of Diamond:
(a) by the written consent of Ultrak and Diamond;
(b) by Ultrak or Diamond if the Effective Date has not
occurred on or before June 30, 1995, unless such failure of
consummation is due to the failure of the terminating party to perform
or observe the covenants, agreements and conditions hereof to be
performed or observed by it on or before the Effective Date; or
(c) by either Ultrak or Diamond if the conditions
precedent to its obligations to consummate its obligations
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<PAGE> 124
under this Agreement have not been satisfied or waived by it on or
before the Effective Date.
The date on which occurs any termination pursuant to this Section 10.1 is
herein referred to as the "Termination Date."
10.02. Modification, Amendment and Waiver. No change,
modification, or amendment of this Agreement shall be valid or binding upon the
parties hereto unless such change, modification or amendment shall be in
writing and signed by all the parties hereto. No waiver of any term or
condition of this Agreement shall be enforceable unless it shall be in writing
signed by the party against which it is sought to be changed. The waiver by
any party of a breach of any provision of this Agreement by any other shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
ARTICLE XI:
MISCELLANEOUS
11.01. Expenses. Each party hereto shall bear its own
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby; provided, however, Diamond's legal fees and
expenses in connection with this Agreement and the transactions contemplated
hereby shall not exceed $35,000. To the extent legal fees and expenses of
Diamond exceed $35,000, then such excess shall be paid by the Signing
Shareholders.
11.02. Counterparts. This Agreement may be executed in two
or more counterparts, all of which will be considered the same agreement and
faxed copies of manually executed signature pages to this Agreement will be
fully binding and enforceable without the need for delivery of the manually
executed signature page.
11.03. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
11.04. Notices. All notices and other communications hereunder will
be in writing and will be deemed given if delivered by hand or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses for a party as will be
specified by like notice) and will be deemed given on the date on which so
hand-delivered or on the third business day following the date on which so
mailed to the address set forth opposite the name and signature block for each
party to this Agreement.
11.05. Severability. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable, such provision shall
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<PAGE> 125
be fully severable, and this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision were never a part hereof; the
remaining provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance; and in lieu of such illegal, invalid, or unenforceable provision,
there shall be added automatically as part of this Agreement, a provision as
similar in its terms to such illegal, invalid, or unenforceable provision as
may be possible and be legal, valid, and enforceable.
11.06. Assignments. This Agreement shall not be assignable by
operation of law or otherwise. Any attempted assignment of this Agreement
shall be void.
11.07. Entire Agreement. This Agreement, the Schedules attached
hereto, and the Exhibits attached hereto constitute the entire agreement, and
supersede all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
All Schedules, Exhibits, and documents and agreements referred to herein or
attached hereto are fully and completely incorporated herein effective as of
the first reference herein.
11.08. Headings. The headings contained in this Agreement are for
reference purposes and will not affect in any way the meaning or interpretation
of this Agreement. Use of "herein," "hereof" or similar terms refer to this
Agreement as a whole.
[Signatures on the following page]
31
<PAGE> 126
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
ULTRAK, INC.
1220 Champion Circle By: /s/ GEORGE K. BROADY
Suite 100 ---------------------------
Carrollton, Texas 75006 George K. Broady, President
Attn: George K. Broady and CEO
DIAMOND ELECTRONICS, INC.
4465 Coonpath Road By: /s/ JOHN W. BIDDINGER
Carroll, Ohio 43112 ---------------------------
Attn: John W. Biddinger John W. Biddinger, Chairman
of the Board
DIAMOND PURCHASING CORP.
1220 Champion Circle By: /s/ GEORGE K. BROADY
Suite 100 ---------------------------
Carrollton, Texas 75006 George K. Broady, President
Attn: George K. Broady
Address for each Signing
Shareholder:
/s/ RICHARD M. TOMPKINS
2124 Creekview Court ------------------------------
Reynoldsburg, Ohio 43068 RICHARD M. TOMPKINS
/s/ ROBERT N. DAVIES
c/o Servaas, Inc. ------------------------------
1000 Waterway Boulevard ROBERT N. DAVIES
Indianapolis, Indiana 46202
/s/ JOHN W. BIDDINGER
7491 Albert Tillinghast Drive ------------------------------
Sarasota, Florida 34240 JOHN W. BIDDINGER
32
<PAGE> 127
<TABLE>
<S> <C>
/s/ H. CHARLES KOEHLER
9102 N. Meridian, Suite 500 ----------------------------
Indianapolis, Indiana 46260 H. CHARLES KOEHLER
/s/ WILLIAM MUIRHEAD, III
304 Long Cove Drive ----------------------------
Hilton Head Island, WILLIAM MUIRHEAD, III
South Carolina 29928
</TABLE>
I hereby agree to the terms of the Merger and agree to vote all of my
shares of Diamond Common Stock in favor of the Merger.
/s/ MARGARET BIDDINGER
----------------------------
MARGARET BIDDINGER
33
<PAGE> 128
EXHIBIT 1.01(a)
ARTICLES OF MERGER (TEXAS)
<PAGE> 129
CERTIFICATE AND ARTICLES OF MERGER OF
BUSINESS CORPORATIONS
Pursuant to Article 5.04 of the Texas Business Corporation Act, as
amended, the undersigned corporations hereby adopt the following Certificate
and Articles of Merger for the purpose of merging them into one of such
corporation:
1. The names of the undersigned corporations are as follows:
Name of Corporation
Diamond Electronics, Inc. ("Diamond")
Diamond Purchasing Corp. ("Newco")
2. The name of the surviving corporation after the merger shall
be Diamond Electronics, Inc., an Ohio corporation, and it shall be governed by
the laws of the State of Ohio. The registered agent of the surviving
corporation after the merger shall be _________________, and the registered
office of the surviving corporation after the merger shall be
_________________________________________________________________.
3. The Agreement and Plan of Reorganization dated as of April 28,
1995 (the "Plan"), a copy of which is attached as Exhibit A hereto, was
approved by the shareholders of Newco in the manner prescribed by the Texas
Business Corporation Act, as amended and was approved by the shareholders of
Diamond in the manner prescribed by the Ohio General Corporation Law, as
amended.
4. As to each of the undersigned corporations, the numbers of
shares outstanding and entitled to vote on the Plan are:
<TABLE>
<CAPTION>
Corporation No. of Shares Entitled
Name Outstanding to Vote
- ---- ----------- ----------
<S> <C> <C>
Diamond 4,809,219 ______
Newco 1,000 1,000
</TABLE>
Each of the undersigned corporations has only one class of capital stock
outstanding.
<PAGE> 130
5. As to each of the undersigned corporations, the numbers of
shares voted for and against the Plan, respectively, are:
<TABLE>
<CAPTION>
Corporation
Name Voted For Voted Against
- ---- --------- -------------
<S> <C> <C>
Diamond ______ ______
Newco 1,000 0
</TABLE>
No shares of either of the undersigned corporations were entitled to vote as a
class or a series with respects to the Plan.
IN WITNESS WHEREOF, each of the undersigned corporations has caused
these Certificate and Articles of Merger to be executed by and on its behalf
and in its corporate name as of ________ ___, 1995.
DIAMOND ELECTRONICS, INC.,
an Ohio corporation
By:______________________________
John W. Biddinger, Chairman
of the Board
DIAMOND PURCHASING CORP.,
a Texas corporation
By:______________________________
George K. Broady, President
<PAGE> 131
EXHIBIT 1.01(b)
CERTIFICATE OF MERGER (OHIO)
<PAGE> 132
Prescribed by Approved ______
Bob Taft, Secretary of State Date __________
30 East Broad Street, 14th Floor Fee ___________
Columbus, Ohio 43266-0418
From MER (July 1994)
CERTIFICATE OF MERGER
In accordance with the requirements of Ohio law, the undersigned
corporations, limited liability companies and/or limited partnerships, desiring
to effect a merger, set forth the following facts:
I. SURVIVING ENTITY
A. The name of the entity surviving the merger is:
_______________________________________________________________________
_______________________________________________________________________
(IF THE SURVIVING ENTITY IS AN OHIO LIMITED PARTNERSHIP OR QUALIFIED
FOREIGN LIMITED PARTNERSHIP, ITS REGISTRATION NUMBER MUST BE PROVIDED)
B. Name change: As a result of this merger, the name of the
surviving entity has been changed to the following:____________
_____________________________________________________ (COMPLETE
ONLY IF THE NAME OF SURVIVING ENTITY IS CHANGING THROUGH THE
MERGER)
C. The surviving entity is a: (Please check the appropriate box
and fill in the appropriate blanks)
[ ] Domestic (Ohio) corporation
[ ] Foreign (Non-Ohio) corporation incorporated under the laws of
the state/country of _______________________ and licensed to
transact business in the state of Ohio.
[ ] Foreign (Non-Ohio) corporation incorporated under the laws of
the state/country of _____________________, and NOT licensed
to transact business in the state of Ohio.
[ ] Domestic (Ohio) limited liability company
[ ] Foreign (Non-Ohio) limited liability company organized under
the laws of the state/country of _____________________, and
registered to do business in the state of Ohio.
[ ] Foreign (Non-Ohio) limited liability company organized under
the laws of the state/country of ___________________, and NOT
registered to do business in the state of Ohio.
[ ] Domestic (Ohio) limited partnership, registration number
_______________
<PAGE> 133
[ ] Foreign (Non-Ohio) limited partnership organized under the
laws of the state/country of _____________________, and
registered to do business in the state of Ohio, under
registration number ______________________
[ ] Foreign (Non-Ohio) limited partnership organized under the
laws of the state/country of _______________________, and NOT
registered to do business in the state of Ohio.
II. MERGING ENTITIES
The name, type of entity, and state/country of incorporation or
organization, respectively, of each entity, other than the survivor, which is a
party to the merger are as follows: (IF INSUFFICIENT SPACE TO COVER THIS ITEM,
PLEASE ATTACH A SEPARATE SHEET LISTING THE MERGING ENTITIES; OHIO REGISTERED OR
FOREIGN QUALIFIED LIMITED PARTNERSHIPS MUST INCLUDE REGISTRATION NUMBER)
Name State/Country of Organization Type of Entity
________________________ ____________________ _________________________
________________________ ____________________ _________________________
________________________ ____________________ _________________________
________________________ ____________________ _________________________
________________________ ____________________ _________________________
III. MERGER AGREEMENT ON FILE
The name and mailing address of the person or entity from whom/which
eligible persons may obtain a copy of the agreement of merger upon written
request:
Name Address
___________________ __________________________________________
(street and number)
__________________________________________
(city, village or township) (state) (zip code)
IV. EFFECTIVE DATE OF MERGER
This merger is to be effective:
On _____________________ (if a date is specified, the date must be a
date on or after the date of filing; the effective date of the merger cannot
be earlier than the date of filing; if no date is specified, the date of filing
will be the effective date of the merger).
<PAGE> 134
V. MERGER AUTHORIZED
The laws of the state or country under which each constituent entity
exists, permits this merger.
This merger was adopted, approved and authorized by each of the
constituent entities in compliance with the laws of the state under which it is
organized, and the persons signing this certificate on behalf of each of the
constituent entities are duly authorized to do so.
VI. STATUTORY AGENT
The name and address of the surviving entity's statutory agent upon
whom any process, notice or demand may be served is:
Name Address
___________________ ________________________________________________________
(complete street address)
________________________________________________________
(city, village or township) (zip code)
(This item MUST be completed if the surviving entity is a foreign entity which
is not licensed, registered or otherwise authorized to conduct or transact
business in that State of Ohio)
Acceptance of Agent
The undersigned, named herein as the statutory agent for the above
referenced surviving entity, hereby acknowledges and accepts the appointment of
statutory agent for said entity.
______________________________________
Signature of Agent
(The acceptance of agent must be completed by domestic surviving entities if
through this merger the statutory agent for the surviving entity has changed,
or the named agent differs in any way from the name reflected on the Secretary
of State's records.)
VII. STATEMENT OF MERGER
Upon filing, or upon such later date as specified herein, the merging
entity/entities listed herein shall merge into the listed surviving entity.
VIII. AMENDMENTS
The articles of incorporation, articles of organization or certificate
of limited partnership (strike the inapplicable terms) of the surviving
domestic entity herein, are amended as set forth in the attached "Exhibit A"
(Please note that any amendments to articles of incorporation,
articles of organization or to a certificate of limited partnership MUST be
attached if the surviving entity is a DOMESTIC corporation, limited liability
company, or limited partnership.)
<PAGE> 135
IX. QUALIFICATION OR LICENSURE OF FOREIGN SURVIVING ENTITY
A. The listed surviving foreign corporation, limited liability
company, or limited partnership desires to transact business in Ohio as a
foreign corporation, foreign limited liability company, or foreign limited
partnership, and hereby appoints the following as its statutory agent upon whom
process, notice or demand against the entity may be served in the State of
Ohio. The name and complete address of the statutory agent is:
____________________________ __________________________________
(name) (street and number)
_______________________________________, Ohio ___________________
(city, village or township) (zip code)
The subject surviving foreign corporation, limited liability company
or limited partnership irrevocably consents to service of process on the
statutory agent listed above as long as the authority of the agent continues,
and to service of process upon the Secretary of State if the agent cannot be
found, if the corporation, limited liability company or limited partnership
fails to designate another agent when required to do so, or if the
corporation's, limited liability company's, or limited partnership's license or
registration to do business in Ohio expires or is canceled.
B. The qualifying entity also states as follows: (complete only if
applicable)
1. Foreign Qualifying Limited Liability Company
(If the qualifying entity is a foreign limited
liability company, the following information must be
completed)
a. The name of the limited liability company in its
state of organization/registration is ____________
__________________________________________________
b. The name under which the limited liability
company desires to transact business in Ohio is
__________________________________________________
c. The limited liability company was organized or
registered on ________________________ under the
month day year
laws of the state/country of ____________________.
d. The address to which interested persons may
direct request for copies of the articles of
organization, operating agreement, bylaws, or
other charter documents of the company is: _______
__________________________________________________
<PAGE> 136
2. FOREIGN QUALIFYING LIMITED PARTNERSHIP
(If the qualifying entity is a foreign limited
partnership, the following information must be
completed)
a. The name of limited partnership is ___________
______________________________________________
b. The limited partnership was formed on
______________________________ under the laws
month day year
of the state/country of ______________________
c. The address of the office of the limited
partnership in its state/country of
organization is ______________________________
______________________________________________
d. The limited partnership's principal office
address is ___________________________________
______________________________________________
e. The names and business or residence addresses
of the GENERAL partners of the partnership
are as follows:
Name Address
_____________________________________________
_____________________________________________
_____________________________________________
(If insufficient space to cover this item,
please attach a separate sheet listing the
general partners and their respective
addresses)
f. The address of the office where a list of the
names and business or residence addresses of
the limited partners and their respective
capital contributions is to be maintained is:
_____________________________________________
_____________________________________________
The limited partnership hereby certifies that
it shall maintain said records until the
registration of the limited partnership in
Ohio is cancelled or withdrawn.
<PAGE> 137
The undersigned constituent entities have caused this certificate of
merger to be signed by its duly authorized officers, partners and
representatives on the date(s) stated below.
<TABLE>
<S> <C>
___________________________________ ___________________________________
exact name of entity exact name of entity
By:________________________________ By:________________________________
Its:_______________________________ Its:_______________________________
Date:______________________________ Date:______________________________
___________________________________ ___________________________________
exact name of entity exact name of entity
By:________________________________ By:________________________________
Its:_______________________________ Its:_______________________________
Date:______________________________ Date:______________________________
___________________________________ ___________________________________
exact name of entity exact name of entity
By:________________________________ By:________________________________
Its:_______________________________ Its:_______________________________
Date:______________________________ Date:______________________________
___________________________________ ___________________________________
exact name of entity exact name of entity
By:________________________________ By:________________________________
Its:_______________________________ Its:_______________________________
Date:______________________________ Date:______________________________
___________________________________ ___________________________________
exact name of entity exact name of entity
By:________________________________ By:________________________________
Its:_______________________________ Its:_______________________________
Date:______________________________ Date:______________________________
</TABLE>
(Please note that the chairman of the board, the president, vice president,
secretary or an assistant secretary must sign on behalf of each constituent
corporation, and at least on general partner must sign on behalf of each
constituent limited partnership; If insufficient space for signature, a
separate sheet should be attached continuing such signatures)
<PAGE> 138
ANNEX B
OHIO REVISED CODE Section 1.701.85
Dissenting shareholder's demand for fair cash value of shares.
(A)(1) A shareholder of a domestic corporation is entitled to relief
as a dissenting shareholder in respect of the proposal in Sections 1701.74,
1701.76, and 1701.84 of the Revised Code, only in compliance with this section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of
the shares of the corporation as to which he seeks relief as of the date fixed
for the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the
date on which the vote on such proposal was taken at the meeting of the
shareholders, the shareholder shall deliver to the corporation a written demand
for payment to him of the fair cash value of the shares as to which he seeks
relief, stating his address, the number and class of such shares, and the
amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division
(C) of Section 1701.84 of the Revised Code in the case of a merger pursuant to
Section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of Section 1701.84 of the Revised Code in the case of
a merger pursuant to Section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
Section 1701.80 or 1701.801 of the Revised Code, the shareholder shall deliver
to the corporation a written demand for payment with the same information as
that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on
the constituent corporation involved constitutes service on the surviving or
the new corporation, whether served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing
the shares as to which he seeks relief, he, within fifteen days from the date
of the sending of such requests, shall deliver to the corporation the
certificates requested, in order that the corporation may forthwith endorse on
them a legend to the effect that demand for the fair cash value of such shares
has been made. The corporation promptly shall return such endorsed certificates
to the shareholder. Failure on the part of the shareholder to deliver such
certificates terminates his rights as a dissenting shareholder, at the option
of the corporation, exercised by written notice sent to him within twenty days
after the lapse of the fifteen-day period, unless a court for good cause shown
otherwise directs. If shares represented by a certificate on which such a
legend has been endorsed are transferred, each new certificate issued for them
shall bear a similar legend, together with the name of the original dissenting
holder of such shares. Upon receiving a demand for payment from a dissenting
shareholder who is the record holder of uncertificated securities, the
corporation shall make an appropriate notation of the demand for payment in its
shareholder records. If uncertificated shares for which payment has been
demanded are to be transferred, any new certificate issued for the shares shall
bear the legend required for certificated securities as provided in this
paragraph. A transferee of the shares so endorsed, or of the uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
Such request by the corporation is not an admission by the corporation that the
shareholder is entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder shall
have come to an agreement on the fair cash value per share of the shares as to
which he seeks relief, the shareholder or the corporation, which in the case of
a merger or consolidation may be the surviving or the new corporation, within
three months of the service of the demand by the shareholder, may file a
complaint in the court of the common pleas of the
<PAGE> 139
county in which the principal office of the corporation which issued
such shares is located, or was located at the time when the proposal was
adopted by the shareholders of the corporation, or, if the proposal was not
required to be submitted to the shareholders, was approved by the directors.
Other dissenting shareholders, within the period of three months, may join as
plaintiffs, or may be joined as defendants in any such proceeding, and any two
or more such proceedings may be consolidated. The complaint shall contain a
brief statement of the facts, including the vote and the facts entitling the
dissenting shareholder to the relief demanded. No answer to such complaint is
required. Upon the filing of the complaint, the court, on motion of the
petitioner, shall enter an order fixing a date for a hearing on the complaint,
and requiring that a copy of the complaint and a notice of the filing and of
the date for hearing be given to the respondent or defendant in the manner in
which summons is required to be served or substituted service is required to be
made in other cases. On the day fixed for the hearing on the complaint or any
adjournment of it, the court shall determine from the complaint and from such
other evidence as is submitted by either party whether the shareholder is
entitled to be paid the fair cash value of any shares and, if so, the number
and class of such shares. If the court finds that the shareholder is so
entitled, the court may appoint one or more persons as appraisers to receive
evidence and to recommend a decision on the amount of the fair cash value. The
appraisers have such power and authority as is specified in the order of their
appointment. The court thereupon shall make a finding as to the fair cash value
of a share, and shall render judgment against the corporation for the payment
of it, with interest at such rate and from such dated as the court considers
equitable. The costs of the proceeding, including reasonable compensation to
the appraisers to be fixed by the court, shall be assessed or apportioned as
the court considers equitable. The proceeding is a special proceeding, and
final orders in it may be vacated, modified, or reversed on appeal pursuant to
the rules of appellate procedure and, to the extent not in conflict with those
rules, Chapter 2505 of the Revised Code. If, during the pendency of any
proceeding instituted under this section, a suit or proceeding is or has been
instituted to enjoin or otherwise to prevent the carrying out of the action as
to which the shareholder has dissented, the proceeding instituted under this
section shall be stayed until final determination of the other suit or
proceeding. Unless any provision in division (D) of this section is applicable,
the fair cash value of the shares so agreed upon by the parties or as fixed
under this section shall be paid within thirty days after the date of final
determination of such value under this division, the effective date of the
amendment of the articles, or the consummation of the other action involved,
whichever occurs last. Upon the occurrence of the last such event, payment
shall be made immediately to a holder of uncertificated securities entitled to
such payment. In the case of holders of shares represented by certificates,
payment shall be made only upon and simultaneously with the surrender to the
corporation of the certificates representing the shares for which such payment
is made.
(C) If the proposal was required to be submitted to the
shareholders of the corporation, fair cash value as to those shareholders shall
be determined as of the day prior to that on which the vote by the shareholders
was taken and, in the case of a merger pursuant to Section 1701.80 or 1701.801
of the Revised Code, fair cash value as to the shareholders of a constituent
subsidiary corporation shall be determined as of the day before the adoption of
the agreement of merger by the directors of the particular constituent
subsidiary corporation. The fair cash value of a share for the purposes of this
section is the amount that a willing seller, under no compulsion to sell, would
be willing to accept, and that a willing buyer, under no compulsion to
purchase, would be willing to pay, but in no event shall the fair cash value of
it exceed the amount specified in the demand of the particular shareholder. In
computing such fair cash value, any appreciation or depreciation in market
value resulting from the proposal submitted to the directors or the
shareholders shall be excluded.
(D) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief, and
the right and obligation of the corporation to purchase such shares and to pay
the fair cash value of them terminates if:
(1) Such shareholder has not complied with this section,
unless the corporation by its directors waives such failure;
(2) The corporation abandons, or is finally enjoined or
prevented from carrying out, or the shareholders rescind their adoption, of the
action involved;
<PAGE> 140
(3) The shareholder withdraws his demand, with the consent
of the corporation by its directors;
(4) The corporation and the dissenting shareholder shall not
have come to an agreement as to the fair cash value per share, and neither the
shareholder nor the corporation shall have filed or joined in a complaint under
division (B) of this section within the period provided.
(E) From the time of giving demand, until either the termination of
the rights and obligations arising from it or the purchase of the shares by the
corporation, all other rights accruing from such shares, including voting
rights or dividend or distribution rights, are suspended. If during the
suspension, any dividend or distribution is paid in money upon shares of such
class, or any dividend, distribution, or interest is paid in money upon any
securities issued in extinguishment of or in substitution for such share, an
amount equal to the dividend, distribution, or interest which, except for the
suspension, would have been payable upon such shares or securities, shall be
paid to the holder of record as a credit upon the fair cash value of the
shares. If the right to receive fair cash value is terminated otherwise than by
the purchase of the shares by the corporation, all rights of the holder shall
be restored and all distributions which, except for the suspension, would have
been made shall be made to the holder of record of the shares at the time of
the termination.
<PAGE> 141
ANNEX C
ARTICLES OF INCORPORATION
OF
DIAMOND ELECTRONICS, INC.
ARTICLE I
Name
The name of the Corporation is Diamond Electronics, Inc.
ARTICLE II
Principal Office
The place in Ohio where its principal office is to be located is 1465
Coon Path Road, Carroll, Fairfield County, Ohio 43112.
ARTICLE III
Purposes
The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98 of the Ohio Revised Code.
<PAGE> 142
ARTICLE IV
Shares
The authorized number of shares of the Corporation shall be 5,100,000,
of which 5,000,000 shall be common shares, each without par value, and 100,000
shall be preferred shares, each with par value of $100 per share.
Dividends may be declared by the Board of Directors and paid in
preferred shares to the holders of common shares without the approval of the
holders of the preferred shares or any series thereof in which payment is to be
made.
Preferred shares shall be issuable in series having distinctive
designations. The Board of Directors of the Corporation shall determine whether
preferred shares shall be issued as a part of a preexisting series or as a part
of a new series. Subject to the limitations set forth in the General
Corporation Law of Ohio, the Board of Directors of the Corporation shall, by
resolution adopted prior to the issuance of any shares thereof, determine the
relative rights, preferences, limitations and restrictions of each such series
of preferred shares, including without limitation the authority to (a)
determine the dividend rate, if any, for the shares of such series, (b) provide
terms for the redemption of the shares of such series, including the redemption
price and date of a
2
<PAGE> 143
sinking fund, if any, and (c) provide terms, conditions and a ratio of exchange
upon which the shares of such series may be converted into shares of any other
class of shares of the Corporation. Each share of each series of preferred
shares shall have the same relative rights as, and be identical in all respects
with, all the other shares of the same series.
No dividends shall be declared or paid at any time upon any common
shares of the Corporation unless and until all dividends upon the preferred
shares then accrued and unpaid have been paid in full.
Outstanding preferred shares may be subject to redemption at the
option of the Corporation by resolution of its Board of Directors at such
redemption price as shall have been fixed by the Board of Directors with regard
to each such series at or before the time of issue of any shares thereof,
together with all dividends accumulated or accrued and unpaid to the date of
redemption. Not less than thirty (30) days' notice of a call and redemption
pursuant to this paragraph shall be given by mail to each holder of record at
his post office address appearing upon the books of the Corporation, but any
failure on the part of any holder of such shares to receive such notice shall
not render any such redemption invalid or ineffectual. Upon the date fixed for
redemption, payment for the shares redeemed shall be made to the holders of
record at the principal office of the Corporation and in such other place as
3
<PAGE> 144
may be determined by the Board of Directors and specified in the notice, upon
presentation and surrender of their share certificates, duly endorsed for
transfer.
In any application of the funds and assets of the Corporation to the
repayment of its outstanding capital shares in liquidation (other than by
redemption or purchase as otherwise provided in this Article) whether voluntary
of involuntary, holders of preferred shares shall be entitled to be paid in
full the par value of their shares and accrued and unpaid dividends thereon
before any payment shall be made to the holders of the common shares, and
thereafter the remaining assets of the Corporation shall be distributed pro
rata among the holders of the common shares.
When payment of the consideration for which a capital share was
authorized to be issued shall have been received by the Corporation, said share
shall be deemed to be fully paid and not liable to any further call or
assessment, and the holder thereof shall not be liable for any further
payments.
Except as otherwise provided in the General Corporation Law of Ohio,
preferred shares shall not confer any voting rights or powers upon the holders
thereof.
4
<PAGE> 145
ARTICLE V
Directors
The Directors of the Corporation shall have the power to cause the
Corporation from time to time and at any time to purchase, hold, sell, transfer
or otherwise deal with (A) shares of any class or series issued by it, (B) any
security or other obligation of the Corporation which may confer upon the
holder thereof the right to convert the same into shares of any class or series
authorized by the Articles of the Corporation and (C) any security or other
obligation which may confer upon the holder thereof the right to purchase
shares of any class or series authorized by the Articles of the Corporation.
The Corporation shall have the right to repurchase, if and when any shareholder
desires to sell, or on the happening of any event is required to sell, shares
of any class or series issued by the Corporation. The authority granted in this
Article V of these Articles shall not limit the plenary authority of the
Directors to purchase, hold, sell, transfer or otherwise deal with shares of
any class or series, securities, or other obligations issued by the Corporation
or authorized by its Articles.
5
<PAGE> 146
ARTICLE VI
Preemptive Rights
No shareholder of the Corporation shall have, as a matter of right,
the preemptive right to purchase or subscribe for shares of any class, now or
hereafter authorized, or to purchase or subscribe for securities or other
obligations convertible into or exchangeable for such shares or which by
warrant or otherwise entitle the holders thereof to subscribe for or purchase
any such share.
ARTICLE VII
Approval of Business Combinations
Section 1. Supermajority Vote. Except as provided in Sections 2
and 3 of this Article VII, neither the Corporation nor any of its Subsidiaries
shall become party to any Business Combination with a Related Person without
the prior affirmative vote at a meeting of the Corporation's shareholders;
(a) By the holders of not less than 80% of the
outstanding shares of all classes of the Corporation considered for
purposes of this Article VII as a single class, and
6
<PAGE> 147
(b) By an Independent Majority of Shareholders.
Such favorable votes shall be in addition to any shareholder vote that
would be required without reference to this Section 1 and shall be required
notwithstanding the fact that no vote may be required, or that some lesser
percentage may be specified by law or in other Articles of these Articles of
Incorporation or the Regulations of the Corporation or otherwise.
Section 2. Fair Price Exception. The provisions of Section 1
shall not apply to a Business Combination if all of the conditions set forth in
subsections (a) through (d) are satisfied.
(a) The fair market value of the property, securities or
other consideration to be received per share by holders of each class
or series of capital shares of the Corporation in the Business
Combination is not less, as of the date of the consummation of the
Business Combination (the "Consummation Date") than the higher of the
following: (i) the highest per share price (with appropriate
adjustments for recapitalizations and for share splits, share
dividends and like distributions) including brokerage commissions and
solicitation fees paid by the Related Person in acquiring any of its
holdings of such class or series of capital shares within the two year
period immediately prior to the first public announcement
7
<PAGE> 148
of the proposed Business Combination ("Announcement Date") plus
interest compounded annually, from the date that the Related Person
became a Related Person (the "Determination Date"), or if later from a
date two years before the Consummation Date, through the Consummation
Date, at the rate publicly announced as the "prime rate" of interest
of Citibank, N.A. (or of such other major bank headquartered in New
York as may be selected by a majority of the Continuing Directors)
from time to time in effect, less the aggregate amount of any cash
dividends paid and the fair market value of any dividends paid in
other than cash on each share from the date from which interest
accrues under the preceding clause through the Consummation Date up to
but not exceeding the amount of interest so payable per share; OR (ii)
the fair market value per share of such class or series on the
Announcement Date as determined by the highest closing sale price
during the 30-day period immediately preceding the Announcement Date
if such share is listed on a securities exchange registered under the
Securities Exchange Act of 1934 or, if such share is not listed on any
such exchange, the highest closing bid quotation with respect to such
share during the 30-day period preceding the Announcement Date on the
National Association of Securities Dealers, Inc. Automated Quotation
System or any similar system then in use, or if no such quotations are
available, the fair market value of such share immediately prior to
the first public announcement
8
<PAGE> 149
of the proposed Business Combination as determined by the Board of
Directors in good faith. In the event of a Business Combination upon
consummation of which the Corporation would be the surviving
corporation or company or would continue to exist (unless it is
provided, contemplated or intended that as part of such Business
Combination or within one year after consummation thereof a plan of
liquidation or dissolution of the Corporation will be effected), the
term "other consideration to be received" shall include (without
limitation) common shares and/or the share of any other class of
shares retained by shareholders of the Corporation other than Related
Persons who are parties to such Business Combination;
(b) The consideration to be received in such Business
Combination by holders of each class or series of capital shares other
than the Related Person involved shall, except to the extent that a
shareholder agrees otherwise as to all or part of the shares which he
or she owns, be in the same form and of the same kind as the
consideration paid by the Related Person in acquiring the majority of
the capital shares of such class or series already Beneficially Owned
by it;
(c) After such Related Person became a Related Person and
prior to the consummation of such Business Combination: (i) such
Related Person shall have taken
9
<PAGE> 150
steps to insure that the Board of Directors of the Corporation
included at all times representation by Continuing Directors
proportionate to the ratio that the number of Voting Shares of the
Corporation from time to time owned by shareholders who are not
Related Persons bears to all Voting Shares of the Corporation
outstanding at the time in question (with a Continuing Director to
occupy any resulting fractional position among the directors); (ii)
such Related Person shall not have acquired from the Corporation,
directly or indirectly, any shares of the Corporation (except upon
conversion of convertible securities acquired by it prior to becoming
a Related Person or as a result of a pro rata share dividend, share
split or division of shares or in a transaction which satisfied all
applicable requirements of this Article VII); (iii) such Related
Person shall not have acquired any additional Voting Shares of the
Corporation or securities convertible into or exchangeable for Voting
Shares except as a part of the transaction which resulted in such
Related Person's becoming a Related Person; and (iv) such Related
Person shall not have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or tax credits
provided by the Corporation or any Subsidiary, or made any major
change in the Corporation's business or equity capital structure
entered into any contract, arrangement or understanding
10
<PAGE> 151
with the Corporation except any such change, contract, arrangement or
understanding as may have been approved by the favorable vote of not
less than a majority of the Continuing Directors of the Corporation;
and
(d) A proxy statement complying with the requirements of
the Securities Exchange Act of 1934 and the rules and regulations of
the Securities and Exchange Commission thereunder, as then in force
for corporations subject to the requirements of Section 14 of such Act
(even if the Corporation is not otherwise subject to Section 14 of
such Act), shall have been mailed to all holders of capital shares of
the Corporation entitled to vote with respect to such Business
Combination. Such proxy statement shall contain on the face page
thereof, in a prominent place, any recommendations as to the
advisability (or inadvisability) of the Business Combination which the
Continuing Directors, or any of them, may have furnished in writing
and, if deemed advisable by a majority of the Continuing Directors, a
fair summary of an opinion of a reputable investment banking firm
addressed to the Corporation as to the fairness (or lack of fairness)
of the terms of such Business Combination from the point of view of
the holders of Voting Shares other than any Related Person (such
investment banking firm to be selected by a majority of the Continuing
Directors, to be furnished with all information it reasonably
requests, and to be paid a reasonable fee for
11
<PAGE> 152
its services upon receipt by the Corporation of such opinion).
Section 3. Director Approval Exception. The provisions of
Sections 3 shall not apply to a Business Combination if:
(a) The Continuing Directors of the Corporation by a
two-thirds vote (i) have expressly approved a memorandum of
understanding with the Related Person with respect to the Business
Combination prior to the time that the Related Person became a Related
Person and the Business Combination is effected by substantially the
same terms and conditions as are provided by the memorandum of
understanding, or (ii) have otherwise approved the Business
Combination (this provision is incapable of satisfaction unless there
is at least one Continuing Director); or
(b) The Business Combination is solely between the
Corporation and another corporation, one hundred percent of the Voting
Shares of which is owned directly or indirectly by the Corporation.
Section 4. Definitions. For the purpose of this Article VII:
(a) A "Business Combination" mean:
12
<PAGE> 153
(i) the sale, exchange, lease, transfer or other
disposition to or with a Related Person or any Affiliate or
Associate of such Related Person by the Corporation or any of
its Subsidiaries (in a single transaction or a Series of
Related Transactions) of all or substantially all, or any
Substantial Part, of its or their assets or businesses
(including, without limitation, any securities issued by a
Subsidiary);
(ii) The purchase, exchange, lease or other
acquisition by the Corporation or any of its Subsidiaries (in
a single transaction or a Series of Related Transactions) of
all or substantially all, or any Substantial Part, of the
assets or business of a Related Person or any Affiliate or
Associate of such Related Person;
(iii) Any merger or consolidation of the Corporation
or any Subsidiary thereof into or with a Related Person or any
Affiliate or Associate of such Related Person or into or with
another Person which, after such merger or consolidation,
would be an Affiliate or an Associate of a Related Person, in
each case irrespective of which Person is the surviving entity
in such merger or consolidation;
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(iv) Any reclassification of securities,
recapitalization or other transaction (other than a redemption
in accordance with the terms of the security redeemed) which
has the effect, directly or indirectly, of increasing the
proportionate amount of Voting Shares of the Corporation or
any Subsidiary thereof which are Beneficially Owned by a
Related Person, or any partial or complete liquidation,
spinoff, splitoff or splitup of the Corporation or any
Subsidiary thereof; provided, however, that this Section
4(a)(iv) shall not relate to any transaction that has been
approved by a majority of the Continuing Directors; or
(v) The acquisition upon the issuance thereof of
Beneficial Ownership by a Related Person of Voting Shares or
securities convertible into Voting Shares or any voting
securities or securities convertible into voting securities of
any Subsidiary of the Corporation, or the acquisition upon the
issuance thereof of Beneficial Ownership by a Related Person
of any rights, warrants or options to acquire any of the
foregoing or any combination of the foregoing voting Shares or
voting securities of a Subsidiary.
(b) A "Series of Related Transactions" shall be deemed to
include not only a series of transactions with the same
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Related Person but also a series of separate transactions with a
Related Person or any Affiliate or Associate of such Related Person.
(c) A "Person" shall mean any individual, firm,
corporation or other entity and any partnership, syndicate or other
group.
(d) "Related Person" shall mean any Person (other than
the Corporation or any of the Corporation's Subsidiaries or the
Continuing Directors, singly or as a group) who or that at any time
described in the last sentence of this subsection (d):
(i) is the Beneficial Owner, directly or
indirectly, of more than ten percent (10%) of the voting power
of the outstanding Voting Shares and who has not been the
Beneficial Owner, directly or indirectly, of more than ten
percent (10%) of the voting power of the outstanding Voting
Shares for a continuous period of two years prior to the date
in question; or
(ii) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date
in question (but not continuously during such two-year period)
was the Beneficial Owner,
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directly, of ten percent (10%) or more of the voting power of
the then outstanding Voting Shares; or
(iii) is an assignee of or has otherwise succeeded to
any Voting Shares which were at any time within the two-year
period immediately prior to the date in question beneficially
owned by any Related Person, if such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.
