1
EXHIBIT 10.63
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into November 7, 1996 (the
"Agreement") between Integrated Security Systems, Inc. a Delaware corporation
(the "Buyer") and X. Xxxx Xxxxxxx, residing in Denton, Texas (the "Seller").
WHEREAS, Seller is the owner of 1000 shares of common stock of Xxxxxxx
Company, a Texas corporation ("Xxxxxxx"), par value $1.00 per share, such 1000
shares being all of the issued and outstanding stock of Xxxxxxx (such shares
being referred to as the "Stock"), and
WHEREAS, Buyer desires to purchase and Seller desires to sell the Stock;
WHEREAS, this Agreement shall supercede and replace the Stock Purchase
Agreement entered into on September 5, 1996 between Buyer and Seller, as
subsequently amended pursuant to an Amendment to Stock Purchase Agreement dated
October 21, 1996 between Buyer and Seller;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth in this Agreement, and intending to be legally bound, the parties agree
as follows:
1. Sale of Stock.
1.1 The Sale. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as hereinafter defined), Seller agrees to sell the
Stock to Buyer, free and clear of all liens, claims and encumbrance of every
kind, and Buyer agrees to purchase the Stock from Seller.
1.2 Purchase Price and Payment.
1.2.1 Purchase Price. The total purchase price to be paid to the
Seller for the Stock shall be equal to Five Million Eight Hundred and Ten
Thousand Dollars ($5,810,000.00).
1.2.2 Adjustments to Purchase Price.
(a) Reduction. The Purchase Price shall be reduced by the sum
of paragraphs 1.2.2 (a) (1) and 1.2.2 (a) (2):
(1) the sums of the following principal amounts owed by
Xxxxxxx (excluding any prepayment penalties and interest) on the day prior to
the Closing Date:
(i) Notes Payable - Current;
(ii) Note Payable - USL Capital;
(iii) Note Payable - USL Capital #2;
(iv) Note Payable - GNB;
(v) Note Payable - GNB #2;
(vi) Note Payable - Pilot Point; and
(vii) any other amounts owed for borrowed funds as
may exist on the day prior to the Closing Date; and
(2) Five Hundred Thousand Dollars ($500,000.00) of the
amounts due under the Consulting Agreement and Covenant Not to Compete between
Xxxxxxx and Seller in the form attached hereto, the Consulting Agreement and
Covenant Not to Compete between Xxxxxxx and Xxxxxx Xxxxxxx Xxxxxxxx
("Xxxxxxxx") in the form attached hereto, and the Covenant Not to Compete
between Xxxxxxx and MPA Modular, L.L.C., Texas limited liability company ("MPA
Modular") in the form attached hereto. The three agreements mentioned in the
preceding sentence are referred to in this Agreement as the (the "Noncompete
Agreements").
STOCK PURCHASE AGREEMENT - Page 1
2
(b) Increase. The Purchase Price shall be increased by the
greater of the following:
(1) $50,000.00; and
(2) $2,500.00 multiplied by the number of days from and
including October 24, 1996 through and including the Closing Date.
1.2.3 Payment of Purchase Price. Payment of the Purchase Price
determined under paragraphs 1.2.1 and 1.2.2 above shall be paid at the Closing,
on the Closing Date as follows:
(a) One Million Five Hundred Thousand Dollars ($1,500,000.00)
of the Purchase Price shall be satisfied by Buyer's execution, delivery to
Seller at Closing, and payment of a Secured Promissory Note (the "Note") in the
original principal amount of One Million Five Hundred Thousand Dollars
($1,500,000.00). The Note shall be in the form attached hereto and the Note
shall be dated as of the Closing Date; and
(b) The balance of the Purchase Price shall be paid by a bank
cashier's check, wire transfer or other immediately available funds acceptable
to Seller.
1.2.4 Security. Payment of the Note shall be secured by the
following:
(a) a Vendor's Lien retained in the deed to be executed and
delivered by Xxxxxxx Family Partners, Ltd. (the "Partnership") to Buyer at the
closing of the transaction contemplated by the Real Estate Purchase Agreement
(herein so called) which is incorporated herein by reference;
(b) a Deed of Trust (herein so called) to be executed and
delivered by Xxxxxxx at Closing, such Deed of Trust to be in the form attached
hereto;
(c) a Security Agreement (herein so called) to be executed and
delivered by Xxxxxxx, as debtor, and Seller, as secured party, such Security
Agreement to be in the form attached hereto.
