<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
AUGUST 23, 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 (I.R.S. 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
On August 7, 1996, the Company acquired 75% of the stock from the founders and
current management of Maxpro Systems Pty, Ltd. (Maxpro), a Perth, Australia
based privately held company, for approximately US$8.2 million in cash.
Additional consideration in the form of Ultrak restricted stock can be earned
by the founders if certain pretax net income levels are attained over a two
year period beginning July 1, 1996.
The selling shareholders of Maxpro are Christopher Paul Davies, Kim Robert
Rhodes, Scott Anthony Rhodes and Rhodes Davies & Associates Pty. Ltd.
Maxpro is a manufacturer of a computer controlled matrix video switching system
that is coupled to a computer controlled alarm input and output network used
primarily in casinos, airports, mines, nuclear power plants, prisons and other
large closed circuit television applications. The transaction will be
accounted for as a purchase and the operations of Maxpro will be included in
the Company's consolidated statement of income since the date of acquisition.
Goodwill is expected to be amortized over 25 years using the straight line
method.
2
<PAGE> 3
ULTRAK, INC. AND SUBSIDIARIES
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
The financial statements of Maxpro Systems Pty Ltd. as of and for the years
ended June 30, 1996 and 1995 are attached.
(b) Pro forma financial information
The following unaudited pro forma condensed balance sheets and statements of
income assume the acquisition of Maxpro occurred on June 30, 1996 and January
1, 1995, respectively. The unaudited pro forma condensed combined balance
sheets combine Ultrak's June 30, 1996 consolidated balance sheet with Maxpro's
June 30, 1996 balance sheet. The unaudited pro forma condensed combined
statements of income combine Ultrak's consolidated statement of income for the
fiscal year ended December 31, 1995 with the corresponding Maxpro statement of
income for the twelve months ended December 31, 1995 and Ultrak's consolidated
statement of income for the six months ended June 30, 1996 with Maxpro's
statement of income for the six months ended June 30, 1996. All financial
statements of Maxpro were converted from Australian dollars (Aus D) to US
dollars (USD) using the exchange rate as of June 30, 1996 (.7976 to 1.00).
The unaudited pro forma combined statements of income are presented for
illustrative purposes only and are not necessarily indicative of the operating
results that would have occurred if the business combination had been
consummated as of January 1, 1995, nor are they necessarily indicative of
future operating results.
These unaudited pro forma combined financials statements should be read in
conjunction with the historical financial statements and the related notes
thereto.
(c) Exhibits
Exhibit 10.1 Stock Purchase Agreement dated August 7, 1996 among Chris Davies,
Kim Rhodes, Scott Rhodes, Rhodes Davies & Associates Pty Ltd. and Ultrak, Inc.
Exhibit 10.2 Shareholders Deed dated August 7, 1996 between Bajada &
Associates Pty Ltd. and Ultrak, Inc.
Exhibit 10.3 Consultancy Agreement dated August 7, 1996 between Rhodes Davies
& Associates Pty Ltd., Maxpro Systems Pty Ltd. and Ultrak, Inc.
3
<PAGE> 4
<TABLE>
<CAPTION>
ULTRAK AND MAXPRO
UNAUDITED PRO FORMA CONDENSED USD AUS D USD USD
COMBINED BALANCE SHEETS ULTRAK MAXPRO MAXPRO PRO FORMA PRO FORMA
AS OF JUNE 30, 1996 JUNE 30, JUNE 30, JUNE 30, ADJUSTMENTS COMBINED
ASSETS 1996 1996 1996
--------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and Short term Investments $ 16,627,364 1,470,114 1,172,563 (1) (8,200,000) 9,599,927
Trade Acounts Receivable, net 17,376,018 335,948 267,952 17,643,970
Notes Receivable 288,234 0 0 288,234
Inventories, net 23,211,343 1,057,475 843,442 24,054,785
Advances for Inventory Purchases 5,737,261 0 0 5,737,261
Prepaid Expenses and Other Current Assets 689,480 20,242 16,145 705,625
Deferred Income Taxes 875,292 0 0 875,292
--------------- ---------------------------------------------------
Total Current Assets 64,804,992 2,883,779 2,300,102 (8,200,000) 58,905,094
--------------- ---------------------------------------------------
Property, Plant and Equipment, net 4,122,825 226,364 180,548 4,303,373
Goodwill, net 2,854,462 0 0 (2) 6,905,510 9,759,972
Notes Receivable, Noncurrent 875,000 0 0 875,000
Other Assets 382,511 47,469 37,861 420,372
--------------- ---------------------------------------------------
Total Assets $ 73,039,790 3,157,612 2,518,511 (1,294,490) 74,263,811
=============== ===================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable-Trade $ 5,829,329 563,232 449,234 6,278,563
Current Portion of Long-Term Debt 23,841 0 0 23,841
Notes Payable 806,303 0 0 806,303
Accrued Expenses 1,455,973 55,800 44,506 1,500,479
Federal and State Income Taxes Payable 419,499 367,317 292,972 712,471
Other Current Liabilities 857,750 7,287 5,812 863,562
--------------- ---------------------------------------------------
Total Current Liabilities 9,392,695 993,636 792,524 0 10,185,219
--------------- ---------------------------------------------------
Minority Interest 0 0 0 (3) 431,497 431,497
Stockholders' Equity:
Preferred Stock 976,755 0 976,755
Common Stock 103,263 6 5 (3) (5) 103,263
Additional Paid-in Capital 56,139,009 900,029 717,863 (3) (717,863) 56,139,009
Less: Treasury Stock (246,068) 0 0 (3) 0 (246,068)
Retained Earnings 6,674,136 1,263,941 1,008,119 (3) (1,008,119) 6,674,136
--------------- ---------------------------------------------------
Total Stockholders' Equity 63,647,095 2,163,976 1,725,987 (1,725,987) 63,647,095
--------------- ---------------------------------------------------
Total Liabilities and Stockholders' Equity $ 73,039,790 3,157,612 2,518,511 (1,294,490) 74,263,811
=============== ===================================================
</TABLE>
Notes to Unaudited Pro Forma Condensed Balance Sheets:
- ----------------------------------------------------------------
(1). To reflect consideration given of $8.2 million.
(2). To reflect the excess of cost over identifiable assets less liabilities.
(3). To eliminate the capital accounts of Maxpro and to record minority
interest.
4
<PAGE> 5
<TABLE>
<CAPTION>
ULTRAK AND MAXPRO
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED 6/30/96 FOR THE SIX MONTHS ENDED
--------------------------------
USD AUSD USD USD
ULTRAK MAXPRO MAXPRO PRO FORMA PRO FORMa
JUNE 30, JUNE 30, JUNE 30, ADJUSTMENTS COMBINED
1996 1996 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $61,440,469 3,444,458 2,747,300 64,187,769
Cost of Products Sold 43,887,601 1,829,604 1,459,292 45,346,893
Gross Margin 17,552,868 1,614,854 1,288,008 0 18,840,876
Operating Expenses:
Selling and Admininstrative 8,682,525 2,000,999 1,595,997 (1) 138,000 10,416,522
Operations and Research 3,611,459 0 0 3,611,459
-------------------------------------------------------------
12,293,984 2,000,999 1,595,997 138,000 14,027,981
-------------------------------------------------------------
Operating Income 5,258,884 (386,145) (307,989) (138,000) 4,812,895
-------------------------------------------------------------
Other (Income) Expense:
Interest Expense 886,803 7,672 6,119 0 892,922
Interest Income 50,276 (141,526) (112,881) 0 (62,605)
Minority Interest 0 0 0 (2) (50,832) (50,832)
-------------------------------------------------------------
937,079 (133,854) (106,762) (50,832) 779,485
-------------------------------------------------------------
Income (Loss) before Income Taxes 4,321,805 (252,291) (201,227) (87,168) 4,033,410
Income Taxes 1,516,774 (48,962) (39,052) 0 1,477,722
-------------------------------------------------------------
Net Income (Loss) $ 2,805,031 (203,329) (162,175) (87,168) 2,555,688
=============================================================
Earnings (Loss) per Common Share $ 0.33 $0.28
=============================================================
Shares Used in Computation 8,247,774 (3) 538,411 8,786,185
=============================================================
</TABLE>
Notes to Unaudited Pro Forma Condensed Combined Statements of Income:
- -----------------------------------------------------------------------------
(1). To reflect goodwill amortization over 25 years.
(2). To reflect minority interest.
(3). To reflect on a proforma basis the number of shares that would have been
issued to raise $8.2 million at the secondary offering price of $16.375
less expenses of 7%.
5
<PAGE> 6
<TABLE>
<CAPTION>
ULTRAK AND MAXPRO
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED 12/31/95 FOR THE TWELVE MONTHS ENDED
------------------------------------
USD AUSD USD USD
ULTRAK MAXPRO MAXPRO PRO FORMA PRO FORMA
DECEMBER 31, DECEMBER 31, DECEMBER 31, ADJUSTMENTS COMBINED
1995 1995 1995
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $101,232,305 11,099,285 8,852,790 110,085,095
Cost of Products Sold 76,319,278 5,559,470 4,434,233 80,753,511
-----------------------------------------------------------------
Gross Margin 24,913,027 5,539,815 4,418,556 0 29,331,583
Operating Expenses:
Selling and Admininstrative 13,254,921 3,118,336 2,487,185 (1) 276,000 16,018,106
Operations and Research 5,542,529 0 0 5,542,529
-----------------------------------------------------------------
18,797,450 3,118,336 2,487,185 276,000 21,560,635
-----------------------------------------------------------------
Operating Income 6,115,577 2,421,479 1,931,372 (276,000) 7,770,949
-----------------------------------------------------------------
Other (Income) Expense:
Interest Expense 1,840,489 0 0 0 1,840,489
Interest Income 40,502 (45,441) (36,244) 0 4,258
Minority Interest 0 0 0 (2) 348,092 348,092
-----------------------------------------------------------------
1,880,991 (45,441) (36,244) 348,092 2,192,840
-----------------------------------------------------------------
Income (Loss) before Income Taxes 4,234,586 2,466,920 1,967,615 (624,092) 5,578,109
-----------------------------------------------------------------
Income Taxes 1,539,529 721,221 575,246 0 2,114,775
-----------------------------------------------------------------
Net Income (Loss) $ 2,695,057 1,745,699 1,392,370 (624,092) 3,463,334
=================================================================
Earnings (Loss) per Common Share $ 0.36 $ 0.44
=================================================================
Shares Used in Computation 7,147,904 (3) 538,411 7,686,315
=================================================================
</TABLE>
.
Notes to Unaudited Pro Forma Condensed Combined Statements of Income:
(1). To reflect goodwill amortization over 25 years.
(2). To reflect minority interest.
(3). To reflect on a proforma basis the number of shares that would have been
issued to raise $8.2 million at the secondary offering price of $16.375
less expenses of 7%.
6
<PAGE> 7
MAXPRO SYSTEMS PTY LTD
ACN 009 081 467
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 1996
<PAGE> 8
MAXPRO SYSTEMS PTY LTD
DIRECTORS REPORT
FOR THE YEAR ENDED 30 JUNE 1996
The directors present the accounts of this company for the year ended 30 June
1996 and in accordance with Section 304(l) of the Corporations Law report as
follows:-
DIRECTORS
The name of the Directors in office at the date of this report:
Christopher Paul Davies
Selwyn John Bajada
Kim Robert Rhodes
Scott Anthony Rhodes
ACTIVITIES
The principal activity of the company during the course of the financial year
was the design, manufacture and installation of video surveillance systems.
OPERATING RESULTS
The profit of the company for the financial year after providing for income tax
of $274,405 amounted to $943,154 (1995: $320,037).
DIVIDENDS
The Directors do not recommend the payment of a dividend and no dividends have
been declared or paid since the end of the previous financial year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
At the date of this report no other matter or circumstance which has arisen
since 30 June 1996 that has significantly affected or may significantly affect:
a) the operations, in financial years subsequent to 30 June 1996 of the
company
b) the results of those operations
c) the state of affairs, in financial years subsequent to 30 June 1996 of the
company
DIRECTORS' BENEFITS
Since the end of the previous financial year, no Director of the company has
received or become entitled to receive any benefit by reason of a contract made
by the company or a related body corporate with a Director or a firm of which a
Director is a member other than as set out in Note 18 to the financial
statements.
Page 1
<PAGE> 9
SIGNED at PERTH this 7th day of August 1996
In accordance with the Resolution of the Directors
/s/ CHRISTOPHER PAUL DAVIES
- --------------------------------
Christopher Paul Davies
/s/ KIM ROBERT RHODES
- --------------------------------
Kim Robert Rhodes
Page 2
<PAGE> 10
MAXPRO SYSTEMS PTY LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
Note 1996 1995
$ $
<S> <C> <C> <C>
OPERATING PROFIT BEFORE
INCOME TAX 2 1,217,559 306,036
Income tax attributable to
opertaing profit 4 274,405 (14,001)
--------- -------
OPERATING PROFIT AFTER
INCOME TAX 943,154 320,037
RETAINED PROFITS AT THE
BEGINNING OF THE
FINANCIAL YEAR 320,787 750
--------- -------
TOTAL AVAILABLE FOR
APPROPRIATION 1,263,941 320,787
Dividends provided for or paid - -
--------- -------
RETAINED PROFITS AT THE
END OF THE FINANCIAL
YEAR 1,263,941 320,787
========= =======
</TABLE>
The accompanying notes form part of
these financial statements
Page 3
<PAGE> 11
MAXPRO SYSTEMS PTY LTD
BALANCE SHEET
AS AT 30 JUNE 1996
<TABLE>
<CAPTION>
Note 1996 1995
$ $
<S> <C> <C> <C>
CURRENT ASSETS
Cash 1,470,114 508,513
Receivables 5 335,948 874,390
Inventories 6 1,057,475 805,025
Other 7 20,242 3,994
--------- ---------
TOTAL CURRENT ASSETS 2,883,779 2,191,922
--------- ---------
NON CURRENT ASSETS
Plant and equipment 8 226,364 169,144
Other 9 47,469 14,001
--------- ---------
TOTAL NON CURRENT
ASSETS 273,833 183,145
--------- ---------
TOTAL ASSETS 3,157,612 2,375,067
--------- ---------
CURRENT LIABILITIES
Creditors and borrowings 10 563,232 841,636
Other 12 55,800 283,046
Provisions 13 367,317 29,563
--------- ---------
TOTAL CURRENT
LIABILITIES 986,349 1,154,245
--------- ---------
NON CURRENT LIABILITIES
Other 14 7,287 -
--------- ---------
TOTAL NON CURRENT
LIABILITIES 7,287 -
--------- ---------
TOTAL LIABILITIES 993,636 1,154,245
--------- ---------
NET ASSETS 2,163,976 1,220,822
========= =========
SHAREHOLDERS' EQUITY
Share capital 16 6 6
Reserves 15 900,029 900,029
Retained earnings 1,263,941 320,787
--------- ---------
TOTAL SHAREHOLDERS'
EQUITY 2,163,976 1,220,822
========= =========
</TABLE>
The accompanying notes form part
of these financial statements
Page 4
<PAGE> 12
MAXPRO SYSTEMS PTY LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
Note 1996 1995
$ $
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Cash receipts in the course of
operations 10,124,757 4,316,767
Cash payments in the course of
operations (9,026,253) (4,833,987)
Interest received 49,765 16,542
Interest paid (331) (584)
---------- ----------
NET CASH OUTFLOWS FROM
OPERATING ACTIVITIES 19(b) 1,147,938 (501,262)
---------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES
Payments for plant and equipment (122,301) (203,250)
Proceeds from sale of plant and
equipment - 5,500
---------- ----------
NET CASH OUTFLOWS FROM
INVESTING ACTIVITIES (122,301) (197,750)
---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from issue of shares - 900,030
---------- ----------
NET CASH INFLOWS FROM
FINANCING ACTIVITIES - 900,030
---------- ----------
NET INCREASE IN CASH
HELD 1,025,637 201,018
CASH AT BEGINNING OF
PERIOD 201,023 5
---------- ----------
CASH AT END OF PERIOD 19(a) 1,226,660 201,023
========== ==========
</TABLE>
The accompanying notes form part of
these financial statements
Page 5
<PAGE> 13
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
NOTE I STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The significant policies which have been adopted in the preparation of these
financial statements are:
a) BASIS OF PREPARATION
The financial statements of the company have been drawn up in accordance
with applicable Accounting Standards, the Corporations Law and Schedule 5
to the Regulations and other mandatory professional reporting requirements
(Urgent Issues Group Consensus Views). They have been prepared on the
basis of historical costs and do not take into account changing money
values or, except where stated, current valuations of non-current assets.
The accounting policies have been consistently applied and, except where
there is a change in accounting policy, are consistent with those of the
previous year.
b) INCOME TAX
Tax effect accounting procedures are applied whereby income tax is
regarded as an expense and is matched with the accounting profit after
allowing for permanent differences between taxable and accounting income.
Income tax on net cumulative timing differences is set aside to deferred
income tax and future income tax benefit accounts at current rates. Timing
differences arise when the period in which items included in determining
accounting profit differ from the periods in which they are included in
determining taxable income.
The future income tax benefit relating to timing differences is carried
forward as an asset if there is assurance beyond reasonable doubt of it
being realised. The future income tax benefit relating to tax losses are
only brought to account when their realisation is virtually certain.
c) FIXED ASSETS
Fixed asset are recorded at cost. All fixed assets are depreciated over
their estimated useful lives commencing from the time the asset is held
ready for use.
The gain or loss on disposal of all fixed assets, is determined as the
difference between the carrying amount of the asset at the time of
Page 6
<PAGE> 14
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
disposal and the proceeds of disposal, and is included in the results of
the company in the year of disposal.
d) INVENTORIES
Inventories are valued at the lower of cost and net realisable value.
Cost is based on the first-in first-out principle and includes expenditure
incurred in acquiring the inventories and bringing them to their existing
condition and location. In the case of manufactured inventories and
work-in-progress, cost includes an appropriate share of both variable and
fixed costs. Fixed costs have been allocated on the basis of normal
operating capacity.
Net Realisable Value
Net realisable value is determined on the basis of normal selling
patterns. Expenses of marketing, selling and distribution to customers are
estimated and are deducted to establish net realisable value.
e) EMPLOYEE ENTITLEMENTS
The provision for employees' entitlements to wages, salaries, annual leave
and sick leave represents the amount that the company has a present
obligation to pay resulting from employees' services provided up to balance
date. The provision has been calculated at nominal amounts based on
current wage and salary rates and includes related on-costs.
f) NON CURRENT ASSETS
The carrying amounts of all non-current assets are reviewed to determine
whether they are in excess of their recoverable amount at balance date. If
the carrying amount of a non-current asset exceeds the recoverable amount,
the asset is written down to the lower amount. In assessing recoverable
amounts the relevant cash flows have not been discounted to their present
value.
g) RESEARCH AND DEVELOPMENT COSTS
Research and development expenditure is expensed as incurred except to the
extent that its recoverability is assured beyond any reasonable doubt, in
which case it is deferred and amortised over the shorter of the period in
which the related benefits are expected to be realised or five
Page 7
<PAGE> 15
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
years. All deferred research and development expenditure is reviewed
annually to determine any amounts that are no longer recoverable. All such
amounts are written off.
h) TRANSLATION OF CONTROLLED FOREIGN ENTITIES
The financial statements of overseas controlled entities that are
integrated foreign operations are translated using the temporal method.
Monetary assets and liabilities are translated into Australian currency at
rates of exchange current at balance date, while non-monetary items and
revenue and expense items are translated at exchange rates current when
the transactions occurred. Exchange differences arising on translation are
brought to account in the profit and loss account.
i) DOUBTFUL DEBTS AND CREDIT RETURNS
The collectability of debts is assessed at year end and specific provision
is made for any doubtful accounts and goods to be returned for credit.
j) WARRANTIES
Provision is made for the estimated liability on all products still under
warranty and includes any claims already received. The estimate is based
on the experience of warranty costs incurred over previous years.
