IRREVOCABLE PROXY
THIS AGREEMENT, dated as of January 31, 1996, between Golden Press
Holding, L.L.C., a Delaware limited liability company (the "Buyer"), and the
Trust, fbo Xxxxxxx X. Xxxxxxxxx u/a March 16, 1978, Xxxxxxx X. Xxxxxxxxx and
Xxxxxx Xxxxxx, as trustees (the "Shareholder"), a shareholder of Western
Publishing Group, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution of this Agreement, the
Company and the Buyer are entering into a Securities Purchase Agreement (the
"Securities Purchase Agreement") pursuant to which the Buyer will purchase (the
"Securities Purchase") 13,000 shares of the Company's Series B Convertible
Preferred Stock, no par value ("Series B Preferred Stock"), and a warrant (the
"Warrant") to purchase 3,250,000 shares (subject to adjustment) of the Company's
common stock, par value $.01 per share ("Company Common Stock");
WHEREAS, contemporaneously with the execution of this Agreement, Buyer is
entering into an agreement substantially similar to this Agreement with each of
(i) Xxxxxxx X. Xxxxxxxxx and (ii) the Trust fbo Xxxxxxx X. Xxxxxxxxx u/a Xxxxx
X. Xxxxxxxxx dated April 5, 1986, Fleet National Bank of Connecticut, as trustee
(collectively, the "Other Shareholders"), which own 3,501,000 and 95,771 shares
of Company Common Stock, respectively; and
WHEREAS, the Buyer, as a condition to its willingness to enter into
the Securities Purchase Agreement, has required the Shareholder to grant the
Buyer an irrevocable proxy with respect to all of the shares of Company Common
Stock owned by the Shareholder, together with any additional shares of Company
Common Stock hereafter acquired by the Shareholder (such specified number of
shares, and any additional shares when and if they are acquired by Shareholder,
being referred to as the "Shares") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Irrevocable Proxy. By entering into this Agreement, the Shareholder
hereby grants a proxy (the "Proxy") appointing the Buyer (or any designee of the
Buyer) as the Shareholder's lawful agent, attorney-in-fact and proxy, with full
power of substitution, for and in the Shareholder's name, to vote, express
consent or dissent, or otherwise to utilize such voting power in such manner and
upon such matters as the Buyer or its proxy or substitute shall, in the Buyer's
sole discretion, deem proper with respect to the Shares, including without
limitation, to vote any or all the Shares at any meeting, or in connection with
any written consent, of the Company's shareholders (i) in favor of the
Securities Purchase (or any similar transaction involving the Company and the
Buyer (or an Affiliate thereof)), (ii) in favor of the Securities Purchase
Agreement or other agreement evidencing any such transaction and in favor of any
other related transactions or matters presented in connection with any such
transaction, including the Company Voting Matters (as defined in the Securities
Purchase Agreement), and (iii) against any other proposal which provides for any
merger, sale of assets or other Third Party Business Combination (as defined in
the Securities Purchase Agreement) between the Company (or any subsidiary of the
Company) and any other person or entity or which would make it impractical for
the Buyer to effect the Securities Purchase or other similar transaction
involving the Company and the Buyer (or an Affiliate thereof); provided,
however, that, until the consummation of the Securities Purchase, the Proxy
shall not allow Buyer to vote against, or for the removal of, existing members
of the Company's Board of Directors, except that the Proxy will be voted for the
Company Voting Matters as contemplated by Section 5.3 of the Securities Purchase
Agreement. The Proxy is irrevocable, is coupled with an interest, and is granted
in consideration of the Buyer's entering into this Agreement and the Securities
Purchase Agreement; provided, however, that the Proxy shall be revoked upon the
earlier to occur of (x) the termination of the Securities Purchase Agreement in
accordance with its terms prior to the consummation of the Securities Purchase
and (y) the failure of the aggregate "beneficial ownership" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of Buyer, each
member thereof, any Affiliates of such members (other than of Warburg, Xxxxxx
Ventures, L.P. ("WPV")) and the general partnership that acts as a general
partner of WPV, at any time following the consummation of the Securities
Purchase, to constitute 15% or more of the outstanding Company Common Stock
(after taking into account the conversion or exercise of all outstanding
securities of the Company that are convertible into or exercisable for shares of
Company Common Stock, provided, however, that the shares of Company Common Stock
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issuable upon exercise of the Warrant shall be taken into account only in the
amount of the excess, if any, of the number of such shares over the number of
shares of Company Common Stock issued to such parties as dividends on the Series
B Preferred Stock). If the proxy granted in this Section 1 shall be determined
to be invalid for any reason, the Shareholder hereby agrees to vote the Shares,
in any circumstances set forth in this Section 1, in accordance with the written
instructions of Buyer. Notwithstanding any implication to the contrary in this
Agreement, the proxy granted in this Section 1 shall be revoked, and the
agreement set forth in the immediately preceding sentence shall be terminated,
with respect to any Shares upon the sale or transfer of such Shares to a third
party (other than an Affiliate of the Shareholder), provided that such sale or
transfer is otherwise permitted under the terms of this Agreement. For purposes
of this Agreement, "Affiliate" is used as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), and includes, without
limitation, immediate family members and trusts, 25% or more of the beneficial
interests of which are owned by such person or one or more members of his
immediate family members.