A Related Person shall be deemed to have acquired a share of the Corporation at
the time when such Related Person became the Beneficial Owner thereof. For the
purposes of determining whether a Person is the Beneficial Owner of ten percent
or more of the voting power of the then outstanding Voting Shares, the
outstanding Voting Shares shall be deemed to include any Voting Shares that may
be issuable to such Person Pursuant to a right to acquire such Voting Shares
and that is therefore deemed to be Beneficially owned by such Person pursuant
to Section 4(e)(ii)(a). A Person who is a Related Person at (i) the time any
definitive agreement relating to a Business Combination is entered into, (ii)
the record date for the determination of shareholders entitled to notice of and
to vote on a
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Business Combination, or (iii) the time immediately prior to the consummation
of a Business Combination, shall be deemed a Related Person.
(e) A Person shall be a "Beneficial Owner" of any Voting
Shares:
(i) which such Person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
(ii) which such Person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote
pursuant to andy agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any Voting Shares.
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(f) An "Affiliate" of, or a person Affiliated with, a
specific person, means a Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under
common control with, the Person specified.
(g) The term "Associate" used to indicate a relationship
with any Person, means (i) any corporation or organization (other than
this Corporation or a majority-owned Subsidiary of this Corporation)
of which such Person is an officer or partner or is, directly or
indirectly, the Beneficial Owner of five percent or more of any class
of equity securities, (ii) any trust or other estate in which such
Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity, (iii) any
relative or spouse of such Person, or any relative of such spouse, who
has the same home as such person, or (iv) any investment company
registered under the Investment Company Act of 1940, for which such
Person or any Affiliate of such Person serves as investment advisor.
(h) "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Related Person set forth in paragraph
(d) of this Section 4, the term
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"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
(i) "Continuing Director" means any member of the Board
of directors of the Corporation (the "Board") who is not associated
with the Related Person and was a member of the Board prior to the
time that the Related Person became a Related person, and any
successor of a Continuing Director who is not associated with the
Related person and is recommended to succeed the Continuing Director
by not less than two-thirds of the Continuing Directors then on the
Board.
(j) "Independent Majority of Shareholders" shall mean the
holders of a majority of the outstanding Voting shares that are not
Beneficially Owned or controlled, directly or indirectly, by a Related
person.
(k) "Voting Share" shall mean all outstanding capital
shares of the Corporation or another corporation entitled to vote
generally in the election of directors, and each reference to a
proportion of Voting Shares shall refer to such proportion of Voting
Shares shall refer to such proportion of the votes entitled to be cast
by such shares.
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(l) "Substantial Part" means properties and assets
involved in any single transaction or a Series of Related Transactions
having an aggregate fair market value of more than ten percent of the
total consolidated assets of the Person in question as determined
immediately prior to such transaction or Series of related
Transactions.
Section 5. Director Determinations. A majority of the
Continuing Directors shall have the power to determine for the purposes of this
Article VII, on the basis of information known to them: (i) the number of
Voting Shares of which any Person is the Beneficial Owner, (ii) whether a
Person is an Affiliate or Associate of another, (iii) whether a Person has an
agreement, arrangement or understanding with another as to the matters referred
to in the definition of "Beneficial Owner," (iv) whether the assets subject to
any Business Combination constitute a Substantial part, (v) whether two or more
transactions constitute a Series of Related Transactions, and (vi) such other
matters with respect to which a determination is required under this Article
VII.
Section 6. Amendment of Article VII. Any amendment, change or
repeal of this Article VII or any other amendment of these Articles of
Incorporation which would have the effect of modifying or permitting
circumvention of this Article VII, shall require the affirmative vote, at a
meeting of shareholders of the Corporation, as to all shares held:
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(a) By the holders of at least 80% of the outstanding
Voting Shares of all classes of the Corporation considered for
purposes of this Article VII as a single class; and
(b) By an Independent Majority of Shareholders;
Provided, however, that this Section 6 shall not apply to, and such
vote shall not be required for, any such amendment, change or repeal
recommended to shareholders by the favorable vote of not less than two-thirds
of the Directors who then qualify as Continuing Directors with respect to all
Related Persons and any such amendment, change or repeal so recommended shall
require only the vote, if any, required under the applicable provisions of the
law.
Section 7. Fiduciary Obligations Unaffected. Nothing in this
Article VII shall be construed to relieve any Related Person from any fiduciary
duty imposed by law.
ARTICLE VIII
Cumulative Voting
No shareholder shall have the right to cumulate such voting power as
he possesses in the election of any Director of the Corporation unless
cumulative voting is required by law.
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ANNEX D
ARVIN/DIAMOND, INC.
BY-LAWS
Article I
OFFICES
Section 1.1. Registered Office. The registered office of the
corporation shall be maintained in the City of Cleveland, State of Ohio, and
the name of the registered agent in charge thereof is C. T. Corporation System.
Section 1.2 Other Offices. The corporation may also have an
office in the Cities of Carroll and Lancaster, State of Ohio and in the City of
Columbus, State of Indiana and also offices at such other places as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
Article II
STOCKHOLDERS' MEETINGS
Section 2.1. Place of Meetings. All meetings of the stockholders,
whether annual or special, shall be held within or without the State of Ohio as
may be fixed from time to time by the Board of Directors.
Section 2.2. Annual Meetings. An annual meeting of the
stockholders, commencing with the year 1985, shall be held on the third
Thursday in April in each year, but if a legal holiday then on the next secular
day following, at 2:00 P.M., at which they shall elect a Board of Directors,
and transact such other business as may properly be brought before the meeting.
Section 2.3. Notice of Meeting. Written notice of the annual
meeting stating the place, date and hour of the meeting, shall be given not
less than ten nor more than fifty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Notice of any such meeting may be waived in writing by any shareholder if the
waiver sets forth in reasonable detail and purpose or purposes for which the
meeting is called, and the time and place thereof. Attendance at any meeting,
in person or by proxy, shall constitute a waiver of notice of such meeting.
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Section 2.4. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Articles of Incorporation, may be called by the President,
and shall be called by the Secretary at the request in writing of a majority of
the Board of Directors, or at the request in writing of stockholders owning at
least 50% of the number of shares of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 2.5. Notice of Special Meetings. Written notice of a
special meeting, stating the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called, shall be given not less
than ten nor more than fifty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given when
deposited in the United Sates mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Notice any such meeting may be waived in writing by any shareholder if the
waiver sets forth in reasonable detail the purpose or purposes for which the
meeting is called, and the time and place thereof. Attendance at any meeting,
in person or by proxy, shall constitute a waiver of notice of such meeting.
Section 2.6. Quorum. The holders of a majority of the shares
issued and outstanding and entitled to vote in person or by proxy shall be
requisite and shall constitute a quorum at all meetings otherwise provided by
statute, by the Articles of Incorporation or by these By-Laws. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote in person or by proxy shall
have the power to adjourn the meeting.
Section 2.7. Voting. When a quorum is present at any meeting, the
subject to the provisions of the General Corporation Act of the State of Ohio,
the Articles of Incorporation or these By-Laws in respect of the vote that
shall be required for a specified action, the vote of the holders of a majority
of the shares having voting power, present in person or represented by proxy,
shall decide any question brought before such meeting. Each stockholder shall
have one name on the books of the Corporation, except as otherwise provided in
the Articles of Incorporation.
Section 2.8. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him by proxy, but no such proxy shall be voted or acted upon after eleven
months from its date, unless the proxy provides for a longer period.
Section 2.9. Unanimous Consent. Whenever the vote of
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stockholders at a meeting thereof is required or permitted to be taken for or
in connection with any corporate action by any provisions of the statutes or of
the Articles of Incorporation or these By-Laws, the meeting, notice of the
meeting, and vote of stockholders may be dispensed with if stockholders owning
one hundred (100%) percent of the outstanding stock of the Corporation consent
in writing to such corporate action being taken.
Article III
DIRECTORS
Section 3.1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation and do all such
acts and things as are not bey the General Corporation Act of the State of Ohio
nor by the Articles of Incorporation nor by these By-Laws directed or required
to be exercised or done by the stockholders.
Section 3.2 Number of Directors. The number of directors which
shall constitute the whole Board shall be three. The directors shall be elected
at the annual meeting of the stockholders, and each director shall hold office
until his successor is elected and qualified or until his earlier resignation
or removal.
Section 3.3 Vacancies. If the office of any director or
directors becomes vacant by reason of death, resignation, retirement,
disqualification, removal from office, or otherwise, or a new directorship is
created, a majority of the remaining directors, though less than a quorum,
shall choose a successor or successors, or a director to fill the newly created
directorship, who shall hold office for the unexpired term or until the next
election or directors.
Section 3.4. Committees of Directors. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but not such committee shall have the power or authority in reference to
amending the Articles of Incorporation, adopting an agreement or merger or
consolidation, recommending to the stockholder the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
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dissolution, or amendment the By-Laws of the Corporation; and, unless the
resolution, By-Laws, or Articles of Incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors. The committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors when required.
Section 3.5. Compensation of Directors. Directors, as such, may
receive such stated salary for their services and/or such fixed sums and
expenses for attendance at each regular or special meeting of the Board of
Directors as may be established by resolution of the Board, except that an
employee of the Corporation may not also receive compensation as a Director;
provided that nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
Section 3.6 Annual Meeting. The annual meeting of the Board of
Directors shall be held on the date of and following the annual meeting of the
stockholders in each year at the place thereof. Notice of such meeting, unless
waived, shall be given by mail or telegram to each director elected at such
annual meeting, at his address as the same may appear on the records of the
Corporation, or in the absence of such address, at his residence or usual place
of business, at least three days before the day on which such meeting is to be
held.
Section 3.7. Special Meetings. Special meetings of the Board of
Directors may be held at any time on the call of the President or at the
request in writing of any one director. Notice of any such meeting, unless
waived, shall be given by mail or telegram to each director at his address as
the same appears on the records of the Corporation not less than one day prior
to the day on which such meeting is to be held if such notice is by telegram,
and not less than two days prior to the day on which the meeting is to be held
if such notice is by mail. If the Secretary shall fail or refuse to give such
notice, then the notice may be given by the officer or any one of the directors
making the call. Any such meeting may be held within or without the state of
Ohio at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof. Any meeting of the Board
of Directors shall be a legal meeting without any notice thereof having been
given, if all the directors shall be present thereat, and no notice of a
meeting shall be required to be given to any director who shall attend such
meeting.
Section 3.8. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting, if a written
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consent to such action is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or committee.
Members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting pursuant to this section shall constitute presence in person at such
meeting.
Section 3.9 Quorum and Manner of Acting. Except as otherwise
provided in these By-Laws, a majority of the total number of directors as at
the time specified by the By-Laws shall constitute a quorum at any regular or
special meeting of the Board of Directors. Except as otherwise provided by
statute, by the Articles of Incorporation, or by these By-Laws, the vote of a
majority of the directors present shall be the act of the Board of Directors.
In the absence of a quorum, a majority of the directors present may adjourn the
meeting from time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given, except that notice shall be given to all
directors if the adjournment is for more than thirty days.
Article IV
OFFICERS
Section 4.1. Officers. The officers of the Corporation shall be a
president, such number of Vice Presidents, if any, as the Board of Directors
may determine, a Secretary, an Assistant Secretary and a Treasurer. One person
may hold any number of offices, except as may be otherwise provided by law.
Section 4.2. Election, Term of Office and Eligibility. The
officers of the Corporation shall be elected annually by the Board of Directors
at its annual meeting; provided that new or additional officers may be elected
at any meeting of the Board. Each officer, except such officers as may be
appointed in accordance with the provisions of Section 4.3, shall hold office
until the next annual election of officers or until his death, resignation or
removal. None of the officers need be members of the Board.
Section 4.3. Subordinate Officers. The Board of Directors may
appoint such Assistant Secretaries, Assistant Treasurers, Controller and other
officers to hold office for such period and with such authority and to perform
such duties as the Board may from time to time determine. The Board may, by
specific resolution, empower the chief executive officer of the Corporation to
appoint any such subordinate officers.
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Section 4.4. Removal. The President, any Vice President, the
Secretary and/or the Treasurer may be removed at any time, either with or
without cause, but only by the affirmative vote of the majority of the total
number of directors as at the time specified by the By-Laws. The Assistant
Secretary and any subordinate officers appointed pursuant to Section 4.3 may be
removed at any time, either with or without cause, by the majority vote of the
directors present at any meeting of the Board or by any committee or officer
empowered to appoint such subordinate officers.
Section 4.5. The President. The President shall be the chief
executive officer of the Corporation. He shall have executive authority to
effect all orders and resolutions of the Board of Directors and, subject to the
control vested in the Board of Directors by statute, by the Articles of
Incorporation, or by these By-Laws, shall administer and be responsible for the
management of the business and affairs of the Corporation. He shall preside at
all meetings of the stockholders and the Board of Directors; and in general
shall perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
Section 4.6. The Vice Presidents. In the event of the absence or
disability of the President, each Vice President, in the order of his
seniority, which shall be in the order of his election, shall perform the
duties of the President. The Vice Presidents shall also perform such other
duties as from time to time may be assigned to them by the Board of Directors
or by the chief executive officer of the corporation.
Section 4.7. The Secretary. The Secretary shall:
(a) Keep the minutes of the meetings of the stockholders and of
the Board of Directors;
(b) See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
(c) Be custodian of the records and of the seal of the Corporation
and see that the seal or a facsimile or equivalent thereof is
affixed to or reproduced on all documents, the execution of
which on behalf of the Corporation under its seal is duly
authorized;
(d) Have charge of the stock record books of the Corporation;
(e) In general, perform all duties incident to the office of
Secretary, and such other duties
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as are provided by these By-Laws and as from time to time are
assigned to him by the Board of Directors or by the chief
executive officer of the Corporation.
Section 4.8. The Assistant Secretaries. If one or more Assistant
Secretaries shall be appointed pursuant to the provisions of Section 4.3, then,
at the request of the Secretary, or in his absence or disability, the Assistant
Secretary designated by the Secretary (or in the absence of such designations,
then any one of such Assistant Secretaries) shall perform one duties of the
Secretary and when so acting shall have all the powers of, and be subject to
all the restrictions upon, the Secretary.
Section 4.9. The Treasurer. The Treasurer shall:
(a) Receive and be responsible for all funds of and securities
owned or held by the Corporation and, in connection therewith,
among other things: keep or cause to be kept full and accurate
records and accounts for the Corporation; deposit or cause to
be deposited to the credit of the Corporation all moneys,
funds and securities so received in such or other depository
as the Board of Directors or an officer designated by the
Board may from time to time establish; and disburse or
supervise the disbursement of funds of the Corporation as may
be properly authorized;
(b) Render to the Board of Directors at any meeting thereof, or
from time to time whenever the Board of Directors or the chief
executive officer of the Corporation may require, financial
and other appropriate reports on the condition of the
Corporation.
(c) In general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to him by the Board of Directors or by the chief
executive officer of the Corporation.
Section 4.10. The Assistant Treasurers. If one or more Assistant
Treasurers shall be appointed pursuant to the provisions of Section 4.3, then,
at the request of the Treasurer, or in his absence or disability, the Assistant
Treasurer designated by the Treasurer (or Treasurers) shall perform all the
duties of the Treasurer and when so acting shall have all the powers of and be
subject to all the restrictions upon, the Treasurer.
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Section 4.11. Salaries. The salaries of the officers shall be
fixed from time to time by the Board of Directors, and no officer shall be
prevented from receiving such salary by reason of the fact that the is also a
director of the Corporation.
Section 4.12. Delegation of Duties. In case of the absence of any
officer of the Corporation or for any other reason which may seem sufficient to
the Board of Directors, the Board of Directors may, for the time being,
delegate his powers and duties, or any of them, to any other officer or to any
director.
Article V
SHARES OF STOCK
Section 5.1. Regulation. Subject to the terms of any contract of
the Corporation, the Board of Directors may make such rules and regulations as
it may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the Corporation, including the issue of
new certificates for lost, stolen or destroyed certificates, and including the
appointment of transfer agents and registrars.
Section 5.2 Consideration for Shares. The Board of Directors
shall cause the Corporation to issue the capital stock of the Corporation for
such consideration as has been fixed by such board in accordance with the
provisions of the Articles of Incorporation.
Subject to the provisions of the Articles of Incorporation, the
consideration for the issuance of shares of the capital stock of the
Corporation may be paid, in whole or in part, in money, in other property,
tangible or intangible, or in labor actually performed for, or services
actually rendered to the Corporation; provided, however, that the part of the
surplus of the Corporation which is transferred to capital upon the issuance of
shares as a share dividend shall be deemed to be the consideration for the
issuance of such shares. When payment of the consideration for which a share
was authorized to be issued shall have been received by the Corporation, or
when surplus shall have been transferred to capital upon the issuance of a
share dividend, such share shall be declared and taken to be fully paid and not
liable to any further call or assessment, and the holder thereof shall not be
liable for any further payments thereon. In the absence of actual fraud in the
transaction, the judgment of the Board of Directors as to the value of such
property, labor or services received as consideration, or the value placed by
the Board of Directors upon the corporate assets in the event of a share
dividend shall be conclusive. Promissory notes or future services shall not be
accepted in payment or part payment of any of the capital stock of the
Corporation.
Section 5.3 Stock Certificates. Certificates for shares
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of the stock of the Corporation shall be respectively numbered serially for
each class of shares, or series thereof, as they are issued, shall be impressed
with the corporate seal or a facsimile thereof, and shall be signed by the
President or a Vice President, and by the Secretary or Treasurer, provided that
such signatures may be facsimiles on any certificate countersigned by a
transfer agent other than the Corporation or its employee or by a registrar
other than the Corporation or its employee. Each certificate shall exhibit the
name of the Corporation, the class (or series of any class) and number of
shares represented thereby, and the name of the holder. Each certificate shall
be otherwise in such form as may be prescribed by the Board of Directors.
Section 5.4 Restriction on Transfer of Securities. A restriction
on the transfer or registration of transfer of securities of the Corporation
may be imposed either by the Articles of Incorporation or by these By-Laws or
by an agreement among any number of security holders or among such holders and
the Corporation. No restriction so imposed shall be binding with respect to
securities issued prior to the adoption of the restriction unless the holders
of the securities are parties to an agreement or voted in favor of the
restriction.
A restriction on the transfer of securities of the Corporation is
permitted by this Section if it:
(a) Obligates the holder of the restricted securities to offer to
the Corporation or to any other holders of securities of the
Corporation or to any other person or to any combination of
the foregoing a prior opportunity, to be exercised within a
reasonable time, to acquire the restricted securities; or
(b) Obligates the Corporation or any holder of securities of the
Corporation or any other person or any combination of the
foregoing to purchase the securities which are the subject of
an agreement respecting the purchase and sale of the
restricted securities; or
(c) Requires the Corporation or the holders of any class of
securities of the Corporation to consent to any proposed
transfer of the restricted securities or to approve the
proposed transferee of the restricted securities; or
(d) Prohibits the transfer of the
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restricted securities to designated persons or classes of
persons, and such designation is not manifestly unreasonable;
or
(e) Restricts transfer or registration of transfer in any other
lawful manner.
Unless noted conspicuously on the security, a restriction, even though
permitted by this Section, is ineffective except against a person with actual
knowledge of the restriction.
Section 5.5 Transfer of Shares. Subject to the restrictions
permitted by Section 5.4, shares of the capital stock of the Corporation shall
be transferable on the books of the Corporation by the holder thereof in person
or by his duly authorized attorney, upon the surrender or cancellation of a
certificate or certificates for a like number of shares. As against the
Corporation, a transfer of shares can be made only on the books of the
Corporation and in the manner hereinabove provided, and the Corporation shall
be entitled to treat the registered holder of any share as the owner thereof
and shall not be bound to recognize any equitable or other claim to or interest
in such share as the owner thereof and shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person, whether or not it shall be express or other notice thereof, save as
expressly provided by the statutes of the State of Ohio.
Section 5.6 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not be more than fifty nor less than ten days before the date of such
meeting, nor more than fifty days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at
the close of business on the day next preceding the day on
which notice is given, or, if notice is waived, at the close
of business on the day next preceding the day on which the
meeting is held;
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(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent
is expressed;
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 5.7 Lost Certificate. Any stockholder claiming that a
certificate representing shares of stock has been lost, stolen or destroyed may
make an affidavit or affirmation of the fact and, if the Board of Directors so
requires, advertise the same in a manner designated by the Board, and give the
Corporation a bond of indemnity in form and with security for an amount
satisfactory to the Board (or an officer or officers designated by the Board),
whereupon a new certificate may be issued of the same tenor and representing
the same number, class and/or series of shares as were represented by the
certificate alleged to have been lost, stolen or destroyed.
Article VI
BOOKS AND RECORDS
Section 6.1 Location. The books, accounts and records of the
Corporation may be kept at such place or places within or without the State of
Ohio as the Board of Directors may from time to time determine.
Section 6.2 Inspection. The books, accounts, and records of the
Corporation shall be open to inspection by any member of the Board of Directors
at all times; and open to inspection by the stockholders at such times, and
subject to such regulations as the Board of Directors may prescribe, except as
otherwise provided by statute.
Section 6.3 Corporate Seal. The corporate seal shall contain two
concentric circles between which shall be the name of the Corporation and the
word "Ohio" and in the center shall be inscribed the words "Corporate Seal".
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Article VII
DIVIDENDS AND RESERVES
Section 7.1 Dividends. The Board of Directors of the
Corporation, subject to any restrictions contained in the Articles of
Incorporation and other lawful commitments of the Corporation, may declare and
pay dividends upon the shares of its capital stock either out of the surplus of
the Corporation, as defined in and computed in accordance with the General
Corporation Act of the State of Ohio or in case there shall be no such surplus,
out of the net profits of the Corporation for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. If the capital of the
Corporation, computed in accordance with the General Corporation Act of the
State of Ohio shall have been diminished by depreciation in the value of its
property, or by losses, or otherwise, to an amount less than the aggregate
amount of the capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets, the Board of
Directors of the Corporation shall not declare and pay out of such net profits
any dividends upon any shares of any classes of its capital stock until the
deficiency in the amount of capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets shall
have been repaired.
Section 7.2 Reserves. The Board of Directors of the Corporation
may set apart, out of any of the funds of the Corporation available for
dividends, a reserve or reserves for any proper purpose and may abolish any
such reserve.
Article VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Fiscal Year. The fiscal year of the Corporation
shall end on the Sunday nearest December 31, in each year, or otherwise fixed
by the Board of Directors.
Section 8.2 Depositories. The Board of Directors or an officer
designated by the Board shall appoint banks, trust companies, or other
depositories in which shall be deposited from time to time the money or
securities of the Corporation.
Section 8.3 Checks, Drafts and Notes. All checks, drafts, or
other orders for the payment of money and all notes or other evidences of
indebtedness issued in the name of the Corporation shall be signed by such
officer or officers or agent or agents as shall from
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time to time be designated by resolution of the Board of Directors or by an
officer appointed by the Board.
Section 8.4 Contracts and Other Instruments. The Board of
Directors may authorize any officer, agent or agents to enter into any contract
or execute and deliver any instrument in the name and on behalf of the
Corporation and such authority may be general or confined to specific
instances.
Section 8.5 Notices. Whenever under the provisions of the
statutes or of the Articles of Incorporation or of these By-Laws shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, by depositing the same in a post office or letter box, in a post-paid
sealed wrapper, or by delivery to a telegraph company, addressed to such
director or stockholder at such address as appears on the books of the
Corporation, or, in default of other address, to such director or stockholder
at the General Post Office in the city of the shareholder's last known address
and such notice shall be deemed to be given at the time when the same shall be
thus mailed.
Section 8.6 Waivers of Notice. Whenever any notice is required
to be given under the provisions of the statutes or of the Articles of
Incorporation or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice.
Section 8.7 Stock in Other Corporations. Any shares of stock in
any other corporation which may from time to time be held by this Corporation
may be represented and voted at any meeting of shareholders of such corporation
by the President or Vice President, or by any other person or persons thereunto
authorized by the Board of Directors, or by any proxy designated by written
instrument of appointment executed in the name of this Corporation by its
President or Vice President. Shares of stock belonging to the Corporation need
not stand in the name of the Corporation, but may be held for the benefit of
the Corporation in the individual name of the Treasurer or of any other nominee
designated for the purpose by the Board of Directors. Certificates for shares
so held for the benefit of the Corporation shall be endorsed in blank or have
proper stock powers attached so that said certificates are at all times in due
form for
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transfer, and shall be held for safekeeping in such manner as shall be
determined from time to time by the Board of Directors.
Section 8.8 Indemnification of Officers, Directors, Employees and
Agents; Insurance.
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation), by reason of the fact that he is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified by the Corporation against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, except in
relation to matters as to which he is adjudged in such action, suit or
proceeding, civil or criminal, to be liable for negligence or misconduct in the
performance of duty to the Corporation. Provided, however, that such
indemnification shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any provision of the Articles of
Incorporation, By-Laws, resolution, or other authorization heretofore or
hereafter adopted, after notice, by a majority vote of all the voting shares
then issued and outstanding; and provided further that expenses incurred in
defending any action, suit or proceeding, civil or criminal, may be paid by the
Corporation in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay the amount paid by the Corporation if it
shall ultimately be determined that the director, officer, employee, or agent
is not entitled to indemnification as provided hereunder.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Section 8.8.
Section 8.9 Amendment of By-Laws. The Board of Directors, by the
affirmative vote of a majority of the whole Board, may adopt, amend or repeal
these By-Laws at any annual or special meeting.
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ANNEX E
ARTICLES OF INCORPORATION
OF
ULTRACOM INC.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned incorporator
being a natural person of the age of eighteen years or more and desiring to
forma body corporate under the laws of the State of Colorado does hereby adopt
and deliver in duplicate to the Secretary of State of the State of Colorado,
these Articles of Incorporation.
ARTICLE I
Name
The name of the corporation shall be: ULTRACOM INC.
ARTICLE II
Period of Duration
The corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the State
of Colorado unless dissolved according to law.
ARTICLE III
Purposes and Powers
1. Purposes. Except as restricted by the Articles of
Incorporation, the corporation is organized for the purpose of transacting all
lawful business for which corporations may be incorporated pursuant to the
Colorado Corporation Code.
2. General Powers. Except as restricted by the Articles of
Incorporation, the corporation may exercise all powers which a corporation may
exercise legally pursuant to the Colorado Corporation Code including the
following:
<PAGE> 177
(a) To buy, sell, trade, manufacture, deal in and deal with goods,
wares and merchandise of every kind and nature, and to carry on such business
as wholesalers, retailers, importers and exporters; to acquire all such
merchandise, supplies, materials and other articles as shall be necessary or
incidental to such business; and to have any and all powers above set forth as
fully as natural persons, whether as principals, agents or otherwise.
(b) To take, hold and acquire by purchase, lease, exchange,
merger, or otherwise, and to sell, lease, mortgage, pledge, exchange or
otherwise deal in, real property and personal property of every kind, nature,
and description and any and all interest therein and wherever situated.
(c) To construct buildings or other improvements upon its land or
upon the lands of others, and to furnish, manage or operate the same.
(d) To act as agent, nominee, contractor or otherwise, either
alone or in company with others, as fully and to the same extent as natural
persons might or could do.
(e) To impose restriction upon the transfer of its own shares in
the manner permitted and upon compliance with limitations imposed by law, and
upon such terms as its board of directors may direct.
(f) In general to carry on any lawful business or activity and to
have and exercise all of the powers and rights conferred by the laws of the
State of Colorado upon corporations formed under such laws.
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The foregoing clauses shall be construed as objects, purposes and
powers, and the matters expressed in each clause shall be in no wise limited by
reference or inference from the terms of any other clause, but shall be
regarded as independent objects, purposes and powers; the enumeration of
specific objects, purposes and powers shall not be construed to limit or
restrict in any manner the general powers and rights of the corporation as
provided by law, nor shall the expression of one object, purpose or power be
determined to exclude another, although it be of like nature but not expressed.
3. Partial Liquidations. The board of directors of the
corporation may distribute, from time to time, to its shareholders in partial
liquidation, out of stated capital or capital surplus of the corporation, a
portion of its assets in cash or property.
4. Issuance of Shares. The board of directors of the corporation
may divide and issue any class of stock of the corporation in series pursuant
to a resolution properly filed with the Secretary of State of Colorado.
ARTICLE IV
Capital Stock
The aggregate number of shares which this corporation shall authority
to issue is thirty million (30,000,000) shares of no par value ($0.00) each,
which shares shall be designated "Common Stock".
This corporation shall also have authority to issue ten million
(10,000,000) shares of one cent par value ($0.01) each,
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which shares shall be designated as "Class "A" Non-Voting Common Stock".
1. Dividends. Dividends in cash, property or shares of the
corporation may be paid upon the Common Stock, as and when declared by the
board of directors, out of funds of the corporation to the extent and in the
manner permitted by law.
2. Distribution in Liquidation. Upon any liquidation,
dissolution or winding up of the corporation, and after paying or adequately
providing for the payment of all its obligations, the remainder of the assets
of the corporation shall be distributed, either in cash or in kind, pro rata to
the holders of the Common Stock.
3. Voting Rights; Cumulative Voting. Each outstanding share of
Common Stock shall be entitled to one vote and each fractional share of Common
Stock shall be entitled to a corresponding fractional vote on each matter
submitted to a vote of shareholders. Cumulative voting shall not be allowed in
the election of directors of the corporation.
4. Denial of Preemptive Rights. No holder of any shares of the
corporation, whether now or hereafter authorized, shall have any preemptive or
preferential right to acquire any shares or securities of the corporation,
including shares or securities held in the treasury of the corporation.
5. "Class "A" Non-Voting Common Stock" shall be identical, in all
rights and privileges to and subject to the same
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restrictions as, the corporation's Common Stock except such "Class "A"
Non-Voting Common Stock shall not have voting rights.
ARTICLE V
Right of Directors to Contract with Corporation
No contract or other transaction between the corporation and one or
more of its directors or any other corporation, firm, association, or entity in
which one or more of its directors are directors or officers or are financially
interested shall be either void or voidable solely because of such relationship
or interest or solely because such directors are present at the meeting of the
board of directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction or solely because their votes are counted
for such purpose if:
(a) The fact of such relationship or interest is
disclosed or known to the board of directors or committee which
authorizes, approves, or ratifies the contract or transaction by a
vote or consent sufficient for the purpose without counting the votes
or consents of such interested directors; or
(b) The fact of such relationship or interests disclosed
or known to the shareholders entitled to vote and they authorize,
approve, or ratify such contract or transaction by vote or written
consent; or
(c) The contract or transaction is fair and reasonable to
the corporation.
Common or interested directors may be counted in determining
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the presence of a quorum at a meeting of the board of directors or a committee
thereof which authorities, approves, or ratifies such contract or transaction.
ARTICLE VI
Corporate Opportunity
The officers, directors and other members of management of this
corporation shall be subject to the doctrine of "corporate opportunities" only
insofar as it applies to business opportunities in which this corporation has
expressed an interest as determined from time to time by this corporation's
board of directors as evidenced by resolutions appearing in the corporation'
minutes. Once such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the attention of the
officers, directors, and other members of management of this corporation shall
be disclosed promptly to this corporation and made available to it. The board
of directors may reject any business opportunity presented to it and thereafter
any officer, director or other member of management may avail himself of such
opportunity. Until such time as this corporation, through its board of
directors, has designated an area of interest, the officers, directors and
other members of management of this corporation shall be free to engage in such
areas of interest on their own and this doctrine shall not limit the rights of
any officer, director or other member of management of this corporation to
continue a business existing prior to the time that such area of interest is
designated by the corporation. This provision shall
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not be construed to release any employee of this corporation (other than an
officer, director or member of management) from any duties which he may have to
this corporation.
ARTICLE VII
Indemnification
Directors and Others
1. The corporation shall indemnify any person who was or is a
party o is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the corporation),
by reason of the fact that he is or was a director, officer, employee, or agent
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or proceeding
if he acted in good faith and in a manner he reasonably believed to be in the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in the best
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interests of the corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in the best
interests of the corporation; but no indemnification shall be made in respect
of any claim, issue, or matter as to which such person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which such action
or suit was brought determines upon application that, despite the adjudication
of liability, but in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses which such
court deems proper.
3. To the extent that a director, officer, employee, or agent of
the corporation has been successful on the merits in
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defense of any action, suit, or proceeding referred to in this article or in
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
4. Any indemnification under paragraph 1 or 2 of this article
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in said paragraphs 1 or 2. Such
determination shall be made by the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such action, suit, or
proceeding, or, if such a quorum is not obtainable or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or by the shareholders.
5. Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit, or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit, or proceeding as
authorized in paragraph 4 of this article upon receipt of an undertaking by or
on behalf of the director, officer, employee, or agent to repay such amount
unless it is ultimately determined that he is entitled to be indemnified by the
corporation as authorized in this article.
6. The indemnification provided by this article shall not be
deemed exclusive of any other rights to which those indemnified may
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be entitled under the Articles of Incorporation, any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, and any procedure
provided for by any of the foregoing, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of heirs, executors, and
administrators of such a person.
7. The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee, o agent of the
corporation or who is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this article.
8. A unanimous vote of each class of shares entitled to vote
shall be required to amend this article.
ARTICLE VIII
Shareholder Voting
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders.
When, with respect to any action to be taken by shareholders of this
Corporation, the laws of Colorado require the vote or
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<PAGE> 186
concurrence of the holders of two-thirds of the outstanding shares, of the
shares entitled to vote thereon, or of any class or series, such action may be
taken by the vote or concurrence of a majority of such shares or class or
series thereof.
ARTICLE IX
Adoption and Amendment of Bylaws
The initial Bylaws of the corporation shall be adopted by its board of
directors. The power to alter or amend or repeal the Bylaws or adopt new Bylaws
shall be vested in the board of directors, but the holders of common stock may
also alter, amend or repeal the Bylaws or adopt new Bylaws. The Bylaws may
contain any provisions for the regulation and management of the affairs of the
corporation not inconsistent with law or these Articles of Incorporation.
ARTICLE X
Registered Office and Registered Agent
The address of the initial registered office of the corporation is 890
South Coors Drive, Lakewood, Colorado 80228, and the name of the initial
registered agent at such address is Theodore A. Waibel, Jr. Either the
registered office or the registered agent may be changed in the manner
permitted by law.
ARTICLE XI
Initial Board of Directors
The number of directors of the corporation shall be fixed by the
Bylaws of the corporation, except the initial board of directors of the
corporation shall consist of five directors. The
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names and addresses of the persons who shall serve as directors until the first
annual meeting of shareholders and until their first annual meeting of
shareholders and until their successors are elected and shall qualify are as
follows:
NAME ADDRESS
---- -------
Theodore A. Waibel, Jr. 890 South Coors Drive
Lakewood, Colorado 80229
Kenneth R. Hackett 2782 Bella Vista Lane
Denver, Colorado 80302
Ronald J. Gustas 7533 East Bates Drive
Denver, Colorado 80232
Lessing E. Gold 8500 Wilshire Boulevard
Beverly Hills, California 90211
Vincent J. Stefanich 459 South Figway
Lakewood, Colorado 80228
ARTICLE XII
Incorporator
The name and address of the incorporator is as follows:
NAME ADDRESS
---- -------
Paul H. Metzinger 2600 Energy Center
717 Seventeenth Street
Denver, Colorado 80202
IN WITNESS WHEREOF, the above-named incorporator has signed these
Articles of Incorporation this 8th day of April, 1980.
/s/ Paul H. Metzinger
Paul H. Metzinger
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<PAGE> 188
STATE OF COLORADO )
)
CITY AND COUNTY OF DENVER )
I, the undersigned, a Notary Public, hereby certify that on the 8th
day of April, 1980, personally appeared before me, Paul H. Metzinger who being
by me first duly swore, declared that he is the person who signed the foregoing
document as incorporator, that it was his free and voluntary act and deed, and
that the statements therein contained are true.
WITNESS my hand and official seal.
My Commission expires: My commission expires March 8, 1987
/s/
Notary Public
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<PAGE> 189
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Ultracom Inc.
SECOND: The following amendment to Article I of the Articles of
Incorporation was adopted by the shareholders of the corporation in the manner
prescribed by the Colorado Corporation Act on July 3, 1980:
The name of the Corporation shall be: Ultrak, Inc.
THIRD: The number of outstanding shares of the corporation at the time
of such adoption was 10,500,000 and the number of shares entitled to vote
thereon was 10,500,000.
FOURTH: The number of shares voted for such amendment was 10,500,000
and the number of shares voted against such amendment was 0.
Dated: July 7, 1980
ULTRACOM, INC.
By /s/ Theodore A. Waibel, Jr.
President
By /s/ Assistant Secretary
Assistant Secretary
<PAGE> 190
VERIFICATION
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
I, the undersigned, a Notary Public, hereby certify that on the 7th
day of July, 1980, personally appeared before me, Theodore A. Waibel, Jr., who
being by me first duly sworn, declared that he is the President of Ultracom,
Inc., that he signed the foregoing Articles of Amendment to the Articles of
Incorporation, that it was his free and voluntary act and deed, and that the
statements therein contained are true.
WITNESS my hand and official seal.
My Commission expires: 9-17-83
/s/ LEWIS R. TAYLOR
Notary Public
(NOTARIAL SEAL)
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[STATE SEAL]
STATE OF COLORADO
DEPARTMENT OF
STATE
I hereby certify that this is a true and complete copy of the document
as filed in this office and admitted to record in File No 06885.
