<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DECEMBER 31, 1996
(Date of Report)
ULTRAK, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-9463 75-2626358
(State or other Jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1220 CHAMPION CIRCLE, SUITE 100
CARROLLTON, TEXAS 75006
(Address of principal executive offices)
(214) 280-9675
(Registrant's telephone number, including area code)
<PAGE> 2
ULTRAK, INC. AND SUBSIDIARIES
ITEM 2: Acquisition of Assets
ACQUISITION OF VIDEV GMBH
On December 16, 1996, Ultrak Holdings Limited, a United Kingdom company and
wholly-owned subsidiary ("Holdings") of Ultrak, Inc. ("Ultrak") acquired 100%
of the outstanding share capital of VideV GmbH, a German private company
("VideV"), from all of the shareholders (collectively, the "Shareholders") of
VideV. VideV is a distributor of closed circuit television products based in
Dusseldorf, Germany. VideV was purchased for 4,000,000 Deutsche Marks paid in
cash (the "Initial Payment") and deferred consideration based on the pre-tax
earnings of VideV ending December 31, 1997 times 6 minus the Initial Payment
(the "Deferred Consideration"). The Deferred Consideration shall be at least
DM 2,000,000 but not more than DM 4,000,000 and shall be payable one-half in
cash and one-half in unregistered shares of Common Stock, $0.01 par value per
share, of Ultrak. The purchase price of VideV was reached after extended
negotiations with the shareholders of VideV and was determined based on VideV's
relative market position in Germany and the potential synergies between Ultrak
and VideV. The acquisition of VideV was funded by the funds received by Ultrak
pursuant to its most recent public offering on November 18, 1996. As part of
the acquisition, Ultrak extended a line of credit to VideV in the amount of DM
5,000,000 and Heinz-Joachim Wilke ("Wilke") was elected Managing Director of
VideV.
ITEM 7: Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Pursuant to the recent revisions to Rule 3-05 of Regulation S-K of the
Securities Exchange Act of 1934, as amended, effective November 18, 1996,
financial statements of VideV are not required to be filed as part of this
report.
(b) Pro forma financial information.
Pursuant to the recent revisions to Rule 3-05 of Regulation S-K of the
Securities Exchange Act of 1934, as amended, effective November 18, 1996, pro
forma financial statements of VideV are not required to be filed as part of
this report.
(c) Exhibits.
EXHIBIT 1: Purchase Agreement of German GmbH Share Capital, dated
December 16, 1996, among all of the shareholders of Videv, Ultrak, and
Holdings.
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EXHIBIT 6.11: Investment Letter, dated December 16, 1996, from Wilke.
EXHIBIT 9.03: Arbitration Agreement, dated December 16, 1996, among
Wilke, Werner Klink, Ultrak, and Holdings.
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 hereto duly authorized.
ULTRAK, INC.
(Registrant)
Date: December 31, 1996 By: /s/ TIM D. TORNO
----------------------------------
Tim D. Torno, Vice President-Finance
2
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INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1 Purchase Agreement of German GmbH Share Capital, dated
December 16, 1996
6.11 Investment Letter
9.03 Arbitration Agreement
</TABLE>
<PAGE> 1
PURCHASE AGREEMENT OF GERMAN GMBH SHARE CAPITAL
THIS AGREEMENT, dated December 16, 1996 (the "Signing Date"), is among
Heinz-Joachim Wilke ("Wilke"), Dr. Peter Hess, Trustee for Wilke ("Hess"),
Werner Klink ("Klink") (Wilke, Hess, and Klink are sometimes collectively
referred to as the "Shareholders" or individually as a "Shareholder"), Ruth
Klink, Maximilian Klink, Caroline Klink, Doris Wilke (Ruth Klink, Maximilian
Klink, Caroline Klink, and Doris Wilke are collectively referred to as the
"Family Members"), and Ultrak, Inc., a Delaware corporation ("Ultrak"), and
Ultrak Holdings Limited, a United Kingdom company and wholly-owned subsidiary
of Ultrak ("Holdings").
Recital. The Shareholders and the Family Members desire to sell all
of the outstanding share capital (the "Share Capital") of VideV GmbH, a German
private company ("VideV"), to Holdings in accordance with this Agreement and
Ultrak desires that Holdings acquire all of the Share Capital (the
"Acquisition").
NOW, THEREFORE, in consideration of the foregoing and the terms of
this Agreement, 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 ACQUISITION
1.01. The Purchase. Subject to the terms hereof, the Shareholders
and the Family Members shall sell and deliver to Holdings, and Holdings agrees
to purchase from the Shareholders and the Family Members, the Share Capital of
VideV set forth below opposite each Shareholder or Family Member's name:
<TABLE>
<CAPTION>
Name Share Capital Percentage of Share Capital
---- ------------- ---------------------------
<S> <C> <C>
Wilke 96,000 24%
Doris Wilke 96,000 24%
Hess 8,000 2%
Klink 96,000 24%
Ruth Klink 96,000 24%
Maximilian Klink 4,000 1%
Caroline Klink 4,000 1%
-------------- ------- ------
Total 400,000 100%
</TABLE>
1.02. Purchase Price. The purchase price to be paid for the Share
Capital shall be the aggregate of the following:
(a) Four Million Deutsche Marks (DM 4,000,000) ("Initial
Payment") payable by certified check or wire transfer duly received at the
Closing (as hereinafter defined) to each Shareholder in the amount set forth
below opposite each Shareholders' name:
<PAGE> 2
<TABLE>
<CAPTION>
Name Amount
---- ------
<S> <C>
Wilke DM 1,344,000
Hess DM 56,000
Klink DM 2,600,000
------------
Total DM 4,000,000
</TABLE>
(b) An amount ("Final Payment") equal to the Net Value
(as hereinafter defined) of VideV as of the end of the Earnout Period (as
hereinafter defined) less the Initial Payment. The Final Payment will be paid
one-half in cash and one-half in unregistered shares of Common Stock, $0.01 par
value per share, of Ultrak ("Ultrak Stock"). For purposes of this Section
1.02(b), the value of Ultrak Stock will be the average closing price for the
final twenty (20) trading days on the NASDAQ National Market System ending on
the last business day of the Earnout Period and such average closing price
shall be converted to Deutsche Marks using the United States Dollar to Deutsche
Mark conversion rate on the last business day of the Earnout Period. The "Net
Value" is the product of (i) the earnings of Videv after all expenses other
than income taxes for the fiscal year ending December 31, 1997 (the "Earnout
Period") times (ii) six (6). The Net Value will be calculated in accordance
with United States generally accepted accounting principles ("GAAP") and shall
not include any costs or expenses of VideV related to the Acquisition.
