SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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)
MONARCH AVALON, INC.
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(Name of Issuer)
Common Stock, par value $0.25 per share
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(Title of Class and Securities)
609020102
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(CUSIP Number of Class of Securities)
Phillip H. Waldoks, Esq.
Senior Vice President-Corporate Legal Affairs
and Secretary
Hasbro, Inc.
32 West 23rd Street
New York, New York 10010
(212) 645-2400
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Thomas H. Kennedy
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
August 3, 1998
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(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 that 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: ( )
Note. Schedules filed in paper format shall include a
signed original and five copies of the schedule, including all
exhibits. See Rule 13d-7(b) for other parties to whom copies
are to be sent.
13D
CUSIP No. 609020102
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Hasbro, Inc. (05-0155090) and HIAC XII Corp. (05-0497248)
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (X)
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS* Not applicable.
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Hasbro, Inc. (Rhode Island) and HIAC XII Corp. (Delaware)
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(7) SOLE VOTING POWER
NUMBER OF -0-
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY -0-
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON -0-
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
-0-
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* (X)
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0%
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(14) TYPE OF REPORTING PERSON*
CO
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Item 1. Security and Issuer.
The class of equity securities to which this statement relates is
Common Stock, par value $0.25 per share (the "Common Stock"), of Monarch
Avalon, Inc., a Delaware corporation (the "Issuer"), which has its
principal executive office at 4517 Harford Road, Baltimore, Maryland 21204.
The Issuer's telephone number is (410)254-9200.
Item 2. Identity and Background.
Hasbro, Inc. ("Hasbro") is a Rhode Island corporation the principal
business of which is the designing, manufacturing and marketing of toys,
games, interactive software, puzzles and infant products. The principal
executive office of Hasbro is located at 1027 Newport Avenue, Pawtucket,
Rhode Island 02862.
HIAC XII Corp. is a Delaware corporation and a wholly owned, indirect
subsidiary of Hasbro ("HIAC XII") which was formed for the purpose of
acquiring certain assets of the Issuer. The principal executive office of
HIAC XII is located at 1027 Newport Avenue, Pawtucket, Rhode Island 02862.
Neither Hasbro, HIAC XII, nor any of the officers or directors of
Hasbro or HIAC XII, respectively, was, during the last five years,
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
Neither Hasbro, HIAC XII, nor any of the officers or directors of
Hasbro or HIAC XII, respectively, was, during the last five years, a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and, as a result of such proceeding, was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State securities
laws or finding any violation with respect to such laws.
The names, business addresses, present principal occupations or
employments and citizenships of the directors and officers of Hasbro and
HIAC XII are set forth in Schedule A hereto.
Item 3. Source and Amount of Funds or Other Consideration.
Not applicable.
Item 4. Purpose of the Transaction.
In connection with its acquisition of certain assets of the Issuer,
pursuant to an Asset Purchase Agreement among HIAC XII, Hasbro and the
Issuer pursuant to which the Issuer has agreed to sell substantially all
the assets of the Issuer's games business to HIAC XII (the "Asset Purchase
Agreement"), HIAC XII has entered into a voting agreement (the "Voting
Agreement") and an irrevocable proxy (the "Proxy") that may be deemed to
transfer ownership of 721,019 shares of Common Stock from Jackson Y. Dott
and A. Eric Dott (collectively, the "Stockholders") to HIAC XII, a wholly
owned, indirect subsidiary of Hasbro. Pursuant to the Voting Agreement and
the Proxy, the Stockholders have, with respect to all of the shares of
Common Stock set forth on Schedule I of the Voting Agreement which is
attached as an exhibit to this Schedule 13D, agreed to vote, and have
granted an irrevocable proxy to HIAC XII to vote: (i) to approve the Asset
Purchase Agreement between the Issuer, HIAC XII and Hasbro, 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 Issuer's games business, (B) a sale or transfer of the assets of the
Issuer's games business that the Issuer has agreed to sell pursuant to the
Asset Purchase Agreement, 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 of the Issuer's games
business that the Issuer has agreed to sell pursuant to the Asset Purchase
Agreement, (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 Issuer's games 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.
As the Voting Agreement and Proxy require the Stockholders to approve
the change of name of the Issuer to a name not including "Avalon", the
Stockholders shall have to vote to approve an amendment to the Issuer's
certificate of incorporation , which amendment would reflect such change of
name.
Item 5. Interest in Securities of the Issuer.
The aggregate number of shares of Common Stock that are subject to
the Voting Agreement and the Proxy is 721,019, which number includes
currently exercisable options to purchase up to 120,000 shares of Common
Stock. Such number of shares represents 41.4% of the Common Stock of the
Issuer, which percentage calculation is based on the capitalization of the
Issuer as set forth in the Issuer's Report on Form 10-KSB for the fiscal
year ended April 30, 1998.