Page 8
<PAGE> 16
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
NOTE 2 OPERATING PROFIT
(A) OPERATING REVENUE AND
EXPENSES
Operating profit has been arrived
at after including:
OPERATING REVENUE
Sales revenue 9,749,867 4,917,512
Other revenue
Interest 49,765 16,542
Government grants 120,113 7,363
Gross proceeds from
the sale of non-current
assets - 5,500
--------- ---------
TOTAL OPERATING
REVENUE 9,919,745 4,946,917
========= =========
OPERATING EXPENSES
Interest paid to other
persons 331 584
Demonstration equipment - 11,320
Depreciation of plant and
equipment 65,081 33,106
Lease rental expense 118,336 49,635
Amounts set aside to
provision for:
- Employee entitlements 32,552 29,563
- Doubtful debts/credit
returns 61,741 -
- Warranties 8,000 -
Research and development
costs written off 976,637 713,243
Foreign exchange
transaction loss 7,672 -
(B) SALE OF NON-CURRENT ASSETS
Profit on sales of property, plant
and equipment - 4,500
</TABLE>
Page 9
<PAGE> 17
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
NOTE 3 AUDITOR'S REMUNERATION
Amounts received or due and
receivable by the Auditors of the
company for:
Auditing the financial
statements 8,000 8,000
======= =======
NOTE 4 INCOME TAX
Prima facie tax expense on operating profit
is reconciled to the income tax provided in
accounts as follows:
a) INCOME TAX EXPENSE
Prima facie tax expense on operating
profit at 36% (1995: 33%) 438,321 100,991
Less tax effect of:
Research and Development at 150% 175,795 117,685
Other non allowable items (13,151) (2,693)
Restatement of deferred tax balance
due to change in income tax rate 1,272 -
------- -------
Income tax expense 274,405 (14,001)
======= =======
Income tax expense comprises:
Current income tax provision 300,586 -
Future income tax benefit (33,468) (14,001)
Deferred income tax provision 7,287 -
------- -------
Income tax expense 274,405 (14,001)
======= =======
b) PROVISION FOR CURRENT INCOME TAX
Balance at beginning of year - -
Income tax paid/withheld (3,384) -
Current income tax on operating
profit 300,586 -
------- -------
Balance at end of year 297,202 -
======= =======
</TABLE>
Page 10
<PAGE> 18
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
c) FUTURE INCOME TAX BENEFIT
Provision for doubtful debt/credit
returns 22,227 -
Provision for warranties 2,880 -
Provision for employee entitlements 22,362 9,756
Provision for tax benefits - 4,245
--------- -------
47,469 14,001
========= =======
d) PROVISION FOR DEFERRED INCOME TAX
Expenditure deductible for tax but
deferred for accounting purposes 7,287 -
========= =======
NOTE 5 RECEIVABLES
Trade debtors 387,231 869,254
Less: Provision for doubtful
debts/credit returns 61,741 -
--------- -------
325,490 869,254
Other debtors 10,458 5,136
--------- -------
TOTAL RECEIVABLES 335,948 874,390
========= =======
NOTE 6 INVENTORIES
Raw materials 379,343 381,160
Work in progress 162,223 295,058
Finished goods 515,909 128,807
--------- -------
TOTAL INVENTORIES 1,057,475 805,025
========= =======
NOTE 7 OTHER CURRENT ASSETS
Prepayments 20,242 3,994
========= =======
</TABLE>
Page 11
<PAGE> 19
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
NOTE 8 PLANT AND EQUIPMENT
Plant and equipment at cost 292,776 170,475
Accumulated depreciation (82,583) (26,147)
------- -------
210,193 144,328
------- -------
Leasehold improvements at cost 31,775 31,775
Accumulated depreciation (15,604) (6,959)
------- -------
16,171 24,816
------- -------
Total plant and equipment 324,551 202,250
Total accumulated depreciation (98,187) (33,106)
------- -------
TOTAL PLANT AND EQUIPMENT 226,364 169,144
======= =======
NOTE 9 NON-CURRENT ASSETS - OTHER
Future income tax benefit 47,469 14,001
======= =======
NOTE 10 CREDITORS AND BORROWINGS
CURRENT
Bank overdraft 243,457 307,490
Trade creditors and accruals 319,778 534,146
------- -------
TOTAL CREDITORS AND BORROWINGS 563,232 841,636
======= =======
</TABLE>
Page 12
<PAGE> 20
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
NOTE 11 FINANCING ARRANGEMENTS
The company has access to the
following lines of credit
Total facilities available:
Bank overdraft - 200,000
======= =======
Facilities utilised at balance date:
Bank overdraft - 200,000
======= =======
Facilities over utilised at balance
date:
Bank overdraft 243,457 107,490
======= =======
NOTE 12 OTHER CURRENT LIABILITIES
Income in advance 55,800 283,046
======= =======
NOTE 13 PROVISIONS - CURRENT
Employee entitlements 62,115 29,563
Warranties 8,000 -
Income tax 297,202 -
------- -------
TOTAL PROVISIONS - CURRENT 367,317 29,563
======= =======
NOTE 14 NON CURRENT LIABILITIES
Provision for deferred income tax 7,287 -
======= =======
</TABLE>
Page 13
<PAGE> 21
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
NOTE 15 RESERVES
Share premium 900,029 900,029
======= =======
MOVEMENTS DURING THE YEAR
Balance at beginning of year 900,029 -
Add: Premium on ordinary shares
issued during the period - 900,029
------- -------
Balance at end of year 900,029 900,029
======= =======
NOTE 16 SHARE CAPITAL
Authorised Capital
10,000,000 ordinary shares of $0.01
ea. 100,000 100,000
======= =======
Issued and Paid-up Capital
595 ordinary shares of $0.01 ea. 6 6
------- -------
6 6
======= =======
NOTE 17 COMMITMENTS
OPERATING LEASE COMMITMENTS
Future operating lease rentals not
provided in the financial statements
and payable:
Not later than one year 10,225 -
Later than one year but not later than
two years 10,225 -
Later than two years but not later than
five years 7,669 -
</TABLE>
Page 14
<PAGE> 22
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
1996 1995
$ $
NOTE 18 CONTINGENT LIABILITIES
The details and estimated maximum amounts of contingent liabilities,
classified according to the party from whom the contingent liability
arises are set out below. The directors are not aware of any
circumstance or information which would lead them to believe that
these liabilities will crystallise and consequently no provisions
are included in the accounts in respect of these matters.
IN RESPECT OF THE COMPANY
Bank guarantees have been issued to:
Argyle Diamond Mines Pty Ltd 168,118
Hamersley Iron Pty Ltd. 10,653
These guarantees have been secured
by personal guarantees by C Davies,
K Rhodes and S Rhodes -
NOTE 19 CASH FLOW INFORMATION
(a) RECONCILIATION OF CASH
For the purposes of the Statement of Cash Flows, cash includes cash
on hand and at bank and short term deposits at call, net of
outstanding bank overdrafts. Cash as at the end of the financial
year as shown in the Statement of Cash Flows is reconciled to the
related items in the balance sheet as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Cash 1,470,114 508,513
Bank overdraft 10 (243,454) (307,490)
--------- --------
TOTAL CASH 1,226,660 201,023
========= =======
</TABLE>
Page 15
<PAGE> 23
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
(b) RECONCILIATION OF NET CASH FLOWS FROM OPERATING
ACTIVITIES TO NET INCOME AFTER INCOME TAX
Operating profit after income tax 943,154 320,037
Depreciation 65,081 33,106
Gain on sale of equipment - (4,500)
Increase in future income tax benefit (33,468) (14,001)
Decrease in trade debtors 482,023 (869,254)
Increase in inventories (252,450) (805,025)
Increase in other debtors (5,322) 11,826
Decrease in other non-current assets - 750
Increase in prepayments (16,248) (3,994)
Decrease in trade creditors (214,368) 530,087
Decrease in income in advance (227,246) 283,046
Increase in provisions 399,495 16,660
Increase in provision for deferred tax 7,287 -
--------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,147,938 (501,262)
========= ========
</TABLE>
(c) FINANCING FACILITIES Refer note 11
NOTE 20 SEGMENTAL REPORTING
The company designs, manufactures and installs video surveillance systems and
operates predominantly in one geographical segment, Australia.
NOTE 21 RELATED PARTY INFORMATION
DIRECTORS
The names of each person holding the position of Director of the company
during the financial year are Messrs C P Davies, K R Rhodes, S A Rhodes and S
J Bajada.
Other transactions with the company
The company has entered into a Management Agreement with Rhodes Davies &
Associates Pty Ltd of whom Mr C P Davies, Mr K R Rhodes and Mr S A Rhodes are
Directors. Management Fees of $1,016,450 have been paid during the course of
the year.
Page 16
<PAGE> 24
MAXPRO SYSTEMS PTY LTD
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 1996
Mr S J Bajada a director of the company, is Managing Director of Bajada &
Associates Pty Ltd, received fees of $43,630, during the course of the year to
provide Corporate Advisory Services.
The company has entered a rental agreement with Rhodes Davies & Associates Pty
Ltd of whom Messrs C P Davies, K R Rhodes and S A Rhodes are Directors to rent
the premises known as Unit 1, 25 Irvine Drive, Malaga, Western Australia. Rent
of $26,290 has been paid during the course of the year.
Page 17
<PAGE> 25
MAXPRO SYSTEMS PTY LTD
STATEMENT BY DIRECTORS
FOR THE YEAR ENDED 30 JUNE 1996
We, Christopher Paul Davies and Kim Robert Rhodes, being two Directors of the
company, hereby state that in the opinion of the Directors:
1. a) the financial statements set out on pages 3 to 17, are drawn up so as
to give a true and fair view of the results and cash lows for the
financial year ended 30 June 1996 and the state of affairs of the
company at 30 June 1996;
b) at the date of this statement there are reasonable grounds to believe
that the company will be able to pay its debts as and when they fall
due.
2. The financial statements have been made out in accordance with applicable
Accounting Standards and other mandatory professional reporting
requirements.
SIGNED at PERTH this 7th day of August 1996
Signed in accordance with a Resolution of the Directors
/s/ CHRISTOPHER PAUL DAVIES
- --------------------------------
Christopher Paul Davies
/s/ KIM ROBERT RHODES
- --------------------------------
Kim Robert Rhodes
Page 18
<PAGE> 26
[GRANT THORNTON LETTERHEAD]
INDEPENDENT AUDIT REPORT
TO THE MEMBERS OF MAXPRO SYSTEMS PTY LTD
SCOPE
We have audited the financial statements of Maxpro Systems Pty Ltd for the
financial year ended 30 June 1996 as set out on pages 3 to 18. The company's
directors are responsible for the financial statements. We have conducted an
independent audit of these financial statements in order to express an opinion
on them to the members of the company.
Our audit has been conducted in accordance with Australian Auditing Standards
to provide reasonable assurance as to whether the financial statements are free
of material misstatement. Our procedures included examination, on a test basis,
of evidence supporting the amounts and other disclosures in the financial
statements, and the evaluation of accounting policies and significant
accounting estimates. These procedures have been undertaken to form an opinion
whether, in all material respects, the financial statements are presented
fairly in accordance with Accounting Standards and other mandatory professional
reporting requirements (urgent issues group consensus views) and statutory
requirements so as to present a view which is consistent with our understanding
of the company's financial position, the results of its operations and its cash
flows.
The audit opinion expressed in this report has been formed on the above basis.
AUDIT OPINION
In our opinion, the financial statements of Maxpro Systems Pty Ltd are properly
drawn up:-
a) so as to give a true and fair view of:
i) the company's state of affairs as at 30 June 1996 and its profit and
cash flows for the financial year ended on that date; and
ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of
the Corporations Law to be dealt with in the financial statements;
b) in accordance with the provisions of the Corporations Law; and
c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
/s/ GRANT THORNTON
- --------------------------------
GRANT THORNTON
CHARTERED ACCOUNTANTS
/s/ T G WALLACE
- --------------------------------
T G WALLACE
PARTNER
PERTH, WA
DATED THIS 7TH DAY OF AUGUST 1996.
Page 19
<PAGE> 27
ULTRAK, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ULTRAK, INC.
(Registrant)
Date: August 23, 1996 By: /s/ TIM D. TORNO
---------------------
Tim D. Torno
Principal Financial and
Accounting Officer
7
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
Exhibit 10.1 Stock Purchase Agreement dated August 7, 1996 among Chris
Davies, Kim Rhodes, Scott Rhodes, Rhodes Davies & Associates
Pty Ltd. and Ultrak, Inc.
Exhibit 10.2 Shareholders Deed dated August 7, 1996 between Bajada &
Associates Pty Ltd. and Ultrak, Inc.
Exhibit 10.3 Consultancy Agreement dated August 7, 1996 between Rhodes
Davies & Associates Pty Ltd., Maxpro Systems Pty Ltd. and Ultrak,
Inc.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT, dated August 7, 1996 (the "Signing Date"), is among
Chris Davies ("Davies"), Kim Rhodes ("K. Rhodes"), Scott Rhodes ("S. Rhodes"),
Rhodes Davies & Associates Pty. Ltd. (ACN 009 333 788) ("RDA") (Davies, K.
Rhodes, S. Rhodes, and RDA are sometimes collectively referred to as the
"Signing Shareholders" and individually referred to as a "Signing
Shareholder"), and Ultrak, Inc., a Delaware corporation ("Ultrak").
Recitals. Each Signing Shareholder desires to sell all of the
outstanding shares of capital stock (the "Maxpro Stock") of Maxpro Systems Pty.
Ltd. (ACN 009 081 467), an Australian proprietary limited company ("Maxpro"),
owned or to be acquired (in the case of RDA) by him to Ultrak in accordance
with the terms of this Agreement and Ultrak desires to acquire all of the
outstanding shares of Maxpro Stock owned by the Signing Shareholders (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. On the terms and subject to the conditions set
forth herein, at the Closing (as hereinafter defined) each Signing Shareholder
covenants and agrees to sell and deliver to Ultrak, and Ultrak agrees to
purchase from each Signing Shareholder, on the Closing Date (as hereinafter
defined) the number of shares of the Maxpro Stock set forth opposite each
Signing Shareholder's name below:
<TABLE>
<CAPTION>
Name Shares
---- ------
<S> <C>
Davies 92
K. Rhodes 92
S. Rhodes 92
RDA 171
</TABLE>
The aggregate number of shares of the Maxpro Stock owned by all of the Signing
Shareholders is hereinafter referred to as the "Signing Shareholders' Shares".
1.02. Purchase Price. (a) The purchase price to be paid by Ultrak
to the Signing Shareholders for the Signing Shareholders' Shares shall be the
aggregate of the following:
(i) Ten Million Five Hundred Thousand Australian Dollars
(A$10,500,000) (the "Cash Purchase Price"), payable by cashier's check or wire
transfer at the Closing in the amount set forth below opposite each Signing
Shareholder's name below:
<PAGE> 2
<TABLE>
<CAPTION>
Name Amount
---- ------
<S> <C>
Davies A$______
K. Rhodes A$______
S. Rhodes A$______
RDA A$______
</TABLE>
(ii) If the Maxpro Group's (as hereinafter defined)
operating profit before interest, income taxes, and Corporate Charges (as
hereinafter defined) (the "Formula Profit") is at least Two Million Australian
Dollars (A$2,000,000) (the "First Earnout Profit Target") for Maxpro's fiscal
year ending June 30, 1997 (the "First Earnout Period"), then Ultrak shall issue
the Signing Shareholders that number of unregistered shares of Common Stock of
Ultrak ("Ultrak Stock") as is equal to the quotient of (A) Three Hundred
Thousand United States Dollars (US$300,000) divided by (B) the closing price on
July 1, 1997 of Ultrak Stock as reported for the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") in the Wall Street
Journal, Southwest Edition. If the Formula Profit for the Maxpro Group for the
First Earnout Period is less than the First Earnout Profit Target, then no
shares of Ultrak Stock will be issued for the First Earnout Period. The
"Maxpro Group" means Maxpro and any wholly-owned subsidiary of Maxpro. The
term "Corporate Charges" means costs and expenses of Ultrak that are charged or
allocated to Ultrak's subsidiaries or divisions other than for specific
services and the term "Corporate Charges" does not include costs and expenses
of Ultrak that are charged or allocated on a normal cost recovery basis to the
Maxpro Group for services requested by Maxpro and actually performed by
Ultrak's corporate office for the Maxpro Group. By way of example and not
limitation, an allocation of Ultrak's expenses for services (billing,
collection, marketing, etc.) actually performed by Ultrak's corporate office
for Maxpro would not be a Corporate Charge and such expenses would be
considered in calculating the Formula Profit.
(iii) If the Maxpro Group's Formula Profit is at least Six
Million Australian Dollars (A$6,000,000) (the "Second Earnout Profit Target")
for Maxpro's fiscal year ending June 30, 1998 (the "Second Earnout Period"),
then Ultrak will issue the Signing Shareholders that number of unregistered
shares of Ultrak Stock as is equal to the quotient of (A) Six Hundred Thousand
United States Dollars (US$600,000) divided by (B) the closing price on July 1,
1998 of Ultrak Stock as reported for NASDAQ in the Wall Street Journal,
Southwest Edition. If the Formula Profit for the Maxpro Group for the Second
Earnout Period is less than the Second Earnout Profit Target, then no shares of
Ultrak Stock will be issued for the Second Earnout Period.
(b) The Formula Profit for the Maxpro Group for the First Earnout
Period and the Second Earnout Period shall, as between the parties hereto, be
conclusively determined by the then auditors for Maxpro. The auditors shall
issue a certificate as to the amount of the Maxpro Group's Formula Profit as
soon as possible following the conclusion of the audit for the Maxpro Group for
each of the First Earnout Period and the Second Earnout Period. The
certificate shall be conclusive and binding on Ultrak, and the Signing
Shareholders. If the certificate of the auditors provides that the Maxpro
Group's Formula Profit equalled or exceeded the First Earnout Profit Target for
the First Earnout Period, then Ultrak will issue the number of unregistered
shares of Ultrak Stock determined in accordance with Section 1.02(a)(ii) within
thirty (30) days of the issuance by the auditors of the certificate certifying
the Formula Profit for the First Earnout Period. If the certificate of the
auditors provides that the Maxpro Group's Formula Profit equalled or exceeded
the Second Earnout
- 2 -
<PAGE> 3
Profit Target for the Second Earnout Period, then Ultrak will issue the number
of unregistered shares of Ultrak Stock determined in accordance with Section
1.02(a)(iii) within thirty (30) days of the issuance by the auditors of the
certificate certifying the Formula Profit for the Second Earnout Period. The
auditors for the Maxpro Group shall be Grant Thornton LLP or such other
accountants as are acceptable to Ultrak. The auditors for the Maxpro Group for
the Second Earnout Period need not be the same auditors that audited Maxpro's
financial statements for the First Earnout Period. The Signing Shareholders
acknowledge and agree that the Maxpro Group's research and development expenses
in each of the First Earnout Period and the Second Earnout Period will at least
equal the Maxpro Group's research and development expenses in fiscal 1996.
Ultrak covenants and agrees that, in determining Formula Profits, it will not
transfer or direct sales made by the Maxpro Group to Ultrak or other Ultrak
subsidiaries. Any subsidiary of Maxpro that is part of the Maxpro Group shall
have the same fiscal year as Maxpro.
1.03. Execution and Delivery of Closing Documents. Before the
Closing, each party shall cause to be prepared, and at the Closing the parties
shall execute and deliver, each agreement and instrument required by this
Agreement to be so executed and delivered and not theretofore accomplished. At
the Closing, the Signing Shareholders shall deliver the certificate or
certificates representing the Selling Shareholders' Shares duly endorsed or
accompanied by stock powers executed (with the signature of the endorsing party
guaranteed by an appropriate person or entity as required by Ultrak) and in
form sufficient to vest title thereto fully in Ultrak, free and clear of all
liens, liabilities, claims and encumbrances, against delivery by Ultrak of the
Cash Purchase Price. At the Closing, each party also shall execute and
deliver, or cause to be executed and delivered, such other appropriate and
customary documents as any other party reasonably may request for the purpose
of consummating the transactions contemplated by this Agreement. All actions
taken at the Closing shall be deemed to have been taken simultaneously at the
time the last of any such actions is taken or completed.
1.04. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 o'clock a.m., local time,
at such offices as the parties shall agree on August 2, 1996, or on such other
date as may be agreed upon by the parties, but in any event not later than
August 23, 1996 (the "Termination Date") unless further extended by written
agreement of the parties to this Agreement. The day on which the Closing
occurs is herein referred to as the "Closing Date."
1.05. Further Assurances. After the Closing, the Signing
Shareholders shall execute and deliver such additional documents and take such
additional actions as Ultrak may reasonably deem to be practical and necessary
or advisable in order to consummate the transactions contemplated by this
Agreement and to vest more fully in Ultrak the ownership of the Signing
Shareholders' Shares.
- 3 -
<PAGE> 4
1.06. Effective Date for Accounting Purposes. To the fullest extent
possible, the effective date of the Acquisition for accounting purposes will be
July 1, 1996 and the effective date of the transfer of control of Maxpro to
Ultrak will be July 1, 1996.
1.07. Personal Guarantees of Signing Shareholders. If the Signing
Shareholders have guaranteed any indebtedness or obligations of Maxpro, then
such guarantees will be disclosed on Schedule 1.08 of the Disclosure Schedule
(the "Disclosed Guarantees"). Promptly following the Closing, Ultrak will use
all reasonable efforts to have the Signing Shareholders released from the
Disclosed Guarantees. To the extent Ultrak cannot obtain any Signing
Shareholder's release from a Disclosed Guarantee, Ultrak will agree to fully
indemnify such Signing Shareholder from any liability with respect to that
Disclosed Guaranty to the extent that the event giving rise to liability occurs
subsequent to the Closing.
1.08. Ultrak Products. Following the Closing, Ultrak agrees that,
subject to contractual restrictions with third parties, Ultrak will provide the
Maxpro Group with access to all products that Ultrak and its subsidiaries
produce or distribute. Ultrak agrees to private label Ultrak's products for
sale by the Maxpro Group in Australia; provided, however, the Signing
Shareholders acknowledge and agree that the Maxpro Group will be charged all
internal and external costs of Ultrak associated with causing Ultrak's products
to be labelled and packaged with Maxpro's name.
1.09. Ultrak Loans to Signing Shareholders. Following the Closing,
Ultrak agrees, upon written request, to loan each Signing Shareholder an amount
equal to the Australian income tax payable by such Signing Shareholder solely
with respect to the shares of Ultrak Stock issuable pursuant to Sections
1.02(a)(ii) and 1.02(a)(iii). Each Signing Shareholder agrees to make all
elections reasonably available under applicable law to reduce his Australian
income taxes payable with respect to the shares of Ultrak Stock. Each loan
under this Section 1.10 shall [be made only if shares of Ultrak Stock are not
earned pursuant to Sections 1.02(a)(ii) and 1.02(a)(iii) and shall] bear
interest at a floating rate of interest equal to the total of the LIBOR rate as
announced in the Wall Street Journal plus three hundred (300) basis points.
The interest rate on the outstanding balance of each loan will automatically
adjust with any change in LIBOR. A loan will be made available to a signing
Shareholder pursuant to this Section 1.10 upon execution of a promissory note
in form and substance reasonably satisfactory to Ultrak. Each loan to a
Signing Shareholder pursuant to this Section 1.10 will be repayable in six (6)
equal installments spaced six (6) months apart, with the first installment to
be paid six (6) months after the loan is advanced to a Signing Shareholder.
ARTICLE II: REGISTRATION RIGHTS
2.01. Registration.
(a) If, at any time before July 1, 2000, Ultrak proposes
to file a registration statement (on any form other than Form S-4 or
Form S-8) relating to the Ultrak Stock
- 4 -
<PAGE> 5
under the Securities Act of 1933, as amended (the "Securities Act"),
for sale for its own account, Ultrak will, not less than ten (10) days
prior to the initial filing of such registration statement, deliver
written notice of such intention to the Signing Shareholders setting
forth the intended method of disposition, the maximum proposed
offering price, commissions and discounts in connection therewith and
other relevant information. Such notice must indicate that the
Signing Shareholders have piggyback registration rights pursuant to
this Section 2.01(a) with respect to the shares of the Ultrak Stock
which are then held by the Signing Shareholders and were acquired
pursuant to Section 1.01 hereof (the "Registrable Shares"). If any
Signing Shareholder owning Registrable Shares so requests in writing
within five (5) days after such notification, Ultrak hereby agrees to
include in such registration statement up to all (subject to the terms
of this Article II) of the Registrable Shares owned by such Signing
Shareholder and to use all reasonable best efforts to register such
Registrable Shares so that such Registrable Shares may be sold at such
times and in such manner as the holder or holders thereof shall
determine. If the proposed registration by Ultrak is, in whole or in
part, an underwritten public offering of Ultrak Stock, then any
request pursuant to this Section 2.01(a) to register must specify and
irrevocably agree that the Registrable Shares of a Signing Shareholder
to be included in the underwriting will be included on the same terms
and conditions as the shares of the Ultrak Stock otherwise being sold
by Ultrak through underwriters under such registration.