Notwithstanding anything to the contrary in this Agreement or in any other
agreement, the minimum amount of the Final Payment shall not be less than Two
Million Deutsche Marks (DM 2,000,000) and no more than Four Million Deutsche
Marks (DM 4,000,000). The Net Value of VideV for the Earnout Period shall be
conclusively determined by Grant Thornton LLP and shall be binding on Ultrak,
VideV, and each Shareholder. The Final Payment shall be payable (or in the
case of the shares of Ultrak Stock issuable to Wilke) within thirty (30) days
of the completion of the audit of VideV (which audit shall be completed no
later than March 31, 1998) as follows as to the minimum amount (and any amount
payable in excess of the minimum amount will be payable in the same pro rata
percentages):
<TABLE>
<CAPTION>
Shares of
Name Cash Ultrak Stock
---- ----- ------------
<S> <C> <C>
Wilke 536,000 1,000,000
Hess 64,000 0
Klink 400,000 0
------- -------------
Total DM 1,000,000 DM 1,000,000
</TABLE>
1.03. Line of Credit. At the Closing, Ultrak shall extend a line of
credit to VideV in the maximum amount of Five Million Deutsche Marks (DM
5,000,000) pursuant to the Promissory Note in the form of Exhibit 1.03 ("Line
of Credit").
1.04. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m., local time, at
Dusseldorf, Germany on December 16, 1996 ("Closing Date"), or on such other
date and at such other place as the parties may agree,
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but no later than December 31, 1996 (the "Termination Date") unless further
extended by written agreement of the parties. To the fullest extent possible,
the effective date of the Acquisition for accounting purposes and the effective
date of the transfer of control of VideV to Holdings will be December 31, 1996.
1.05. Closing Documents. At the Closing, each party shall execute
and deliver each agreement and instrument required by this Agreement and such
other appropriate documents as any party reasonably requests as necessary to
consummate the transactions contemplated hereby, including but not limited to,
execution of a notarial transfer of title deed before an acting notary pursuant
to the form attached as Exhibit 1.05.
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder jointly and severally represents and warrants to
Ultrak and Holdings that the following are true and correct as of the Signing
Date and will be true and correct as of the Closing Date. For purposes of this
Article II, the term "VideV" shall also include VideV Systems Gmbh ("VideV
Systems") and the term "Share Capital" shall also include all of the Share
Capital of VideV Systems.
2.01. Organization; Subsidiaries; Records. VideV is a private
company, duly organized, and validly existing under the laws of Germany, has
the corporate power and authority to own or hold under lease its assets and to
carry on its business. Except for VideV Systems, VideV does not own (nor has
it ever owned) the capital stock of any corporation, nor does it have (nor has
it ever had) an interest in any other entity. True, correct, and complete
copies of the Articles of Association and all amendments thereto of VideV have
been delivered to Ultrak and no further amendments are pending for
registration. The minute books of VideV are complete and accurate.
2.02. Binding Effect; No Violation; No Consent. This Agreement
constitutes a valid and binding agreement of each Shareholder, enforceable
against him in accordance with its terms. Neither the execution and delivery
of this Agreement by each Shareholder nor the consummation of the transactions
contemplated hereby will (a) with the lapse of time, the giving of notice, or
both, violate or conflict with any document to which a Shareholder and/or VideV
is a party or is bound, or result in the creation of any lien, charge, or
encumbrance upon any VideV asset or the Share Capital; (b) violate or conflict
with any law, regulation, permit, authorization, franchise, license, judgment,
order, writ, injunction, or decree of any court or governmental authority; or
(c) materially and adversely effect the condition (financial or otherwise),
business, or operations of VideV (a "Material Adverse Effect"). Other than as
set forth on Schedule 2.02, no authorization, consent, or approval of, or
filing with, any governmental authority is necessary for the consummation by
the Shareholders of the transactions contemplated hereby.
2.03. Capitalization. The Share Capital of VideV consists solely of
DM 400,000, which is fully and properly paid, validly issued, and
nonassessable, and no direct or indirect repayment of funds contributed to the
Share Capital have been made. The Share Capital of VideV Systems consists
solely of DM 100,000, which is fully and properly paid, validly issued, and
<PAGE> 4
nonassessable, and no direct or indirect repayment of funds contributed to the
Share Capital have been made. There are no preemptive rights, outstanding
subscriptions, options, warrants, or other commitments obligating (a) VideV to
issue any Share Capital or (b) a Shareholder to transfer any Share Capital.
Each Shareholder is the record and beneficial owner of his respective Share
Capital, free and clear of all liens, liabilities, proxies, claims, and
encumbrances. As of the Closing Date, the transfer by notarized deed of the
certificates representing the Share Capital will transfer to Holdings good and
indefeasible title to the Share Capital. Upon consummation of the Acquisition,
Holdings will be the sole shareholder of VideV and VideV will be the sole
shareholder of VideV Systems.