2. Legending of Certificates; Nominee Shares. The Shareholder agrees to
submit to the Buyer contemporaneously with or promptly following execution of
this Agreement (or promptly following receipt of any additional certificates
representing any additional Shares) all certificates representing the Shares so
that the Buyer may note thereon a legend referring to the transfer restrictions
in this Agreement. If any of the Shares beneficially owned by the Shareholder
are held of record by a brokerage firm in "street name" or in the name of any
other nominee (a "Nominee," and, as to the Shares, "Nominee Shares"), the
Shareholder agrees that, upon written notice by the Buyer requesting it, the
Shareholder will within five days of the giving of such notice execute and
deliver to the Buyer a limited power of attorney in such form as shall be
reasonably satisfactory to the Buyer enabling the Buyer to require the Nominee
to grant to the Buyer an irrevocable proxy to the same effect as Section 1
hereof with respect to the Nominee Shares held by such Nominee and to submit to
the Buyer the certificates representing such Nominee Shares for notation of the
foregoing legend thereon.
3. [Intentionally omitted.]
4. Representations and Warranties of the Shareholder. The Shareholder
represents and warrants to the Buyer that:
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(a) On the date hereof, the Shareholder is the owner of record of 400,000
shares of Company Common Stock. All of the Shares are validly issued, fully paid
and nonassessable, with no personal liability attaching to the ownership
thereof; and the Shareholder has good and valid title to the Shares, free and
clear of any agreements, liens, adverse claims or encumbrances whatsoever with
respect to the ownership of or the right to vote the Shares. The Shareholder has
not granted any proxies with respect to the Shares except as contemplated by
this Agreement.
(b) The Shareholder has the full right, power and authority to enter into
this Agreement, and this Agreement has been duly and validly executed and
delivered on behalf of the Shareholder.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not, with
or without the giving of notice or the passage of time, (i) violate any
judgment, injunction or order of any court, arbitrator or governmental agency
applicable to the Shareholder, or (ii) conflict with, result in the breach of
any provision of, constitute a default under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Shareholder under, or require the consent of any third party under, any
agreement, instrument, judgment, order or decree to which the Shareholder is a
party or by which the Shareholder may be bound.
(d) This Agreement is the valid and binding Agreement of the Shareholder,
enforceable against the Shareholder in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
(e) The Shares are the only shares of Company Common Stock owned of record
by the Shareholder, and the Shareholder does not own any options to purchase or
rights to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any securities of the
Company.
(f) No investment banker, broker or finder is entitled to a commission or
fee from the Shareholder or the Company in respect of this Agreement based upon
any arrangement or agreement made by or on behalf of the Shareholder.
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5. Additional Covenants of the Shareholder. The Shareholder hereby
covenants and agrees that:
(a) The Shareholder will not enter into any transaction, take any action,
or by inaction permit any event to occur, that would result in any of the
representations or warranties of the Shareholder herein contained not being true
and correct at and as of the time immediately after the occurrence of such
transaction, action or event.
(b) Until the termination of this Agreement, the Shareholder, whether
directly, indirectly, or through any employee, agent or otherwise shall not: (i)
solicit or initiate any inquiry or submission of a proposal or an offer from any
person or entity relating to any acquisition or purchase of (A) the assets,
business or property of the Company or any subsidiary thereof, or (B) any equity
interest in, or any merger, consolidation or business combination with, the
Company or any of its subsidiaries (an "acquisition proposal"), or (ii)
participate in any discussions or negotiations regarding, or furnish to any
other person or entity any information with respect to, or otherwise cooperate
in any way or assist or facilitate any acquisition proposal by any other person
or entity. The Shareholder shall promptly advise the Buyer of any communication
(including the identity of the person or entity making such communication and
the terms thereof) that the Shareholder may receive relating to any of the
foregoing.
