This VOTING
AGREEMENT (this “ Agreement ”), dated as of
March 13, 2007, is entered into by and among eToys Direct,
Inc., a Delaware corporation (the “ Company ”),
and the individuals and other parties listed on Schedule A
hereto (each, a “ Stockholder ”, and
collectively, the “ Stockholders ”).
WHEREAS, the
Stockholders own (both beneficially and of record) in the aggregate
2,153,553 shares of the Parent Common Stock (together with any
shares of Parent Common Stock acquired by the Stockholders after
the date hereof, referred to hereinafter collectively as the
“ Shares ”);
WHEREAS, Parent,
Merger Sub, and the Company have entered into an Agreement and Plan
of Merger, dated as of the date hereof (the “ Merger
Agreement ”); and
WHEREAS, each
Stockholder has agreed to enter into this Agreement in order to
induce the Company to enter into the Merger Agreement and to
consummate the transactions contemplated by the Merger
Agreement.
NOW, THEREFORE, in
consideration of the Company’s entering into the Merger
Agreement and of the mutual covenants and agreements contained
herein and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
SECTION 1.
Defined Terms . Capitalized terms used in this Agreement and
not otherwise defined herein shall have the meanings assigned to
them in the Merger Agreement.
SECTION 2.
Representations and Warranties of Stockholders . Each
Stockholder hereby severally, and not jointly, represents and
warrants to the Company as follows:
2.1
Title to the Shares . Such Stockholder is both the record
and beneficial owner of, and has good and marketable title to, the
number of shares of Parent Common Stock and other securities
convertible into or exercisable or exchangeable for any shares of
Parent Common Stock set forth opposite the name of such Stockholder
on Schedule A hereto, which as of the date hereof constitutes
all of the shares of Parent Common Stock and all other securities
convertible into or exercisable or exchangeable for shares of
Parent Common Stock owned both beneficially and of record by such
Stockholder. Such Stockholder has the exclusive right to vote such
shares of Parent Common Stock, and any shares acquired upon the
conversion, exercise or exchange of all such other securities held
by him, her or it as of the date hereof, on all matters submitted
to holders of shares of Parent Common Stock. Such Stockholder does
not have any rights of any nature to acquire any additional
securities of Parent, except as set forth on Schedule A. Such
Stockholder owns all of such shares of Parent Common Stock free and
clear of all security interests, liens, claims, pledges, options,
rights of first refusal, limitations on voting rights,
restrictions, charges, proxies and other encumbrances of any
nature, except for any such (the “ Existing Liens
”) (i) as will be terminated in connection with the
Parent Debt
Repayment,
(ii) as are disclosed in a Schedule 13D filed by any
Stockholder with the SEC prior to the date of this Agreement, or
(iii) as are provided for in a brokerage margin account
agreement to which any such shares of Parent Common Stock are
subject as of the date of this Agreement, and has not appointed or
granted any proxy, which appointment or grant is still effective,
with respect to any of such shares of Parent Common Stock owned by
such Stockholder. To the extent any Person other than such
Stockholder possesses the power to direct the voting of any Shares
of which such Stockholder is both the record and beneficial owner,
the identity of such Person is noted in a footnote to
Schedule A.
2.2
Organization . Such Stockholder (if an entity) is duly
organized, validly existing and in good standing under the laws of
the state of its incorporation, formation or
organization.
2.3
Authority Relative to this Agreement . Such Stockholder has
the legal capacity (in the case such Stockholder is a natural
person) and all necessary power and authority to execute and
deliver this Agreement, to perform his, her or its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions
contemplated hereby have been duly and validly authorized by all
necessary action on the part of such Stockholder (in case such
Stockholder is not a natural person). This Agreement has been duly
and validly executed and delivered by such Stockholder and,
assuming its due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance
with its terms, (i) except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors’ rights generally, and
(ii) subject to general principles of equity.