2. Closing.
2.1 Initial Closing Date. The purchase and sale of the stock shall take
place at a closing (the "Closing") to be held at the offices of Xxxxxxxx & Co.,
Dallas, Texas, at 10:00 A.M., local time, on such date as the parties may
mutually agree upon but in any event not later than December 16, 1996. The date
on which the Closing shall take place, as it may be extended pursuant to
paragraph 2.2, is referred to in this Agreement as the "Closing Date."
2.2 Extended Closing Date. Buyer shall have the right to extend the Closing
Date as provided in this paragraph 2.2.
(a) First Extension. Buyer shall have the right to extend the
Closing Date up to January 15, 1997 by giving Seller written notice of its
intention to do on or before December 16, 1996 (and time is of the essence).
The written notice must be accompanied by a bank cashier's check payable to
Seller in the amount of $82,500.00. If Seller fails to receive the written
notice and the $82,500 bank cashier's check on or before December 16, 1996,
this Agreement shall automatically terminate.
STOCK PURCHASE AGREEMENT - Page 2
3
(b) Second Extension. Only if Buyer has extended the Closing
Date to January 15, 1997 in the manner described in paragraph 2.2 (a), Buyer
shall have the right to extend the Closing Date up to February 15, 1997 by
giving Seller written notice of its intention to do on or before January 15,
1997 (and time is of the essence). The written notice must be accompanied by a
bank cashier's check payable to Seller in the amount of $77,500.00. If Seller
fails to receive the written notice and the $77,500 bank cashier's check on or
before January 15, 1997, this Agreement shall automatically terminate.
2.3 Xxxxxxx Money. On or before 5 p.m. (local time) on November 15, 1996
(and time is of the essence), Buyer agrees to deliver to Seller the sum of
Fifty Thousand Dollars ($50,000.00) in the form of a bank cashier's check (the
"Xxxxxxx Money") to be retained by Seller in accordance with the terms of this
paragraph. If Buyer fails to deliver the Xxxxxxx Money as provided, this
Agreement shall automatically terminate. The $82,500 referred to in paragraph
2.2 (a) and the $77,500 referred to in paragraph 2.2 (b) shall be considered
additional "Xxxxxxx Money". If the purchase and sale contemplated by this
Agreement is consummated, then all Xxxxxxx Money paid to Seller shall be
applied to the cash portion of the Purchase Price at the Closing. In all other
events, the Xxxxxxx Money is not refundable under any circumstances and shall
retained by Seller as liquidated damages and not as a penalty.
3. Representation and Warranties of Seller.
Seller hereby represents and warrants to Buyer as follows:
3.1 Power and Authorization. Seller has full power and lawful authority to
execute and deliver this Agreement and to consummate and perform the
transactions contemplated hereby. The execution and delivery of this Agreement
and the Related Documents by Seller constitutes the valid obligation of Seller,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and other laws affecting the rights of creditors
generally and to the availability of equitable remedies. As used in this
Agreement, "Related Documents" means the Real Estate Purchase Agreement, the
Note, the Deed of Trust, the Security Agreement, the Noncompete Agreements, the
Guarantys, the Right of First Refusal Agreement (as defined), and the Offset
Agreement (as defined). At Closing, Seller shall deliver to Buyer documents
evidencing the authorization required by this paragraph, said documents to be
certified as true and correct by Seller.
3.2 Compliance. No approval or consent of any federal, state, county, local
or other governmental agency or body is required in connection with the
execution, delivery, consummation and performance of this Agreement by Seller.
The execution, delivery, consummation and performance of this Agreement by
Seller will not conflict with or result in the breach or violation of any term
or provision of, or constitute a default under, or cause the acceleration of
any payments pursuant to, any indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which Seller is a party or any
order, statute, writ, injunction, decree, rule by regulation of any court or
any governmental agency or body.
3.3 Ownership of Stock. Seller is beneficial and record owner of all of the
Stock, there exists no voting agreement, voting trust, or proxy with respect to
any shares of the Stock; and the Stock is owned by Seller free and clear of any
liens, claims or encumbrances. There are no actions, suits, or proceedings at
law or in equity pending, threatened against or affecting, Seller's ownership
of the Stock. The Stock is validly issued, fully paid and nonassessable. The
Stock represents all of the issued and outstanding shares of Xxxxxxx.