2.04. Financial Statements. The financial statements of VideV
attached as Schedule 2.04 (the "Financial Statements") (a) have each been
certified by Gullug & Elbert, registered auditor, whose report is attached
thereto; (b) have been prepared in accordance with the books and records of
VideV and are correct, complete, and maintained on a consistent basis; (c)
correctly reflect VideV's income, expenses, assets, and liabilities; (d) are
complete and accurate; and (e) present fairly the financial position and the
results of operations of VideV for the periods covered thereby, in accordance
with German GAAP consistently applied, except (i) normally recurring year-end
adjustments and (ii) the absence of notes required by GAAP. No distribution,
payment, or dividend has been declared, paid, or distributed with respect to
any Share Capital of VideV. The Financial Statements reflect all material
liabilities or obligations of VideV, accrued, contingent, or otherwise, other
than liabilities and obligations incurred in the ordinary course of business of
VideV since October 1, 1996 and all reserves shown therein are sufficient to
provide for the losses contemplated thereby. Except as set forth in the
Financial Statements or on Schedule 2.04, VideV has no other liabilities and
obligations and each Shareholder does not know of any basis for the assertion
of any other claims, liabilities, or obligations that would have a Material
Adverse Effect.
2.05. Laws. To the best knowledge of the Shareholders, VideV has
complied with all laws, rules, regulations, and ordinances (collectively,
"Laws") applicable to it or its business, and has received no notice of any
alleged violation of any Law. Set forth on Schedule 2.05 is a list of all
licenses, franchises, permits, and governmental authorizations of VideV
(collectively, "Permits"). In connection with any real property owned, used,
or leased by VideV ("Real Property"), neither VideV nor the Shareholders have
(a) placed any asbestos-containing thermal insulation or building products or
PCB-containing products ("Hazardous Products") on the Real Property; (b) any
knowledge that any owner, prior lessee, or user has placed any Hazardous
Products on the Real Property; (c) installed or maintained any active or
inactive hazardous waste receptacles on the Real Property; (d) knowledge that
any active or inactive hazardous waste receptacles have ever been on the Real
Property; (e) unperformed environmental obligations; or (f) knowledge of any
hazardous or solid waste or hazardous materials, or spills, discharges, or
other releases of hazardous substances on or from the Real Property.
2.06. Taxes. Except as set forth on Schedule 2.06, VideV has duly
and timely filed all tax returns and reports required to be filed, and has paid
or established adequate reserves for all taxes (including penalties and
interest) which have, or will for current periods, become due. The income tax
returns or reports fairly reflect the taxable income and taxes of VideV for the
periods covered thereby. VideV has (a) to the best knowledge of each
Shareholder, not violated any tax
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Law; (b) no waivers or agreements for the extension of time for the assessment
of any tax; and (c) no tax audit pending or, to the best knowledge of each
Shareholder, threatened. VideV has withheld or collected all monies due for
income, social security, unemployment insurance, sales, excise, and use taxes,
and the portion of any such taxes to be paid by VideV to governmental agencies,
has been paid to each such agency or set aside for payment in the manner
required by applicable Law.
2.07. Absence of Certain Changes. Except as set forth on Schedule
2.07, since October 1, 1996, VideV has not (a) suffered damage to or loss of
any material assets; (b) contracted for or paid any single capital expenditure
or total capital expenditures in excess of US$10,000 and US$50,000,
respectively; (c) created or allowed a lien, claim, or encumbrance on any of
its assets; (d) acquired or disposed of any material assets, except in the
ordinary course of business; (e) incurred, assumed, or guaranteed any
indebtedness; (f) forgiven, cancelled, released, or otherwise waived any rights
or claims; (g) entered into any modification or amendment to, or terminated,
any material agreement; (h) made a loan or granted any bonus or benefit to any
Shareholder or any VideV employee; (i) adopted or executed any Plan (as
hereinafter defined); or (j) experienced any other material adverse change in
the condition (financial or otherwise), business, or operations of VideV.
2.08. Title. VideV has good title to all assets reflected in the
Financial Statements (except as they have since been affected by transactions
in the ordinary course of business and consistent with past practices) and
VideV owns such assets free and clear of all liens, liabilities, claims, or
encumbrances except (a) statutory liens for taxes that are not yet delinquent
and (b) as expressly stated in the Financial Statements. All fixed assets
(whether owned or leased by VideV) are in good condition and repair for their
intended use in the ordinary course of business and conform in all material
respects with all applicable Laws and there are no known defects therein.
2.09. Proprietary Rights. VideV owns all of the patents,
technology, know-how, processes, trademarks, and copyrights or possesses
adequate licenses necessary to conduct its business without conflict with the
rights of others (the "Proprietary Rights"). All Proprietary Rights of VideV
are listed on Schedule 2.09-a. Except as set forth on Schedule 2.09-b, (a) no
third party consent is required for use of the Proprietary Rights by VideV; (b)
no third party claim has been asserted relating to the ownership of or the
right to use any Proprietary Right or challenging the validity of any license
of VideV, and VideV does not know of any basis for any such claim; (c) each of
the Proprietary Rights is valid and subsisting, has not been terminated and, if
applicable, has been duly issued or filed; and (d) there is no claim or inquiry
as to whether any product, activity, or operation of VideV, including but not
limited to the Eurocorder technology, infringes upon any Proprietary Right of
any third party, and no proceedings are pending or threatened which challenge
the rights of VideV with respect thereto.