DATED: 10/7/1982
[illegible]
Secretary of State
BY Murry Sears
<PAGE> 192
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
ULTRAK, INC.
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Ultrak, Inc.
SECOND: The following amendment to Article IV of the Articles of
Incorporation was adopted by the shareholders of the corporation in the manner
prescribed by the Colorado Corporation Code on the 30th day of September, 1982.
The Articles of Incorporation shall be amended by changing Article IV
in its entirety to read as follows:
ARTICLE IV
Capital Stock
The aggregate number of voting common shares which this corporation
shall have authority to issue is thirty million (30,000,000) shares of no par
value ($0.00) each, which shares shall be designated "Common Stock".
This corporation also shall have authority to issue ten million
(10,000,000) shares of one cent par value ($O.01) each, which shares shall be
designated as "Class "A" Non-Voting Common Stock".
<PAGE> 193
This corporation also shall have the authority to issue two million
(2,000,000) shares with a par value of Five Dollars ($5.00) each, which shares
shall be designated "Preferred Stock".
1. Shares of Preferred Stock may be issued from time to
time in one or more series, each such series to have distinctive
serial designations, as shall hereafter be determined in the
resolution or resolutions providing for the issue of such Preferred
Stock from time to time adopted by the Board of Directors pursuant to
authority so to do which is hereby vested in the Board of Directors,
which resolutions shall be filed with the Secretary of State of the
State of Colorado as required by law.
2. Each series of Preferred Stock
(a) may have such number of shares;
(b) may have such voting powers, full or
limited, or may be without voting powers;
(c) may be subject to redemption at such
time or times and at such prices;
(d) may be entitled to receive dividends
(which may be cumulative or noncumulative) at such rate or
rates, on such conditions, from such date or dates, and at
such times, and payable in preference to, or in such relation
to, the dividends
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payable on any other class or classes or series of stock;
(e) may have such rights upon the
dissolution of, or upon any distribution of the assets of, the
Corporation;
(f) may be made convertible into, or
exchangeable for, shares of any other class or classes or of
any other series of the same or any other class or classes of
stock of the corporation at such price or prices or at such
rates of exchange, and with such adjustments;
(g) may be entitled to the benefit of a
sinking fund or purchase fund to be applied to the purchase or
redemption of shares of such series in such amount or amounts;
(h) may be entitled to the benefit of
conditions and restrictions upon the creation of indebtedness
of this corporation or any subsidiary, upon the issue of any
additional stock (including additional shares of such series
or of any other series), and upon the payment of dividends or
the making of other distributions on, and the purchase,
redemption or other acquisition by this corporation or any
subsidiary of any outstanding stock of this corporation; and
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(i) may have such other relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof;
all as shall be stated in said resolution or resolutions providing for
the issue of such Preferred Stock. Except where otherwise set forth
in the resolution or resolutions adopted by the Board of Directors
providing for the issue of any series of Preferred Stock, the number
of shares comprising such series may be increased or decreased (but
not below the number of shares then outstanding) from time to time by
like action of the Board of Directors.
3. Shares of any series of Preferred Stock which have
been redeemed (whether through the operation of a sinking fund or
otherwise) or purchased by the corporation, or which, if convertible
or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes shall have the status of
authorized and unissued shares of Preferred Stock and may be reissued
as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors
or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on
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issuance set forth in the resolution or resolutions adopted by the
Board of Directors providing for the issue of any series of Preferred
Stock and to any filing required by law.
4. If the corporation declares or pays a dividend upon
any class of Common Stock payable otherwise than in cash out of
earnings or earned surplus (determined in accordance with generally
accepted accounting principles, consistently applied), except for a
stock dividend payable in shares of Common Stock (a "Liquidating
Dividend"), then the corporation will pay to the holders of Preferred
Stock convertible into shares of such class of Common Stock at the
time of payment thereof the Liquidating Dividends which would have
been paid on the Common Stock had the Preferred Stock been converted
immediately prior to the date on which a record is taken, or, if no
such record is taken, the date as of which the record holders of
Common Stock entitled to such dividends are to be determined.
5. If at any time the corporation grants, issues or
sells any Option, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders
of any class of Common Stock (the "Purchase Rights"), then each holder
of Preferred Stock convertible into shares of such class of Common
Stock will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate
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Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon
conversion of such holder's Preferred Stock immediately before the
date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.
6. Dividends in cash, property or shares of the
corporation may be paid upon the Common Stock, as and when declared by
the Board of Directors, out of funds of the corporation to the extent
and in the manner permitted by law, except that no Common Stock
dividend shall be paid for any year unless the holders of Preferred
Stock, if any, shall receive the maximum allowable Preferred Stock
dividend for such year, plus any required dividends accumulated from
prior years.
7. Upon any liquidation, dissolution or winding up of
the corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the
corporation shall be distributed, either in cash or in kind, first pro
rata to the holders of Preferred Stock until the required amount to be
distributed to the Preferred Stock has
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been distributed, and the remainder pro rata to the holders of the
Common Stock.
8. Each outstanding share of Common Stock shall be
entitled to one vote and each fractional share of Common Stock shall
be entitled to a corresponding fractional vote on each matter
submitted to a vote of shareholders. Cumulative voting shall not be
allowed in the election of directors of the corporation. "Class "A"
Non-Voting Common Stock" shall be identical in all rights and
privileges to and subject to the same restrictions as, the
corporation's Common Stock except such "Class "A" Non-Voting Common
Stock" shall not have voting rights, except as required by law, in
which case each share of "Class "A" Non-Voting Common Stock" shall be
entitled to one vote. Shares of Preferred stock shall not be entitled
to any vote, except as required by law, in which case each share of
Preferred Stock shall be entitled to one vote, or except as otherwise
provided by the resolution or resolutions of the Board of Directors
providing for the issue of any series of the Preferred Stock.
7. No holder of any shares of the corporation, whether
now or hereafter authorized, shall have any preemptive or preferential
right to acquire any shares or securities of the corporation,
including shares or securities held in the treasury of the
corporation.
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ARTICLES OF AMENDMENT
TO THE
AMENDED ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Amended Articles of Incorporation:
FIRST: The name of the corporation is Ultrak, Inc.
SECOND: The following amendment was adopted by the shareholders of
the corporation in the manner prescribed by the Colorado Corporation Act on
December 22, 1986.
The Articles of Incorporation shall be amended by amending the first
paragraph of Article IV to read as follows:
The aggregate number of voting common shares which this Corporation
shall have authority to issue is fifty million (50,000,000) shares of
no par value ($0.00) each, which shares shall be designated "Common
Stock.")
THIRD: The number of outstanding shares of the corporation at the
time of such adoption was 20,370,937 and the number of shares entitled to vote
thereon was 20,370,937.
FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows:
CLASS NUMBER OF SHARES
----- ----------------
Common -0-
<PAGE> 200
FIFTH: The number of shares voted for such amendment was 15,620,000
and the number of shares voted against such amendment was -0-.
SIXTH: The number of shares of each class entitled to vote thereon as
a class voted for and against such amendment, respectively, was zero.
SEVENTH: The manner, if not set forth in such amendment, in which the
issued shares provided for in the amendment, shall be effected, is as follows:
The 20,370,937 common no par value shares issued and outstanding are
hereby reversed split 5 for 1 to reduce issued and outstanding common
shares to 4,074,187.
EIGHTH: The manner in which such amendment effects a change in the
amount of stated capital, and the amount of stated capital as changed by such
amendment, are as follows:
No Change
The undersigned officers hereby verify that these Articles of
Amendment have been properly adopted by the undersigned corporation; that the
statements contained herein are true; that they signed these Articles of
Amendment for and on behalf of the corporation as President and Secretary of
the corporation, respectively; and they hereby acknowledge that it was their
free and voluntary act and deed.
DATED: December 22, 1986
ULTRAK, INC.
By: /s/ THEODORE A WAIBEL, JR.
Theodore A. Waibel, Jr., President
By: /s/ DANIEL P. MURPHY
Daniel P. Murphy, Secretary
<PAGE> 201
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
I, a Notary Public in and for the said County and State, hereby
certify that on the 22nd day of December, 1986, personally appeared before me
Theodore A. Waibel, Jr. and Daniel P. Murphy, who being by me first duly sworn,
declared that they are the persons who signed the foregoing document as
President and Secretary, respectively, that the statements therein contained
are true, and they acknowledged that it was their free and voluntary act and
deed.
WITNESS my hand and official seal.
My commission expires: Nov 20, 1989
/s/ PAUL H. METZINGER
Notary Public
Address: 2410S
600-17th Street
Denver, Colorado 80202
(SEAL)
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ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
ULTRAK, INC.
Effective as of December 28, 1993 (the "Effective Date"), pursuant to
the provisions of Section 7-2-109 of the Colorado Corporation Code, Ultrak,
Inc. (the "corporation"), hereby adopts the following Articles of Amendment to
its Articles of Incorporation to (i) change the number of authorized shares of
its Common Stock, no par value ("Common Stock"), (ii) eliminate the
authorization of its Class A Non-Voting Common Stock, $.O1 par value, the
authorization of its Series A 8% Cumulative Convertible Preferred Stock and the
authorization of its Senior, Series B 8% Cumulative Convertible Preferred
Stock, (iii) amend the rights and preferences of the outstanding Series A 12%
Cumulative Convertible Preferred Stock to, among other things, increase the
voting rights of holders of such Series A Preferred Stock and make other
changes to give effect to the reverse stock split referred to in clause (iv)
below and paragraph FOURTH of these Articles of Amendment; and (iv) accomplish
a reverse stock split of the corporation's Common Stock in the form of a
reclassification of the outstanding Common Stock as provided in paragraph
FOURTH of these Articles of Amendment.
FIRST. The name of the corporation is Ultrak, Inc.
SECOND. The following amendment to the Articles of Incorporation was
adopted by the shareholders of the corporation on December 17, 1993 to be
effective as of the Effective Date:
Article IV of the Articles of Incorporation and all Statements
of Rights and Designations heretofore filed with the Secretary of
State, designating series of shares of
<PAGE> 203
Preferred Stock thereunder, shall be amended and restated to read as
an entirety as follows:
ARTICLE IV
Capital Stock
1. Common Stock.
The aggregate number of common shares which this corporation
shall have authority to issue is Twenty Million (20,000,000) shares of
no par value each, which shares shall be designated "Common Stock".
2. Preferred Stock.
The aggregate number of preferred shares which this
corporation shall have authority to issue is Two Million (2,000,000)
shares with a par value of Five Dollars ($5.00) each, which shares
shall be designated "Preferred Stock". Included in such number of
shares of Preferred Stock are 195,351 shares which have been
designated as "Series "A" 12% Cumulative Convertible Preferred Stock,"
the rights and preferences of which are set forth in full or referred
to in paragraph 8 of this Article IV.
Shares of Preferred Stock may be issued from time to time in
one or more series, each such series to have distinctive serial
designations (other than a designation containing the term "Series A")
as shall after December 28, 1993 be determined in the resolution or
resolutions providing for the issue of such Preferred Stock from time
to time adopted by the Board of Directors pursuant to authority so to
do which is hereby vested in the Board of Directors, which resolutions
shall be filed with the Secretary of State of the State of Colorado as
required by law.
Each series of Preferred Stock as shall after December 28,
1993 be established by the Board of Directors
(a) may have such number of shares;
(b) may have such voting powers, full or limited, or may
be without voting powers;
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(c) may be subject to redemption at such time or times
and at such prices;
(d) may be entitled to receive dividends (which may be
cumulative or noncumulative) at such rate or rates, on such
conditions, from such date or dates, and at such times, and payable in
preference to, or in such relation to, the dividends payable on any
other class or classes or series of stock;
(e) may have such rights upon the dissolution of, or upon
any distribution of the assets of, the corporation;
(f) may be made convertible into, or exchangeable for,
shares of any other class or classes or of any other series of the
same or any other class or classes of stock of the corporation at such
price or prices or at such rates of exchange, and with such
adjustments;
(g) may be entitled to the benefit of a sinking fund or
purchase fund to be applied to the purchase or redemption of shares of
such series in such amount or amounts;
(h) may be entitled to the benefit of conditions and
restrictions upon the creation of indebtedness of this corporation or
any subsidiary, upon the issue of any additional stock (including
additional shares of such series or of any other series), and upon the
payment of dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by this corporation or any
subsidiary of any outstanding stock of this corporation; and
(i) may have such other relative, participating, optional
or other special rights, qualifications, limitations or restrictions
thereof;
all as shall be stated in said resolution or resolutions providing for
the issue of such Preferred Stock.
3. Treasury Shares.
Shares of any series of Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or
otherwise) or purchased by the corporation, or which, if convertible
or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes, shall have the status of
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authorized and unissued shares of Preferred Stock and may be reissued
as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors
or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in the resolution or
resolutions adopted by the Board of Directors providing for the issue
of any series of Preferred Stock and to any filing required by law.
4. Dividends.
Dividends in cash, property or shares of the corporation may
be paid upon the Common Stock as and when declared by the Board of
Directors, out of funds of the corporation to the extent and in the
manner permitted by law, except that no Common Stock dividend shall be
paid for any year unless the holders of Preferred Stock, if any, shall
receive the maximum allowable Preferred Stock dividend for such year
applicable to each respective series, plus any required dividends
accumulated from prior years.
5. Distribution Upon Liquidation.
Except as otherwise provided by the resolution or resolutions
of the Board of Directors providing for the issue of any series of
Preferred Stock, upon any liquidation, dissolution or winding up of
the corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the
corporation shall be distributed, either in cash or in kind, first pro
rata to the holders of Preferred Stock until the required amount to be
distributed to the Preferred Stock has been distributed, and the
remainder pro rata to the holders of the Common Stock.
6. Voting. Each outstanding share of Common Stock shall be
entitled to one vote and each fractional share of Common Stock shall
be entitled to a fractional vote on each matter submitted to a vote of
shareholders. Cumulative voting shall not be allowed in the election
of directors of the corporation. Except as provided in paragraph 8 of
this Article IV with respect to Series A Cumulative Convertible
Preferred Stock, shares of Preferred Stock shall not be entitled to
any vote, except as required by law, in which case each share of
Preferred Stock shall be entitled to one vote, or except as
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otherwise provided by the resolution or resolutions of the Board of
Directors providing for the issue of any series of the Preferred
Stock.
7. Preemptive Rights. Except as otherwise provided by the
resolution or resolutions of the Board of Directors providing for the
issue of any series of Preferred Stock, no holder of any shares of the
corporation, whether now or hereafter authorized, shall have any
preemptive or preferential right to acquire any shares or securities
of the corporation, including shares or securities held in the
treasury of the corporation.
8. Series A 12% Cumulative Convertible Preferred Stock.
One Hundred Ninety-five Thousand Three Hundred Fifty-one
(195,351) shares of the corporation's Preferred Stock shall be
designated as "Series "A" 12% Cumulative Convertible Preferred Stock"
(the "Series A Preferred Stock") and shall have the rights and
preferences set forth or referred to in this paragraph 8. Certain
other capitalized terms used in this paragraph 8 are defined in
subparagraph g of this paragraph 8.
a. Dividends.
(i) When and as declared by the Board of
Directors of the corporation and to the extent permitted under
the Colorado Corporation Code, the corporation will pay
preferential dividends to the holders of Series A Preferred
Stock. Except as otherwise provided herein, dividends on each
share of Series A Preferred Stock will accrue, from and after
January 1, 1991, cumulatively at the rate of $0.15 per fiscal
quarter to and including the earlier of (A) the date on which
the Redemption Price of such share is paid if such share is
redeemed, or (B) the date on which such share is converted or
(C) the date upon which any dissolution, liquidation or
winding up of the corporation is effected. Dividends will be
payable commencing March 31, 1991, and on each subsequent
March 31, June 30, September 30 and December 31. All dividends
will accrue whether or not such dividends have been declared
and whether or not there are profits, surplus or other funds
of the corporation legally available for the payment of
dividends. The date on which the corporation initially issues
any share of Series A Preferred Stock will be deemed to be its
"date of issuance"
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regardless of the number of times a transfer of such share is
made on the stock records maintained by or for the corporation
and regardless of the number of certificates which may be
issued to evidence such share.
(ii) To the extent not paid on each March 31, June
30, September 30 and December 31, beginning January 1, 1991,
all dividends which have accrued on each share of Series A
Preferred Stock then outstanding during the three-month period
ending upon such date will be added to the Liquidation Value
of such share and will remain a part thereof until such
dividends are paid.
(iii) If at any time the corporation pays less than
the total amount of dividends then accrued with respect to the
Series A Preferred Stock, such payment will be distributed
among the holders of the Series A Preferred Stock so that an
equal amount will be paid with respect to each outstanding
share of Series A Preferred Stock.
b. Liquidation.
Upon any liquidation, dissolution or winding up of
the corporation, the holders of Series A Preferred Stock will
be entitled to be paid, before any distribution or payment is
made upon any other equity securities of the corporation, an
amount in cash equal to the sum of the aggregate Liquidation
Value of all shares of Series A Preferred Stock outstanding,
and the holders of Series A Preferred Stock will not be
entitled to any further payment. If upon any such liquidation,
dissolution or winding up, the assets of the corporation to be
distributed among the holders of the Series A Preferred Stock
are insufficient to permit payment to such holders of the
aggregate amount which they are entitled to be paid, then the
entire assets to be distributed will be distributed ratably
among such holders based upon the aggregate Liquidation Value
of the Series A Preferred Stock held by such holder. The
corporation will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the
payment date stated therein, to each record holder of Series A
Preferred Stock. Neither the consolidation or merger of the
corporation into or with any other corporation or
corporations, nor the sale or
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transfer by the corporation of all or any part of its assets,
nor the reduction of the capital stock of the corporation,
will be deemed to be a liquidation, dissolution or winding up
of the corporation within the meaning of this subparagraph b.
c. Redemptions.
(i) Upon resolution of the Board of Directors,
the corporation may redeem shares of Series A Preferred Stock.
For each such share which may be redeemed, if any, the
corporation will be obligated to pay to the holder thereof the
Redemption Price.
(ii) In the event of redemption the corporation
will mail, unless waived by the holders, written notice (the
"Notice of Redemption") of each such redemption to each record
holder not less than 10 days prior to the date on which such
redemption is to be made. Upon mailing any Notice of
Redemption, the corporation will become obligated (A) to
redeem from each holder the number of shares of Series A
Preferred Stock, as stated in the Notice of Redemption, to be
redeemed from such holder, and (B) to send each record holder
a cashier's or certified check in an amount equal to the
Redemption Price of such number of shares of Series A
Preferred Stock at least five business days prior to the date
specified for redemption in the notice. Upon receipt of such
check, the record holder of the shares of Series A Preferred
Stock to be redeemed will become obligated to surrender the
certificates representing such number of shares on or before
the date specified for redemption in the Notice of Redemption.
In case fewer than the total number of shares represented by
any certificate are redeemed, a new certificate representing
the number of unredeemed shares will be issued to the record
holder thereof in such holder's or such holder's nominee's
name, without cost to such holder.
(iii) No share of Series A Preferred Stock is
entitled to any dividends accruing after redemption. On
redemption all rights of the holder of such share will cease,
and such share will not be deemed to be outstanding.
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(iv) Any shares of Series A Preferred Stock which
are redeemed or otherwise acquired by the corporation will be
cancelled and will not be reissued, sold or transferred.
(v) Neither the corporation nor any Subsidiary
will redeem or otherwise acquire any Series A Preferred Stock,
except as expressly authorized herein or pursuant to a
purchase offer made pro rata to all holders of Series A
Preferred Stock on the basis of the number of shares of such
class owned by each such holder.
d. Conversion.
(i) Any holder of Series A Preferred Stock may
convert all or any of such shares held by such holder into
shares of Common Stock: (A) at any time subsequent to January
1, 1991, or (B) at any time prior to redemption as referred to
in subparagraph c(i) hereof, after receipt of Notice of
Redemption. The number of shares of Common Stock which any
such holder will receive in return for the shares converted by
such holder will be 2.083.
(ii) Each conversion of Series A Preferred Stock
will be deemed to have been effected as of the close of
business on the date on which the certificate or certificates
representing the shares of Series A Preferred Stock to be
converted have been surrendered at the principal office of the
corporation. At such time as such conversion has been
effected, the rights of the holder of such Series A Preferred
Stock as such holder will cease and the Person or Persons in
whose name or names any certificate or certificates for shares
of Common Stock are to be issued upon such conversion will be
deemed to have become the holder or holders of record of the
shares of Common Stock represented thereby.
(iii) As soon as possible after a conversion has
been effected, the corporation will deliver to the converting
holder:
(A) a certificate or certificates
representing the number of shares of Common Stock
issuable by reason of such conversion in such name or
names and such denomination or
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denominations as the converting holder has specified;
(B) payment in an amount equal to all
accrued dividends with respect to such shares of
Series A Preferred Stock converted, which have not
been paid prior thereto; and
(C) a certificate representing any
shares of Series A Preferred Stock which were
represented by the certificate or certificates
delivered to the corporation in connection with such
conversion but which were not converted.
(iv) If for any reason the corporation is unable
to pay any accrued dividends on the Series A Preferred Stock
being converted, the corporation will pay such dividends to
the converting holder as soon thereafter as funds of the
corporation are legally available for such payment and such
obligation will be evidenced by the corporation's promissory
note payable to such holder and bearing interest at the prime
rate of interest at the United Bank of Denver, N.A. as in
effect during the time such note is outstanding.
(v) The issuance of certificates for shares of
Common Stock upon conversion of Series A Preferred Stock will
be made without charge to the holders of such Series A
Preferred Stock for any issuance tax in respect thereof or
other cost incurred by the corporation in connection with such
conversion and the related issuance of shares of Common Stock.
(vi) The corporation will not close its books
against the transfer of Series A Preferred Stock or of Common
Stock issued or issuable upon conversion of Series A Preferred
Stock in any manner which interferes with the timely
conversion of Series A Preferred Stock.
(vii) The conversion Price for the Common Stock
will be $2.40 per share of Common Stock and will not be
subject to adjustment except as otherwise specifically set
forth herein.
(viii) Prior to the consummation of any Organic
Change, the corporation will make appropriate
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provisions (in form and substance satisfactory to the holders
of a majority of the Series A Preferred Stock then
outstanding) to insure that each of the holders of Series A
Preferred Stock will thereafter have the right to acquire and
receive in lieu of or in addition to the shares of Common
Stock immediately theretofore acquirable and receivable upon
the conversion of such holder's Series A Preferred Stock, such
shares of stock, securities or assets as such holder would
have received in connection with such Organic Change if such
holder had converted his Series A Preferred Stock immediately
prior to such Organic Change. In any such case appropriate
provisions (in form and substance satisfactory to the holders
of a majority of the Series A Preferred Stock then
outstanding) will be made to insure that the provisions of
this subparagraph d(viii) will thereafter be applicable to
Series A Preferred Stock (including, in the case of any such
consolidation, merger or sale in which the successor
corporation or purchasing corporation is other than the
corporation, an immediate adjustment of the Conversion Price
to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding
immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon conversion of Series A
Preferred Stock, if the value so reflected is less than the
Conversion Price in effect immediately prior to such
consolidation, merger or sale). The corporation will not
effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor corporation (if other
than the corporation) resulting from such consolidation or
merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the
holders of a majority of the Series A Preferred Stock then
outstanding), the obligation to deliver to each such holder
such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to
acquire.
(ix) if the corporation at any time after
December 28, 1993 subdivides (by any stock split, stock
dividend or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such
subdivision will
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be proportionately reduced, and if the corporation at any time
after December 28, 1993 combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination will be
proportionately increased.
(x) The corporation will send written notice to
all holders of Series A Preferred Stock at least 20 days prior
to the date on which the corporation closes its books or takes
a record for determining rights to vote with respect to any
Organic change, dissolution or liquidation. The corporation
will also give to the holders of shares of Series A Preferred
Stock at least 30 days prior written notice of the date on
which any Organic Change, dissolution or liquidation will take
place.
e. Voting Rights.
Holders of shares of Series A Preferred Stock will be
entitled to vote on all matters which are or may be submitted
to a vote of shareholders of the corporation permitted under
the laws of the State of Colorado. Each share, until redeemed
or converted, shall have voting rights equal to 16.667 shares
of Common Stock. Holders of the shares of Series A Preferred
Stock shall further have the same rights accorded to holders
of Common Stock on all matters relating to the voting of such
Common Stock provided by the laws of the State of Colorado.
f. Purchase Rights.
If at any time the corporation grants, issues or
sells any options, convertible securities or rights to
purchase stock, warrants, securities or other property pro
rata to the record holders of Common Stock (the "Purchase
Rights"), then each holder of Series A Preferred Stock will be
entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number
of shares of Common Stock acquirable upon conversion of such
holder's Series A Preferred Stock immediately before the date
on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no
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such record is taken,, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or
sale of Purchase Rights.
g. Definitions.
"Conversion Price" means $2.40, subject to adjustment
as provided in subparagraph d(ix) of this paragraph 8.
"Liquidation Value" of any share of Series A
Preferred Stock as of any particular date will be equal to
$5.00 plus any unpaid dividends on such share of Series A
Preferred Stock; and, in the event of any liquidation,
dissolution or winding up of the corporation or the redemption
of such share of Series A Preferred Stock, unpaid dividends on
such share of Series A Preferred Stock, regardless of whether
they have become payable, will be added to the Liquidation
Value of such share of Series A Preferred Stock, on the
payment date in any liquidation, dissolution or winding up, or
on the Redemption Date, as the case may be, accrued to the
close of business on such payment date or Redemption Date.
"Organic Change" means any capital reorganization,
reclassification, consolidation, merger or any sale of all or
substantially all of the corporations assets to another Person
which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in
exchange for Common Stock.
"Redemption Date" as to any share of Series A
Preferred Stock means the date specified in the Notice of any
Redemption provided that no such date will be a Redemption
Date unless the applicable Redemption Price is actually paid
in full on or before such date, and if not so paid in full,
the Redemption Date will be the date on which such Redemption
Price is fully paid. If, however, the full Redemption Price is
not paid on the Redemption Date solely because a holder has
not surrendered his certificate(s) at the corporation's
principal office as provided in subparagraph c(ii) hereof,
then as to such holder the date specified herein for the
scheduled redemption shall be the Redemption Date.
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"Person" means an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency
thereof.
"Redemption Price" means an amount equal to the
Liquidation Value.
"Subsidiary" means any corporation of which shares of
stock having at least a majority of the ordinary voting power
in electing the board of directors, is, at the time as of
which any determination is being made, owned by the
corporation either directly or indirectly through one or more
Subsidiaries.
h. Miscellaneous
(i) The corporation will keep at its principal
office a register for the registration of Series A Preferred
Stock. Upon the surrender of any certificate representing
Series A Preferred Stock at such place, the corporation will,
at the request of the record holder of such certificate,
execute and deliver (at the corporation's expense) a new
certificate or certificates in exchange therefor representing
in the aggregate the number of shares represented by the
surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of
shares of Series A Preferred Stock as is requested by the
holder of the surrendered certificate and will be
substantially identical in form to the surrendered
certificate, and dividends will accrue on the Series A
Preferred Stock represented by such new certificate from the
date to which dividends have been fully paid on such Series A
Preferred Stock represented by the surrendered certificate.
(ii) Upon receipt of evidence and an agreement to
indemnify reasonably satisfactory to the corporation (an
affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft,
destruction or mutilation of any certificate evidencing one or
more shares of Series A Preferred Stock the corporation will
(at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of
shares of
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Series A Preferred Stock represented by such lost, stolen,
destroyed or mutilated certificate, and dividends will accrue
on the Series A Preferred Stock represented by such new
certificate from the date to which dividends have been fully
paid on such lost, stolen, destroyed or mutilated certificate.
(iii) Amendments, modifications or waivers of any
of the terms hereof will be binding and effective if the prior
written consent of holders of at least 75% of the Series A
Preferred Stock outstanding at the time such action is taken
is obtained; provided that no such action will change (A) the
rate of which or the manner in which dividends on the Series A
Preferred Stock accrue or the times at which such dividends
become payable or the amount payable on redemption of the
Series A Preferred Stock are to occur, unless the prior
written consent of the holders of at least 90% of the Series A
Preferred Stock then outstanding is obtained, (B) except as
set forth in subparagraph d(ix) of this paragraph 8, the
Conversion Price of the Series A Preferred Stock or the number
of shares or class of stock into which the Series A Preferred
Stock is convertible, unless the prior written consent of the
holders of at least 90% of the Series A Preferred Stock then
outstanding is obtained or (C) the percentage required to
approve any change described in clauses (A) and (B) above,
unless the prior written consent of the holders of at least
90% of the Series A Preferred Stock then outstanding is
obtained; and provided further that no such change in the
terms hereof may be accomplished by merger or consolidation of
the corporation with another corporation unless the
corporation has obtained the prior written consent of the
holders of the applicable percentage of the Series A Preferred
Stock.
(iv) All notices referred to herein, except as
otherwise expressly provided, will be hand delivered or mailed
by registered or certified mail, return receipt requested,
postage prepaid, and will be deemed to have been given when so
hand delivered or mailed.
(v) The Board of Directors shall not have any
authority to increase the number of authorized shares of
Series A Preferred Stock.
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(vii) Except as expressly authorized in this
paragraph 8, the shares of Series A Preferred Stock, and the
holders thereof, shall be subject to the provisions of
paragraphs 3, 4, 5, 6, and 7 of this Article IV.
THIRD. The number of shares of Common Stock and the number of shares
of Preferred Stock, voting as a class, voted for this amendment were sufficient
for approval.
FOURTH. Effective as of the Effective Date, each share of the
corporation's Common Stock issued before the Effective Date will be
reclassified, changed and converted so that, from and after the Effective Date,
each one share of the outstanding Common Stock shall be deemed to represent
0.1667 of a share of Common Stock, such reclassification to be effected without
change in the par value of the Common Stock or in the stated capital of the
corporation. Holders of shares of Common Stock issued before the Effective Date
will be asked to surrender the certificates representing such shares for new
certificates representing the number of shares held by them after the Effective
Date. No holders will be issued a fractional share of Common Stock, instead,
any fraction of a share shall be rounded to the next highest whole share, based
upon shares owned of record as reflected on the stock records of the
corporation.
DATED as of the 17th day of December, 1993.
/s/ GEORGE K. BROADY
George K. Broady, President
/s/ TIM D. TORNO
Tim D. Torno, Secretary
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ANNEX F
BYLAWS
OF
ULTRAK, INC.
ARTICLE I
Principal Office and Corporate Seal
Section 1. The principal office and place of business of the
Corporation in the State of Colorado shall be 660 Compton Street, Broomfield,
Colorado 80020. Other offices and places of business may be established from
time to time by resolution of the board of directors or as the business of the
corporation may require.
Section 2. The seal of the corporation shall have inscribed thereon
the name of the corporation and shall be in such form as may be approved by the
board of directors, which shall have power to alter the same at pleasure. The
corporation may use the seal by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced.
ARTICLE II
Shares and Transfer Thereof
Section 1 - Certificates. The shares of this corporation shall be
represented by certificates signed by the president or a vice president and the
secretary or an assis-
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tant secretary of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof. The signatures of the president or vice
president and the secretary or assistant secretary upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the corporation itself or an employee of
the corporation. In case any officer who has signed a certificate shall have
ceased to be such officer before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer at the date
of its issue.
Section 2 - New Certificates. No new certificates evidencing shares
shall be issued unless and until the old certificate or certificates, in lieu
of which the new certificate is issued, shall be surrendered for cancellation,
except as provided in Section 3 of this Article II.
Section 3 - Loss or Destruction. In case of loss or destruction of any
certificate of shares, another certificate may be issued in its place upon
satisfactory proof of such loss or destruction and, at the discretion of the
corporation, upon giving to the corporation a satisfactory bond of indemnity
issued by a corporate surety in an amount and for a period satisfactory to the
board of directors.
Section 4 - Transfer Agent. Unless otherwise specified by the board of
directors by resolution, the secretary of
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the corporation shall act as transfer agent of the certificates representing
the shares of stock of the corporation. He shall maintain a stock transfer
book, the stubs in which shall set forth among other things, the names and
addresses of the holders of all issued shares of the corporation, the number of
shares held by each, the certificate numbers representing such shares, the date
of issue of the certificates representing such shares, and whether or not such
shares originate from original issue or from transfer. Subject to Section 5,
the names and addresses of the shareholders as they appear on the stubs of the
stock transfer book shall be conclusive evidence as to who are the shareholders
of record and as such entitled to receive notice of the meetings of
shareholders; to vote at such meetings; to examine the list of the shareholders
entitled to vote at meetings; to receive dividends; and to own, enjoy and
exercise any other property or rights deriving from such shares against the
corporation. Each shareholder shall be responsible for notifying the secretary
in writing of any change in his name or address and failure so to do will
relieve the corporation, its directors, officers, from liability for failure to
direct notices or other documents, or pay over or transfer dividends or other
property or rights, to a name or address other than the name and address
appearing on the stub of the stock transfer book.
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Section 5 - Close of Transfer Book and Record Date. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the board of directors may provide that the stock transfer
books shall be closed for a stated period, but not to exceed in any case fifty
days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of, or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer books, the board
of directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the board of directors does not order the
stock transfer books closed, or fix in advance a record date, as above
provided, then the record date for the determination of shareholders entitled
to notice of, or to vote at any meeting of shareholders, or any adjournment
thereof, or entitled to receive payment of any dividend, or for the
determination of shareholders for
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any proper purpose shall be thirty days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
ARTICLE III
Shareholders and Meetings Thereof
Section 1 - Shareholders of Record. Only shareholders of record on
the books of the corporation shall be entitled to be treated by the corporation
as holders in fact of the shares standing in their respective names, and the
corporation shall not be bound to recognize any equitable or other claim to, or
interest in, any shares on the part of any other person, firm or corporation,
whether or not it shall have express or other notice thereof, except as
expressly provided by the laws of Colorado.
Section 2 - Meetings. Meetings of shareholders shall be held at the
principal office of the corporation, or at such other place as specified from
time to time by the board of directors. If the board of directors shall
specify another location such change shall be recorded on the notice calling
such meeting.
Section 3 - Annual Meeting. In the absence of a resolution of the
board of directors providing otherwise, the annual meeting of shareholders of
the corporation for the election of directors, and for the transaction of such
other
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business as may properly come before the meeting, shall be held on the first
day of the fifth month in each fiscal year, if the same be not a legal holiday,
and if a legal holiday, then on the next succeeding business day, at 9:00
o'clock a.m.
Section 4 - Special Meetings. Special meetings of the shareholders may
be called by the president, the board of directors, the holders of not less
than one-tenth of all the shares entitled to vote at the meeting, or legal
counsel of the corporation as last designated by resolution of the board of
directors.
Section 5 - Notice. Written notice stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten days nor more
than fifty days before the date of the meeting, either personally or by mail,
by or at the direction of the president, the secretary, or the officer or
person calling the meeting to each shareholder of record entitled to vote at
such meeting; except that, if the authorized shares are to be increased, at
least thirty days' notice shall be given.
Notice to shareholders of record, if mailed, shall be deemed given as
to any shareholder of record, when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the
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corporation, with postage thereon prepaid, but if three successive letters
mailed to the last-known address of any shareholder of record are returned as
undeliverable, no further notices to such shareholder shall be necessary, until
another address for such shareholder is made known to the corporation.
Section 6 - Shareholder Record. The officer or agent having charge of
the stock transfer books for shares of this corporation shall make, at least
ten days before each meeting of shareholders, a complete record of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which record, for a period of ten days before such meeting, shall
be kept on file at the principal office of the corporation, whether within or
outside colorado, and shall be subject to inspection by any shareholder for any
purpose germane to the meeting at any time during usual business hours. Such
record shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder for any
purpose germane to the meeting during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such record or transfer books or to vote at
any meeting of shareholders.
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Section 7 - Quorum and Adjournment. At any meeting of the
shareholders the presence, in person or by proxy of the holders of more than a
majority of the shares outstanding and entitled to vote shall constitute a
quorum. In the absence of a quorum, the meeting may be adjourned by any
officer entitled to preside at, or act as secretary of such meeting, or by a
majority in interest of those shareholders present in person or by proxy.
Section 8 - Voting. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or by his duly authorized attorney
in fact. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
At all meetings of the shareholders, a quorum being present, all
matters shall be decided by a simple majority vote of the then eligible shares,
except as otherwise provided by statute, by the Articles of Incorporation of
the corporation, or by these Bylaws. The vote on any matter need not be by
ballot unless required by statute or requested by a shareholder, in person or
by proxy, who is entitled to vote at the meeting.
Section 9 - Conduct of Meetings. Each meeting of the shareholders
shall be presided over by the president, or if the president shall not be
present, by the vice president. If both the president and vice president are
absent, a
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chairman shall be chosen by a majority in voting interest of those shareholders
present or represented by proxy. The secretary of the corporation shall act as
secretary of each meeting of the shareholders. If he shall not be present the
chairman of the meeting shall appoint a secretary.
ARTICLE IV
Directors, Powers and Meetings
Section 1 - Board of Directors. The business and affairs of the
corporation shall be managed by a board of three directors who need not be
shareholders of the corporation or residents of the State of Colorado and who
shall be elected at the annual meeting of shareholders or some adjournment
thereof. Directors shall hold office until the next succeeding annual meeting
of shareholders and until their successors shall have been elected and shall
qualify. The board of directors may increase or decrease, to not less than
three, the number of directors by resolution.
