PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of September 8, 1998 (this
"Agreement"), entered into by and among GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
(together with its successors and assigns, "GBFE") GOLDEN BOOKS HOME VIDEO, INC.
(together with its successors and assigns, "GBHV"), GOLDEN BOOKS PUBLISHING
COMPANY, INC. (together with its successors and assigns, "GBPC") and GOLDEN
PRESS HOLDING, L.L.C. (together with its successors and assigns, "GPH") as
secured party hereunder, for its benefit and the ratable benefit of any other
holders (the "Holders") of the Notes (defined below). This Agreement is being
entered into in connection with, pursuant to and as collateral security for the
debts, liabilities and obligations of each of GBFE, GBPC and GBHV arising under
or with respect to the Note Purchase Agreement (as defined below) the Notes and
the Publishing Notes (as defined below).
NOW, THEREFORE, in consideration of the premises and the covenants set
forth herein and in the Note Purchase Agreement, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.1. DEFINED TERMS. As used herein, capitalized terms defined in
the Note Purchase Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Note Purchase Agreement. All terms defined in
the UCC (defined below) and not otherwise defined herein or in the Note Purchase
Agreement shall have the meanings assigned to them in the UCC.
"Accounts" shall have the meaning ascribed to it by the UCC.
"Additional GBHV Collateral" shall mean all assets of GBHV other than the
Distribution Agreement, the License Agreement, and the Publishing Notes,
including without limitation (i) any intercompany indebtedness incurred by GBPC
and held by GBHV; (ii) all of GBHV's interests in each of its licenses of
intellectual property, whether now held or hereafter acquired or accrued
(including, without limitation, each right to use or exploit certain copyrighted
or trademarked fictional characters, concepts, works, or images in causing or
licensing the production, manufacture, distribution, or exhibition of video and
television programs) and titles and accounts receivable in respect thereof;
(iii) all other of GBHV's property, whether now held or hereafter acquired or
accrued, including without limitation goods (of whatever nature), intellectual
property (of whatever character), negotiable documents, cash, cash equivalents,
chattel paper (including certificated securities or instruments which comprise
part of such chattel paper), accounts, inventory, equipment, instruments,
documents, deposit accounts, investment property, fixtures, contract rights, and
general
intangibles; and (iv) all books and records related to any of the foregoing.
"Chattel Paper" shall have the meaning ascribed to it by the UCC.
"Collateral" shall have the meaning ascribed to it in Article II hereof.
"Copyrights" shall mean all of the proprietary rights, in whole or in part,
of GBFE and any of its subsidiaries related to the Proprietary Programs, whether
registered or unregistered, and whether or not the underlying works of
authorship have been published, and all works of authorship and other rights
therein or derived therefrom, and all right, title and interest to make and
exploit all derivative works based upon or adopted from works, now owned or
hereafter acquired, covered by such copyright, copyright registrations,
copyright applications and proprietary rights, and any renewals or extensions
thereof, including, without limitation, (a) the right to print, reproduce,
publish and distribute any of the foregoing, (b) the right to xxx or otherwise
recover for any and all past, present and future infringements and
misappropriations thereof, (c) all income, royalties, damages and other payments
now or hereafter due and/or payable with respect thereto (including, without
limitation, payments under all agreements and contracts entered into in
connection therewith, and damages and payments for past or future infringements
thereof), and (d) all rights of GBFE and its subsidiaries, corresponding thereto
throughout the world and all other rights of any kind whatsoever of GBFE and its
subsidiaries, accruing thereunder or pertaining thereto.
"Copyright Licenses" shall mean all agreements and contracts with any other
Person in connection with or referring to, in whole or in part, any of the
Copyrights, now owned or hereafter acquired, throughout the world, subject, in
each case, to the terms of such agreements and contracts.
"Distribution Agreement" means that certain Agreement, dated as of November
11, 1997, between GBHV and Sony Music, a Group of Sony Music Entertainment, as
in effect on the date hereof.
"Distributions" shall have the meaning ascribed to it in Section
2.1(b)(iii).
"Documents" shall have the meaning ascribed to it by the UCC.
"Equipment" shall have the meaning ascribed to it by the UCC.
"GBFE Collateral" shall have the meaning ascribed to it by Section 2.1(b).
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"Goods" shall have the meaning ascribed to it by the UCC.
"Home Video Collateral" shall have the meaning ascribed to it by Section
2.1(a).
"Inventory" shall have the meaning ascribed to it by the UCC.
"License Agreement" shall mean certain that certain license agreement
between GBHV and GBPC, dated as of January 1, 1998, as in effect on the date
hereof.