3.4 Good Title. The sale by Seller of the Stock and the delivery to Buyer
of the certificate evidencing ownership of the Stock pursuant hereto will
transfer to Buyer good and valid title to the Stock free and clear of all
liens, claims and encumbrances.
STOCK PURCHASE AGREEMENT - Page 3
4
3.5 Xxxxxxx Ownership of Assets. All of the assets, tangible and
intangible, which are used at the time of the execution of this Agreement by
Xxxxxxx in the normal conduct of its business will be owned by Xxxxxxx at
Closing, except for (a) the improved real estate which is the subject of the
Real Estate Purchase Agreement; and (b) assets which are consumed or sold in
the normal course of its business. Additionally, at Closing Seller will
transfer to Xxxxxxx the assets listed on Leased Assets Schedule attached hereto
in exchange for Xxxxxxx'x transfer to Seller at Closing of the items listed on
Exchanged Personal Assets Schedule attached hereto.
3.6 Exclusivity to Buy and Access to Information. From the Effective Date
until the sooner to occur of the Closing or the earlier termination of this
Agreement, Seller shall not enter into any agreements or understandings with
other parties concerning the sale of all or part of the stock or assets of
Xxxxxxx and will not discuss or negotiate with, or disclose any information
regarding Xxxxxxx, or this Agreement, to any parties except as may be
reasonably necessary in Seller's opinion in the ordinary conduct of Xxxxxxx'x
business or as may be reasonably necessary in Seller's opinion to consummate
the Closing as defined in this Agreement.
3.7 Organization and Good Standing. Seller represents that the Xxxxxxx is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas.
3.8 Financial Statements. Seller has delivered to Buyer copies of the June
30, 1996 financial statements of Xxxxxxx and (except for vacation and warranty
expense accounting) such financial statements fairly represent the financial
condition and results of operations of Xxxxxxx as of such date and have been
prepared in accordance with federal income tax accounting principals applied on
a basis consistent with that of prior periods, except as changed to conform
with Internal Revenue Service requirements, and as of the date hereof, there
are no obligations, liabilities or indebtedness (including contingent and
indirect liabilities and obligations) of Xxxxxxx which are (separately or in
the aggregate) material and not reflected in such financial statements or
otherwise disclosed therein.
3.9 Full Disclosure. To the best of Seller's knowledge, there is no
material fact that Seller has not disclosed to Buyer which could have a
material adverse effect on the properties, business prospects or condition
(financial or otherwise) of Xxxxxxx. Seller has not omitted to state any
material fact necessary to keep the statements contained herein from being
misleading.
3.10 No Litigation. To the best of Seller's knowledge, there are no
actions, suits, investigations, arbitrations or administrative proceedings
pending or threatened, except for possible claims by Xxxxxx Xxxx.
3.11 Disclosure. No representation or warranty made by Seller to Buyer, nor
any statement or information furnished to Buyer relating to this Agreement and
the Related Documents contained or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to make
the statements contained in this Agreement and the Related Documents or the
information furnished to Buyer not misleading.
3.12 No Other Representations or Warranties. Except for the representations
and warranties expressly stated in this Agreement, Seller makes no other
representations or warranties, express or implied. Buyer acknowledges it has
not relied on any representation or warranty, express or implied, except
Seller's representations and warranties expressly stated in this Agreement.
Accordingly, Buyer releases Seller from all claims, damages, costs or expenses
based on any representation or warranty, express or implied, except for
Seller's representations and warranties expressly stated in this Agreement.
Buyer agrees never to assert any claims against Seller (or Xxxxxxx'x officers
and directors) based on use of corporate funds, except only (a) claims of use
of corporate funds for illegal acts or moral turpitude, if any, and (b) claims
based on the representation contained in paragraph 3.8 of this Agreement.
4. Representations and Warranties of Buyer.
Buyer hereby represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
STOCK PURCHASE AGREEMENT - Page 4
5
4.2 Corporate Power and Authorization. Buyer has full power and lawful
authority to execute and deliver this Agreement and Related Documents, and to
consummate and perform the transactions contemplated thereby. The execution and
delivery of this Agreement and the Related Documents by Buyer and the
consummation and performance of the transactions contemplated thereby have been
duly and validly authorized by all necessary corporate and other proceedings,
and this Agreement and the Related Documents constitute (or, upon execution,
will constitute) valid obligations of Buyer, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
moratorium and other laws affecting the rights of creditors generally and to
the availability of equitable remedies. At Closing, Buyer shall deliver to
Seller documents evidencing the authorization required by this paragraph, said
documents to be certified as true and correct by Buyer's Secretary.
