VOTING AGREEMENT
This VOTING AGREEMENT (this "Agreement") is entered into as of the 10th day
of May, 2000, by and among DualStar Technologies Corporation, a Delaware
corporation (the "Company"), and Xxxxxx Xxxxxxx, Xxxx Xxxxxxx and Geneva
Associates Merchant Banking Partners I, LLC (each, individually, a "Stockholder"
and, collectively, the "Stockholders").
W I T N E S S E T H
WHEREAS, the persons listed on the Schedule of Investors attached hereto as
Schedule 1 (the "Investors") are acquiring from the Company, at the election of
the Investors (a)(i) $30,000,000 aggregate principal amount of a convertible
promissory note of the Company, convertible into shares of the Company's Common
Stock, par value $.01 per share ("Common Stock") at an initial conversion price
of $4.00 per share and (ii) 4,050,000 shares of Common Stock at a purchase price
of $4.00 per share, or (b) 11,500,000 shares of Common Stock at a purchase price
of $4.00 per share, pursuant to a Securities Purchase Agreement (the "Securities
Purchase Agreement") among the Company and the Investors;
WHEREAS, the Company has entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Paracomm, Inc., a Delaware corporation ("Paracomm"),
and DCI Acquisition Co., a Delaware corporation and wholly-owned subsidiary of
the Company ("MergerSub"), pursuant to which MergerSub shall merge with and into
Paracomm (the "Merger"), and resulting in Paracomm becoming a wholly-owned
subsidiary of the Company;
WHEREAS, pursuant to the Merger Agreement, the Stockholders shall receive,
as a result and in consideration of the Merger, an aggregate of 526,106 shares
of Common Stock (subject to a Hold Back Escrow (as such term is defined in the
Merger Agreement) and adjustment pursuant to the Merger Agreement); and
WHEREAS, in order to induce the Company to enter into and carry out the
transactions contemplated by the Merger Agreement and in order to induce the
Investors to enter into and carry out the transactions contemplated by the
Securities Purchase Agreement, the Stockholders and the Company are willing to
enter into this Agreement.
NOW, THEREFORE, in consideration of the promises contained herein, and for
other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
A. GENERAL PROVISIONS
This Agreement implements, among other things, the following general
agreements:
1. For so long as a Stockholder shall continue to own any of the Voting
Shares (as hereinafter defined), such Stockholder shall act in all capacities
and shall cause the Voting Shares held thereby to be duly represented, in person
or by proxy, at the next annual
meeting of the Company's stockholders following the date hereof and at any other
duly called meeting of the Company's stockholders and shall vote the Voting
Shares of the Company as hereinafter provided. For purposes of this Agreement,
"Voting Shares" shall mean any shares of Common Stock received by a Stockholder
pursuant to the Merger (except while in the Hold Back Escrow), and the Warrants
(as such term is defined in the Merger Agreement) and any shares of Common Stock
issued upon exercise thereof (collectively "Voting Shares") owned (within the
meaning of Rule 13d-3 under the Exchange Act) by such Stockholder upon
consummation of the Transactions (as such term is defined in the Merger
Agreement), which shares are entitled to vote upon the election of the Company's
Board of Directors.
2. Each Stockholder shall act in all capacities to cause any transferee
of such Stockholder's Voting Shares that is an Affiliate thereof to assume the
obligations of such Stockholder hereunder. For purposes of this Agreement,
"Affiliate" shall mean, as to any Stockholder, (a) the partners, retired
partners, members, retired members, directors and officers, as the case may be,
of such Stockholder, (b) the partners or members of any of the parties referred
to in the foregoing clause of this definition, (c) the spouse or lineal
descendants of such Stockholder or any of the parties referred to in the
foregoing clauses of this definition, (d) a trust for the benefit of such
Stockholder or any of the parties referred to in the foregoing clauses of this
definition, (e) any corporation, limited liability company or partnership
controlled by such Stockholder or by any of the parties referred to in the
foregoing clauses of this definition, and (f) any other party that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, any Stockholder.
