SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)
MONARCH AVALON, INC.
(Name of Issuer)
Common Stock, Par Value $.25 per share
(Title of Class of Securities)
609020102
(CUSIP Number)
Michael W. Conron, Esquire
Venable, Baetjer and Howard, LLP
1800 Mercantile Bank & Trust Building
2 Hopkins Plaza
Baltimore, MD 21201
(410) 244-7608
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 3, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No.: 609020102 13D
1. NAME OF REPORTING PERSON: A. Eric Dott
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES
ONLY): UNDISCLOSED
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS: Not Applicable
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States
of America
NUMBER OF
7. SOLE VOTING POWER: -0- shares
SHARES
BENEFICIALLY
8. SHARED VOTING POWER: 253,490 shares
OWNED BY
EACH
9. SOLE DISPOSITIVE POWER: -0- shares
REPORTING
PERSON 10. SHARED DISPOSITIVE POWER: 253,490 shares
WITH
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 253,490 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
14.9%
14. TYPE OF REPORTING PERSON: IN
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this statement relates is Common
Stock, $.25 par value, ("Common Stock") of Monarch Avalon, Inc., a Delaware
corporation (the "Issuer"), which has its principal executive office at 4517
Harford Road, Baltimore, MD 21204. The Issuer's telephone number is (410)254-
9200.
Item 2. Identity and Background.
(a) Mr. A. Eric Dott ("Mr. Dott")
(b) 4517 Harford Road, Baltimore, MD 21214
(c) Chairman of the Board of Directors, Monarch Avalon, Inc., 4517
Harford Road, Baltimore, MD 21214, a company engaged in the manufacture and
sale of board and computer games, the manufacture and sale of envelopes,
commercial printing and the publication of a magazine.
(d) Mr. Dott has not been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) in the last five years.
(e) Mr. Dott has not been a party to a civil proceeding described in Item
2(e) of Schedule 13D during the last five years.
(f) Mr. Dott is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Not Applicable
Item 4. Purpose of Transaction.
(a) Except as set forth pursuant to Item 4(c) and as described in Item 6, Mr.
Dott has not at the current time formulated any plans or proposals of the type
referred to in clauses (a), (b), (d) through (f), or (h) through (j) of Item 4
of Schedule 13D.
(c) In connection with the sale by the Issuer of the assets of its games
division, Mr. Dott has entered into a voting agreement (the "Voting Agreement")
and irrevocable proxy (the "Irrevocable Proxy") as described in Item 6 that may
be deemed to transfer shared beneficial ownership of the shares of Common Stock
reported in this Schedule 13D to HIAC XII Corp., an indirect subsidiary of
Hasbro, Inc. Pursuant to the Voting Agreement and Irrevocable Proxy, Mr. Dott
has, with respect all shares of Common Stock reported on this Schedule 13D,
agreed to vote, and has granted an irrevocable proxy to HIAC XII Corp. to vote,
<PAGE>
(i) to approve the asset purchase agreement between the Issuer, HIAC XII Corp.
and Hasbro, Inc., pursuant to which the Issuer has agreed to transfer
substantially all the assets of the Issuer's games business to HIAC XII Corp.
(the "Asset Purchase Agreement"), and the transactions contemplated thereby,
and
(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 Issuer under the Voting Agreement or the Asset Purchase
Agreement.
(g) Pursuant to the Voting Agreement and Irrevocable Proxy, Mr. Dott has, with
respect all shares of Common Stock reported on this Schedule 13D, agreed to
vote, and has granted an irrevocable proxy to HIAC XII Corp. to vote, to
approve an amendment to the Issuer's charter to change of the name of the
Issuer to a name not including the word "Avalon."
Item 5. Interest in Securities of the Issuer.
(a) Aggregate Number of Shares of Common Stock: 253,490 shares*
Percentage of Class: 14.9% **
* Number includes currently exercisable options to purchase up to 80,000 shares
of Common Stock.
** Percentage calculation based on capitalization of Issuer set forth in
Issuer's Report on Form 10-KSB dated April 30, 1998.
(b) Voting power and disposition power with respect to all shares set
forth in Item 5(a) is shared as described in Item 6 with HIAC XII Corp. HIAC
XII Corp., a Delaware corporation, is an indirect subsidiary of Hasbro, Inc., a
designer, manufacturer and marketer of toys, games, interactive software,
puzzles and infant products. HIAC XII Corp.'s address is 1027 Newport Avenue,
Pawtucket, RI 02862. Mr. Dott has no knowledge of facts pertaining to Items
2(d) and (e) of Schedule 13D with respect to HIAC XII Corp.