As discussed more fully in Item 4 above and Item 6 below, on August
3, 1998, HIAC XII entered into a Voting Agreement and a Proxy with the
Stockholders, pursuant to which the Stockholders agreed, among other
things, to vote to approve the sale by the Issuer to HIAC XII of
substantially all of the assets of the games business of the Issuer and to
vote against any action or agreement that will result in a material breach
of any covenant, representation or warranty or any other obligation of the
Issuer under the Voting Agreement or the Asset Purchase Agreement. HIAC
XII's agreement to enter into the Asset Purchase Agreement with the Issuer
provided the consideration for the Stockholders' agreement to enter into
the Voting Agreement and the Proxy.
The agreement of the Stockholder's to vote to approve and to vote
against certain limited actions or agreements set forth in the Voting
Agreement and the Proxy may be perceived as a transfer of the beneficial
ownership from the Stockholders to HIAC XII of such shares of Common Stock
which are subject to the Voting Agreement and the Proxy. Pursuant to Rule
13d-4 under the Securities Exchange Act of 1934 (the "Exchange Act"),
Hasbro and HIAC XII expressly disclaim beneficial ownership of the 721,019
shares of Common Stock that are subject to the Voting Agreement and the
Proxy and maintain that the Stockholders are the beneficial owners of such
shares within the meaning of Rule 13d-3 of the Exchange Act.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
In connection with the acquisition of the assets of the Issuer's
games business, HIAC XII has entered into the Voting Agreement and the
Proxy. Pursuant to the Voting Agreement and the Proxy and until the earlier
to occur of the closing of the sale of substantially all the assets of the
Issuer's games business pursuant to the Asset Purchase Agreement and the
termination of the Asset Purchase Agreement, the Stockholders have agreed
to vote, and have granted an irrevocable proxy to HIAC XII to vote, all of
the shares of Common Stock that are subject to the Voting Agreement and the
Proxy: (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 Issuer's
games business, (B) a sale or transfer of the assets of the Issuer's games
business that the Issuer has agreed to sell pursuant to the Asset Purchase
Agreement, 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 of the Issuer's games business that the Issuer has agreed
to sell pursuant to the Asset Purchase Agreement, (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 Issuer's games
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. Pursuant to the
Voting Agreement, the Stockholders have also agreed that for so long as the
Asset Purchase Agreement is in effect, the Stockholders will not dispose of
any shares of Issuer Common Stock which are the subject of the Voting
Agreement and the Proxy.
Item 7. Material to be Filed as Exhibits.
Exhibit No. Item
3.1 Voting Agreement, dated as of August 3, 1998, by and
between HIAC XII Corp. and A. Eric Dott and Jackson Y.
Dott, stockholders of Monarch Avalon, Inc.
3.2 Irrevocable Proxy, dated as of August 3, 1998, by and
between HIAC XII Corp. and A. Eric Dott and Jackson Y.
Dott, stockholders of Monarch Avalon, Inc.
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.
HASBRO, INC.
August 13, 1998 By: /s/ Phillip H. Waldoks
Date __________________________
Name: Phillip H. Waldoks
Title: Senior Vice President -
Corporate Legal Affairs and
Secretary
HIAC XII CORP.
August 13, 1998 By: /s/ Phillip H. Waldoks
Date __________________________
Name: Phillip H. Waldoks
Title: Senior Vice President -
Corporate Legal Affairs and
Secretary
SCHEDULE A
INFORMATION CONCERNING DIRECTORS AND OFFICERS OF
HASBRO, INC. AND HIAC XII CORP.
I. OFFICERS AND DIRECTORS OF HASBRO, INC.
DONAL A. BARKSDALE - Senior Vice President and Chief
Information Officer
a. Principal Occupation Senior Vice President
or Employment: and Chief Information
Officer of Hasbro, Inc.
b. Business Address: 200 Naragansett Park Drive
Pawtucket, Rhode Island
02862
c. Citizenship: United States
ALAN R. BATKIN - Director
a. Principal Occupation Vice Chairman of
or Employment: Kissinger Associates, Inc.
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
HAROLD P. GORDON - Vice Chairman and Director
a. Principal Occupation Vice Chairman of
or Employment: Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship Canadian
ALEX GRASS - Director
a. Principal Occupation Chairman of the
or Employment: Executive Committee of
Rite Aid Corporation
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
ALAN G. HASSENFELD - Chairman of the Board, President and
Chief Executive Officer
a. Principal Occupation Chairman of the Board,
or Employment: President and Chief
Executive Officer of
Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
SYLVIA K. HASSENFELD - Director
a. Principal Occupation Former Chairman of the
or Employment: Board of the American
Jewish Joint
Distribution Committee, Inc.
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
RICHARD B. HOLT - Senior Vice President and Controller
a. Principal Occupation Senior Vice President
or Employment: and Controller of
Hasbro, Inc.
b. Business Address: 200 Naragansett Park Drive
Pawtucket, Rhode Island
02862
c. Citizenship: United States
VIRGINIA H. KENT - President, Global Brands and Product Development
a. Principal Occupation President of Global
or Employment: Brands and Product
Development of Hasbro, Inc.
b. Business Address: 1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
ADAM KLEIN - Executive Vice President, Global Strategy
and Development
a. Principal Occupation Executive Vice
or Employment: President of Global Strategy
and Development of
Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
MARIE JOSEE KRAVIS - Director
a. Principal Occupation Senior Fellow of the
or Employment: Hudson Institute
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
CLAUDINE B. MALONE - Director
a. Principal Occupation President of Financial
or Employment: and Management
Consulting, Inc.