2.4
No Conflict . The execution and delivery of this Agreement
by such Stockholder does not, and the performance of this Agreement
by such Stockholder will not, (a) require any consent,
approval, authorization or permit of, or filing with or
notification to, any Governmental Entity or any other Person by
such Stockholder, except for any such filings with the SEC on
Schedule 13D as may be required under the Exchange Act;
(b) conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under any
provision of, the articles or certificate of incorporation, bylaws
or analogous documents of such Stockholder (other than Stockholders
that are natural persons) or any other agreement to which such
Stockholder is a party, including any voting agreement,
stockholders agreement, voting trust, trust agreement, pledge
agreement, loan or credit agreement, note, bond, mortgage,
indenture lease or other agreement, instrument, permit, concession,
franchise or license; or (c) conflict with or violate any
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to such Stockholder or to such
Stockholder’s property or assets.
SECTION 3.
Covenants of Stockholders .
3.1
Restriction on Transfer . Each Stockholder hereby covenants
and agrees that, prior to the termination of this Agreement, except
as otherwise specifically contemplated by this Agreement, such
Stockholder shall not, and shall not offer or agree to, sell,
transfer, tender, assign, hypothecate or otherwise dispose of,
grant any proxy with respect to, or
deposit into a
voting trust such Stockholder’s Shares, or enter into a
voting trust agreement or create any additional security interest,
lien, claim, pledge, option, right of first refusal, limitation on
voting rights, charge or other encumbrance of any nature whatsoever
with respect to such Shares.
3.2
Additional Shares . During the period prior to the
termination of this Agreement, each Stockholder will promptly
notify the Company of the number of new shares of Parent Common
Stock or any other securities of Parent acquired directly or
beneficially by such Stockholder, if any, after the date hereof.
Any such shares shall become “Shares” within the
meaning of this Agreement.
3.3
Nonsolicitation . Prior to the termination of this
Agreement, each Stockholder, severally and not jointly, agrees to
not, and to not propose, resolve, agree or permit any Subsidiary or
representative of such Stockholder to, directly or indirectly,
(i) solicit, initiate or take any action to facilitate or
encourage the submission of inquiries, proposals or offers from any
Person relating to any Acquisition Proposal, or agree to or endorse
any Acquisition Proposal; (ii) enter into any agreement to
(x) facilitate or further the consummation of any Acquisition
Proposal, (y) approve or endorse any Acquisition Proposal or
(z) in connection with any Acquisition Proposal, require
Parent or Merger Sub to abandon, terminate or fail to consummate
the Merger; or (iii) except as and to the extent Parent may be
permitted so to do pursuant to the terms of the Merger Agreement,
including, without limitation, Section 7.5 thereof, enter into
or participate in any discussions or negotiations in connection
with any Acquisition Proposal or inquiry with respect to any
Acquisition Proposal, or furnish to any Person any information with
respect to Parent’s business, properties or assets in
connection with any Acquisition Proposal or inquiry with respect to
any Acquisition Proposal.
SECTION 4.
Voting Agreement; Proxy .
4.1
Voting Agreement . Each Stockholder hereby agrees, severally
and not jointly, that, prior to the termination of this Agreement,
at any meeting of the stockholders of Parent, however called, in
any action by written consent of the stockholders of Parent, or in
any other circumstances upon which such Stockholder’s vote,
consent or other approval is sought, such Stockholder shall vote
the Shares owned both beneficially and of record by such
Stockholder, and any other Shares over which such Stockholder
possesses the power to direct the vote:
(a)
in favor of adoption of the Merger Agreement and approval of the
terms thereof and of the Merger and each of the other transactions
contemplated thereby;
(b)
against any action or agreement that is, or would be, reasonably
likely to result in any conditions to Parent’s obligations
under the Merger Agreement not being fulfilled or would result in,
or would reasonably be likely to result in, a material breach of
any representation, warranty, covenant or agreement of Parent or
Merger Sub under the Merger Agreement;
(c)
against any Acquisition Proposal;
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