Section 2 - Regular Meetings. The annual meeting of the board of
directors shall be held at the same place as, and immediately after, the annual
meeting of shareholders, and no notice shall be required in connection
therewith. The annual meeting of the board of directors shall be for the
purpose of electing officers and the transaction of such other business as may
come before the meeting. Regular
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meetings of the board of directors may be held without notice as determined by
resolution adopted by the board.
Section 3 - Special Meetings. Special meetings of the board of
directors or any committee designated by said board may be called at any time
by the president or by any director, and may be held within or outside the
State of Colorado at such time and place as the notice or waiver thereof may
specify. Notice of such meetings shall be mailed or telegraphed to the last
known address of each director at least five days, or shall be given to a
director in person or by telephone at least forty-eight hours, prior to the
date or time fixed for the meeting. special meetings of the board of directors
may be held at any time that all directors are present in person, and presence
of any director at a meeting shall constitute waiver of notice of such meeting
except as otherwise provided by law. Unless specifically required by law, the
Articles of Incorporation or these Bylaws, neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors or any
committee designated by said board need be specified in the notice or waiver of
notice of such meeting.
Section 4 - Special Attendance. Except as may be otherwise provided by
the Articles of Incorporation or Bylaws, members of the board of directors of
any committee designated by such board may participate in a meeting of the
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board or committee by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can hear each other
at the same time. Such participation shall constitute presence in person at
the meeting.
Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting except where a director attends a meeting for the
express purpose of objecting to the transaction of business because the meeting
is not lawfully called or convened.
Section 5 - Quorum and Voting. A quorum at all meetings of the board
of directors shall consist of a majority of the number of directors then
holding office, but a smaller number may adjourn from time to time without
further notice, until a quorum is secured. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors, unless the act of a greater number is required by the
laws of the State of Colorado or by the Articles of Incorporation or these
Bylaws.
Section 6 - Organization. The president of the corporation, or in his
absence, the vice president, shall preside at each meeting of the board of
directors. The secretary, or in his absence, any person appointed by the
chairman of the meeting, shall act as secretary of the meeting.
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Section 7 - Presumption of Assent. A director of the corporation who
is present at a meeting of the board of directors at which action or any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
Section 8 - Vacancies. Any vacancy occurring in the board of
directors may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the board of directors. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office, and shall hold such office until his successor is duly
elected and shall qualify. Any directorship to be filled by reason of an
increase in the number of directors shall be filled by the affirmative vote of
a majority of the directors then in office or by an election at an annual
meeting, or at a special meeting of shareholders called for that purpose. A
director chosen to fill a position resulting from an increase in the number of
direc-
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tors shall hold office until the next annual meeting of shareholders and until
his successor shall have been elected and shall qualify.
Section 9 - Compensation. Directors may receive such compensation and
reimbursement for expenses as may be established by appropriate resolution of
the board of directors and in addition thereto, shall receive reasonable
traveling expense, if any is required, or attendance at such meetings. A
director may serve the corporation in a capacity other than that of a director
and receive compensation for the services rendered in that capacity.
Section 10 - Executive Committees. The board of directors, by
resolution adopted by a majority of the number of directors may designate from
among its members an executive committee, and one or more other committees each
of which, to the extent provided in the resolution shall have all of the
authority of the board of directors; but no such committee shall have the
authority of the board of directors in reference to amending the Articles of
Incorporation, adopting a planof merger or consolidation, recommending to the
shareholders the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the corporation otherwise than
in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation
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thereof, or amending the Bylaws of the corporation. the designation of such
committees and the delegation thereto of authority shall not operate to relieve
the board of directors, or any member thereof, of any responsibility imposed by
law.
Section 11 - Removal of Directors. The shareholders may, at a meeting
called for the express purpose of removing directors, by a majority vote of the
shares entitled to vote at an election of directors, remove the entire board of
directors or any lesser number, with or without cause.
Section 12 - Resignations. A director of the corporation may resign
at any time by giving written notice to the board of directors, president or
secretary of the corporation. The resignation shall take effect upon the date
of receipt of such notice, or at any later period of time specified therein.
The acceptance of such resignation shall not be necessary to make it effective,
unless the resignation requires it to be effective as such.
Section 13 - General Powers. The business and affairs of the
corporation shall be managed by the board of directors which may exercise all
such powers of the corporation and do all such lawful acts and things as are
not by statute or by the Articles of Incorporation or by these Bylaws directed
or required to be exercised or done by the shareholders. The directors shall
pass upon any and all bills or
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claims of officers for salaries or other compensation and, if deemed advisable,
shall contract with officers, employees, directors, attorneys, accountants, and
other persons to render services to the corporation.
ARTICLE V
Waiver of Notice
Notwithstanding any notices required by law or these Bylaws to be
given to any shareholder or director of the corporation, a waiver thereof in
writing signed by the person entitled to such notice, whether before, at, or
after the time stated therein shall be the equivalent to the giving of such
notice.
ARTICLE VI
Action Without a Meeting
Any action required to be taken at a meeting of the directors,
executive committee, or other committee of the directors, or shareholders of
this corporation, or any action which may be taken at a meeting of directors,
executive committee, or other committee of the directors, or shareholders, may
be taken without a meeting if a consent in writing, setting forth the action so
taken shall be signed by all of the directors, executive or other committee
members or shareholders entitled to vote with respect to the subject matter
thereof.
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Such consent shall have the same force and effect as a unanimous vote
of the directors, executive committee or other committee members or
shareholders, as the case may be and may be stated as such in any articles or
document filed with the Secretary of State of Colorado.
ARTICLE VII
Officers
Section 1 - Term and Compensation. The elective officers of the
corporation shall consist of at least a president, a secretary and a treasurer
each of whom shall be eighteen years or older and who shall be elected by the
board of directors at its annual meeting. Unless removed in accordance with
procedures established by law and these Bylaws, the said officers shall serve
until the next succeeding annual meeting of the board of directors and until
their respective successors are elected and shall qualify. Any two offices,
but not more than two, may be held by the same person at the same time, except
that one person may not simultaneously hold the offices of president and
secretary. The board may elect or appoint such other officers and agents as it
may deem advisable, who shall hold office during the pleasure of the board.
All officers shall be paid such compensation as may be directed by the board.
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Section 2 - Powers. The officers of the corporation shall exercise
and perform the respective powers, duties and functions as are stated below,
and as may be assigned to them by the board of directors.
(a) The president shall be the chief executive officer of
the corporation and shall, subject to the control of the board of
directors, have general supervision, direction and control of the
business and officers of the corporation. He shall preside at all
meetings of the shareholders and of the board of directors. The
president or a vice president, unless some other person is
specifically authorized by the board of directors, shall sign all
stock certificates, bonds, deeds, mortgages, leases and contracts of
the corporation. The president shall perform all the duties commonly
incident to his office and such other duties as the board of directors
shall designate.
(b) In the absence or disability of the president, the
vice president or vice president, if any, in order of their rank as
fixed by the board of directors, and if not ranked, the vice
presidents in the order designated by the board of directors, shall
perform all the duties of the president, and when so acting shall have
all the powers of, and be subject to all the restrictions on the
president. Each vice president
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shall have such other powers and preform such other duties as may from
time to time be assigned to him by the president.
(c) The secretary shall keep accurate minutes of all
meetings of the shareholders and the board of directors. He shall
keep, or cause to be kept a record of the shareholders of the
corporation and shall be responsible for the giving of notice of
meetings of the shareholders or the board of directors. The secretary
shall be custodian of the records and of the seal of the corporation
and shall attest the affixing of the seal of the corporation when so
authorized. The secretary or assistant secretary shall sign all stock
certificates. The secretary shall perform all duties commonly
incident to his office and such other duties as may from time to time
be assigned to him by the president.
(d) An assistant secretary may, at the request of the
secretary, or in the absence or disability of the secretary, perform
all of the duties of the secretary. He shall perform such other
duties as may be assigned to him by the president or by the secretary.
(e) The treasurer, subject to the order of the board of
directors, shall have the care and custody of the money, funds,
valuable papers and documents of the
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corporation. He shall keep accurate books of accounts of the
corporation's transactions, which shall be the property of the
corporation, and shall render financial reports and statements of
condition of the corporation when so requested by the board of
directors or president. The treasurer shall perform all duties
commonly incident to his office and such other duties as may from time
to time be assigned to him by the president. In the absence or
disability of the president and vice president or vice presidents, the
treasurer shall perform the duties of the president.
(f) An assistant treasurer may, at the request of the
treasurer, or in the absence or disability of the treasurer, perform
all of the duties of the treasurer. He shall perform such other
duties as may be assigned to him by the president or by the treasurer.
Section 3 - Compensation. All officers of the corporation may receive
salaries or other compensation if so ordered and fixed by the board of
directors. The board shall have authority to fix salaries in advance for
stated periods or render the same retroactive as the board may deem advisable.
Section 4 - Delegation of Duties. In the event of absence or
inability of any officer to act, the board of directors may delegate the powers
or duties of such officer to any other officer, director or person whom it may
select.
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Section 5 - Removal. Any officer or agent may be removed by the board
of directors or by the executive committee, if any, whenever in its judgment
the best interest of the corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not, of itself,
create contract rights.
ARTICLE VIII
Finance
Section 1 - Reserve Funds. The board of directors, in its uncontrolled
discretion, may set aside from time to time, out of the net profits or earned
surplus of the corporation, such sum or sums as it deems expedient as a reserve
fund to meet contingencies, for equalizing dividends, for maintaining any
property of the corporation, and for any other purpose.
Section 2 - Banking. The moneys of the corporation shall be deposited
in the name of the corporation in such bank or banks or trust company or trust
companies, as the board of directors shall designate, and may be drawn out only
on checks signed in the name of the corporation by such person or persons as
the board of directors by appropriate resolution may direct. Notes and
commercial paper, when
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authorized by the board, shall be signed in the name of the corporation by such
officer or officers or agent or agents as shall thereunto be authorized from
time to time.
Section 3 - Fiscal Year. The fiscal year of the corporation shall be
determined by resolution of the board of directors.
ARTICLE IX
Dividends
Subject to the provisions of the Articles of Incorporation and the
laws of the State of Colorado, the board of directors may declare dividends
whenever, and in such amounts, as in the board's opinion the condition of the
affairs of the corporation shall render such advisable.
ARTICLE X
Contracts, Loans and Checks
Section 1 - Execution of Contracts. Except as otherwise provided by
statute or by these Bylaws, the board of directors may authorize any officer or
agent of the corporation to enter into any contract, or execute and deliver any
instrument in the name of, and on behalf of the corporation. Such authority
may be general or confined to specific instances and, unless so authorized, no
officer, agent or employee shall have any power to bind the corporation for
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any purpose, except as may be necessary to enable the corporation to carry on
its normal and ordinary course of business.
Section 2 - Loans. No loans shall be contracted on behalf of the
corporation and no negotiable paper shall be issued in its name unless
authorized by the board of directors. When so authorized, any officer or agent
of the corporation may effect loans and advances at any time for the
corporation from any bank, trust company or institution, firm, corporation or
individual. An agent so authorized may make and deliver promissory notes or
other evidence of indebtedness of the corporation and may mortgage, pledge,
hypothecate or transfer any real or personal property held by the corporation
as security for the payment of such loans. Such authority, in the board of
directors discretion, may be general or confined to specific instances.
Section 3 - Checks. Checks, notes, drafts and demands for money
issued in the name of the corporation shall be signed by such person or persons
as designated by the board of directors and in the manner the board of
directors prescribes.
ARTICLE XI
Amendments
Subject to repeal or change by action of the shareholders, these
Bylaws may be altered, amended or repealed at
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the annual meeting of the board of directors or at any special meeting of the
board called for that purpose.
ARTICLE XII
Gender
Whenever in these Bylaws the masculine gender is used, it shall be
deemed to include the feminine gender.
The above Bylaws approved and adopted by the Board of Directors on
April 21, 1980.
/s/ Vincent J. Shanovich
Secretary
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ANNEX G
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is executed as of
____________________, 1995, by and between Ultrak, Inc., a Colorado corporation
("Parent"), and Ultrak, Inc., a Delaware corporation ("Subsidiary").
WITNESSETH:
WHEREAS, the authorized capital stock of Subsidiary consists of
20,000,000 shares of Common Stock, $0.01 par value ("Subsidiary Common Stock"),
and 2,000,000 shares of Preferred Stock, $5.00 par value ("Subsidiary Preferred
Stock"), 195,351 shares of which have been designated Series A 12% Cumulative
Convertible Preferred Stock ("Subsidiary Series A Preferred Stock"), of which
1,000 shares of Subsidiary Common Stock are issued and outstanding and owned by
Parent; and
WHEREAS, the authorized capital stock of Parent consists of 20,000,000
shares of Common Stock, no par value ("Parent Common Stock") and 2,000,000
shares of Preferred Stock, $5.00 par value ("Parent Preferred Stock"), 195,351
shares of which have been designated Series A 12% Cumulative Convertible
Preferred Stock ("Parent Series A Preferred Stock"), of which approximately
6,560,000 shares of Parent Common Stock and 195,351 shares of Parent Series A
Preferred Stock are issued and outstanding; and
WHEREAS, the respective boards of directors and shareholders of Parent
and Subsidiary deem it to be desirable and in the best interest of the
respective corporations that the two corporations merge into a single
corporation (the "Merger"), and, pursuant to resolutions duly adopted, such
boards of directors and shareholders have approved and adopted this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements and covenants contained herein, the parties hereto agree as follows:
ARTICLE I
Section 1.1. In accordance with the provisions of the Colorado
Business Corporation Act and the Delaware General Corporation Law at the
Effective Time (defined below) of the Merger, Parent shall be merged into
Subsidiary, which shall be the surviving corporation (in its capacity as such
surviving corporation Subsidiary is hereinafter sometimes referred to as the
"Surviving Corporation", and Parent and Subsidiary are hereinafter sometimes
referred to collectively as the "Constituent Corporations"), and as such
Subsidiary shall continue to be governed by the laws of the State of Delaware.
Section 1.2. The Merger shall become effective on December 29, 1995 or
such later date as the Articles of Merger, executed, adopted and approved in
accordance with the Delaware General Corporation Law, shall have been filed
with the Secretary of State of Delaware. The time when the Merger shall become
effective is herein called the "Effective Time." The actions described above
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shall be conclusive evidence, for all purposes of this Agreement, of compliance
with all conditions precedent.
Section 1.3. Except as may otherwise be set forth herein, at the
Effective Time, the corporate existence and identity of Subsidiary, with all
its purposes, powers, franchises, privileges, rights and immunities shall
continue under the laws of the State of Delaware, unaffected and unimpaired by
the Merger, and the corporate existence and identity of Parent, with all its
purposes, powers, franchises, privileges, rights and immunities, shall be
merged with and into Subsidiary and the Surviving Corporation shall be vested
fully therewith, and the separate corporate existence and identity of Parent
shall thereafter cease, except to the extent continued by applicable law. At
the Effective Time, the Surviving Corporation shall have the following rights
and obligations:
(a) The Surviving Corporation shall have all the rights,
privileges, immunities and powers, and shall be subject to all of the
duties and liabilities, of a corporation organized under the laws of
the State of Delaware.
(b) The Surviving Corporation shall succeed to, without
other transfer, and shall possess and enjoy, all of the rights,
privileges, immunities, powers, purposes and franchises, of both a
public and private nature, of the Constituent Corporations and all
property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account and all other choses in
action, and every other interest of or belonging to either of the
Constituent Corporations shall be deemed to be transferred to and
vested in the Surviving Corporation without further act or deed, and
shall thereafter be the property of the Surviving Corporation as they
were of the respective Constituent Corporations, and the title to any
real estate vested by deed or otherwise in either of said Constituent
Corporations shall not revert or be in any way impaired by reason of
the Merger.
(c) The Surviving Corporation shall thenceforth be
responsible and liable for all debts, liabilities, obligations and
duties of either of the Constituent Corporations, and any claim
existing or action or proceeding pending by or against either
Constituent Corporation may be prosecuted as if the Merger had not
occurred, or the Surviving Corporation may be substituted in its
place. Neither the rights of creditors nor any liens upon the
property of either Constituent Corporation shall be impaired by the
Merger.
Section 1.4. If at any time the Surviving Corporation shall deem or be
advised that any further transfers, assignments, conveyances, assurances in law
or other acts or things are necessary or desirable to vest or confirm in the
Surviving Corporation the title to any property or assets of either of the
Constituent Corporations, each Constituent Corporation and its proper officers
and directors shall execute and deliver any and all such proper transfers,
assignments, conveyances and assurances in law, and shall do all other acts and
things as are necessary or proper to vest or confirm title to such property and
assets in the Surviving Corporation and to otherwise carry out the purposes and
intent of this Agreement.
ARTICLE II
Section 2.1. The Certificate of Incorporation of Subsidiary in effect
at the Effective Time shall constitute the Articles of Incorporation of the
Surviving Corporation until amended, altered or repealed in the manner provided
by law.
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Section 2.2. The By-Laws of Subsidiary in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation, until amended, altered or
repealed.
Section 2.3. The directors of Subsidiary at the Effective Time shall
be the directors of the Surviving Corporation and shall hold office in
accordance with the By-Laws of the Surviving Corporation until the next annual
meeting of shareholders of the Surviving Corporation or until their respective
successors are elected and qualified.
Section 2.4. The officers of Subsidiary at the Effective Time shall be
the officers of the Surviving Corporation and shall hold office subject to the
Bylaws of the Surviving Corporation.
ARTICLE III
Section 3.1. At the Effective Time, the manner of exchanging the
outstanding Common Stock of the Constituent Corporations shall be as follows:
(a) Each share of Parent Common Stock outstanding
immediately prior to the Effective Time, except all shares of Parent
Common Stock held by Parent in its treasury, which shall be cancelled
and no shares issued in respect thereof, shall, at the Effective Time,
by virtue of the Merger and without action on the part of the holder
thereof, be converted into one share of the Subsidiary Common Stock.
(b) Each share of Parent Series A Preferred Stock
outstanding immediately prior to the Effective Time shall, at the
Effective Time, by virtue of the Merger and without action on the part
of the holder thereof, be converted into one share of the Subsidiary
Series A Preferred Stock, which is identical in all respects,
including rights, preferences and designations, to the Parent Series A
Preferred Stock.
(c) Each share of Subsidiary Common Stock outstanding
immediately prior to the Effective Time shall, at the Effective Time,
by virtue of the Merger and without any action on the part of the
holder thereof, be cancelled and returned to the status of authorized
but unissued stock of the Surviving Corporation.
(d) No fractional shares of Subsidiary Common Stock or
Subsidiary Series A Preferred Stock and no certificates or scrip
certificates therefor shall be issued.
(e) All of the shares of Subsidiary Common Stock and
Subsidiary Series A Preferred Stock, when delivered pursuant to the
provisions of this Agreement, shall be validly issued, fully paid and
nonassessable.
(f) If any stock certificate evidencing shares of
Subsidiary Common Stock and/or Subsidiary Series A Preferred Stock is
requested to be issued in a name other than that in which the
surrendered Parent stock certificate is registered, it shall be a
condition of such issuance that the surrendered stock certificate
shall be properly endorsed in blank or otherwise in proper form for
transfer and that the person requesting such exchange pay to the
Surviving Corporation any applicable transfer or other taxes or
establish to the satisfaction of the Surviving Corporation that any
such tax has been paid or is not payable.
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ARTICLE IV
Section 4.1. This Agreement may be executed by the parties hereto in
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one instrument.
Section 4.2. Subject to applicable law, this Agreement may be amended,
modified or supplemented only by written agreement of Parent and Subsidiary at
any time prior to the Effective Time.
Section 4.3. This Agreement may be terminated at any time prior to the
Effective Time by mutual agreement of the parties hereto.
IN WITNESS WHEREOF, each of the Constituent Corporations has caused
this Agreement to be executed on its behalf by its respective officers hereunto
duly authorized as of the date first above written.
ULTRAK, INC.
a Colorado corporation
By: ___________________________
George K. Broady, President
ULTRAK, INC.,
a Delaware corporation
By: ___________________________
George K. Broady, President
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ANNEX H
CERTIFICATE OF INCORPORATION
OF
ULTRAK, INC.
1. The name of the Corporation is Ultrak, Inc.
2. The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Corporation Trust Center, in the City
of Wilmington, County of New Castle. The name of its registered agent
at such address is The Corporation Trust Company.
3. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware.
4. Capital Stock
A. Common Stock.
The aggregate number of common shares which this Corporation
shall have authority to issue is Twenty Million (20,000,000) shares
with a par value of One Cent ($0.01) each, which shares shall be
designated "Common Stock".
B. Preferred Stock.
The aggregate number of preferred shares which this
Corporation shall have authority to issue is Two Million (2,000,000)
shares with a par value of Five Dollars ($5.00) each, which shares
shall be designated "Preferred Stock". Included in such number of
shares of Preferred Stock are 195,351 shares which have been
designated as "Series "A" 12% Cumulative Convertible Preferred Stock,"
the rights and preferences of which are set forth in full or referred
to in paragraph H of this Article 4.
Shares of Preferred Stock may be issued from time to time in
one or more series, each such series to have distinctive serial
designations (other than a designation containing the term "Series A")
as shall be determined in the resolution or resolutions providing for
the issue of such Preferred Stock from time to time adopted by the
Board of Directors pursuant to authority so to do which is hereby
vested in the Board of Directors, which resolutions shall be filed
with the Secretary of State of the State of Delaware as required by
law.
Each series of Preferred Stock as shall be established by the
Board of Directors
(a) may have such number of shares;
(b) may have such voting powers, full or limited, or may be
without voting powers;
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(c) may be subject to redemption at such time or times and at
such prices;
(d) may be entitled to receive dividends (which may be
cumulative or noncumulative) at such rate or rates, on such
conditions, from such date or dates, and at such times, and payable in
preference to, or in such relation to, the dividends payable on any
other class or classes or series of stock;
(e) may have such rights upon the dissolution of, or upon any
distribution of the assets of, the Corporation;
(f) may be made convertible into, or exchangeable for, shares
of any other class or classes or of any other series of the same or
any other class or classes of stock of the Corporation at such price
or prices or at such rates of exchange, and with such adjustments;
(g) may be entitled to the benefit of a sinking fund or
purchase fund to be applied to the purchase or redemption of shares of
such series in such amount or amounts;
(h) may be entitled to the benefit of conditions and
restrictions upon the creation of indebtedness of this Corporation or
any subsidiary, upon the issue of any additional stock (including
additional shares of such series or of any other series), and upon the
payment of dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by this Corporation or any
subsidiary of any outstanding stock of this Corporation; and
(i) may have such other relative, participating, optional or
other special rights, qualifications, limitations or restrictions
thereof;
all as shall be stated in said resolution or resolutions providing for
the issue of such Preferred Stock.
C. Treasury Shares.
Shares of any series of Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or
otherwise) or purchased by the Corporation, or which, if convertible
or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes, shall have the status of
authorized and unissued shares of Preferred Stock and may be reissued
as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors
or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in the resolution or
resolutions adopted by the Board of Directors providing for the issue
of any series of Preferred Stock and to any filing required by law.
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D. Dividends.
Dividends in cash, property or shares of the Corporation may
be paid upon the Common Stock as and when declared by the Board of
Directors, out of funds of the Corporation to the extent and in the
manner permitted by law, except that no Common Stock dividend shall be
paid for any year unless the holders of Preferred Stock, if any, shall
receive the maximum allowable Preferred Stock dividend for such year
applicable to each respective series, plus any required dividends
accumulated from prior years.
E. Distribution Upon Liquidation.
Except as otherwise provided by the resolution or resolutions
of the Board of Directors providing for the issue of any series of
Preferred Stock, upon any liquidation, dissolution or winding up of
the Corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the
Corporation shall be distributed, either in cash or in kind, first pro
rata to the holders of Preferred Stock until the required amount to be
distributed to the Preferred Stock has been distributed, and the
remainder pro rata to the holders of the Common Stock.
F. Voting.
Each outstanding share of Common Stock shall be entitled to
one vote. Cumulative voting shall not be allowed in the election of
directors of the Corporation. Except as provided in paragraph H of
this Article 4 with respect to Series A Cumulative Convertible
Preferred Stock, shares of Preferred Stock shall not be entitled to
any vote, except as required by law, in which case each share of
Preferred Stock shall be entitled to one vote, or except as otherwise
provided by the resolution or resolutions of the Board of Directors
providing for the issue of any series of the Preferred Stock.
G. Preemptive Rights.
Except as otherwise provided by the resolution or resolutions
of the Board of Directors providing for the issue of any series of
Preferred Stock, no holder of any shares of the Corporation, whether
now or hereafter authorized, shall have any preemptive or preferential
right to acquire any shares or securities of the Corporation,
including shares or securities held in the treasury of the
Corporation.
H. Series A 12% Cumulative Convertible Preferred Stock.
One Hundred Ninety-five Thousand Three Hundred Fifty-one
(195,351) shares of the Corporation's Preferred Stock shall be
designated as "Series "A" 12% Cumulative Convertible Preferred Stock"
(the "Series A Preferred Stock") and shall have the rights and
preferences set forth or referred to in this paragraph H. Certain
other capitalized terms used in this paragraph H are defined in
subparagraph 7 of this paragraph H.
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1. Dividends.
(a) When and as declared by the Board of Directors
of the Corporation and to the extent permitted under the
General Corporation Law of Delaware, the Corporation will pay
preferential dividends to the holders of Series A Preferred
Stock. Except as otherwise provided herein, dividends on each
share of Series A Preferred Stock will accrue cumulatively at
the rate of $0.15 per fiscal quarter to and including the
earlier of (i) the date on which the Redemption Price of such
share is paid if such share is redeemed, or (ii) the date on
which such share is converted or (iii) the date upon which any
dissolution, liquidation or winding up of the Corporation is
effected. Dividends will be payable on each March 31, June
30, September 30 and December 31. All dividends will accrue
whether or not such dividends have been declared and whether
or not there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends.
The date on which the Corporation initially issues any share
of Series A Preferred Stock will be deemed to be its "date of
issuance" regardless of the number of times a transfer of such
share is made on the stock records maintained by or for the
Corporation and regardless of the number of certificates which
may be issued to evidence such share.
(b) To the extent not paid on each March 31, June
30, September 30 and December 31, all dividends which have
accrued on each share of Series A Preferred Stock then
outstanding during the three-month period ending upon such
date will be added to the Liquidation Value of such share and
will remain a part thereof until such dividends are paid.
(c) If at any time the Corporation pays less than
the total amount of dividends then accrued with respect to the
Series A Preferred Stock, such payment will be distributed
among the holders of the Series A Preferred Stock so that an
equal amount will be paid with respect to each outstanding
share of Series A Preferred Stock.
2. Liquidation.
Upon any liquidation, dissolution or winding up of
the Corporation, the holders of Series A Preferred Stock will
be entitled to be paid, before any distribution or payment is
made upon any other equity securities of the Corporation, an
amount in cash equal to the sum of the aggregate Liquidation
Value of all shares of Series A Preferred Stock outstanding,
and the holders of Series A Preferred Stock will not be
entitled to any further payment. If upon any such liquidation,
dissolution or winding up, the assets of the Corporation to be
distributed among the holders of the Series A Preferred Stock
are insufficient to permit payment to such holders of the
aggregate amount which they are entitled to be paid, then the
entire assets to be distributed will be distributed ratably
among such holders based upon the aggregate Liquidation Value
of the Series A Preferred Stock held by such holder. The
Corporation will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the
payment date stated therein, to each record holder of
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Series A Preferred Stock. Neither the consolidation or merger
of the Corporation into or with any other Corporation or
Corporations, nor the sale or transfer by the Corporation of
all or any part of its assets, nor the reduction of the
capital stock of the Corporation, will be deemed to be a
liquidation, dissolution or winding up of the Corporation
within the meaning of this subparagraph b.
3. Redemptions.
(a) Upon resolution of the Board of Directors, the
Corporation may redeem shares of Series A Preferred Stock.
For each such share which may be redeemed, if any, the
Corporation will be obligated to pay to the holder thereof the
Redemption Price.
(b) In the event of redemption the Corporation will
mail, unless waived by the holders, written notice (the
"Notice of Redemption") of each such redemption to each record
holder not less than 10 days prior to the date on which such
redemption is to be made. Upon mailing any Notice of
Redemption, the Corporation will become obligated (i) to
redeem from each holder the number of shares of Series A
Preferred Stock, as stated in the Notice of Redemption, to be
redeemed from such holder, and (ii) to send each record holder
a cashier's or certified check in an amount equal to the
Redemption Price of such number of shares of Series A
Preferred Stock at least five business days prior to the date
specified for redemption in the notice. Upon receipt of such
check, the record holder of the shares of Series A Preferred
Stock to be redeemed will become obligated to surrender the
certificates representing such number of shares on or before
the date specified for redemption in the Notice of Redemption.
In case fewer than the total number of shares represented by
any certificate are redeemed, a new certificate representing
the number of unredeemed shares will be issued to the record
holder thereof in such holder's or such holder's nominee's
name, without cost to such holder.
(c) No share of Series A Preferred Stock is entitled
to any dividends accruing after redemption. On redemption all
rights of the holder of such share will cease, and such share
will not be deemed to be outstanding.
(d) Any shares of Series A Preferred Stock which are
redeemed or otherwise acquired by the Corporation will be
cancelled and will not be reissued, sold or transferred.
(e) Neither the Corporation nor any Subsidiary will
redeem or otherwise acquire any Series A Preferred Stock,
except as expressly authorized herein or pursuant to a
purchase offer made pro rata to all holders of Series A
Preferred Stock on the basis of the number of shares of such
class owned by each such holder.
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4. Conversion.
(a) Any holder of Series A Preferred Stock may
convert all or any of such shares held by such holder into
shares of Common Stock at any time prior to redemption as
referred to in subparagraph 3(a) of this paragraph 6, after
receipt of Notice of Redemption. The number of shares of
Common Stock which any such holder will receive in return for
the shares converted by such holder will be 2.083.
(b) Each conversion of Series A Preferred Stock will
be deemed to have been effected as of the close of business on
the date on which the certificate or certificates representing
the shares of Series A Preferred Stock to be converted have
been surrendered at the principal office of the Corporation.
At such time as such conversion has been effected, the rights
of the holder of such Series A Preferred Stock as such holder
will cease and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock are
to be issued upon such conversion will be deemed to have
become the holder or holders of record of the shares of Common
Stock represented thereby.
(c) As soon as possible after a conversion has been
effected, the Corporation will deliver to the converting
holder:
(i) a certificate or certificates
representing the number of shares of Common Stock
issuable by reason of such conversion in such name or
names and such denomination or denominations as the
converting holder has specified;
(ii) payment in an amount equal to all
accrued dividends with respect to such shares of
Series A Preferred Stock converted, which have not
been paid prior thereto; and
(iii) a certificate representing any shares
of Series A Preferred Stock which were represented by
the certificate or certificates delivered to the
Corporation in connection with such conversion but
which were not converted.
(d) If for any reason the Corporation is unable to
pay any accrued dividends on the Series A Preferred Stock
being converted, the Corporation will pay such dividends to
the converting holder as soon thereafter as funds of the
Corporation are legally available for such payment and such
obligation will be evidenced by the Corporation's promissory
note payable to such holder and bearing interest at the prime
rate of interest at the United Bank of Denver, N.A., or a
successor thereto, as in effect during the time such note is
outstanding.
(e) The issuance of certificates for shares of
Common Stock upon conversion of Series A Preferred Stock will
be made without charge to the holders of such Series A
Preferred Stock for any issuance tax in respect thereof
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or other cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Common
Stock.
(f) The Corporation will not close its books against
the transfer of Series A Preferred Stock or of Common Stock
issued or issuable upon conversion of Series A Preferred Stock
in any manner which interferes with the timely conversion of
Series A Preferred Stock.
(g) The Conversion Price for the Common Stock will
be $2.40 per share of Common Stock and will not be subject to
adjustment except as otherwise specifically set forth herein.
(h) Prior to the consummation of any Organic Change,
the Corporation will make appropriate provisions (in form and
substance satisfactory to the holders of a majority of the
Series A Preferred Stock then outstanding) to insure that each
of the holders of Series A Preferred Stock will thereafter
have the right to acquire and receive in lieu of or in
addition to the shares of Common Stock immediately theretofore
acquirable and receivable upon the conversion of such holder's
Series A Preferred Stock, such shares of stock, securities or
assets as such holder would have received in connection with
such Organic Change if such holder had converted his Series A
Preferred Stock immediately prior to such Organic Change. In
any such case appropriate provisions (in form and substance
satisfactory to the holders of a majority of the Series A
Preferred Stock then outstanding) will be made to insure that
the provisions of this subparagraph 4(h) will thereafter be
applicable to Series A Preferred Stock (including, in the case
of any such consolidation, merger or sale in which the
successor Corporation or purchasing Corporation is other than
the Corporation, an immediate adjustment of the Conversion
Price to the value for the Common Stock reflected by the terms
of such consolidation, merger or sale, and a corresponding
immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon conversion of Series A
Preferred Stock, if the value so reflected is less than the
Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Corporation will not
effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor corporation (if other
than the Corporation) resulting from such consolidation or
merger or the corporation purchasing such assets assumes by
written instrument (in form reasonably satisfactory to the
holders of a majority of the Series A Preferred Stock then
outstanding), the obligation to deliver to each such holder
such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to
acquire.
(i) If the Corporation subdivides (by any stock
split, stock dividend or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced, and if the
Corporation combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the
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Conversion Price in effect immediately prior to such
combination will be proportionately increased.
(j) The Corporation will send written notice to all
holders of Series A Preferred Stock at least 20 days prior to
the date on which the Corporation closes its books or takes a
record for determining rights to vote with respect to any
Organic Change, dissolution or liquidation. The Corporation
will also give to the holders of shares of Series A Preferred
Stock at least 30 days prior written notice of the date on
which any Organic Change, dissolution or liquidation will take
place.
5. Voting Rights.
Holders of shares of Series A Preferred Stock will be
entitled to vote on all matters which are or may be submitted
to a vote of shareholders of the Corporation permitted under
the laws of the State of Delaware. Each share, until redeemed
or converted, shall have voting rights equal to 16.667 shares
of Common Stock. Holders of the shares of Series A Preferred
Stock shall further have the same rights accorded to holders
of Common Stock on all matters relating to the voting of such
Common Stock provided by the laws of the State of Delaware.
6. Purchase Rights.
If at any time the Corporation grants, issues or
sells any options, convertible securities or rights to
purchase stock, warrants, securities or other property pro
rata to the record holders of Common Stock (the "Purchase
Rights"), then each holder of Series A Preferred Stock will be
entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number
of shares of Common Stock acquirable upon conversion of such
holder's Series A Preferred Stock immediately before the date
on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date
as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of Purchase Rights.
7. Definitions.
"Conversion Price" means $2.40, subject to adjustment
as provided in subparagraph 4(i) of this paragraph H.
"Liquidation Value" of any share of Series A
Preferred Stock as of any particular date will be equal to
$5.00 plus any unpaid dividends on such share of Series A
Preferred Stock; and, in the event of any liquidation,
dissolution or winding up of the Corporation or the redemption
of such share of Series A Preferred Stock, unpaid dividends on
such share of Series A Preferred Stock, regardless of whether
they have become payable, will be added to the Liquidation
Value of such share of Series A Preferred Stock, on the
payment date in any liquidation, dissolution or winding up, or
on the
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Redemption Date, as the case may be, accrued to the close of
business on such payment date or Redemption Date.
"Organic Change" means any capital reorganization,
reclassification, consolidation, merger or any sale of all or
substantially all of the Corporation's assets to another
Person which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with
respect to or in exchange for Common Stock.
"Redemption Date" as to any share of Series A
Preferred Stock means the date specified in the Notice of any
Redemption provided that no such date will be a Redemption
Date unless the applicable Redemption Price is actually paid
in full on or before such date, and if not so paid in full,
the Redemption Date will be the date on which such Redemption
Price is fully paid. If, however, the full Redemption Price
is not paid on the Redemption Date solely because a holder has
not surrendered his certificate(s) at the Corporation's
principal office as provided in subparagraph 3(b) of this
paragraph H, then as to such holder the date specified herein
for the scheduled redemption shall be the Redemption Date.
"Person" means an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency
thereof.
"Redemption Price" means an amount equal to the
Liquidation Value.
"Subsidiary" means any corporation of which shares of
stock having at least a majority of the ordinary voting power
in electing the board of directors, is, at the time as of
which any determination is being made, owned by the
Corporation either directly or indirectly through one or more
Subsidiaries.
8. Miscellaneous
(a) The Corporation will keep at its principal
office a register for the registration of Series A Preferred
Stock. Upon the surrender of any certificate representing
Series A Preferred Stock at such place, the Corporation will,
at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing
in the aggregate the number of shares represented by the
surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of
shares of Series A Preferred Stock as is requested by the
holder of the surrendered certificate and will be
substantially identical in form to the surrendered
certificate, and dividends will accrue on the Series A
Preferred Stock represented by such new certificate from the
date to which dividends have been fully paid on such Series A
Preferred Stock represented by the surrendered certificate.