2.10. Labor Relations; Plans. There is not, either pending or
threatened, against VideV any (a) unfair labor practice complaint or
proceeding; (b) discrimination charge, relating to sex, age, race, national
origin, handicap, or veteran status; (c) representation question involving an
attempt to organize a bargaining unit; (d) labor grievance; or (e) direct or
indirect, express or implied, obligation to pay severance pay to any officer or
employee of VideV, or any consultant, agent, or other person or entity. VideV
does not have any works council. Except as set forth
<PAGE> 6
on Schedule 2.10, VideV does not sponsor or maintain and is not a party to, any
employee benefit, pension, or profit sharing plan ("Plan"), nor is VideV
obligated to create any Plan. The Plans set forth on Schedule 2.10 are in
compliance and are fully funded in accordance with the laws of Germany and
German GAAP.
2.11. Litigation. Except as set forth on Schedule 2.11, VideV is
not a party to, and the business and assets of VideV are not the subject of,
any pending or threatened suit, claim, action, or investigation initiated by or
with any person or entity or any administrative, arbitration, or other
governmental authority, and VideV does not know of any basis therefor. Neither
VideV nor its business, assets, or employees are subject to any continuing
court or administrative order, writ, injunction, decree, or settlement
agreement restricting VideV's business in any material respect.
2.12. Contracts. (a) Except as set forth on Schedule 2.12, VideV is
not a party to, or bound by, any undischarged, written or oral contract or
agreement relating to (i) employment; (ii) consulting; (iii) collective
bargaining; (iv) restriction of VideV's right to compete, sell to, or purchase
from any other person or entity; (v) any affiliate of VideV, or a person
controlled directly or indirectly thereby, for the borrowing or lending of
monies, the purchase or sale of goods, or the performance of services; (vi)
payment or receipt of license fees or royalties to or from any person or
entity; (vii) agency, representation, distribution, or franchise; (viii)
service; (ix) guaranty, performance, bid, or completion bond, or surety or
indemnification; (x) the purchase, sale, ownership, use, or license of
technology; (xi) lease or sublease of real or personal property; (xii) the
purchase, sale, margining, or pledge of securities; (xiii) product service or
warranty; (xiv) sharing of profits, losses, costs, or liabilities; or (xv)
letters of intent or other binding obligations of VideV or the Shareholders to
sell VideV, whether by sale of Share Capital of VideV, VideV assets or
otherwise (collectively, the "Contracts"). Except as set forth on Schedule
2.12, VideV has not received any complaint or claim under any Contract.
Schedule 2.12 contains a list of all policies of insurance of which VideV is a
beneficiary and such policies are in full force and effect. All premiums due
thereon have been paid and no notice of cancellation has been received with
respect thereto.
(b) Set forth on Schedule 2.12 is a complete list of all
(i) agreements (written or oral) between each Shareholder, any entities owned
or controlled by each Shareholder, and/or their family members, on the one
hand, and VideV, on the other hand; and (ii) all amounts due and owing thereon.
2.13. Brokers and Finders. Neither VideV nor the Shareholders have
employed any broker or finder or incurred any liability for any fees therefor
in connection herewith.
2.14. Disclosure. Each Shareholder is unaware of any facts, events,
or circumstances which have not been disclosed to Ultrak or Holdings which are
or may be material to VideV.
<PAGE> 7
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF ULTRAK AND HOLDINGS
Each of Ultrak and Holdings jointly and severally represents and
warrants to the Shareholders that the following are true and correct as of the
Signing Date and will be true and correct as of the Closing Date:
3.01. Organization. Each of Holdings and Ultrak is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, and each has the corporate power and authority
to own or lease its assets and to carry on its business. Each of Holdings and
Ultrak has the corporate power to enter into this Agreement and to carry out
its obligations hereunder.
3.02. Binding Effect; No Violation. This Agreement constitutes a
valid and binding agreement of Holdings and Ultrak, enforceable against them in
accordance with its terms. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
violate or conflict with any document to which Holdings or Ultrak is a party or
is bound, or result in the creation of any lien, charge, or encumbrance upon
any asset of Holdings or Ultrak; (b) violate or conflict with any law,
regulation, permit, authorization, franchise, license, judgment, order, writ,
injunction, or decree of any court or governmental authority; or (c) materially
and adversely affect the condition (financial or otherwise), business, or
operations of Holdings or Ultrak. No authorization, consent, or approval of,
or filing with, any governmental authority is necessary for the consummation by
Ultrak and Holdings of the transactions contemplated hereby.
3.03. Capitalization of Ultrak. The authorized capital stock of
Ultrak consists of 20,000,000 shares of Ultrak 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 September 30, 1996, there were issued and outstanding
approximately 10,623,831 shares of Ultrak Stock and 195,351 shares of Series A
Preferred Stock.
3.04. Consents. Except for the consent of NationsBank of Texas, N.A.
("NationsBank"), the primary lender of Ultrak, no authorization or consent of
any governmental authority, lender, lessor, or any other person or entity is
required in connection with the execution, delivery, and performance of this
Agreement or the agreements contemplated hereby on the part of Ultrak or
Holdings.
ARTICLE IV: JOINT COVENANTS OF ULTRAK AND THE SHAREHOLDERS
4.01. Cooperation. Ultrak and each Shareholder will (a) cooperate
with one another to determine whether any filings with or authorizations or
consents from, any governmental authority or third party, are required prior to
the Closing Date in connection with the transactions contemplated in this
Agreement and cooperate in making any such filings or obtaining any such
consents; (b) keep each other informed in regards to the transactions
contemplated by this Agreement; (c) cooperate with one another and expend
reasonable amounts in order to remove
<PAGE> 8
any impediments to the consummation of the transactions contemplated herein;
(d) take such actions as the other party may reasonably request to consummate
the transactions contemplated by this Agreement; and (e) use all reasonable
efforts to satisfy all conditions precedent specified in Articles VI and VII
herein.