"Note Purchase Agreement" shall mean that certain Note Purchase Agreement,
dated September 8, 1998, by and among GBHV, GBPC, GBFE and GPH.
"Notes" shall mean the senior secured notes of GBHV issued from time to
time in accordance with the Note Purchase Agreement.
"Obligations" shall mean all of GBFE's, GBPC's and GBHV's respective
obligations under the Note Purchase Agreement, the Notes, the Publishing Notes
and this Agreement.
"Person" or "person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Pledgor" shall mean each of GBFE and GBHV.
"Pledged Securities" shall mean the Publishing Notes and the GBFE
Collateral.
"Proceeds" shall have the meaning ascribed to it by the UCC.
"Proprietary Program" shall mean any motion picture, the copyright in which
is owned, directly or indirectly, by GBPC and which is or becomes licensed to
GBHV for distribution pursuant to the Distribution Agreement or License
Agreement.
"Publishing Notes" means the senior notes of GBPC issued to GBHV from time
to time and endorsed to GPH in accordance with the Note Purchase Agreement.
"Records" shall mean all of the present and future books of account of
every kind or nature of the Companies, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including
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any rights of either GBFE or GBHV with respect to the foregoing maintained with
or by any other Person).
"Requisite Holders" shall mean the Holder or Holders of at least 66 2/3% in
principal amount of the outstanding Notes, unless otherwise provided in the Note
Purchase Agreement.
"Secured Parties" shall mean the collective reference to GPH and any
subsequent Holder.
"Security Interests" means the Lien on the Collateral created by this
Agreement in favor of GPH and any subsequent Holders of Notes.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York, provided, that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or availability of
such remedy.
ARTICLE II.
GRANT OF SECURITY INTERESTS
Section 2.1. SECURITY INTEREST.
(a) As security for the prompt and complete payment and performance in full
of the principal of, premium, if any, and interest on the Notes when and as the
same shall be due and payable, whether on an interest payment date, at maturity,
by acceleration, purchase, repurchase, redemption or otherwise, and interest on
the overdue principal of, premium and interest, if any, to the extent such
premium or interest is permitted by law, on the Notes and the performance of all
other Obligations, GBHV hereby pledges, assigns, transfers and grants to GPH,
for the benefit of itself and any subsequent Holders, a security interest in and
continuing first priority (other than Additional GBHV Collateral which may be
subject to Permitted Encumbrances) Lien on, all of its right, title and interest
in, to and under the following, in each case, whether now owned or existing or
hereafter acquired or arising, and wherever located (all of which is defined as
the "Home Video Collateral"):
(i) the Distribution Agreement, the License Agreement, the Publishing Notes
and the Additional GBHV Collateral, and all rights to receive moneys due and to
become due under any of them;
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(ii) all rights of GBHV to receive proceeds of any insurance, indemnity,
warranty, guaranty or collateral security with respect to the Distribution
Agreement, the License Agreement, the Publishing Notes and the Additional GBHV
Collateral;
(iii) all claims of GBHV for damages arising out of or for breach of or
default under the Distribution Agreement, the License Agreement, the Publishing
Notes and the Additional GBHV Collateral; and
(iv) to the extent not included in the foregoing, all Proceeds of any of
the foregoing.
(b) As further security for the prompt and complete payment and performance
in full of the principal of, premium, if any, and interest on the Notes when and
as the same shall be due and payable, whether on an interest payment date, at
maturity, by acceleration, purchase, repurchase, redemption or otherwise, and
interest on the overdue principal of, premium and interest, if any, to the
extent such premium or interest is permitted by law, on the Notes and the
performance of all other Obligations, GBFE hereby pledges, assigns, transfers
and grants to GPH, for the benefit of itself and the Holders, a security
interest in and continuing first priority Lien (subject to Permitted
Encumbrances) on, all of its right, title and interest in, to and under the
following property, in each case whether now owned or existing or hereafter
acquired or arising, and wherever located (all of which is defined as the "GBFE
Collateral"):
(i) all of the issued and outstanding shares of capital stock of each of
GBHV and GBPC (collectively, the "Pledged Shares"), including the certificates
representing the Pledged Shares and any interest of GBFE in the entries on the
books of any financial intermediary pertaining to the Pledged Shares;
(ii) all additional shares of capital stock of the respective issuers of
the Pledged Shares from time to time acquired by GBFE (which shall remain at all
times until this Agreement terminates, certificated shares) which additional
shares shall be deemed to be part of the Pledged Shares, including the
certificates representing such additional shares and any interest of GBFE in the
entries on the books of any financial intermediary pertaining to such additional
shares;
(iii) all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital, income, profits and other property, interests
or proceeds from time to time received, receivable or otherwise distributed to
GBFE in respect of or in exchange for any or all of the Pledged Shares (the
"Distributions"); and
(iv) to the extent not included in any of the foregoing, all Proceeds of
any of the foregoing.
