VOTING AGREEMENT
This VOTING AGREEMENT (the "Agreement"), dated as of August 3, 1998,
is entered into by and between HIAC XII CORP., a Delaware corporation ("Buyer")
and each of the undersigned as holders (the "Stockholders") of the capital stock
of Monarch Avalon, Inc. (the "Company").
WHEREAS, Buyer and the Company have entered into an Asset Purchase
Agreement of even date herewith (the "Asset Purchase Agreement"), pursuant to
which Buyer has agreed to acquire and the Company has agreed to sell certain
assets of the Company, upon the terms and subject to the conditions set forth
therein;
WHEREAS, each of the Stockholders, as the record and beneficial owner
of, and having the sole right to vote and dispose of, the number of shares (the
"Shares") of common stock, par value $0.25 per share, of the Company (the
"Company Common Stock") set forth opposite each such Stockholder's name on Sched
ule I attached hereto, will directly and significantly benefit from the
consummation of the Asset Purchase Agreement; and
WHEREAS, as a condition to its willingness to enter into the Asset
Purchase Agreement, Buyer has required that the Stockholders agree, and the
Stockholders are willing to agree, to the matters set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth below, the parties hereto agree as follows:
1. Voting of Shares.
1.1 Voting Agreement. Until the earlier to occur of the Closing
(as described in Section 1.5 of the Asset Purchase Agreement) or the termination
of the Asset Purchase Agreement pursuant to Article VII thereof notwithstanding
the survival of any terms of the Asset Purchase Agreement following such
termination, each of the Stockholders hereby agrees to vote (or cause to be
voted) all of the Shares (and any and all securities issued or issuable in
respect thereof) which such Stockholder is entitled to vote (or to provide his
written consent thereto), at any annual, special or other meeting of the
stockholders of the Company, and at any adjournment or adjournments thereof, or
pursuant to any consent in lieu of a meeting or otherwise:
(i) to approve the Asset Purchase Agreement and the transactions
contemplated thereby, including the change of the name of the Company to a name
not including the word "Avalon";
(ii) against any action or agreement that will result in a
breach in any material respect of any covenant, representation or warranty or
any other obligation of the Company under this Agreement or the Asset Purchase
Agreement; and
(iii) against (A) any extraordinary corporate transaction, such
as a merger, rights offering, reorganization, recapitalization or liquidation in
volving the Business (as described in the Asset Purchase Agreement), (B) a sale
or transfer of the Assets, other than in the ordinary course of business or
pursuant to the Asset Purchase Agreement, or the issuance of any securities of
the Company (except options to purchase Company Common Stock granted to
directors of the Company and the related issuance of Company Common Stock upon
exercise of such options in accordance with the terms thereof, provided, that
after the approval of such options, the number of shares of the Company Common
Stock outstanding plus the number of shares of Company Common Stock reserved for
issuance pursuant to such options to directors shall be equal to the current
number of shares of Company Common Stock outstanding plus the number of shares
of Company Common Stock reserved for issuance pursuant to existing options to
directors) or of any subsidiary holding or having any rights to any of the
Assets, (C) any change in the executive officers or Board of Directors of the
Company, (D) any change in the present corporate structure of the Company or the
Business or (E) any action that is intended, or could reasonably be expected, to
materially impede, interfere with, delay, postpone or adversely affect the
approval of the Asset Purchase Agreement and the transactions contemplated by
the Asset Purchase Agreement.
1.2 Proxy. At Buyer's request, each of the Stockholders will
deliver to Buyer an irrevocable proxy (the "Irrevocable Proxy") only with
respect to the matters covered by clauses (i), (ii) and (iii) of this paragraph
1 granting to Buyer or its designee a proxy to vote the Shares in accordance
with the terms of this Agreement; provided, that such proxy shall survive only
until the earlier to occur of the Closing (as described in Section 1.5 of the
Asset Purchase Agreement) or the termination of the Asset Purchase Agreement
pursuant to Article VII thereof notwithstanding the survival of any terms of the
Asset Purchase Agreement following such termination.
2. Representations and Warranties of Stockholder. Each of the Stock
holders severally represents and warrants to Buyer as follows:
2.1 Binding Agreement. The Stockholder has the capacity to exe
cute and deliver this Agreement and to consummate the transactions contemplated
hereby. The Stockholder has duly and validly executed and delivered this Agree
ment and this Agreement constitutes a legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of whether en
forceability is considered in a proceeding in equity or at law).