(c) As discussed in Item 4 and Item 6, on August 3, 1998, Mr. Dott
entered into the Voting Agreement and the Irrevocable Proxy with HIAC XII Corp.
and Mr. Jackson Y. Dott, Mr. Dott's son and President of the Issuer. Pursuant
to such agreements, Mr. Dott agreed to share voting power and disposition
power, as described in Item 6, with respect to all shares set forth in Item
5(a) with HIAC XII Corp. The consideration for Mr. Dott's agreement to enter
into the Voting Agreement and the Irrevocable Proxy was HIAC XII Corp.'s
agreement to enter into the Asset Purchase Agreement with the Issuer. Mr. Dott
received no additional consideration.
(d) Not applicable.
(e) Not applicable.
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
In connection with the sale by the Issuer of the assets of its games
division, Mr. Dott has entered into the Voting Agreement and the Irrevocable
Proxy. Pursuant to the Voting Agreement and the Irrevocable Proxy and until
the earlier to occur of the closing of the sale of the Issuer's games division
pursuant to the Asset Purchase Agreement or the termination of the Asset
Purchase Agreement, Mr. Dott has, with respect all shares of Common Stock
reported on this Schedule 13D, agreed to vote, and has granted an irrevocable
proxy to HIAC XII Corp. to vote:
(i) to approve the Asset Purchase Agreement and the transactions
contemplated thereby, including the change of the name of the Issuer 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 Issuer under the Voting 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 games business, (B) a sale or transfer of the assets of the
games business, other than in the ordinary course of business or pursuant
to the Asset Purchase Agreement, or the issuance of any securities of the
Issuer (except options to purchase Issuer Common Stock granted to
directors of the Issuer and the related issuance of Issuer 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 Issuer Common Stock outstanding plus the number of shares of Issuer
Common Stock reserved for issuance pursuant to such options to directors
shall be equal to the current number of shares of Issuer Common Stock
outstanding plus the number of shares of Issuer 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 Issuer, (D) any change in
the present corporate structure of the Issuer 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.
<PAGE>
Mr. Dott has also agreed for the term of the Asset Purchase Agreement not to
dispose of any shares of Common Stock reported on this Schedule 13D.
Item 7. Material to be Filed as Exhibits.
Exhibit No. Item
3.1 Irrevocable Proxy
3.2 Voting Agreement
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 7, 1998 /s/ A. Eric Dott
----------------------
A. Eric Dott
<PAGE>
0091844.01EXHIBIT INDEX
Exhibit No. Item
3.1 Irrevocable Proxy
3.2 Voting Agreement
<PAGE>
IRREVOCABLE PROXY
IRREVOCABLE PROXY, dated as of August 3, 1998, by and between HIAC XII
CORP., a Delaware corporation ("Buyer"), A. Eric Dott and Jackson Y. Dott
(together with A. Eric Dott, the "Stockholders").
WHEREAS, concurrently with the execution and delivery of this
Agreement, Monarch Avalon, Inc., a Delaware corporation (the "Company") and
Buyer are entering into an Asset Purchase Agreement, dated as of August 3, 1998
(the "Asset Purchase Agreement"), providing, among other things, for the sale by
the Company and the acquisition by Buyer of certain assets of the Company; and
WHEREAS, the Stockholders are the owners beneficially and of record of
an aggregate of 601,019 Shares and 120,000 Option Shares (as described in the
Voting Agreement dated August 3, 1998, between Buyer and each of the
Stockholders (the "Voting Agreement")); and
WHEREAS, as a condition to its willingness to enter into the Asset
Purchase Agreement, Buyer has requested that the Stockholders agree, and the
Stockholders have agreed pursuant Section 1.2 of the Voting Agreement, to grant
Buyer an irrevocable proxy (the "Proxy") with respect to the Shares, upon the
terms and subject to the conditions hereof;
NOW, THEREFORE, to induce Buyer to enter into the Asset Purchase
Agreement and in consideration of the aforesaid and the mutual representations,
warranties, covenants and agreements set forth herein and in the Asset Purchase
Agreement and the Voting Agreement, the parties hereto agree as follows:
<PAGE>
1. Each Stockholder hereby constitutes and appoints Buyer, during
the term of this Agreement as such Stockholder's true and lawful proxy and
attorney-in-fact, with full power of substitution and resubstitution, to vote
all of the Shares (and any and all securities issued or issuable in respect
thereof) which such Stockholder is entitled to vote, for and in the name, place
and stead of such Stockholder, 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 busi
ness 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 ex
pected, 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. All power and authority
hereby conferred is coupled with an interest and is irrevocable. In the
event that Buyer is unable to exercise such power and authority for any
reason, each Stockholder agrees that he will vote all the Shares owned by
him in favor of approval and adoption of the Asset Purchase Agreement and
the transactions contemplated thereby, at any such meeting or adjournment
thereof, or provide his written consent thereto.