4.3 Compliance. No approval or consent of any federal, state, county, local
or other governmental agency or body is required in connection with the
execution, delivery, consummation and performance of this Agreement and Related
Documents by Buyer. The execution, delivery, consummation and performance of
this Agreement and the Related Documents by Buyer, will not conflict with or
result in the breach or violation of any term or provision of, or constitute a
default under, or cause the acceleration of any payments pursuant to, the
articles of incorporation or bylaws of Buyer or any indenture, mortgage, deed
of trust, note agreement or other agreement or instrument to which Buyer or the
Company in a party or any statute, order, writ, injunction, decree, rule or
regulation of any court or any governmental agency or body.
4.4 Disclosure. No representation or warranty made by Buyer to Seller, nor
any statement or information furnished to Seller relating to this Agreement and
the Related Documents contained or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to make
the statements contained in this Agreement and the Related Documents or the
information furnished to Seller not misleading.
4.5 No Other Representations or Warranties. Except for the representations
and warranties expressly stated in this Agreement, Buyer makes no other
representations or warranties, express or implied. Seller acknowledges it has
not relied on any representation or warranty, express or implied, except
Buyer's representations and warranties expressly stated in this Agreement.
Accordingly, Seller releases Buyer from all claims, damages, costs or expenses
based on any representation or warranty, express or implied, except for Buyer's
representations and warranties expressly stated in this Agreement.
5. Seller's Conditions Precedent. The obligation of Seller to consummate the
transactions contemplated hereby shall be subject to and conditioned upon the
satisfaction, on or before the Closing, of all of the following conditions, any
one or more of which may be waived by Seller:
5.1 Correctness of Warranties. All of the representations and warranties of
Buyer set forth in this Agreement shall be true on and as of the Closing Date
as though such representations and warranties were made on and as of the
Closing Date.
5.2 Performance of Obligations. Buyer shall have performed and complied
with all the obligations, covenants and conditions required to be performed or
complied with by Buyer at or prior to the Closing.
5.3 Officer's Certificate. Seller shall have received a certificate of
Buyer, dated the Closing Date, duly executed by its President, in a form
reasonably acceptable to Seller, to the effect that all representations and
warranties of Buyer set forth in this Agreement and the Related Documents shall
be true and correct as of the Closing Date as if made on the Closing Date.
STOCK PURCHASE AGREEMENT - Page 5
6
5.4 Opinion of Counsel. Seller shall have received from Xxxxxx X. Xxxxxxxx,
Xx., Esq., counsel to Buyer, an opinion addressed to Seller, dated the Closing
Date, in a form reasonably acceptable to Seller.
5.5 Payment and Delivery. Buyer shall have paid or caused to be paid to
Seller the Purchase Price as determined in paragraph 1.2 hereof. Buyer shall
have delivered or caused to be delivered to Seller all documents required to be
delivered pursuant to this Agreement, including, without limitation, the Note,
the Deed of Trust, the Security Agreement, the Noncompete Agreements and the
Guarantys (as defined).
5.6 No Actions. No action, suit or proceeding shall have been instituted
before a court or governmental body, or instituted or threatened by any
governmental body or agency, to restrain or prevent the carrying out of the
transactions contemplated hereby.
5.7 Releases. Seller shall have received unconditional final written
releases (in a form satisfactory to Seller) of all Xxxxxxx obligations for
which Seller is personally liable. If any such releases are not received prior
to or at Closing, then Buyer shall have given Seller unconditional written
indemnifications by Buyer (in a form satisfactory to Seller) for all Xxxxxxx
obligations for which Seller is personally liable.
5.8 Real Estate Purchase Agreement. The obligation of Seller to consummate
the transaction contemplated by this Agreement (and the Related Documents) is
expressly subject to the simultaneous closing of the transaction contemplated
by the Real Estate Purchase Agreement.
6. Buyer's Conditions Precedent.
The obligation of Buyer to consummate the transactions contemplated hereby
shall be subject to and conditioned upon the satisfaction, on or before the
Closing, of all of the following conditions, any one or more of which may be
waived by Buyer:
6.1 Correctness of Warranties. All of the representations and warranties of
Seller set forth in the Agreement shall be true on and as of the Closing Date
as though such representations and warranties were made on and as of the
Closing Date.
