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                                                                   EXHIBIT 10.16

NATIONSBANK
NATIONSBANK OF TEXAS, N.A.

                                THIRD AMENDMENT
                                       TO
                        FINANCING AND SECURITY AGREEMENT

                 This agreement ("Third Amendment") is executed and entered
into by and among NATIONSBANK OF TEXAS, N.A. ("Lender"), ULTRAK, INC., a
Colorado corporation, DENTAL VISION DIRECT, INC., a Texas corporation, EXXIS
TECHNOLOGIES, INC., a Texas corporation, JAK PACIFIC VIDEO WARRANTY AND REPAIR
SERVICES, INC., a California corporation, and DIAMOND ELECTRONICS, INC., an
Ohio corporation, as follows:

                                  Definitions

         The following definitions shall apply throughout this Third Amendment:

         "CCTV/LPEC Merger Date" means December 31, 1993.

         "Diamond" means Diamond Electronics, Inc., an Ohio corporation.

         "JAK" means JAK Pacific Video Warranty and Repair Services, Inc., a
         California corporation.

         "Effective Date" means July 18, 1995.

         "Exxis" means Exxis Technologies, Inc., a Texas corporation.

         "Financing and Security Agreement" means the certain Financing and
         Security Agreement dated effective as of September 24, 1993 among
         Lender, Ultrak, LPEC, CCTV and DVDI, as may be modified, amended,
         renewed, extended or restated from time to time.

         "Ultrak Parties" collectively means Ultrak, DVDI, Diamond, JAK and
         Exxis.

Except as provided otherwise herein, terms defined in the Financing and
Security Agreement are incorporated herein by reference and shall have the same
meanings wherever used herein as are prescribed by the Financing and Security
Agreement, as amended by this Third Amendment.

                                    Recitals

         Lender, Ultrak and DVDI are parties to the Financing and Security
         Agreement.

         Subsequent to execution of the Financing and Security Agreement, CCTV
         and LPEC were merged into Ultrak.

         It is proposed that each of Diamond, Exxis and JAK become a party to
         the Financing and Security Agreement as a Borrower, with all rights,
         benefits and obligations of a Borrower thereunder.

NOW THEREFORE, for valuable consideration, the receipt of which hereby is
acknowledged, and in consideration of the mutual agreements and benefits in the
premises, the undersigned parties each hereby agrees as follows:

       ARTICLE 1. SUPPLEMENTAL AGREEMENTS IN RESPECT OF CCTV/LPEC MERGER

         1.1.    The Ultrak Parties represent and warrant to Lender that on the
CCTV/LPEC Merger Date, CCTV and LPEC each was merged into Ultrak in a merger
transaction in which Ultrak assumed ownership of all properties (including all
Collateral), and all liabilities (including all Obligations) of CCTV and LPEC,
respectively. Lender consents to such merger (such consent to be deemed
effective as of the CCTV/LPEC Merger Date) subject to the terms of this Third
Amendment.

         1.2.    Contemporaneously upon execution hereof, Ultrak shall deliver
to Lender a copy of the Certificate of Merger, or comparable document,
certified by the Secretary of State of Colorado and confirming the merger
transaction referenced in paragraph 1.1.

         1.3.    Ultrak acknowledges that it is directly liable for all
Obligations owing by each of CCTV and LPEC, respectively, as of the CCTV/LPEC
Merger Date. Ultrak represents that all Collateral previously owned by CCTV and
LPEC, respectively, prior to the CCTV/LPEC Merger Date is now owned by Ultrak,
subject to Lender's interests under the Financing and Security Agreement. On
and after the CCTV/LPEC Merger Date, any and all Loan Documents which at any
time have been or are executed in the name of CCTV or LPEC, respectively, shall
be deemed to be the act of Ultrak.
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         1.4.    Ultrak agrees to execute such additional documentation in
connection with the foregoing as Lender may reasonably request in order to
protect and continue Lender's rights under the Loan Documents.

        ARTICLE II. SUPPLEMENTAL AGREEMENTS IN RESPECT OF DIAMOND, EXXIS AND JAK

         2.1.    The Financing and Security Agreement hereby is amended, as of
the Effective Date, to add a new paragraph 1.21a immediately following
paragraph 1.21, a new paragraph 1.27a immediately following paragraph 1.27, and
a new paragraph 1.37a immediately following paragraph 1.37, respectively, each
of which shall read in its entirety as follows:

                 "1.21a  "Diamond" means Diamond Electronics, Inc., an Ohio
                 corporation, whose chief executive office is located at 1220
                 Champion Circle, Suite 100, Carrollton, Texas 75006."

                 "1.27a   "Exxis" means Exxis Technologies, Inc., a Texas
                 corporation, whose chief executive office is located at 1220
                 Champion Circle, Suite 100, Carrollton, Texas 75006."

                 "1.37a   "JAK" means JAK Pacific Video Warranty and Repair
                 Services, Inc., a California corporation, whose chief
                 executive office is located at 1220 Champion Circle, Suite
                 100, Carrollton, Texas 75006."

         2.2.    Paragraph 1.7 (definition of "Borrower") hereby is amended to
read in its entirety as follows:

                 "1.7     "Borrower"separately and severally means each of
                 Ultrak, DVDI, JAK, Diamond and Exxis, respectively."

         2.3.    Paragraph 1.9 (definition of "Borrowers") hereby is amended to
read in its entirety as follows:

                 "1.9     "Borrowers"collectively means all of Ultrak, DVDI,
                 JAK, Diamond and Exxis, collectively together. "

         2.4.    Contemporaneously upon execution hereof, Diamond, Exxis and
JAK each shall deliver to Lender each of the items (pertaining to themselves,
respectively) as are itemized by subparagraphs (a) through (n) of paragraph 4.1
of the Financing and Security Agreement.

         2.5.    Exhibit 3.4 ("Location of Collateral") to the Financing and
Security Agreement hereby is amended and restated, as of the Effective Date, to
read in its entirety as shown in Exhibit "A" attached hereto which is
incorporated herein by reference. The second sentence of Paragraph 3.4
("Location of Collateral") of the Financing and Security Agreement hereby is
amended and restated as follows:

         "Exhibit 3.4 attached hereto correctly identifies the locations where
         all Inventory and Equipment will be maintained, and if any such
         location is a leased location, the name and address of the owner
         thereof."