4.02. Confidentiality. Each of Ultrak and the Shareholders agrees
to take all reasonable precautions to keep in strict confidence any information
relating to any other party which may be provided to or discovered by it in
connection with the consummation of this Agreement and will not disclose such
information to anyone other than those people directly involved in the
investigations or negotiations pertaining to this Agreement. If the
transactions contemplated by this Agreement are not consummated, each of Ultrak
and the Shareholders agrees to return or destroy all documents obtained from
any other party in connection with its investigations or negotiations of this
Agreement and to use all reasonable efforts to maintain the confidentiality of
any information obtained thereby.
ARTICLE V: COVENANTS OF THE SHAREHOLDERS
5.01. Conduct of VideV's Business. Prior to the Closing Date, each
Shareholder will cause VideV and VideV Systems to (a) conduct its operations in
the ordinary course of business consistent with past practices; (b) not declare
or pay any dividends; (c) not adopt any amendments to its Articles of
Association; (d) not issue any Share Capital of VideV or VideV Systems; (e) not
grant any options, warrants, or other rights to acquire any Share Capital of
VideV or VideV Systems; (f) not purchase or redeem any Share Capital of VideV
or VideV Systems; (g) not make any loan or advance to any Shareholder or any
officer, director, or employee; (h) not increase the compensation of, pay, or
accrue any bonus to any employee; and/or (i) not (unless otherwise required by
applicable Law) agree to take any action that would make any representation or
warranty in Article II hereof untrue or incorrect.
5.02. Access. Each Shareholder will afford to Ultrak, Holdings, and
their representatives full and complete access during normal business hours,
throughout the period prior to the Closing Date, to VideV's properties,
personnel, contracts, books, records (including but not limited to tax
returns), and reports, and will use all reasonable efforts to furnish promptly
to Ultrak or Holdings such additional information as to VideV's businesses and
properties as Ultrak, Holdings, or their representatives may request.
5.03. Notice of any Material Change. Each Shareholder, promptly
after the first notice or occurrence thereof, but not later than the Closing
Date, shall disclose to Holdings on Schedule 5.03 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 the representations and warranties in
this Agreement untrue in any material respect; or (c) would otherwise
constitute a Material Adverse Effect. 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.
<PAGE> 9
ARTICLE VI: CONDITIONS PRECEDENT TO
ULTRAK'S AND HOLDINGS' OBLIGATIONS
The obligations of Ultrak and Holdings to consummate the transactions
contemplated by this Agreement will be subject to satisfaction on or before the
Closing Date of each of the following conditions:
6.01. Absence of Litigation. No governmental authority shall have
instituted, or threatened in writing to institute, any action or proceeding
seeking to enjoin, restrain, or otherwise prohibit the consummation of the
transactions contemplated by this Agreement, and no order, judgment, or decree
by any court or governmental authority shall be in effect that enjoins,
restrains, or prohibits the same or otherwise would materially interfere with
the operation of Ultrak, Holdings, or VideV after the Acquisition.
6.02. Intentionally omitted.
6.03. No Material Adverse Change. There shall have been no material
adverse change in the condition (financial or otherwise), business, operations,
or assets of VideV.
6.05. Intentionally Omitted.
6.04. Board Approval. Ultrak's Board of Directors shall have
approved, in its discretion, the Acquisition and the existing terms of this
Agreement.
6.06. Due Diligence. Ultrak or Holdings shall have reviewed all of
the assets, liabilities, contracts, books and records, and other properties of
VideV that Ultrak or Holdings determines are necessary or appropriate and
Ultrak or Holdings shall have determined, in its discretion, that its review of
the foregoing is acceptable.
6.07. Employment Agreement. Wilke shall have executed an Employment
Agreement with VideV in the form of Exhibit 6.07.
6.08. Resignation of Klink. Klink shall have resigned as General
Manager of VideV and from all other positions relating to VideV.
6.09. Termination of Service Agreement. The Service Agreement
between VideV and Johnson Consulting GmbH shall have been terminated.
6.10. NationsBank Approval. NationsBank shall have approved, in
writing, the Acquisition.
6.11. Investment Letter. Wilke shall have executed an Investment
Letter in the form of Exhibit 6.11.
<PAGE> 10
6.12. Financial Adjustments. Each adjustment to VideV's financial
statements listed or described on Exhibit 6.12, or resulting from Ultrak's
additional due diligence, shall be booked, recorded, and made effective as of
December 31, 1996, and not thereafter changed, reversed, or modified in any
manner.
6.13. Restructuring Charges. An analysis of restructuring and
related charges to be completed prior to the Closing Date.
6.14. Proof of Merger. Ultrak or Holdings shall have been provided
with the necessary documentation to merge VideV Systems with or into VideV
which merger shall be effective on or before January 1, 1997.
6.15. Proof of Existence. Ultrak or Holdings shall have been
provided with a statement from the Trade Register as to the current existence
of VideV and VideV Systems.
6.16. Cancellation of Bonus Agreements. Ultrak or Holdings shall
have been provided with proof satisfactory to it of cancellation of the bonus
agreements with all VideV employees.
6.17. Release Agreements. All employees of VideV shall have
executed Release Agreements (satisfactory to Ultrak) releasing VideV from any
liability or obligation in connection with VideV's employee bonus plan.
ARTICLE VII: CONDITIONS PRECEDENT TO THE
SHAREHOLDERS' OBLIGATIONS
The obligations of each Shareholder to consummate the transactions
contemplated by this Agreement will be subject to the satisfaction on or before
the Closing Date of the following conditions:
7.01. No Material Adverse Change. There shall have been no material
adverse change in the condition (financial or otherwise), business, operations,
or assets of Ultrak.
7.02. Line of Credit. Ultrak shall have extended the Line of Credit
to VideV.