6.2 Performance of Obligations. Seller shall have performed and complied
with all of the obligations, covenants and conditions required to be performed
or complied with by them at or prior to the Closing.
6.3 Certificate. Buyer shall have received a certificate of Seller, dated
the Closing Date duly executed in a form reasonably acceptable to Buyer, to the
effect that all representations and warranties of Seller set forth in this
Agreement are true and correct as of the Closing Date as if made on the Closing
Date and that the business of Xxxxxxx prior to Closing has been conducted in
accordance with paragraph 10 hereof.
6.4 Opinion of Counsel. Buyer shall have received from Xxxxxxxx Xxxxxx,
counsel to Seller, an opinion addressed to Buyer, dated the Closing Date, in a
form reasonably acceptable to Buyer.
6.5 Delivery of Stock Certificate. Seller shall have presented certificate
or certificates representing the Stock endorsed in blank or accompanied by
executed stock powers in favor of Buyer.
STOCK PURCHASE AGREEMENT - Page 6
7
6.6 No Actions. No action, suit or proceeding shall have been instituted
before a court or governmental body, or instituted or threatened by any
governmental body or agency, to restrain or prevent the carrying out of the
transactions contemplated hereby.
6.7 Condition on Closing Date. The assets, liabilities and operations of
Xxxxxxx on the Closing date shall be consistent with the June 30, 1996
unaudited financial statements of Xxxxxxx previously furnished to Buyer, which
were prepared from the books and records of the Company in accordance with
generally accepted federal income tax accounting principles, except for the
following:
(a) Changes that have occurred as a result of operations conducted
in accordance with paragraph 10 hereof;
(b) Changes that have occurred as a result of adjustments
necessary to conform the financial statements to generally accepted accounting
principles as determined by Price Waterhouse LLP or another independent
accountant acceptable to Buyer; and
(c) All amounts due under the Promissory Note in the original
principal amount of $735,849.38 and dated October 24, 1996 executed by the
Partnership and payable to the order of Xxxxxxx have been paid in full.
6.8 Noncompete Agreement. Seller, Xxxxxxxx, and MPA Modular, shall each
have executed the Noncompete Agreements. Buyer agrees that each of the
Noncompete Agreements will be guaranteed by Buyer by its execution and delivery
to Seller, Xxxxxxxx and MPA Modular at Closing of the three Guaranty Agreements
(the "Guarantys") in the forms attached hereto.
6.9 Real Estate Purchase Agreement. The obligation of Buyer to consummate
the transaction contemplated by this Agreement (and the Related Documents) is
expressly subject to the simultaneous closing of the transaction contemplated
by the Real Estate Purchase Agreement.
6.10 Release of Claims by Certain Employees. Seller shall deliver releases
acceptable to Buyer from employees who have, to Seller's knowledge, prior to
the Closing Date, threatened Xxxxxxx with actions, suits, litigation or
administrative proceedings against Xxxxxxx, its officers or directors;
provided, however, if for any reason Seller does not deliver an acceptable
release from Xxxxxx Xxxx with respect to claims asserted by her, Buyer agrees
to waive the requirement of such a release in consideration of Seller's
agreement to indemnify Buyer from such claims as provided in paragraph 7.1 (b)
of this Agreement.
6.11 Resignations. All directors and officers of Xxxxxxx shall each have
resigned, effective as of the time of, but subject to, Closing.
6.12 Audit. An audit of Xxxxxxx'x financial statements by Price Waterhouse
LLP or another independent accountant acceptable to Buyer shall have been
completed and the results of said audit are satisfactory to Buyer. Buyer, in
its sole judgment, shall determine if this condition precedent is fulfilled.
6.13 Funds Available. Buyer shall have funds available in an amount
sufficient to pay the Purchase Price at the Closing of this Agreement. Buyer
shall, in its sole discretion, determine whether or not this condition
precedent has been fulfilled.
6.14 Right of First Refusal Agreement. Seller, the Partnership and MPA
Modular shall have executed the Right of First Refusal Agreement (herein so
called) substantially in the form
STOCK PURCHASE AGREEMENT - Page 7
8
attached hereto granting to Buyer the subordinate right of first refusal to
purchase the assets or ownership units of MPA Modular.