(c) Until the termination of this Agreement, the Shareholder shall not,
directly or indirectly, (i) grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any Shares or (ii)
acquire, sell, assign, transfer, encumber or otherwise dispose of, or enter into
any contract, option or other arrangement or understanding with respect to the
direct or indirect acquisition or sale, assignment, transfer, encumbrance or
other disposition of, any shares of capital stock of the Company during the term
of this Agreement other than with the Other Shareholders. The Shareholder shall
not seek or solicit any such acquisition or sale, assignment, transfer,
encumbrance or other disposition or any such contract, option or other
arrangement or assignment or understanding and the Shareholder agrees to notify
the Buyer promptly and to provide all details requested by the Buyer if the
Shareholder shall be approached or solicited, directly or indirectly, by any
person or entity with respect to any of the foregoing. Notwithstanding the
foregoing, the Shareholder shall be entitled, (i) at any time beginning three
business days after
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the financial results of the Company for the fiscal year ending February 3, 1996
have been Publicly Disclosed (as defined below) by the Company, but not before
consummation of the Securities Purchase, to sell all or a portion of the Shares
to any purchaser, (x) in the case of non-negotiated, public, open-market
transactions, in amounts not to exceed the limitations set forth in Rule 144(e)
under the Securities Act (provided that the Shareholder and its Affiliates shall
be considered one person for purposes of such limitations) and (y) in all other
cases, other than to an Entrepreneurial Investor (as defined below) and (ii) to
pledge Shares in order to secure a loan from a bona fide lending institution,
provided that (x) prior to such pledge such institution agrees in writing to
enter into an agreement with the Buyer substantially identical to this Agreement
and reasonably satisfactory in all respects to the Buyer, such agreement to take
effect immediately prior to such institution's foreclosing or receiving any
rights (other than a security interest therein) in respect of such Shares, and
(y) prior to such foreclosure, the rights of such institution in respect of such
Shares shall be limited to a security interest therein and be subject to this
Agreement and (iii) to distribute Shares to its beneficiaries as required under
its terms of trust, provided that prior to such distribution, such beneficiary
shall enter into an agreement with the Buyer substantially identical to this
Agreement and reasonably satisfactory in all respects to the Buyer. The
Shareholder shall provide the Buyer with prior written notice of any proposed
transfer of Shares pursuant to this Section 5(c) and evidence of compliance
therewith. For purposes of this Agreement, "Publicly Disclosed" means the
Company's publicly announcing (which may include disclosure in the Proxy
Statement mailed to the holders of Company Common Stock in connection with the
Securities Purchase) the consolidated financial results of the Company and its
consolidated subsidiaries for the fiscal year ending February 3, 1996 in the
same detail as the Company's public announcement of such results for the fiscal
year ended January 28, 1995 (containing at least the consolidated revenues,
operating income and net income of the Company and its consolidated
subsidiaries), and an "Entrepreneurial Investor" means any investor that (or any
investor, any of whose Affiliates) (x) is listed on Schedule I hereto or (y) is
unacceptable to Xxxx Xxxxxxxxxx, in his sole discretion, provided that no
individual or entity listed on Schedule II hereto shall be deemed an
Entrepreneurial Investor.
(d) The Shareholder shall execute and deliver any additional documents
reasonably necessary or desirable, in the reasonable opinions of both the
Buyer's counsel and the Shareholder's counsel, to evidence the Proxy granted in
Section 1
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with respect to the Shares or otherwise implement and effect the provisions of
this Agreement.
6. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Shareholder that:
(a) The Buyer has all requisite power and authority to enter into and
perform all of its obligations under this Agreement. The execution, delivery and
performance of this Agreement and all of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of the Buyer. This
Agreement has been duly executed and delivered by the Buyer.
(b) Neither the execution, delivery or performance of this Agreement by the
Buyer nor the consummation of the transactions contemplated herein will violate
the organizational documents of the Buyer or will conflict with or result in the
breach of any material term, condition or provision of any instrument,
indenture, contract, lease or other document or understanding, oral or written,
to which the Buyer is a party or is otherwise bound or affected in such a manner
as to materially and adversely affect the business of the Buyer.