(b) If a registration pursuant to this Section 2.01
involves an underwritten offering and the managing underwriter of such
underwritten offering informs Ultrak and the Signing Shareholders by
letter of such managing underwriter's reasonable belief that the
effect of including all of the Registrable Shares so requested to be
included in the registration statement will materially and adversely
affect the sale of the shares of the Ultrak Stock proposed to be sold
by Ultrak, then the number of shares of the Ultrak Stock that a holder
of Registrable Shares may include in such registration shall be
reduced (and the number of shares of the Ultrak Stock to be sold by
other selling shareholders shall also be reduced) to a number
determined by multiplying (x) the total number of shares held by all
selling shareholders having contractual registration rights (including
the holders of Registrable Shares) which the managing underwriter is
willing to have included in such registration, times (y) a fraction,
the numerator of which is the number of Registrable Shares which such
Signing Shareholder requested to be included in such registration
statement and the denominator of which is the number of all shares
(including the Registrable Shares) which all the selling shareholders
having contractual registration rights have requested to be included
in such registration.
(c) Notwithstanding Section 2.01(b), the Signing
Shareholders recognize and agree that their rights under this Section
2.01 shall be expressly subject and inferior to the registration
rights of Petrus Fund, L.P. ("Petrus") with respect to 100,000 shares
of Ultrak Stock with such registration rights expiring on November 30,
1996.
- 5 -
<PAGE> 6
(d) In connection with any registrations under this
Section 2.01, the Signing Shareholders shall cooperate with Ultrak and
promptly furnish all information necessary to effect the proper
registration of Registrable Shares desired to be sold.
2.02. Costs and Expenses. All costs and expenses in connection with
the registration of any Registrable Shares under Section 2.01 of this Agreement
or the performance of Ultrak's obligations under Section 2.01 of this
Agreement, including, but not limited to, all registration, filing, stock
exchange and NASD fees; all fees and expenses of complying with securities or
blue sky laws; fees and disbursements of counsel for Ultrak, counsel
responsible for qualifying the Registrable Shares under blue sky laws, and of
independent accountants and other experts of Ultrak; and all other reasonable
expenses of Ultrak in connection with the transfer and delivery of the
Registrable Shares, shall be borne by Ultrak; provided, however, that Ultrak
shall not be obligated to pay any underwriting commissions or discounts
relating to the Registrable Shares and Ultrak shall not be obligated to pay the
fees and expenses of any separate legal counsel retained by any Signing
Shareholder.
2.03. Indemnification.
(a) Ultrak hereby agrees to indemnify and hold harmless
each Signing Shareholder owning Registrable Shares requesting or
joining in a registration hereunder and each other person, if any, who
controls such holder within the meaning of the Securities Act, against
all losses, liabilities, claims, damages, and expenses, joint or
several, to which such holder or controlling person may become subject
under the Securities Act or otherwise, insofar as such loss,
liability, claim, damage or expense arises out of or is based upon any
untrue statement of any material fact contained in any registration
statement covering the Registrable Shares, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or in an
amendment or supplement thereto executed by or on behalf of Ultrak or
based upon written information furnished by or on behalf of Ultrak
filed in any jurisdiction in order to qualify the Registrable Shares
under the securities laws thereof or filed with the United States
Securities and Exchange Commission (the "SEC"), or arises out of or is
based upon the omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that Ultrak shall not be obligated to indemnify a
Signing Shareholder in any such case to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any
untrue statement or omission relating to such Signing Shareholder or
the Signing Shareholder's method of distributing the Registrable
Shares, or otherwise, that was made in reliance upon, and in
conformity with, written information duly executed and furnished by
such Signing Shareholder specifically for use in the registration
statement, or any amendment or supplement thereto, or any application,
as the case may be.
(b) By requesting Registrable Shares to be covered by any
registration statement in accordance with this Agreement, each Signing
Shareholder agrees to indemnify and hold harmless Ultrak, each of its
directors and each of its officers who
- 6 -
<PAGE> 7
have signed said registration statement, and each person, if any, who
controls Ultrak within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to
the same extent as the indemnification by Ultrak provided for in
Section 2.03(a), but only with respect to untrue statements or
omissions, if any, relating to such Signing Shareholder or the Signing
Shareholder's method of distributing the Registrable Shares, or
otherwise, made in such registration statement, prospectus contained
therein, or amendment or supplement thereto, or in any application, in
reliance upon, and in conformity with, written information duly
executed and furnished by such Signing Shareholder against whom
indemnification is sought to Ultrak specifically for use in the
registration statement, in the prospectus contained therein, or any
amendment or supplement thereto, or any application, as the case may
be.
(c) Promptly after the receipt by an indemnified party
under Section 2.03(a) or 2.03(b) above of notice of the commencement
of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have
been advised by its counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to participate
in the defense of such action on behalf of such indemnified party or
parties (it being understood, however, that the indemnifying party
shall not be liable for the fees and expenses of more than one
separate counsel, which, in the case of Section 2.03(a) above, shall
be designated by the Signing Shareholder and which, in the case of
Section 2.03(b) above, shall be designated by Ultrak). After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense of any such action, the indemnifying party
shall not be liable to such indemnified party under Section 2.03(a) or
2.03(b) above for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation, unless (i) the indemnified
party shall have employed counsel in accordance with the proviso in
the immediately preceding sentence, (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the
notice of commencement of the action, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party. The indemnification required
by this Article II shall be made by periodic payments during the
course of the investigation or defense, as and when bills are received
or losses, liabilities, claims, damages or expenses are incurred.
- 7 -
<PAGE> 8
2.04 Termination of Rights. The right of any Signing Shareholder
to register Registrable Shares pursuant to Section 2.01 shall automatically
terminate as to any Registrable Shares that may be sold under Rule 144
promulgated by the SEC pursuant to the Securities Act. ("Rule 144") without
registration (subject only to volume limitations as set forth in Rule 144).
2.05. Exchange Act Registration. Ultrak agrees to maintain
registration of the Ultrak Stock under the Exchange Act, to timely file and
maintain all required reports and other filings with the SEC, and to take such
action as may from time to time be necessary to enable holders of Registrable
Shares to be able to sell pursuant to Rule 144, unless otherwise restricted by
this Agreement or unless sales can be made without compliance with Rules 144
and 145 promulgated by the SEC under the Securities Act.
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF THE
SIGNING SHAREHOLDERS
Each Signing Shareholder jointly and severally represents and warrants
to Ultrak that the following are true and correct as of the Signing Date and
will be true and correct as of the Closing Date as if made on that date:
3.01. Organization, Qualification, and Good Standing. Maxpro is a
corporation duly organized, validly existing, and in good standing under
Australian law, has the corporate power and authority to own or hold under
lease its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification.
3.02. Investments or Subsidiaries. Other than as set forth on
Schedule 3.02 of the Disclosure Schedule, Maxpro does not own (nor has it ever
owned) the capital stock of any corporation, nor does it have (nor has it ever
had) an equity, profit sharing, participation, or other interest in any
corporation, partnership, joint venture, or other entity.
3.03. Corporate Records. Copies of the Memorandum of Association
(the "Charter") and all amendments thereto and the Articles of Association (the
"Bylaws") and all amendments thereto of Maxpro have been delivered to Ultrak
and such copies are true, correct, and complete. The minute books of Maxpro
contain accurate and complete minutes of all meetings of and accurate and
complete consents to all actions taken without meetings by the Board of
Directors (and any committee thereof) and the shareholders of Maxpro since the
formation of Maxpro.
3.04. No Violation. Except as set forth on Schedule 3.04 of the
Disclosure Schedule, neither the execution and delivery of this Agreement by
the Signing Shareholders nor the consummation of the transactions contemplated
hereby will violate or conflict with, or result in the breach or termination
of, or otherwise give any other contracting party the right to terminate, or
constitute a default (or an event which, with the lapse of time, or the giving
of notice, or both,
- 8 -
<PAGE> 9
will constitute a default) under, any contract, license, other instrument or
commitment to which Maxpro is a party or by which Maxpro is bound, or result in
the creation of any lien, charge or encumbrance upon the properties or assets
of Maxpro pursuant to the terms of any such contract, license, instrument or
commitment. Other than as set forth on Schedule 3.04 of the Disclosure
Schedule, no authorization, consent, or approval of, or filing with, any
governmental body or authority is necessary for the consummation by Maxpro and
the Signing Shareholders of the transactions contemplated herein.
3.05. Authority of Signing Shareholders; No Violation by Signing
Shareholders. This Agreement has been duly and validly executed and delivered
by each Signing Shareholder and, assuming this Agreement constitutes a valid
and binding agreement of Ultrak, this Agreement constitutes a valid and binding
agreement of each Signing Shareholder, enforceable against each Signing
Shareholder in accordance with its terms. Except as set forth on Schedule 3.05
of the Disclosure Schedule, neither the execution and delivery of this
Agreement by any Signing Shareholder nor the consummation of the transactions
contemplated hereby by the Signing Shareholders will: (a) violate or conflict
with, or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (or an event
which, with the lapse of time, or the giving of notice, or both, will
constitute a default) under, any contract, license, other instrument or
commitment to which a Signing Shareholder is a party or by which a Signing
Shareholder is bound, or result in the creation of any lien, charge or
encumbrance upon the properties or assets of Maxpro or the Signing
Shareholders' Shares pursuant to the terms of any such contract, license,
instrument or commitment, or (b) violate or conflict with any applicable law,
regulation, permit, authorization, franchise, license, judgment, order, writ,
injunction or decree of any court or governmental body of any jurisdiction.
3.06. Capitalization. The authorized capital stock of Maxpro
consists solely of 10,000 shares of Maxpro Stock, 595 shares of which are
issued and outstanding. There are no other authorized classes or series of
capital stock of Maxpro. All outstanding shares of Maxpro Stock are duly
authorized, validly issued, fully paid, and nonassessable and have been
offered, issued, sold, and delivered by Maxpro in compliance with applicable
securities laws. There are no preemptive rights with respect to the Maxpro
Stock. There are no outstanding subscriptions, options, warrants, rights, or
other arrangements or commitments, whether express or implied, obligating
Maxpro to issue any shares of Maxpro Stock or securities exchangeable for or
convertible into Maxpro Stock. Schedule 3.06 of the Disclosure Schedule lists
all of the Maxpro Stock as owned or to be owned immediately prior to the
Closing Date, the address of each shareholder of Maxpro as shown in Maxpro's
books and records, and the number of shares of Maxpro Stock owned by each
shareholder of Maxpro or to be owned immediately prior to the Closing Date. As
of the Closing Date (prior to the consummation of the transactions contemplated
hereby), each Signing Shareholder will be the lawful record and beneficial
owner of the shares of Maxpro Stock set forth by his name on Schedule 3.06 of
the Disclosure Schedule, free and clear of all liens, liabilities, proxies,
claims, and encumbrances of any kind (other than as noted on Schedule 3.06 of
the Disclosure Schedule). The transfer as of the Closing Date of the
certificates representing the Signing Shareholders' Shares will transfer to
Ultrak good and indefeasible title to such shares of Maxpro Stock, free and
clear of all liens, liabilities, claims, and encumbrances of every kind, and
Maxpro and the Signing Shareholders will forever warrant and defend such title
against any claimants thereto.
- 9 -
<PAGE> 10
3.07. Maxpro Financial Statements. The audited balance sheet of
Maxpro as of June 30, 1995 (the "Audited Balance Sheet") and the audited
statement of operations, statement of cash flows and statement of changes in
shareholders' equity of Maxpro for the fiscal year ended June 30, 1995 (the
"Audited Financial Statements"), each certified by KPMG Peat Marwick,
independent certified public accountants, whose report thereon is included
therein, and the unaudited balance sheet of Maxpro as of April 30, 1996 (the
"1996 Balance Sheet") (the Audited Balance Sheet and the Unaudited Balance
Sheet are collectively referred to as the "Balance Sheets") and the unaudited
statement of operations and statement of cash flows of Maxpro for the 10-month
period ended April 30, 1996 (collectively, including the 1996 Balance Sheet,
the "Unaudited Financial Statements"), have been prepared in accordance with
the books and records of Maxpro, which books and records are complete,
maintained on a consistent basis, and correctly reflect its income, expenses,
assets and liabilities, are true, complete and accurate and present fairly the
financial position of Maxpro as of the dates of Balance Sheets and the results
of operations of Maxpro for the periods covered by said statements of
operations, in accordance with generally accepted Australian accounting
principles ("GAAP") consistently applied, except as otherwise disclosed therein
and except, in the case of the Unaudited Financial Statements, for (i) normally
recurring year-end adjustments, which adjustments will not be material either
individually or in the aggregate, and (ii) the absence of notes required by
GAAP. The Audited Financial Statements and the Unaudited Financial Statements
are collectively referred to in this Agreement as the "Financial Statements."
3.08. Compliance with Laws. Maxpro has complied with all laws,
rules, and/or regulations applicable to it or its business, and has received no
notice of any alleged violation of any such laws, rules, or regulations.
3.09. Taxes. Maxpro has duly filed when due all income, excise,
corporate, franchise, property, sales, payroll, withholding, and other tax
returns and reports required to be filed by it as of the date hereof by
Australia, the United States of America, or any state or any political
subdivision thereof and has paid or established adequate reserves for all taxes
(including penalties and interest) which have or may become due for the tax
periods covered by such returns, and any assessments which have been received
by it. All such tax returns or reports which are income tax returns or reports
fairly reflect the taxable income generated by Maxpro and the taxes of Maxpro
for the periods covered thereby. Maxpro is not delinquent in the payment of
any tax, assessment, or governmental charge, there is no tax deficiency or
delinquency asserted against Maxpro and there is no unpaid assessment, proposal
for additional taxes, deficiency or delinquency in the payment of any of the
taxes of Maxpro that could be asserted by any taxing authority, nor of any
violation of any tax law. There are no waivers or agreements by Maxpro for the
extension of time for the assessment of any tax as shown on such returns or
reports with respect to Maxpro. No audit of Maxpro with respect to taxes is
pending or threatened. All monies required to be withheld or collected by
Maxpro from employees or customers for income taxes, social security and
unemployment insurance taxes and sales, excise, and use taxes, and the portion
of any such taxes to be paid by Maxpro to governmental agencies, have been
collected or withheld and either paid to the respective governmental agencies
or set aside for such purpose in the manner required by applicable law and are
properly reflected in the Financial Statements or on the books and records of
Maxpro.
- 10 -
<PAGE> 11
3.10. Liabilities and Obligations. The Financial Statements reflect
all material liabilities or obligations of Maxpro, accrued, contingent, or
otherwise (asserted or unasserted), arising out of transactions effected or
events occurring on or prior to the Signing Date, other than liabilities and
obligations incurred in the ordinary course of business of Maxpro since April
30, 1996, which liabilities and obligations are either (i) set forth on
Schedule 3.10 of the Disclosure Schedule or (ii) not, individually or in the
aggregate, material to the assets, condition (financial or otherwise), business
or operations of Maxpro. All reserves shown in the Financial Statements are
appropriate, reasonable, and sufficient to provide for the losses thereby
contemplated. Except as set forth in the Financial Statements, Maxpro is not
liable upon or with respect to, or obligated in any other way to provide funds
in respect of or to guarantee or assume in any manner, any debt, obligation, or
liability of any person, corporation, association, partnership, joint venture,
trust, or other entity, and Maxpro knows of no basis for the assertion of any
other claims, liabilities, or obligations of any nature or in any amount that
would be material to the condition (financial or otherwise), business, or
operations of Maxpro.
3.11. Employee Benefit Plans and Arrangements; ERISA. Maxpro does
not sponsor or maintain and Maxpro is not otherwise a party to, nor has it been
in default under, any accrued obligations under any Australian employee benefit
law, rule, or regulation or any "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (such plans being hereinafter referred to collectively as the "ERISA
Plans"), or any other pension, profit sharing, or other retirement plan, fringe
benefit plan, health, group insurance or other welfare benefit plan, or other
similar plan, agreement, policy or understanding ("Other Plans" and, together
with ERISA Plans, the "Plans"), whether formal or informal and whether legally
binding or not. Maxpro does not have any commitment to create any such Plan.
Maxpro is not now, nor has it been, a part of a controlled group of
corporations within the meaning of Section 414(b) of the Code or a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Code. Maxpro has never sponsored, adopted, maintained or been obligated
to contribute to a single employer, multiple employer or multiemployer defined
benefit pension plan which is, or ever was, subject to the provisions of Title
IV of ERISA. Maxpro is not now, nor has it sponsored, adopted, maintained, or
been obligated to contribute to a Plan which is or ever was subject to the
minimum funding standards of Section 302 of ERISA and Section 412 of the Code.
Maxpro does not have any obligation in connection with any Plan pursuant to the
terms of a collective bargaining agreement. To the best of Maxpro's knowledge,
no Plan previously sponsored or maintained by Maxpro, or to which Maxpro has
otherwise been a party, has resulted in any material liability or obligation
for Maxpro other than as reflected on the Financial Statements.
3.12. Absence of Certain Changes. Except as set forth on Schedule
3.12 of the Disclosure Schedule, from and including April 30, 1996, Maxpro has
not: (a) suffered any material adverse change in its condition (financial or
otherwise), business, or operations; (b) contracted for or paid any single
capital expenditure in excess of A$10,000 or total capital expenditures in
excess of A$50,000; (c) mortgaged, pledged, or subjected to any lien, lease,
security interest, or other charge or encumbrance any of its properties or
assets; (d) formed or acquired or disposed of any interest in any corporation,
partnership, joint venture, or other entity;
- 11 -
<PAGE> 12
(e) suffered any damage or destruction to or loss of any assets (whether or not
covered by insurance) or lost or terminated employees or suppliers that could
or does adversely affect its condition (financial or otherwise), business, or
operations; (f) except for the disposal of inventory, machinery, vehicles, and
equipment consistent with past practices, acquired or disposed of any assets or
incurred, assumed, or guaranteed any indebtedness for borrowed money or other
liabilities or obligations to pay money other than trade payables in the
ordinary course of business; (g) forgiven, compromised, cancelled, released,
permitted to lapse, or waived any rights or claims that are material to the
condition (financial or otherwise), business, or operations of Maxpro; (h)
entered into, terminated or agreed to any modifications or amendments to any
material agreements, leases, or commitments; (i) paid any bonus, granted any
benefit, made any payments, or loaned any money to its shareholders, employees,
or other affiliates; (j) entered into any employment, compensation, consulting,
or collective bargaining agreement with any person or group, or modified or
amended the terms of any such existing agreement or entered into, adopted, or
amended any Plan; or (k) entered into or terminated any other commitment or
transaction or experienced any other event that is material to the condition
(financial or otherwise), business, or operations of Maxpro.
3.13. Title and Related Matters. Maxpro has good and marketable
title to all assets reflected in the Financial Statements as owned by Maxpro
and to those other assets reflected in Maxpro's books and records as being
owned (except as they have since been affected by transactions in the ordinary
course of business and consistent with past practices), and Maxpro owns such
assets free and clear of all mortgages, liens, pledges, charges, or
encumbrances of any kind or character, except (a) statutory liens for property
taxes that are not yet delinquent and (b) as expressly stated in the Financial
Statements or on Maxpro's books and records (except as they have since been
affected by transactions in the ordinary course of business and consistent with
past practices).
3.14. Insurance. Maxpro is a beneficiary of policies of insurance,
issued by insurers of recognized responsibility, providing adequate coverage to
insure the properties and businesses thereof against such risks and in such
amounts as are prudent and customary in Maxpro's industry. All of such
policies are, and will be maintained through the Closing Date, in full force
and effect. All premiums due thereon have been paid and no notice of
cancellation has been received with respect thereto.
3.15. Patents, Trademarks, Copyrights, Etc. Except as set forth on
Schedule 3.15 of the Disclosure Schedule, Maxpro owns all patents, technology,
know-how, processes, trademarks, and copyrights, if any, necessary to conduct
its business, or possesses adequate licenses or other rights, if any, therefor,
without conflict with the rights of others (the "Proprietary Rights"). Except
as set forth on Schedule 3.15 of the Disclosure Schedule, Maxpro has the sole
and exclusive right to use the Proprietary Rights without infringing or
violating the rights of any third parties. No consent of third parties is
required for the use thereof by Maxpro, and no claim has been asserted by any
person to the ownership of or right to use any Proprietary Right or challenging
or questioning the validity or effectiveness of any such license or agreement,
and Maxpro does not know of any basis for any such claim. Each of the
Proprietary Rights is valid
- 12 -
<PAGE> 13
and subsisting, has not been cancelled, abandoned, or otherwise terminated and,
if applicable, has been duly issued or filed. There is no claim that, or
inquiry as to whether, any product, activity or operation of Maxpro infringes
upon or involves, or has resulted in the infringement of, any Proprietary Right
of any other person, corporation or other entity; and no proceedings have been
instituted, are pending or are threatened which challenge the rights of Maxpro
with respect thereto.
3.16. Consents. Maxpro possesses all necessary licenses,
franchises, permits, and governmental authorizations material to the conduct of
its business, and no authorization, consent, approval, permit, or license of,
or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required
in connection with, the execution, delivery, and performance of this Agreement
or the agreements contemplated hereby on the part of Maxpro, and the execution,
delivery, and performance of this Agreement will not with the giving of notice,
the lapse of time, or both, terminate such licenses, franchises, permits, and
governmental authorizations.
3.17. Labor Relations. Maxpro is not a party to any collective
bargaining agreements with any union and no collective bargaining agreement is
currently being negotiated by Maxpro. There are no unfair labor practice
charges, complaints, or proceedings against Maxpro pending or threatened before
any governmental agency or authority. There are no discrimination charges
(relating to sex, age, race, national origin, handicap, or veteran status)
pending before any governmental agency or authority. There is no pending
representation question involving an attempt to organize a bargaining unit
including any employees of Maxpro and no labor grievance has been filed.
3.18. Litigation and Claims. Except as set forth on Schedule 3.18
of the Disclosure Schedule, Maxpro is not a party to, and the business and
assets of Maxpro are not the subject of or affected by, any pending or
threatened suit, claim, action, or litigation by or with any party or any
administrative, arbitration, or other governmental proceeding, investigation,
or inquiry. Maxpro is not (a) subject to any continuing court or
administrative order, writ, injunction, or decree applicable specifically to
Maxpro or to its business, assets, operations, or employees, or (b) in default
with respect to any such order, writ, injunction, or decree. Maxpro does not
know of any basis for any such action, proceeding, or investigation.