6.15 Offset Agreement. Seller, Buyer and Xxxxxxx shall have executed the
Offset Agreement (herein so called) substantially in the form attached hereto.
6.16 Insurance Purchase. Seller shall have purchased from Xxxxxxx all
right, title and interest of Xxxxxxx in the Life Insurance Policy insuring
Seller's life for a total consideration equal to the cash surrender value of
the policy at the date of Closing.
7. Indemnification.
7.1 Indemnification by Seller.
(a) General. Subject to subparagraph 7.3 and paragraph 11.1 below,
Seller shall protect, defend, indemnify and hold harmless Buyer and its
officers, directors and stockholders against any claims, causes of action,
losses, damages, liabilities and expenses whatsoever (including reasonable
counsel fees, costs and expenses incurred in defending against the assertion of
claims or liabilities) which may be sustained, suffered, or incurred by any of
them arising out of or in connection with the breach of any representation,
warranty, covenants, or other obligation of Seller contained in this Agreement
and the Related Documents.
(b) Xxxxxx Xxxx Claims. If for any reason Seller does not deliver
an acceptable release from Xxxxxx Xxxx pursuant to paragraph 6.10 of this
Agreement with respect to claims asserted by her, then subject to subparagraph
7.3 and paragraph 11.1 below, Seller agrees to protect, defend, indemnify and
hold Buyer and its officers, directors and stockholders against any claims,
causes of action, losses, damages, liabilities and expenses whatsoever
(including reasonable counsel fees, costs and expenses incurred in defending
against the assertion of such claims or liabilities) which may be sustained,
suffered or incurred by any of them arising out of or in connection with claims
asserted by Xxxxxx Xxxx against Xxxxxxx based on facts and events which
occurred prior to Closing.
7.2 Indemnification by Buyer. Subject to subparagraph 7.3 and paragraph
11.1 below, Buyer shall protect, defend, indemnify and hold harmless Seller,
his heirs and personal representatives against any claims, causes of action,
losses, damages, liabilities and expenses whatsoever (including reasonable
counsel fees, costs and expenses incurred in defending against the assertion of
claims or liabilities) which may be sustained, suffered, or incurred by any of
them arising out of or in connection with the breach of any representation,
warranty, covenant, or other obligation of Buyer contained in this Agreement
and the Related Documents.
7.3 Notice and Participation.
(a) If a claim by third party is made against a party entitled to
indemnification pursuant to paragraph 7 (an "Indemnitee"), and if such
Indemnitee intends to seek indemnity with respect thereto under this paragraph
7, the Indemnitee shall promptly, and in any event within 60 days after the
assertion of any claim or the discovery of any fact upon which Indemnitee
intends to base a claim for indemnification under this Agreement (a "Claim"),
notify the party from whom indemnification is sought (an "Indemnitor") of such
Claim. In the event of any Claim, Indemnitor, at its option, may assume (with
legal counsel reasonably acceptable to the Indemnitee) the defense of any
claim, demand, lawsuit or other proceeding in connection with the Indemnitee's
Claim, and may assert any defense of Indemnitee or Indemnitor; provided, that
Indemnitee shall have the right at its own expense to participate jointly with
Indemnitor in the defense of any claim, demand, lawsuit or other proceeding in
connection with the Indemnitee's Claim and provided further that failure to
give such notice shall not preclude Indemnitee making any Claim thereon if the
failure or delay in giving such notice did not prejudice Indemnitee. If
Indemnitor elects to undertake the defense of any Claim hereunder, Indemnitee
shall cooperate with Indemnitor to the fullest extent possible in regard to all
matters relating to the Claim (including, without limitation, corrective
actions required by applicable law, assertion of defenses and the
determination, mitigation, negotiation and settlement of all amounts, costs,
actions, penalties, damages and the like related thereto) so as to permit
Indemnitor's management of same with regard to the amount of damages payable by
the Indemnitor hereunder. Neither Seller not Buyer shall be entitled to settle
any Claim without the prior written consent of the other, which consent shall
not unreasonably be withheld.
STOCK PURCHASE AGREEMENT - Page 8
9
(b) If the Indemnitor undertakes, conducts or controls the defense or
settlement of any Claim and it is later determined that such Claim was not a
Claim for which the Indemnitor is required to Indemnify the Indemnitee under
this paragraph 7, the Indemnitee shall reimburse the Indemnitor for all its
costs and expenses with respect to such settlement or defense, including
reasonable attorneys' fees and disbursements. 8. Legal Fees.
