EXECUTION COPY
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT is made and entered into as of this 27th day
of November 1996, among TYCO INTERNATIONAL, LTD., a Massachusetts corporation
("PARENT"), T3 ACQUISITION CORP., a Florida corporation and a wholly owned
subsidiary of Parent ("SUB"), and the other parties signatory hereto (each, a
"SHAREHOLDER").
WHEREAS each Shareholder desires that ELECTROSTAR, INC., a Florida
corporation (the "Company"), Parent and Sub enter into an Agreement and Plan
of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "MERGER AGREEMENT") with respect to the merger of Sub with
and into the Company (the "MERGER"); and
WHEREAS each Shareholder is executing this Agreement as an inducement to
Parent to enter into and execute, and to cause Sub to enter into and execute,
the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. Each Shareholder
severally, and not jointly, represents and warrants to Parent and Sub as
follows:
(a) Such Shareholder is the record and beneficial owner of the
number of shares of Common Stock, par value $.01 per share, of the Company
(the "COMPANY COMMON STOCK"), including shares of Company Common Stock
issuable upon conversion of shares of the Company's Class B non-voting common
stock, par value $.01 per share (the "Class B Common Stock"), separately
identified as such, set forth opposite such Shareholder's name in SCHEDULE A
hereto (as may be adjusted from time to time pursuant to Section 5, such
Shareholder's "SHARES"). Except for such Shareholder's Shares and any other
shares of Company Common Stock subject hereto, such Shareholder is not the
record or beneficial owner of any shares of Company Common Stock.
(b) This Agreement has been duly authorized, executed and
delivered by such Shareholder and constitutes the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally. Neither the execution
and delivery of this Agreement nor the consummation by such Shareholder of the
transactions contemplated hereby will result in a violation of, or a default
under, or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which such
Shareholder is a party or bound or to which such Shareholder's Shares are
subject. To the best of such Shareholder's knowledge, consummation by such
Shareholder of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to such
Shareholder or such Shareholder's Shares, except for any necessary filing
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
(c) Such Shareholder's Shares and the certificates representing
such Shares are now and at all times during the term hereof will be held by
such Shareholder, or by a nominee or custodian for the benefit of such
Shareholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder.
(d) Except for fees payable to Alex. Xxxxx & Sons Incorporated
and Trivest II, Inc., no broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission from Parent, Sub or the Company in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of such Shareholder (it being agreed that the representation set forth
in this Section 1(d) is being given by the holder of the Company's Class B
Common Stock only as to its knowledge).
(e) Such Shareholder understands and acknowledges that Parent
is entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon such Shareholder's execution and delivery of this Agreement.
Such Shareholder acknowledges that the irrevocable proxy set forth in Section
4 is granted in consideration for the execution and delivery of the Merger
Agreement by Parent and Sub.
SECTION 2. AGREEMENT TO TENDER. Each Shareholder hereby severally
agrees that it shall tender its Shares into the Offer (as defined in the
Merger Agreement) and that it shall not withdraw any Shares so tendered (it
being understood that the obligation contained in this sentence is
unconditional). If necessary, the Shareholder holding the outstanding shares
of Class B Common Stock shall convert such shares into Company Common Stock
and tender the Company Common Stock issued upon conversion as provided in the
previous sentence.
SECTION 3. COVENANTS. Each Shareholder severally, and not jointly,
agrees with, and covenants to, Parent and Sub as follows:
(a) Such Shareholder shall not, except as contemplated by the
terms of this Agreement, (i) TRANSFER (the term "transfer" shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of such
Shareholder's Shares or any interest therein, (ii) enter into any contract,
option or other agreement or understanding with respect to any transfer of any
or all of such Shares or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization or consent in or with respect to such
Shares, (iv) deposit such Shares into a voting trust or enter into a voting
agreement or arrangement with respect to such Shares or (v) take any other
action that would in any way restrict, limit or interfere with the performance
of its obligations hereunder or the transactions contemplated hereby;
provided, however, that nothing in this Agreement shall prohibit Xxxxxx X.
Xxxxx and F.G. Xxxxxxx Xxxxxx from making charitable contributions of up to
54,000 and 20,000 shares of Company Common Stock, respectively.
(b) Subject to Section 8, such Shareholder shall not, nor shall it
permit any investment banker, attorney or other adviser or representative of
such Shareholder to, directly or indirectly, (i) solicit, initiate or
encourage the submission of, any Acquisition Proposal (as defined in the
Merger Agreement) or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by an investment
banker, attorney or other adviser or representative of such Shareholder,
whether or not such person is purporting to act on behalf of such Shareholder
or otherwise, shall be deemed to be a violation of this Section 3(b) by such
Shareholder.