3.19. Employees and Consultants. Except as set forth on Schedule
3.19 of the Disclosure Schedule, Maxpro has no direct or indirect, express or
implied, obligation to pay severance or termination pay to any officer or
employee of Maxpro, or to pay any termination or severance payments to any
consultant, agent, or other person or entity.
3.20. Books of Account. The books of account of Maxpro have been
kept accurately in the ordinary course of business, the transactions entered
therein represent bona fide transactions and the revenues, expenses, assets,
and liabilities of Maxpro have been properly recorded in such books.
- 13 -
<PAGE> 14
3.21. Distributions. Since July 1, 1995, no distribution, payment
or dividend of any kind has been declared, paid or distributed by Maxpro on or
with respect to any of its capital stock at any time.
3.22. Accounts Receivable. The accounts receivable of Maxpro on
April 30, 1996, and those existing on the Closing Date:
(a) will have arisen out of sales in the ordinary course
of business and represent bona fide indebtedness of the applicable
account debtor;
(b) to the best knowledge of Maxpro and each Signing
Shareholder, are and will be collectible in full, net of the reserves
therefore set forth on the books of Maxpro, which reserves were
calculated consistent with past practices and with GAAP applied
consistently with the Audited Financial Statements; and
(c) are subject to no claims of offset, counterclaim,
recoupment or setoff and, to the best knowledge of Maxpro and each of
the Signing Shareholders, there are no facts or circumstances (whether
asserted or unasserted) that could give rise to such a claim.
Schedule 3.22 of the Disclosure Schedule is a complete and
accurate accounts receivable aging report for Maxpro as of a date within thirty
(30) days of the date of this Agreement.
3.23. Contracts.
(a) Except as set forth on Schedule 3.23 of the
Disclosure Schedule, Maxpro is not a party to, or bound by, any
material undischarged written or oral:
(i) contract of employment for any period of time
whatsoever, or restricting the employment, of any employee;
(ii) consulting agreement;
(iii) collective bargaining agreement;
(iv) contract or agreement restricting in any
manner Maxpro's right to compete with any other person or
restricting Maxpro's right to sell to or purchase from any
other person;
(v) agreement with any affiliate of Maxpro or
person controlled directly or indirectly by an affiliate of
Maxpro for or with respect to the borrowing or lending of
monies, the purchase or sale of goods or the performance of
services;
(vi) contract for the payment or receipt of
license fees or royalties to or from any person, firm or
corporation;
- 14 -
<PAGE> 15
(vii) contract of agency, representation,
distribution or franchise which cannot be canceled without
payment or penalty upon notice of thirty (30) days or less;
(viii) service contract in an annual amount in
excess of A$60,000;
(ix) guaranty, performance, bid or completion
bond, or surety or indemnification agreement;
(x) contract relating to the purchase, sale,
ownership, use or license of technology except licenses for
third party software generally available to the public;
(xi) lease or sublease, either as lessee or
sublessee, lessor or sublessor, of real or personal property
or intangibles;
(xii) contracts relating to the purchase, sale or
margining of securities;
(xiii) warranty or product service contracts;
(xiv) joint venture, partnership or other contracts
involving a sharing of profits, losses, costs or liabilities;
or
(xv) contract not listed above.
All material contracts, leases, subleases and other instruments of the
type referred to in this Section 3.23 and described on Schedule 3.23 of the
Disclosure Schedule (collectively, "Contracts") are in full force and effect
and are binding upon Maxpro and, to the best knowledge of Maxpro and each of
the Signing Shareholders, are binding on the other parties thereto. Except as
set forth on Schedule 3.23 of the Disclosure Schedule, no default by Maxpro
and/or each of the Signing Shareholders, no material default by the other
contracting parties has occurred thereunder, and no event has occurred which
with the giving of notice or the lapse of time, or both, would constitute a
material default by Maxpro, Maxpro has delivered to Ultrak true and complete
copies of each contract, lease, sublease, or other instrument described on
Schedule 3.23 of the Disclosure Schedule.
(b) Except as disclosed on Schedule 3.23 of the
Disclosure Schedule, Maxpro is not a party to, or bound by, any
Contract under the terms of which performance by Maxpro according to
the terms of this Agreement will be a default or an event of
acceleration, or would otherwise require consent.
(c) Schedule 3.23 of the Disclosure Schedule contains a
list of every material license, permit or governmental approval,
order, directive and agreement applied for, pending, issued, rejected
or given to Maxpro with respect to the conduct of its business
- 15 -
<PAGE> 16
or operations. Maxpro possesses all licenses, permits, and
governmental approvals and authorization which are required in order
to operate its business as presently conducted and Maxpro is in
compliance with all such licenses, permits, approvals and
authorizations.
(d) Schedule 3.23 of the Disclosure Schedule contains a
list of all pending or threatened claims against Maxpro under each
Contract (including without limitation, claims for back charges,
rebates, price reductions, breaches of product or service warranties
or for product or service liability for products manufactured or
sold), excluding requests for service in the ordinary course of
business which Maxpro is required to perform pursuant to the terms of
standard warranties and which are covered by warranty reserves, to the
extent such claims, individually or in the aggregate, could have a
material adverse effect on the condition (financial or otherwise),
business, or operations of Maxpro.
3.24. Corporate Name. There are no actions, suits, or proceedings
pending or threatened against or affecting Maxpro which may result in any
impairment of the right of Maxpro to use its corporate name. Schedule 3.24 of
the Disclosure Schedule lists any former corporate names of Maxpro and any
names other than its full corporate name under which Maxpro has conducted
business.
3.25. Compliance with Environmental Laws. Maxpro has not obtained
and has not been required to have obtained any permits, licenses, or similar
authorizations by reason of any applicable environmental laws, rules, or
regulations. In connection with the real property leased by Maxpro ("Real
Property"), Maxpro has not placed any asbestos-containing thermal insulation or
building products or PCB-containing products on the Real Property, and Maxpro
has no knowledge that any owner, prior lessee or user has placed any
asbestos-containing thermal insulation or building products or PCB-containing
products on the Real Property. There is no hazardous waste, solid waste or
hazardous substances on the Real Property. Maxpro has not installed or
maintained any active or inactive hazardous waste receptacles on the Real
Property, and Maxpro does not have any knowledge that any active or inactive
hazardous waste receptacles have ever been installed or maintained on the Real
Property. There have been no spills, discharges or other releases of hazardous
or toxic substances onto or from the Real Property. There are no unperformed
environmental obligations of Maxpro or against the Real Property.
3.26. Condition of Fixed Assets. All of the fixed assets owned or
leased by Maxpro's are in good condition and repair for the intended use in the
ordinary course of business and conform in all material respects with all
applicable ordinances, regulations and other laws and there are no known latent
defects therein.
3.27. Brokers and Finders. None of Maxpro, the Signing
Shareholders, or any of Maxpro' officers, directors, shareholders, and
employees has employed any broker, finder, or investment bank or incurred any
liability for any investment banking fees, financial advisory fees, brokerage
fees, or finders' fees in connection with the transactions contemplated hereby.
- 16 -
<PAGE> 17
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF ULTRAK
Ultrak represents and warrants to the Signing Shareholders that the
following are true and correct as of the Signing Date and will be true and
correct as of the Closing Date as if made on that date:
4.01. Organization, Qualification, and Good Standing. Ultrak is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, and Ultrak has the corporate power and
authority to own or hold under lease its properties and assets and to carry on
its business as it is now being conducted.
4.02. 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 June 30, 1996, there were issued and outstanding
approximately 10,300,000 shares of Ultrak Stock and 195,351 shares of Series A
Preferred Stock.
4.03. Corporate Authority Relative to This Agreement; No Violation.
Ultrak has the corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by Ultrak's Boards of Directors and no other
corporate proceedings on the part of Ultrak are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Ultrak and, assuming this Agreement
constitutes a valid and binding agreement of the other parties hereto, this
Agreement constitutes a valid and binding agreement of Ultrak, enforceable
against Ultrak in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will: (x) violate or conflict with any provision of the
Certificate of Incorporation or Bylaws of Ultrak, (y) violate or conflict with,
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (or an event
which, with the lapse of time, or the giving of notice, or both, will
constitute a default) under, any contract, license, other instrument or
commitment to which Ultrak is a party or by which Ultrak is bound, or result in
the creation of any lien, charge or encumbrance upon the properties or assets
of Ultrak pursuant to the terms of any such contract, license, instrument or
commitment, or (z) violate or conflict with any law, regulation, permit,
authorization, franchise, license, judgment, order, writ, injunction or decree
of any court or governmental body of any jurisdiction, in each case as such is
related to Ultrak or its assets.
4.04. Ultrak SEC Reports and Financial Statements. Ultrak has
previously furnished to Maxpro a copy of (i) Ultrak's annual report on Form
10-K filed with the SEC for the year ended December 31, 1995, (ii) Ultrak's
quarterly report on Form 10-Q filed with the SEC for the quarter ended March
31, 1996 and (iii) Ultrak's definitive prospectus, dated May 30, 1996, in
connection with the public sale of shares of Ultrak Stock (the "SEC Filings").
The audited
- 17 -
<PAGE> 18
consolidated financial statements and unaudited consolidated interim financial
statements (collectively referred to herein as the "Ultrak Financials")
included in the SEC Filings (including any related notes and schedules) fairly
presented the financial position of Ultrak as of the dates thereof and the
results of operations and changes in financial position or other information
included therein for the periods or as of the dates then ended, all in
accordance with generally accepted accounting principles consistently applied
during the periods involved (except as otherwise stated therein).
4.05. Consents. Except for the consent of NationsBank of Texas,
N.A. ("NationsBank"), no authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required
in connection with, the execution, delivery, and performance of this Agreement
or the agreements contemplated hereby on the part of Ultrak or.
4.06. Brokers and Finders. Neither Ultrak nor any officer or
director of Ultrak has employed any broker, finder, or investment bank or
incurred any liability for any investment banking fees, financial advisory
fees, brokerage fees, or finders' fees in connection with the transactions
contemplated hereby.
ARTICLE V: JOINT COVENANTS OF ULTRAK AND THE SIGNING
SHAREHOLDERS
5.01. Access. Each of Ultrak and the Signing Shareholders, on
behalf of themselves and Maxpro, will afford to one another and to one
another's officers, employees, accountants, counsel, and other authorized
representatives, full and complete access during normal business hours,
throughout the period prior to the Closing Date, to its properties, personnel,
contracts, commitments, books, records (including but not limited to tax
returns) and reports, schedules or other documents and will use all its
reasonable efforts to cause its respective representatives to furnish promptly
to the other such additional financial and operating data and other information
as to its respective businesses and properties as the other or its duly
authorized representatives may from time to time reasonably request.
5.02. Notice of any Material Change. Each of Ultrak and the Signing
Shareholders, promptly after the first notice or occurrence thereof, but not
later than the Closing Date, shall disclose to the other in writing the
occurrence of any event or the existence of any state of facts that: (a) had
such event occurred or such facts existed or been known at the date hereof,
would have been required to have been set forth in this Agreement; (b) would
make any of its representations and warranties in this Agreement untrue in any
material respect; or (c) would otherwise constitute a material adverse change
in the business, results of operations, working capital, assets, liabilities or
condition (financial or otherwise) of Ultrak or Maxpro, as the case may be. No
notice hereunder will have any effect for the purpose of determining the
satisfaction of or compliance with the conditions to the obligations of the
parties set forth elsewhere in this Agreement.
- 18 -
<PAGE> 19
5.03. Cooperation. Ultrak and the Signing Shareholders, on behalf
of themselves and Maxpro, will: (a) cooperate with one another in determining
whether any filings are required to be made with or consents, authorizations,
clearances and approvals required to be obtained from, any governmental or
regulatory authorities in any jurisdiction or any third party prior to the
Closing Date in connection with the consummation of the transactions
contemplated in this Agreement and cooperate in making any such filings
promptly and in seeking timely to obtain any such consents; (b) keep each other
informed in connection with the transactions contemplated by this Agreement;
(c) cooperate with one another and expend reasonable amounts in order to lift
any injunctions or remove any other impediment to the consummation of the
transactions contemplated herein; and (d) take such actions as the other party
may reasonably request to consummate the transactions contemplated by this
Agreement and use all its reasonable efforts to satisfy all conditions
precedent to the obligations to close such transactions.
5.04. Confidentiality. Each party to this Agreement will take all
reasonable precautions to maintain the confidentiality of any information
concerning any other party or any affiliate of any other party provided to or
discovered by it or its representatives and will not disclose such information
to anyone other than those people directly involved in the investigation and
negotiations pertaining to the transactions contemplated hereby. Each party
further agrees that in the event the transactions contemplated by this
Agreement are not consummated, it will return or destroy all documents and
records obtained from any other party during the course of its investigation or
negotiations pertaining to the transactions contemplated hereby and will use
all its reasonable efforts to cause all information with respect to such other
party and its businesses which it obtained pursuant to this Agreement to be
kept confidential.
5.05. No Solicitation. Until the Closing Date, each of the Signing
Shareholders covenants that neither they nor their officers, directors, agents,
or affiliates, will: (a) directly or indirectly, encourage, solicit or
initiate discussion or negotiations with any corporation, partnership, person
or other entity or group concerning any merger, sale of all or substantially
all of the assets, business combination, sale of shares of capital stock or
similar transactions involving Maxpro, whether by providing nonpublic
information or otherwise; or (b) disclose, directly or indirectly, any
information not customarily disclosed to any person concerning its business and
properties, afford to any other person access to its properties, books or
records or otherwise assist or encourage any person in connection with any of
the foregoing. In the event Maxpro receives any offer or inquiry for a
transaction of the type referred to in (a) above, the Signing Shareholders will
promptly inform Ultrak as to any such offer.
5.06. Public Announcements. Both the Signing Shareholders, on
behalf of themselves and Maxpro, and Ultrak will consult with the other before
issuing any press release, public announcement, or make any public filing
regarding this Agreement, and will not, unless otherwise required by law, issue
any such press release prior to such consultation.
- 19 -
<PAGE> 20
ARTICLE VI: COVENANTS OF THE SIGNING SHAREHOLDERS
6.01 Conduct of Maxpro's Business. Prior to the Closing Date, and
except as may be permitted, required or contemplated pursuant to this Agreement
or as specifically or as may be consented to in writing by Ultrak, the Signing
Shareholders will, and each Signing Shareholder covenants and agrees that he
will cause Maxpro to:
(a) conduct its operations in the ordinary and usual
course of business consistent with past and current practices, and
will use all its reasonable efforts to maintain and preserve intact
its business organization and goodwill, to retain the service of its
key officers and employees, and to maintain satisfactory relationships
with customers and those having business relationships with it;
(b) not declare or pay any dividends on its outstanding
shares of capital stock;
(c) not propose or adopt any amendments to its Charter or
Bylaws;
(d) not issue any shares of its capital stock or effect
any stock split or otherwise change its current capitalization;
(e) not grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock;
(f) not purchase or redeem any shares of its capital
stock;
(g) not make any loan or advance to any shareholder,
officer, director, or employee;
(h) not increase the compensation of or pay or accrue any
bonus to any employee other than in accordance with past established
practices; and/or
(i) unless otherwise required by law, not agree to take
any action that would make any representation or warranty in Article
III hereof untrue or incorrect.
ARTICLE VII: JOINT CONDITIONS PRECEDENT
Except as may be waived by all parties, the obligations of Ultrak and
the Signing Shareholders to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing Date,
of each of the following conditions:
7.01. Absence of Litigation. No governmental agency or authority
shall have instituted, or threatened in writing to institute, any action or
proceeding seeking to delay, restrain, enjoin or prohibit the consummation of
the transactions contemplated by this Agreement, and no order, judgment or
decree by any court or governmental agency or authority shall be in effect that
enjoins, restrains or prohibits the same or otherwise would materially
interfere with the operation of the assets and business of Ultrak or Maxpro
after the Acquisition.
- 20 -
<PAGE> 21
ARTICLE VIII: CONDITIONS PRECEDENT TO ULTRAK'S OBLIGATIONS
The obligations of Ultrak to consummate the transactions contemplated
by this Agreement will be subject to the satisfaction on or before the Closing
Date of each of the following conditions:
8.01. Representations and Warranties; Compliance. The
representations and warranties of the Signing Shareholders in this Agreement
shall have been true and correct in all material respects on and as of the
Signing Date and shall be true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date, and the covenants
and agreements of Maxpro in this Agreement shall have been complied with in all
material respects. On the Closing Date, the Signing Shareholders shall have
provided Ultrak with a Certificate of Compliance in the form of Exhibit 8.01.
8.02. No Material Adverse Change. There shall have been no material
adverse change in Maxpro's business, properties, assets, liabilities, results
of operations or condition, financial or otherwise, from the financial
information set forth in the Financial Statements.
8.03. Consultancy Agreement. Each party to the Consultancy
Agreement, dated September 14, 1994 (the "Prior Consultancy Agreement"),
between Rhodes Davies & Associates Pty. Ltd. and Maxpro, shall have executed a
new Consultancy Agreement (the "New Consultancy Agreement") among the parties
to the Prior Consultancy Agreement in the form of Exhibit 8.03.
8.04. Board Approval. Ultrak's Board of Directors shall have
approved, in its discretion, the Acquisition and the terms of this Agreement.
8.05. Approval of the Australian Foreign Investment Review Board.
The Australian Foreign Investment Review Board shall have approved the
Acquisition.
8.06. Due Diligence. Ultrak shall have reviewed all of the assets,
liabilities, contracts, books and records, and other properties of Maxpro that
Ultrak determines are necessary or appropriate and Ultrak shall have
determined, in its discretion, that its review of the foregoing is acceptable.
8.07. Shareholders Deed. Bajada & Associates, Pty. Ltd. (ACN 059
781 770) ("B&A") shall have consented in writing to the Acquisition and the
terms of this Agreement and waived any rights to acquire the Signing
Shareholders' Shares under that certain Shareholders' Deed, dated September 14,
1994, among B&A, the Signing Shareholders, and Maxpro and B&A shall have agreed
with Ultrak in writing as to mutual rights of first refusal with respect to any
subsequent transfer by Ultrak or B&A of shares of the Maxpro Stock.
8.08. NationsBank Approval. NationsBank shall have approved, in
writing, the Acquisition.
- 21 -
<PAGE> 22
8.09. Investment Letter. Each Signing Shareholder shall have
executed an Investment Letter in the form of Exhibit 8.09.
8.10. Audit. Grant Thornton LLP or such other accounting firm
acceptable to Ultrak shall have completed an audit of the Maxpro Group's
financial statements for the year ended June 30, 1996 and the audit report of
Grant Thornton LLP or such other accounting firm for such year shall have been
furnished to Ultrak and be reasonably acceptable to Ultrak.
ARTICLE IX: CONDITIONS PRECEDENT TO THE SIGNING SHAREHOLDERS'
OBLIGATIONS
The obligations of the Signing Shareholders to consummate the
transactions contemplated by this Agreement will be subject to the satisfaction
on or before the Closing Date of each of the following conditions:
9.01. Representations and Warranties; Compliance. The
representations and warranties of Ultrak in this Agreement shall have been true
and correct in all material respects on and as of the Signing Date and shall be
true and correct in all material respects as of the Closing Date as though made
on and as of the Closing Date, and the covenants and agreements of Ultrak in
this Agreement shall have been complied with in all material respects. On the
Closing Date, Ultrak shall have provided the Signing Shareholders with a
Certificate of Compliance in the form of Exhibit 9.01.
9.02. No Material Adverse Change. There shall have been no material
adverse change in Ultrak's assets, liabilities, results of operations or
condition, financial or otherwise.
9.03 New Consultancy Agreement. The New Consultancy Agreement
shall have been executed.
ARTICLE X: INDEMNIFICATION
10.01. Indemnification. Each Signing Shareholder jointly and
severally covenants and agrees to indemnify Ultrak against any loss, expense,
liability, or other damages, including the reasonable costs of investigation,
interest, penalties and attorneys' and accountant's fees ("Damages"), incurred
(whether or not paid) in connection with or arising from or attributable to any
breach or inaccuracy of any representation or warranty made by any Signing
Shareholder herein or any breach or failure to perform any agreement or
covenant of any Signing Shareholder herein.
10.02. Threshold. The Signing Shareholders shall not be required to
make any indemnification payment pursuant to Section 10.1 for any Damages until
such time as the total amount of all Damages that have been directly or
indirectly suffered or incurred (whether or not paid) by Ultrak or to which
Ultrak has become subject exceeds A$50,000 in the aggregate. At
- 22 -
<PAGE> 23
such time as the total amount of such Damages exceeds US$50,000 in the
aggregate, Ultrak shall be entitled to be indemnified against the full amount
of such Damages (and not solely the amount that exceeds US$50,000).
10.03. Expiration of Indemnity. Ultrak may make no claim for
indemnification for Damages after December 31, 1997 (the "Claims Deadline").
The expiration of the period within which claims may be made shall not affect
any rights of Ultrak with respect to claims made prior to the Claim Deadline.
10.04. Fraud. Notwithstanding any provision in this Agreement to the
contrary, the liability of a Signing Shareholder for fraud shall be subject
only to applicable statutes of limitations, and any claim against any Signing
Shareholder alleging fraud need not be presented by the Claim Deadline.
10.05. Survival of Representations and Warranties. Other than
disclosures set forth in the Disclosure Schedule hereto or in the Certificate
of Compliance to be delivered at Closing pursuant to Section 8.01 hereof, no
disclosure by Maxpro or any Signing Shareholder nor any investigation by or on
behalf of Ultrak with respect to Maxpro shall be deemed to affect Ultrak's
reliance on the representations, warranties, covenants or agreements contained
herein or to waive Ultrak'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 Signing Shareholders. The indemnity
obligations of the Signing Shareholders under this Article X (and the
representations, warranties, covenants and agreements of the Signing
Shareholders) shall survive the Closing until the Claim Deadline.
ARTICLE XI: WAIVER AND AMENDMENT
11.01. Modification, Amendment and Waiver. This Agreement may not be
modified unless such modification is in writing and signed by all parties
hereto. No waiver of any term of this Agreement shall be enforceable unless in
writing and signed by the party against which it is sought to be changed. The
waiver by any party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
ARTICLE XII: REMEDIES
12.01 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.