         2.6.    Pursuant to paragraph 3.17 of the Financing and Security
Agreement: Each Borrower other than Diamond, Exxis and JAK (i) hereby agrees
that the continuing security interest and lien previously granted to Lender by
such Borrower under such paragraph 3.17 shall secure all Obligations from time
to time owing by each of the other Borrowers, respectively (including without
limitation Diamond, Exxis and JAK), and as additional security, hereby grants
to Lender a continuing security interest and lien in and to all of its right,
title and interest in the Collateral to secure all Obligations from time to
time owing by each of the other Borrowers, respectively (including without
limitation Diamond, Exxis and JAK) (such grant to be governed by, and entitled
to all of the benefits of, the Financing and Security Agreement as provided in
such paragraph 3.17), (ii) each Borrower other than Diamond, Exxis and JAK
shall execute and deliver for the benefit of Lender guaranty agreements
pursuant to which such party shall guarantee to Lender the prompt payment and
performance of all Obligations from time to time owing by Diamond, Exxis and
JAK, respectively (such guaranty agreements to be in form and substance
satisfactory to Lender and delivered to Lender contemporaneously upon execution
of this Third Amendment) and (iii) each of Diamond, Exxis and JAK,
respectively, hereby grants to Lender a continuing security interest and lien
in and to all of its right, title and interest in the Collateral to secure all
Obligations of each other Borrower from time to time arising on or after the
Effective Date, respectively (such grants to be governed by, and entitled to
all of the benefits of the Financing and Security Agreement), and each of
Diamond, Exxis and JAK, respectively, shall execute and deliver for the benefit
of Lender a guaranty agreement pursuant to which such party shall guarantee to
Lender the prompt payment and performance of all Obligations of each other
Borrower from time to time arising on or after the Effective Date (such
guaranty agreements to be in form and substance satisfactory to Lender),
provided that it is agreed that (i) such security interest and guaranty
agreements shall not secure any Obligations existing and owing as of the close
of Lender's business on the Business Day preceding the Effective Date (for this
purpose it is agreed that payments applied on or after the Effective Date to
Obligations of any Borrower shall be deemed applied first in reduction of
Obligations of





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<PAGE>   3
such Borrower existing as of the close of Lender's business on the Business Day
preceding the Effective Date). Each Borrower hereby acknowledges that its
agreement to the provisions of this paragraph is in consideration of the
availability of loans to each of the other Borrowers under the Financing and
Security Agreement and is not required by Lender as a condition to the
availability of loans or extensions of credit to such Borrower.

         2.7.    As of the Effective Date, Exhibit 5.6 ("Share Ownership") of
the Financing and Security Agreement hereby is deemed to be amended to read in
its entirety as provided in Exhibit "B" attached hereto.

         2.8.    Each of Diamond, Exxis and JAK has delivered to Lender its
balance sheet, income statement and statement of cash flow as of its fiscal
year ending December 31, 1994, and its balance sheet and income statement as of
the monthly period ending May 31, 1995. Such financial statements were prepared
in accordance with GAAP, and are correct and complete, and fairly present the
financial condition of such Borrowers as of such dates and the results of their
respective operations for the periods covered thereby. There has been no
material adverse change in the business, properties or financial condition of
Diamond or Exxis since the dates of the foregoing financial statements,
respectively.

         2.9.    Diamond, Exxis and JAK each hereby represents and warrants to
Lender each of the representations and warranties provided by the following
paragraphs of the Financing and Security Agreement, as though separately set
forth herein: Paragraphs 3.3, 3.4 (as amended by paragraph 2.5 of this Third
Amendment), 3.6 and 3.9, and each of paragraphs 5.1 through 5.5, paragraph 5.6
(as amended by paragraph 2.7 of this Third Amendment), paragraph 5.7 and each
of paragraphs 5.9 through 5.20.

         2.10.   On and after the Effective Date, each of Diamond, Exxis and
JAK shall be deemed to be a party to the Financing and Security Agreement (as
supplemented by this Third Amendment) as a Borrower for all purposes, and
Diamond, Exxis and JAK each hereby covenants and agrees to perform all
obligations of a Borrower thereunder, subject to the terms of this Third
Amendment.

                       ARTICLE III. ADDITIONAL AMENDMENTS

         3.1     The Financing and Security Agreement hereby is amended to
restate or add, as the case may be, the following definitions in Article 1, as
follows:

         "1.00   "ADJUSTED LIBOR RATE" means an interest rate per annum equal
         to the quotient of (i) the London Interbank Offered Rate, divided by
         (ii) a percentage equal to 100.0% less the Eurodollar Reserve
         Percentage.

         "1.14   "COLLATERAL" means collectively all of the foregoing, now
         owned and hereafter acquired: Receivables, Inventory, Equipment, and
         all computer programs, applications, discs, software, files and other
         records pertaining to any Collatera1. Collateral also includes all
         proceeds of any of the foregoing at any time arising, including
         insurance proceeds."

         "1.18   "CONTRACT TERM" means the period specified in the preamble of
         this Agreement and continuing through July 31, 1997

         "1.19   "CREDIT LIMIT" means the amount of Seventeen Million Five
         Hundred Thousand and no/100 Dollars ($17,500,000.00)."

         "1.24a  "EQUIPMENT" means all equipment now owned and hereafter
         acquired, including without limitation all machinery, furniture and
         other goods used or bought for use in business and all other property
         which is properly classified as equipment pursuant to the Code, both
         now owned and hereafter acquired.

         "1.26a  "EURODOLLAR BUSINESS DAY" means any Business Day on which
         transactions in United States Dollars are conducted in the London
         interbank market.

         "1.26b  "EURODOLLAR RESERVE PERCENTAGE" shall mean the maximum reserve
         requirement (including without limitation, any basic, supplemental,
         marginal and emergency reserves) (expressed as a percentage)
         applicable to member banks of the Federal Reserve System in respect of
         "Eurocurrency Liabilities" under Regulation D of the Board of
         Governors of the Federal Reserve System, or such additional,
         substituted or amended reserve requirement as may be hereafter
         applicable to member banks of the Federal Reserve System."

         "1.35a  "INTEREST PERIOD" means the period commencing on the first
         effective Eurodollar Business Day of a LIBOR Contract Rate election
         under paragraph 2.2a and ending one, two, three or six months
         thereafter, as designated by a Borrower at the time of such election,
         provided that (i) if any Interest Period would otherwise end on a day
         which is not a Eurodollar Business Day, then such Interest Period
         shall be extended to the next succeeding Eurodollar Business Day
         unless to do so would extend such Interest Period into a subsequent
         calendar month, in which event such Interest Period shall end on the
         next





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         preceding Eurodollar Business Day, and (ii) any Interest Period that
         begins on the last day of a calendar month, or on a day for which
         there is no numerically corresponding day in the calendar month at the
         end of such Interest Period, shall end on the last Eurodollar Business
         Day of the last calendar month of such Interest Period, and provided
         further, that no Interest Period may end on a day which is after the
         last day of the Contract Term."

         "1.40a  "LIBOR CONTRACT RATE" means the Adjusted LIBOR Rate plus two
         and one-half percent (2.50%) per annum."

         "1.40b  "LIBOR RATE OPTION" means any election by a Borrower, in
         accordance with paragraph 2.2a to have any Tranche bear interest
         according to the LIBOR Contract Rate."