7. Termination. This Agreement may be terminated by any party hereto on or
after the day of termination of the Securities Purchase Agreement in accordance
with its terms, prior to the consummation of the Securities Purchase, and
thereafter (i) by mutual written consent of both parties hereto, provided that
Section 10 hereof shall survive termination of this Agreement or (ii) at such
time as the Shareholder and the Other Shareholders shall have disposed of direct
and indirect "beneficial ownership" of all shares of Company Common Stock
(excluding the 60,000 share of Company Common Stock owned by the Xxxxxxx X. and
Xxxxxx Xxxxxxxxx Foundation, Inc.) in bona fide transactions that do not violate
this Agreement.
8. Binding Effect; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
permitted assigns. Except as contemplated by Section 5(d), the Shareholder shall
not assign its rights or obligations hereunder without the Buyer's consent. The
Buyer may assign its rights and obligations hereunder to an Affiliate.
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9. Notices. All notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or by
Federal Express or other courier service or sent by express mail, postage
prepaid, return receipt requested, addressed to the respective party at the
applicable address below, on the date of such personal delivery or on the date
received:
If to the Buyer: Golden Press Holding, L.L.C.
c/o Warburg, Xxxxxx Ventures, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
with a copy to: Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to the Shareholder: Xxxxxxx X. Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
with a copy to: Milbank, Tweed, Xxxxxx & XxXxxx
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Any party may change the foregoing address from time to time by giving the
other party notice thereof.
10. Injunctive Relief; Remedies Cumulative.
(a) Each party hereto acknowledges that the other party will be irreparably
harmed and that there will be no adequate remedy at law for a violation of any
of the covenants or agreements of such party that are contained in this
Agreement. It is accordingly agreed that, in addition to any other remedies that
may be available to the non-
8
breaching party upon the breach by any other party of such covenants and
agreements, the non-breaching party shall have the right to obtain injunctive
relief to restrain any breach or threatened breach of such covenants or
agreements or otherwise to obtain specific performance of any of such covenants
or agreements.
(b) No remedy conferred upon or reserved to any party herein is intended to
be exclusive of any other remedy, and every remedy shall be cumulative and in
addition to every other remedy herein or now or hereafter existing at law, in
equity or by statute.
11. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of laws thereof; provided, however, that the laws of the
State of Delaware shall govern as to internal corporate matters.
12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single agreement.
13. Effect of Partial Invalidity. Whenever possible, each provision of this
Agreement shall be construed in such a manner as to be effective and valid under
applicable law. If any provision of this Agreement or the application thereof to
any party or circumstance shall be prohibited by or invalid under applicable
law, such provisions shall be ineffective to the extent of such prohibition
without invalidating the remainder of such provision or any other provisions of
this Agreement or the application of such provision to the other party or other
circumstances.
14. Entire Agreement. This Agreement constitutes the entire understanding
among the parties hereto with respect to the subject matter hereof and
supersedes any prior agreements, written or oral, with respect thereto.
15. Jurisdiction and Process. Each party hereto irrevocably submits to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each party hereto irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. Each party
9
hereto agrees that a final judgment in any such proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Each party hereto consents to process being served
in any such proceeding by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested to such party at its address
specified in Section 9 or at such other address of which such party shall then
have been notified pursuant to said Section. Each party hereto agrees that such
service upon receipt (i) shall be deemed in every respect effective service of
process upon it in any such proceeding and (ii) shall, to the fullest extent
permitted by applicable law, be taken and held be valid personal service upon
and personal delivery to such party. Such service shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States
Postal Service or any reputable commercial delivery service.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first above written.
GOLDEN PRESS HOLDING, L.L.C.
By: WARBURG, XXXXXX VENTURES, L.P.
Member
By:___________________________
Name:
Title: General Partner
XXXXXXX X. XXXXXXXXX AND
XXXXXX XXXXXX, trustees, x/x
Xxxxx 00, 0000 xxx Xxxxxxx X.
Xxxxxxxxx
By:________________________________
Xxxxxxx X. Xxxxxxxxx
Trustee
By:________________________________
Xxxxxx Xxxxxx
Trustee
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Index of Defined Terms
beneficial ownership ....................................................... 2
Buyer ...................................................................... 1
Company .................................................................... 1
Company Common Stock ....................................................... 1
Nominee .................................................................... 3
Nominee Shares ............................................................. 3
Other Shareholders ......................................................... 1
Proxy ...................................................................... 1
Publicly Disclosed ......................................................... 6
Securities Purchase ........................................................ 1
Securities Purchase Agreement .............................................. 1
Series B Preferred Stock ................................................... 1
Shareholder ................................................................ 1
Shares ..................................................................... 1
Warrant .................................................................... 1