ARTICLE VIII: INDEMNIFICATION
8.01. Indemnification by Shareholders. Each Shareholder covenants
and agrees to indemnify Ultrak, Holdings, and VideV against any loss, expense,
liability, taxes, VAT, customs, or other damage, including the reasonable costs
of investigation, interest, penalties and attorneys' and accountants' fees
("Damages"), actually incurred by Ultrak, Holdings, or VideV in connection with
or arising from or attributable to (a) any breach or inaccuracy of any
representation or warranty made by any Shareholder herein; (b) any breach or
failure of any Shareholder to perform any agreement or covenant herein; (c) any
taxes of VideV or VideV Systems relating to periods prior to the Closing Date;
(d) any product liability claim against VideV or VideV Systems relating to
periods prior to the Closing Date; (e) any litigation or claim against VideV or
VideV Systems relating to periods prior to the Closing Date; (f) any litigation
or claim against
<PAGE> 11
VideV, Holdings, or Ultrak relating to the Memorandum of Understanding with
Norbain PLC ("Norbain Memorandum"); or (g) the failure of the Shareholders to
fully pay in the Share Capital of VideV or VideV Systems. The Shareholders
shall not indemnify Holdings for any payment made by Holdings to Wilke pursuant
to Section 8.05 of this Agreement.
8.02. Threshold. No Shareholder shall be required to make any
indemnification payment pursuant to Section 8.01 for any Damages until such
time as the total amount of all Damages that have been incurred by Ultrak,
Holdings, or VideV exceeds US$150,000.00 in the aggregate (the "Threshold").
At such time as the total amount of such Damages exceeds the Threshold, Ultrak,
Holdings, or VideV shall be entitled to be indemnified against the full amount
of such Damages exceeding the Threshold. The Threshold amount shall not apply
with respect to claims regarding title to the Share Capital. As to financial
statement liabilities, accruals, and reserves, the breach or inaccuracy of
representations and warranties with respect thereto shall be determined with
reference to the Financial Statements as adjusted pursuant to Section 6.12.
8.03. Expiration of Indemnity; Fraud. Ultrak, Holdings, or VideV
may not make a claim for indemnification for Damages after the expiration of
three (3) years from the Closing Date. Notwithstanding any provision in this
Agreement to the contrary, the liability of any Shareholder for fraudulent
conduct shall be subject only to applicable statutes of limitations.
8.04. Survival of Representations; Warranties. No disclosure by any
Shareholder nor any investigation by or on behalf of Ultrak or Holdings with
respect to VideV or VideV Systems shall be deemed to affect Ultrak's or
Holding's reliance on the representations, warranties, covenants, or agreements
contained herein or to waive Ultrak's or Holding's rights to indemnity as
provided herein for the breach or inaccuracy or failure to perform or comply
with any representation, warranty, covenant, or agreement of the Shareholders.
The indemnity obligations of each Shareholder under this Article VIII (and the
representations, warranties, covenants, and agreements of each Shareholder)
shall survive the Closing until the expiration of the period set forth in
Section 8.03.
8.05. Indemnification by Holdings. Holdings covenants and agrees to
indemnify the Shareholders against one-half of any amount actually paid by the
Shareholders to Norbain PLC pursuant to Section 14 of the Norbain Memorandum up
to a maximum aggregate payment by Holdings of L75,000. The Shareholders
acknowledge and agree that they are indemnifying VideV, Holdings, and Ultrak to
the extent VideV, Holdings, or Ultrak is liable to Norbain PLC pursuant to the
Norbain Memorandum.
ARTICLE IX: REMEDIES
9.01. Equitable Remedies. The parties hereto acknowledge that a
refusal by a party to consummate the transactions contemplated hereby will
cause irreparable harm to the other parties, for which there may be no adequate
remedy at law. A party not in default at the time of such refusal shall be
entitled, in addition to other remedies at law or in equity, to specific
performance of this Agreement by the party that refused to consummate the
transactions contemplated hereby.
9.02. Remedies of VideV. After the Closing, VideV shall have the
same rights and
<PAGE> 12
benefits under this Agreement as does Ultrak or Holdings with respect to the
representations, warranties, and covenants of each Shareholder contained
herein, as fully as if such representations, warranties, and covenants had been
made to or with VideV in lieu or in place of Ultrak or Holdings. In any
proceeding by VideV to assert or prosecute any claims under, or to otherwise
enforce, this Agreement, each Shareholder agrees that he shall not assert as a
defense or bar to recovery by VideV, Ultrak, or Holdings and hereby waive any
right to so assert such defense or bar such recovery, that (a) prior to the
Closing, VideV or VideV Systems shall have had knowledge of the circumstances
giving rise to the claim being pursued by it, Ultrak, or Holdings; (b) prior to
the Closing, VideV or VideV Systems engaged in conduct or took action that
caused or brought about the circumstances giving rise to its, Ultrak's, or
Holdings' claim, or otherwise contributed thereto; (c) VideV is estopped from
asserting or recovering upon its claim by reason of having joined in the
representations, warranties, and covenants made by any Shareholder in this
Agreement; or (d) any Shareholder has a right of contribution from VideV to the
extent that there is any recovery against him.
9.03. ARBITRATION. THE PARTIES AGREE TO ARBITRATE ANY DISPUTE OR
CLAIM RELATING TO THIS AGREEMENT IN ACCORDANCE WITH THE ARBITRATION AGREEMENT
ATTACHED AS EXHIBIT 9.03.
ARTICLE X: MISCELLANEOUS
10.01. GOVERNING LAW. THE INTERNAL LAWS (AND NOT THE CONFLICTS OF
LAWS RULES) OF TEXAS SHALL GOVERN THIS AGREEMENT. THE LAWS OF GERMANY SHALL
APPLY TO THE OPERATION OF VIDEV. THE UNITED NATION'S CONVENTION ON CONTRACTS
FOR THE INTERNATIONAL SALE OF GOODS SHALL NOT APPLY TO THIS AGREEMENT.