3. Any designee of any holder or holders of the Company's stock who
shall serve as a member of the Board of Directors shall have full authority to
exercise his discretion and business judgement to perform his duty as Director
and shall incur no special obligation or liability to any of such holders as a
result of such exercise. No party shall have any claim against any such
designee, or the holder or holders who selected such designee, with regard to
such selection. The Company shall take all actions as may be necessary to cause
the Company to indemnify the members of the Board of Directors to the fullest
extent permitted under applicable law.
4. Each of the parties hereto acknowledges and agrees that,
notwithstanding the termination provisions set forth in Section H below, the
obligations of the Stockholders under Section B shall terminate and be of no
further force and effect upon the termination of the Investors' contractual
right from the Company to designate one or more nominees to the Board of
Directors of the Company.
B. VOTING FOR DIRECTORS
1. Each Stockholder hereby agrees to vote all Voting Shares of the
Company now or hereafter owned or controlled by such Stockholder, directly or
indirectly, and otherwise to use such Stockholder's best efforts as a
stockholder of the Company to elect as Directors, in any election of Directors
of the Company, the persons designated by the Investors.
2. The initial Director-designees of the Investors are set forth on
Schedule 3 hereto. After the election of such initial Director-designees, the
Company shall furnish written notice of Director-designees of the Investors to
the Stockholders at least five (5) days before any
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election of Directors. In the absence of such notice, the Directors then serving
and previously designated shall be reelected if still eligible to serve as
provided herein. No Stockholder shall vote to remove any member of the Board of
Directors designated in accordance with the aforesaid procedure unless the
Investors so vote, and if the Investors so vote, then all Stockholders shall
likewise so vote.
3. Any vacancy on the Board of Directors created by the resignation,
removal, incapacity or death of any person designated under this Section B shall
be filled by another person designated by the Investors. Each of the
Stockholders shall vote their respective Voting Shares in accordance with such
new designation, and any such vacancy shall not be filled in the absence of a
new designation by the Investors.
4. Each of the parties hereto acknowledges and agrees that,
notwithstanding the termination provisions set forth in Section H below, the
obligations of the Stockholders under this Section B shall terminate and be of
no further force and effect upon the termination of the Investors' contractual
right from the Company to designate one or more nominees to the Board of
Directors of the Company.
C. MANAGEMENT PROPOSALS
Each Stockholder hereby agrees to vote all Voting Shares of the Company now
or hereafter owned or controlled by such Stockholder, directly or indirectly, in
favor of all matters as may be recommended by management of the Company at the
annual meeting of the Company's stockholders scheduled to be held as soon as
practicable after the date hereof, or at any adjournment thereof, as reflected
in the preliminary Proxy Statement of the Company, a copy of which the Company
has provided to Xxxxxx Xxxxxxx on behalf of the Stockholders, or in any
amendment thereto.
D. COVENANTS OF THE STOCKHOLDERS
Each Stockholder covenants and agrees that, until the termination of this
Agreement, it shall be a condition to the transfer of Voting Shares to any
Affiliate of such Stockholder that such Affiliate joins and agrees to be bound
by the terms and conditions of this Agreement.
E. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders represents and warrants to the Company that: (1)
the execution, delivery and performance of this Agreement will not conflict
with, require a consent, waiver or approval under, or result in a breach of or
default under, any of the terms of any contract, commitment or other obligation
(written or oral) to which he or it is bound; (2) this Agreement has been duly
executed and delivered by such Stockholder, and, in the case of Geneva
Associates Merchant Banking Partners I, LLC, all requisite limited liability
company action has been taken to authorize the execution of this Agreement and
the consummation of the transactions contemplated hereby; (3) this Agreement
constitutes a legal, valid and binding obligation thereof, enforceable against
such Stockholder in accordance with its terms; (4) such Stockholder is the sole
owner of or has the sole right to vote the Voting Shares set forth opposite such
Stockholder's name on Schedule 2 and said stock represents all Voting Shares
which such Stockholder is the sole owner of or has the sole right to vote at the
date hereof; (5) such
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Stockholder has full right, power and authority to execute and deliver this
Agreement and to perform its obligations hereunder; and (6) such Stockholder
owns the Voting Shares free and clear of all liens, claims, pledges, charges,
proxies, restrictions, encumbrances, voting trusts and voting agreements of any
nature whatsoever other than as provided by this Agreement, the Merger Agreement
and any other agreement or instrument executed in connection therewith.