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
MORRIS W. OFFIT - Director
a. Principal Occupation Chief Executive Officer
or Employment: of Offitbank
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
JOHN T. O'NEILL - Executive Vice President and Chief
Financial Officer
a. Principal Occupation Executive Vice
or Employment: President and Chief
Financial Officer of
Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
NORMA T. PACE - Director
a. Principal Occupation Partner of Paper
or Employment: Analytics Associates
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
CYNTHIA S. REED - Senior Vice President and General
Counsel
a. Principal Occupation Senior Vice President
or Employment: and General Counsel of
Hasbro, Inc.
b. Business Address: 1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
E. JOHN ROSENWALD, JR. - Director
a. Principal Occupation Vice Chairman of The
or Employment: Bear Stearns Companies, Inc.
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
CARL SPIELVOGEL - Director
a. Principal Occupation Chairman and Chief
or Employment: Executive Officer of
Carl Spielvogel
Associates, Inc.
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
PRESTON ROBERT TISCH - Director
a. Principal Occupation Co-Chairman and Co-
or Employment: Chief Executive
Officer of Loews
Corporation
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
MARTIN R. TRUEB - Senior Vice President and Treasurer
a. Principal Occupation Senior Vice President
or Employment: and Treasurer of
Hasbro, Inc.
b. Business Address: 200 Naragansett Park Drive
Pawtucket, Rhode Island
02862
c. Citizenship: United States
ALFRED J. VERRECCHIA - Executive Vice President,
President, Global Operations and Director
a. Principal Occupation Executive Vice
or Employment: President and
President, Global
Operations of Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
GEORGE B. VOLANAKIS - President, European Sales and
Marketing
a. Principal Occupation President of European
or Employment: Sales and Marketing of
Hasbro, Inc.
b. Business Address: Roundwood Avenue
Stockley Park
Uxbridge Middx UB11 1AZ
England
c. Citizenship: United States
PHILLIP H. WALDOKS - Senior Vice President - Corporate
Legal Affairs and Secretary
a. Principal Occupation Senior Vice President-
or Employment: Corporate Legal Affairs
and Secretary of
Hasbro, Inc.
b. Business Address: 32 West 23rd Street
New York, New York
10010
c. Citizenship: United States
E. DAVID WILSON - President, Hasbro Americas
a. Principal Occupation President, Hasbro
or Employment: Americas of Hasbro, Inc.
b. Business Address: 1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
PAUL WOLFOWITZ - Director
a. Principal Occupation Dean of Paul H. Nitze
or Employment: School of Advanced
International Studies
at the Johns Hopkins
University
b. Business Address: c/o Hasbro, Inc.
1027 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
II. OFFICERS AND DIRECTORS OF HIAC XII CORP.
HAROLD P. GORDON - Executive Vice President and Director
a. Principal Occupation Vice Chairman of
or Employment: Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: Canadian
ALAN G. HASSENFELD - President and Director
a. Principal Occupation Chairman of the Board,
or Employment: President and Chief
Executive Officer of
Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
RICHARD B. HOLT - Senior Vice President and Controller
a. Principal Occupation Senior Vice President
or Employment: and Controller of
Hasbro, Inc.
b. Business Address: 200 Naragansett Park Drive
Pawtucket, Rhode Island
02862
c. Citizenship: United States
JOHN T. O'NEILL- Executive Vice President and Chief
Financial Officer
a. Principal Occupation Executive Vice
or Employment: President and Chief
Financial Officer of
Hasbro, Inc.
b. Business Address: 1011 Newport Avenue
Pawtucket, Rhode Island
02862
c. Citizenship: United States
MARTIN R. TRUEB - Senior Vice President and Treasurer
a. Principal Occupation Senior Vice President
or Employment: and Treasurer of
Hasbro, Inc.
b. Business Address: 200 Naragansett Park Drive
Pawtucket, Rhode Island
02862
c. Citizenship: United States
PHILLIP H. WALDOKS - Senior Vice President - Corporate
Legal Affairs, Secretary and Director
a. Principal Occupation Senior Vice President-
or Employment: Corporate Legal Affairs
and Secretary of
Hasbro, Inc.
b. Business Address: 32 West 23rd Street
New York, New York
10010
c. Citizenship: United States
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.
1027 Newport Avenue
Pawtucket, RI 02862
Fax: (401) 727-5121
Attention: Harold P. Gordon
Vice-Chairman
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.
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/ 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
SCHEDULE I TO
VOTING AGREEMENT
Name of Stockholder Number of Shares
A. Eric Dott 173,490
Jackson Y. Dott 424,529
Jackson Y. Dott, in his capacity as 3,000
custodian for Lauren Noel Dott
under the Maryland Gifts
to Minors Act.
SCHEDULE II TO
VOTING AGREEMENT
Name of Stockholder Number of Option Shares
A. Eric Dott 80,000
Jackson Y. Dott 40,000
Exhibit 3.2
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:
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 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. 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.
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
purposes 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
irrevocable 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.
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