         "1.40c  "LONDON INTERBANK OFFERED RATE" means, with respect to any
         LIBOR Rate Option for the applicable Interest Period, the rate of
         interest per annum (rounded upward, if necessary, to the next higher
         1/1 6th of one percent) determined by Lender, in accordance with its
         customary general practice from time to time, to be the rate at which
         deposits in immediately available funds in Dollars are or would be
         offered or quoted by Lender to major banks in the London interbank
         market, as of approximately 11:00 a.m. London time, or as soon
         thereafter as practicable, on the second Business Day immediately
         preceding the first day of such Interest Period, for a term comparable
         to such Interest Period and in an amount equal to the amount of the
         Tranche to be the subject of such LIBOR Rate Option. If no such offers
         or quotes are generally available for such amount, then Lender shall
         be entitled to determine the London Interbank Offered Rate for any
         such LIBOR Rate Option by estimating in its reasonable judgment the
         per annum rate (described above) that would be applicable if such
         quotes or offers were generally available."

         "1.41   "LOAN DOCUMENTS" means this Agreement, each Revolving Note,
         each Term Note, each Guaranty, the Real Property Collateral Documents
         and any other documents or agreements executed in connection
         therewith, and also includes any and all renewals, extensions,
         modifications or amendments of any of the foregoing."

         "1.49a  "PRETAX NOT INCOME" for any period means net income for such
         period prior to accruing for appropriate taxes but otherwise
         determined as provided by the definition of "Net Income" in paragraph
         6.22(b)."

         "1.51a  "REAL PROPERTY COLLATERAL" means the certain real property
         described within Exhibit 1.51 a."

         "1.51b  "REAL PROPERTY COLLATERAL DOCUMENTS" means the certain
         [DESCRIBE DEED OF TRUST OR MORTGAGE] Deed of Trust of even date
         herewith executed by Borrower creating a deed of trust lien in the
         Real Property Collateral for the benefit of Lender, together with all
         affidavits, certificates and other documents executed by Borrower in
         connection therewith.

         "1.59a  "TERM FACILITY" means the loan facility established by this
         Agreement pursuant to Article IIA."

         "1.59b  "TERM FACILITY CREDIT LIMIT" means the maximum amount in
         respect of the Term Facility applicable to each respective Borrower,
         as follows: (i) $500,000.00 for Ultrak, (ii) $100,000.00 for DVDI,
         (iii) $100,000.00 for Exxis, (iv) $1,800,000.00 for Diamond and (v)
         $0.00 (zero dollars) for JAK.

         "1.59c  "TERM FACILITY BORROWING BASE" means (i) with respect to any
         Borrower other than Diamond, an amount equal to seventy five percent
         (75.0%) of the forced sale liquidation value of Equipment owned by
         such Borrower and (ii) with respect to Diamond, an amount equal to the
         sum of seventy five percent (75.0%) of the forced sale liquidation
         value of Equipment owned by Diamond plus seventy five percent of the
         fair market value of the Real Property Collatera1. The forced sale
         liquidation value of Equipment and the fair market value of the Real
         Property Collateral, for purposes of determining the Term Facility
         Borrowing Base, shall be as determined by Lender from time to time in
         its discretion.

         "1.59d  "TERM NOTE" shall mean a promissory note executed by a
         Borrower payable to the order of Lender evidencing loans to such
         Borrower under the Term Facility, as provided in paragraph 2A.1 and in
         form satisfactory to Lender, and includes any and all renewals,
         extensions, amendments or modifications thereof."

         "1.59e  "TRANCHE" means any portion of the Revolving Facility the
         principal amount of which is subject to election of the LIBOR Contract
         Rate in accordance with paragraph 2.2a."        

         3.2     The first sentence of paragraph 1.17 (definition of
"Contract Rate") of the Financing and Security Agreement hereby is amended to
read as follows:

         "CONTRACT RATE" means, on any day, a floating annual rate of interest
         calculated on the basis of actual days elapsed but computed as if each
         year consists of 360 days, equal to





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<PAGE>   5
         the sum of the Prime Rate effective as of the first day of the
         calendar month in which such day falls plus (i) in the case of the
         Revolving Facility, one-quarter of one percent (0.25%) and (ii) in the
         case of the Term Facility, one-quarter of one percent (0.25%)."

         3.3     Paragraph 1.21 (definition of "Eligible Accounts") of the
Financing and Security Agreement hereby is amended to add the following,
immediately after the existing last sentence thereof:

         "At Lender's discretion, Lender may consider for eligibility accounts
         owing by account debtors located outside the United States, provided,
         that the aggregate unpaid amount (in United States dollars) (i) of all
         such accounts at no time exceeds $200,000.00 and (ii) for all such
         accounts owing by any single account debtor at no time exceeds
         $100,000.00, and provided further, that the determination of whether
         to include any such accounts as Eligible Accounts shall at all times
         be and remain in Lender's sole discretion."

         3.4     The Financing and Security Agreement hereby is amended to add
Exhibit 1.52a entitled "Real Property Collateral" in the form attached as
Exhibit "C" attached hereto.

         3.5     In paragraph 1.4 (definition of "Aggregate Borrowing Base")
and paragraph 1.16 (definition of "Company Borrowing Base"), the dollar amount
"$5,000,000.00" hereby is amended, in each case, to read "$8,750,000.00".

         3.6     The Financing and Security Agreement is amended to add a new
paragraph 2.2a (entitled "LIBOR Option") and a new paragraph 2.2b (entitled
"Interest Rate Reduction"), respectively, immediately following paragraph 2.1,
each of which shall read in its entirety as follows:

                 "2.2a    LIBOR OPTION. Subject to the terms and provisions of
         this Agreement, and in lieu of the interest rate otherwise applicable
         under paragraph 2.1, each Borrower shall have the option to elect a
         rate per annum equal to the lesser of (i) the LIBOR Contract Rate or
         (ii) the Maximum Rate as being applicable to any Tranche during any
         Interest Period, provided, that any such Tranche shall be in the
         minimum amount of $1,750,000.00, and no more than four (4) separate
         Tranches may exist in the aggregate at any one time. Any Borrower may
         make such election at any time by written notice, in form satisfactory
         to Lender, delivered to Lender no later than two (2) Eurodollar
         Business Days prior to the beginning of the Interest Period to which
         such election shall be applicable, therein stating (i) the Interest
         Period selected, and the date such Interest Period is to begin, and
         (ii) the principal amount of the Tranche to be subject to such
         election. Any such written notice of election shall be irrevocable.
         Accrued interest on the principal amount of each Tranche shall be
         payable monthly in arrears on the last day of each calendar month and
         on the last day of the Interest Period applicable to such Tranche. If,
         with respect to any election under this paragraph, Lender determines
         that deposits in United States Dollars, in applicable amounts, are not
         being offered to Lender, or other major United States banks of
         comparable size to Lender, in the London interbank Eurodollar market
         for the applicable Interest Period, or Lender determines that the
         LIBOR Contract Rate will not adequately and fairly reflect the cost to
         Lender of maintaining or funding the applicable portion of the Loans
         relative to such election for such Interest Period, then at Lender's
         option, Lender may give notice to Borrowers and thereby suspend the
         option to elect the LIBOR Contract Rate, pending any subsequent
         reinstatement in Lender's discretion, and with respect to any such
         election then applicable to any portion of the Loans, require that
         such portion either be repaid in full (in which event any amounts
         otherwise payable in the event of prepayment of a Tranche as provided
         below shall not be applicable) or converted to bear interest according
         to the interest rate provided in paragraph 2.1. All unpaid principal,
         if any, of loans with respect to which no such election is made, as
         provided herein, shall automatically be deemed to be subject to, and
         shall accrue interest at, the interest rate as provided by paragraph
         2.1. Except as results from application of proceeds of Receivables as
         provided by paragraph 3.8, prepayment of a Tranche shall not be
         permitted without the prior written consent of Lender. Should any
         prepayment of a Tranche, or any portion thereof, occur (whether as a
         result of such applications or by consent of Lender, or otherwise),
         then within fifteen (15) days of Lender's request therefor, Borrowers
         shall pay to Lender any loss or expense which Lender may incur or
         sustain as a result of any such prepayment. Lender's statement of the
         amount of such loss or expense, prepared in reasonable detail by
         Lender, shall be conclusive and binding for all purposes, absent
         manifest error or gross negligence. Calculation of such amounts shall
         be made as though Lender shall have actually funded or committed to
         fund the relevant Tranche through the purchase of an underlying
         deposit in an amount equal to the amount of such Tranche and having a
         maturity comparable to the related Interest Period (provided, however,
         that it is understood that Lender may fund, or make provision for
         funding, any Tranche in any manner as Lender may determine in its
         discretion)."

                 "2.2b    INTEREST RATE REDUCTION. The interest rate(s)
         otherwise applicable to the Revolving Facility under paragraph 2.2a or
         paragraph 2.2b, as the case may be, shall be subject to reduction on
         the conditions, and in specified amounts, as follows:





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<PAGE>   6
<TABLE>
<CAPTION>
==================================================================================
           CONDITIONS                                        AMOUNT OF RATE
                                                               REDUCTION
   No Event of Default exists, and:              =================================
                                                 Contract Rate           LIBOR
                                                                     Contract Rate
==================================================================================
<S>                                              <C>                 <C>
Tangible Net Worth at December 31, 1995                              
equals or exceeds $16,000,000.00 and                                 
----------------------------------------------   One-quarter          One-half
Pretax Net Income at for fiscal year ending          of                  of
December 31, 1995 equals or exceeds              one percent         one percent
$6,000,000.00 and                                  (0.25%)             (0.5%)
----------------------------------------------                       
Leverage Ratio at December 31, 1995 does                             
not exceed 2.50 to 1.00.                                             
==================================================================================
</TABLE>

         Once achieved, any such reduction shall be permanent, subject to the
         other terms and conditions of this Agreement. Compliance with the
         above conditions shall be measured and determined according to the
         annual audited financial statements delivered to Lender under
         paragraph 6.5. Any such reduction shall be deemed effective as of the
         first day of the calendar month next following the calendar month in
         which such financial statements are delivered to Lender."

         3.7     Paragraph 2.5 ("Early Termination of Revolving Facility by
Borrower") hereby is amended and restated to read in its entirety as follows:

                 "EARLY TERMINATION OF REVOLVING FACILITY. Borrowers
         acknowledge that termination of the Revolving Facility at any time
         prior to expiration of the Contract Term would result in the loss by
         Lender of benefits under this Agreement, and that the damages incurred
         by Lender as a result of such termination would be difficult and
         impractical to ascertain. Therefore, in the event of termination of
         the Revolving Facility at any effective time prior to expiration of
         the Contract Term, then, for the privilege of any such termination and
         as a condition to the effectiveness thereof, Borrowers jointly and
         severally agree to pay to Lender a sum certain, as liquidated damages,
         equal to the following Applicable Percentage (herein defined) of the
         Revolving Credit Limit, which amount Borrowers and Lender acknowledge
         to be the best estimate of the amount necessary to fairly and
         reasonably compensate Lender for its damages resulting from such
         termination. As used herein, "Applicable Percentage" means one percent
         (1.0%), provided, that the Applicable Percentage shall automatically
         reduce by fifty-five one-thousandths percent (0.055%) beginning on
         January 18, 1996 and by like amounts on the numerically corresponding
         day of each subsequent calendar month thereafter. No such payment will
         be applicable with respect to (i) any reduction under the Revolving
         Facility which is a result of proceeds received by a Borrower through
         capital contributions or which does not result in early termination
         and total repayment of the Revolving Facility, (ii) renewal or
         refinancing of the Obligations by Lender, (iii) early termination of
         the Revolving Facility and total payment of the Obligations following
         any reduction in the advance rate generally applicable for determining
         the Company Borrowing Base or the Aggregate Borrowing Base (a) in
         respect of Eligible Accounts to an amount less than eighty percent
         (80%) or (b) in respect of Eligible Inventory to an amount less than
         forty-five percent (45%), provided that Borrowers notify Lender in
         writing of such intended termination within thirty (30) days following
         the effective date of any such reduction, and such termination and
         total payment are consummated within ninety (90) days after such
         effective date of reduction or (iv) early termination of the Revolving
         Facility and total payment of the Obligations following any
         notification by Lender of suspension of the LIBOR Option as provided
         by paragraph 2.2a, provided, that Borrowers notify Lender in writing
         of such intended termination within thirty (30) days following the
         effective date of any such suspension, and such termination and total
         payment are consummated within ninety (90) days after such effective
         date of suspension."

         3.8     A new Article IIA (entitled "Term Loan Facility") hereby is
added to the Financing and Security Agreement, immediately following the
conclusion of Article II ("Revolving Credit Facility"), which shall read in its
entirety as follows:

                          "ARTICLE IIA. TERM FACILITY

                 2A.1 LOANS. Subject to and on the terms and conditions
         provided in this Agreement, Lender hereby approves a loan in favor of
         each Borrower, secured by the Collateral, in an aggregate amount up to
         the lesser of (i) the Term Facility Borrowing Base applicable to each
         such Borrower or (ii) the Term Facility Credit Limit applicable to
         each such Borrower, respectively, provided, that the aggregate
         principal amount loaned to all Borrowers under the Term Facility shall
         not at any time exceed Two Million Five Hundred Thousand and no/l00
         dollars ($2,500,000.00). Each loan to a Borrower under the Term
         Facility, and all accrued interest thereon, shall be payable as
         provided in this Agreement





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<PAGE>   7
         and additionally evidenced by a Term Note executed by such Borrower.
         Each loan to a Borrower under the Term Facility shall be funded upon
         request of such Borrower and upon satisfaction of all requirements
         prescribed by paragraph 4.3 or at such other time as may be determined
         by mutual agreement.

