STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (the "Agreement") made the 25th day of November,
1998, by and among DUALSTAR TECHNOLOGIES CORPORATION, a Delaware corporation
(the "Corporation"), and the persons or entities listed on SCHEDULE A annexed to
this Agreement (such persons or entities are hereinafter referred to
individually as a "Stockholder" or collectively as the "Stockholders", unless
otherwise individually named).
WHEREAS, the Stockholders are stockholders, or may hereafter become
stockholders upon conversion of outstanding securities, of the Corporation, and
the Stockholders desire to make certain arrangements among them and with the
Corporation.
NOW, THEREFORE, in consideration of the foregoing premise and the
covenants and agreements contained herein, the parties agree as follows:
1. NOMINATION OF DIRECTORS. Commencing for the 1999 Annual Meeting
of Stockholders of the Corporation, each Stockholder shall recommend to the
Board of Directors of the Corporation the nomination of, for election as a
Director of the Corporation, (i) one (1) person designated by each of Xxxxxxx
Xxxxx, Xxxxxx Xxxxxxx, and Xxxxxxx Xxxxx, (ii) two (2) persons designated by
Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx, and Xxxxxxx Xxxxx, collectively, and (iii) one
(1) person designated by Technology Investors Group, LLC (collectively, the
"Initial Nominees"), PROVIDED, HOWEVER, that the Initial Nominee of Technology
Investors Group, LLC and any nominee of the other Stockholders other than the
Directors of the Corporation elected at the 1998 Annual Meeting of Stockholders
must be reasonably acceptable to the other parties (for the purposes hereof, an
Initial Nominee shall not be "reasonably acceptable" if disclosure with respect
to such Initial Nominee would be required pursuant to Item 401(f) of Regulation
S-K of the Securities and Exchange Commission (the "Commission")). In the event
the Corporation reports a net loss from operations in the fiscal year ending
June 30, 1999, each Stockholder shall recommend to the Board of Directors of the
Corporation the nomination of, for election as a Director of the Corporation,
one (1) additional person (the "Additional Nominee") designated by Technology
Investors Group, LLC ("TIG"). The Additional Nominee also must be reasonably
acceptable to the other parties. The Initial Nominees and the Additional
Nominee shall be referred to collectively hereinafter as the "Nominee(s)". For
purposes of this Section 1, "net loss from operations" shall be calculated using
income from continuing operations based on the audited financial statements, as
audited by the Corporation's independent auditors (and, for this purpose, as
adjusted by excluding amortization, depreciation, and the cumulative effect of
accounting changes).
2. VOTING. Each Stockholder will vote, or direct the voting of, all
of the shares of stock of the Corporation ("Stock") as to which such Stockholder
now or hereafter has voting power (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) at all meetings of
stockholders for the election of Directors, or shall express or direct the
expression of consent to any such action of stockholders taken without a
meeting, for the election as a Director
of each Nominee. If a Nominee shall not be nominated by the Board of
Directors or stand for election or shall cease to act for any reason as a
Director, the person or persons who designated such Nominee shall have the
exclusive right to recommend to the Board of Directors the nomination of a
successor to such Nominee.
3. RESTRICTIONS ON TRANSFER OF STOCK.
3.1. Without the prior written consent in his or its discretion of each
party to this Agreement (other than the Corporation), no Stockholder shall sell,
assign, transfer, pledge, encumber or in any way dispose of any Stock owned by
such Stockholder on the date of this Agreement, or issued to any Stockholder
upon conversion of the Subordinated Convertible Note (the "Note") sold by the
Corporation to TIG on the date of this Agreement (current ownership is set
forth on SCHEDULE A attached hereto), nor shall any such Stock be transferable
on the books of the Corporation or its transfer agent for the Stock (except for
a transfer permitted by Section 3.2 below).