12.02 Remedies of Maxpro. After the Closing, Maxpro shall have the
same rights and benefits under this Agreement as does Ultrak with respect to
the representations, warranties and covenants of the Signing Shareholders
contained herein, as fully as if such representations,
- 23 -
<PAGE> 24
warranties, and covenants had been made to or with Maxpro in lieu or in place
of Ultrak as the purchaser of the Signing Shareholders' Shares. In any
proceeding by Maxpro to assert or prosecute any claims under, or to otherwise
enforce, this Agreement, the Signing Shareholders agree that they shall not
assert as a defense or bar to recovery by Maxpro or Ultrak, and hereby waive
any right to so assert such defense or bar such recovery, that (a) prior to the
Closing, Maxpro shall have had knowledge of the circumstances giving rise to
the claim being pursued by it or Ultrak; (b) prior to the Closing, Maxpro
engaged in conduct or took action that caused or brought about the
circumstances giving rise to its or Ultrak's claim, or otherwise contributed
thereto; (c) Maxpro is estopped from asserting or recovering upon its claim by
reason of having joined in the representations, warranties and covenants made
by the Signing Shareholders in this Agreement; or (d) the Signing Shareholders
have a right of contribution from Maxpro to the extent that there is any
recovery against them.
ARTICLE XIII: MISCELLANEOUS
13.01. Expenses. Each party hereto shall bear its own expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby; provided, however, Maxpro's legal fees and
expenses in connection with this Agreement and the transactions contemplated
hereby shall not exceed A$20,000. To the extent legal fees and expenses of
Maxpro exceed A$20,000, then such excess shall be paid by the Signing
Shareholders.
13.02. Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered the same agreement and faxed
copies of manually executed signature pages to this Agreement will be fully
binding and enforceable without the need for delivery of the manually executed
signature page.
13.03. GOVERNING LAW. THE INTERNAL LAWS (AND NOT THE CONFLICTS OF
LAWS RULES) OF TEXAS GOVERN THIS AGREEMENT.
13.04. Notices. All notices hereunder will be in writing and will be
deemed given if delivered by hand or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth opposite
each party's name on the signature page of this Agreement (or at such other
addresses for a party as will be specified by like notice) and will be deemed
given on the date on which so hand-delivered or on the third business day
following the date on which so mailed to the address set forth opposite the
name and signature block for each party to this Agreement.
13.05. 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 illegal, invalid,
or unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance; and in lieu
of such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement, a
- 24 -
<PAGE> 25
provision as similar in its terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.
13.06. Assignments; Entire Agreement; Headings. This Agreement shall
not be assignable by operation of law or otherwise. Any attempted assignment
of this Agreement shall be void. This Agreement, the Schedules attached
hereto, and the Exhibits attached hereto constitute the entire agreement, and
supersede all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
All Schedules, Exhibits, and documents and agreements referred to herein or
attached hereto are fully and completely incorporated herein effective as of
the first reference herein. The headings contained in this Agreement are for
reference purposes and will not affect in any way the meaning or interpretation
of this Agreement. Use of "herein," "hereof" or similar terms refer to this
Agreement as a whole. The reference to any gender shall be construed to
include the masculine, feminine, and neuter.
[SIGNATURES ON THE FOLLOWING PAGE]
- 25 -
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
ULTRAK, INC.
Address for Ultrak:
1220 Champion Circle By: /s/ GEORGE K. BROADY
Suite 100 --------------------------------------
Carrollton, Texas 75006 George K. Broady, President and CEO
Attn: George K. Broady
Address for each Signing
Shareholder:
Unit 1 /s/ CHRIS DAVIES
25 Irvine Drive ------------------------------------------
Malaga, Western Australia 6062 CHRIS DAVIES
Unit 1 /s/ KIM RHODES
25 Irvine Drive ------------------------------------------
Malaga, Western Australia 6062 KIM RHODES
Unit 1 /s/ SCOTT RHODES
25 Irvine Drive ------------------------------------------
Malaga, Western Australia 6062 SCOTT RHODES
RHODES DAVIES & ASSOCIATES, PTY. LTD.
c/o Complete Business Systems
47A Kirwan Street By: /s/ CHRIS DAVIES
Floreat, Western Australia ---------------------------------------
Its: Director
-----------------------------------
- 26 -
<PAGE> 27
EXHIBIT 8.01
Signing Shareholders
CERTIFICATE OF COMPLIANCE
Each of the undersigned, Chris Davies ("Davies"), Kim Rhodes ("K.
Rhodes"), Scott Rhodes ("S. Rhodes"), and Rhodes Davies & Associates Pty. Ltd.
("RDA") (Davies, K. Rhodes, S. Rhodes and RDA are collectively referred to
herein as the "Signing Shareholders" and individually referred to as a "Signing
Shareholder"), hereby certifies to Ultrak, Inc. ("Ultrak") that:
1. The representations and warranties of such Signing Shareholder
in the Stock Purchase Agreement (the "Purchase Agreement"), dated August 7,
1996 (the "Signing Date"), by and among the Signing Shareholders, and Ultrak
were true and correct as to such Signing Shareholder in all material respects
on and as of the Signing Date and are true and correct in all material respects
as of the date hereof.
2. Each of the Signing Shareholders has complied, in all material
respects, with all of the undersigned Signing Shareholders' covenants and
agreements required by the Purchase Agreement to be performed and complied with
by the undersigned Signing Shareholders.
DATED: August __, 1996
-------------------------------------
CHRIS DAVIES
-------------------------------------
KIM RHODES
-------------------------------------
SCOTT RHODES
RHODES DAVIES & ASSOCIATES PTY. LTD.
By:
----------------------------------
Its:
------------------------------
<PAGE> 28
EXHIBIT 8.03
CONSULTANCY DEED
EDWARDS ROBINSON LARK
-----Commercial Lawyers-----
23 Ventnor Avenue West Perth WA 6005 Postal Address: PO Box 212 West
Perth WA 6872
Phone (09) 481 4774 Fax (09) 481 5370
Our Ref: PGL:
<PAGE> 29
THIS DEED is made between the following parties:
1. ULTRAK, INC. a company registered in Delaware USA of 1220 Champion Circle,
Suite 100 Carrollton, Texas 75006("Ultrak").
3. RHODES DAVIES & ASSOCIATES PTY LTD (ACN 009 333 788) of care of Complete
Business Systems, 47A Kirwan Street, Floreat, Western Australia
("Consultant")
4. MAXPRO SYSTEMS PTY LTD (ACN 009 081 467) Unit 1, 25 Irvine Drive, Malaga,
Western Australia in its capacity as trustee of the Rhodes Davies Trust
(the "Company").
RECITALS
A. The Executives, Ultrak, the Consultant and the Company have entered into
the Stock Agreement and, after consummation of the transactions
contemplated by the Stock Agreement, Ultrak and will be the majority
holder of the shares in the Company.
B. The Company carries on the Business.
C. The Executives are directors and employees of the Consultant.
D. The Company has agreed to appoint the Consultant as a consultant to
provide to the Company the Management Services and the Consultant has
agreed to accept the appointment and provide the Management Services to
the Company on the terms of this deed.
THE PARTIES AGREE, in consideration of, among other things, the mutual promises
contained in this deed:
1. DEFINITIONS AND INTERPRETATION
in this deed, including the recitals:
1.1 DEFINITIONS
"B&A Nominee" means Selwyn Bajada or any person for the time being holding the
office of director of Bajada & Associates Pty Ltd ACN 059 781 770 who is
nominated by that corporation to replace Selwyn Bajada.
"Business" means the electronics security business carried on by the Company in
the area of closed circuit television system design, manufacture, supply,
installation and commissioning.
"Business Day" means every day which is not a Saturday, Sunday or public or
bank holiday within the meaning of the Public and Bank Holidays Act 1972 (WA);
"Board" means the board of directors from time to time of the Company.
"Commencement Date" means 1 July 1996;
"Consulting Fee" means the fee payable to the Consultant under Clause 4;
"Executives" means Christopher Davies, Kim Rhodes and Scott Rhodes;
"Former Deed" means the Consultancy Agreement made between the Company and the
Consultant and dated September 14, 1994.
"Information" means any information in respect of the Company's business which
is not in the public domain and includes, but is not limited to, any document,
book, account, process, patent, specification, drawing, design or know-how
which is:
(a) supplied by the Company to the Consultant or an Executive; or
(b) generated by the Consultant or an Executive in the course of performing
the Consultant's obligations under this deed;
1
<PAGE> 30
"Management Services" means the services to be provided to the Company by the
Consultant under Clause 2.2 and in accordance with the terms of this deed,
including but not limited to assisting the Company with the management of the
Subsidiary;
"Shareholders" means Ultrak and any persons who become shareholders in the
Company by assignment from Ultrak subsequent to the Commencement Date;
"Stock Agreement" means the Stock Purchase Agreement to be entered into among
the Executives and Ultrak on August 1996;
"Subsidiary" means Maxpro Systems Pty Ltd, a corporation incorporated in the
State of Nevada;
"Term" means the period of two years commencing on the Commencement Date;
"Termination Date" means the last day of the Term;
"Ultrak Shares" means the shares in Ultrak which may be earned under Clauses
1.02(a)(ii) & (iii) of the Stock Agreement by the Executives; and
"US$" means United States of America dollars.
1.2 INTERPRETATION
In this deed, unless the contrary intention appears, the following provisions
apply to the interpretation of this deed:
(a) Headings, underlining and numbering are for convenience only and do not
affect the interpretation of this deed.
(b) A reference to a statute, regulation, proclamation, ordinance or by-law
includes every statute, regulation, proclamation, ordinance or by-law
amending, consolidating or replacing them, and a reference to a statute
includes every regulation, proclamation, ordinance and by-law issued under
that statute.
(c) A reference to a party to this deed or to another document referred to in
this deed includes that party's successors and permitted assigns.
(d) Where the day on or by which a thing is required to be done is not a
Business Day, that thing is to be done or by the succeeding Business Day.
2. ENGAGEMENT
2.1 ENGAGEMENT
(a) The Company engages the Consultant for the Term for the purposes of
providing to the Company the Management Services and the Consultant
accepts such appointment.
(b) The Company agrees that it will pay the Consulting Fee to the Consultant.
(c) The parties may extend the Term by mutual written consent.
2.2 RESPONSIBILITIES
Until the Termination Date the Consultant shall manage the Business in the
manner which it best sees fit:
(a) with due skill, expertise, diligence and vigour; and
(b) in accordance with all applicable laws, regulations, orders and rules.
2.3 TERMINATION OF FORMER DEED
This deed terminates the Former Deed with effect from the Commencement Date.
2
<PAGE> 31
3. COVENANTS
3.1 EXECUTIVES OF CONSULTANT
(a) The Consultant agrees to make the Executives available to the Company to
enable the Company to undertake its usual business including the
management of the Subsidiary and all overseas operations.
(b) The Company and the Shareholders acknowledge that as employees of the
Consultant, the Executives are entitled to public holidays, annual leave
and sick leave from the Consultant and as a consequence all three
Executives will not always be available at the same time to manage the
Business.
3.2 PERFORMANCE BY EXECUTIVES
The Consultant shall procure that the Executives, whilst they or any of them
are employed by the Consultant:
(a) perform the Management Services in accordance with the reasonable
directions of the Board and in a reasonably competent and expeditious
manner; and
(b) diligently attend to the Business.
3.3 NO CONFLICT OF INTEREST
The Consultant warrants that neither the Consultant nor the Executives will
perform services of any type, or provide any advice or assistance to any
competitor or potential competitor of the Company either directly or indirectly
nor do any other act which may give rise to a conflict with the interests of
the Company.
4. OPERATING DETAILS
4.1 SUBSIDIARY
Subject always to the directions of the Company as the sole shareholder of the
Subsidiary
(a) the Executives are at the date of this deed all directors of the
Subsidiary and intend to maintain those offices.
(b) the Executives and the B&A Nominee shall act as joint Presidents of the
Subsidiary.
(c) it is likely that Andrew Jackson and Nigel Heard will be appointed as Vice
Presidents of the Subsidiary.
4.2 BUDGETS
(a) The Executives shall prepare realistic budgets with a view to the Company
achieving both earnout profit targets under Clause 1.02(a) of the Stock
Agreement on the basis of consolidated accounts (the "Budgets").
(b) Ultrak undertakes to use its best endeavours to accept the Budgets
prepared under Clause 4.2(a).
(c) Where Ultrak determines that in the opinion of Ultrak it would be
appropriate to incur expenditures in addition to those set out in any
Budget and requests the Board to consider the merit of those expenditures,
provided that the Board agrees to those expenditures, then such
expenditures shall not be considered in calculating the earnout profit
targets under Clause 1.02(a) of the Stock Agreement.
3
<PAGE> 32
4.3 CO-OPERATION BY ULTRAK
Ultrak covenants that so long as the Board is managing the Company in
accordance with the Budgets and there are no significant commercial or personal
difficulties between the executives of Ultrak and any of the Executives that
Ultrak will not seek to interfere with the day to day management of the Company
or the Board.
4.4 CONSENT OF SHAREHOLDERS
The Board shall not without the prior approval of Ultrak and Bajada &
Associates Pty Ltd ACN 059 781 770:
(a) amend the Memorandum of Association or the Articles of Association of the
Company:
(b) borrow money from any person other than Ultrak unless the Company is able
to obtain money on terms which the Board considers to be more favourable
than the terms offered by Ultrak; or
(c) issue any shares in the Company or the Subsidiary.
5. CONSULTING FEE
(a) The Consulting Fee for the twelve month period commencing from the
Commencement Date shall be US$840,000 and for the following twelve month
period shall be US$560,000 payable in equal monthly instalments no later
than the 15th day of each month into such bank accounts as the Consultant
directs.
(b) Any monthly instalment of the Consulting Fee which would have been paid by
the Commencement Date if this deed had been entered into before the
Commencement Date shall be paid promptly upon the signing of this deed;
provided, however, that the amount shall be reduced by any payments under
the Former Deed.
6. EXPENSES
The Company must reimburse the Consultant and the Executives for reasonable
out-of-pocket expenses incurred by the Consultant or the Executives, as the
case may be, in connection with the Business.
7. APPOINTMENT AS DIRECTORS
(a) The Shareholders agree that the Executives will initially comprise the
majority of the Board of directors of the Company, but, notwithstanding
anything to the contrary in this deed, the Shareholders reserve the right
to make changes to the Board as they see fit.
8. DELEGATION AND SUBSTITUTION
(a) Subject to Clause 8(b), the Consultant is required to personally perform
all of the Management Services and has no right to delegate performance of
the Management Services to any employee of the Consultant other than to
one or more of the Executives.
(b) If any Executive dies or through ill health is unable to perform his
services to the Consultant, the Consultant shall be entitled to replace
the deceased or ill Executive.
(c) The Shareholders acknowledge that they are satisfied with the level of
staffing of the Company at the Commencement Date and have no present
intentions to reduce it.
(d) The Shareholders further acknowledge that if the Consultant determines
that the level of activity of the Company or the Subsidiary is sufficient
to justify the appointment of any further staff to the Company or the
Subsidiary that it will be empowered to arrange any such appointment on
terms and conditions of its choosing.
4
<PAGE> 33
9. RESPONSIBILITY FOR LEAVE AND OTHER BENEFITS
9.1 NO RESPONSIBILITY
Subject to Clause 9.2, the Company is not responsible for the Executives and
the Consultant shall not have any claim against the Company for annual Leave,
sick leave, long service leave, public holidays, superannuation contributions,
redundancy payments, or any other similar benefits that may be owing to the
Executives in connection with the Management Services under this deed.
9.2 INDEMNITY
(a) Subject to Clause 9.2(b), the Consultant agrees to indemnify the Company
in the event that the Company is required to make payments in relation to
any of the benefits referred to in sub-Clause 9.1 to the Executives.
(b) In the event that any liability to State Payroll tax is assessed to any of
the Company or the Consultant in respect of any part of the Consulting Fee
paid for the Management Services or remuneration paid by the Consultant to
the Executives out of the Consulting Fee, this tax shall be met by the
Company.
10. RESPONSIBILITY FOR INCOME TAXES AND INSURANCE
10.1 INCOME TAX
The Consultant is responsible for making any income tax deductions or payments
required under the Income Tax Assessment Act 1936 (Commonwealth) arising from
payment of the Consultancy Fee, and expressly forbids the Company from making
any income tax deductions or payments.
10.2 WORKER'S COMPENSATION
The Consultant will take out any necessary workers' compensation insurance as
required by the Workers' Compensation and Rehabilitation Act 1981 (WA) in
connection with the Consultant's engagement under this deed.
10.3 SUPERANNUATION
The Consultant is responsible for making any superannuation payments required
under the Superannuation Guarantee (Administration) Act 1992 (Commonwealth) in
connection with the Consultant's engagement under this deed.
10.4 FRINGE BENEFITS TAX
The Consultant must pay any fringe benefit tax payable under the Fringe
Benefits Tax Assessment Act 1986 (Cth) in relation to any remuneration or
benefit provided by the Company to the Consultant or the Executives under this
deed.
11. CONFIDENTIALITY
11.1 CONSULTANT'S OBLIGATIONS
The Consultant must:
(a) keep any Information secret and confidential, except to the extent that
the Consultant or an Executive is required by law to disclose it;
(b) take all reasonable and necessary precautions to maintain the secrecy and
prevent the disclosure of any information; and
(c) procure that each Executive complies with the obligations set out in this
clause.
11.2 SURVIVAL OF OBLIGATIONS
The Consultant's obligations under this Clause 11 survive the termination of the
Consultant's appointment as consultant to the Company.
5
<PAGE> 34
12. TERMINATION OF DEED
12.1 TERMINATION
Subject to clauses 12.2 and 12.3, this deed shall only terminate on the
Termination Date.
12.2 TERMINATION BY NOTICE
Either party shall be entitled to terminate this deed, by written notice to the
other party; if:
(a) an order is made or an effective resolution is approved for the
appointment of a provisional liquidator or, for the winding up of the
Company or the Consultant (as the case may be);
(b) a receiver or manager is appointed for the Company or the Consultant (as
the case may be) or any part of the assets of the Company or the
Consultant;
(c) the Company or the Consultant (as the case may be) proposes to enter into,
or enters into, any scheme of arrangement with creditors or any of them;
or
(d) the Company or the Consultant (as the case may be) calls a meeting of its
creditors for the purpose of placing the Consultant under official
management and appointing an official manager of the Company or the
Consultant (as the case may be).
12.3 TERMINATION WITHOUT PREJUDICE
Termination by either party of this deed shall be without prejudice to the
rights or obligations of the terminating party in respect of any occurrence
prior to such termination.
12.4 ACTION UPON TERMINATION
Upon termination of this deed, the Consultant shall:
(a) relinquish possession and control to the Company, or as the Company shall
direct, of all the Company's assets and moneys held or controlled by the
Consultant pursuant to this deed; and
(b) deliver to the Company, or as the Company shall direct, all documents,
books, confidential information, technical information. intellectual
property, accounts and other records relating to the Business, the
Information or the performance of the Management Services or its other
duties and obligations hereunder.
13. LEGAL RELATIONSHIP
(a) The Company and the Consultant agree that the legal relationship between
the Company and the Consultant is that of principal and independent
contractor and not that of employer and employee and no term of this deed
shall be construed as creating a relationship of employer and employee
between the Company and the Consultant or any employee or agent of the
Consultant.
(b) Neither the Consultant nor the Company is liable for the obligations or
debts of the other except as set out in this deed.
14. COMPETITION
14.1 UNDERTAKINGS
Neither the Consultant nor any of the Executives shall without first obtaining
the written consent of the Company:
(a) directly or indirectly carry on any business similar to or competitive
with the Business in the world for 1 year after the termination of this
deed;
6
<PAGE> 35
(b) persuade any person or corporation which is a customer or client of the
Company, or who was in the twelve month period before the termination of
this deed a customer or client of or in respect of the Business, to cease
doing business with the Company or reduce the amount of business which the
customer or client would normally do in respect of the Business for 1 year
after the termination of this deed;
(c) For a period of one year after the termination of this deed, induce or
attempt to induce any person who at the termination of this deed is an
employee of the Company in the Business to terminate his or her employment
with the Company.
15. MISCELLANEOUS
15.1 NOTICES
(a) A notice:
(1) to a party to this deed is to be in legible writing and in English
addressed to that party at its address set out at the beginning of
this deed;
(2) is to be signed by the sender or, in the case of a body corporate, is
to be signed by an officer of, or under the common seal of, the
sender or by its solicitors or agents;
(3) is to be regarded as having been given by the sender and received by
the addressee;
(A) if by delivery in person, when delivered to the addressee;
(B) if by post, 3 Business Days from and including the date of
postage to the addressee; or
(C) if by facsimile transmission, when the sender has a clear
transmission report to the addressee,
but if the delivery or receipt is on a day which is not a Business
Day or is after 4:00 pm (addressee's time) on the following Business
Day.
(b) A facsimile transmission is to be regarded as legible unless the addressee
telephones the sender within 1 Business Day after transmission and informs
the sender that it is not legible.
(c) A notice can be relied on by the addressee, and the addressee is not
liable to another person for the consequences of that reliance if the
addressee believes it to be genuine, correct and authorised by the sender.
15.2 CONTINUING EFFECT
The obligations imposed and the benefits conferred on the parties under this
deed shall be binding upon and enure to the respective parties and each of
their respective permitted successors in title, transferees and permitted
assigns.
15.3 COSTS
The parties must procure that the Executives pays the costs of Edwards Robinson
Lark in relation to the preparation of this deed and any stamp duty assessed on
the deed.
15.4 CUMULATIVE REMEDIES
All remedies either under this deed, at law, in equity, under statute or
otherwise afforded to the Consultant or the Company will be cumulative and not
alternative.
7
<PAGE> 36
15.5 ENTIRE DEED
The terms, covenants, conditions, agreements, provisions, stipulations and
obligations, contained in, and implied by, this deed comprise the entire
agreement between the parties at the Commencement Date and no other term,
covenant, condition, agreement, provision, representation or warranty applies.
15.6 ASSIGNMENT
(a) Rights arising out of, or under, this deed are not assignable by one party
without the prior written consent of the other party.
(b) A breach of sub Clause (a) by one party entitles the other party to
terminate this deed.
(c) As a condition to the giving of consent by one party to the other to a
proposed assignment, the party giving that consent is entitled to require
guarantees of directors and/or shareholders of a body corporate to which
this deed is to be assigned and a guarantee of this deed of the
performance of the proposed assignee.
(d) A Shareholder may not transfer all or any of its shares in the Company
without first procuring that the transferee enters into a deed to the
reasonable satisfaction of the Consultant which contains provisions
substantially in the form of the provisions of this deed.
