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