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(b) Upon receipt of evidence and an agreement to
indemnify reasonably satisfactory to the Corporation (an
affidavit of the registered holder, without bond, will be
satisfactory) of the ownership and the loss, theft,
destruction or mutilation of any certificate evidencing one or
more shares of Series A Preferred Stock the Corporation will
(at its expense) execute and deliver in lieu of such
certificate a new certificate representing the number of
shares of Series A Preferred Stock represented by such lost,
stolen, destroyed or mutilated certificate, and dividends will
accrue on the Series A Preferred Stock represented by such new
certificate from the date to which dividends have been fully
paid on such lost, stolen, destroyed or mutilated certificate.
(c) Amendments, modifications or waivers of any of
the terms hereof will be binding and effective if the prior
written consent of holders of at least 75% of the Series A
Preferred Stock outstanding at the time such action is taken
is obtained; provided that no such action will change (i) the
rate of or the manner in which dividends on the Series A
Preferred Stock accrue or the times at which such dividends
become payable or the amount payable on redemption of the
Series A Preferred Stock, unless the prior written consent of
the holders of at least 90% of the Series A Preferred Stock
then outstanding is obtained, (ii) except as set forth in
subparagraph 4(i) of this paragraph 8, the Conversion Price of
the Series A Preferred Stock or the number of shares or class
of stock into which the Series A Preferred Stock is
convertible, unless the prior written consent of the holders
of at least 90% of the Series A Preferred Stock then
outstanding is obtained or (iii) the percentage required to
approve any change described in clauses (i) and (ii) above,
unless the prior written consent of the holders of at least
90% of the Series A Preferred Stock then outstanding is
obtained; and provided further that no such change in the
terms hereof may be accomplished by merger or consolidation of
the Corporation with another corporation unless the
Corporation has obtained the prior written consent of the
holders of the applicable percentage of the Series A Preferred
Stock.
(d) All notices referred to herein, except as
otherwise expressly provided, will be hand delivered or mailed
by registered or certified mail, return receipt requested,
postage prepaid, and will be deemed to have been given when so
hand delivered or mailed.
(e) The Board of Directors shall not have any
authority to increase the number of authorized shares of
Series A Preferred Stock.
(f) Except as expressly authorized in this paragraph
H, the shares of Series A Preferred Stock, and the holders
thereof, shall be subject to the provisions of paragraphs C,
D, E, F, and G of this Article 4.
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5. The name and mailing address of the incorporator is:
Timothy K. Skipworth
Gardere & Wynne, L.L.P.
Suite 3000
1601 Elm Street
Dallas, Texas 75201.
6. The number of directors of the Corporation shall be fixed in the
manner provided in the Bylaws of the Corporation, and until changed in
the manner provided in the Bylaws shall be five (5). The names and
mailing addresses of the persons who are to serve as directors until
the first annual meeting of shareholders or until their successors are
elected and qualified are as follows:
Name Address
---- -------
George K. Broady 1220 Champion Circle, Suite 100
Carrollton, Texas 75006
William C. Lee 1220 Champion Circle, Suite 100
Carrollton, Texas 75006
Charles C. Neal 1220 Champion Circle, Suite 100
Carrollton, Texas 75006
James D. Pritchett 1220 Champion Circle, Suite 100
Carrollton, Texas 75006
Robert F. Sexton 1220 Champion Circle, Suite 100
Carrollton, Texas 75006
7. Indemnification
A. Actions Other Than by or in the Right of the Corporation
The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (all of such persons being hereafter
referred to in this Article as a "Corporate Functionary"), against
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a
plea ofnolo
11
<PAGE> 255
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation or, with respect to any criminal action
or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
B. Actions by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or
was a Corporate Functionary against expenses (including attorneys'
fees) judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation, unless and
only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
C. Determination of Right to Indemnification.
Any indemnification under paragraphs A or B of this Article 7
(unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the Corporate Functionary is proper in the
circumstances because he has met the applicable standard of conduct
set forth in paragraphs A or B of this Article 7. Such determination
shall be made (i) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a
quorum, or (ii) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion or (iii)
by the shareholders.
D. Right to Indemnification.
Notwithstanding the other provisions of this Article 7, to the
extent that a Corporate Functionary has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to
in paragraphs A or B of this Article 7 (including the dismissal of a
proceeding without prejudice or the settlement of a proceeding without
admission of liability), or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
E. Prepaid Expenses.
Expenses incurred by a Corporate Functionary in defending a
civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the Corporate Functionary to repay such
amount if it
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<PAGE> 256
shall ultimately be determined he is not entitled to be indemnified by
the Corporation as authorized in this Article 7.
F. Right to Indemnification upon Application; Procedure upon
Application.
Any indemnification of a Corporate Functionary under
paragraphs B, C or D, or any advance of expenses under paragraph E, of
this Article 7 shall be made promptly upon, and in any event within 60
days after, the written request of the Corporate Functionary, unless
with respect to applications under paragraphs B, C, or D of this
Article 7, a determination is reasonably and promptly made by a
majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, that such
Corporate Functionary acted in a manner set forth in such paragraphs
as to justify the Corporation in not indemnifying or making an advance
of expenses to the Corporate Functionary. If there are no such
directors, the Board of Directors shall promptly direct that
independent legal counsel shall decide whether the Corporate
Functionary acted in a manner set forth in such paragraphs as to
justify the Corporation's not indemnifying or making an advance of
expenses to the Corporate Functionary. The right to indemnification
or advance of expenses granted by this Article 7 shall be enforceable
by the Corporate Functionary in any court of competent jurisdiction if
the Board of Directors or independent legal counsel denies his claim,
in whole or in part, or if no disposition of such claim is made within
60 days. The expenses of the Corporate Functionary incurred in
connection with successfully establishing his right to
indemnification, in whole or in part, in any such proceeding shall
also be indemnified by the Corporation.
G. Other Rights and Remedies.
The indemnification and advancement of expenses provided by or
granted pursuant to this Article 7 shall not be deemed exclusive of
any other rights to which any person seeking indemnification and/or
advancement of expenses may be entitled under any other provision of
this Certificate of Incorporation, or any agreement, vote of
shareholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office, and shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
Corporate Functionary and shall inure to the benefit of the heirs,
executors and administrators of such a person. Any repeal or
modification of this Certificate of Incorporation or relevant
provisions of the General Corporation Law of Delaware and other
applicable law, if any, shall not affect any then existing rights of a
Corporate Functionary to indemnification or advancement of expenses.
H. Insurance.
Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not
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the Corporation would have the power to indemnify him against such
liability under the provisions of this Article 7 or the General
Corporation Law of Delaware.
I. Mergers.
For purposes of this Article 7, references to "the
Corporation" shall include, in addition to the resulting or surviving
corporation, constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority
to indemnify its directors, officers, employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of
this Article 7 with respect to the resulting or surviving corporation
as he would have with respect to such constituent corporation if its
separate existence had continued.
J. Savings Provision.
If this Article 7 or any portion hereof shall be invalidated
on any ground by a court of competent jurisdiction, the Corporation
shall nevertheless indemnify each Corporate Functionary as to expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit, proceeding or
investigation, whether civil, criminal or administrative, including a
grand jury proceeding or action or suit brought by or in the right of
the Corporation, to the full extent permitted by any applicable
portion of this Article 7 that shall not have been invalidated.
8. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the
manner prescribed by statute, and all rights conferred upon
shareholders herein are granted subject to this reservation.
9. A director of the Corporation shall not, to the fullest extent
permitted by the General Corporation Law of Delaware as the same
exists or may hereafter be amended, be liable to the Corporation or
its shareholders for monetary damages for breach of his or her
fiduciary duty to the Corporation or its shareholders.
10. No contract or other transaction between the Corporation and one or
more of its directors or any other corporation, firm, association or
entity in which one or more of its directors are directors or officers
or are financially interested shall be either void or voidable solely
because of such relationship or interest or solely because such
directors are present at the meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract
or transaction or solely because their votes are counted for such
purpose if:
(a) The fact of such relationship or interest is
disclosed or known to the Board of Directors or committee
which authorizes, approves or ratifies the contract or
transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested
directors; or
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(b) The fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and
they authorize, approve or ratify such contract or transaction
by vote or written consent; or
(c) The contract or transaction is fair and
reasonable to the Corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract
or transaction.
The undersigned, being the incorporator named above, for the purpose
of forming a corporation pursuant to the General Corporation Law of Delaware,
does make this certificate, hereby declaring and certifying that this is his
act and deed and the facts herein stated are true, and accordingly has hereunto
set his hand this ____ day of _______, 19__.
_________________________
Timothy K. Skipworth
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ANNEX I
BY-LAWS
OF
ULTRAK, INC.
(A DELAWARE CORPORATION)
<PAGE> 260
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
OFFICES
Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Time and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Notice of Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 5. Notice of Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 7. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 8. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 9. List of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 10. Inspectors of Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 11. Actions Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Number, Qualification, and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3. Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 7. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 8. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 9. Special Meetings; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 10. Quorum and Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 11. Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMMITTEES OF DIRECTORS
Section 12. Executive Committee; How Constituted and Powers . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
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Section 13. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 14. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 15. Quorum and Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 16. Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 17. Alternate Members of Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 18. Minutes of Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
GENERAL
Section 19. Actions Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 20. Presence at Meetings by Means of Communications Equipment . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
NOTICES
Section 1. Type of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3. When Notice Unnecessary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
OFFICERS
Section 1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Election or Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Salaries of Elected Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 8. Assistant Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10. Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 12. Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 13. Controller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 14. Assistant Controllers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI
INDEMNIFICATION
Section 1. Actions Other Than by or in the Right of the Corporation . . . . . . . . . . . . . . . . . . . 11
Section 2. Actions by or in the Right of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3. Determination of Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4. Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5. Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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Section 6. Right to Indemnification upon Application; Procedure upon Application . . . . . . . . . . . . . 12
Section 7. Other Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9. Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 10. Savings Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII
CERTIFICATES REPRESENTING STOCK
Section 1. Right to Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2. Facsimile Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3. New Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5. Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6. Registered Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3. Annual Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4. Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6. Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices
at such other place or places, both within and without the State of Delaware,
as the Board of Directors may from time to time determine or the business of
the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Time and Place of Meetings. All meetings of the
shareholders for the election of directors shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting. Meetings of shareholders for any other purpose may be held at such
time and place, within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of shareholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting, at
which meeting the shareholders shall elect by a plurality vote a Board of
Directors and transact such other business as may properly be brought before
the meeting.
Section 3. Notice of Annual Meetings. Written notice of the
annual meeting, stating the place, date, and hour of the meeting, shall be
given to each shareholder of record entitled to vote at such meeting not less
than 10 or more than 50 days before the date of the meeting.
Section 4. Special Meetings. Special meetings of the
shareholders for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation, may be called at any time by
order of the Board of Directors and shall be called by the President, the Board
of Directors or at the request in writing of the holders of not less than ten
percent (10%) of the voting power represented by all the shares issued,
outstanding and entitled to be voted at the proposed special meeting, unless
the Certificate of Incorporation provides for a different percentage, in which
event such provision of the Certificate of Incorporation shall govern. Such
request shall state the purpose or purposes of the proposed special meeting.
Business transacted at any special meeting of shareholders shall be limited to
the purposes stated in the notice.
Section 5. Notice of Special Meetings. Written notice of a
special meeting, stating the place, date, and hour of the meeting and the
purpose or purposes for which the meeting is called, shall be given to each
shareholder of record entitled to vote at such meeting not less than 10 or more
than 50 days before the date of the meeting, except that if the authorized
shares are to be increased, at least 30 days notice shall be given.
Section 6. Quorum. Except as otherwise provided by statute or
the Certificate of Incorporation, the holders of stock having a majority of the
voting power of the stock entitled to be
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voted thereat, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at all meetings of the shareholders.
If, however, such quorum shall not be present or represented at any meeting of
the shareholders, the shareholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time without notice (other than announcement at the meeting at which the
adjournment is taken of the time and place of the adjourned meeting) until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given to each shareholder of record entitled to vote at the meeting.
Section 7. Organization. At each meeting of the shareholders,
the Chairman of the Board or the President, determined as provided in Article V
of these By-Laws, or if those officers shall be absent therefrom, another
officer of the Corporation chosen as chairman present in person or by proxy and
entitled to vote thereat, or if all the officers of the Corporation shall be
absent therefrom, a shareholder holding of record shares of stock of the
Corporation so chosen, shall act as chairman of the meeting and preside
thereat. The Secretary, or if he shall be absent from such meeting or shall be
required pursuant to the provisions of this Section 7 to act as chairman of
such meeting, the person (who shall be an Assistant Secretary, if an Assistant
Secretary shall be present thereat) whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
Section 8. Voting. Except as otherwise provided in the
Certificate of Incorporation, each shareholder shall, at each meeting of the
shareholders, be entitled to one vote in person or by proxy for each share of
stock of the Corporation held by him and registered in his name on the books of
the Corporation on the date fixed pursuant to the provisions of Section 5 of
Article VII of these By-Laws as the record date for the determination of
shareholders who shall be entitled to notice of and to vote at such meeting.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held directly or indirectly by the Corporation, shall
not be entitled to vote. Any vote by stock of the Corporation may be given at
any meeting of the shareholders by the shareholder entitled thereto, in person
or by his proxy appointed by an instrument in writing subscribed by such
shareholder or by his attorney thereunto duly authorized and delivered to the
Secretary of the Corporation or to the secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from its
date, unless said proxy shall provide for a longer period. Each proxy shall be
revocable unless expressly provided therein to be irrevocable and unless
otherwise made irrevocable by law. At all meetings of the shareholders all
matters, except where other provision is made by law, the Certificate of
Incorporation, or these By-Laws, shall be decided by the vote of a majority of
the votes cast by the shareholders present in person or by proxy and entitled
to vote thereat, a quorum being present. Unless demanded by a shareholder of
the Corporation present in person or by proxy at any meeting of the
shareholders and entitled to vote thereat, or so directed by the chairman of
the meeting, the vote thereat on any question other than the election or
removal of directors need not be by written ballot. Upon a demand of any such
shareholder for a vote by written ballot on any question or at the direction of
such chairman that a vote by written ballot be taken on any question, such vote
shall be taken by written ballot. On a vote by written ballot, each ballot
shall be signed by the shareholder voting, or by his proxy, if there be such
proxy, and shall state the number of shares voted.
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Section 9. List of Shareholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its
stock ledger, either directly or through another officer of the Corporation
designated by him or through a transfer agent appointed by the Board of
Directors, to prepare and make, at least 10 days before every meeting of the
shareholders, a complete list of the shareholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each shareholder and
the number of shares registered in the name of each shareholder. Such list
shall be open to the examination of any shareholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
before said meeting, either at a place within the city where said meeting is to
be held, which place shall be specified in the notice of said meeting, or, if
not so specified, at the place where said meeting is to be held. The list
shall also be produced and kept at the time and place of said meeting during
the whole time thereof, and may be inspected by any shareholder of record who
shall be present thereat. The stock ledger shall be the only evidence as to
who are the shareholders entitled to examine the stock ledger, such list or the
books of the Corporation, or to vote in person or by proxy at any meeting of
shareholders.
Section 10. Inspectors of Votes. At each meeting of the
shareholders, the chairman of such meeting may appoint two Inspectors of Votes
to act thereat, unless the Board of Directors shall have theretofore made such
appointments. Each Inspector of Votes so appointed shall first subscribe an
oath or affirmation faithfully to execute the duties of an Inspector of Votes
at such meeting with strict impartiality and according to the best of his
ability. Such Inspectors of Votes, if any, shall take charge of the ballots,
if any, at such meeting and, after the balloting thereat on any question, shall
count the ballots cast thereon and shall make a report in writing to the
secretary of such meeting of the results thereof. An Inspector of Votes need
not be a shareholder of the Corporation, and any officer of the Corporation may
be an Inspector of Votes on any question other than a vote for or against his
election to any position with the Corporation or on any other question in which
he may be directly interested.
Section 11. Actions Without a Meeting. Any action required to be
taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of shareholders,
may be taken without a meeting, without prior notice, and without a vote if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereat were present and voted. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those shareholders who have not consented in
writing.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors, which shall have and may exercise
all such powers of the Corporation and do all such lawful acts and things as
are not by statute, the Certificate of Incorporation, or these By-Laws directed
or required to be exercised or done by the shareholders.
Section 2. Number, Qualification, and Term of Office. The
number of directors which shall constitute the whole Board of Directors shall
not be less than two (2). Within the limits above specified, the number of
directors which shall constitute the whole Board of Directors shall be
determined by resolution of the Board of Directors. Directors need not be
shareholders. The
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directors shall be elected at the annual meeting of the shareholders, except as
provided in Sections 4 and 5 of this Article III, and each director elected
shall hold office until the annual meeting next after his election and until
his successor is duly elected and qualified, or until his death or retirement
or until he resigns or is removed in the manner hereinafter provided. Directors
shall be elected by a plurality of the votes of the shares present in person or
represented by proxy and entitled to vote on the election of directors at any
annual or special meeting of shareholders. Such election shall be by written
ballot.
Section 3. Resignations. Any director may resign at any time by
giving written notice of his resignation to the Corporation. Any such
resignation shall take effect at the time specified therein, or if the time
when it shall become effective shall not be specified therein, then it shall
take effect immediately upon its receipt by the Secretary. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 4. Removal of Directors. Any director may be removed,
either with or without cause, at any time, by the affirmative vote by written
ballot of a majority in voting interest of the shareholders of record of the
Corporation entitled to vote, given at an annual meeting or at a special
meeting of the shareholders called for that purpose. The vacancy in the Board
of Directors caused by any such removal shall be filled by the shareholders at
such meeting or, if not so filled, by the Board of Directors as provided in
Section 5 of this Article III.
Section 5. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the annual meeting next after their election and until their successors are
elected and qualified, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner provided by
statute.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. Place of Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 7. Annual Meetings. The first meeting of each newly
elected Board of Directors shall be held immediately following the annual
meeting of shareholders, and no notice of such meeting to the newly elected
directors shall be necessary in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held
immediately following the annual meeting of shareholders, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as
shall be specified in a written waiver signed by all of the directors.
Section 8. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
Section 9. Special Meetings; Notice. Special meetings of the
Board of Directors may be called by the Chairman of the Board, the President,
or the Secretary on 48 hours' notice to each director, either personally or by
telephone or by mail, telegraph, telex, cable, wireless, or other form of
recorded communication; special meetings shall be called by the President or on
the written
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request of any director. Notice of any such meeting need not be given to any
director, however, if waived by him in writing or by telegraph, telex, cable,
wireless, or other form of recorded communication, or if he shall be present at
such meeting.
Section 10. Quorum and Manner of Acting. At all meetings of the
Board of Directors, a majority of the directors at the time in office (but not
less than one-third of the whole Board of Directors) shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, except as may be otherwise specifically provided by statute
or by the Certificate of Incorporation. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present. A director of the Corporation
who is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the Corporation after such
adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Section 11. Remuneration. The Board of Directors may at any time
and from time to time by resolution provide that a specified sum shall be paid
to any director of the Corporation, either as his annual remuneration as such
director or member of any committee of the Board of Directors or as
remuneration for his attendance at each meeting of the Board of Directors or
any such committee. Further, the Corporation shall reimburse each director for
any expenses paid by him on account of his attendance at any meeting. Nothing
in this Section 11 shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving remuneration therefor.
COMMITTEES OF DIRECTORS
Section 12. Executive Committee; How Constituted and Powers. The
Board of Directors may in its discretion, by resolution passed by a majority of
the whole Board of Directors, designate an Executive Committee consisting of
one or more of the directors of the Corporation. Subject to the provisions of
Section 141 of the General Corporation Law of the State of Delaware, the
Certificate of Incorporation, and these By-Laws, the Executive Committee shall
have and may exercise, when the Board of Directors is not in session, all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and shall have the power to authorize
the seal of the Corporation to be affixed to all papers which may require it;
but the Executive Committee shall not have the power to fill vacancies in the
Board of Directors, the Executive Committee, or any other committee of
directors or to elect or approve officers of the Corporation. The Executive
Committee shall have the power and authority to authorize the issuance of
common stock and grant and authorize options and other rights with respect to
such issuance. The Board of Directors shall have the power at any time, by
resolution passed by a majority of the whole Board of Directors, to change the
membership of the Executive Committee, to fill all vacancies in it, or to
dissolve it, either with or without cause.
Section 13. Organization. The Chairman of the Executive
Committee, to be selected by the Board of Directors, shall act as chairman at
all meetings of the Executive Committee and the Secretary shall act as
secretary thereof. In case of the absence from any meeting of the Executive
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Committee of the Chairman of the Executive Committee or the Secretary, the
Executive Committee may appoint a chairman or secretary, as the case may be, of
the meeting.
Section 14. Meetings. Regular meetings of the Executive
Committee, of which no notice shall be necessary, may be held on such days and
at such places, within or without the State of Delaware, as shall be fixed by
resolution adopted by a majority of the Executive Committee and communicated in
writing to all its members. Special meetings of the Executive Committee shall
be held whenever called by the Chairman of the Executive Committee or by any
member of the Executive Committee then in office. Notice of each special
meeting of the Executive Committee shall be given by mail, telegraph, telex,
cable, wireless, or other form of recorded communication or be delivered
personally or by telephone to each member of the Executive Committee not later
than the day before the day on which such meeting is to be held. Notice of any
such meeting need not be given to any member of the Executive Committee,
however, if waived by him in writing or by telegraph, telex, cable, wireless,
or other form of recorded communication, or if he shall be present at such
meeting; and any meeting of the Executive Committee shall be a legal meeting
without any notice thereof having been given, if all the members of the
Executive Committee shall be present thereat. Subject to the provisions of
this Article III, the Executive Committee, by resolution adopted by a majority
of the whole Executive Committee, shall fix its own rules of procedure.
Section 15. Quorum and Manner of Acting. A majority of the
Executive Committee shall constitute a quorum for the transaction of business,
and the act of a majority of those present at a meeting thereof at which a
quorum is present shall be the act of the Executive Committee.
Section 16. Other Committees. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of Directors,
designate one or more other committees consisting of one or more directors of
the Corporation, which, to the extent provided in said resolution or
resolutions, shall have and may exercise, subject to the provisions of Section
141 of the Delaware General Corporation Law, and the Certificate of
Incorporation and these By-Laws, the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
shall have the power to authorize the seal of the Corporation to be affixed to
all papers which may require it; but no such committee shall have the power to
fill vacancies in the Board of Directors, the Executive Committee, or any other
committee or in their respective membership, to appoint or remove officers of
the Corporation, or to authorize the issuance of shares of the capital stock of
the Corporation, except that such a committee may, to the extent provided in
said resolutions, grant and authorize options and other rights with respect to
the common stock of the Corporation pursuant to and in accordance with any plan
approved by the Board of Directors. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. A majority of all the members of any such committee
may determine its action and fix the time and place of its meetings and specify
what notice thereof, if any, shall be given, unless the Board of Directors
shall otherwise provide. The Board of Directors shall have power to change the
members of any such committee at any time to fill vacancies, and to discharge
any such committee, either with or without cause, at any time.
Section 17. Alternate Members of Committees. The Board of
Directors may designate one or more directors as alternate members of the
Executive Committee or any other committee, who may replace any absent or
disqualified member at any meeting of the committee, or if none be so
appointed, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
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Section 18. Minutes of Committees. Each committee shall keep
regular minutes of its meetings and proceedings and report the same to the
Board of Directors at the next meeting thereof.
GENERAL
Section 19. Actions Without a Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting, if all members of the
Board of Directors or committee, as the case may be, consent thereto in writing
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or the committee.
Section 20. Presence at Meetings by Means of Communications
Equipment. Members of the Board of Directors, or of any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting conducted pursuant
to this Section 20 shall constitute presence in person at such meeting.
ARTICLE IV
NOTICES
Section 1. Type of Notice. Whenever, under the provisions of
any applicable statute, the Certificate of Incorporation, or these By-Laws,
notice is required to be given to any director or shareholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, in
person or by mail, addressed to such director or shareholder, at his address as
it appears on the records of the Corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given in
any manner permitted by Article III hereof and shall be deemed to be given at
the time when first transmitted by the method of communication so permitted.
Section 2. Waiver of Notice. Whenever any notice is required to
be given under the provisions of any applicable statute, the Certificate of
Incorporation, or these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto, and transmission of a
waiver of notice by a director or shareholder by mail, telegraph, telex, cable,
wireless, or other form of recorded communication may constitute such a waiver.
Section 3. When Notice Unnecessary. Whenever, under the
provisions of the Delaware General Corporation Law, the Certificate of
Incorporation or these By-Laws, any notice is required to be given to any
shareholder, such notice need not be given to the shareholder if:
(a) notice of two consecutive annual meetings and all notices of
meetings held during the period between those annual meetings,
if any, or
(b) all (but in no event less than two) payments (if sent by first
class mail) of distributions or interest on securities during
a 12-month period,
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have been mailed to that person, addressed at his address as shown on the
records of the Corporation, and have been returned undeliverable. Any action
or meeting taken or held without notice to such a person shall have the same
force and effect as if the notice had been duly given. If such a person
delivers to the Corporation a written notice setting forth his then current
address, the requirement that notice be given to that person shall be
reinstated.
ARTICLE V
OFFICERS
Section 1. General. The elected officers of the Corporation
shall be a President, a Secretary and a Treasurer. The Board of Directors may
also elect or appoint a Chairman of the Board, one or more Vice Presidents, one
or more Assistant Vice Presidents, one or more Assistant Secretaries, a
Treasurer, one or more Assistant Treasurers, a Controller, one or more
Assistant Controllers, and such other officers and agents as may be deemed
necessary or advisable from time to time, all of whom shall also be officers.
Two offices may be held by the same person.
Section 2. Election or Appointment. The Board of Directors at
its annual meeting shall elect or appoint, as the case may be, the officers to
fill the positions designated in or pursuant to Section 1 of this Article V.
Officers of the Corporation may also be elected or appointed, as the case may
be, at any other time.
Section 3. Salaries of Elected Officers. The salaries of all
elected officers of the Corporation shall be fixed by the Board of Directors.
Section 4. Term. Each officer of the Corporation shall hold his
office until his successor is duly elected or appointed and qualified or until
his earlier resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Any officer elected or appointed by the
Board of Directors or the Executive Committee may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. Any vacancy
occurring in any office of the Corporation by death, resignation, removal, or
otherwise may be filled by the Board of Directors or the appropriate committee
thereof.
Section 5. Chairman of the Board. The Chairman of the Board, if
one be elected, shall be the chief executive officer of the Corporation and
shall preside when present at all meetings of the Board of Directors and, with
the approval of the President, may preside at meetings of the shareholders. He
shall advise and counsel the President and other officers of the Corporation,
and shall exercise such powers and perform such duties as shall be assigned to
or required of him from time to time by the Board of Directors.
Section 6. President. In the absence of a Chairman of the
Board, the President shall be the ranking and chief executive officer of the
Corporation and shall have the duties and responsibilities, and the authority
and power, of the Chairman of the Board. The President shall be the chief
operating officer of the Corporation and, subject to the provisions of these
By-Laws, shall have general supervision of the affairs of the Corporation and
shall have general and active control of all its business. He shall preside,
when present, at all meetings of shareholders, except when the Chairman of the
Board presides with the approval of the President and as may otherwise be
provided by statute, and, in the absence of any other person designated thereto
by these By-Laws, at all meetings of the Board of Directors. He shall see that
all orders and resolutions of the Board of
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Directors and the shareholders are carried into effect. He shall have general
authority to execute bonds, deeds, and contracts in the name of the Corporation
and affix the corporate seal thereto; to sign stock certificates; to cause the
employment or appointment of such employees and agents of the Corporation as
the proper conduct of operations may require, and to fix their compensation,
subject to the provisions of these By-Laws; to remove or suspend any employee
or agent who shall have been employed or appointed under his authority or under
authority of an officer subordinate to him; to suspend for cause, pending final
action by the authority which shall have elected or appointed him, any officer
subordinate to the President; and, in general, to exercise all the powers and
authority usually appertaining to the chief operating officer of a corporation,
except as otherwise provided in these By-Laws.
Section 7. Vice Presidents. In the absence of the President or
in the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors or the President may from time to time
prescribe.
Section 8. Assistant Vice Presidents. In the absence of a Vice
President or in the event of his inability or refusal to act, the Assistant
Vice President (or in the event there shall be more than one, the Assistant
Vice Presidents in the order designated by the Board of Directors, or in the
absence of any designation, then in the order of their appointment) shall
perform the duties and exercise the powers of that Vice President, and shall
perform such other duties and have such other powers as the Board of Directors,
the President, or the Vice President under whose supervision he is appointed
may from time to time prescribe.
Section 9. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of the shareholders and record all
the proceedings of the meetings of the Corporation and of the Board of
Directors in a book to be kept for that purpose and shall perform like duties
for the Executive Committee or other standing committees when required. He
shall give, or cause to be given, notice of all meetings of the shareholders
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or the President, under
whose supervision he shall be. He shall have custody of the corporate seal of
the Corporation, and he, or an Assistant Secretary, shall have authority to
affix the same to any instrument requiring it, and when so affixed, it may be
attested by his signature or by the signature of such Assistant Secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the Corporation and to attest the affixing by his signature. The
Secretary shall keep and account for all books, documents, papers, and records
of the Corporation, except those for which some other officer or agent is
properly accountable. He shall have authority to sign stock certificates and
shall generally perform all the duties usually appertaining to the office of
the secretary of a corporation.
Section 10. Assistant Secretaries. In the absence of the
Secretary or in the event of his inability or refusal to act, the Assistant
Secretary (or, if there shall be more than one, the Assistant Secretaries in
the order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Secretary and shall perform such other duties
and have such other powers as the Board of Directors, the President, or the
Secretary may from time to time prescribe.
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Section 11. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors, at its regular
meetings or when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, he shall give the Corporation a bond
(which shall be renewed every six years) in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property of whatever
kind in his possession or under his control belonging to the Corporation. The
Treasurer shall be under the supervision of the Vice President in charge of
finance, if one is so designated, and he shall perform such other duties as may
be prescribed by the Board of Directors, the President, or any such Vice
President in charge of finance.
Section 12. Assistant Treasurers. The Assistant Treasurer or
Assistant Treasurers shall assist the Treasurer, and in the absence of the
Treasurer or in the event of his inability or refusal to act, the Assistant
Treasurer (or in the event there shall be more than one, the Assistant
Treasurers in the order designated by the Board of Directors, or in the absence
of any designation, then in the order of their appointment) shall perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board of Directors, the President, or
the Treasurer may from time to time prescribe.
Section 13. Controller. The Controller, if one is appointed,
shall have supervision of the accounting practices of the Corporation and shall
prescribe the duties and powers of any other accounting personnel of the
Corporation. He shall cause to be maintained an adequate system of financial
control through a program of budgets and interpretive reports. He shall
initiate and enforce measures and procedures whereby the business of the
Corporation shall be conducted with the maximum efficiency and economy. If
required, he shall prepare a monthly report covering the operating results of
the Corporation. The Controller shall be under the supervision of the Vice
President in charge of finance, if one is so designated, and he shall perform
such other duties as may be prescribed by the Board of Directors, the
President, or any such Vice President in charge of finance.
Section 14. Assistant Controllers. The Assistant Controller or
Assistant Controllers shall assist the Controller, and in the absence of the
Controller or in the event of his inability or refusal to act, the Assistant
Controller (or, if there shall be more than one, the Assistant Controllers in
the order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Controller and perform such other duties and
have such other powers as the Board of Directors, the President, or the
Controller may from time to time prescribe.
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ARTICLE VI
INDEMNIFICATION
Section 1. Actions Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (all of such persons being hereafter
referred to in this Article as a "Corporate Functionary"), against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by reason
of the fact that he is or was a Corporate Functionary against expenses
(including attorneys' fees) judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation, unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Determination of Right to Indemnification. Any
indemnification under Sections 1 or 2 of this Article VI (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of a Corporate Functionary is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Sections 1 or 2 of this Article VI. Such determination shall be made
(i) by a majority vote of the directors who are not parties to such action,
suit, or proceeding, even though less than a quorum, or (ii) if there are no
such directors, or if such directors so direct, by independent legal counsel in
a written opinion or (iii) by the shareholders.
Section 4. Right to Indemnification. Notwithstanding the other
provisions of this Article VI, to the extent that a Corporate Functionary has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 or 2 of this Article VI (including the
dismissal of a proceeding without prejudice or the settlement of a proceeding
without admission of liability), or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 5. Prepaid Expenses. Expenses incurred by a Corporate
Functionary in defending a civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the
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Corporation in advance of the final disposition of such action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the Corporate
Functionary to repay such amount if it shall ultimately be determined he is not
entitled to be indemnified by the Corporation as authorized in this Article VI.
Section 6. Right to Indemnification upon Application; Procedure
upon Application. Any indemnification of a Corporate Functionary under
Sections 2, 3 or 4, or any advance of expenses under Section 5, of this Article
VI shall be made promptly upon, and in any event within 60 days after, the
written request of the Corporate Functionary, unless with respect to
applications under Sections 2, 3 or 5 of this Article VI, a determination is
reasonably and promptly made by the Board of Directors by a majority vote of
the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, that such Corporate Functionary acted in a manner
set forth in such Sections as to justify the Corporation in not indemnifying or
making an advance of expenses to the Corporate Functionary. If there are no
such directors, the Board of Directors shall promptly direct that independent
legal counsel shall decide whether the Corporate Functionary acted in a manner
set forth in such Sections as to justify the Corporation's not indemnifying or
making an advance of expenses to the Corporate Functionary. The right to
indemnification or advance of expenses granted by this Article VI shall be
enforceable by the Corporate Functionary in any court of competent jurisdiction
if the Board of Directors or independent legal counsel denies his claim, in
whole or in part, or if no disposition of such claim is made within 60 days.
The expenses of the Corporate Functionary incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any such proceeding shall also be indemnified by the Corporation.
Section 7. Other Rights and Remedies. The indemnification and
advancement of expenses provided by or granted pursuant to this Article VI
shall not be deemed exclusive of any other rights to which any person seeking
indemnification and/or advancement of expenses may be entitled under any other
provision of these By-Laws, or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Corporate Functionary and shall inure to the
benefit of the heirs, executors, and administrators of such a person. Any
repeal or modification of these By-Laws or relevant provisions of the Delaware
General Corporation Law and other applicable law, if any, shall not affect any
then existing rights of a Corporate Functionary to indemnification or
advancement of expenses.
Section 8. Insurance. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article VI or the Delaware General Corporation Law.
Section 9. Mergers. For purposes of this Article VI, references
to "the Corporation" shall include, in addition to the resulting or surviving
corporation, constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent
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corporation or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise shall stand in the same position under
the provisions of this Article VI with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
Section 10. Savings Provision. If this Article VI or any portion
hereof shall be invalidated on any ground by a court of competent jurisdiction,
the Corporation shall nevertheless indemnify each Corporate Functionary as to
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit, proceeding or investigation,
whether civil, criminal or administrative, including a grand jury proceeding or
action or suit brought by or in the right of the Corporation, to the full
extent permitted by any applicable portion of this Article VI that shall not
have been invalidated.
ARTICLE VII
CERTIFICATES REPRESENTING STOCK
Section 1. Right to Certificate. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a Vice
President and by the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences, and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations, or restrictions of
such preferences or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock; provided, that, except as otherwise provided in
Section 202 of the Delaware General Corporation Law, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock a
statement that the Corporation will furnish without charge to each shareholder
who so requests the powers, designations, preferences, and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of such
preferences or rights.
Section 2. Facsimile Signatures. Any of or all the signatures
on the certificate may be facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the
date of issue.
Section 3. New Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation and alleged to have been
lost, stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim
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that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen, or destroyed or the issuance of such new
certificate.
Section 4. Transfers. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation, or authority to
transfer, it shall be the duty of the Corporation, subject to any proper
restrictions on transfer, to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
Section 5. Record Date. The Board of Directors may fix in
advance a date, not preceding the date on which the resolution fixing the
record date is adopted, and
(i) not more than 50 days nor less than 10 days preceding
the date of any meeting of shareholders, as a record
date for the determination of the shareholders
entitled to notice of, and to vote at, any such
meeting and any adjournment thereof,
(ii) not more than 10 days after the date on which the
resolution fixing the record date is adopted, as a
record date in connection with obtaining a consent of
the shareholders in writing to corporate action
without a meeting, or
(iii) not more than 50 days before the date for payment of
any dividend or distribution, or the date for the
allotment of rights, or the date when any change, or
conversion or exchange of capital stock shall go into
effect, or the date on which any other lawful action
shall be taken, as the record date for determining
the shareholders entitled to receive payment of any
such dividend or distribution, or to receive any such
allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of
capital stock or other lawful action of the
corporation,
and in such case such shareholders and only such shareholders as shall be
shareholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, any such meeting and any adjournment thereof (provided,
however, that the Board of Directors may fix a new record date for an adjourned
meeting), or to give such consent, or to receive payment of such dividend or
distribution, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid. If the
Board of Directors does not order the stock transfer books closed, or fix in
advance a record date, as above provided, then the record date for the
determination of shareholders entitled to notice of, or to vote at any meeting
of shareholders, or any adjournment thereof, or entitled to receive payment of
any dividend, or for the determination of shareholders for any proper purpose
shall be 30 days prior to the date on which the particular action requiring
such determination of shareholders is to be taken.
Section 6. Registered Shareholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not provided by the laws of the State of Delaware.
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ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, if any, subject to the provisions of the Certificate of
Incorporation, may be declared by the Board of Directors (but not any committee
thereof) at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation.
Section 2. Reserves. Before payment of any dividend, there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, thinks proper as a reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
Section 3. Annual Statement. The Board of Directors shall
present at each annual meeting, and at any special meeting of the shareholders
when called for by vote of the shareholders, a full and clear statement of the
business and condition of the Corporation.