                 2A.2 INTEREST. The unpaid principal from day to day
         outstanding under the Term Facility shall bear interest at the lesser
         of (i) the Contract Rate or (ii) the Maximum Rate, provided, however
         that, subject to the provisions of paragraph 9.10, in the event that
         the Contract Rate shall exceed the Maximum Rate at any time and
         thereafter the Contract Rate shall be less than the Maximum Rate, the
         rate of interest applicable hereunder shall remain at the Maximum Rate
         until the aggregate accrued interest to date under the Term Facility
         equals the amount that would have accrued had the Contract Rate at all
         times remained in effect. Interest shall be calculated on a 360
         day/year basis, subject to the Maximum Rate. All past due principal
         and all past due accrued interest under the Term Facility shall accrue
         interest at the Maximum Rate.

                 2A.3 REPAYMENT TERMS AND MATURITY. Accrued interest under the
         Term Facility shall be paid monthly on the last day of each calendar
         month during the time any loan thereunder is outstanding. Principal of
         each loan under the Term Facility shall be payable as follows: (i)
         equal monthly installments in an amount equal to the amount required
         to fully amortize the face principal amount of the Term Note
         evidencing same over the remaining term of a hypothetical amortization
         period of 120 months commencing on September 1, 1995, such monthly
         payments to begin on the later of September 1, 1995 or the first day
         of the calendar month next following the calendar month in which such
         Term Note is made effective, and continuing on the first day of each
         calendar month thereafter through and including July 1, 1997, (ii)
         followed by a final installment of all remaining unpaid principal on
         the last day of the Contract Term. Subject to Lender's rights under
         Article VIII, the Term Facility shall terminate and all outstanding
         principal, unpaid accrued interest and other obligations thereunder
         shall be due and payable in full on July 31, 1997. To the extent that
         any accrued interest or principal payment owing by any Borrower under
         the Term Facility is not paid on its due date as specified above,
         Lender may at its option (but with no obligation to do so), add the
         amount thereof to the unpaid principal due by such Borrower under the
         Revolving Facility, in which event such amount due under the Term
         Facility will be deemed paid and the aggregate amount thereof shall be
         treated as a loan to such Borrower under the Revolving Facility.

                 2A.4 MANDATORY INTERIM PRINCIPAL PAYMENTS. If at any time,
         from time to time, the unpaid principal amount outstanding and owing
         by a Borrower under the Term Facility exceeds the Term Facility
         Borrowing Base applicable to such Borrower then, within thirty (30)
         days following written request or demand by Lender, such Borrower
         shall make an immediate payment of principal in reduction of its loan
         under the Term Facility in an amount not less than the amount
         necessary to eliminate such excess as of the time of such payment. All
         such amounts, if any, payable by such Borrower shall be deemed to be
         payable on demand (subject to such thirty (30) day period), and Lender
         shall have the right at any time (after the expiration of such thirty
         (30) day period) (but no obligation) to charge such amount as a loan
         to such Borrower under the Revolving Facility, or offset same against
         any amount owing by Lender to such Borrower, without prior notice. If
         at any time, from time to time, the aggregate unpaid principal amount
         outstanding and owing by all Borrowers under the Term Facility exceeds
         the aggregate amount of $2,500,000.00, Borrowers jointly and severally
         agree to make an immediate payment of principal under the Term
         Facility in an amount not less than the amount of such excess, which
         may be applied by Lender in reduction of the Term Facility in Lender's
         discretion. All such amounts, if any, shall be deemed to be payable on
         demand, and Lender shall have the right (but no obligation) to charge
         such amount as a loan to any Borrower under the Revolving Facility, or
         offset same against any amount owing by Lender to any Borrower,
         without prior notice.

                 2A.5 AUTOMATIC MATURITY AND REQUIRED PAYMENT. Notwithstanding
         the foregoing, each loan under the Term Facility shall automatically
         mature and be due and payable in full, without notice, upon the
         earlier of (i) expiration of the Contract Term or (ii) any earlier
         termination of the Revolving Facility, in which event each Borrower
         agrees to pay all of its Obligations under Term Facility in ful1.

                 2A.6 PREPAYMENT. Any Borrower shall have the right at any time
         and from time to time to make prepayments on the principal amount
         borrowed under the Term Facility, in whole or in part, provided, that
         (i) all partial prepayments shall be applied in such manner as Lender
         may determine.

                 2A.7 PURPOSE AND USE OF FUNDS. The Term Facility shall be used
         for the following purpose: Refinancing of existing indebtedness.

         3.9     The first sentence of paragraph 3.6 ("Collateral Reports") is
amended to read as follows:

         "At such times and according to such frequency as may be determined by
         mutual agreement, and at such other times as Lender may request, each
         Borrower shall execute





                                       7
<PAGE>   8
         and deliver to Lender, in form satisfactory to Lender, a collateral
         report setting forth a certification of Eligible Accounts and Eligible
         Inventory, and calculation of its Company Borrowing Base, in form
         prescribed by Lender."

         3.10    The Financing and Security Agreement hereby is amended to add
a new paragraph 3.9a (entitled "Real Property Collateral"), immediately
following paragraph 3.9, which shall read in its entirety as follows:

         "3.9a REAL PROPERTY COLLATERAL. Diamond shall grant a deed of         
         trust lien or mortgage for the benefit of Lender covering the         
         Real Property Collateral, which at all times shall be                 
         maintained as a first priority deed of trust lien or mortgage         
         in favor of Lender, securing all of the Obligations, as               
         provided in the Real Property Collateral Documents. Prior to          
         funding under the Term Facility with respect to any Real              
         Property Collateral, Diamond shall provide Lender, at                 
         Borrower's expense, with (i) an environmental site assessment,        
         prepared by a credentialed environmental site consultant              
         acceptable to Lender and in form satisfactory to Lender,              
         confirming to Lender the status of compliance with                    
         Environmental Requirements with respect to such Real Property         
         Collateral, (ii) a mortgagee's policy of title insurance              
         written by a title insurance company acceptable to Lender and         
         in form satisfactory to Lender, containing no exceptions other        
         than as are acceptable to Lender and (iii) a boundary survey,         
         performed and certified to Lender by a credentialed registered        
         surveyor acceptable to Lender, and in form satisfactory to            
         Lender. As promptly as possible, Lender shall obtain an               
         updated appraisal of the Real Property Collateral, on a               
         valuation basis acceptable to Lender, prepared by a                   
         credentialed appraiser acceptable to Lender, and complying            
         with applicable law and in form satisfactory to Lender.               
         Lender may obtain an updated appraisal with respect to the            
         Real Property Collateral at such times as Lender may request          
         in order to comply with applicable law or internal policy             
         requirements. Diamond shall pay all reasonable costs and              
         expenses incurred by Lender in obtaining any and all such             
         updated appraisals."                                                  

         3.11    Paragraph 3.10 ("Guaranty") hereby is amended and restated to
read in its entirety as follows:

                 "3.10 GUARANTY. Guarantor shall execute and deliver to Lender
         a guaranty agreement, in form and substance satisfactory to Lender,
         pursuant to which Guarantor shall guarantee prompt payment and
         performance when due of all Obligations; provided, that in the event
         Borrowers meet the conditions for interest rate reduction prescribed
         by paragraph 2.2b, such guaranty shall be deemed released and
         discharged, in which event, upon Guarantor's written request and
         certification to Lender that Borrowers have met such conditions,
         Lender will execute and deliver to Guarantor a written release of such
         guaranty."