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SECTION 4. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(a) Each Shareholder hereby irrevocably grants to, and
appoints, Parent and Xxxx Xxxxxxxx, J. Xxxx XxXxx, Xxxxx Xxxxxx and any other
individual who shall hereafter be designated by Parent, such Shareholder's
proxy and attorney-in-fact (with full power of substitution), for and in the
name, place and stead of such Shareholder, to vote such Shareholder's Shares,
or grant a consent or approval in respect of such Shares, at any meeting of
shareholders of the Company or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is sought,
against (i) any merger agreement or merger (other than the Merger Agreement
and the Merger), consolidation, combination, sale of substantial assets,
reorganization, joint venture, recapitalization, dissolution, liquidation or
winding up of or by the Company and (ii) any amendment of the Company's
Articles of Incorporation or By-laws or other proposal or transaction
(including any consent solicitation to remove or elect any directors of the
Company) involving the Company or any of its subsidiaries which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent
or nullify, or result in a breach of any covenant, representation or warranty
or any other obligation or agreement of the Company under or with respect to,
the Offer, the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement (each of the foregoing in clause (i) or
(ii) above, a "COMPETING TRANSACTION").
(b) Such Shareholder represents that any proxies heretofore
given in respect of such Shareholder's Shares are not irrevocable, and that
any such proxies are hereby revoked.
(c) Such Shareholder hereby affirms that the irrevocable proxy
set forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. Such
Shareholder hereby further affirms that the irrevocable proxy is coupled with
an interest and may under no circumstances be revoked. Such Shareholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do
or cause to be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of Section
607.0722 of the Florida Business Corporations Act (the "CORPORATION LAW").
SECTION 5. CERTAIN EVENTS. Each Shareholder agrees that this
Agreement and the obligations hereunder shall attach to such Shareholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation such Shareholder's heirs, guardians,
administrators or successors. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Company Common Stock, or the
acquisition of additional shares of Company Common Stock or other securities
or rights of the Company by any Shareholder, the number of Shares listed on
Schedule A beside the name of such Shareholder shall be adjusted appropriately
and this Agreement and the obligations hereunder shall attach to any
additional shares of Company Common Stock or other securities or rights of the
Company issued to or acquired by such Shareholder.
SECTION 6. STOP TRANSFER; LEGEND. The Company agrees with, and
covenants to, Parent that the Company shall not register the transfer of any
certificate representing any Shareholder's Shares, unless such transfer is
made to Parent or Sub or otherwise in compliance with this Agreement. Each
Shareholder agrees that such Shareholder will tender to the Company, within
five business days after the date hereof, any and all certificates
representing such Shareholder's Shares and the Company will inscribe upon such
certificates the following legend: "The shares of Common Stock, par value
$.01 per share, of the Company represented by this certificate are subject to
a Shareholder Agreement dated as
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of November 27, 1996, and may not be sold or otherwise transferred, except in
accordance therewith. Copies of such Agreement may be obtained at the
principal executive offices of the Company.
SECTION 7. VOIDABILITY. If prior to the execution hereof, the Board
of Directors of the Company shall not have duly and validly authorized and
approved by all necessary corporate action the acquisition of Company Common
Stock by Parent and Sub and the other transactions contemplated by this
Agreement and the Merger Agreement, so that by the execution and delivery
hereof Parent or Sub would become, or could reasonably be expected to become,
an "Interested shareholder" with whom the Company would be prevented for any
period pursuant to Section 607.0901 of the Corporation Law from engaging in
any "Affiliated transaction" (as such terms are defined in Section 607.0901 of
the Corporation Law) then this Agreement shall be void and unenforceable until
such time as such authorization and approval shall have been duly and validly
obtained.
SECTION 8. SHAREHOLDER CAPACITY. No person executing this Agreement
who is or becomes during the term hereof a director or officer of the Company
makes any agreement or understanding herein in his or her capacity as such
director or officer. Each Shareholder signs solely in its capacity as the
record holder and beneficial owner of such Shareholder's Shares and nothing
herein shall limit or affect any actions taken by a Shareholder or any
officer, director, partner or affiliate of such Shareholder in its capacity as
an officer or director of the Company to the extent specifically permitted by
the Merger Agreement.
SECTION 9. FURTHER ASSURANCES. Each Shareholder shall, upon request
of Parent or Sub execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Parent or Sub to be necessary
or desirable to carry out the provisions hereof and to vest the power to vote
such Shareholder's Shares as contemplated by Section 4 in Parent and the other
irrevocable proxies described therein.
SECTION 10. TERMINATION. This Agreement, and all rights and
obligations of the parties hereunder, shall terminate upon the earlier of (a)
the date upon which the Merger Agreement is terminated in accordance with its
terms either (i) by Parent or Sub (provided that no termination under this
clause shall relieve any Shareholder of liability for such shareholder's
breach of its or his obligations under this Agreement) or (ii) by mutual
written consent of Parent, Sub and the Company or (b) the date that Parent or
Sub shall have purchased and paid for the Shares of each Shareholder pursuant
to Section 2.