2.2 No Conflict. Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, nor the
compliance with any of the provisions hereof, (a) require any consent, approval,
authorization or permit of, registration, declaration or filing (except for
filings under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) with, or notification to, any governmental entity, (b) result in a
default (or an event which, with notice or lapse of time or both, would become a
default) or give rise to any right of termination by any third party,
cancellation, amendment or acceleration under any contract, agreement, instru
ment, commitment, arrangement or understanding, or result in the creation of a
security interest, lien, charge, encumbrance, equity or claim with respect to
any of the Shares, (c) require any material consent, authorization or approval
of any person other than a governmental entity, or (d) violate or conflict with
any order, writ, injunction, decree or law applicable to the Stockholder or the
Shares.
2.3 Ownership of Shares. Except as otherwise set forth on
Schedule I, the Stockholder is the record and beneficial owner as such term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended,
(the "Beneficial Owner") of the Shares set forth opposite such Stockholder's
name on Schedule I hereto. Except as otherwise set forth on Schedule I hereto,
the Stockholder owns the Shares free and clear of any security interests, liens,
charges, encumbrances, equities, claims, options or limitations of whatever
nature and free of any other limitation or restriction (including any restric
tion on the right to vote, sell or otherwise dispose of the Shares except for
such restrictions or limitations as may be imposed by the federal and state
securities laws and any rules, regulations or policies promulgated pursuant
thereto). The Stockholder holds exclusive power to vote the Shares, subject to
the limitations set forth in Section 1 of this Agreement. The Stockholder is
the record and Beneficial Owner of the options and the shares of the Company
Common Stock issuable upon exercise of stock options (the "Option Shares") set
forth oposite such Stockholder's name on Schedule II attached hereto. The
Stockholder owns the options and, upon exercise of such options, would own the
Option Shares, free and clear of any security interests, liens, charges, encum
brances, equities, claims, options or limitations of whatever nature and free of
any other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of the Shares except for such restrictions or
limitations as may be imposed by the federal and state securities laws and any
rules, regulations or policies promulgated pursuant thereto). The Shares and
the Option Shares set forth opposite the Stockholder's name on Schedule I and
Schedule II hereto, respectively, represent all of the shares of capital stock
of the Company of which the Stockholder is the Beneficial Owner.
3. Representations and Warranties of Buyer. Buyer represents and
warrants to the Stockholder as follows:
3.1 Binding Agreement. Buyer is a corporation duly incorpo
rated, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the Asset Purchase Agreement by Buyer and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Directors of Buyer, and no other
corporate proceedings on the part of Buyer are necessary to authorize the execu
tion, delivery and performance of this Agreement and the Asset Purchase
Agreement by Buyer and the consummation of the transactions contemplated hereby
and thereby. Buyer has duly and validly executed this Agreement and this Agree
ment constitutes a legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
3.2 No Conflict. Neither the execution and delivery of this
Agreement, the consummation by Buyer of the transactions contemplated hereby,
nor the compliance by Buyer with any of the provisions hereof will (a) conflict
with or result in a breach of any provision of its Certificate of Incorporation
or By-laws, (b) require any consent, approval, authorization or permit of, regis
tration, declaration or filing (except for filings under the Exchange Act) with,
or notification to, any governmental entity, (c) result in a default (or an
event which, with notice or lapse of time or both, would become a default) or
give rise to any right of termination by any third party, cancellation, amend
ment or acceleration under any contract, agreement, instrument, commitment,
arrangement or understanding, (d) require any material consent, authorization or
approval of any person other than a governmental entity, or (e) violate or
conflict with any order, writ, injunction, decree or law applicable to the
Buyer, the Stockholder or the Shares.
4. Transfer and Other Restrictions. For so long as the Asset
Purchase Agreement is in effect:
4.1 Certain Prohibited Transfers. The Stockholder agrees not
to:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or under
standing with respect to the sale, transfer, pledge, encumbrance, assignment or
other disposition of, the Shares or any interest contained therein
(collectively, a "Transfer"), other than pursuant to this Agreement; provided,
however, that notwithstanding any other provision of this Agreement, the Asset
Purchase Agreement or the Irrevocable Proxy, the Stockholder is permitted to
Transfer Option Shares as payment for the exercise price and/or any tax
withholding in connection with the exercise of stock options;
(b) except as contemplated by this Agreement, grant any proxies
or power of attorney or enter into a voting agreement or other arrangement with
respect to the Shares, other than this Agreement; nor
(c) deposit the Shares into a voting trust.
4.2 Efforts. The Stockholder agrees not to take any action
which would make any representation or warranty of the Stockholder herein untrue
or incorrect in any material respect or take any action that would have the
effect of preventing or disabling such Stockholder from performing his obliga
tions under this Agreement, other than any action permitted to be taken pursuant
to the Asset Purchase Agreement.
4.3 Additional Shares. Without limiting the provisions of the
Asset Purchase Agreement, in the event (i) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of shares of capital
stock of the Company on, of or affecting the Shares or (ii) the Stockholder
shall become the beneficial owner of any additional shares of Company Common
Stock or other securities entitling the holder thereof to vote or give consent
with respect to the matters set forth in Section 1 hereof, then the terms of
this Agreement shall apply to the shares of capital stock or other securities of
the Company held by the Stockholder immediately following the effectiveness of
the events described in clause (i) or the Stockholder becoming the beneficial
owner thereof, as described in clause (ii), as though they were Shares here
under. The Stockholder hereby agrees, while this Agreement is in effect, to
promptly notify Buyer of the number of any new shares of Company Common Stock
acquired by the Stockholder, if any, after the date hereof.
50 Legend. The Stockholder shall surrender to the Company all cer
tificates representing the Shares, and instruct the Company to place the follow
ing legend on such certificates:
"The shares of capital stock represented by this certificate are
subject to a Voting Agreement, dated as of August 3, 1998, by and
among HIAC XII CORP. and ."
60 Specific Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with the terms hereof or were otherwise
breached and that each party shall be entitled to specific performance of the
terms hereof, in addition to any other remedy which may be available at law or
in equity.
70 Confidentiality. Except as may be required by applicable law,
the Stockholder and Buyer severally agree to keep proprietary information regard
ing the Company and Buyer and their respective subsidiaries confidential.
80 Termination. Except for Section 7 hereof, which shall survive
without limitation, this Agreement shall terminate on the earlier of (i) the
Closing (as described in Section 1.5 of the Asset Purchase Agreement), (ii) the
agreement of the parties hereto to terminate this Agreement and (iii) the
termination of the Asset Purchase Agreement pursuant to Article VII thereof
notwithstanding the survival of any terms of the Asset Purchase Agreement
following such termination.
90 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery, (b) facsimile transmission, or (c) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such party
as shall be specified by notice given hereunder):
If to Buyer, to:
HIAC XII CORP.
c/o Hasbro, Inc.
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice-Chairman
with a copy to:
Hasbro, Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President-Corporate
Legal Affairs and Secretary
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Stockholder, to:
c/o Monarch Avalon, Inc.
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Baetjer and ▇▇▇▇▇▇ LLP
1800 Mercantile Bank and Trust Building
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
100 Certain Events. The Stockholder agrees that this Agreement and
the obligations hereunder shall attach to the 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.
110 Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
120 Consideration. This Agreement is granted in consideration of the
execution and delivery of the Asset Purchase Agreement by Buyer.
130 Amendment. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
140 Successors and Assigns. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party hereto. This Agreement will be binding upon, inure to the benefit of and
be enforceable by each party and such party's respective heirs, beneficiaries,
executors, representatives and permitted assigns.
150 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
160 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of ▇▇▇▇
▇▇▇▇ (without giving effect to the provisions thereof relating to conflicts of
law).
170 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
180 Headings. 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.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each of the undersigned Stockholders and a duly authorized officer
of Buyer on the day and year first written above.
HIAC XII CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
By: /s/ A. ▇▇▇▇ ▇▇▇▇
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Name: A. ▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
SCHEDULE I TO
VOTING AGREEMENT
Name of Stockholder Number of Shares
A. ▇▇▇▇ ▇▇▇▇ 173,490
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 427,529
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, in his capacity as 3,000
custodian for Lauren ▇▇▇▇ ▇▇▇▇
under the Maryland Gifts
to Minors Act.
SCHEDULE II TO
VOTING AGREEMENT
Name of Stockholder Number of Option Shares
A. ▇▇▇▇ ▇▇▇▇ 80,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 40,000