In any action, suit or proceeding brought by any party to this Agreement
against any other party or parties hereto to enforce its rights hereunder, the
court or other body before which such action, suit or proceeding is brought may
award reasonable attorneys' fees to the prevailing party.
9. Termination.
In the event that the Closing has not taken place on or before the Closing
Date (as it may be extended), either party hereto may, by written notice given
to the other, terminate this Agreement. Upon any termination of this Agreement
pursuant to this paragraph 9, this Agreement shall cease to have any further
force or effect and no party hereto shall have any liability to the other
hereunder of any nature whatsoever except as stated in paragraph 11.13 of this
Agreement.
10. Conduct of Business Prior to Closing.
Except with the consent in writing of Buyer, which will not be unreasonably
withheld or delayed and except as may be required to effect the transactions
contemplated by this Agreement, Seller covenants, between the date of this
Agreement and the Closing Date, that he will use best efforts to cause Xxxxxxx
to conduct its business in the ordinary course and, except as may otherwise be
provided in this Agreement: (a) preserve the good standing of Xxxxxxx in all
jurisdictions in which it is engaged in business; (b) preserve the organization
of Xxxxxxx and use best efforts to preserve the goodwill of customers,
suppliers and others having business relations with it; (c) keep in force at no
less than their present limits all existing bonds and policies of insurance
insuring Xxxxxxx and its properties; (d) not permit Xxxxxxx to enter into any
contract, commitment, arrangement or transaction expected to affect revenue,
expense, assets or liabilities by more than $25,000 (unless such contract,
commitment or arrangement is substantially a continuation of a prior contract,
commitment or arrangement, or is in the ordinary course of its business); (e)
not make or permit any change in the Articles of Incorporation or By-laws of
Xxxxxxx or in the authorized, issued or outstanding securities; (f) not permit
Xxxxxxx to xxxxx any stock options or rights to purchase any security of
Xxxxxxx; (g) not permit Xxxxxxx to purchase, any of its securities or to pay
any dividends; (h) not permit Xxxxxxx to make any payments to officers,
director or employees not in the ordinary and established course of business;
(i) not without reasonable cause initiate any management changes; or (j) not
agree to pay any previously disputed or unrecorded federal or state tax or
agree to a change in the established methods of calculating such taxes.
11. Miscellaneous.
11.1 Survival. The representations and warranties made in this Agreement
shall survive the Closing and expire twenty four (24) months after Closing,
except for (a) representations and warranties relating to federal tax matters,
which shall survive the Closing and expire three (3) years from the date of
filing of the return on which the tax matter is based, and (b) representations
and warranties relating to pre-Closing expense and revenue items which become
known after Closing, which shall survive the Closing and expire six (6) months
after Closing.
11.2 Specific Performance. The parties hereto agree that the failure of any
party to comply with any of its obligations contained in this Agreement would
cause the other parties hereto permanent and irreparable harm for which there
would be no adequate remedy at law.
STOCK PURCHASE AGREEMENT - Page 9
10
Therefore, it is agreed that each party hereto may enforce the obligations of
each of the other parties by specific performance upon application to any court
of equity having jurisdiction hereover, and such remedy shall be cumulative and
in addition to any other remedies any party may have.
11.3 Successors and Assigns. This Agreement shall not be assignable or
transferable by any party hereto except by the written consent of the other
party hereto.
11.4 Entire Agreement. This Agreement and the Related Documents (a)
integrate all the terms and conditions mentioned in or incidental to this
Agreement; (b) supersede all oral negotiations and prior writing with respect
to its subject matter; and (c) are intended by the parties as the final
expression of the agreement with respect to the terms and conditions set forth
in those documents and as the complete and exclusive statement of the terms and
conditions agreed to by the parties. No representation, understanding, promise,
warranty, agreement, or arrangement, oral or written, express or implied, shall
be enforceable against either party unless it is contained in this Agreement or
the Related Documents, and no evidence thereof shall be admissible in any
action relating hereto.
11.5 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or deposit with the United States Post Office, by
registered or certified mail, return receipt requested, postage prepaid
(provided that mailed notices shall not be deemed effectively given until
received), addressed as follows:
If to Buyer: Integrated Security Systems, Inc.