10.02. Expenses. Each party hereto shall bear its own expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby.
10.03. Notices. All notices hereunder will be in writing and will be
deemed given if delivered personally or by delivery service or mailed by
registered or certified mail (return receipt requested) to the parties at the
addresses set forth opposite each party's name on the signature page hereof (or
at such other address for a party as will be specified by like notice) and will
be deemed given on the date on which so delivered or on the third business day
following the date on which so mailed to the address set forth opposite the
name of such party on the signature page hereof.
10.04. Severability. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable, such provision shall be fully severable,
and this Agreement shall be construed and enforced as if such provision was
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.
<PAGE> 13
10.05. Miscellaneous. This Agreement may be modified only by a
writing signed by all parties hereto. This Agreement may be executed in
counterparts. 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. This Agreement shall not be
assignable and any attempted assignment of this Agreement shall be void. This
Agreement and the Schedules, Exhibits, and documents attached hereto constitute
the entire agreement, and supersede all other prior agreements, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof, including but not limited to the Promise to Buy and Promise to Sell
between Ultrak and VideV. All Schedules, Exhibits, documents, and agreements
referred to herein or attached hereto are incorporated by reference herein.
The headings are for reference purposes only and do not affect in any way the
meaning or interpretation hereof. Use of "herein," "hereof," "hereby," or
similar terms refer to this Agreement as a whole. The reference to any gender
shall be construed to include the masculine, feminine, and neuter.
[SIGNATURES ON THE FOLLOWING PAGE]
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
Addresses: ULTRAK, INC.
1220 Champion Circle, Suite 100
Carrollton, Texas 75006 By:
Attn: Chief Financial Officer --------------------------------
Gary Woods, Authorized Signatory
ULTRAK HOLDINGS LIMITED
1220 Champion Circle, Suite 100
Carrollton, Texas 75006 By:
Attn: Chief Financial Officer --------------------------------
Gary Woods, Authorized Signatory
Grobenbaumer Weg 10
D-4000 Dusseldorf ----------------------------------
Dusseldorf, Germany HEINZ-JOACHIM WILKE
Grobenbaumer Weg 10
D-4000 Dusseldorf ----------------------------------
Dusseldorf, Germany DORIS WILKE, By Heinz-Joachim Wilke,
Attorney-in-Fact
Tiergartenstr. 47
40237 Dusseldorf ----------------------------------
Dusseldorf, Germany WERNER KLINK
Tiergartenstr. 47
40237 Dusseldorf -----------------------------------
Dusseldorf, Germany RUTH KLINK, By Werner Klink
Attorney-in-Fact
Tiergartenstr. 47
40237 Dusseldorf -----------------------------------
Dusseldorf, Germany MAXIMILIAN KLINK, By Werner Klink
Attorney-in-Fact
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
<PAGE> 15
Tiergartenstr. 47
40237 Dusseldorf -----------------------------------
Dusseldorf, Germany CAROLINE KLINK, By Werner Klink
Attorney-in Fact
Rosenbergstr. 20
CH - 6300 Zug -----------------------------------
DR. PETER HESS, Trustee for Wilke
<PAGE> 1
Exhibit 6.11
INVESTMENT LETTER
December 16, 1996
Ultrak, Inc.
1220 Champion Circle, Suite 100
Carrollton, Texas 75006
Gentlemen:
This Investment Letter (this "Letter") is between Heinz-Joachim Wilke
(the "undersigned") and Ultrak, Inc., a Delaware corporation ("Ultrak"). This
Letter is executed in connection with and as a condition to the undersigned's
acquisition from Ultrak of a number of shares (the "Shares") of Ultrak's Common
Stock, $0.01 par value ("Ultrak Stock"), pursuant to that certain Purchase
Agreement of German GmbH Share Capital, dated December 16, 1996, among Ultrak,
Ultrak Holdings Limited ("Holdings"), and the undersigned (the "Purchase
Agreement"). The undersigned represents, warrants, covenants, and agrees with
Ultrak as follows:
1. The undersigned hereby acknowledges that (i) the Shares will
not be registered under the Securities Act of 1933, as amended (the "Federal
Act"), the Texas Securities Act, as amended (the "Texas Act"), or the
securities acts of any other state or country (the "Other Acts"), (ii) the
Shares will be issued, to the undersigned in reliance upon one or more
exemptions from registration contained in the Federal Act, the Texas Act, and
the Other Acts, and (iii) Ultrak's reliance on such exemptions is based in part
upon the representations made by the undersigned in this Letter.
2. The undersigned hereby represents to Ultrak that the
undersigned will acquire the Shares solely for the undersigned's own account
for investment and not with a view to, or for offer or sale in connection with,
the unregistered "distribution" of all or any part of the Shares within the
meaning of the Federal Act. The undersigned acknowledges and agrees that the
issuance of the Shares will not be, reviewed or approved by the Securities and
Exchange Commission (the "SEC") or any other governmental agency or department.
3. The undersigned hereby represents to Ultrak that the
undersigned has such knowledge and experience in financial and business matters
that the undersigned is capable of evaluating the merits and risks of investing
in the Shares and that the undersigned is able to bear the economic risk,
including a total loss, of such an investment. The undersigned understands and
has fully considered the risks of investing in the Shares and that, because of
the restrictions on transferring the Shares, it may not be possible for the
undersigned to liquidate his investment in the case of emergency.
4. The undersigned acknowledges and agrees that he will acquire
the Shares based solely on his review of the SEC Filings (described in Section
9 herein) and investigation of, and satisfaction with, Ultrak's current and
anticipated financial condition and assets and not based on
<PAGE> 2
any oral representations of any individual. The undersigned acknowledges that
he has had access to all information which he considers necessary or advisable
to enable him to make an informed decision concerning the acquisition of the
Shares. The undersigned confirms that he and his advisors have been given the
opportunity to ask questions of, and to receive answers from, persons acting on
behalf of Ultrak and to obtain any additional information.