Section 4. Checks. All checks or demands for money and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
prescribe.
Section 5. Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board of Directors.
Section 6. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization,
and the word "Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed, affixed, reproduced, or otherwise.
ARTICLE IX
AMENDMENTS
These By-Laws may be altered, amended, or repealed or new By-Laws may
be adopted by the Board of Directors at any regular meeting of the Board of
Directors or at any special meeting of the Board of Directors if notice of such
alteration, amendment, repeal, or adoption of new By-Laws be contained in the
notice of such special meeting.
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CERTIFICATION
I, Tim D. Torno, Secretary of the Corporation, hereby certify that the
foregoing is a true, accurate and complete copy of the By-Laws of Ultrak, Inc.
adopted by its Board of Directors as of _____________, 1995.
_________________________
Tim D. Torno, Secretary
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ANNEX J
ARTICLE 113
DISSENTERS' RIGHTS
PART I
RIGHT OF DISSENT--PAYMENT FOR SHARES
7-113-101 DEFINITIONS.--For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares
held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or acquiring domestic
or foreign corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under section 7-113-102 and who exercises that right at
the time and in the manner required by part 2 of this article.
(4) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effective date of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action except to the extent that
exclusion would be inequitable.
(5) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate currently paid
by the corporation on its principal bank loans or, if none, at the legal rate
as specified in section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a
beneficial shareholder.
7-113-102 RIGHT TO DISSENT.--(1) A shareholder, whether or
not entitled to vote, is entitled to dissent and obtain payment of the fair
value of his or her shares in the event of any of the following corporate
actions:
(a) Consummation of a plan of merger to which the corporation is a
party if:
(I) Approval by the shareholders of that corporation is required
for the merger by section 7-111-103 or 7-111-104 or by the articles of
incorporation, or
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(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired.
(c) Consummation of a sale, lease, exchange, or other disposition
of all, or substantially all, of the property of the corporation for which a
shareholder vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other disposition
of all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote upon
the consent of the corporation to the disposition pursuant to section
7-112-102(2).
(2) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of:
(a) An amendment to the articles of incorporation that materially
and adversely affects rights in respect of the shares because it:
(I) Alters or abolishes a preferential right of the shares; or
(II) Creates, alters, or abolishes a right in respect of redemption
of the shares, including a provision respecting a sinking fund for their
redemption or repurchase; or
(b) An amendment to the articles of incorporation that affects
rights in respect of the shares because it:
(I) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(II) Reduces the number of shares owned by the shareholder to a
fraction of a share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the
fair value of the shareholder's shares in the event of any corporate action to
the extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
7-113-103 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(1) A
record shareholder may assert dissenters' rights as to fewer than all the
shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
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dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to
the shares held on the beneficial shareholder's behalf only if;
(a) The beneficial shareholder causes the corporation to receive
the record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder
dissents with respect to the shares held by any one or more beneficial
shareholders, each such beneficial shareholder must certify to the corporation
that the beneficial shareholder and the record shareholder or record
shareholders of all shares owned beneficially by the beneficial shareholder
have asserted, or will timely assert, dissenters' rights as to all such shares
as to which there is no limitation on the ability to exercise dissenters'
rights. Any such requirement shall be stated in the dissenters' notice given
pursuant to section 7-113-203.
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
7-113-201 NOTICE OF DISSENTERS' RIGHTS.--(1) If a proposed
corporate action creating dissenters' rights under section 7-113-102 is
submitted to a vote at a shareholders' meeting, the notice of the meeting shall
be given to all shareholders, whether or not entitled to vote. The notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under this article and shall be accompanied by a copy of this article
and the materials, if any, that under articles 101 to 117 of this title, are
required to be given to shareholders entitled to vote on the proposed action at
the meeting. Failure to give notice as provided by this subsection (1) to
shareholders not entitled to vote shall not affect any action taken at the
shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is authorized without a meeting of shareholders
pursuant to section 7-107-104, any written or oral solicitation of a
shareholder to execute a writing consenting to such action contemplated in
section 7-107-104 shall be accompanied or preceded by a written notice stating
that shareholders are or may be entitled to assert dissenters' rights under
this article, by a copy of this article, and by the materials, if any, that,
under articles 101 to 117 of this title, would have been required to be given
to shareholders entitled to vote on the proposed action if the proposed action
were submitted to a vote at a shareholders' meeting. Failure to give notice as
provided by this subsection (2) to shareholders not entitled to vote shall not
affect any action taken pursuant to section 7-107-104 for which the notice was
to have been given.
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7-113-202 NOTICE OF INTENT TO DEMAND PAYMENT.--(1) If a
proposed corporate action creating dissenters' rights under section 7-113-102
is submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken,
written notice of the shareholder's intention to demand payment for the
shareholder's shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights
under section 7-113-102 is authorized without a meeting of shareholders
pursuant to section 7-107-104, a shareholder who wishes to assert dissenters'
rights shall not execute a writing consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of
subsection (1) or (2) of this section is not entitled to demand payment for the
shareholder's shares under this article.
7-113-203 DISSENTERS' NOTICE.--(1) If a proposed corporate
action creating dissenters' rights under section 7-113-102 is authorized, the
corporation shall give a written dissenters' notice to all shareholders who are
entitled to demand payment for their shares under this article.
(2) The dissenters' notice required by subsection (1) of this
section shall be given no later than ten days after the effective date of the
corporate action creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the
effective date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment
demands and the address of a place where certificates for certificated shares
must be deposited;
(c) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request
a dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment
demand and certificates for certificated shares, which date shall not be less
than thirty days after the date the notice required by subsection (1) of this
section is given;
(f) State the requirement contemplated in section 7-113-103 (3),
if such requirement is imposed; and
(g) Be accompanied by a copy of this article.
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7-113-204 PROCEDURE TO DEMAND PAYMENT.--(1) A shareholder who
is given a dissenters' notice pursuant to section 7-113-203 and who wishes to
assert dissenters' rights shall, in accordance with the terms of the
dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may
be the payment demand form contemplated in section 7-113-102(2)(d), duly
completed, or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with
subsection (1) of this section retains all rights of a shareholder, except the
right to transfer the shares, until the effective date of the proposed
corporate action giving rise to the shareholder's exercise of dissenters'
rights and has only the right to receive payment for the shares after the
effective date of such corporate action.
(3) Except as provided in section 7-113-207 or 7-113-209(1)(b),
the demand for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the
Shareholder's share certificates as required by the date or dates set in the
dissenters' notice is not entitled to payment for the shares under this
article.
7-113-205 UNCERTIFICATED SHARES.-- (1) Upon receipt of a
demand for payment under section 7-113-204 from a shareholder holding
uncertificated shares, and in lieu of the deposit of certificates representing
the shares, the corporation may restrict the transfer thereof.
(2) In all other respects, the provisions of section 7-113-204
shall be applicable to shareholders who own uncertificated shares.
7-113-206 PAYMENT.--(1) Except as provided in section
7-113-208, upon the effective date of the corporate action creating dissenters'
rights under section 7-113-102 or upon receipt of a payment demand pursuant to
section 7-113-204, whichever is later, the corporation shall pay each dissenter
who complied with section 7-113-204, at the address stated in the payment
demand, or if no such address is stated in the payment demand, at the address
shown on the corporation's current record of shareholders for the record
shareholder holding the dissenter's shares, the amount the corporation
estimates to be the fair value of the dissenter's shares, plus accrued
interest.
(2) The payment made pursuant to subsection (1) of this section
shall be accompanied by:
(a) The corporation's balance sheet as of the end of its most
recent fiscal year or, if that is not available, the corporation's balance
sheet as of the end of a fiscal year ending not more than sixteen months before
the date of payment, an income statement for that year, and, if the corporation
customarily provides such statements to shareholders, a statement of changes in
shareholders' equity for that year and a statement of cash flow for that year,
which balance sheet and statements shall have been audited if the corporation
customarily provides audited financial statements to shareholders, as well as
the latest available financial statements, if any, for the interim or full-year
period, which financial statements need not be audited;
5
<PAGE> 284
(b) A statement of the corporation's estimate of the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under
section 7-113-209; and
(e) A copy of this article.
7-113-207 FAILURE TO TAKE ACTION.--(1) If the effective date
of the corporate action creating dissenters' rights under section 7-113-102
does not occur within sixty days after the date set by the corporation by which
the corporation must receive the payment demand as provided in section
7-113-203, the corporation shall return the deposited certificates and release
the transfer restrictions imposed on uncertificated shares.
(2) If the effective date of the corporate action creating
dissenters' rights under section 7-113-102 occurs more than sixty days after
the date set by the corporation by which the corporation must receive the
payment demand as provided in section 7-113-203, then the corporation shall
send a new dissenters' notice, as provided in section 7-113-203, and the
provisions of sections 7-113-204 to 7-113-209 shall again be applicable.
7-113-208 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.--(1) The corporation may, in or
with the dissenters' notice given pursuant to section 7-113-203, state the date
of the first announcement to news media or to shareholders of the terms of the
proposed corporate action creating dissenters' rights under section 7-113-102
and state that the dissenter shall certify in writing, in or with the
dissenter's payment demand under section 7-113-204, whether or not the
dissenter (or the person on whose behalf dissenters' rights are asserted)
acquired beneficial ownership of the shares before that date. With respect to
any dissenter who does not so certify in writing, in or with the payment
demand, that the dissenter or the person on whose behalf the dissenter asserts
dissenters' rights acquired beneficial ownership of the shares before such
date, the corporation may, in lieu of making the payment provided in section
7-113-206, offer to make such payment if the dissenter agrees to accept it in
full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section
shall include or be accompanied by the information required by section
7-113-206(2).
7-113-209 PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT
OR OFFER.--(1) A dissenter may give notice to the corporation in writing of
the dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any
payment made under section 7-113-206, or reject the corporation's offer under
section 7-113-208 and demand payment of the fair value of the shares and
interest due, if:
(a) The dissenter believes that the amount paid under section
7-113-206 or offered under section 7-113-208 is less than the fair value of the
shares or that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206
within sixty days after the date set by the corporation by which the
corporation must receive the payment demand; or
6
<PAGE> 285
(c) The corporation does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as required
by section 7-113-207(1).
(2) A dissenter waives the right to demand payment under this
section unless the dissenter causes the corporation to receive the notice
required by subsection (1) of this section within thirty days after the
corporation made or offered payment for the dissenter's shares.
PART 3
JUDICIAL APPRAISAL OF SHARES
7-113-301 COURT ACTION.--(1) If a demand for payment under
section 7-113-209 remains unresolved, the corporation may, within sixty days
after receiving the payment demand, commence a proceeding and petition the
court to determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the sixty-day period, it
shall pay to each dissenter whose demand remains unresolved the amount
demanded.
(2) The corporation shall commence the proceeding described in
subsection (1) of this section in the district court of the county in this
state where the corporation's principal office is located or, if it has no
principal office in this state, in the district court of the county in which
its registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic
corporation merged into, or whose shares were acquired by, the foreign
corporation was located.
(3) The corporation shall make all dissenters, whether or not
residents of this state, whose demands remain unresolved parties to the
proceeding commenced under subsection (2) of this section as in an action
against their shares, and all parties shall be served with a copy of the
petition. Service on each dissenter shall be by registered or certified mail,
to the address stated in such dissenter's payment demand, or if no such address
is stated in the payment demand, at the address shown on the corporation's
current record of shareholders for the record shareholder holding the
dissenter's shares, or as provided by law.
(4) The jurisdiction of the court in which the proceeding is
commenced under subsection (2) of this section is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers have the
powers described in the order appointing them, or in any amendment to such
order. The parties to the proceeding are entitled to the same discovery rights
as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
7-113-302 COURT COSTS AND COUNSEL FEES.-- (1) The court in an
appraisal proceeding commenced under section 7-311-301 shall determine all
costs of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. The court shall assess the costs against
the corporation; except that the court may assess costs against all or some of
7
<PAGE> 286
the dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the
court finds the corporation did not substantially comply with the requirements
of part 2 of this article; or
(b) Against either the corporation or one or more dissenters, in
favor of any other party, if the court finds that the party against whom the
fees and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the
corporation, the court may award to said counsel reasonable fees to be paid out
of the amounts awarded to the dissenters who were benefitted.
8
<PAGE> 287
___________________________________
PROXY
The undersigned hereby (1) acknowledges receipt of the Notice of the
Special Meeting of Shareholders of Diamond Electronics, Inc. (herein sometimes
called the "Company") to be held on May ___, 1995 at
__________________________, Indianapolis, Indiana, at _______ a.m., local time;
and (2) appoints H. Charles Koehler and William Muirhead, III, and each of
them, with power of substitution, as his proxies to vote upon and act with
respect to all of the shares of Common Stock of the Company standing in the
name of the undersigned or with respect to which the undersigned is entitled to
vote and act, at the Special Meeting and at any adjournment thereof, and the
undersigned directs that this proxy be voted as follows:
a. A proposal to approve and adopt that certain Agreement and
Plan of Reorganization, dated April 28, 1995, by and among Diamond, Ultrak,
Inc., a Colorado corporation ("Ultrak"), Diamond Purchasing Corp., a Texas
corporation and wholly-owned subsidiary of Ultrak ("Ultrak Subsidiary"), and
the following shareholders of Diamond: Richard M. Tompkins, John W. Biddinger,
Robert N. Davies, H. Charles Koehler, and William Muirhead, III, pursuant to
which (i) Ultrak Subsidiary would merge (the "Merger") with and into Diamond,
(ii) Diamond would become a wholly-owned subsidiary of Ultrak, and (iii) each
outstanding share of common stock, no par value, of Diamond would be converted
into the right to receive shares of common stock, no par value, of Ultrak (or
cash for small amounts of stock) pursuant to the formula described therein.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
b. In the discretion of the proxies, as to any other business
that may properly come before the Special Meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE
MATTERS SPECIFICALLY REFERRED TO ABOVE
The undersigned hereby revokes any proxy or proxies heretofore given
to vote upon or act with respect to such Common Stock and hereby ratifies and
confirms all that the proxies appointed herein, their substitutes, or any of
them, may lawfully do by virtue hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
Dated: May ____, 1995 __________________________________________
__________________________________________
(Print Name and Title, if applicable)
Please date this Proxy and sign your name
exactly as it appears on your stock
certificate. Where there is more than one
owner, each should sign. When signing as an
attorney, administrator, executor, guardian
or trustee, please add your title as such.
If executed by a corporation, this Proxy
should be signed by a duly authorized
officer.
Please date, sign, and mail this Proxy in
the enclosed envelope.
<PAGE> 288
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS/PROXY STATEMENT
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 3-101.5 of the Colorado Corporation Code provides that any
director, officer, employee or agent of a Colorado corporation may be
indemnified against judgments, settlements, penalties, fines and reasonable
expenses actually incurred by him in connection with or in defending any
action, suit or proceeding in which he is a party by reason of his position.
With respect to any proceeding arising from actions taken in his official
capacity as a director or officer, he may be indemnified so long as it shall be
determined that he conducted himself in good faith and that he reasonably
believed that such conduct was in the corporation's best interests. In cases
not concerning conduct in his official capacity as a director or officer, he
may be indemnified as long as he reasonably believed that his conduct was not
opposed to the corporation's best interests. In the case of any criminal
proceeding, a director or officer may be indemnified if he had no reasonable
cause to believe his conduct was unlawful. If a director or officer is wholly
successful, on the merits or otherwise, in connection with such a proceeding,
such indemnification is mandatory. The Registrant's Articles of Incorporation
provide for indemnification of its present and former directors, employees and
agents to the fullest extent provided by Article 3-101.5.
Colorado corporations are also authorized to obtain insurance to protect
a person who is or was a director, officer, employee, fiduciary, or agent of a
Colorado corporation from certain liabilities, including liabilities against
which the corporation cannot indemnify its directors, officers, employees, or
agents.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------- ----
<S> <C>
*2.1 Agreement and Plan of Reorganization dated April 28, 1995 (the
"Agreement"), among Ultrak, Inc. ("Ultrak"), Diamond
Electronics, Inc. ("Diamond"), Diamond Purchasing Corp., and
certain shareholders of Diamond (the Agreement and Exhibits
1.01(a) and (b) thereto are included as Annex A to the
Prospectus/Proxy Statement)
**3.1 Articles of Incorporation of Ultrak, as amended through December
17, 1993 (included as Annex E to the Prospectus/Proxy Statement)
**3.2 Bylaws of Ultrak, as amended through March 10, 1995 (included as
Annex F to the Prospectus/ Proxy Statement)
**5.1 Legal opinion of Gardere & Wynne, L.L.P.
**10.1 Loan Agreement, dated as of July 20, 1992, between Ultrak, CCTV
Source International, Inc. and Loss Prevention Electronics
Corporation and Petrus Fund, L.P.
**10.2 Financing and Security Agreement, dated as of September 24,
1993, by and among NationsBank of Texas, N.A., Ultrak, Loss
Prevention Electronics Corporation, CCTV Source International,
Inc., and Dental Vision Direct, Inc. (with Guaranty by
Individual executed by George K. Broady, for the benefit of
NationsBank of Texas, N.A.)
**10.3 First Amendment to Loan Agreement, dated as of October 4, 1993,
between Ultrak, CCTV Source International, Inc. and Loss
Prevention Electronics Corporation, and Petrus Fund, L.P. (with
related Restated Revolving Credit Note)
**10.4 Second Amendment to Warrant Purchase Agreement, dated as of
October 4, 1993, between Ultrak, George K. Broady, and Petrus
Fund, L.P.
</TABLE>
II-1
<PAGE> 289
<TABLE>
<S> <C>
**10.5 Security Agreement, dated as of October 4, 1993, between Exxis
Technologies, Inc. and Petrus Fund, L.P.
**10.6 Security Agreement, dated as of October 4, 1993, between Dental
Vision Direct, Inc. and Petrus Fund, L.P.
**10.7 Ultrak 1988 Non-Qualified Stock Option Agreement
**10.8 Amendment No. 2 to Ultrak, Inc. 1988 Non-Qualified Stock Option
Plan
**10.9 Warrant Purchase Agreement, dated as of July 20, 1992, between
Ultrak, George K. Broady and Petrus Fund, L.P.
**10.10 Warrant to Purchase Ultrak Common Stock issued to Judith A.
Schindler
**10.11 First Amendment to Financing and Security Agreement, dated
effective October 31, 1994, by and among NationsBank of Texas,
N.A., Ultrak, Loss Prevention Electronics Corporation, CCTV
Source International, Inc. and Dental Vision Direct, Inc.
**10.12 Second Amendment to Loan Agreement, executed November 11, 1994,
to be effective as of October 4, 1994, by and between Ultrak and
Petrus Fund, L.P.
**10.13 Third Amendment to Warrant Purchase Agreement, executed November
11, 1994 to be effective as of October 4, 1994, by and among
Ultrak, George K. Broady and Petrus Fund, L.P.
**10.14 Letter Agreement among Ultrak, Risheg and JAK Pacific Warranty
and Repair Services, Inc. ("JAK") regarding Ultrak's purchase
and option to purchase JAK's common stock, dated as of April 5,
1994
**11 Computation of Per Share Data
**21 List of Ultrak's Subsidiaries
**23.1 Consent of Grant Thornton, LLP, dated May 5, 1995
**23.2 Consent of Norman, Jones, Enlow & Co., dated May 5, 1995
**23.3 Consent of Gardere & Wynne, L.L.P. (to be included in Exhibit
5.1)
**23.4 Consent of Future Director
**24.1 Power of Attorney (set forth on Page II-5)
</TABLE>
_______________
* Filed herewith
** Filed previously
II-2
<PAGE> 290
(b) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules of Ultrak are
included in Part II of this Registration Statement:
Report of Independent Accountants to Financial Statement
Schedules
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are inapplicable or
the information is included in Ultrak's Consolidated Financial Statements or
Notes thereto.
ITEM 22. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement; and
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions set forth or described in
Item 20 of the Registration Statement, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 291
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-4
<PAGE> 292
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Dallas, State of Texas on
the 9th day of May, 1995.
ULTRAK, INC.
By: /s/ George K. Broady George K.
Broady, Chief Executive Officer
and President
POWER OF ATTORNEY
Each of the undersigned hereby appoints George K. Broady, as attorney
and agent for the undersigned, with full power of substitution, for and in the
name, place and stead of the undersigned, to sign and file with the Securities
and Exchange Commission under the Securities Act of 1933 any and all amendments
and exhibits to this Registration Statement and any and all applications,
instruments and other documents to be filed with the Securities and Exchange
Commission pertaining to the registration of the securities covered hereby,
with full power and authority to do and perform any and all acts and things
whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons and in
the capacities indicated on May 9, 1995.
<TABLE>
<S> <C>
/s/ George K. Broady Chairman of the Board, Chief Executive
George K. Broady Officer, President, and Director (Principal
Executive Officer)
* Executive Vice President, Chief Operating
James D. Pritchett Officer, and Director
* Secretary-Treasurer and Chief Financial
Tim D. Torno Officer (Principal Financial Officer and
Principal Accounting Officer)
* Director
William C. Lee
_______________________ Director
Charles C. Neal
</TABLE>
*By: /s/ GEORGE K. BROADY
George K. Broady
Attorney-In-Fact
II-5
<PAGE> 293
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SCHEDULES
Board of Directors
Ultrak, Inc.
In connection with our audits of the consolidated financial statements
of Ultrak, Inc. and Subsidiaries referred to in our report dated February 17,
1995, we have also audited Schedule II for the three years in the period ended
December 31, 1994. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.
GRANT THORNTON LLP
Dallas, Texas
February 17, 1995
S-1
<PAGE> 294
SCHEDULE II
ULTRAK, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
Balance at Balance at
beginning Charge to end
Description of period operations Deductions(1) of period
----------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Year ended December 31, 1994
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . $213,607 $532,344 $(422,179) $323,772
======== ======== ========= ========
Year ended December 31, 1993
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . $135,105 $228,814 $(150,312) $213,607
======== ======== ========= ========
Year ended December 31, 1992
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . $ 61,976 $287,669 $(214,540) $135,105
======== ======== ========= ========
</TABLE>
Notes
- -----
(1) Accounts written off.
S-2
<PAGE> 295
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------- ----
<S> <C>
*2.1 Agreement and Plan of Reorganization dated April 28, 1995 (the
"Agreement"), among Ultrak, Inc. ("Ultrak"), Diamond
Electronics, Inc. ("Diamond"), Diamond Purchasing Corp., and
certain shareholders of Diamond (the Agreement and Exhibits
1.01(a) and (b) thereto are included as Annex A to the
Prospectus/Proxy Statement)
**3.1 Articles of Incorporation of Ultrak, as amended through December
17, 1993 (included as Annex E to the Prospectus/Proxy Statement)
**3.2 Bylaws of Ultrak, as amended through March 10, 1995 (included as
Annex F to the Prospectus/ Proxy Statement)
**5.1 Legal opinion of Gardere & Wynne, L.L.P.
**10.1 Loan Agreement, dated as of July 20, 1992, between Ultrak, CCTV
Source International, Inc. and Loss Prevention Electronics
Corporation and Petrus Fund, L.P.
**10.2 Financing and Security Agreement, dated as of September 24,
1993, by and among NationsBank of Texas, N.A., Ultrak, Loss
Prevention Electronics Corporation, CCTV Source International,
Inc., and Dental Vision Direct, Inc. (with Guaranty by
Individual executed by George K. Broady, for the benefit of
NationsBank of Texas, N.A.)
**10.3 First Amendment to Loan Agreement, dated as of October 4, 1993,
between Ultrak, CCTV Source International, Inc. and Loss
Prevention Electronics Corporation, and Petrus Fund, L.P. (with
related Restated Revolving Credit Note)
**10.4 Second Amendment to Warrant Purchase Agreement, dated as of
October 4, 1993, between Ultrak, George K. Broady, and Petrus
Fund, L.P.
**10.5 Security Agreement, dated as of October 4, 1993, between Exxis
Technologies, Inc. and Petrus Fund, L.P.
**10.6 Security Agreement, dated as of October 4, 1993, between Dental
Vision Direct, Inc. and Petrus Fund, L.P.
**10.7 Ultrak 1988 Non-Qualified Stock Option Agreement
**10.8 Amendment No. 2 to Ultrak, Inc. 1988 Non-Qualified Stock Option
Plan
**10.9 Warrant Purchase Agreement, dated as of July 20, 1992, between
Ultrak, George K. Broady and Petrus Fund, L.P.
**10.10 Warrant to Purchase Ultrak Common Stock issued to Judith A.
Schindler
**10.11 First Amendment to Financing and Security Agreement, dated
effective October 31, 1994, by and among NationsBank of Texas,
N.A., Ultrak, Loss Prevention Electronics Corporation, CCTV
Source International, Inc. and Dental Vision Direct, Inc.
**10.12 Second Amendment to Loan Agreement, executed November 11, 1994,
to be effective as of October 4, 1994, by and between Ultrak and
Petrus Fund, L.P.
**10.13 Third Amendment to Warrant Purchase Agreement, executed November
11, 1994 to be effective as of October 4, 1994, by and among
Ultrak, George K. Broady and Petrus Fund, L.P.
**10.14 Letter Agreement among Ultrak, Risheg and JAK Pacific Warranty
and Repair Services, Inc. ("JAK") regarding Ultrak's purchase
and option to purchase JAK's common stock, dated as of April 5,
1994
**11 Computation of Per Share Data
**21 List of Ultrak's Subsidiaries
**23.1 Consent of Grant Thornton, LLP, dated May 5, 1995
**23.2 Consent of Norman, Jones, Enlow & Co., dated May 5, 1995
**23.3 Consent of Gardere & Wynne, L.L.P. (to be included in Exhibit
5.1)
**23.4 Consent of Future Director
**24.1 Power of Attorney (set forth on Page II-5)
</TABLE>
______________
* Filed herewith
** Filed previously
<PAGE> 1
EXHIBIT 10.1
<PAGE> 2
EXHIBIT 8.01-A
CERTIFICATE OF COMPLIANCE OF DIAMOND
[attached]
<PAGE> 3
EXHIBIT 8.01-A
CERTIFICATE OF COMPLIANCE
The undersigned, Diamond Electronics, Inc., an Ohio corporation
("Diamond'), hereby certifies to Ultrak, Inc., a Colorado corporation
("Ultrak"), and Diamond Electronics Corp., a Texas corporation ("Newco"), that:
1. The representation and warranties of Diamond in the Agreement
and Plan of Reorganization (the "Merger Agreement"), dated April 11, 1995 (the
"Signing Date"), by and among Diamond, Ultrak, Newco and certain shareholders
of Diamond were true and correct in all material respects on and as of the
Signing Date and are true and correct in all material respects as of the date
hereof.
2. Diamond has complied, in all material respects, with all of
the covenants and agreements required by the Merger Agreement to be performed
and complied with by Diamond.
DATED: ________________________, 1995
DIAMOND ELECTRONICS, INC.
By:_______________________________
Signature
Printed Name:_____________________
Title:____________________________
<PAGE> 4
EXHIBIT 8.01-B
CERTIFICATE OF THE SIGNING SHAREHOLDERS
[attached]
<PAGE> 5
EXHIBIT 8.01-B
Signing Shareholders
CERTIFICATE OF COMPLIANCE
Each of the undersigned, Richard M. Tompkins ("Tompkins"), John W.
Biddinger ("Biddinger"), Robert N. Davies ("Davies"), H. Charles Koehler
("Koehler"), and William Muirhead, III ("Muirhead") (Tompkins, Biddinger,
Davies, Koehler, and Muirhead are collectively referred to herein as the
"Signing Shareholders" and individually referred to as a "Signing
Shareholder"), hereby certifies to Ultrak, Inc., a Colorado corporation
("Ultrak"), and Diamond Electronics Corp., a Texas corporation ("Newco"), that:
The representation and warranties of such Signing Shareholder in the
Agreement and Plan of Reorganization (the "Merger Agreement"), dated April 11,
1995 (the "Signing Date"), by and among Diamond Electronics, Inc., an Ohio
corporation, the Signing Shareholders, Ultrak, and Newco were true and correct
as to such Signing Shareholder in all material respects on and as of the
Signing Date and are true and correct in all material respects as of the date
hereof.
DATED:________________________, 1995
_____________________________________
Richard M. Tompkins
_____________________________________
John W. Biddinger
_____________________________________
Robert N. Davies
_____________________________________
H. Charles Koehler
_____________________________________
William Muirhead, III
<PAGE> 6
EXHIBIT 8.03
OPINION LETTER OF
DAGGER, JOHNSTON, MILLER, OGILVIE & HAMPSON
[attached]
<PAGE> 7
DAGGER, JOHNSTON, MILLER, OGILVIE & HAMPSON
[LETTERHEAD]
April 11, 1995
DRAFT
Ultrak, Inc.
1220 Champion Circle
Suite 100
Carrollton, TX 75006
Gentlemen:
We have acted as special Ohio counsel for Diamond Electronics, Inc.,
an Ohio corporation ("Diamond"), in connection with the Agreement and Plan of
Reorganization, dated April 11, 1995 (the "Agreement"), among Diamond, Ultrak,
Inc., a Colorado corporation ("Ultrak"), the Signing Shareholders and Diamond
Electronics Corp., a Texas corporation ("Newco"). This opinion letter is
being delivered to you pursuant to Section 8.03 of the Agreement. Capitalized
terms used herein that are defined in the Agreement shall have the meaning set
forth therein unless otherwise defined herein.
In connection with this opinion letter, we have examined and relied
upon the Agreement, the Articles of Incorporation, By-Laws and Regulations of
Diamond, Officers' Certificates and representations of management, and such
other corporate documents and records of Diamond as we have deemed necessary.
We have assumed the genuineness of all signatures, the legal capacity of
natural persons, the authenticity of all documents submitted to us as originals
and conformity to the original documents of all documents submitted to us as
certified or photostatic copies, the authenticity of the originals of latter
documents, and the due authorization, execution and delivery of all documents
by parties other than Diamond. We have not independently verified any of the
facts contained in such documents.
This opinion deals only with the specific legal issues explicitly
addressed herein. The law covered by the opinions expressed herein is limited
to the law of the State of Ohio. We call your attention to the fact that the
Agreement and other acquisition documents by their terms are to be governed by
and
____________________
(1) Ultrak's approval of this legal opinion is subject to Dagger, Johnston,
Miller & Hampson rendering an opinion regarding the capital stock of
Diamond Electronics, Inc.
<PAGE> 8
Page 2
Diamond Opinion Letter
construed in accordance with the laws of the State of _____________. No
opinion is expressed as to whether a Court would give effect to such provisions
and for purposes of the opinions expressed herein, we assume that the laws of
the State of ____________ do not vary from the laws of the State of Ohio.
Based solely upon the foregoing documents, examination thereof, and
representations of management, and subject to the foregoing limitations and
qualifications, based upon our current actual knowledge we are of the opinion
that:
1. Diamond is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Ohio, and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
2. Diamond has all requisite corporate power and authority to
execute and deliver the Agreement, to merge with Newco in accordance with the
terms of the Agreement, and to consummate the transactions contemplated by the
Agreement. The execution and delivery of the Agreement by Diamond, the
performance by Diamond of its obligations thereunder, and the consummation of
the Merger and the other transactions described in the Agreement have been duly
and validly authorized by all necessary corporate action on the part of
Diamond.
3. The Agreement has been duly executed and delivered by Diamond
and constitutes a valid and binding obligation of Diamond, enforceable against
Diamond in accordance with its terms, except (a) as may be limited by
Bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or
similar laws affecting the enforceability of creditors' rights generally, (b)
as may be limited by general principles of equity (regardless of whether such
enforceability is considered an action at law or equity), (c) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to certain equitable defenses and the discretion of the Court before
which any proceeding therefore may be brought, and (d) subject to the other
Common Qualifications, as defined and set forth in the Legal Opinion Accord of
the ABA Section of Business Law (1991).
4. The execution, delivery and performance of the Agreement, the
consummation of the Merger and other transactions described in the Agreement,
and the fulfillment of and compliance of the terms and conditions of the
Agreement do not and will not, with the passing of time, or the giving of
notice or both, violate, constitute a breach of, or a default under, result in
the loss of any material benefit under, or permit the acceleration of any
<PAGE> 9
Page 3
Diamond Opinion Letter
obligation under (a) any term or provision of the Articles of Incorporation or
By-laws or Regulations of Diamond, (b) any contract or agreement of Diamond
known to us, (c) any judgment, decree of order, known to us, of any court or
governmental authority or agency addressed to and binding on Diamond or any of
its properties, or (d) the Ohio General Corporation Law, any statute,
regulation or rule of the State of Ohio, or the United States applicable to
Diamond, except in the case of clauses (b) (c) and (d) above, for such
violations, breaches, defaults or accelerations as to do not have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business, or prospects of Diamond. Further, the opinion contained
in this paragraph is specifically not directed at any antitrust or unfair
competition laws or related statutes or regulations promulgated by the United
States.
5. Each consent, approval, order or authorization of, or
registration, declaration, or filing with, any governmental agency or public or
regulatory unit, agency, body, or authority of the State of Ohio with respect
to Diamond required to be made or obtained in connection with the execution,
delivery or performance of the Agreement by Diamond or the consummation of the
transactions described therein by Diamond has been made or obtained, except for
such consents, approvals, orders, authorizations, registrations, declarations,
or filings the failure of which to obtain or make would not have a material
adverse effect upon the assets, liabilities, results of operations, financial
condition, business or prospects of Diamond. However, this Opinion does not
address legal issues, if any, arising under Federal Securities Laws and
Regulations administered by the Securities and Exchange Commission, State "Blue
Sky" Laws and Regulations, and laws and regulations relating to commodity (and
other) futures and indices and other similar instruments; (b) pension and
employee benefit laws and regulations; (c) anti-trust and unfair competition
laws and regulations; (d) laws and regulations concerning filing and notice
requirements other than requirements applicable to charter-related documents
such as Articles of Merger; (e) compliance with fiduciary duty requirements;
(f) environmental laws and regulations; (g) land use and subdivision laws and
regulations; (h) tax laws and regulations; (i) federal patent and copyright
laws and regulations and federal and state trademark and other electoral
property laws and regulations; (j) racketeering laws and regulations; (k)
health and safety laws and regulations; (l) labor laws and regulations; (m)
laws, regulations and policies concerning national and local emergency,
possible judicial deference to acts of sovereign states, and criminal and civil
forfeiture laws; (n) other statutes of general application to the extent they
provide for criminal prosecution.
<PAGE> 10
Page 4
Diamond Opinion Letter
6. Except for matters disclosed in the Agreement of the Proxy
Statements/Prospectus, we are not aware of any pending or threatened
litigation, judgment, decree, injunction, or order of any court, which is
reasonably likely (i) to have a material adverse effect on the assets,
liabilities, results of operations, financial conditions, business or prospects
of Diamond or (ii) to cause a material limitation on Ultrak's ability to
operate the business of Diamond after the Closing.
Our opinions and "negative assurance" confirmation are subject to the
following additional assumptions, exceptions and limitations:
(A) With respect to the opinion expressed in Paragraph 6 hereof,
we have not conducted any search of any indexes, dockets or other records of
any federal, state or local court, administrative agency or body of any
arbitrator or conducted any other independent investigation.
(B) As used in the opinions and "negative assurance" confirmations
expressed herein, "to the best of our knowledge," "known to us" and similar
phrases mean the actual knowledge, without independent investigation or
verification, of attorneys in our Firm who are involved in our representation
of Diamond.
(C) This Opinion may be relied upon by you only in connection with
the Agreement and Merger contemplated thereunder, and may not be used or relied
upon by you for any purpose whatsoever without in each instance our prior
written consent. We are qualified to practice law in the State of Ohio and we
do not purport to be experts on, to express any opinion concerning any law
other than the laws of the State of Ohio and relevant law of the United States
of America (with the limitations as set forth above). This Opinion Letter is
solely for the benefit of the addressee hereof in connection with the closing
of the Merger contemplated by the Agreement, and no other person or entity may
rely upon this Opinion Letter without the prior express written consent of this
firm. This Opinion letter is given as of the date hereof, and we assume no
duty to communicate with you with respect to any matter that comes to our
attention hereafter.
DAGGER, JOHNSTON, MILLER, OGILVIE &
HAMPSON
By: Brian D. Shonk, Partner
<PAGE> 11
EXHIBIT 8.05
RICHARD TOMPKINS EMPLOYMENT AGREEMENT
[attached]
<PAGE> 12
EXHIBIT 8.05
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated May ___, 1995, is between Ultrak, Inc., a
Colorado corporation ("Employer"), and Richard M. Tompkins, an individual
resident of Ohio ("Employee").
Recitals. Employee has previously been an employee and stockholder of
Diamond Electronics, Inc., an Ohio corporation ("Diamond"), and Employer has
acquired all of the stock of Diamond. Employer desires to employ Employee as
President and Chief Executive Officer ("CEO") of ("Diamond"), and Employee
desires to be employed by Employer as President and CEO of Diamond, pursuant to
the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and the agreements
and covenants set forth below, the sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby
covenant and agree as follows:
1. Employment and Duties. Employee agrees to be employed by
Employer, and Employer agrees to employ Employee, as President and CEO of
Diamond on the terms and conditions set forth in this Agreement. Employee
shall perform such duties on behalf of Employer as directed from time to time
by Employer's Board of Directors (the "Board"). Employee shall use his best
efforts to preserve the business of Employer and Diamond and the goodwill of
all employees, customers, suppliers, and other persons having business
relations with Employer and Diamond. Employee agrees during the Term (as
hereinafter defined) to devote his best efforts, skills, and abilities to the
performance of his duties as stated in this Agreement and to the furtherance of
Employer's business.