15.7 EXCLUSION OF MORATORIA
A statute, moratorium or other governmental order which affects
prejudicially the rights, powers or discretions of the parties under this
deed does not apply to this deed unless application is mandatory.
15.8 VARIATION
A variation of a term of this deed must be in writing and signed by each
of the parties to this deed.
15.9 WAIVER
(a) A waiver of a breach of this deed or of the rights created by, or arising
under, this deed must be in writing and signed by the party giving the
waiver.
(b) A breach of this deed is not waived by:
(1) a failure to exercise;
(2) a delay in exercising; or
(3) a partial exercise,
of a remedy available under this deed or at law or in equity.
(c) A right created by, or arising under, this deed is not waived by:
(1) a failure to exercise;
(2) a delay in exercising; or
(3) a partial exercise,
of that right.
15.10 GOVERNING LAW AND JURISDICTION
(a) This deed is governed by the laws of Western Australia; and
8
<PAGE> 37
(b) Each party irrevocably submits to the exclusive jurisdiction of the Courts
of Western Australia with respect to this deed; provided, however, such
submission shall not cause Ultrak to be subject to taxation in Western
Australia or to qualify as a foreign corporation in Western Australia.
(c) The parties acknowledge that Ultrak has no physical presence in Australia.
15.11 COUNTERPARTS
(a) This deed may be executed in any number of counterparts.
(b) All counterparts, taken together, constitute one instrument.
(c) A party may execute this deed by signing any counterpart.
EXECUTED by the parties as a deed this 7th day of August 1996.
ULTRAK, INC.
By:
George K. Broady, President and CEO
THE COMMON SEAL of RHODES
RHODES DAVIES & ASSOCIATES PTY LTD DAVIES
was hereunto affixed by & ASSOCIATES
authority of the directors PTY LTD
in the presence of: A.C.N. 009 333 788
COMMON SEAL
/s/ KIM RHODES /s/ CHRISTOPHER DAVIES
- ------------------------- ---------------------------------
Director Director/Secretary
KIM RHODES CHRISTOPHER DAVIES
- ------------------------- ---------------------------------
Name (please print) Name (please print)
9
<PAGE> 38
THE COMMON SEAL of MAXPRO
MAXPRO SYSTEMS PTY LTD SYSTEMS
was hereunto affixed by PTY LTD
authority of the directors A.C.N. 009 081 467
in the presence of:
COMMON SEAL
/s/ KIM RHODES [ILLEGIBLE]
- ------------------------- ---------------------------------
Director Secretary
KIM RHODES [ILLEGIBLE]
- ------------------------- ---------------------------------
Name (please print) Name (please print)
10
<PAGE> 39
Exhibit 8.09
INVESTMENT LETTER
Ultrak, Inc. August ___, 1996
1220 Champion Circle
Suite 100
Carrollton, Texas 75006
Gentlemen:
This Investment Letter (this "Letter") is issued to Ultrak, Inc., a
Delaware corporation ("Ultrak"), in connection with the undersigned's
acquisition or possible acquisition from Ultrak of certain shares (the
"Shares") of Ultrak's Common Stock, $0.01 par value (the "Stock") pursuant to
that certain Stock Purchase Agreement, dated August 7, 1996, among Ultrak, the
undersigned, and others (the "Agreement").
1. In connection with the issuance or possible issuance to the
undersigned of the Shares, the undersigned hereby acknowledges and understands
that the Shares have not been registered under the United States Securities Act
of 1933, as amended (the "Federal Act"), the Texas Securities Act, as amended
(the "Texas Act"), or any securities acts of any other state or country (the
"Other Acts"), that the Shares are being 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 that 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 is acquiring 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 represents that he has no current
intention to sell, convey, dispose, of or otherwise distribute any interest in
or risk related to the Shares. The undersigned acknowledges and agrees that
this transaction has not been reviewed or approved by the United States
Securities and Exchange Commission or any other governmental agency or
department.
3. 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, except as set forth in Article II
of the Agreement, 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 of the foregoing, the undersigned must
hold the Shares for at least two (2) years from issuance (unless subsequently
registered prior to that time under Article II of the Agreement) 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, (ii) the Shares
may be sold under Rule 144, or (iii) an exemption from registration is
available at the time of resale of the Shares (and in compliance with Sections
6 and 8 of this Letter). The undersigned is aware of the provisions of Rule
144 which permits limited resale of shares
<PAGE> 40
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
such shares, the availability of certain current public information about the
issuer of such shares, the resale occurring not less than two years after
acquisition, the sale being through a "broker's transaction" or in transactions
directly with a "market maker" (as provided by Rule 144(f)) and the number of
shares being sold during any three-month period not exceeding specified
limitations (unless the sale is within the requirements of Rule 144(k)).
4. 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 for purposes of this investment the risks of this
investment and that, because of the restrictions on transfer, it may not be
possible for the undersigned to liquidate his investment in the case of
emergency.
5. The undersigned acknowledges and agrees that he is or may be
acquiring the Shares without being offered or furnished any offering literature
or prospectus other than the SEC Filings (as defined in Article IV of the
Agreement). The undersigned hereby acknowledges that the undersigned has had
access to all information which the undersigned considers necessary or
advisable to enable the undersigned to make an informed decision concerning the
acquisition of the Shares. The undersigned is acquiring the Shares based
solely on the undersigned's review of the SEC Filings and his investigation of,
and satisfaction with, Ultrak's current and anticipated financial condition and
assets and not based on any oral representations of any individual. The
undersigned confirms that he and his representatives and advisors have been
given the opportunity to ask questions of, and to receive answers from, persons
acting on behalf of Ultrak concerning the business and prospects of Ultrak and
to obtain any additional information, to the extent such persons possess such
information or can acquire it without unreasonable effort or expense and
without breach of confidentiality obligations, necessary to verify the accuracy
of the information set forth in the SEC Filings.
6. The undersigned understands that the undersigned must not, and
the undersigned agrees that the undersigned 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. Nothing in this Letter shall permit the undersigned to sell
any of the Shares in violation of any other agreement between Ultrak and the
undersigned or among Ultrak, the undersigned, and others, including but not
limited to the Agreement.
8. The undersigned understands and agrees that there may be typed
or otherwise printed on the certificates representing the Shares, and any other
securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation, or similar event, a legend
referring to the foregoing restriction upon disposition, such legend to be
substantially in the following form (in addition to any other legends required
by applicable law):
<PAGE> 41
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 APPLICABLE 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.
9. The undersigned also understands that Ultrak's Transfer Agent,
the keeper of Ultrak's stock transfer books and records, has been instructed
not to transfer the Shares except upon Ultrak's instructions for the two (2)
years from issuance and that Ultrak will take such other steps as Ultrak deems
necessary to prevent the transfer of the Shares in the absence of compliance
with the foregoing restrictions.
Very truly yours,
Date: August __, 1996 ---------------------------------------
---------------------------------------
If the person signing this Letter is married, then such person's
spouse must sign below:
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: August __, 1996
---------------------------------------
Signature
Printed Name:
---------------------------------------
<PAGE> 42
EXHIBIT 9.01
CERTIFICATE OF COMPLIANCE
The undersigned, Ultrak, Inc., a Delaware corporation ("Ultrak"),
hereby certifies to the Signing Shareholders (as hereinafter defined) that:
1. The representations and warranties of Ultrak in the Stock
Purchase Agreement (the "Purchase Agreement"), dated August 7, 1996 (the
"Signing Date"), by and among Ultrak and certain shareholders of Maxpro (the
"Signing Shareholders") were true and correct in all material respects on and
as of the Signing Date and are true and correct in all material respects as of
the date hereof.
2. Ultrak has complied, in all material respects, with all of the
covenants and agreements required by the Purchase Agreement to be performed and
complied with by Ultrak.
DATED: August __, 1996
ULTRAK, INC.
By:
------------------------------------
Tim D. Torno, Vice President
<PAGE> 43
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
THE ACQUISITION
SCHEDULE 1.08 - PERSONAL GUARANTEES OF SIGNING SHAREHOLDERS
1. The Signing Shareholders have guaranteed the indebtedness of Maxpro to
trade creditors. Attached as Appendix 1.08A is a list of these creditors.
2. The Signing Shareholders have guaranteed Bank Guarantees issued by
Maxpro in favour of:
Argyle Diamond Mines Pty Ltd
(4 October 1995) $168,118.00
Hamersley Iron Pty Ltd
(31 July 1995) $ 10,653.00
- --------------------------------------------------------------------------------
<PAGE> 44
MAXPRO SYSTEMS PTY LTD
APPENDIX 1.08A - SCHEDULE OF PERSONAL GUARANTEES TO TRADE CREDITORS BY
SIGNING SHAREHOLDERS.
Abacus ES Rubin Group Pty Ltd
Kounis Metal Industries Sands & McDougall Office Products
Ademco Australia Seragraph Prints
Akai Pty Ltd Sentinal Electrical Services Pty Ltd
Alltools WA Pty Ltd FJ Sweetman
Allstamps Tang Computers
Altronic Distributors P/L Thomsons
Ansett Air Freight Transalley
Aqua Vital Truesize Engineering
Arlec Holdings Tubemakers Metaland
Best Copy Service The Type Foundry
Braemac Pty Ltd Television Communications
Bring Couriers Tyre Torque Tyre Power
CDM Australia Venda Serve
Cleanway Veltek
Interactive Video Security Pty Ltd Venables & Lawrence
Coventrys Viking Office Products
Custom Plastics Vision Products Pty Ltd
Danzas Pty Ltd Avnet EMG
D & B Metals Wattyl
DHL Worldwide Express Worldwide Electronic Components
Electronics Sheetmetal Radix Pty Ltd
Farnell Electronic Components BPS Video Services
GEC Video Systems Division Discount Freight Express
Harbuch Electronics Pty Ltd Ricon
Hartec Limited Alcora Pty Ltd
Hawthorn Press Pty Ltd Electroplaters Pty Ltd
Holman Distributors Johnson Technology Corp Pty Ltd
Homewrap Dunlop Flexible Foams
Hydair Drives AFC Group Pty Ltd
Javelin Electronics Pty Ltd Memo Communications Co Pty Ltd
JRL Component Sales Pty Ltd Elect Cables
J & S Castlehow Electrical Services Task Office Supplies
J. W. Rogers CR Kennedy Co Pty Ltd
Laser & Allied Cutting Service Automated Motion Systems
Rittal Pty Ltd Fordigraph Office Plus
Lawrence & Hanson Beeline Couriers
Litton Precision Products Int. Inc Matrix Linx
Flexible Drive Agencies Colli & Sons
Mitsubishi Electric Australia P/L Designtec
Multi-Contact Australia Pty Ltd Sunlec International Pty Ltd
Philips Components Pty Ltd Vicon Industries Pty Ltd
Philips Scientific & Industrial P/L AAEP Pty Ltd
Photoplotting Services Microtouch Australia Pty Ltd
Precision Circuits Amcor Fibre Packaging
Precision Sheetmetal Allguard
Pro-Spec Distributors Australian Amp Pty Ltd
Protective Cases Philips Consumer Products
PTH Circuits Computronics International
QED Pace Assembly
Reserve Electronics Bollinger & Co Pty Ltd
Rojone Pty Ltd Visual Link CCTV Systems
Auto Door Systems
Menzel Plastic Traders Pty Ltd
<PAGE> 45
RS Components Ferntree Computer Systems
Quick Cup All Metal Finishes
RVB Products AARQUE Systems Pty Ltd
Consolidated Bearing Company Entech Printed Circuits
Optical Systems Design Osborne Plating Pty Ltd
Upsonic Colortype Press
Pak Pacific Data Comm Australia Pty Ltd
East Coast Printed Circuits QANTAS
Roy Galvin & Co Pty Ltd
EDM Supplies WA
Kirkside Products
Ward Packaging
Spunwell Products
Liberty Liquors
IRT Electronics
Ansett Australia
John Perkins Metal Products
Black Box Catalog
Jemal Products Pty Ltd
G & S Industries Pty Ltd
Gilbert Lodge
J G Thomas and Associates
Techmetal Industries Pty Ltd
SMI Cables Pty Ltd
Ausoptic Pty Ltd
UPS Company
GEC Wholesale
BOC Gases
X-On Electronic Services
Baltimore Instruments
Mizco Metals Pty Ltd
Leibert Corporation Australia Pty Ltd
Audio Video Communications
Meneghello Galvinising Service
Printex
Advanced Drafting Supplies
Advanced Assembly
JSE Systems
Videotronics UWE Bischke Australia
Canon Australia Pty Ltd
Belrise Pty Ltd
Data Comm Pty Ltd
Computer Corp Pty Ltd
Western Lockservice
D E Engineers
Jacksons Drawing Supplies
Dual Engraving Pty Ltd
Peter Austin Agencies
Atcom Distributors
Professional Powder Coaters
Van Jays Electrical
Hales Precision Metal Products
United Construction Pty Ltd
Wards Skyroad
Alarmcom Security Pty Ltd
<PAGE> 46
- -------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.02 - INVESTMENTS IN SUBSIDIARIES
AUSTRALIA (HEAD OFFICE - PARENT COMPANY):
Maxpro Systems Pty Ltd (ACN 009 081 467)
Unit 1
25 Irvine Drive
MALAGA WA 6066
Tel: 619 249 1633
Fax: 619 249 3350
UNITED STATES OF AMERICA (100% SUBSIDIARY COMPANY):
Maxpro Systems Pty Ltd (Incorporated State of Nevada 22016-95)
2300 Rock Springs Drive
#2059-10
LAS VEGAS NEVADA 89128
Tel: 1 702 243 5741
Fax: 1 702 243 5736
UNITED KINGDOM (BRANCH):
Maxpro Systems (Company No: FC018628, Branch No: BR002996)
Hill Farm
Charndon
OXFORDSHIRE OX6 0B1 UNITED KINGDOM
Tel: 44 129 673 0268
Fax: 44 129 673 0668
- -------------------------------------------------------------------------------
<PAGE> 47
- -------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.04 - CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT: NO VIOLATION
1. Waiver of rights inter sc with respect to the Shares contained in the
"Shareholders' Deed" dated 14th September 1994, by Selwyn Bajada on behalf of
Bajada & Associates Pty Ltd as trustee for the Knight Capital Fund.
2. Approval by the Foreign Review Investment Board, to the sale and
transfer of shares from the Signing Shareholders to Ultrak Inc. Attached letter
from Foreign Investment Review Board dated 19 July 1996 confirms that this
matter is being dealt with.
- -------------------------------------------------------------------------------
<PAGE> 48
c/- Treasury Building
[AUSTRALIA LOGO] Canberra ACT 2600
Telephone (06) 263 2111
Overseas 61-6-263 2111
Fax (06) 263 2940
Foreign Investment Review Board
19 July 1996
Our Ref: FIR 96/3647
Your Ref: L60799BB
Mr G Blekkenhorst
Maxpro Systems Pty Ltd
Unit 1/25 Irvine Drive
MALAGA WA 6062
Dear Sir,
CONCERNING: ULTRAK INC/MAXPRO SYSTEMS PTY LTD - ACQ OF SHARES.
Receipt is acknowledged of the above proposal. Examination of proposals
normally takes up to 30 days and a decision will be conveyed to you as soon as
possible.
Should additional information be required, the action officer for the proposal
will contact you as soon as possible.
Any correspondence on this matter should quote the file reference number. Our
general inquiries telephone number is (06) 263 3795.
Yours Faithfully
[ILLEGIBLE]
Executive Member
Foreign Investment Review Board
<PAGE> 49
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS
SCHEDULE 3.05
-------------
None
<PAGE> 50
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.06 - CAPITALISATION
1. The authorised share capital of Maxpro Systems Pty Ltd is One Hundred
Thousand Dollars ($100,000) consisting of Ten Million (10,000,000) ordinary
shares divided into 10,000,000 shares of $0.01 each.
2. The issued and paid-up share capital is 595 shares of $0.01 each.
3. Details of Shareholders:
Christopher Paul Davies 92 shares
3 Rona Street
NORTH BEACH WA 6020
Kim Robert Rhodes 92 shares
28 Merrifield Place
MULLALOO WA 6027
Scott Anthony Rhodes 92 shares
17 Moran Place
WANNEROO WA 6065
Christopher Paul Davies )
Kim Robert Rhodes ) Jointly 171 shares
Scott Anthony Rhodes )
(Addresses as above)
These shares are in the process of being
transferred to:
Rhodes Davies & Associates Pty Ltd.
c/- Complete Business Consultants
47 Kirwin Street
FLOREAT WA 6014
Bajada & Associates Pty Ltd as trustee for
The Knight Capital Fund 148 shares
Level 6
111 St George's Tce
PERTH WA 6000
- -------------------------------------------------------------------------------
<PAGE> 51
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS
SCHEDULE 3.10
-------------
None
<PAGE> 52
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS
SCHEDULE 3.12
-------------
None
<PAGE> 53
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.14 - INSURANCE
Certificates of currency for insurance policies insuring the business for such
risks and in such amounts as are prudent for Maxpro Systems Pty Ltd are
attached as Appendix 3.14A, 3.14B and 3.14C.
- --------------------------------------------------------------------------------
<PAGE> 54
APPENDIX 3.14C
[MERCANTILE MUTUAL LETTERHEAD]
U31
25th July 1996 OUR REF: RHODDAV2
CERTIFICATE OF CURRENCY
This is to certify that the undermentioned Policy has been renewed and the
Insurance is current to the date mentioned.
POLICY NO: 70A031994PLB
NAME OF INSURED: Maxpro Systems Pty Ltd & Others
SITUATION: Anywhere in Australia
INTEREST INSURED: Public & Products Liability
SUM INSURED: $5,000,000
CURRENT TO: 3rd August 1996
Yours Faithfully,
/s/ ILLEGIBLE
MERCANTILE MUTUAL INS (AUST) LTD.
<PAGE> 55
APPENDIX 3.14B
[MERCANTILE MUTUAL LETTERHEAD]
U31
25/7/96 OUR REF: RHODDAV2
CERTIFICATE OF CURRENCY
This is to certify that the undermentioned Policy has been renewed and the
Insurance is current to the date mentioned.
POLICY NO: 70W021549WCA
NAME OF INSURED: MAXPRO SYSTEMS PTY LTD & OTHERS
SITUATION: ANYWHERE IN WESTERN AUSTRALIA
INTEREST INSURED: WORKERS COMPENSATION
SUM INSURED: AS PER ACT
CURRENT TO: 3/10/96
Yours Faithfully,
/s/ ILLEGIBLE
MERCANTILE MUTUAL INS (AUST) LTD.
<PAGE> 56
APPENDIX 3.14A
[MERCANTILE MUTUAL LETTERHEAD]
U31
CERTIFICATE OF CURRENCY
This is to certify that the undermentioned Policy has been renewed and the
Insurance is current to the date mentioned.
POLICY NO: 70P740104BPK
NAME OF INSURED: Maxpro Systems Pty Ltd & Others
SITUATION: Unit 1/25 Irvine Street, MALAGA
INTEREST INSURED: 1) Buildings 2) Contents
SUM INSURED: 1) $154,000 2) $1,250,000
CURRENT TO: 3rd August 1996
Yours Faithfully,
/s/ ILLEGIBLE
MERCANTILE MUTUAL INS (AUST) LTD.
<PAGE> 57
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.15 - PATENTS TRADEMARKS AND COPYRIGHTS
Details of ownership and application of patents and trademarks are detailed in
the attached letter from Griffith Hack & Co. dated 30 July 1996, and attached
as Appendix 3.15A.
- -------------------------------------------------------------------------------
<PAGE> 58
APPENDIX 3.15A
[GRIFFITH HACK & CO LETTERHEAD]
30 July 1996
Maxpro Systems Pty Ltd
Unit 1/25 Irvine Drive
MALAGA WA 6062
ATTENTION: MR. G. BLOWERS
COMMERCIAL MANAGER
Dear Grant,
INTERNATIONAL PROPERTY PORTFOLIO
IN THE NAME OF MAXPRO SYSTEMS PTY LTD
YOUR REF: f60714gb
OUR REF: APM:NH:MAXPRO.J30
- -------------------------------------------------------------------------------
I confirm that Maxpro Systems Pty Ltd is the owner and applicant in respect of
the following:
1) International application No. PCT/AU95/00457;
2) Australian trade mark application No. 679926;
3) Australian trade mark application No. 679927;
4) Australian trade mark application No. 679928;
5) Australian trade mark application No. 679929;
6) Australian trade mark application No. 679930; and,
7) Australian trade mark application No. 679931.
Kindly note, S.A. Rhodes and A.W. Jackson are co-applicants of the above
International application for the purposes of U.S.A. only. Nevertheless, from
our understanding of the relationship between Messrs Rhodes and Jackson, and
Maxpro Systems Pty Ltd, proprietorship of the invention resides with Maxpro
Systems Pty Ltd for all countries designated in the International application
including the U.S.A. itself.
Please do not hesitate to contact me if you require any further information.
Kind regards.
Yours sincerely,
GRIFFITH HACK & CO.
A. P. Mizzi
<PAGE> 59
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE SIGNING SHAREHOLDERS
SCHEDULE 3.18
-------------
None
<PAGE> 60
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.19 - EMPLOYEES AND CONSULTANTS
In the event that Mr Tracy Tye, Manager of the United Kingdom Branch, were to
terminate his services with Maxpro, there will be a contingent liability.
Mr Tye receives a 3% commission on cash receipts from Accounts Receivable
customers for sales achieved by him. Payments are made quarterly in arrears.
- -------------------------------------------------------------------------------
<PAGE> 61
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.22 - ACCOUNTS RECEIVABLE
Attached as Appendix 3.22A is a complete and accurate accounts receivable aging
report as at 31 July 1996 at 3:00pm.