3.2. Notwithstanding anything to the contrary provided herein, an
individual Stockholder may at any time during his lifetime transfer all or part
of his Stock to his spouse, children or grandchildren or to a trust for their
benefit, or upon his death any of such Stock may be transferred to his spouse,
children or grandchildren or to a trust for their benefit by bequest or
otherwise under his will or pursuant to the laws of descent and distribution;
provided that, any transferee of Stock pursuant to the above shall agree in
writing, as a condition of transfer, to hold such Stock subject to the terms of
this Agreement as if such transferee were a party to this Agreement as a
Stockholder.
3.3. Nothing contained in this Agreement shall affect any other
restrictions pursuant to federal or state securities law on transfer of any
Stock issued upon conversion.
4. TERM. This Agreement shall terminate on the earlier of: (i)
thirty (30) months from the date of this Agreement, or (ii) such date following
conversion of the Note that the voting power of TIG amounts to less than five
percent (5%) of the then outstanding shares of stock of the Corporation entitled
to vote for election of Directors. Subject to the foregoing, Sections 1 and 2
will not apply to TIG in any fiscal year immediately following two (2)
consecutive fiscal years in which the Corporation incurs a net loss from
operations (as defined in Section 1 above); PROVIDED, HOWEVER, that this
Agreement will apply again to TIG in any fiscal year following any fiscal year
in which the Corporation has a profit.
5. MISCELLANEOUS.
5.1. AMENDMENT. This Agreement and the Schedule hereto may not be
amended except by an instrument in writing signed by or on behalf of each of the
parties hereto.
5.2. WAIVER. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by or on behalf of such party.
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5.3. GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York.
5.4. CAPTIONS. The Section captions used herein are for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Agreement.
5.5. PUBLICITY. None of the parties hereto shall issue any press
release or make any other public statement, in each case relating to or
connected with or arising out of this Agreement or the matters contained herein,
without obtaining the prior approval of the other parties to the contents and
the manner of presentation and publication thereof, except such reports or other
notices that the party issuing or making same has been advised by counsel are
required pursuant to applicable law or regulation.
5.6. NOTICE. Any notice required hereunder shall be in writing and
shall be sufficiently given if delivered or sent by reputable overnight courier
or facsimile transmission (in each case with evidence of receipt), addressed to
the Corporation at its principal office and to TIG, and the Stockholders,
respectively, at the addresses set forth on SCHEDULE A hereto. Any party may
change such address by like notice. If sent by courier, such notice shall be
deemed to have been given as of the next business day after it was deposited
with the courier service and if sent by facsimile such notice shall be deemed to
have been given when transmitted.
5.7. PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
5.8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
5.9. ENTIRE AGREEMENT. This Agreement, including the Schedule referred
to herein, which forms a part hereof, contains the entire understanding of the
parties hereto with respect to the subject matter contained herein and therein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
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IN WITNESS WHEREOF, each of the parties has executed this
Agreement on the date first set forth above.
TECHNOLOGY INVESTORS DUALSTAR TECHNOLOGIES CORPORATION
GROUP, LLC
By: /s/ Xxxx X. Xxxxxx By: /s/ Elven X. Xxxxxx
---------------------- -------------------------------
Name: Xxxx X. Xxxxxx Name: Elven X. Xxxxxx
Title: Manager Title: Chairman
/s/ Xxxxxxx Xxxxx
----------------------------------
Xxxxxxx Xxxxx, individually
/s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx, individually
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, individually
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SCHEDULE A
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NAMES, ADDRESSES AND
STOCK OWNERSHIP OF THE CORPORATION
Name and Address Common Stock Ownership
---------------- ----------------------
DualStar Technologies Corporation N/A
00-00 00xx Xxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Fax No. 000-000-0000
Xxxxxxx Xxxxx 435,000
0000 Xxx Xxxxxxx
Xxxxxxxx, XX 00000
Xxxxxx Xxxxxxx 435,000
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxx 435,000
00 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Technology Investors Group LLC N/A
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxx, Xxx Xxxx 00000
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