         3.12    The Financing and Security Agreement hereby is amended to add
a new paragraph 4.3 (entitled "Loans Under Term Facility"), immediately
following paragraph 4.1, which shall read in its entirety as follows:

                 "4.3 LOANS UNDER TERM FACILITY. As a condition to each loan to
         a Borrower under the Term Facility, each of the following requirements
         must be satisfied in Lender's discretion: (a) such Borrower shall be
         current with respect to the delivery of all items as required under
         paragraph 4.1, (b) the amount outstanding to such Borrower under the
         Term Facility, immediately following funding of the amount of loan
         requested, will not exceed the Term Facility Credit Limit or the Term
         Facility Borrowing Base applicable to such Borrower, and the aggregate
         amount outstanding to all Borrowers under the Term Facility shall not
         exceed $2,500,000.00, (c) Lender shall have received the Real Property
         Collateral Documents, and the items with respect thereto required by
         paragraph 3.9a, in form satisfactory to Lender, (d) all
         representations and warranties contained in Article III and Article V
         hereof shall be true, correct and complete in all material respects
         (as determined by Lender in its sole discretion), and (a) no Event of
         Default shall have occurred and be continuing, or shall result from
         such loan and no other event or condition which would be the subject
         of a required notice under paragraph 6.13 shall be in existence. Any
         request for funding under the Term Facility at a time when any of the
         foregoing requirements is not satisfied may be declined by Lender
         without prior notice."

         3.13    Subparagraph (a) of paragraph 6.22 ("Financial Covenants")
hereby is amended to add, or modify, the following, as noted:

                 (a)      Subparagraph (all ("Tangible Net Worth") is amended
                          to add the following, immediately after the last line
                          thereof:

<TABLE>
                          <S>                                    <C>
                          "December 31, 1995                     $12,000,000.00
                           December 31, 1996                     $16,000,000.00"
</TABLE>

                 (b)      Subparagraph (a)2 ("Leverage Ratio") is amended to
                          add the following, immediately after the last line
                          thereof:





                                       8
<PAGE>   9
<TABLE>                                                                      
                          <S>                                       <C>
                          "December 31, 1995                        2.75 to 1.0
                           December 31, 1996                        2.50 to 1.0
                           All subsequent periods                   2.25 to 1.0"
</TABLE>

                 (c)      Subparagraph (a)3 ("Capital Expenditures") is amended
                          to add the following, immediately after the last line
                          thereof:

<TABLE>
                          <S>                                       <C>
                          "Fiscal year ending December 31, 1995     $1,500,000.00
                           Fiscal year ending December 31, 1996     $2,000,000.00
                           Fiscal quarter ending July 31, 1997      $2,000,000.00"
</TABLE>

                 (d)      Subparagraph (a)4 ("Interest Coverage Ratio") is
                          amended to add the following, immediately after the
                          last line thereof:

<TABLE>
                          <S>                                       <C>
                          "December 31, 1995                        4.25 to 1.0
                           December 31, 1996                        4.50 to 1.0"
</TABLE>

                 (e)      Subparagraph (a)5 ("Net Income") is amended to add
                          the following, immediately after the last line
                          thereof:

<TABLE>
                          <S>                                       <C>
                          "Fiscal year ending December 31, 1995     $3,000,000.00
                           Fiscal year ending December 31, 1996     $4,000,000.00"
</TABLE>

         3.14    Subparagraph (h) and subparagraph (i) of paragraph 7.1 ("Event
of Default") of the Financing and Security Agreement hereby are amended and
restated to read in their entirety, respectively, as follows:

                 "(h)     The filing or commencement of any attachment,
                 sequestration, garnishment, execution or other action against
                 or with respect to any of the Collateral or the Real Property
                 Collateral involving an amount in controversy in excess of
                 $50,000.00;"

                 "(i)     The filing or commencement of any attachment,
                 sequestration, garnishment, execution or other action against
                 or with respect to any Borrower's property not included within
                 the Collateral or the Real Property Collateral if the amount in
                 controversy is excess of $100,000.00 or if the outcome,
                 pendency or effect thereof is reasonably expected to           
                 result in or cause a Material Adverse Effect;"
        
        3.15    Paragraph 9.1 ("Effective Date; Termination") of the Financing
and Security Agreement hereby is amended and restated to read in its entirety as
follows:

                 "9.1     EFFECTIVE DATE; TERMINATION. This Agreement shall
         become effective upon acceptance by Lender, as of the effective date
         specified in the preamble of this Agreement and, subject to all other
         provisions of the Loan Documents, shall continue in full force and
         effect through expiration of the Contract Term at which time the
         Revolving Facility and the Term Facility each shall terminate without
         further notice. Notwithstanding any termination or notice of
         termination, the Obligations and all rights and remedies of Lender
         hereunder with respect thereto, including without limitation all
         rights and remedies with respect to the Collateral shall remain in
         full force and effect until the Obligations have been paid in ful1."

         3.16    The amendments specified in this Article III are in addition
to, and shall be deemed to become effective simultaneously with, those
specified in Article II.

                              ARTICLE IV. GENERAL

         4.1     In consideration of this Third Amendment and increase of the
Credit Limit as provided herein, Borrowers jointly and severally agree to pay
to Lender a Credit Limit increase fee in the amount of $12,500.00 [which is
calculated by multiplying the sum of (i) the aggregate amount of increase of
the Credit Limit hereunder by one-half of one percent (.005%)], which shall be
payable upon execution hereof.

         4.2.    Contemporaneously upon execution of this Third Amendment, each
of the Ultrak Parties shall deliver to Lender: (i) a copy of corporate
resolutions (in form satisfactory to Lender) approving this Third Amendment,
authorizing the transactions contemplated hereby, and authorizing and directing
a named officer or officers to execute and deliver this Third Amendment and any
related documents contemplated hereby to be executed by such party, duly
adopted by the board of directors, accompanied by the certificate of the
corporate secretary, dated as of the Effective Date, that such copy is a true
and complete copy of resolutions duly adopted by the board of directors, and
that such resolutions have not been amended, modified, or revoked in any
respect and are in full force and effect as of the date hereof, (ii) an opinion
of counsel in form satisfactory to Lender and (iii) such related documents as
Lender may reasonably request in connection with this Third Amendment.