- -------------------------------------------------------------------------------
<PAGE> 62
APPENDIX 3.22A
<TABLE>
<CAPTION>
Debtor Trial Balance 31/07/96
31/07/96 - 15:22 Maxpro Systems Pty Ltd Page : 1
Debtor Balance ------------------------Aged Balances-------------------------
Code Debtor Name Todate Current 30 Days 60 Days 90 Days 120 Days
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
MD0021 THE ADELAIDE CASINO 317.44 317.44
MD0032 ARGYLE DIAMOND SALES 221288.96 50461.36 10750.25 160077.35
MD0042 ASCO SECURITY SYSTEMS PTY LTD 146.40 146.40
MD0107 AUSTRALIAN GEOPHYSICAL SERVICES 1750.00 1750.00
MD0022 BURSWOOD RESORT CASINO 6631.92 6631.92
MD0001 CHUBB - WA 128221.20 124582.80 1698.40 1940.00
MD0106 CHUBB TASMANIA 297.48 297.48
MD0008 CHUBB - VICTORIA 16018.80 5167.92 5112.00 5738.88
MD0023 CHUBB NSW 9290.50 8543.50 747.00
MD0092 CHUBB SECURITY HOLDINGS 634.32 -2688.00 1000.00 2538.32 -216.00
MF0063 CHUBB SOUTH AFRICA 89014.70 76462.70 12552.00
MD0065 DARLING HARBOUR AUTHORITY 289.37 289.37
MF0002 DEFENCE SECURITY SYSTEMS 3078.00 3078.00
MD0044 FIRE FIGHTING ENTERPRISES -69.40 -69.40
MD0039 GEC VIDEO SYSTEMS - OLD 16164.00 16164.00
MD0049 GEC VIDEO SYSTEMS DIVISION WA 102.00 102.00
MD0007 HAMERSLEY IRON 5914.00 7547.00 -3480.00 -3480.00 5327.00
MD0068 HONEYWELL LIMITED NSW 44038.80 306.00 5294.80 34990.00 3448.00
MD0089 HONEYWELL PROTECTION SERVICES 1606.56 1200.00 751.52 -344.96
MD0004 HONEYWELL LTD - VIC 19097.88 19097.68
MD0056 HONEYWELL QUEENSLAND 58496.00 49316.00 5670.00 2320.00 1190.00
MD0062 HONEYWELL LIMITED 70824.00 32876.00 6027.00 31921.00
MF0100 INTERNATIONAL ELECTRONIC PROTECTION 488695.46 488695.46
MD0105 INTER SECURITY SYSTEMS 19297.96 19297.96
MD0030 JAMES HARDIE BUILDING AUTOMATION 295.00 295.00
MD0066 JAMES HARDIE BUILDING SERVICES 13912.84 11975.00 327.44 1610.40
MD0047 KALBOORLIE CONSOLIDATED GOLD MINE 17946.76 17946.76
MD0096 MAXPRO SYSTEMS - PROJECTS 3265.00 3265.00
MF0080 MAXPRO SYSTEMS UK 8694.00 8694.00
MF0102 MAXPRO SYSTEMS USA 24655.10 24655.10
MD0086 MGM GRAND CASINO DARWIN 46195.92 28051.68 18144.24
MD0053 MISCELLANEOUS DEBTORS 8489.16 1950.00 6047.47 491.69
MD0051 CITY OF PERTH 11798.25 9338.00 2460.25
MF0090 RESORTS WORLD BHD 124577.20 124577.20
MD0081 RSJ ELECTRICAL SERVICES PTY LTD 2658.00 2658.00
MD0012 SACON ENGINEERING SERVICES 820.00 820.00
MD0091 SATCHWELL CONTROL SYSTEMS 1010.00 820.00 190.00
MD0052 SECURITY WAREHOUSE 34067.28 32859.48 1207.80
MF0003 ST ELECTRONIC & ENGINEERING LIMITED 40470.00 18300.00 120.00 22050.00
MD0025 SENSORMATIC INDUSTRIAL SYDNEY AUST -2628.50 -2628.50
MD0026 TELECOM AUSTRALIA 1234.90 1234.90
MD0104 TOWNSVILLE CITY COUNCIL 2057.00 2057.00
MD0040 WORMALDS - GLD 580.00 580.00
MD0103 WORMALD SOUTH AUSTRALIA 32522.00 31394.00 1128.00
MD0009 WORMALD SECURITY - NSW 2110.50 2307.70 120.00 372.00 -689.20
MD0033 YUMAX COMMUNICATIONS 11926.98 3067.80 439.10 896.40 6413.68 1110.00
===============================================================================================================================
Grand Total Balance Todate 1587803.74 % Of Total
Current 1203229.92 75%
30 Days 31103.95 2%
60 Days 40793.64 3%
90 Days 50235.93 3%
120 Days 262440.30 17%
</TABLE>
<PAGE> 63
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.23 - CONTRACTS
1. Maxpro Systems Pty Ltd has issued bank guarantees in favour of:
Argyle Diamond Mines Pty Ltd
(4 October 1995) $168,118.00
Hamersley Iron Pty Ltd
(31 July 1995) $ 10,653.00
The above are secured by personal guarantees by Christopher Paul Davies, Kim
Robert Rhodes and Scott Anthony Rhodes.
2. The following staff are employed at salaries and benefits in excess of
A$60,000:
G G Blekkenhorst Accountant $68,250
G Blowers Executive Asst $70,571
B O'Connell Contracts Manager $65,120
W Rhodes Technical Officer $60,880
N Heard Operations Manager $94,500
C Wright Systems Applications
Manager $72,591
D Marshall Production Manager $60,844
A Jackson President - USA $82,999 plus fully
maintained motor vehicle
and rental subsidy of
$20,000 per year.
R McCarter USA US$70,000
3. An unregistered Lease Agreement is held with JW Rogers Pty Ltd for the lease
of 44 Irvine Drive, Malaga, Western Australia, 6062. The lease expires on 31
January 1998. JW Rogers Pty Ltd hold a bond of $4,000.00 (Four Thousand
Dollars). There is a three year option at expiration of the first term.
4. An unregistered Lease Agreement is held with Christopher Paul Davies, Kim
Robert Rhodes and Scott Anthony Rhodes for the lease of Unit 1, 25 Irvine
Drive, Malaga, Western Australia, 6062.
5. Maxpro Systems Pty Ltd has entered into a "Consultancy Agreement" with
Rhodes Davies & Associates Pty Ltd of whom Mr C P Davies, Mr K R Rhodes and Mr
S A Rhodes are Directors. Consultancy Fees of $1,016,450 have been paid for the
1995/96 financial year.
- --------------------------------------------------------------------------------
<PAGE> 64
MAXPRO SYSTEMS PTY LTD
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.23 - CONTRACTS (continued)
6. Mr S J Bajada a Director of Maxpro Systems Pty Ltd, is Managing Director of
Bajada & Associates Pty Ltd, received fees of $43,630, for the 1995/96
financial year, to provide Corporate Advisory Services. Currently this fee does
not exceed $60,000 per annum.
- --------------------------------------------------------------------------------
Page 2
<PAGE> 65
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES OF MAXPRO AND THE SIGNING SHAREHOLDERS
SCHEDULE 3.24 - CORPORATE NAME
1. Radcom Australia Pty Ltd was incorporated on 1st December 1983.
2. On 20th January 1987 Radcom Australia Pty Ltd changed its name to Cyber
Systems Australia Pty Ltd.
3. On 23rd September 1994 Cyber Systems Australia Pty Ltd changed its name to
Maxpro Systems Pty Ltd.
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 10.2
SHAREHOLDERS' DEED
THIS SHAREHOLDERS' DEED is made on the 7th day of August 1996 between:
1. BAJADA & ASSOCIATES PTY LTD ACN 059 781 770 for and on behalf of the
Knights Capital Fund of 6th Floor, 111 St Georges Terrace, Perth, Western
Australia ("B&A"); and
2. ULTRAK, INC, a Delaware corporation ("Ultrak")
RECITALS:
A. There are 595 ordinary Shares in the capital of the Company, of which B&A
holds 148 Shares and the remainder are held by other Shareholders, defined
as the "Original Shareholders".
B. B&A and the Original Shareholders are parties to a Shareholders Agreement
dated 14 September 1994, which confers upon B&A certain rights with
respect to the Company.
C. Ultrak wishes to purchase the Shares held by the Original Shareholders,
and has entered into the Stock Purchase Agreement and the Consultancy
Deed in connection with the purchase.
D. B&A has agreed to waive its pre-emptive right in respect of the proposed
purchase, and to terminate the Shareholders Agreement referred to in
Recital B, subject to the agreements set out in this Agreement.
THE PARTIES AGREE as follows:
- --------------------------------------------------------------------------------
1 DEFINITIONS
In this Agreement:
"AFFILIATE" means, in relation to any party, a corporation, where
50% or more of the issued shares in the corporation are owned by
that party or by another Affiliate of that party, or where 50% or
more of the issued shares in that party are owned by the corporation
or by an Affiliate of that corporation.
"ASSOCIATE" means, in relation to any party, an Affiliate of that
party or any other person with whom that party has a material
association, however arising.
"B&A NOMINEE DIRECTOR" means from time to time the nominee of B&A
appointed as a Director under clause 7.2.
"BUSINESS" means the electronics security business carried on by the
Company conducted as at the date of this Agreement in the area of
closed circuit television system design, manufacture, supply,
installation and commissioning.
"COMPANY" means MaxPro Systems Pty Ltd ACN 009 081 467 of Unit 1,
25 Irvine Drive, Malaga, Western Australia.
"CONSULTANCY DEED" means a deed between Ultrak, Rhodes Davies &
Associates Pty Ltd and the Company, to be dated the same date as the
Stock Purchase Agreement.
"DIRECTOR" means a director of the Company.
"MAXPRO TECHNOLOGY" means the technology which is currently used by
the Company in connection with its Business or which is subsequently
developed by
- --------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 1
<PAGE> 2
2 Effective Date
the Company in connection with its Business. The Maxpro Technology
shall include all improvements and innovations which are reasonably
based upon then existing Maxpro Technology.
"UTLRAK ASSOCIATE" means Ultrak and any Associate of Ultrak.
"SHAREHOLDER" means a registered holder of Shares.
"SHARES" means issued shares in the capital of the Company.
"STOCK PURCHASE AGREEMENT" means an agreement to be entered into
between the Original Shareholders and Ultrak, for the sale by the
Original Shareholders to Ultrak of all of the issued shares in the
Company held by the Original Shareholders.
"ULTRAK NOMINEE DIRECTOR" means a Director which Ultrak nominates or
otherwise causes to be appointed as a Director.
"WORKING CAPITAL FACILITY" means a $4 million working capital
facility from Ultrak to the Company, which has been approved by B&A
prior to the date of this Agreement, and any extensions of the term
of such facility.
- --------------------------------------------------------------------------------
2 EFFECTIVE DATE
(a) This Agreement shall become effective on the date on which
Closing occurs under the Stock Purchase Agreement.
(b) In the event that the provisions of the Stock Purchase Agreement
and the Consultancy Deed referred to in Recital C are
inconsistent with or contrary to any of the provisions of this
Agreement, the provisions of this Agreement shall prevail and
take precedence to the extent of such inconsistency or
contradiction.
- --------------------------------------------------------------------------------
3 TERMINATION OF ORIGINAL SHAREHOLDERS AGREEMENT
On and from the date on which this Agreement becomes effective, the
Shareholders Agreement referred to in Recital B shall be terminated.
- --------------------------------------------------------------------------------
4 WAIVER OF PRE-EMPTIVE RIGHTS
In consideration for the terms set out in this Agreement, B&A
hereby waives its pre-emptive rights under the Shareholders
Agreement referred to in Recital B and under the Articles of
Association of the Company, in respect of the acquisition by Ultrak
of the Shares held by the Original Shareholders pursuant to the
Stock Purchase Agreement.
- --------------------------------------------------------------------------------
5 RESTRICTION ON ASSIGNMENT OF SHARES
5.1 MEANING OF "ASSIGN"
In this Part, to "ASSIGN" an interest means to sell, assign or
otherwise dispose of the whole or a part of that interest.
- --------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 2
<PAGE> 3
5 Restriction on assignment of Shares
5.2 DEED OF COVENANT
A Shareholder shall not assign any part of its Shares in the Company
unless the proposed assignee has first delivered to the other
Shareholders a binding undertaking to be bound by the terms of this
Agreement with respect to the Shares to be assigned.
5.3 RIGHT OF FIRST REFUSAL
A Shareholder ("assignor") may not assign any part of its Shares in
the Company without first offering the Shares in writing to the
other Shareholders, on the following basis:
(a) In its offer to the other Shareholders, the assignor shall
state the consideration and all of the other material terms
upon which it is prepared to sell the Shares.
(b) The other Shareholders shall have a period of 30 days after
receipt of the offer in which to accept the offer.
(c) If any of the other Shareholders accepts the offer, then the
Transferor shall assign the Shares to that Shareholder on the
terms offered and accepted. If more than one of the other
Shareholders accepts the offer, then the assignor shall assign
the Shares to those Shareholders pro rata to their relative
percentage Shareholdings, or otherwise as those Shareholders
may agree.
(d) If none of the other Shareholders accepts the offer within the
30 day period, the assignor may, subject to any other
restrictions imposed under this Agreement, assign the Shares
to any third party upon terms no more favorable to the third
party than those offered to the other Shareholders. If the
assignment is not completed within 120 days after the
expiration of the 30 day period, the assignor may not assign
the Shares to any third party without first having offered the
Shares again to the other Shareholders in accordance with this
clause.
5.4 ASSIGNEE TO BE APPROVED
Except for an assignment to an Affiliate, a Shareholder may not
assign any of its Shares to any third party unless the identity of
the proposed assignee has been approved by the remaining
Shareholders, approval not to be unreasonably withheld.
5.5 ASSIGNMENT OF INTERESTS IN KNIGHTS CAPITAL FUND
(a) Ultrak acknowledges that B&A holds its Shares as Manager for
and on behalf of the Knights Capital Fund.
(b) The restrictions on assignment of Shares will not apply to any
assignment resulting from an assignment by an investor in the
Knights Capital Fund of its interest in the Fund.
(c) The restrictions on assignment of Shares will not apply to any
assignment resulting from a distribution of assets of the
Knights Capital Fund to the Investors of the Fund, provided
that the assignee must enter into a deed of covenant with the
remaining Shareholders under which it binds itself, in a form
acceptable to the remaining Shareholders, to all the
provisions of this Agreement.
- --------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 3
<PAGE> 4
6 Issues of shares
5.6 ASSIGNMENT TO AN AFFILIATE
A Shareholder may assign its Shares to an Affiliate without
complying with clause 5.3 provided that the assigning Shareholder
and its Affiliate enter into a deed of covenant with the remaining
Shareholders under which they agree that:
(a) if the Affiliate subsequently ceases to be an Affiliate of the
assigning Shareholder, it must re-assign the Shares to the
assigning Shareholder; and
(b) the Affiliate binds itself, in a form acceptable to the
remaining Shareholders, to all the provisions of this
Agreement.
- --------------------------------------------------------------------------------
6 ISSUES OF SHARES
Except with the prior approval of all Shareholders, the Company may
not issue any further Shares or other securities with rights to
convert to Shares.
- --------------------------------------------------------------------------------
7 DIRECTORS
7.1 MAXIMUM NUMBER
The maximum number of Directors of the Company shall be 5 unless
otherwise agreed by all of the Shareholders.
7.2 B&A NOMINEE AND ULTRAK NOMINEE
(a) B&A and Ultrak shall each from time to time be entitled to
nominate 1 person to be appointed as a non-paid non-executive
Director.
(b) The Shareholders shall cause the nominees from time to time of
B&A and Ultrak under paragraph (a) to be appointed as
Directors.
7.3 MEETINGS AT LEAST QUARTERLY
The Directors must meet at least once a quarter unless otherwise
agreed by all of the Directors. The Directors may meet by telephone
conference call or similar means.
7.4 MAJOR DECISIONS TO BE APPROVED BY DIRECTORS
(a) All major decisions affecting the Company or the Business,
must be approved by all of the Directors. Major decisions
will not include operational matters arising in the ordinary
course of business.
(b) Ultrak and B&A acknowledge the provisions of clause 4.3 of the
Consultancy Deed. Ultrak and B&A agree that paragraph (a)
above will be subject to the provisions of clause 4.3 of the
Consultancy Deed.
- --------------------------------------------------------------------------------
8 DEALINGS WITH ASSOCIATES OF ULTRAK
8.1 CERTAIN DEALINGS WITH ULTRAK ASSOCIATES PROHIBITED
Except with the prior approval of B&A, the Company shall not:
(a) guarantee any obligations of any Ultrak Associate; or
(b) advance any moneys to any Ultrak Associate; or
- --------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 4
<PAGE> 5
8 Dealings with associates of Ultrak
(c) borrow any moneys from any Ultrak Associate, other than the
Working Capital Facility; or
(d) give any security over its assets for the benefit of any
Ultrak Associate; or
(e) give any undertaking for the performance of any obligation of
any Ultrak Associate;
(f) sell to any Ultrak Associate any material asset, including
without limitation:
(1) the shares in any subsidiary company; or
(2) any part of the Business worldwide;
(3) the right to carry out the Business in any part of the
world;
(4) the right to use or otherwise exploit the Company's
technology in any part of the world;
(g) purchase any material asset from any Ultrak Associate.
8.2 COMMERCIAL DEALINGS TO BE AT ARMS-LENGTH
All commercial dealings and transactions between the Company and any
Ultrak Associate shall be on an arms'-length basis and on terms no
less favorable to the Company than those that would be available
from other sources considering all elements of the dealings and
transactions (including without limitation volume of purchases,
sales, marketing and distribution support, sales referrals,
introduction to new dealers and markets, and warehousing).
8.3 MAXPRO TECHNOLOGY
(a) Except with the prior approval of all Directors, Ultrak shall
ensure that no Ultrak Associate, other than the Company and
wholly-owned subsidiaries of the Company, will use or exploit
the Maxpro Technology. It is acknowledged however that Ultrak
Associates may provide services to the Company consistent with
clause 8.2.
(b) It is Ultrak's intent to initially sell through Ultrak's
distribution channels products manufactured by the Company and
or wholly-owned subsidiaries of the Company.
(c) With the prior consent of B&A, Ultrak may subsequently cause
Ultrak Associates to manufacture products using the Maxpro
Technology, which will be the subject of further agreement
between Ultrak and the Company consistent with clause 8.2.
The consent of B&A to such an arrangement will not be
unreasonably withheld, where it can be demonstrated by Ultrak
that the proposed arrangement will be in the best interests of
the Company.
8.4 EMPLOYEES
Ultrak shall not make any offer to any employee of the Company that
would cause the employee to cease being an employee of the Company,
or otherwise take any action which has the purpose of likely effect
of causing any employee of the Company to cease being an employee of
the Company.
- --------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 5
<PAGE> 6
9 Conduct of Directors and Ultrak
- --------------------------------------------------------------------------------
9 CONDUCT OF DIRECTORS AND ULTRAK
9.1 DEVELOPMENT OF BUSINESS AND COMPANY
The Directors must:
(a) diligently attend to the development of the Business of the
Company;
(b) use their best skills and endeavours to maximise the
prospects and profitability of the Company.
9.2 JUST AND FAITHFUL
Ultrak and each Director which Ultrak has caused to be appointed
shall at all times act bona fide and in the best interests of the
Company and in good faith towards all of the Shareholders.
9.3 KEEP OTHER SHAREHOLDERS INFORMED
The Directors shall:
(a) promptly advise B&A of any material matter or information
concerning the Company's business;
(b) at all times gives to B&A a full and proper account of any
significant action the Directors propose to take in respect of
the Company.
- --------------------------------------------------------------------------------
10 CERTAIN MATTERS REQUIRING CONSENT OF ALL DIRECTORS
10.1 RESTRICTION ON CERTAIN ACTIVITIES
The Company shall not, without the prior consent of all Directors:
(a) sell or dispose of any material part of the Business or its
assets;
(b) grant any mortgage, charge or other encumbrance over any
material part of its Business or its assets, except for the
Working Capital Facility or other necessary working capital
requirements;
(c) change the nature of the Business;
(d) change the structure of the Business or the direction in which
the Business is conducted.
10.2 DIVIDEND POLICY
The dividend policy of the Company from year to year shall require
the prior approval of all Directors.
- --------------------------------------------------------------------------------
11 ACCOUNTING RECORDS
11.1 COMPANY TO KEEP FULL ACCOUNTING RECORDS
The Company shall keep in Perth, Western Australia, full and
complete accounting records in accordance with the accounting
standards required under the Corporations Law and otherwise the
standards generally adopted in Australia.
11.2 INSPECTION
The Company's accounting records shall at all times be made
available for inspection and copying by B&A and Ultrak.
- --------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 6
<PAGE> 7
12 Accounts
- -------------------------------------------------------------------------------
12 ACCOUNTS
12.1 COMPANY TO KEEP PROPER ACCOUNTS
(a) The Company shall prepare full and complete accounts
without delay as at 30 June each year, in accordance
with the accounting standards required under this
Agreement. The annual accounts shall include:
(1) a balance sheet reflecting all the Company's
assets and liabilities;
(2) a profit and loss account; and
(3) a collation of the documents which show the
Company's compliance with tax laws.
(b) The Company shall provide to B&A a copy of the annual
accounts.
(c) The Company shall prepare appropriate management
accounts at the end of each month. The Company shall
provide a copy of the management accounts to each
Director.
- -------------------------------------------------------------------------------
13 CONDUCT OF DIRECTORS
13.1 B&A NOMINEE
B&A shall cause the B&A Nominee Director to comply with the
obligations imposed on Directors under this Agreement, and also
to act consistently with and not do anything that would
constitute a breach of the obligations of B&A or the Company
under this Agreement.
13.2 ULTRAK NOMINEES
Ultrak shall cause each Ultrak Nominee Director to comply with
the obligations imposed on Directors under this Agreement, and
also to act consistently with and not do anything that would
constitute a breach of the obligations of Ultrak or the Company
under this Agreement.
- -------------------------------------------------------------------------------
14 WINDING UP
Each Shareholder agrees that it shall not in any manner procure
or attempt to procure the winding up of the Company.
- -------------------------------------------------------------------------------
15 ARTICLES OF ASSOCIATION
15.1 THIS AGREEMENT TO HAVE PRIORITY
In the event that the provisions of the articles of association
of the Company are inconsistent with or contrary to any of the
provisions of this Agreement, the provisions of this Agreement
shall prevail and take precedence to the extent of such
inconsistency or contradiction.
15.2 AMENDMENT OF ARTICLES
The parties shall, if requested by any of the Shareholders, as
soon as practicable following the discovery of any inconsistency
between the provisions of this Agreement and the Articles of
Association, cause a general meeting of the Company to convene
and shall pass at that general meeting such resolutions or
- -------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 7
<PAGE> 8
16 Relationship between the Parties
special resolutions (as the case may be) as are necessary to
amend the Articles of Association in a manner so that the
Articles of Association are consistent with the provisions of
this Agreement.
- -------------------------------------------------------------------------------
16 RELATIONSHIP BETWEEN THE PARTIES
Nothing in this Agreement shall be construed to constitute any
Shareholder the agent or representative of any other Shareholder
or to create any trust or partnership at law for any purposes
whatsoever.