5. The undersigned hereby acknowledges that the provisions of
Rule 144 promulgated under the Federal Act ("Rule 144") are not now available
for the public resale of the Shares and that the undersigned has no right to
have the Shares registered under the Federal Act to permit them to be resold.
The undersigned also hereby acknowledges that, as a result, the undersigned
must hold the Shares for at least two (2) years from issuance to him of the
Shares assuming the entire risk of investment therein for that period of time,
until and unless (i) the Shares are subsequently registered under the Federal
Act or (ii) an exemption from registration is available at the time of resale
of the Shares (and in compliance with Section 7 of this Letter). The
undersigned is aware that Rule 144 permits limited resales of unregistered
shares subject to the satisfaction of certain conditions.
6. The undersigned understands that he must not, and the
undersigned agrees that he will not, sell, transfer, assign, encumber, or
otherwise dispose of the Shares or any interest therein, unless prior thereto
the undersigned has delivered to Ultrak, and Ultrak has accepted as
satisfactory, an opinion of experienced and competent counsel to the effect
that such proposed sale, transfer, assignment, encumbrance, or disposition will
not constitute or result in any violation of the Federal Act, the Texas Act,
the Other Acts, or any other applicable statute relating to the disposition of
securities.
7. The undersigned understands that there may be printed on the
certificates representing the Shares, and any other securities issued in
respect thereof, a legend substantially as follows (in addition to all other
legends required by applicable law):
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR UNDER ANY STATE LAW, AND SUCH SHARES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER THE
ACT WITH RESPECT TO SUCH DISPOSITION SHALL THEN BE IN EFFECT OR UNLESS THE
PERSON REQUESTING THE TRANSFER OF SUCH SHARES SHALL FURNISH, WITH RESPECT TO
SUCH TRANSFER, AN OPINION OF COUNSEL (BOTH COUNSEL AND OPINION TO BE
SATISFACTORY TO THE CORPORATION) TO THE EFFECT THAT SUCH SALE, TRANSFER,
ASSIGNMENT, OR DISPOSITION WILL NOT INVOLVE ANY VIOLATION OF THE ACT OR ANY
APPLICABLE STATE LAW.
8. Nothing in this Letter shall permit the undersigned to sell
any of the Shares in violation of any other agreement between the undersigned
and either of Ultrak or Holdings. The undersigned agrees that Ultrak may
present this Letter to such parties as they deem appropriate
2
<PAGE> 3
to establish the availability of an exemption from registration of the Shares
under applicable federal and state securities laws and for other similar
purposes. The undersigned is aware that Ultrak has never paid cash dividends
on the Ultrak Stock and that Ultrak presently intends to retain earnings to
finance the development and expansion of its business.
9. The undersigned acknowledges that Ultrak has previously
furnished the undersigned a copy of (a) Ultrak's annual report on Form 10-K
filed with the SEC for the year ended December 31, 1995; (b) Ultrak's quarterly
report on Form 10-Q filed with the SEC for the quarters ended March 31, June
30, and September 30, 1996; and (c) Ultrak's definitive prospectus, dated May
30, 1996, in connection with the public sale of shares of the Ultrak Stock.
10. The undersigned represents to Ultrak that (i) the offer and
sale of the Shares has occurred outside of the United States; (ii) the
undersigned originated the order to purchase the Shares from outside the United
States; and (iii) the sale of the Shares to the undersigned is predicated, in
part, on Regulation S of the Federal Act.
IN WITNESS WHEREOF, the parties have executed this Letter as of the
dates set forth below.
Very truly yours,
Date: December 16, 1996 ------------------------------
Heinz-Joachim Wilke
I hereby acknowledge that I have read this Letter and fully understand
its contents. I further agree that any community property interest or other
interest that I have or may in the future have in the Shares shall be subject
to this Letter.
Date: December 16, 1996 ------------------------------
Signature
Printed Name: Doris Wilke
3
<PAGE> 1
Exhibit 9.03
ARBITRATION AGREEMENT
EACH OF THE UNDERSIGNED, ULTRAK, INC., A DELAWARE CORPORATION
("ULTRAK"), ULTRAK HOLDINGS LIMITED, A UNITED KINGDOM COMPANY ("HOLDINGS"),
HEINZ-JOACHIM WILKE ("WILKE"), AND WERNER KLINK ("KLINK") (WILKE AND KLINK ARE
COLLECTIVELY REFERRED TO AS THE "SHAREHOLDERS") HEREBY AGREE THAT ANY DISPUTE
RELATING TO THE PURCHASE AGREEMENT OF GERMAN GMBH SHARE CAPITAL, DATED DECEMBER
16, 1996, BY AND AMONG ULTRAK, HOLDINGS, THE SHAREHOLDERS, AND OTHERS, SHALL BE
FULLY AND FINALLY SETTLED BY ARBITRATION IN ACCORDANCE WITH THE RULES OF THE
INTERNATIONAL CHAMBER OF COMMERCE, WHICH RULES ARE DEEMED TO BE INCORPORATED
HEREIN BY REFERENCE. ANY SUCH ARBITRATION SHALL BE HELD IN NEW YORK, NEW YORK
AND THE LANGUAGE TO BE USED IN THE ARBITRATION PROCEEDING SHALL BE ENGLISH.
JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR SHALL BE LEGALLY BINDING ON
THE PARTIES THERETO AND MAY BE ENTERED IN ANY COURT HAVING JURISDICTION
THEREOF.
Date: December 16, 1996 ULTRAK, INC.
By:
--------------------------------
Gary Woods, Authorized Signatory
ULTRAK HOLDINGS LIMITED
By:
--------------------------------
Gary Woods, Authorized Signatory
-----------------------------------
HEINZ-JOACHIM WILKE
----------------------------------
WERNER KLINK