                                       9
<PAGE>   10
         4.3     Each of the Ultrak Parties represents that, as of the
Effective Date, ownership of the Ultrak Parties is as reflected in Exhibit "B"
attached hereto, each of the Ultrak Parties is in compliance with all
requirements under the Financing and Security Agreement and that no Event of
Default exists thereunder.

         4.4     The Ultrak Parties and Lender each represents to the other
that all necessary corporate action has been taken to authorize its execution
and performance of this Third Amendment.

         4.5     The Loan Documents, supplemented as provided herein, hereby
are ratified and confirmed as being and remaining valid and in full force and
effect in accordance with their respective terms, as so supplemented. As of the
Effective Date, all references in the Loan Documents to the Financing and
Security shall mean the Financing and Security Agreement as amended by this
Third Amendment.

         4.6     This Third Amendment (i) shall be deemed effective
prospectively as of the Effective Date, (ii) contains the entire agreement
among the parties and may not be amended or modified except in writing signed
by all parties, (iii) shall be governed and construed according to the laws of
the State of Texas and (iv) may be executed in any number of counterparts, each
of which shall be valid as an original and all of which shall be one and the
same agreement. A telecopy of any executed counterpart shall be deemed valid as
an original.

         THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
         PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
         CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE    
         ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
        
         EXECUTED and made effective as of the Effective Date.


                                        ULTRAK, INC.


                                        By: /s/ TIM D. TORNO
                                            ------------------------------------
                                            Tim D. Torno
                                            Vice President



                                        DENTAL VISION DIRECT, INC.


                                        By: /s/ TIM D. TORNO
                                            ------------------------------------
                                            Tim D. Torno
                                            Vice President



                                        JAK PACIFIC VIDEO WARRANTY AND REPAIR 
                                        SERVICES, INC.


                                        By: /s/ TIM D. TORNO
                                            ------------------------------------
                                            Tim D. Torno
                                            Vice President

                                        

                                        DIAMOND ELECTRONICS, INC.


                                        By: /s/ TIM D. TORNO
                                            ------------------------------------
                                            Tim D. Torno
                                            Vice President



                                        EXXIS TECHNOLOGIES, INC.


                                        By: /s/ TIM D. TORNO
                                            ------------------------------------
                                            Tim D. Torno
                                            Vice President



                                        NATIONSBANK OF TEXAS, N.A.


                                        By: /s/ FORREST W. MCCOLLUM
                                            ------------------------------------
                                            Forrest W. McCollum
                                            Vice President





                                       10
<PAGE>   11
                              CONSENT BY GUARANTOR

The undersigned hereby consents to the foregoing Third Amendment to Financing
and Security Agreement and confirms that the certain Guaranty by Individual
dated September 23, 1993 previously executed by the undersigned for the benefit
of Lender hereby is amended and restated as evidenced by the certain Amended
and Restated Guaranty by Individual of even date herewith executed by the
undersigned for the benefit of Lender.

                                        /s/ GEORGE K. BROADY
                                        ----------------------------------------
                                        George K. Broady, individually




THE STATE OF TEXAS        )
                          )
COUNTY OF DALLAS          )


         BEFORE ME, the undersigned authority, on this day personally appeared
Forrest W. McCollum, known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that the same
was the act of said NATIONSBANK OF TEXAS, N.A., and that he executed the same
for the purposes and considerations therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.


                                        /s/ SHERRI D. BENDER
                                        ----------------------------------------
                                        NOTARY PUBLIC, STATE OF TEXAS

My Commission Expires:
                                        Sherri D. Bender
-----------------------------           ----------------------------------------
          [SEAL]                        (Printed Name of Notary) 
      Sherri D. Bender
Notary Public, State of Texas
  My Comm. Expires 03/14/96



THE STATE OF TEXAS        )
                          )
COUNTY OF DALLAS          )

         BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said ULTRAK, INC. and that he executed the same for the purposes and
considerations therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.


                                        /s/ SHERRI D. BENDER
                                        ----------------------------------------
                                        NOTARY PUBLIC, STATE OF TEXAS

My Commission Expires:
                                        Sherri D. Bender
-----------------------------           ----------------------------------------
          [SEAL]                        (Printed Name of Notary) 
      Sherri D. Bender
Notary Public, State of Texas
  My Comm. Expires 03/14/96



THE STATE OF TEXAS        )
                          )
COUNTY OF DALLAS          )


         BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said DENTAL VISION DIRECT, INC., and that he executed the same for the
purposes and considerations therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.


                                        /s/ SHERRI D. BENDER
                                        ----------------------------------------
                                        NOTARY PUBLIC, STATE OF TEXAS

My Commission Expires:
                                        Sherri D. Bender
-----------------------------           ----------------------------------------
          [SEAL]                        (Printed Name of Notary) 
      Sherri D. Bender
Notary Public, State of Texas
  My Comm. Expires 03/14/96



                                       11
<PAGE>   12

THE STATE OF TEXAS        )
                          )
COUNTY OF DALLAS          )


         BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC., and that he
executed the same for the purposes and considerations therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.


                                        /s/ SHERRI D. BENDER
                                        ----------------------------------------
                                        NOTARY PUBLIC, STATE OF TEXAS

My Commission Expires:
                                        Sherri D. Bender
-----------------------------           ----------------------------------------
          [SEAL]                        (Printed Name of Notary) 
      Sherri D. Bender
Notary Public, State of Texas
  My Comm. Expires 03/14/96



THE STATE OF TEXAS        )
                          )
COUNTY OF DALLAS          )


         BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said DIAMOND ELECTRONICS, INC. and that he executed the same for the
purposes and considerations therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.


                                        /s/ SHERRI D. BENDER
                                        ----------------------------------------
                                        NOTARY PUBLIC, STATE OF TEXAS

My Commission Expires:
                                        Sherri D. Bender
-----------------------------           ----------------------------------------
          [SEAL]                        (Printed Name of Notary) 
      Sherri D. Bender
Notary Public, State of Texas
  My Comm. Expires 03/14/96



THE STATE OF TEXAS        )
                          )
COUNTY OF DALLAS          )


         BEFORE ME, the undersigned authority, on this day personally appeared
Tim D. Torno, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that the same was the act
of said EXXIS TECHNOLOGIES, INC., and that he executed the same for the
purposes and considerations therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.


                                        /s/ SHERRI D. BENDER
                                        ----------------------------------------
                                        NOTARY PUBLIC, STATE OF TEXAS

My Commission Expires:
                                        Sherri D. Bender
-----------------------------           ----------------------------------------
          [SEAL]                        (Printed Name of Notary) 
      Sherri D. Bender
Notary Public, State of Texas
  My Comm. Expires 03/14/96



THE STATE OF TEXAS        )
                          )
COUNTY OF DALLAS          )


         BEFORE ME, the undersigned authority, on this day personally appeared
GEORGE K. BROADY, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and considerations therein expressed.

         GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 18th day of July, 1995.


                                        /s/ JEANETTE COURTRIGHT
                                        ----------------------------------------
                                        NOTARY PUBLIC, STATE OF TEXAS
My Commission Expires:

         10/1/97                        Jeanette Courtright
-----------------------------           ----------------------------------------
                                        (Printed Name of Notary) 



                                       12
<PAGE>   13

                                  EXHIBIT "A"
                                       TO
             THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT

             ---------------------------------------------------

                                 EXHIBIT 3.4
                       FINANCING AND SECURITY AGREEMENT
                                    AMONG
                          NATIONSBANK OF TEXAS, N.A.
                                ULTRAK, INC.,
                          DENTAL VISION DIRECT INC.,
                          DIAMOND ELECTRONICS, INC.,
                        EXXIS TECHNOLOGIES, INC., and
             JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.




                            Locations of Collateral

All Inventory and Equipment owned by each Borrower is located at the following
locations:

<TABLE>
<CAPTION>
=============================================================================================================================
ADDRESS OF LOCATION                                       COUNTY                                 OWNED OR LEASED
                                                                                          [IF LEASED, NAME OF LANDLORD]
=============================================================================================================================
<S>                                <C>                                                    <C>
                                                       ULTRAK, INC.
=============================================================================================================================
1220 Champion Circle, Suite 100                           Dallas                                     Leased
Carrollton, Texas 75006                                                                      Champion Circle/TCEP II
                                                                                                  Joint Venture
-----------------------------------------------------------------------------------------------------------------------------
2400 Industrial Lane                                      Boulder                                    Leased
Broomfield, Colorado 80020                                                                Superior Investments I, Inc.
-----------------------------------------------------------------------------------------------------------------------------
913 Commerce Drive                                     Anne Arundel                                  Leased
Annapolis, Maryland 21401                                                                    Annapolis Commerce Park
                                                                                               Limited Partnership
-----------------------------------------------------------------------------------------------------------------------------
1323 Butterfield Road, Suite 110                          DuPage                                     Leased
Downers Grove, Illinois 60515                                                               Gottlieb Properties, Inc.
=============================================================================================================================
                                                DENTAL VISION DIRECT, INC.
=============================================================================================================================
1220 Champion Circle, Suite 100                           Dallas                                      Leased        
Carrollton, Texas 75006                                                                      Champion Circle/TCEP II
                                                                                                  Joint Venture     
=============================================================================================================================
                                                 DIAMOND ELECTRONICS, INC.
=============================================================================================================================
4465 Coonpath Road                                       Fairfield                                    Owned
Carroll, Ohio 43112
=============================================================================================================================
                                                 EXXIS TECHNOLOGIES, INC.
=============================================================================================================================
1220 Champion Circle, Suite 100                           Dallas                                      Leased        
Carrollton, Texas 75006                                                                      Champion Circle/TCEP II
                                                                                                  Joint Venture     
=============================================================================================================================
                                   JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.
=============================================================================================================================
2300 Stowe Drive, Suite C                                San Diego                                   Leased        
Poway, CA 92064                                                                               Poway Industrial Park
=============================================================================================================================
</TABLE>





                                       13
<PAGE>   14

                                  EXHIBIT "B"
                                       TO
              THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT

              ---------------------------------------------------

                                  EXHIBIT 5.6
                        FINANCING AND SECURITY AGREEMENT
                                     AMONG
                           NATIONSBANK OF TEXAS, N.A.
                                 ULTRAK, INC.,
                           DENTAL VISION DIRECT INC.,
                           DIAMOND ELECTRONICS, INC.,
                         EXXIS TECHNOLOGIES, INC., and
              JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.




                                Share Ownership

Ownership:

Ultrak, Inc. is publicly owned. Thirty two and 38/100 percent 132.38%) of the
Voting Stock of Ultrak, Inc. and one hundred percent (100%) of the convertible
preferred stock are owned of record and beneficially by George K. Broady.

One hundred percent (100%) of the Voting Stock of Diamond Electronics, Inc. is
owned of record and beneficially by Ultrak, Inc.

One hundred percent (100%) of the Voting Stock of Dental Vision Direct, Inc. is
owned of record and beneficially by Ultrak, Inc.

Eighty percent (80%) of the Voting Stock of JAK Pacific Video Warranty and
Repair Services, Inc. is owned of record and beneficially by Ultrak, Inc. The
balance of such Voting Stock is owned by Abeer Risheq, an individua1.

Stock options, warrants, etc.:

Ultrak, Inc:

         1.    Non-qualified Employee Stock Option Plan - up to 833,334 shares
               of no par common stock at varying exercise prices.

         2.    Convertible Preferred Stock - convertible into 406,981 shares
               of no par common stock.

         3.    Petrus Warrants - pursuant to the 1992 loan agreement, as
               amended, 200,000 warrants issued to the Petrus Fund, Ltd.,
               convertible into 200,000 shares of no par common stock





                                       14
<PAGE>   15
                                  EXHIBIT "C"
                                       TO
              THIRD AMENDMENT TO FINANCING AND SECURITY AGREEMENT

              ---------------------------------------------------

                                 EXHIBIT 1.51a
                        FINANCING AND SECURITY AGREEMENT
                                     AMONG
                           NATIONSBANK OF TEXAS, N.A.
                                 ULTRAK, INC.,
                           DENTAL VISION DIRECT INC.,
                           DIAMOND ELECTRONICS, INC.,
                         EXXIS TECHNOLOGIES, INC., and
              JAK PACIFIC VIDEO WARRANTY AND REPAIR SERVICES, INC.





                           Real Property Collatera1.





                                       15
<PAGE>   16
                                  EXHIBIT "A"

                                    The Land

Parcel I: Situated in the State of Ohio, County of Fairfield, in the Township
of Greenfield:

         Being Lot Number Two (2), in AMENDED PLAT OF GREENFIELD CROSSROADS, as
         the same is numbered and delineated upon the recorded Plat thereof, of
         record in Plat Book 11, Page 4, Recorder's Office, Fairfield County,
         Ohio.

Parcel II: Situated in the State of Ohio, County of Fairfield, in the Township
of Greenfield:

         Being Lot Number Five (5), in AMENDED PLAT OF GREENFIELD CROSSROADS,
         as the same is numbered and delineated upon the recorded Plat thereof,
         of record in Plat Book 11, Page 4, Recorder's Office, Fairfield
         County, Ohio.

Parcel III:

         Easement from the County Commissioners of Fairfield County, Ohio, to
         Arvin Industries, Inc., dated June 24, 1974, received for record June
         26, 1974, at 1:50 a.m., and recorded in Volume 439, Page 240, records
         of Deeds, Fairfield County, Ohio.