- -------------------------------------------------------------------------------
17 AFFILIATES OF ULTRAK
Ultrak enters into this Agreement on behalf of itself and all of
its Affiliates from time to time.
- -------------------------------------------------------------------------------
18 GOVERNING LAW AND JURISDICTION
(a) Subject to paragraph (b), this Agreement is governed by
and construed in accordance with the laws of the State
of Western Australia and each party irrevocably and
unconditionally submits to the non-exclusive
jurisdiction of the courts of that State and courts of
appeal from them.
(b) B&A may by notice to Ultrak elect that the governing law
and jurisdiction referred to in paragraph (a) will be
the law of Delaware, and such election will take effect
in accordance with its terms
- -------------------------------------------------------------------------------
19 FURTHER ASSURANCES
(a) Each Shareholder must do all things and execute all
further documents necessary to give full effect to this
Agreement
(b) Each Shareholder shall vote its Shares and exercise its
other rights in such a manner as to procure that the
Company complies with all of its obligations under this
Agreement
- -------------------------------------------------------------------------------
20 GENERAL
20.1 VARIATION
No modification, variation or amendment of this Agreement shall
be of any force or effect unless such modification, variation
or amendment is in writing and signed by all the parties hereto.
20.2 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties in relation to its subject matter and supersedes any (if
at all) previous agreements, proposals, representations,
correspondence, negotiations and discussions in connection
therewith.
20.3 COUNTERPARTS
This Agreement may be executed in counterparts.
- -------------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 8
<PAGE> 9
20 General
EXECUTED by the parties as a deed.
SIGNED by and on behalf of BAJADA &
ASSOCIATES PTY LTD by its Managing
Director in the presence of:
/s/ PETER GEOFFREY LAMB /s/ SELWYN BAJADA
- ----------------------------------- -----------------------------------
Witness Managing Director
PETER GEOFFREY LAMB SELWYN BAJADA
- ----------------------------------- -----------------------------------
Name (please print) Name (please print)
SIGNED by and on behalf of ULTRAK,
INC. by its President and Chief
Executive Officer in the presence
of:
/s/ ASHLEY WOJAN /s/ GEORGE K. BROADY
- ----------------------------------- -----------------------------------
Witness George K. Broady
President and Chief Executive Officer
ASHLEY WOJAN GEORGE K. BROADY
- ----------------------------------- -----------------------------------
Name (please print) Name (please print)
- ----------------------------------------------------------------------------
Freehill Hollingdale & Page PERC1\96215015.2 7 August 1996 (19:17) page 9
<PAGE> 1
EXHIBIT 10.3
CONSULTANCY DEED
EDWARDS ROBINSON LARK
--Commercial Lawyers---
23 Ventnor Avenue West Perth WA 6005 Postal Address: PO Box 212 West
Perth WA 6872
Phone (09) 481 4774 Fax (09) 481 5370
Our Ref: PGL:
<PAGE> 2
THIS DEED is made between the following parties:
1. ULTRAK, INC. a company registered in Delaware USA of 1220 Champion Circle,
Suite 100 Carrollton, Texas 75006("Ultrak").
3. RHODES DAVIES & ASSOCIATES PTY LTD (ACN 009 333 788) of care of Complete
Business Systems, 47A Kirwan Street, Floreat, Western Australia
("Consultant")
4. MAXPRO SYSTEMS PTY LTD (ACN 009 081 467) Unit 1, 25 Irvine Drive, Malaga,
Western Australia in its capacity as trustee of the Rhodes Davies Trust
(the "Company").
RECITALS
A. The Executives, Ultrak, the Consultant and the Company have entered into
the Stock Agreement and, after consummation of the transactions
contemplated by the Stock Agreement, Ultrak and will be the majority
holder of the shares in the Company.
B. The Company carries on the Business.
C. The Executives are directors and employees of the Consultant.
D. The Company has agreed to appoint the Consultant as a consultant to
provide to the Company the Management Services and the Consultant has
agreed to accept the appointment and provide the Management Services to
the Company on the terms of this deed.
THE PARTIES AGREE, in consideration of, among other things, the mutual promises
contained in this deed:
1. DEFINITIONS AND INTERPRETATION
In this deed, including the recitals:
1.1 DEFINITIONS
"B&A Nominee" means Selwyn Bajada or any person for the time being holding the
office of director of Bajada & Associates Pty Ltd ACN 059 781 770 who is
nominated by that corporation to replace Selwyn Bajada.
"Business" means the electronics security business carried on by the Company in
the area of closed circuit television system design, manufacture, supply,
installation and commissioning.
"Business Day" means every day which is not a Saturday, Sunday or public or
bank holiday within the meaning of the Public and Bank Holidays Act 1972 (WA);
"Board" means the board of directors from time to time of the Company.
"Commencement Date" means 1 July 1996;
"Consulting Fee" means the fee payable to the Consultant under Clause 4;
"Executives" means Christopher Davies, Kim Rhodes and Scott Rhodes;
"Former Deed" means the Consultancy Agreement made between the Company and the
Consultant and dated September 14, 1994.
"Information" means any information in respect of the Company's business which
is not in the public domain and includes, but is not limited to, any document,
book, account, process, patent, specification, drawing, design or know-how which
is:
(a) supplied by the Company to the Consultant or an Executive; or
(b) generated by the Consultant or an Executive in the course of performing
the Consultant's obligations under this deed;
1
<PAGE> 3
"Management Services" means the services to be provided to the Company by the
Consultant under Clause 2.2 and in accordance with the terms of this deed,
including but not limited to assisting the Company with the management of the
Subsidiary;
"Shareholders" means Ultrak and any persons who become shareholders in the
Company by assignment from Ultrak subsequent to the Commencement Date;
"Stock Agreement" means the Stock Purchase Agreement to be entered into among
the Executives and Ultrak on August 1996;
"Subsidiary" means Maxpro Systems Pty Ltd, a corporation incorporated in the
State of Nevada;
"Term" means the period of two years commencing on the Commencement Date;
"Termination Date" means the last day of the Term;
"Ultrak Shares" means the shares in Ultrak which may be earned under Clauses
1.02(a)(ii) & (iii) of the Stock Agreement by the Executives; and
"US$" means United States of America dollars.
1.2 INTERPRETATION
In this deed, unless the contrary intention appears, the following provisions
apply to the interpretation of this deed:
(a) Headings, underlining and numbering are for convenience only and do not
affect the interpretation of this deed.
(b) A reference to a statute, regulation, proclamation, ordinance or by-law
includes every statute, regulation, proclamation, ordinance or by-law
amending, consolidating or replacing them, and a reference to a statute
includes every regulation, proclamation, ordinance and by-law issued under
that statute.
(c) A reference to a party to this deed or to another document referred to in
this deed includes that party's successors and permitted assigns.
(d) Where the day on or by which a thing is required to be done is not a
Business Day, that thing is to be done or by the succeeding Business Day.
2. ENGAGEMENT
2.1 ENGAGEMENT
(a) The Company engages the Consultant for the Term for the purposes of
providing to the Company the Management Services and the Consultant
accepts such appointment.
(b) The Company agrees that it will pay the Consulting Fee to the Consultant.
(c) The parties may extend the Term by mutual written consent.
2.2 RESPONSIBILITIES
Until the Termination Date the Consultant shall manage the Business in the
manner which it best sees fit:
(a) with due skill, expertise, diligence and vigour; and
(b) in accordance with all applicable laws, regulations, orders and rules.
2.3 TERMINATION OF FORMER DEED
This deed terminates the Former Deed with effect from the Commencement Date.
2
<PAGE> 4
3. COVENANTS
3.1 EXECUTIVES OF CONSULTANT
(a) The Consultant agrees to make the Executives available to the Company to
enable the Company to undertake its usual business including the
management of the Subsidiary and all overseas operations.
(b) The Company and the Shareholders acknowledge that as employees of the
Consultant, the Executives are entitled to public holidays, annual leave
and sick leave from the Consultant and as a consequence all three
Executives will not always be available at the same time to manage the
Business.
3.2 PERFORMANCE BY EXECUTIVES
The Consultant shall procure that the Executives, whilst they or any of them
are employed by the Consultant:
(a) perform the Management Services in accordance with the reasonable
directions of the Board and in a reasonably competent and expeditious
manner; and
(b) diligently attend to the Business.
3.3 NO CONFLICT OF INTEREST
The Consultant warrants that neither the Consultant nor the Executives will
perform services of any type, or provide any advice or assistance to any
competitor or potential competitor of the Company either directly or
indirectly nor do any other act which may give rise to a conflict with the
interests of the Company.
4. OPERATING DETAILS
4.1 SUBSIDIARY
Subject always to the directions of the Company as the sole shareholder of the
Subsidiary
(a) the Executives are at the date of this deed all directors of the
Subsidiary and intend to maintain those offices.
(b) the Executives and the B&A Nominee shall act as joint Presidents of the
Subsidiary.
(c) it is likely that Andrew Jackson and Nigel Heard will be appointed as Vice
Presidents of the Subsidiary.
4.2 BUDGETS
(a) The Executives shall prepare realistic budgets with a view to the Company
achieving both earnout profit targets under Clause 1.02(a) of the Stock
Agreement on the basis of consolidated accounts (the "Budgets").
(b) Ultrak undertakes to use its best endeavours to accept the Budgets
prepared under Clause 4.2(a).
(c) Where Ultrak determines that in the opinion of Ultrak it would be
appropriate to incur expenditures in addition to those set out in any
Budget and requests the Board to consider the merit of those expenditures,
provided that the Board agrees to those expenditures, then such
expenditures shall not be considered in calculating the earnout profit
targets under Clause 1.02(a) of the Stock Agreement.
3
<PAGE> 5
4.3 CO-OPERATION BY ULTRAK
Ultrak covenants that so long as the Board is managing the Company in
accordance with the Budgets and there are no significant commercial or personal
difficulties between the executives of Ultrak and any of the Executives that
Ultrak will not seek to interfere with the day to day management of the Company
or the Board.
4.4 CONSENT OF SHAREHOLDERS
The Board shall not without the prior approval of Ultrak and Bajada &
Associates Pty Ltd ACN 059 781 770:
(a) amend the Memorandum of Association or the Articles of Association of the
Company;
(b) borrow money from any person other than Ultrak unless the Company is able
to obtain money on terms which the Board considers to be more favorable
than the terms offered by Ultrak; or
(c) issue any shares in the Company or the Subsidiary.
5. CONSULTING FEE
(a) The Consulting Fee for the twelve month period commencing from the
Commencement Date shall be US$840,000 and for the following twelve month
period shall be US$560,000 payable in equal monthly instalments no later
than the 15th day of each month into such bank accounts as the Consultant
directs.
(b) Any monthly instalment of the Consulting Fee which would have been paid by
the Commencement Date if this deed had been entered into before the
Commencement Date shall be paid promptly upon the signing of this deed;
provided, however, that the amount shall be reduced by any payments under
the Former Deed.
6. EXPENSES
The Company must reimburse the Consultant and the Executives for reasonable
out-of-pocket expenses incurred by the Consultant or the Executives, as the
case may be, in connection with the Business.
7. APPOINTMENT AS DIRECTORS
(a) The Shareholders agree that the Executives will initially comprise the
majority of the Board of directors of the Company, but, notwithstanding
anything to the contrary in this deed, the Shareholders reserve the right
to make changes to the Board as they see fit.
8. DELEGATION AND SUBSTITUTION
(a) Subject to Clause 8(b), the Consultant is required to personally perform
all of the Management Services and has no right to delegate performance of
the Management Services to any employee of the Consultant other than to
one or more of the Executives.
(b) If any Executive dies or through ill health is unable to perform his
services to the Consultant, the Consultant shall be entitled to replace
the deceased or ill Executive.
(c) The Shareholders acknowledge that they are satisfied with the level of
staffing of the Company at the Commencement Date and have no present
intentions to reduce it.
(d) The Shareholders further acknowledge that if the Consultant determines
that the level of activity of the Company or the Subsidiary is sufficient
to justify the appointment of any further staff to the Company or the
Subsidiary that it will be empowered to arrange any such appointment on
terms and conditions of its choosing.
4
<PAGE> 6
9. RESPONSIBILITY FOR LEAVE AND OTHER BENEFITS
9.1 NO RESPONSIBILITY
Subject to Clause 9.2, the Company is not responsible for the Executives and
the Consultant shall not have any claim against the Company for annual leave,
sick leave, long service leave, public holidays, superannuation contributions,
redundancy payments, or any other similar benefits that may be owing to the
Executives in connection with the Management Services under this deed.
9.2 INDEMNITY
(a) Subject to Clause 9.2(b), the Consultant agrees to indemnify the Company
in the event that the Company is required to make payments in relation to
any of the benefits referred to in sub-Clause 9.1 to the Executives.
(b) In the event that any liability to State Payroll tax is assessed to any of
the Company or the Consultant in respect of any part of the Consulting Fee
paid for the Management Services or remuneration paid by the Consultant to
the Executives out of the Consulting Fee, this tax shall be met by the
Company.
10. RESPONSIBILITY FOR INCOME TAXES AND INSURANCE
10.1 INCOME TAX
The Consultant is responsible for making any income tax deductions or payments
required under the Income Tax Assessment Act 1936 (Commonwealth) arising from
payment of the Consultancy Fee, and expressly forbids the Company from making
any income tax deductions or payments.
10.2 WORKER'S COMPENSATION
The Consultant will take out any necessary workers' compensation insurance as
required by the Workers' Compensation and Rehabilitation Act 1981 (WA) in
connection with the Consultant's engagement under this deed.
10.3 SUPERANNUATION
The Consultant is responsible for making any superannuation payments required
under the Superannuation Guarantee (Administration) Act 1992 (Commonwealth) in
connection with the Consultant's engagement under this deed.
10.4 FRINGE BENEFITS TAX
The Consultant must pay any fringe benefit tax payable under the Fringe
Benefits Tax Assessment Act 1986 (Cth) in relation to any remuneration or
benefit provided by the Company to the Consultant or the Executives under this
deed.
11. CONFIDENTIALITY
11.1 CONSULTANT'S OBLIGATIONS
The Consultant must:
(a) keep any Information secret and confidential, except to the extent that
the Consultant or an Executive is required by law to disclose it;
(b) take all reasonable and necessary precautions to maintain the secrecy and
prevent the disclosure of any Information; and
(c) procure that each Executive complies with the obligations set out in this
clause.
11.2 SURVIVAL OF OBLIGATIONS
The Consultant's obligations under this Clause 11 survive the termination of the
Consultant's appointment as consultant to the Company.
5
<PAGE> 7
12. TERMINATION OF DEED
12.1 TERMINATION
Subject to clauses 12.2 and 12.3, this deed shall only terminate on the
Termination Date.
12.2 TERMINATION BY NOTICE
Either party shall be entitled to terminate this deed, by written notice to the
other party; if:
(a) an order is made or an effective resolution is approved for the
appointment of a provisional liquidator or, for the winding up of the
Company or the Consultant (as the case may be);
(b) a receiver or manager is appointed for the Company or the Consultant (as
the case may be) or any part of the assets of the Company or the
Consultant;
(c) the Company or the Consultant (as the case may be) proposes to enter into,
or enters into, any scheme of arrangement with creditors or any of them;
or
(d) the Company or the Consultant (as the case may be) calls a meeting of its
creditors for the purpose of placing the Consultant under official
management and appointing an official manager of the Company or the
Consultant (as the case may be).
12.3 TERMINATION WITHOUT PREJUDICE
Termination by either party of this deed shall be without prejudice to the
rights or obligations of the terminating party in respect of any occurrence
prior to such termination.
12.4 ACTION UPON TERMINATION
Upon termination of this deed, the Consultant shall:
(a) relinquish possession and control to the Company, or as the Company shall
direct, of all the Company's assets and moneys held or controlled by the
Consultant pursuant to this deed; and
(b) deliver to the Company, or as the Company shall direct, all documents,
books, confidential information, technical information, intellectual
property, accounts and other records relating to the Business, the
Information or the performance of the Management Services or its other
duties and obligations hereunder.
13. LEGAL RELATIONSHIP
(a) The Company and the Consultant agree that the legal relationship between
the Company and the Consultant is that of principal and independent
contractor and not that of employer and employee and no term of this deed
shall be construed as creating a relationship of employer and employee
between the Company and the Consultant or any employee or agent of the
Consultant.
(b) Neither the Consultant nor the Company is liable for the obligations or
debts of the other except as set out in this deed.
14. COMPETITION
14.1 UNDERTAKINGS
Neither the Consultant nor any of the Executives shall without first obtaining
the written consent of the Company:
(a) directly or indirectly carry on any business similar to or competitive
with the Business in the world for 1 year after the termination of this
deed.
6
<PAGE> 8
(b) persuade any person or corporation which is a customer or client of the
Company, or who was in the twelve month period before the termination of
this deed a customer or client of or in respect of the Business, to cease
doing business with the Company or reduce the amount of business which the
customer or client would normally do in respect of the Business for 1 year
after the termination of this deed:
(c) For a period of one year after the termination of this deed, induce or
attempt to induce any person who at the termination of this deed is an
employee of the Company in the Business to terminate his or her employment
with the Company.
15. MISCELLANEOUS
15.1 NOTICES
(a) A notice:
(1) to a party to this deed is to be in legible writing and in English
addressed to that party at its address set out at the beginning of
this deed;
(2) is to be signed by the sender or, in the case of a body corporate, is
to be signed by an officer of, or under the common seal of, the
sender or by its solicitors or agents;
(3) is to be regarded as having been given by the sender and received by
the addressee;
(A) if by delivery in person, when delivered to the addressee;
(B) if by post, 3 Business Days from and including the date of
postage to the addressee; or
(C) if by facsimile transmission, when the sender has a clear
transmission report to the addressee,
but if the delivery or receipt is on a day which is not a Business
Day or is after 4:00 pm (addressee's time) on the following Business
Day.
(b) A facsimile transmission is to be regarded as legible unless the addressee
telephones the sender within 1 Business Day after transmission and informs
the sender that it is not legible.
(c) A notice can be relied on by the addressee, and the addressee is not
liable to another person for the consequences of that reliance if the
addressee believes it to be genuine, correct and authorised by the sender.
15.2 CONTINUING EFFECT
The obligations imposed and the benefits conferred on the parties under this
deed shall be binding upon and enure to the respective parties and each of
their respective permitted successors in title, transferees and permitted
assigns.
15.3 COSTS
The parties must procure that the Executives pays the costs of Edwards Robinson
Lark in relation to the preparation of this deed and any stamp duty assessed on
the deed.
15.4 CUMULATIVE REMEDIES
All remedies either under this deed, at law, in equity, under statute or
otherwise afforded to the Consultant or the Company will be cumulative and not
alternative.
7
<PAGE> 9
15.5 ENTIRE DEED
The terms, covenants, conditions, agreements, provisions, stipulations and
obligations, contained in, and implied by, this deed comprise the entire
agreement between the parties at the Commencement Date and no other term,
covenant, condition, agreement, provision, representation or warranty applies.
15.6 ASSIGNMENT
(a) Rights arising out of, or under, this deed are not assignable by one party
without the prior written consent of the other party.
(b) A breach of sub Clause (a) by one party entitles the other party to
terminate this deed.
(c) As a condition to the giving of consent by one party to the other to a
proposed assignment, the party giving that consent is entitled to require
guarantees of directors and/or shareholders of a body corporate to which
this deed is to be assigned and a guarantee of this deed of the
performance of the proposed assignee.
(d) A Shareholder may not transfer all or any of its shares in the Company
without first procuring that the transferee enters into a deed to the
reasonable satisfaction of the Consultant which contains provisions
substantially in the form of the provisions of this deed.
15.7 EXCLUSION OF MORATORIA
A statute, moratorium or other governmental order which affects
prejudicially the rights, powers or discretions of the parties under this
deed does not apply to this deed unless application is mandatory.
15.8 VARIATION
A variation of a term of this deed must be in writing and signed by each
of the parties to this deed.
15.9 WAIVER
(a) A waiver of a breach of this deed or of the rights created by, or arising
under, this deed must be in writing and signed by the party giving the
waiver.
(b) A breach of this deed is not waived by:
(1) a failure to exercise;
(2) a delay in exercising; or
(3) a partial exercise,
of a remedy available under this deed or at law or in equity.
(c) A right created by, or arising under, this deed is not waived by:
(1) a failure to exercise;
(2) a delay in exercising; or
(3) a partial exercise,
of that right.
15.10 GOVERNING LAW AND JURISDICTION
(a) This deed is governed by the laws of Western Australia; and
8
<PAGE> 10
(b) Each party irrevocably submits to the exclusive jurisdiction of the Courts
of Western Australia with respect to this deed; provided, however, such
submission shall not cause Ultrak to be subject to taxation in Western
Australia or to qualify as a foreign corporation in Western Australia.
(c) The parties acknowledge that Ultrak has no physical presence in Australia.
15.11 COUNTERPARTS
(a) This deed may be executed in any number of counterparts.
(b) All counterparts, taken together, constitute one instrument.
(c) A party may execute this deed by signing any counterpart.
EXECUTED by the parties as a deed this 7 day of August 1996.
ULTRAK, INC.
By:
George K. Broady, President and CEO
RHODES
THE COMMON SEAL of DAVIES
RHODES DAVIES & ASSOCIATES PTY LTD & ASSOCIATES
was hereunto affixed by PTY LTD
authority of the directors A.C.N. 009 333 788
in the presence of:
COMMON SEAL
/s/ K. RHODES /s/ C. DAVIES
- -------------------------------- ------------------------------
Director Director/Secretary
KIM RHODES CHRISTOPHER DAVIES
- -------------------------------- -------------------------------
Name (please print) Name (please print)
9
<PAGE> 11
THE COMMON SEAL of MAXPRO
MAXPRO SYSTEMS PTY LTD SYSTEMS
was hereunto affixed by PTY LTD
authority of the directors A.C.N. 009 081 467
in the presence of:
COMMON SEAL
/s/ K. RHODES /s/ [ILLEGIBLE]
- -------------------------------- ------------------------------
Director Secretary
KIM RHODES [ILLEGIBLE]
- -------------------------------- -------------------------------
Name (please print) Name (please print)
10
<PAGE> 12
STOCK PURCHASE AGREEMENT
EXHIBIT 8.07: CONSENT BY BAJADA & ASSOCIATES
Bajada & Associates Pty Ltd (ACN 059 781 770) hereby consents to the
Acquisition and the terms of the Agreement.
SIGNED for and on behalf of
Bajada & Associates Pty Ltd
by its Managing Director
/s/ BAJADA
- ---------------------------------
