IRREVOCABLE PROXY
IRREVOCABLE PROXY, dated as of August 3, 1998, by and between HIAC XII
CORP., a Delaware corporation ("Buyer"), A. Xxxx Xxxx and Xxxxxxx X. Xxxx
(together with A. Xxxx Xxxx, 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 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.
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.
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. Xxxx Xxxx
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A. Xxxx Xxxx
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
HIAC XII CORP.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