Attention: Xxxxxx X. Xxxxxxxx, President
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
with a copy to: Xxxxxxxx & Co.
Attention: Xxxxxx X. Xxxxxxxx
0000 XxXxxxxx Xxxxxx, Xxxxx X
Xxxxxx, XX 00000
If to Seller prior to Closing: Mr. S. Xxxx Xxxxxxx
Xxxxxxx Company
P. O. Xxx 000
Xxxxxx, XX 00000
If to Seller after Closing: Xx. X. Xxxx Xxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
with a copy to: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxx & Sanger
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
and
Xx. Xxxxx X Xxxxxx
Xxxxxx-Xxxxxx, Inc.
P. O. Xxx 00000
Xxxxx, XX 00000
STOCK PURCHASE AGREEMENT - Page 10
11
or to such other address as such party shall specify in writing.
11.6 Expenses and Fees. Whether or not the transactions contemplated hereby
are consummated, each party hereto shall bear its own expenses in connection
herewith, including its own attorneys' fees.
11.7 Titles and Subtitles. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11.9 Waiver and Amendment. Any term or provision of this Agreement may be
waived at any time by the party which is entitled to the benefits thereof only
in writing and signed by the party making such waiver, and any term or
provision of this Agreement may be amended or supplemented at any time only by
the written agreement of the parties.
11.10 Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed by and construed in accordance with the laws
of the State of Texas.
11.11 Choice of Forum; Consent to Jurisdiction. Any suit, action or
proceeding arising with respect to the validity, construction, enforcement or
interpretation of this Agreement, and all issues relating in any manner
thereto, shall be brought in the courts located in the State of Texas, County
of Dallas. Each of the parties hereto hereby submits and consents to the
exclusive jurisdiction of such court for the purpose of any such suit, action
or proceeding.
11.12 Time of Essence . Time is of the essence in the performance of all
obligations under this Agreement and the Related Documents.
11.13 Nondisclosure. Upon termination of this Agreement for any reason,
Buyer agrees (a) to promptly deliver to Seller all originals and copies of all
documents, work papers and other material (whether tangible or intangible)
containing information concerning Xxxxxxx, regardless of who prepared same (the
"Confidential Information"); (b) not to use any such Confidential Information
in any manner; and (c) not to disclose any such Confidential Information to any
party. The provisions of this paragraph 11.13 shall survive the termination of
this Agreement.
11.14 Brokers. Seller agrees to provide Buyer at Closing with evidence
satisfactory to Buyer that all fees and expenses owed by Seller to
Xxxxxx-Xxxxxx, Inc. have been paid prior to or at Closing. Each party
represents and warrants to the other party that (except for Seller's contract
with Xxxxxx-Xxxxxx, Inc., and Buyer's contracts with Xxxxxx Xxxxx & Associates
and Bathgate XxXxxxxx Capital Group, LLC), it has not contacted or entered into
any agreement with any real estate broker, agent, finder, or any other party in
connection with this transaction, and has not taken any action which would
result in any real estate broker's, finder's or other fees or commissions being
due or payable to any other party with respect to the transaction contemplated
hereby. Each party hereby indemnifies and agrees to hold the other party
harmless from any loss, liability, damage, cost, or expense (including, but not
limited to, reasonable attorneys' fees) resulting to the other party by reason
of a party's failure to pay a commission to its contracted agent. The
indemnities set forth in this paragraph 11.14 shall survive Closing or the
earlier termination of this Agreement.
11.15 Third Party Rights. The provisions of this Agreement shall not
entitle any party not a signatory of this Agreement to any rights as a third
party beneficiary, or otherwise, it being the specific intention of the parties
hereto to preclude all non-signatory parties from any third party beneficiary
rights, or any other rights whatsoever.
STOCK PURCHASE AGREEMENT - Page 11
12
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the date first set forth above.
INTEGRATED SECURITY SYSTEMS, INC.,
a Delaware corporation
By:
---------------------------------
Title:
------------------------------
------------------------------------
X. XXXX XXXXXXX
ACKNOWLEDGMENT
By her signature below, Xxxxx Xxxxxxx, wife of X. Xxxx Xxxxxxx,
acknowledges that although she is not a party to the above Agreement, she
consents to the sale of stock under the Agreement.
[S]
------------------------------------
Xxxxx X. Xxxxxxx
November , 1996
------
STOCK PURCHASE AGREEMENT - Page 12