<PAGE>
2. Any shares of Common Stock issued to the Stockholders upon the
exercise of any stock options that are currently exercisable or become
exercisable during the term of this Agreement shall be deemed Shares for purpos
es of this Agreement.
3. This Proxy shall be governed by and construed in accordance with
the laws of the State of Delaware without giving effect to the provisions
thereof relating to conflicts of law.
4. This Proxy shall be binding upon, inure to the benefit of, and be
enforceable by the successors and permitted assigns of the parties hereto. This
Proxy and the rights hereunder may not be assigned or transferred by Buyer,
except that Buyer may assign its rights hereunder to any direct or indirect
subsidiary.
5. This 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.
6. This Proxy is granted in consideration of the execution and
delivery of the Asset Purchase Agreement by Buyer. Each Stockholder agrees that
such Proxy is coupled with an interest sufficient in law to support an irrevoca
ble power and shall not be terminated by any act of such Stockholder, by lack of
appropriate power or authority or by the occurrence of any other event or
events.
7. The parties acknowledge and agree that performance of their
respective obligations hereunder will confer a unique benefit on the other and
that a failure of performance will not be compensable by money damages. The
parties therefore agree that this Proxy shall be specifically enforceable and
that specific enforcement and injunctive relief shall be available to Buyer and
the Stockholder for any breach of any agreement, covenant or representation
hereunder. This Proxy shall revoke all prior proxies given by the Stockholder
at any time with respect to the Shares.
8. Each Stockholder will, upon request, execute and deliver any
additional documents and take such actions as may reasonably be deemed by Buyer
to be necessary or desirable to complete the Proxy granted herein or to carry
out the provisions hereof.
<PAGE>
9. If any term, provision, covenant, or restriction of this Proxy is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Proxy
shall remain in full force and effect and shall not in any way be affected,
impaired or invalidated.
10. This Proxy may be executed in two counterparts, each of which
shall be deemed to be an original but both of which together shall constitute
one and the same document.
IN WITNESS WHEREOF, Buyer and the Stockholder have caused this Proxy
to be duly executed on the date first above written.
/s/ A. Eric Dott
-----------------------
A. Eric Dott
/s/ Jackson Y. Dott
-----------------------
Jackson Y. Dott
HIAC XII CORP.
By: /s/ Harold P. Gordon
----------------------------
Name: Harold P. Gordon
Title: Executive Vice President
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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:
<PAGE>
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:
<PAGE>
(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:
<PAGE>
"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.
1027 Newport Avenue
Pawtucket, RI 02862
Fax: (401) 727-5121
Attention: Harold P. Gordon
Vice-Chairman
<PAGE>
with a copy to:
Hasbro, Inc.
32 West 23rd Street
New York, New York 10010
Fax: (212)741-0663
Attention: Phillip H. Waldoks
Senior Vice President-Corporate
Legal Affairs and Secretary
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-9931
Fax: (212) 735-2000
Attention: Thomas H. Kennedy, Esq.
If to Stockholder, to:
c/o Monarch Avalon, Inc.
4517 Harford Road
Baltimore, Maryland 21214
Fax: (410) 254-0991
Attention: Eric Dott
with a copy to:
Venable, Baetjer and Howard LLP
1800 Mercantile Bank and Trust Building
2 Hopkins Plaza
Baltimore, Maryland 21201
Fax: (410)244-7742
Attention: Neal D. Borden, 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.
<PAGE>
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 Dela
ware (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.
<PAGE>
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/ Harold P. Gordon
----------------------------
Name: Harold P. Gordon
Title: Executive Vice President
By: /s/ A. Eric Dott
----------------------
Name: A. Eric Dott
By: /s/ Jackson Y. Dott
----------------------
Name: Jackson Y. Dott
<PAGE>
SCHEDULE I TO
VOTING AGREEMENT
Name of Stockholder Number of Shares
A. Eric Dott 173,490
Jackson Y. Dott 427,529
Jackson Y. Dott, in his capacity as 3,000
custodian for Lauren Noel Dott
under the Maryland Gifts
to Minors Act.
<PAGE>
SCHEDULE II TO
VOTING AGREEMENT
Name of Stockholder Number of Option Shares
A. Eric Dott 80,000
Jackson Y. Dott 40,000