2. Compensation.
(a) Employer shall pay to Employee, subject to appropriate tax
withholding, the following:
(i) A base salary (the "Base Salary") of One Hundred
Twenty-Five Thousand and No/100 Dollars ($125,000.00) during the First Year (as
hereinafter defined) and no less than One Hundred Thirty-One Thousand Two
Hundred Fifty Dollars ($131,250.00) during the Second Year (as hereinafter
defined), payable not less often than semi- monthly in accordance with
Employer's standard payment policies. If Employer extends this Agreement for a
Third Year (as hereinafter defined) pursuant to Subsection 3(a), then the Base
Salary for the Third Year shall not be less than One Hundred Thirty-Eight
Thousand Dollars ($138,000.00).
<PAGE> 13
(ii) A bonus in accordance with the bonus program (the "Bonus
Program") of Employer established by Employer for each of Employer's fiscal
years during the Term. The Bonus Program for 1995 (the "1995 Program") is
attached hereto as Exhibit A. For purposes of determining Employee's bonus
under the 1995 Program, the calculations of Actual Net Income shall be adjusted
to remove (i) any expenses associated with the merger whereby Employer acquired
Diamond and (ii) the revenue and profit targets to be achieved for employee to
receive a bonus and the amount of Employee's bonus, if any, will be prorated
from the Effective Date.
(b) On or about the date hereof, Employer shall grant Employee
options to acquire 5,000 shares of Employer's Common Stock, no par value per
share, pursuant to Employer's Nonqualified Stock Option Plan (the "Plan"). The
Board will annually evaluate issuing Employee additional stock options under
the Plan based on Employee's performance and the performance of Diamond.
(c) Employee shall be entitled to health insurance, life
insurance, and disability insurance benefits in accordance with Employer's
standard policies and practices, as such policies and practices shall exist
from time to time.
(d) Employee shall be entitled to participate in Employer's 401(k)
program and in Employer's Employee Stock Purchase Plan.
(e) Employee shall be entitled to four (4) weeks paid vacation and
holidays and sick leave in accordance with Employer's standard policies and
practices, as such policies and practices shall exist from time to time.
(f) Throughout the Term, Employer shall pay, or reimburse Employee
for, all travel and other expenses properly and reasonably incurred by him in
the discharge of his duties hereunder, provided that Employee's claims for
reimbursement are in accordance with Employer's expense reimbursement policy as
such policy shall exist from time to time.
(g) Employer will make available to Employee all such other
benefits as are from time to time made available to Employer's employees
generally.
3. Term and Termination.
(a) The employment of Employee pursuant to this Agreement shall
begin on the date of this Agreement and shall continue until the earliest of
(i) the date Employer terminates it for Just Cause (as hereinafter defined)
upon written notice to Employee, (ii) the death of Employee, (iii) Employee's
Permanent Disability (as hereinafter defined), or (iv) the second anniversary
of the date of this Agreement; provided, however, Employer shall have the
option to extend this Agreement for the Third Year by giving Employee written
notice at least sixty (60) days prior to the end of the Second Year. The term
"Term" shall mean the period from the date hereof through the date this
Agreement terminates or is terminated.
<PAGE> 14
(b) If Employee's employment terminates voluntarily or is
terminated for Just Cause, then Employee shall be entitled only to the
compensation (including accrued but unpaid bonuses) earned by him as of the
date of termination, and Employee shall not be entitled to any severance or
termination pay except as may be determined in accordance with Employer's
severance or termination pay policy.
(c) The term "Just Cause" shall mean any one or more of the
following:
(i) Employee violates, directly or indirectly, any laws
or regulations (other than minor traffic violations or similar offenses),
instructs any of Employer's employees to violate such laws or regulations, or
approves of any of Employer's employees violating such laws or regulations, or
Employee commits an act of moral turpitude, and the Board, after reasonable
investigation of the facts surrounding such violation or action, reasonably
determines that such violation or action materially and adversely affects, or
could reasonably be expected to materially and adversely affect, Employer, its
business or reputation or the ability of Employee to perform his obligations
under this Agreement.
(ii) Employee diverts Employer's funds to himself or any
other person, firm, or entity.
(iii) Employee fails to comply with a specific directive of
the Board of a substantial nature.
(d) Notwithstanding anything to the contrary in this Agreement or
in any other agreement (oral or written) now or hereafter entered into between
Employer and Employee, Employee expressly understands and agrees that the
provisions of Sections 4, 5, 6, and 9, and the remedial provisions of this
Agreement, shall survive any termination of Employee's employment under this
Agreement.
(e) The term "Permanent Disability" shall mean the mental and/or
physical inability of Employee (as determined by a licensed physician
acceptable to both Employer and Employee [or Employee's guardian]) to perform
the duties normally and customarily required of Employee pursuant to this
Agreement for twelve (12) consecutive months.
(f) The term "Year" shall mean the period from [May ___] of a
calendar year through April ___ of the following calendar year. The term
"First Year" shall mean May ___, 1995 through April ___, 1996, the term "Second
Year" shall mean May ____, 1996 through April ____, 1997, and the term "Third
Year" shall, to the extent Employer extends this Agreement pursuant to
Subsection 3(a), mean May ____, 1997 through April ____, 1998.
-3-
<PAGE> 15
4. Nondisclosure Agreement. Employee shall not, during the Term
and for a period of two (2) years thereafter, use for his own account or for
the benefit of any other person, firm, corporation, or other entity, directly
or indirectly, any of the customer lists, customer requirements, contract
terms, trade names, trade secrets, or good will owned by Employer or Diamond
and used in the business of designing, engineering, manufacturing, selling,
leasing, and/or servicing products of a type and nature that Diamond now
produces or produces between the date hereof and the date Employee's employment
terminates (the "Business") or directly or indirectly disclose or furnish to
any other person, firm, corporation, or other entity, the methods by which the
Business is or has been conducted, any of the methods by which the customers of
Employer and/or Diamond or the Business are or have been obtained, or any
confidential or proprietary information whatsoever of Employer, including,
without limitation, the identities of or other information regarding any
customers or prospective customers of Employer and/or Diamond relating to the
Business. Notwithstanding anything to the contrary contained in this Section
4, Employee shall not be prohibited from disclosing or using any information
and methods that are publicly available for reasons other than Employee's
violation of this Agreement.
5. Noncompetition Agreement.
(a) Employee acknowledges and agrees that the proprietary
information he has acquired regarding Diamond and will acquire regarding
Diamond and Employer will enable him to injure Employer and Diamond and
diminish the value of Employee's investment in Diamond if Employee should
compete with Employer and/or Diamond in the Business. Therefore, Employee
hereby agrees that, without the prior written consent of Employer, Employee
shall not, during the Term and for a period of two (2) years thereafter,
directly or indirectly, as a director, officer, agent, employee, consultant or
independent contractor or in any other capacity, (i) invest (other than passive
investments in publicly-owned companies which constitute not more than five
percent (5%) of the voting securities of any such company) or engage in any
business or activity that is competitive with the Business within the United
States; (ii) accept employment with or render services to any other company
engaged in the Business as all or any part of such other company's business; or
(iii) contact, solicit, or attempt to solicit or accept business (A) from any
of the customers of Employer during the Term, or (B) from any person or entity
whose business Employer was soliciting during the Term.
(b) If this Agreement is terminated for Just Cause, then Employee
understands that the noncompetition provisions of Subsection 5(a) applying
subsequent to the termination of this Agreement shall be fully enforceable
against Employee without additional payment by Employer.
-4-
<PAGE> 16
6. Nonemployment. During the Term, Employee shall not, on his
own behalf or on behalf of any other person, partnership, association,
corporation, or other entity, hire, solicit, or seek to hire any employee of
Employer or Diamond or in any other manner attempt directly or indirectly to
influence, induce, or encourage any employee of Employer or Diamond to leave
the employment of Employer or Diamond, nor shall Employee use or disclose to
any person, partnership, association, corporation, or other entity any
information obtained while an employee of Employer concerning the names and
addresses of Employer's and/or Diamond's employees.
7. Affiliate. For purposes of this Agreement, an "affiliate" of
Employer shall mean any person or entity controlling, controlled by, or under
common control with Employer.
8. Severability. Each provision of this Agreement shall be
treated as a separate and independent clause, and the unenforceability of any
one clause shall in no way impair the enforceability of any of the other
clauses herein. If one or more of the provisions contained in this Agreement
shall, for any reason, be held to be excessively restrictive by reason of the
geographic or business scope or duration thereof so as to be unenforceable,
such provision or provisions shall be construed by an appropriate judicial or
arbitral body by limiting and reducing it or them, so that this Agreement shall
be enforceable to the maximum extent compatible with the applicable law as it
shall then appear.
9. Inventions. Employee shall promptly disclose, grant, and
assign to Employer for its sole use and benefit any and all inventions,
improvements, technical information, and suggestions relating in any way to the
products of Employer or any of its affiliates or capable of beneficial use by
Employer or any of its affiliates, which Employee may conceive, develop, or
acquire during the Term (whether or not during usual working hours), together
with all patent applications, letters patent, copyrights, and reissues thereof
that may at any time be granted for or upon any such invention, improvement, or
technical information. In connection therewith, Employee shall promptly at all
times during and after the Term:
(a) Execute and deliver such applications, assignments,
descriptions, and other instruments as may be necessary or proper in the
opinion of Employer to vest title to such inventions, improvements, technical
information, suggestions, patent applications, patents, copyrights, and
reissues thereof in Employer and to enable it to obtain and maintain the entire
right and title thereto throughout the world; and
(b) Render to Employer, at Employer's expense, all such assistance
as it may require in the prosecution of applications for said patents,
copyrights, and reissues thereof, in the prosecution
-5-
<PAGE> 17
or defense of interferences which may be declared involving any of said
applications, copyrights, or patents, and in any litigation in which Employer
may be involved relating to any such inventions, improvements, technical
information, suggestions, patent applications, patents, copyrights, and
reissues thereof.
10. Remedies. Employee acknowledges and recognizes that a
violation or threatened violation by him of the restrictions, agreements, or
covenants contained in Sections 4, 5, 6, or 9 of this Agreement will cause
irreparable damage to Employer and that Employer will have no adequate remedy
at law for such violation or threatened violation. Accordingly, Employee
agrees that Employer shall also be entitled, in addition to any other rights or
remedies existing in its favor, to obtain specific performance or injunctive
relief in order to enforce this Agreement or prevent a breach or further breach
of any provision hereof. Such right to specific performance or injunction
shall be in addition to Employer's right to bring an action for damages
actually sustained by Employer or to exercise any other right or remedy
available to Employer as a result of any breach hereunder.
11. Acknowledgments. Employee acknowledges and recognizes that
(i) the enforcement of any of Sections 4, 5, 6, or 9 of this Agreement by
Employer is necessary to protect the legitimate interests of Employer in
protecting its goodwill, trade secrets and other confidential or proprietary
information, business, accounts, and patronage (collectively, in this Section
11, "Employer's Interests") and will not unreasonably interfere with Employee's
ability to pursue a proper livelihood, and (ii) the restraints imposed by the
covenants of and restrictions on Employee in this Agreement are not greater
than necessary to protect Employer's Interests.
12. Assignment. Employer shall have the right to assign this
Agreement to its successors or assigns only with Employee's consent. The
rights and duties of Employee hereunder are personal to him, and no such right
may be assigned or duty delegated by him.
13. Estate. If Employee dies prior to the expiration of the Term,
any monies that may be due him from Employer under this Agreement as of the
date of his death shall be paid to his estate.
14. Notices. All notices and requests hereunder shall be in
writing and shall be delivered in person, by certified or registered mail,
postage prepaid, or by a nationally recognized overnight delivery service, and
shall be addressed to the addresses specified beside each party's signature at
the end of this Agreement. Such notices and requests shall be deemed delivered
on the day on which personally delivered or, if delivered by mail, on the third
business day after deposit in the United States mail, as evidenced by a post
office receipt furnished to the sender. Any party may change his or its
address for receipt of notices and
-6-
<PAGE> 18
requests hereunder by notice duly given to the other party in accordance with
the provisions of this Section 14.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS
WITHOUT REFERENCE OR REGARD TO THE CONFLICTS OF LAW RULES OF SAID STATE.
16. Costs, Expenses, and Legal Fees. Each party hereto agrees to
pay the costs and expenses, including reasonable attorneys' fees, incurred by
the other party in successfully (i) enforcing any of the terms of this
Agreement or (ii) proving that the other party breached any of the terms of
this Agreement. Except as otherwise provided in the immediately preceding
sentence, Employer and Employee shall pay their own expenses separately
incurred in connection with the preparation and review of this Agreement and
the transactions contemplated hereby.
17. Waiver. The waiver by either party of any breach or provision
of this Agreement must be in writing. No waiver of any breach or failure by
either party to enforce any of the terms or conditions of this Agreement at any
time shall, in any manner, limit or waive such party's right thereafter to
enforce and to compel strict compliance with every term and condition hereof.
One or more waivers of any breach of any covenant, term, or provision of this
Agreement by any party shall not be construed as a waiver of a subsequent
breach of the same covenant, term, or provision nor shall it be considered a
waiver of any other then existing or subsequent breach of a different covenant,
term, or provision.
18. Miscellaneous. This Agreement may be amended only by an
instrument in writing executed by the person against whom enforcement of the
amendment is sought. This Agreement, the schedules and exhibits attached
hereto, and the documents referred to herein or reasonably contemplated hereby,
constitute the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersede all prior written or
oral agreements and understandings relating to the subject matter hereof.
There are no oral agreements between the parties to this Agreement. The
captions in this Agreement are for convenience of reference only. This
Agreement may be executed in one or more counterparts. This Agreement shall be
binding on the parties hereto and their heirs, estates, personal
representatives, successors, and permitted assigns. This Agreement shall not
be construed against the party responsible for, or primarily responsible for,
preparing this Agreement.
-7-
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EMPLOYER:
ULTRAK, INC.
Address:
1220 Champion Circle By:________________________________
Suite 100 Title:_____________________________
Carrollton, Texas 75006
EMPLOYEE:
Address:
2124 Creekview Court ___________________________________
Reynoldsburg, Ohio 43068 Richard M. Tompkins
-8-
<PAGE> 20
EXHIBIT A
TO EMPLOYMENT AGREEMENT
THE ULTRAK GROUP
MANAGER'S INCENTIVE PROGRAM
FOR 1995
Purpose:
The manager's incentive program is intended to reward outstanding performance
and to focus attention on the important aspects of your company or division.
It is also intended to help develop you as a person, a leader and a
businessman. A full understanding of the program provisions is critical to its
success.
Program Provisions:
The program encompasses six (6) areas of measurement, some weighted more
heavily than others. The incentive is based off your base salary and will be
rewarded up to a maximum of 50% of your base salary. The six categories of
measurement and the weighting are set forth below:
<TABLE>
<CAPTION>
Grade Weight in
Range Area of Measurement Points
- ------ -------------------- ------
<S> <C> <C>
0-unlimited Actual Net Income to Budget before
corporate 5.0
0-unlimited Actual Net Revenues to Budget 2.5
0-10 Interco cooperation and market
delineation 2.5
0-10 Improvement in Customer Service
Survey Ratings 1.5
0-10 Improvement in Employee Survey
Supervisor Ratings 1.5
0-10 Organization and management of
assets (AR, Inventory) 1.5
</TABLE>
Incentive Calculations:
A total of 50 points earned equals an incentive payment of 12 1/2 % of base
salary; 100 points earned equals 25% of base salary; 150 points earned equals
37 1/2 % of base salary. Maximum points that can be earned is 200 (50% of base
salary). Irrespective of the number of points earned, no incentive will be paid
if actual net income before corporate is less than 88% of budget.
<PAGE> 21
Example Calculations:
Net income: Up to 88% of actual net income to budget before corporate
equals a grade of 0: 90% equals a grade of 2: 100% equals a
grade of 12: 120% equals a grade of 32, etc. There is no
ceiling in this category.
The grade is then multiplied times the weighting for the total
points earned. For example, if net income before corporate
were 100% of budget, the points would be 12 X weighting
of 5 for a total on this category of 60 points (12 X 5.0 = 60).
Net Revenues: Same as above except the weighting is 2.5 not 5.0. There is
no ceiling in this category. For example, if total revenues
exceed budget by 10%, the points earned would be 22 times 2.5=
55 points earned.
All Other: The maximum grade is 10, however, the weighting factors vary
by categories. Average achievement would be a 5. All of
these areas are subjective.
In the example below, assuming both actual net income before corporate and
revenues were at budget for the year and all other categories scored an 8, the
total points earned would be:
<TABLE>
<CAPTION>
Points Weight Total
------ ------ -----
<S> <C> <C> <C>
*Net Income to Budget 12 5.0 60.0
*Revenues to Budge 12 2.5 30.0
*Intercompany cooperation/delineation 8 2.5 20.0
*Improvement in customer service ratings 8 1.5 12.0
*Improvement in employee survey ratings 8 1.5 12.0
*Balance sheet management 8 1.5 12.0
----
Total points earned 146/200
=73% OR 37% OF BASE
</TABLE>
Grading and Payment:
The incentive payment request should be prepared by you and presented to your
supervisor for review, discussion and approval. If you qualify, interim
payments can be made after July 15th and can be paid on a monthly basis
thereafter. Interim incentive payments should be based upon the June 30th
financial statements. Total interim payments should not exceed 80% of the
final total incentive estimate.
Final incentive payments, including any adjustments necessary, will be made
after the year end audited financial statements are released.
<PAGE> 22
Agreement:
I have read and I understand the provisions of the 1995 Manager's Incentive
Program. My final approved 1995 budget, which is the measuring basis for this
program, is attached.
_________________________ _______________
Managing Director Date
_________________________ _______________
George K. Broady Date
<PAGE> 23
EXHIBIT 9.03
OPINION OF GARDERE & WYNNE, L.L.P.
[attached]
<PAGE> 24
G&W Draft: 4-27-95
[FORM OF OPINION OF GARDERE & WYNNE, L.L.P.)
EXHIBIT 9.03
_______________, 1995
Diamond Electronics, Inc.
4465 Coonpath Road
Carroll, Ohio 43112
Gentlemen:
We have acted as counsel for Ultrak, Inc., a Colorado corporation
("Ultrak"), and Diamond Electronics Corp., a Texas corporation and a
wholly-owned subsidiary of Ultrak ("Newco"), in connection with the
transactions described in the Agreement and Plan of Reorganization, dated as of
April 11, 1995 (the "Merger Agreement"), by and among Ultrak, Diamond
Electronics, Inc., an Ohio corporation ("Diamond"), the Signing Shareholders,
and Newco. Capitalized terms used in this opinion letter and not otherwise
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
In so acting, we have examined and relied upon the accuracy of
original, certified, conformed, or photostatic copies of such records,
agreements, certificates, and other documents as we have deemed necessary or
appropriate to enable us to render the opinions set forth below. In all such
examinations, we have assumed the legal capacity of natural persons, Ultrak's
compliance with the Colorado Business Corporation Act, the genuineness of
signatures on original documents, the authenticity of all original documents,
and the conformity to such original documents of all copies submitted to us as
certified, conformed, or photographic copies and, as to certificates of public
officials, we have assumed the same to have been properly given and to be
accurate. We also have relied, as to various matters of fact relating to the
opinions set forth below, on certificates of public officials and officers of
Ultrak.
Based upon the foregoing and subject to the limitations,
qualifications, and assumptions set forth herein, we are of the opinion that:
(1) Ultrak is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Colorado
and has all requisite corporate power and authority to own, lease, and
operate its properties and to carry on its business as now being
conducted. Ultrak is duly qualified to transact business and is in
good standing as a foreign corporation in the State of Texas. Newco
is a corporation duly incorporated, validly existing, and in good
standing under the laws
<PAGE> 25
Diamond Electronics, Inc.
Page 2
of the State of Texas and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on
its business as now being conducted.
(2) Ultrak and Newco have the full corporate power and
authority to execute and deliver the Merger Agreement, to perform
their obligations under the Merger Agreement, and to consummate the
Merger and the other transactions described therein. The execution
and delivery of the Merger Agreement by Ultrak and Newco, the
performance by Ultrak and Newco of their obligations thereunder, and
the consummation of the Merger and the other transactions described in
the Merger Agreement have been duly and validly authorized by all
necessary corporate action on the part of Ultrak and Newco.
(3) Each consent, approval, order, or authorization of,
or registration, declaration, or filing with, any governmental agency
or public or regulatory unit, agency, body, or authority of the State
of Texas or the United States with respect to Ultrak and/or Newco
required to be made or obtained in connection with the execution,
delivery, or performance of the Merger Agreement by Ultrak and/or
Newco or the consummation of the transactions described therein by
Ultrak and/or Newco has been made or obtained, except for such
consents, approvals, orders, authorizations, registrations,
declarations, or filings, the failure of which to obtain or make would
not have a material adverse effect upon the assets, liabilities,
results of operations, financial condition, business, or prospects of
Ultrak and/or Newco.
(4) The execution, delivery, and performance of the Merger
Agreement, the consummation of the Merger, and the other transactions
described in the Merger Agreement, and the fulfillment of and
compliance with the terms and conditions of the Merger Agreement do no
and will not, with the passing of time or the giving of notice or
both, violate, constitute a breach of, or default under, result in the
loss of any material benefit under, or permit the acceleration of any
obligation under (a) any term or provision of the Articles of
Incorporation or Bylaws of Ultrak or Newco, (b) any judgment, decree,
or order known to us of any court or governmental authority or agency
addressed to and binding on Ultrak or Newco or any of their
properties, or (c) any statute, regulation or rule of the State of
Texas or the United States applicable to Ultrak and/or Newco, except,
in the case of clauses (b) and (c) above, for such violations,
breaches, defaults, or accelerations as do not have a material adverse
effect on the assets, liabilities, results of operations, financial
condition, business, or prospects of Ultrak and/or Newco.
(5) The shares of Ultrak Common Stock that are to be
issued to the shareholders of Diamond pursuant to the Merger (on the
Effective Date and on each of the Adjustment Dates) have been duly
authorized and, when so issued in accordance with the terms of the
Merger Agreement, will be validly issued, fully paid and
nonassessable.
<PAGE> 26
Diamond Electronics, Inc.
Page 3
(6) The Merger Agreement has been duly executed and
delivered by Ultrak and Newco and constitutes the valid and binding
agreement of Ultrak and Newco, enforceable against Ultrak and Newco in
accordance with its terms, except (a) as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or
similar laws affecting the enforceability of creditors' rights
generally, (b) as may be limited by general principles of equity
(regardless of whether such enforceability is considered in an action
at law or a suit in equity), (c) that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought, and (d)
subject to the Other Common Qualifications, as defined and set forth
in the Legal Opinion Accord of the ABA Section of Business Law (1991).
The foregoing opinions are subject to the following limitations,
qualifications, and assumptions:
(a) Whenever any opinion is qualified by the words "to our
knowledge," "known to us," or other words of similar meaning, the quoted words
mean the actual knowledge, without independent investigation or verification,
of attorneys in our Firm involved in the representation of Ultrak.
(b) In rendering the opinions set forth in paragraph (1) above
concerning the good standing of Ultrak in Colorado and the foreign
qualification and good standing of Ultrak in Texas, we have relied exclusively
upon certificates of authorities of the State of Colorado and Texas, and such
opinions have only the meanings ascribed to those certificates by those
authorities.
(c) This opinion letter is limited in all respects to the laws of
the State of Texas and the federal laws of the United States, and we assume no
responsibility as to the applicability or effect of any other laws. No opinion
is expressed herein with respect to any laws, ordinances, statutes or
regulations of any county, city, or other political subdivision of the State of
Texas.
(d) The opinions and "negative assurance" confirmation expressed
herein are limited to the matters specifically addressed, and no opinion or
confirmation is implied or may be inferred beyond the matters so specifically
expressed. Without limiting the generality of the foregoing, no opinion or
confirmation is expressed herein as to the applicability or the effect of the
antitrust or (except as expressly stated herein) the securities laws and
regulations of the State of Texas or the United States to the Merger Agreement
or any of the transactions described therein.
This opinion letter has been furnished to you pursuant to Section 9.03
of the Merger Agreement, and no other person or entity shall be entitled to
rely upon it, or to quote, distribute, or otherwise use it for any other
purpose, without our prior written consent. This
<PAGE> 27
Diamond Electronics, Inc.
Page 4
opinion letter is given as of the date hereof, and we assume no obligation to
advise you after the date hereof of facts or circumstances that come to our
attention or changes in law that occur which could affect the opinions or
confirmation contained herein.
Very truly yours,
GARDERE & WYNNE, L.L.P.
By:______________________________
Richard L. Waggoner, Partner
<PAGE> 28
SCHEDULE 2.01
STATES:
Diamond Electronics, Inc., an Ohio corporation, files state income tax and/or
franchise tax returns in the following states:
1. Maryland
2. New Jersey
3. Ohio
4. Pennsylvania
5. Texas
6. West Virginia
Currently, Diamond owns no property outside of Ohio and has one employee in
Maryland.
Diamond Electronics, Inc. is a corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio.
CITIES:
Diamond employees personnel in, and files corporation city income tax returns
with, the following cities:
1. Columbus, Ohio
2. Lancaster, Ohio
<PAGE> 29
SCHEDULE 2.02
INVESTMENTS OR SUBSIDIARIES:
Diamond currently owns 100 percent of the common stock outstanding of Alpha
CCTV, Inc., an Ohio corporation. This subsidiary was formed to facilitate the
acquisition of certain assets of Alpha Electronics, Inc. As of March 31, 1995,
Alpha CCTV, Inc., was inactive.
Diamond owns 100 percent of the common stock outstanding of Polymatrix, Inc.,
an Ohio corporation. In 1988, Polymatrix, Inc. acquired substantially all of
the assets and specified liabilities of Pearl Polymatrix, Inc., a Georgia
corporation. In 1993, Polymatrix, Inc. was formally dissolved.
Diamond has (or had) a common stock equity interest (7.5 percent) of Diamond
Automation Companies, Inc. ("DAC") (and warrants to acquire an additional 7.5
percent) arising from a June 8, 1992, modification of an asset purchase
agreement by which DAC had previously acquired the Process Automation Systems
assets of Diamond. DAC defaulted on its obligation to pay the cash purchase
price for the assets (which has since been written off as uncollectible by
Diamond) and DAC is believed to be inactive.
<PAGE> 30
SCHEDULE 2.05(C)
All 97,786 warrants previously issued under warrant agreements as disclosed in
the Diamond Financial Statements were called subsequent to January 1995. Of
these warrants, 24,893 expired without being exercised and were paid a call
premium of five cents per share and 72,893 were exercised as shown in the
adjustments to Schedule 2.05(d).
As of April 28, 1995, no stock options were outstanding and exercisable.
<PAGE> 31
SCHEDULE 2.05(d)
A listing of the record holders of Diamond as of March 31, 1995 is attached.
<PAGE> 32
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 1
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
ABF Freight 45 45 5.614 5 0
883 Frank Road; Columbus, OH 43223
Adams Barre Company 58 58 7.236 7 0
P.O. Box 99; Hilliard, OH 43026
All American 22 22 2.745 2 0
5009 Hiatus Road; Sunrise, FL 33351
Allstate Financial Corp. 42 42 5.240 5 0
8150 Perry Hwy #305; Pittsburgh, PA 15237
Alpha Security Systems 58 58 7.236 7 0
13428 West Ave; San Antonio, Texas 78216
Amatom Electronics 24 24 2.994 2 0
446 Blake Street; New Haven, CT 06515
American Credit Indemnity 287 287 35.806 35 35
300 St. Paul Place; Baltimore, MD 21202-2183
AMP, Inc. 89 89 11.104 11 11
MS-1, 6-44, Box 3608; Harrisburg, PA 17105-3608
Anchor Rubber Company 350 350 43.666 43 43
840 S. Patterson, Box 832; Dayton, OH 45401
ANR Freight Systems 48 48 5.988 5 0
Department O; Denver, CO 80271
Apple Graphics 76 76 9.482 9 0
P.O. Box 1509; Dayton, OH 45413
Argrove Box Company 18 18 2.246 2 0
P.O. Box 14015; Dayton, OH 43017
Arius 101 101 12.601 12 12
2709 Electronic Lane, Dallas, Texas 75220
Arjay 6 6 0.749 0 0
7400 Cedar Avenue, Minneapolis, MN 55423
Associated Spring/Raymond 15 15 1.871 1 0
P.O. Box 77152, Detroit, MI 48277
</TABLE>
<PAGE> 33
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 2
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Astro Industries 992 992 123.762 123 123
4403 Dayton Xenia Road, Dayton, OH 45432
ATT 1,137 1,137 141.853 141 141
P.O. Box 93366, Chicago, IL 60673
Automatic Data Processing 190 190 23.704 23 23
3660 Corporate Drive, Columbus, OH 43229
Avis 929 929 115.902 115 115
Box 772, Garden City, NJ 11530
BH Electronics 37 37 4.616 4 0
12219 Wood Lake Drive, Burnsville, MN 55337
Bailey, Thelma 19 19 2,370 2 0
1025 Carroll Eastern Rd NW, Lancaster, OH 43130
Baker, Tim 670 670 83.589 83 83
5025 Ireland Road, Lancaster, OH 43130
Basic Distribution 17 17 2.121 2 0
707 Slocum Street, Lancaster, OH 43130
Baxter, Clara 145 145 18.090 18 18
7360 Cinci-Zanevl Rd, Lancaster, OH 43130
Bearings, Inc. 38 38 4.741 4 0
1850 Lone Eagle St, Columbus, OH 43228
Bell Industries, Inc. 1,205 1,205 150.336 150 150
444 Windsor Park Drive, Dayton, OH 45459
Bennett, Deborah 142 142 17.716 17 17
1400 Graylock St, Lancaster, OH 43130
Berman, Martha L. 4,400 4,400 548.946 548 548
12 East 90th St #4B, New York, NY 10128-0654
Biddinger, John W. 363,473 16,893 380,366 47,454.607 47,454 47,454
9121 Spring Hollow Dr, Indianapolis, IN 46260
Biddinger, Karen E. 15,000 4,000 19,000 2,370.447 2,370 2,370
2020 Lincoln Park West 7C, Chicago, IL 60614
</TABLE>
<PAGE> 34
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 3
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Biddinger, Katherine J. 15,000 4,000 19,000 2,370.447 2,370 2,370
1352 Texas Ave South, Minneapolis, MN 55426
Biddinger, Margaret H. 637,637 637,637 79,551.836 79,551 79,551
9121 Spring Hollow Dr, Indianapolis, IN 46260
Biddinger Investment Capital 0 0 0.000 0 0
9102 N. Meridian St #500, Indianapolis, IN 46260
Biebel & French 6,709 6,709 837.017 837 837
2500 Kettering Tower, Dayton, OH 45423
Black Box Corporation 74 74 9.232 9 0
P.O. Box 12800, Pittsburgh, PA 15241
Blanket Security 117 117 14.597 14 14
6750 Poplar Ave Suite 110, Memphis, TN 38138
Bloom, Jeffrey 226 226 28,196 28 28
1703 Graylock St, Lancaster, OH 43130
Blue Ash Electronics 45 45 5.614 5 0
7260 Edington Drive, Cincinnati, OH 45249
Blue Chip Fasteners 163 163 20.336 20 20
4060 Webster St, Cincinnati, OH 45212-2706
Boley, Robert A. 728 728 90.826 90 90
1494 Deercreek Court, Worthington, OH 43085
Blote, Michael 675 675 84.213 84 84
8043 West Ohio State Lane, Lancaster, OH 43130
Bopla Enclosures 51 51 6.363 6 0
7330 Executive Way, Frederick, MD 21701
Bradley, B.B. 118 118 14.722 14 14
7755 Crile Road, Painesville, OH 44077
Brazos Components Inc. 54 54 6.737 6 0
P.O. Box 460 Bldg 363, Mineral Wells, TX 76067
</TABLE>
<PAGE> 35
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 4
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bresler, Karen 71 71 8.858 8 0
1232 Eighth Ave, Lancaster, OH 43130
Brown & Morrison 456 456 56.891 56 56
P.O. Box 240827, Charlotte, NC 28224
Browns Creek Corporation 5,500 5,500 686.182 686 686
631 2nd Ave South, Nashville, TN 37210
Burlington Air Express 83 83 10.355 10 0
1000 New Holland Ave, Pittsburgh, PA 15250
Calandra Industrial Supply 201 201 25.077 25 25
Box 186, 192 Quarry Rd, Lancaster, OH 43130
Call Dram Company 60 60 7.486 7 0
330 21st Avenue, San Francisco, CA 92017
Capitol Bankers Life 124 124 15.470 15 15
P.O. Box 19191, Greensville, SC 29602-9191
Cardinal Container Corp. 820 820 102.304 102 102
P.O. Box 07868, Columbus, OH 43207
Cellular One/New Par 104 104 12.975 12 12
350 East Wilson Bridge Rd, Worthington, OH 43085
Central Ohio Welding Inc. 734 734 91.574 91 91
1875 Progress Ave, Columbus, OH 43207
Christy, Virginia 161 161 20.086 20 20
4180 Lithopolis Rd, Lancaster, OH 43130
Cincinnati Gasket 65 65 8.109 8 0
40 Illinois Ave, Reading, Cincinnati, OH 45215
City Securities Corp. 50,400 48,000 98,400 12,276.422 12,276 12,276
P.O. Box 44992, Indianapolis, IN 46204
Clover, Judd 445 445 55.518 55 55
302 East Allen St, Lancaster, OH 43130
Collins, Evelyn L. 690 690 86.085 86 86
2527 Lanc-Kirkrsvl Rd NW, Lancaster, OH 43130
</TABLE>
<PAGE> 36
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 5
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Columbia Gas 2 2 0.250 0 0
P.O. Box 182007, Columbus, OH 43218
Columbus & Southern 99 99 12.351 12 12
P.O. Box 1440, Columbus, OH 43216
Commercial Optical 1,116 1,116 139.233 139 139
118 Bridge St, Huntington WV 24700
Commercial Printing 162 162 20.211 20 20
P.O. Box 2550, Lancaster, OH 43130
Compax 35 35 4.367 4 0
P.O. Box 10083, Haija Pay Israel, 26110
Computer Products Inc. 625,667 625,667 78,058,454 78,058 78,058
7900 Glad Road, Boca Raton, FL 33434
Con Way Central Express 39 39 4.866 4 0
P.O. Box 5160, Portland, OR 97208
Conkey, Michael 163 163 20.336 20 20
165 Mt. Ida Ave, Lancaster, OH 43130
Conrac Corporation 950 950 118.522 118 118
1724 South Mountain Ave, Duarte, CA 91010
Control Design Supply 45 45 5.614 5 0
5508 Elmwood Ave #303, Indianapolis, IN 46203
Coopers & Lybrand 3,070 3,070 383.014 383 383
Department 1160, Pittsburgh, PA 15264
Copco Papers 1,648 1,648 205.605 205 205
P.O. Box 16533, Columbus, OH 43216
Craig Brothers 8,914 8,914 1,112.114 1,112 1,112
P.O. Box 395, Carroll, OH 43112
CT Corporation Systems 40 40 4.990 4 0
P.O. Box 1544, Grand Central Sta, New
York, NY 10163
Custom Bobbin Windings 48 48 5.988 5 0
P.O. Box 2369, Zanesville, OH 43702
</TABLE>
<PAGE> 37
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 6
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Custom Coil & Transformer 521 521 65.000 65 65
P.O. Box 3277, Zanesville, OH 43702
D&B Power 1,178 1,178 146.968 146 146
P.O. Box 40M, Bayshore, NY 11706
Davies, Robert N. 367,475 367,475 45,846.321 45,846 45,846
3307 Bay Road North, Indianapolis, IN 46240
Delille Oxygen 5 5 0.624 0 0
701 South Columbus St, Lancaster, OH 43130
Deltec Corporation 38 38 4.741 4 0
2738 Kurtz St, San Diego, CA 92110
DHL Airway 79 79 9.856 9 0
333 Twin Dolphin Dr, Redwood City, CA 94065
Diamond Power Specialty 1,236 1,236 154.204 154 154
2600 East Main St, Lancaster, OH 43130
Digital Equipment Corp. 766 766 95.566 95 95
5231 Grand Ave, Davenport, IA 52807-1014
Downour, Cheryl 148 148 18.465 18 18
872 Valley View Dr, Lancaster, OH 43130
Druck, Diane M. 4,950 4,950 617.564 617 617
5727 Broadway St, Indianapolis, IN 46220
Druck, Justin M. 27,500 27,500 3,430.911 3,430 3,340
2401 North Street, Logansport, IN 46947
Duk Woo Electronics, Inc. 180,148 180,148 22,475.333 22,475 22,475
073-40 Bong Chun-Dong 3.4 Fl. Bon Chun Bldg.