F. ADJUSTMENTS; ADDITIONAL SHARES
In the event of any stock dividend, stock split, merger (other than a
combination, exchange of shares or the like of any of the Voting Shares on, of
or affecting said stock), then the terms of this Agreement shall apply to the
Voting Shares or other instruments or documents held by that Stockholder, as the
case may be, immediately following the effectiveness of the events described in
this Section F as though they were Voting Shares.
G. SPECIFIC PERFORMANCE
The Company and each of the Stockholders acknowledge that the agreements
contained in the Voting Agreement are an integral part of the transactions
contemplated by the Merger Agreement, and that, without these respective
agreements, the Company would not enter into the Merger Agreement, and each of
the parties to this Agreement acknowledges that damages would be an inadequate
remedy for any breach by it of the provisions of this Agreement. Accordingly,
each party to this Agreement agrees that none of the parties shall take any
action to impede any other party from seeking to enforce such right to specific
performance.
H. TERMINATION
This Agreement shall terminate in its entirety and be of no further force
and effect as to a Stockholder upon the earlier to occur of (a) ten years from
the date hereof, or (b) the date upon which such Stockholder transfers or
otherwise disposes of all of his or its Voting Shares.
I. MISCELLANEOUS
1. All notices, requests, consents and other communications herein
shall be in writing and shall be deemed to be delivered (a) on the date
delivered, if personally delivered or transmitted via facsimile with return
confirmation of such transmission, (b) on the business day after the date sent,
if sent by recognized overnight courier service and (c) on the fifth day after
the date sent, if mailed by first-class certified mail, postage prepaid and
return receipt requested, as follows:
(a) If to a Stockholder, at their respective addresses set forth on
Schedule 2 attached hereto,
with a copy to: RubinBaum LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
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If to the Company: DualStar Technologies Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to: Day, Xxxxx & Xxxxxx LLP
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, III, Esq.
Facsimile: (000) 000-0000
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties in accordance with this Section I.1.
2. This Agreement contains the sole and entire understanding of the
parties with respect to its subject matter and supersedes all prior
negotiations, commitments, agreements and understandings between them with
respect thereto. Except as otherwise expressly provided herein, this Agreement
may not be changed or terminated or any performance of condition waived, in
whole or in part, except by a writing signed by (i) the Company and (ii) the
Stockholders holding at least a majority in voting power of the Voting Shares
then held by all of the Stockholders. A waiver on one occasion shall not
constitute a waiver on any further occasion.
3. This Agreement shall be governed by, and construed and enforced in
accordance with, the substantive laws of the State of Delaware, without regard
to its principles of conflicts of laws. In the event any provision of this
Agreement or the application of any such provision to any party shall be held by
a court of competent jurisdiction to be contrary to law, the remaining
provisions of this Agreement shall remain in full force and effect.
4. This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original and which, together, shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
under seal as of the date first above written.
THE COMPANY:
DUALSTAR TECHNOLOGIES CORPORATION
By: /s/
-----------------------------------
Name:
Title:
THE STOCKHOLDERS:
/s/
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Xxxxxx Xxxxxxx
/s/
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Xxxx Xxxxxxx
GENEVA ASSOCIATES MERCHANT
BANKING PARTNERS I, LLC
By: /s/
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Name:
Title:
