Exhibit 3.1
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 Schedule 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 involving 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
Stockholders severally represents and warrants to Buyer as follows:
2.1 Binding Agreement. The Stockholder has the capacity to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Stockholder has duly and validly executed and
delivered this Agreement 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 enforceability 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, instrument, 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 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 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, encumbrances, 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
incorporated, 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 execution, 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 Agreement
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, registration, 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, amendment 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
understanding 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 obligations 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 hereunder. 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.
5. Legend. The Stockholder shall surrender to the Company all
certificates representing the Shares, and instruct the Company to place the
following 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 ."
6. 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.
7. Confidentiality. Except as may be required by applicable law,
the Stockholder and Buyer severally agree to keep proprietary information
regarding the Company and Buyer and their respective subsidiaries
confidential.
8. 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.
9. 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.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Vice-Chairman
with a copy to:
Hasbro, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000)000-0000
Attention: Xxxxxxx X. Xxxxxxx
Senior Vice President-Corporate
Legal Affairs and Secretary
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to Stockholder, to:
c/o Monarch Avalon, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxx
with a copy to:
Xxxxxxx, Baetjer and Xxxxxx LLP
1800 Mercantile Bank and Trust Building
0 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000)000-0000
Attention: Xxxx X. Xxxxxx, Esq.
10. 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.
11. 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.
12. Consideration. This Agreement is granted in consideration of
the execution and delivery of the Asset Purchase Agreement by Buyer.
13. 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.
14. 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.
15. 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.
16. Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to the provisions thereof relating
to conflicts of law).
17. 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.
18. 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/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
By: /s/ A. Xxxx Xxxx
----------------------------
Name: A. Xxxx Xxxx
By: /s/ Xxxxxxx X. Xxxx
---------------------------
Name: Xxxxxxx X. Xxxx
SCHEDULE I TO
VOTING AGREEMENT
Name of Stockholder Number of Shares
A. Xxxx Xxxx 173,490
Xxxxxxx X. Xxxx 424,529
Xxxxxxx X. Xxxx, in his capacity as 3,000
custodian for Lauren Xxxx Xxxx
under the Maryland Gifts
to Minors Act.
SCHEDULE II TO
VOTING AGREEMENT
Name of Stockholder Number of Option Shares
A. Xxxx Xxxx 80,000
Xxxxxxx X. Xxxx 40,000