Kwanak-Ku, Soeul, 151-060 Korea
Duncan, Jerry E. 8,800 8,800 1,097.891 1,097 1,097
401 Cactus Drive, Key West, FL 33040
Dunn & Bradstreet 69 69 8.608 8 0
299 Park Ave, New York, NY 10101
</TABLE>
<PAGE> 38
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 7
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Dwyer Instrument 81 81 10.106 10 0
P.O. Box 373, Michigan City, IN 46360
Eagle Convex Glass Co. 181 181 22.582 22 22
P.O. Box 1340, Clarksburg, WV 26302
East Coast Camera Center 45 45 5.614 5 0
236 Beach 87th St, Roakaway Beach, NY 1693
Edgington, Estella 279 279 34.808 34 34
551 W. Sixth Ave, Lancaster, OH 43130
Electro Marketing 988 988 123.263 123 123
10 Cornwall Drive, Westfield, NY 07090
Electro Mechanical 84 84 10.480 10 0
11411 Bradley Ave, Pacoma, CA 91331
Electromech Inc. 214 214 26.699 26 26
1 Cordier St, Irvington, NY 07111-4009
Electronic Security Sys 83 83 10.355 10 0
13537 Gratiot, Detroit, MI 48205
Electronic Service Parts 168 168 20.960 20 20
2901 East Washington St, Indianapolis, IN 46201
Electronics Marketing Corp. 2,701 2,701 336.978 336 336
Corp. Processing Dept, 0828, Columbus, OH
43271
Elmwood Sensors, Inc. 60 60 7.486 7 0
500 Narragansett Park Dr, Pawtucket, RI 02861
Emery Freight 66 66 8.234 8 0
Box 1959, Scranton, PA 18577
Enyart, Jim 741 741 92.447 92 92
118 Marks Ave, Lancaster, OH 43130
Esro 10 10 1.248 1 0
5364 Ehrlich Rd, Suite 222, Tampa, FL 33625
</TABLE>
<PAGE> 39
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 8
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Eversole, Donald 185 185 23.081 23 23
165 Timber Ridge Dr, Pickerington, OH
43147-1175
Exair Corporation 1,442 1,442 179.904 179 179
1250 Century Circle North, Cincinnati, OH 45246
FEMCO 607 607 75.370 75 75
P.O. Box 640349, Pittsburgh, PA 15264
Fenton, A.W. 36 36 4.491 4 0
P.O. Box 73919, Cleveland, OH 44193
Ferrero, Louis P. 8,800 8,800 1,097.891 1,097 1,097
P.O. Box 40888, Indianapolis, IN 46240
Filtrine Manufacturing 4,821 4,821 601.470 601 601
10 Main St, Harrisville, NH 03450
Fioto, Fred 428 428 53.397 53 53
29065 Evans Road, Logan, OH 43138
Fluid Technology 702 702 87.582 87 87
1315 Nelson St Unit H, Lakewood, CO 80215
Fournier Rubber & Supply 48 48 5.988 5 0
1341 Norton Ave, Columbus, OH 43212
Freeman, (Woltz) Paula 105 105 13.100 13 13
1311 West Fair Ave, Lancaster, OH 43130
Frontier Foundries 1,457 1,457 181.776 181 181
P.O. Box 627, Titusville, PA 16354
Fujinon Inc. 6,042 6,042 753.802 753 753
10 High Point Drive, Wayne, NJ 07470
Gano, Merry Melody 177 177 22.083 22 22
324 West Fair Ave, Lancaster, OH 43130
Garrock 819 819 102.179 102 102
6650 Busch Blvd, Columbus, OH 43229
General Machine & Mould 935 935 116.651 116 116
627 East Main St, Lancaster, OH 43130
</TABLE>
<PAGE> 40
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 9
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
GFS Manufacturing 452 452 56.392 56 56
P.O. Box 1409, Dover, NH 03820
GL Coulter Sales 1,356 1,356 169.175 169 169
444 Barneys Joy Road 5, Dartmouth, MA 02748
Glicks Furniture 38 38 4.741 4 0
1800 East 5th Ave, Columbus, OH 43219
Gorman, Inc. Frank W. 238 238 29.693 29 29
P.O. Box 223, El Paso, TX 79942
Gossell, Russell 156 156 19.463 19 19
464 Shoshone Dr, Lancaster, OH 43130
Gossel, Chuck 379 379 47.284 47 47
2322 Coonpath Road, Lancaster, OH 43130
Grayhill Inc. 155 155 19.338 19 19
P.O. Box 4913, Chicago, IL 60630
Gray, F.J. Company 646 646 80.595 80 80
139-24 Queens Blvd, Jamaica, NY 11435
Guinan, Lana 226 226 28.196 28 28
721 Neil Ave, Lancaster, PA 43130
Guinan, Mark 314 314 39.175 39 39
721 Neil Ave, Lancaster, PA 43130
Harvey, Anthony 173 173 21.584 21 21
1076 Rockport Drive, Carol Stream, IL
60188-2986
Helen's Flowers 37 37 4.616 4 0
936 Prestige Blvd, Lancaster, OH 43130
Hendershot, Bill 983 983 122.639 122 122
1465 Hillbrook Drive, Lancaster, OH 43130
Hersh Packing & Rubber 316 316 39.424 39 39
P.O. Box 186 Canal, Winchester, OH 43110
Hertz Corporation 153 153 19.088 19 19
P.O. Box 26141, Oklahoma City, OK 73126
</TABLE>
<PAGE> 41
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PAGE 10
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Hewlett Packard 299 299 37.303 37 37
P.O. Box 44548, San Francisco, CA 94144
Hill, Christopher 355 355 41.795 41 41
4975 Jacobs Ladder, Lancaster, PA 43130
Hinton's Sunoco 41 41 5.115 5 0
1100 North Memorial Dr, Lancaster, OH 43130
Hirschfeld, Stanley E. 13,200 13,200 1,646.837 1,646 1,646
7273 Waterview Point, Noblesville, IN 46060
HISCO 51 51 6.363 6 0
1024 South Arlington St, Akron, OH 44306
Hoffesetter, J.C. 126 126 15.720 15 15
5244 Springboro Rd, Dayton, OH 45439
Holter, Russell 378 378 47.159 47 47
2960 Sitterly Rd Rt 2 Canal, Winchester,
OH 43110
Honsberger, Peggy 276 276 34.434 34 34
2255 Lucille Dr NE, Lancaster, OH 43130
Howdyshell, Victor 37 37 4.616 4 0
41550 Cob Hollow-Fruitdale, Nelsonville,
OH 45676
Hughes, Peters Inc. 404 404 50.403 50 50
1991 Stanford Rd, Columbus, OH 43212
HULS Printing 186 186 23.205 23 23
P.O. Box 310, Logan, OH 43138
Hurricane Electronics Lab 55 55 6.862 6 0
P.O. Box 1280, Hurricane, UT 84737
Image Memory Systems 51 51 6.363 6 0
6000 Webster St, Dayton, OH 45414
Indiana University Found. 52,800 52,800 6,587.348 6,587 6,587
Showalter House, Box 500, Bloomington, IN 47402
</TABLE>
<PAGE> 42
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PAGE 11
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Instant Replay Video 855 855 106.670 106 106
5950 Steubenville Pike, Robinson Township,
PA 15136
Instrument Technology 26,835 26,835 3,347.945 3,347 3,347
P.O. Box 381, Westfield, MA 01086
Intermountain 25 25 3.119 3 0
11079 Random Valley Circle, Parker, CO
80134-6010
International Space Optics 9,792 9,792 1,221.654 1,221 1,221
5732 Engineer Dr, Huntington Beach, CA 92649
Issel, Daniel P. 17,600 17,600 2,195.783 2,195 2,195
10163 E. Fair Circle, Englewood, CO 8011
J.F. Hopkins & Assoc. 153 153 19.088 19 19
1324 Stimmel Road, Columbus, OH 43223
JL Industrial Supply Co. 9 9 1.123 1 0
31800 Industrial Rd, Livonia, MI 48151
JR Signs 25 25 3.119 3 0
87 Front St, Groveport, OH 43125
JR Woodruff Co. 5,948 5,948 742.075 742 742
P.O. Box 19548, Houston, TX 77024
Jas A. Murphy & Co. Inc. 18 18 2.246 2 0
1421 High St, Hamilton, OH 45011
Johnson, Dr. & Mrs. Earl 17,600 17,600 2,195.783 2,195 2,195
11704 Oak Tree Way, Carmel, IN 46032
Kailay International Corp. 508 508 63.378 63 63
17F, 695, TUN HUA S Rd Taipei, Taiwan, ROC
Kansas City Equip. Co. 512 512 63.877 63 63
P.O. Box 6823, Shawnee Mission, KS 66207
Karl, James K. 8,800 8,800 1,097.891 1,097 1,097
519 East 10th St #200, Bloomington, IN 47408
Kern, B. Keith 100 100 12.476 12 12
10909 OCG Lane, Roseville, OH 43777
</TABLE>
<PAGE> 43
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PAGE 12
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Kern, Russ 765 765 95.442 95 95
14 Chaney St, Roseville, OH 43777
Kern, Terry 84 84 10.480 10 0
242 Sand Street, Crooksville, OH
43731-1227
Kevelder, Dana 1,052 1,052 131.248 131 131
226 Parkwood Dr, Pickerington, OH 43147
Key Blue Print Inc. 217 217 27.073 27 27
195 East Livingston Ave, Columbus, OH 43215
Kirby, Robert 821 821 102.428 102 102
164 Elmwood Ave, Columbus, OH 43130
Kleinhuis (HKL) 26 26 3.244 3 0
Dept L-722, Columbua, OH 43260
Koehler, H. Charles 634,801 634,801 79,198.015 79,198 79,198
P.O. Box 2767, Indianapolis, IN 46206
Kula, Pat 340 340 42.419 42 42
3816 Cass Creek Ct, Groveport, OH 43125
L & B Investments 61,411 61,411 7,661.660 7,661 7,661
9100 Keystone Crossing, Indianapolis, IN 46240
Lacrosse, James 17,600 17,600 2,195.783 2,195 2,195
7915 Morningside Dr, Indianapolis, IN 46240
Lancaster Electro Plating 25 25 3.119 3 0
P.O. Box 367, Lancaster, OH 43130
Lancaster Hospital 50 50 6.238 6 0
401 North Ewing St, Lancaster, OH 43130
Lancaster Restaurant Supply 194 194 24.204 24 24
664 South Columbus St, Lancaster, OH 43130
Lasky, Marven M. 4,400 4,400 548.946 548 548
9476 Tamarack Dr, Indianapolis, IN 46260
Lathrop-Trotter Co. 397 397 49.530 49 49
5006 Barrow Ave, Cincinnati, OH 45209
</TABLE>
<PAGE> 44
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PAGE 13
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
L-Com 20 20 2.495 2 0
1755 Osgood St. North Andover, MA 01845
Lee Spring Co. 20 20 2.495 2 0
1-462 62nd Street, New York, NY 11219
Litton Poly-Scientific 5,137 5,137 640.894 640 640
1213 North Main Street, Blackburg, VA 24060
Lowes of Ohio 134 134 16.718 16 16
1921 Riverway Dr., Lancaster, OH 43130
M C G Electronics 39 39 4.866 4 0
12 Burt Dr., Deer Park, NY 11729
Magnetic Spring Water Co. 84 84 10.480 10 0
1801 Lone Eagle St., Columbus, OH 43228
446 Blake Street; New Haven, CT 06515
Mahrdt, J. Kurt Jr. 25,300 25,300 3,156.438 3,156 3,156
7807 Mystic Bay Dr., Indianapolis, IN 46240
300 St. Paul Place; Baltimore, MD 21202-2183
Marshall, Loretta 274 274 34.184 34 34
2231 Lucille Dr., NE, Lancaster, OH 43130
MS-1 6-55, Box 3608; Harrisburg, PA
17105-3608
Mason, Jim 284 284 35.432 35 35
76732 Eighth St. Rd., Newcomerstown, OH 43832
840 S. Patterson, Box 832; Dayton, OH 45401
May Tech Associates 88 88 10.979 10 0
285 Concord Rd., Marlboro, MA 01752
McGlaughlin Oil Co. 84 84 10.480 10 0
3750 East Livignston Ave., Columbus, OH 43227
P.O. Box 1509; Dayton, OH 45413
MCI Telecommunications 430 430 53.647 53 53
P.O. Box 85570, Lousiville, KY 40285
MCI/Telefax Service 2,804 2,804 349.828 349 349
P.O. Box 41729, Philadelphia, PA 19101
MCI/Western Union Int. 18 18 2.246 2 0
P.O. Box 41729, Philadelphia, PA 19101
McJunkin Corporation 6 6 0.749 0 0
Dept. L-300P Pittsburgh, PA 15264
</TABLE>
<PAGE> 45
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 14
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
McKeever Electric 78 78 9.731 9 0
375 North Grant Ave., Columbus, OH 43215
McKenzie, Eugene 19,131 19,131 2,386.791 2,386 2,386
1014 King St., Lancaster, OH 43130
McMaster-Carr Supply Co. 168 168 20.960 20 20
P.O. Box 7690, Chicago, IL 60680
Mentzell Electric 87 87 10.854 10 0
271 Route 380 West Apollo, PA 15613
Mid Ohio Electric 70 70 8.733 8 0
1170 McKinely Ave., Columbus, OH 43222
Mid South 37 37 4.616 4 0
4796 Pontchartrain Dr., Slidell, LA 70459
Midstate Sales, Inc. 12 12 1.497 1 0
Corp Processing Dept., Columbus, OH 43271
Minnesota Mining & Mfg. 330 330 41.171 41 41
10260 Alliance Rd., #300, Cincinnati, OH 45250
5025 Ireland Road, Lancaster, OH 43130
Mitchell, Russell G. 10,000 10,000 1,247.604 1,247 1,247
300 Fallriver Dr., Reynoldsburg, OH 43068
Montgomery, Paricia 257 257 32.063 32 32
1380 Sugar Grove Rd., Lancaster, OH 43130
7360 Cinci-Zanevl Rd, Lancaster, OH 43130
Moore, Glenn W. 59 59 7.361 7 0
121 Wilson Ave., Lancaster, OH 43130
1850 Lone Eagle St, Columbus, OH 43130
Motion Industries 1,607 1,607 200.490 200 200
P.O. Box 27, Lancaster, OH 43130
444 Windsor Park Drive, Dayton, OH 45459
Muirhead, Judith D. 135,850 135,850 16,948.698 16,948 16,948
710 Forest Blvd., Zionsville, IN 46077
Muirhead, William III 653,120 653,120 81,483.501 81,483 81,483
304 Long Cove Dr., Hilton Head, SC 29928
</TABLE>
<PAGE> 46
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PAGE 15
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Murdock, Greg 103 103 12.850 12 12
2982 Meadowbrook Dr., Lancaster, OH
N&S Enterprises 8,800 8,800 1,097.891 1,097 1,097
203 Brandywine Rd Ole Hickery, TN 37138
National Utility Service 5,664 5,664 706.643 706 706
P.O. Box 712 Park Ridge, NJ 07656
Newark Electronics 7,469 7,469 931.835 931 931
1350 West 5th Ave, Columbus, OH 43212
Norman, Steve 1,100 1,100 137.236 137 137
P.O. Box 150991, Nashville, TN 37215
North Hills Electronics 400 400 49.904 49 49
575 Underhill Blvd, Syosset, NY 11791-3416
Muriel, Jacob 486 486 60.634 60 60
16 Choma Umigdal St, Qyriat Chaim Israel, 26268
Ohio Bell Telephone 557 557 69.492 69 69
45 Erieview Plaza, RM 942, Cleveland, OH 44114
Ohio Counting Scale South 61 61 7.610 7 0
4833 Business Center Way, Cincinnati, OH 45246
Ohio Fluid Power 22 22 2.745 2 0
19768 Progress Drive, Strongville, OH 44136
Ohio Foundry 173 173 21.584 21 21
240 SW Avenue, Talladge, OH 44278
Omni Controls 651 651 81.219 81 81
13540 N. Florida Ave #103, Tampa, FL 33613
Osborne, Thomas S. 26,400 26,400 3,293.674 3,293 3,293
1119 Keystone Way, Carmel, IN 46032
Oyl-Air Company 620 620 77.351 77 77
28196 Scippo Creek Rd, Circleville, OH 43113
P I Rod Inc. 492 492 61.382 61 61
P.O. Box 128, Plymouth, IN 46563
</TABLE>
<PAGE> 47
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PAGE 16
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Panasonic Audio Video 17,245 17,245 2,151.493 2,151 2,151
P.O. Box 1501, Secaucus, NJ 07094
Paul, Crey B. Jr. 23,382 23,382 3,540.949 3,540 3,540
7060 Jonesboro Rd, Morrow, GA 30260
PC World 7 7 0.873 0 0
P.O. Box 55000, Boulder, CO 30322
Pearl Polymatrix Inc. 35,000 35,000 4,366.613 4,366 4,366
420 McCrary Rd, Molena, GA 30258
Peters, Stella 173 173 21.584 21 21
1495 Hillbrook Dr, Lancaster, OH 43130
Phister Equipment Co. 1,245 1,245 155.327 155 155
800 Compton Rd #14, Cincinnati, OH 45231
Pitney Bowes 129 129 16.094 16 16
P.O. Box 85390, Louisville, KY 40285
Pittman Division 2,747 2,747 342.717 342 342
P.O. Box 8500 S-6990, Philadelphia, PA 19178
Plant, Nancy 277 277 34.559 34 34
11545 Brookside Lane, Pickerington, OH 43147
Polaroid Corporation 13 13 1.622 1 0
P.O. Box 93476, Chicago, IL 60673
Principal Financial Corp. 152 152 18.964 18 18
711 High St, Des Moines, IA 50309
Priority Dispatch Inc. 21 21 2.620 2 0
4665 Malsbary Rd, Cincinnati, OH 45242-5632
Pritchard, Norman D. 15,088 15,088 1,882.385 1,882 1,882
136 E. Mithoff, Columbus, OH 43206
Priz Company 1,810 1,810 225.816 225 225
4023 Transport St, Palo Alto, CA 94303
</TABLE>
<PAGE> 48
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PAGE 17
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Prodco Equipment 85 85 10.605 10 0
P.O. Box 361069, Cleveland, Ohio 44136
Quatech 118 118 14.722 14 14
662 Wolf Ledges Parkway, Akron, OH 44311
RL Transfer Inc. 20 20 2.495 2 0
2483 SR 3 & US 22W, Wilmington, OH 45177
Randolph Industries 247 247 30.816 30 30
6400 Corvette St, Los Angeles, CA 90040-1791
Redel Laboratories 49 49 6.113 6 0
148 South Northwest Hwy, Barrington, IL
60010-4672
Reese, Carolyn 118 118 14.722 14 14
4992 Lithopolis Rd, Lancaster, OH 43130
Rental Uniform Service 8 8 0.998 0 0
P.O. Box 631, Lancaster, OH 43130
Richey, David 11,000 11,000 1,372.364 1,372 1,372
10 West Market St #1600, Indianapolis, IN
46204-2970
Rienschield, Debra 220 220 27.447 27 27
151 Lenwood Drive, Lancaster, OH 43130
RMC International 323 323 40.298 40 40
Room 316, Balk Sang Bldg, Yeoeuido-Dong
Seoul, Korea
Rosner, Eli 240 240 29.942 29 29
29 Windstone Dr, San Rafael, CA 94903
Rudolph Brothers 11 11 1.372 1 0
961 Walnut St Canal, Winchester, Oh 43110
Ruff, Paul 25 25 3.119 3 0
125 North Ewing St, Lancaster, OH 43130
Sealed Air Corporation 79 79 9.856 9 0
2550 Commerce Blvd, Sharonville, OH 45241
Sentrol Inc. 70 70 8.733 8 0
10831 SW Cascade Blvd, Portland, OR 97223
</TABLE>
<PAGE> 49
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 18
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Set Point Inc. 199 199 24,827 24 24
P.O. Box 20668, Portland, OR 97220
Seyed Tabaian 460 460 57.390 57 57
7442 Busey Rd Canal, Winchester, OH 43110
Sharpman, Shanman, Poret 1,421 1,421 177.285 177 177
750 Lexington Ave, New York, NY 10022
Shaws Restaurant 47 47 5.864 5 0
123 North Broad St, Lancaster, OH 43130
Shelly, R.G. 18 18 2.246 2 0
41 Cold Water Rd, Don Mills Ontario
Canada M3V 1YS
Sherrick, Jon 48 48 5.988 5 0
1121 Tarkiln Rd Lot 135, Lancaster, OH 43130
Sherwin Williams 325 325 40.547 40 40
840 West Goodale, Columbus, OH 43212
Ship N Out 153 153 19.088 19 19
Road No. 6, Route 22, Brewster, NY 10509
Silcott, Joyce 228 228 28.445 28 28
712 Virginia Avenue, Lancaster OH 43130
Skytel 16 16 1.996 1 0
1600 Golf Road #840, Rolling Meadows, IL 60008
Slaters Hardware 23 23 2.869 2 0
1141 North Memorial Dr, Lancaster, OH 43130
Smith Electronics Inc. 283 283 35.307 35 35
8200 Snowville Rd, Cleveland, OH 44141
Solid State 242 242 30.192 30 30
875 Dearborn Dr, Worthington, OH 43085
Spader & Assoc. 1,563 1,563 195.000 195 195
P.O. Box 29794, Birmingham, AL 35216
</TABLE>
<PAGE> 50
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 19
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Steele, Mr. and Mrs. Richard 17,600 17,600 2,195.783 2,195 2,195
5118 Beaumont Way S Dr, Indianapolis, IN 46250
Stellar Systems 35 35 4.367 4 0
3511 Leonard Court, Santa Clara, CA 95054
Stephenson, Donald 646 646 80.595 80 80
1302 East Fair Ave, Lancaster, OH 43130
Stokes Vacuum 49 49 6.113 6 0
P.O. Box 8500 S-6535, Philadelphia, PA 19178
Storm Products 39 39 4.866 4 0
116 Shore Drive, Hinesdale, IL 60521
Storts, Rose 102 102 12.726 12 12
151 East Broadway, Apt. A, New Lexington,
OH 43764
Stotts-Friedman Co. Inc. 9 9 1.123 1 0
2600 East River Rd, Dayton, OH 45439
Summit Industries, Inc. 22 22 2.745 2 0
4545 Gateway Circle, Dayton, OH 43130
Swartz, Sally 301 301 37.553 37 37
1270-F Sheridan Drive, Lancaster, OH 43130
Switching System 378 378 47.159 47 47
500 Porter Way, Placentia, CA 92670
S.L. Corporation 2,612 2,612 325.874 325 325
240 Tamal Vista Blvd, Corte Madera, CA 94925
S.W. Anderson Co. 11 11 1.372 1 0
P.O. Box 460, Downers Grove, IL 60515
TTI 14 14 1.747 1 0
4700 Rockside Rd #500, Independence, OH 44131
Taylor Chevrolet Leasing 105 105 13.100 13 13
P.O. Box 10, Lancaster, OH 43130
Tech Fab International 1,106 1,106 137.985 137 137
51 Eros Apt. 56 Nehry Place, New Delhi,
India 110 019
</TABLE>
<PAGE> 51
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PAGE 20
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* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Teletronix Systems 2,123 2,123 264.866 264 264
P.O. Box 2340, San Rafael, CA 94912
Television Broadcast 92 92 11.478 11 11
2 Park Avenue, New York, NY 10016
Texas Microsystems Inc. 2,993 2,993 373.408 373 373
P.O. Box 201681, Houston, TX 77216
Texwipe Company 28 28 3.493 3 0
650 East Crescent Ave, Upper Saddle, NJ 07458
Thal-More Associates 84 84 10.480 10 0
P.O. Box 489, Dayton, OH 45449
Therm-O-Disc 171 171 21.334 21 21
1320 South Main St, Mansfield, OH 44907
Thomas Publishing Co. 75 75 9.357 9 0
One Penn Plaza, New York, NY 10119
Thomas, Kerr & Kayden 350 350 43.666 43 43
100 Galleria Pkwy NW #590, Atlanta, GA 30339
Thompson Electric Supplies 575 575 71.737 71 71
2050 Fairwood Ave, Columbus, OH 43215
Thorn Automated Systems 914 914 114.031 114 114
835 Sharon Drive, Westlake, OH 44145
Thorn, Jeffrey 239 239 29.818 29 29
400 Oak St, Bremen, OH 43107
Thyssen Plastic Products Div. 370 370 46.161 46 46
830 Pickens Industrial DR NE, Marietta, GA
30062-3103
Tiffen Manufacturing 313 313 39.050 39 39
90 Osner Ave, Hauppauge, NY 11788
Tompkins, Richard M. 275,124 30,000 305,124 38,067.387 38,067 38,067
6171 Zachary Woods Ln, Columbus, OH 43232
</TABLE>
<PAGE> 52
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 21
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Trans World Airlines Inc. 9,892 9,892 1,234.130 1,234 1,234
Dept CH 10508, North Suburban, IL 60155
Transcat 304 304 37.927 37 37
P.O. Box 73078, Rochester, NY 14673-3078
Tri-Angle Security Inc. 1,987 1,987 247.899 247 247
379 West Second St, Logan, OH 43138
TN Cook Inc. Div. of COW Industries 2,266 2,266 282.707 282 282
1875 Progress Ave, Columbus, OH 43207-1767
U-Line 26 26 3.244 3 0
P.O. Box 460, Lake Bluff, IL 60044
Ultrak Inc. 392 392 48.906 48 48
2400 Industrial Ln #2000A, Broomfield, CO
80020-1689
United Parcel Service 1,788 1,788 223.972 223 223
P.O. Box 1030, Columbus, OH 43216
Universal Processing 1 1 0.125 0 0
707 Hadley Dr, Columbus, OH 43228
Vickroy, Janis 134 134 16.718 16 16
4535 Delmont Rd, Lancaster, OH 43130
Victroeen Inc. 131 131 16.344 16 16
6000 Cochran Rd, Cleveland, OH 44139
Vulcan Binder 539 539 67.246 67 67
P.O. Box 29, Vincent, AL 35178
WMI 26 26 3.244 3 0
3800 Columbus-Lanc Rd, Lancaster, OH 43130
Whittaker Security, Inc. 24 24 2.994 2 0
4501 Lantern Place, Alexandria, VA 22306
Wholesale Supply 71 71 8.858 8 0
P.O. Box 23437, Nashville, TN 37202
William Stamp Co. Inc. 1,189 1,189 148.340 148 148
6493 Riding Rd, Syracuse, NY 13206
</TABLE>
<PAGE> 53
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 22
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Wilson, James 125 125 15.595 15 15
15038 Monmouth St, Lancaster, OH 43130
Winchester Electronic Sales 123 123 15.346 15 15
5304 Winters Chapel Rd, Atlanta, GA 30360
Wolfe, Perry 1,354 1,354 168.926 168 168
2017 Carey Rd NE, Junction City, OH 43748
Woltz, April 127 127 15.845 15 15
3721 B West End Ave, Nashville, TN 37201
Woods, Ashley N. 19,250 19,250 2,401.637 2,401 2,401
3721 B West End Ave, Nashville, TN 37201
Woods, Frank A. 9,500 9,500 1,185.224 1,185 1,185
631 2nd Ave, Nashville, TN 37210
Woods, Grayson N. 19,250 19,250 2,401.637 2,401 2,401
3721 B West End Ave, Nashville, TN 37201
Woods, Jayne Ann 5,500 5,500 686.182 686 686
3721 B West End Ave, Nashville, TN 37201
Wright, Dr. and Mrs. Gary 13,200 13,200 1,646.837 1,646 1,646
6178 N. County Line Rd 550E, Pittsboro,
IN 46167
Wygum J. Medill 64 64 7.895 7 0
1311 County Line Rd NE, Bremen, OH 43107-9758
W.C. Sims Co. Inc. 317 317 39.549 39 39
P.O. Box 4, Springfield, OH 45501
Xerox Corporation 1,295 1,295 161.565 161 161
10490 Vista Park Rd, Dallas, TX 75238
Yates, Chester 357 357 44.539 44 44
RR #8, Lancaster, OH 43130
Ziehlke, Jerome 681 681 34.962 84 84
606 Sandy Creek Dr, Van Vleck, TX 77482
Zielinski, Jerome 18,295 18,295 2,282.491 2,282 2,282
152 Brookhill Lane, Circleville, OH 43113
</TABLE>
<PAGE> 54
DIAMOND ELECTRONICS, INC SHAREHOLDER LIST - WITH CONVERSION TO ULTRAK STOCK:
PAGE 23
***************************************************************************
* *
* ASSUMPTIONS: 1.] 600,000 ULTRAK SHARES EXCHANGED *
* *
***************************************************************************
<TABLE>
<CAPTION>
Ultrak # of
Diamond # of Ultrak # of Ultrak # of Shares
# of Shares Shares after Shares Prelim. Shares Prelim. Final after
Diamond Options/ Options/ B/4 Fractional after Fractional 10 and Less
Shareholder Name # of Shares Warrants to Warrants Shares Shares Shares
Address/City/State/Zip @ 12/31/94 Exercise Exercised Eliminated Eliminated Cashed Out
----------------------------------------- ----------- ----------- ------------ -------------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Subtotal before options + warrants 4,706,326 102,893 4,809,219 600,000.001 599,833 599,339
Options - R Tompkins 30,000 99.89%
Warrants Issued - Rights offering 97,786
Warrants called or expired (24,893)
--------
Subtotal after options + warrants 4,809,219
Number of Ultrak Shares to Issue 600,000
Conversion Factor 8.015365
</TABLE>
<PAGE> 55
SCHEDULE 2.08
TAXES:
Diamond's 1994 corporate income and/or franchise tax returns for Ohio, Texas,
and West Virginia are due for filing in May 1995.
Diamond's corporate federal income tax return for 1994 was not filed on March
15, 1995, but an extension was filed on that date.
Diamond's corporate income tax returns for 1994 for the states of Pennsylvania,
Maryland, and the city of Lancaster, Ohio were not filed on March 15, 1995, but
extensions were filed on that date.
As of January 1, 1995, Diamond had available deferred tax assets totaling
$316,090 and available unused operating loss carry-fowards of $0.
<PAGE> 56
SCHEDULE 2.09
LIABILITIES AND OBLIGATIONS OF DIAMOND
None.
<PAGE> 57
SCHEDULE 2.10
EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS; ERISA:
Diamond sponsors a 401(k) salary savings plan covering all employees meeting
certain eligibility requirements. Under the plan, Diamond is required to
contribute amounts equal to 10% of the employee's first 4% of voluntary
contributions. Diamond's contributions to the plan were $8,429 and $7,481
during 1994 and 1993, respectively.
Diamond has a stock option plan, under which certain employees have been
granted options to purchase shares of the company's common stock at a price
equal to the market price of the stock at the date of the grant. As of January
1, 1995, 30,000 such options were outstanding and exercisable.
<PAGE> 58
SCHEDULE 2.11
ABSENCE OF CERTAIN CHANGES:
1. Diamond has made the following capital expenditure commitments
in excess of $10,000 during the period January 1, 1995 through
March 31, 1995.
- Electromagnetic emission testing system for $16,671.
- SmartScan pro demo system for $23,328.
Total capital expenditure commitments for the period of
January 1, 1995 through March 31, 1995 were $72,874.
2. Diamond previously formed a subsidiary associated with the
acquisition of part of Alpha Electronics, Inc. In late 1994,
Alpha CCTV, Inc. terminated its lease of its San Antonio
office facility. This subsidiary, Alpha CCTV, Inc. was
inactive as of March 31, 1995.
3. Diamond's primary banking relationship is with Society Bank.
4. Certain foreign filings on Diamond's patents were permitted to
lapse during 1991 and 1992 due to a lack of funds to file and
maintain such foreign filings.
5. Executive management bonuses totaling $54,000 were paid during
March, 1995 which represent amounts authorized and accrued.
$4,500 was paid to an affiliate, Biddinger Investment Capital
Corporation, during the first quarter of 1995 for headquarter
expenses. $6,435 was paid to an affiliate, Merchants Travel,
Inc., during the first quarter of 1995 for travel expenses.
Travel advances to various Diamond employees were made during
the first quarter of 1995 in the ordinary course of business.
Outside directors fees totaling $27,000 were made during
March, 1995 to individuals who were also stockholders. During
March, 1995, Diamond's Board of Directors authorized a special
bonus of $16,800 to executive management, contingent upon the
culmination of the proposed Diamond-Ultrak merger.
6. Diamond Patent #1,189,956, "Dark Current Compensating Lens
Control," was allowed to lapse in 1994 as the patent was not
in current use and was determined by management to be of
little or no value to Diamond.
<PAGE> 59
SCHEDULE 2.14
PATENTS, TRADEMARKS, COPYRIGHTS, ETC.:
Diamond abandoned its opportunity to make foreign filings on Diamond patents in
1991 and 1992 during the pendency of Diamond's bankruptcy. Diamond Patent
#1,189,956, "Dark Current Compensating Lease Control," was allowed to lapse in
1994 as the patent was not in current use and was determined by management to
be of little or no value to Diamond.
Diamond has discontinued the use of two trademarks. Diamond's "GOLD DOME"
trademark was contested by a Buffalo, New York bank in November of 1991. On
advice of Diamond's counsel, the company discontinued use of the GOLD DOME
trademark.
Diamond applied for a trademark for "Diamond Vision" which was challenged by
Mitsubishi. Diamond's management determined it was in the best interest of the
company to abandon the application for the trademark.
Diamond's "SmartScan" trademark is also being used by the Peabody Engineering
Corporation in association with one of their flame scanner products. Peabody
Engineering Corporation's counsel has sent the Corporation a copy of its
trademark registration and informed Diamond that it was infringing the Peabody
trademark. The Peabody Engineering Corporation trademark registration is dated
ten months earlier than Diamond's and Peabody Engineering Corporation's first
use of the trademark precedes Diamond's by approximately two months. Diamond
has continued to use the trademark because the company's products do not
compete.
<PAGE> 60
SCHEDULE 2.16(c)
DISCRIMINATION CHARGES
LABOR RELATIONS:
On January 17, 1995, Diamond received notice from the Ohio Civil Rights
Commission that the company was being accused of unlawful discriminatory
practices under Section 4112 of the Ohio Revised Code. Diamond was asked to
provide its response by no later than February 3, 1995.
On January 25, 1995, Diamond's counsel reviewed the charge and the
Corporation's documentation supporting its decision to release the employee due
to excessive absenteeism.
Diamond counsel then prepared a position statement for the Corporation. It was
counsel's opinion that Diamond had sufficient cause to release the employee due
to excessive absenteeism. The position statement was delivered to the Ohio
Civil Rights Commission on February 3, 1995.
As of April 6, 1995, Diamond has not received a response from the Ohio Civil
Rights Commission regarding its allegations of discriminatory practices under
Section 4112 of the Ohio Revised Code.
<PAGE> 61
SCHEDULE 2.17
LITIGATION AND CLAIMS:
Diamond has been notified by The Travelers, the company's group insurance
carrier prior to November, 1991, of their claim against Diamond for non-payment
of premiums of $20,109. The company denies liability for this claim as it is a
pre-petition Chapter 11 debt.
The Travelers has hired counsel who is currently negotiating with Diamond on
The Travelers behalf to resolve the dispute. No provision for any settlement
has been reflected in Diamond's financial statements.
On July 30, 1991, Diamond filed a petition for relief under Chapter 11 of the
Federal Bankruptcy Laws in the United States Bankruptcy Court for the Southern
District of Ohio -- Eastern Division. On December 15, 1992, the Bankruptcy
Court confirmed the company's plan of reorganization.
<PAGE> 62
SCHEDULE 2.20
Since January 1, 1995, Diamond has paid 5 cents per share as a call premium to
warrant holders pursuant to the call of outstanding warrants. Information
regarding any capital stock distributions, payments, and dividends declared,
paid or distributed by Diamond during its 1994 fiscal year is disclosed in the
Diamond Financial Statements.
<PAGE> 63
SCHEDULE 2.21
DIAMOND CORPORATE NAME
CORPORATE NAME:
Diamond has authorized the use of the name "Diamond Electric Co." to a firm in
Cleveland doing business in a non-related industry. A Consent for Use of
Similar Name was executed December 9, 1993 between Diamond and the other
company and is attached.
<PAGE> 64
SCHEDULE 2.23
CONDITION OF FIXED ASSETS:
Major assets of Diamond that require repair:
1. Pump house roof: Several attempts to patch the roof have
failed.
2. Roof-top air conditioners: The following air conditioner units
require inspection and repair as follows:
(1) - OK (Accounting)
(2) - OK (Executive)
(3) - OK (Marketing)
(4) - OK
(5) - OK
(6) - OK
(7) - OK
(8) - OK
(9) - Not operating
(10) - Not operating
(11) - Needs inspection
(12) - Needs inspection (Nelson)
(13) - Needs inspection (Stock)
(14) - Not operating (Dock)
(15) - Needs inspection for leak
(16) - Needs freon
(17) - Needs compressors (Dome)
(18) - OK
(19) - OK
3. Main power switch: Requires either total replacement or repair.
4. Gutters and downspouts: Needs selective replacing.
5. Parking lot: Should be patched and sealed.
6. Water tank: Needs painting due to rust in areas.
7. Fire hydrant in front of building: Needs repaired. Water flows
up from base when water is turned on.
<PAGE> 65
SCHEDULE 3.02
SHARES OWNED OF RECORD AND BENEFICIALLY BY SIGNING SHAREHOLDERS:
Richard M. Tompkins 305,124
John W. Biddinger 380,366
Robert N. Davies 367,475
H. Charles Koehler 634,801
William Muirhead, III 653,120
Margaret Biddinger 637,637
<PAGE> 66
Schedule 4.08
CAPITAL EXPENDITURES OF ULTRAK
Ultrak's capital expenditures since December 31, 1994 exceed
$150,000.00 (Ultrak's capital expenditures since December 31, 1994 amounted to
$200,967 through March 31, 1995).