SECTION 11. PUBLIC ANNOUNCEMENTS. Each Shareholder will consult with
Parent before issuing, and provide Parent with the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement and the Merger Agreement, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange.
SECTION 12. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to Parent or Sub, to
the address set forth in Section
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10.02 of the Merger Agreement; and (ii) if to a Shareholder, to the address
set forth on Schedule A hereto, or such other address as may be specified in
writing by such Shareholder.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement, and shall become
effective (even without the signature of any other Shareholder) as to any
Shareholder when one or more counterparts have been signed by each of Parent,
Sub and such Shareholder and delivered to Parent, Sub and such Shareholder.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the New York and, to the extent expressly
provided herein, the Corporation Law, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except by laws of descent. Any assignment in
violation of the foregoing shall be void.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any event, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall
be enforced to the fullest extent permitted by law.
(i) Each Shareholder agrees that irreparable damage would occur and
that Parent and Sub would not have any adequate remedy at law in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that Parent and Sub shall be entitled to an injunction or injunctions
to prevent breaches by any Shareholder of this Agreement and to enforce
specifically the terms and provisions of this Agreement. Each of the parties
hereto (i) consents to submit such party to the personal jurisdiction of any
Federal court located in the State of New York in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that such party will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court located in the State of New York. The prevailing party in any judicial
action shall be entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorneys' fees and disbursements, and court
costs.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in writing
and signed by such party.
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IN WITNESS WHEREOF, Parent, Sub and the Shareholders have
caused this Agreement to be duly executed and delivered as of the date first
written above.
TYCO INTERNATIONAL LTD.
By: /s/ Xxxxx X. XxXxx
------------------
Name: Xxxxx X. XxXxx
Title: Vice President
T3 ACQUISITION CORP.
By: /s/ Xxxxx X. XxXxx
------------------
Name: Xxxxx X. XxXxx
Title: Vice President
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 6:
ELECTROSTAR, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
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TRIVEST FUND I, LTD.
By: Trivest 1988 Fund Managers, Ltd.,
its general partner
By: Trivest Group, Inc., its general
partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx
Senior Vice President
Address: 0000 Xxxxx Xxxxxxxx Xxxxx
0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer ID: 00-0000000
Telephone: (000)000-0000
TRIVEST EQUITY PARTNERS I, LTD.
By: Trivest 1988 Fund Managers, Ltd.,
its general partner
By: Trivest Group, Inc., its general
partner
By: /s/ Xxxxxxx X. Xxxxx
-----------------------
Xxxxxxx X. Xxxxx
Senior Vice President
Address: 0000 Xxxxx Xxxxxxxx Xxxxx
0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer ID: 00-0000000
Telephone: (000) 000-0000
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LAC PARTNERS
By: /s/ Xxxx X. Xxxxxx
------------------
Xxxx X. Xxxxxx
Managing General Partner
Address: 0000 Xxxxx Xxxxxxxx Xxxxx
0xx Xxxxx
Xxxxx, Xxxxxxx 00000
Taxpayer ID: 00-0000000
Telephone: (000) 000-0000
XXXXXX FINANCIAL, INC.
By: /s/ Xxxxxxxx Xxxxxxxx
---------------------
Xxxxxxxx Xxxxxxxx
Senior Vice President
Address: 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Taxpayer ID: 00-0000000
Telephone: (000) 000-0000
/s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
/s/ Xxxx Xxxxx
--------------
Xxxx Xxxxx
/s/ F. G. Xxxxxxx Xxxxxx, Xx.
-----------------------------
F. G. Xxxxxxx Xxxxxx, Xx.
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SCHEDULE A
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES OF
COMMON STOCK OWNED
Trivest Fund I, Ltd.
0000 Xxxxx Xxxxxxxx Xxxxx
0xx Xxxxx
Xxxxx, Xxxxxxx 00000 2,185,115
Trivest Equity Partners I, Ltd.
0000 Xxxxx Xxxxxxxx Xxxxx
0xx Xxxxx
Xxxxx, Xxxxxxx 00000 682,403
LAC Partners
0000 Xxxxx Xxxxxxxx Xxxxx
0xx Xxxxx
Xxxxx, Xxxxxxx 00000 367,557
Xxxxxx Financial, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 620,737*
* Class B non-voting common stock (equal number of shares of Common Stock
issuable upon conversion and sale)
Xxxxxx X. Xxxxx
0000 Xxxxx 0000 Xxxx
Xxxxx Xxxxx, Xxxx 00000 440,651
Xxxx Xxxxx
00000 Xxxxxx Xxxx
XxxxxXxxxxx, Xxxxxxxxxx 00000 219,450
F.G. Xxxxxxx Xxxxxx
000 Xxxxx 000 Xxxx
Xxxxxxxxxx, Xxxx 00000 149,084
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