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Collectively, the Home Video Collateral and the GBFE Collateral will be
referred to as the "Collateral."
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Each of GBFE, GBPC (solely with respect to Sections 3.7 and 3.8) and GBHV,
jointly and severally, hereby represents and warrants to GPH, which
representations and warranties shall survive execution and delivery of this
Agreement, as follows:
Section 3.1. DELIVERY OF PLEDGED SECURITIES. All certificates, agreements
or instruments representing or evidencing the Pledged Securities shall be
delivered to and held by or on behalf of GPH pursuant to this Agreement and the
Note Purchase Agreement. All Pledged Securities shall be in suitable form for
transfer by delivery and shall be registered in the name of GPH or, in the case
of the Pledged Shares, accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to GPH. GPH shall
have the right, at any time upon the occurrence and during the continuance of
any Event of Default, to endorse, assign or otherwise transfer to or to register
in the name of GPH or any of its nominees or endorse for negotiation any or all
of the Pledged Securities.
Section 3.2. VALIDITY, PERFECTION AND PRIORITY.
Upon the filing of UCC-1 financing statements in the jurisdictions
identified in Schedule 3.2 and the delivery of the Pledged Securities to GPH
pursuant to Section 3.1 above, the security interests in the Collateral granted
to GPH hereunder constitute and will constitute valid and continuing first
priority perfected security interests therein, superior and prior to all Liens
and rights or claims of all other Persons (other than Additional GBHV Collateral
which may be subject to Permitted Encumbrances).
Section 3.3. NO LIENS; OTHER FINANCING STATEMENTS.
(a) Except for the Security Interests granted to GPH hereunder and, in the
case of the Additional GBHV Collateral, Permitted Encumbrances, GBFE or GBHV, as
the case may be, owns and, as to all Collateral whether now existing or
hereafter acquired, subject to Section 4.6 hereof and the terms of the Note
Purchase Agreement, will continue to own, each item of the Collateral free and
clear of all Liens, rights and claims, and each of GBHV and GBFE shall defend
the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to GPH on the Collateral
(other than claims against any Additional GBHV Collateral relating to any
Permitted Lien).
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(b) No financing statement or other evidence of any Lien covering or
purporting to cover any of the Collateral is on file and is effective in any
public office other than (i) financing statements filed or to be filed in
connection with the Security Interests granted to GPH hereunder, (ii) in the
case of Additional GBHV Collateral, financing statements relating to any
Permitted Lien, and (iii) financing statements for which proper, executed
termination statements have been delivered to GPH for filing.
Section 3.4. CHIEF EXECUTIVE OFFICE. The chief executive office of each of
GBFE, GBPC and GBHV is located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000. The originals of the Records are located at chief executive office.
All Records are maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from chief executive office.
Section 3.5. LOCATION OF INVENTORY. All Inventory constituting Collateral
is kept only at (or shall be in transit to) the locations listed on Schedule 3.5
hereto. None of such Inventory is in the possession of an issuer of a negotiable
document (as defined in Section 7-104 of the UCC) therefor or otherwise in the
possession of a bailee or other Person.
Section 3.6. TRADE NAMES; PRIOR NAMES. The only names under which any of
GBHV or GBFE has conducted business during the last five years are as set forth
on Schedule 3.6 hereto.
Section 3.7. ACCOUNTS AND CHATTEL PAPER.
(a) Each Account Receivable and Chattel Paper constituting Collateral
arises from the actual and bona fide sale and delivery of goods by the Company
or rendition of services by the Company in the ordinary course of its business.
(b) The representation and warranty contained in this Section shall be
deemed to be repeated by GBFE and GBHV as of the time when each respective
Account Receivable or Chattel Paper arises.
Section 3.8. INTELLECTUAL PROPERTY.
(a) Schedule 3.8(a) sets forth all Proprietary Programs as of the date
hereof. The Copyrights in the Proprietary Programs identified on Schedule 3.8(a)
are valid and in full force and effect. To the best knowledge of GBPC, after due
inquiry, GBPC and its predecessors-in-interest have made all necessary filings
and recordations and have complied with all formalities and notice requirements
to protect maintain its interest in such Copyrights including, without
limitation, all necessary filings and recordings in the United States Copyright
Office and all formalities and notice requirements set forth in the 1909 and
1976 Copyright Act.
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(b) Schedule 3.8(b) sets forth all Licensed Programs as of the date hereof.
Each and every license agreement granting distribution rights to GBPC in the
Licensed Programs is in full force and effect on the date hereof. Neither GBPC
or GBHV, nor to the best knowledge of GBHV and GBFE after due inquiry, any other
party thereto is in default (or would be in default with notice or lapse of
time, or both) under, is in violation of (or would be in violation with notice
or lapse of time, or both) of, or has otherwise breached said license
agreements, whether or not such default has been waived. There are no unresolved
disputes under said license agreements.
(c) Except as identified in Schedule 3.8(d), GBPC has not granted any
release, covenant not to xxx, or non-assertion assurance to any Person with
respect to any of the Copyrights or Copyright Licenses.
(d) No holding, decision or judgment has been rendered by any Governmental
Entity which would limit, cancel or question the validity, registrability or
enforceability of any of the Copyrights throughout the world.
(e) To the best knowledge of GBPC, after due inquiry, no right or any claim
exists that is likely to be made under or against any of the Copyrights
throughout the world.
(f) To the best knowledge of GBPC, after due inquiry, no claim has been
made and is continuing or threatened that the use by GBPC of any of the
Copyrights is invalid or unenforceable or that the use of such Copyrights does
or may violate the rights of any Person throughout the world. To the best
knowledge of GBPC, after due inquiry, there is currently no infringement or
unauthorized use of any of the Copyrights throughout the world.
(g) No action or proceeding is pending (i) seeking to limit, cancel or
question the validity of any of the Copyrights throughout the world or (ii)
which, if adversely determined, would be reasonably likely to have a material
adverse effect on the value of any such Copyrights throughout the world.
Section 3.9. DISTRIBUTION AGREEMENT. The Distribution Agreement is in full
force and effect on the date hereof. Neither GBHV nor, to the best knowledge of
GBHV and GBFE after due inquiry, any other party thereto is in default (or would
be in default with notice or lapse of time, or both) under, is in violation (or
would be in violation with notice or lapse of time, or both) of, or has
otherwise breached the Distribution Agreement, whether or not such default has
been waived. There are no unresolved disputes under the Distribution Agreement.
Section 3.10. LICENSE AGREEMENT. The License Agreement is in full force and
effect on the date hereof. Neither GBHV nor GBPC is in default (or would be in
default with notice or lapse of time, or both) under, is in violation (or would
be in
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violation with notice or lapse of time, or both) of, or has otherwise breached
the License Agreement, whether or not such default has been waived. There are no
unresolved disputes under or in respect of the License Agreement.
Section 3.11. PLEDGED SHARES. All the Pledged Shares have been duly
authorized and validly issued and are fully paid and nonassessable. The pledge
of the Pledged Shares pursuant to this Agreement does not violate Regulation G,
T, U or X promulgated under the Securities Exchange Act of 1934, as amended, or
any successor statute or regulation as of the date hereof.
ARTICLE IV.
COVENANTS
Section 4.1. FURTHER ASSURANCES. Each of GBFE and GBHV will from time to
time at their own expense, promptly execute, deliver, file and record all
further instruments, endorsements and other documents, and take such further
action consistent with the terms of this Agreement and the Note Purchase
Agreement, as may be required by law for GPH to obtain, or as GPH may deem
necessary in obtaining, the full benefits of this Agreement and of the rights,
remedies and powers herein granted, including, without limitation, the
following:
(a) the filing of any financing statements, in form reasonably acceptable
to GPH, under the UCC with respect to the Liens and security interests granted
hereby (and each of GBFE and GBHV hereby authorizes GPH to file any such
financing statement without its respective signature to the extent permitted by
applicable law); and
(b) furnish to GPH from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as GPH may reasonably request, all in reasonable detail and
in form reasonably satisfactory to GPH.
Notwithstanding the foregoing, each of GBFE and GBHV acknowledges its own
obligation, independent of any request by GPH, to maintain with respect to the
Collateral, valid and continuing first priority perfected security interests,
superior to all Liens and rights or claims of all other Persons; provided, that
Additional GBHV Collateral may be subject to Permitted Encumbrances.
Section 4.2. CHANGE OF NAME, IDENTITY, CORPORATE STRUCTURE, CHIEF EXECUTIVE
OFFICES, OR LOCATION OF INVENTORY AND EQUIPMENT. None of GBHV or GBFE shall
change its name, identity, corporate structure or the location of its chief
executive offices (as specified in Section 3.4 hereof) or location of the
Collateral without (i) giving GPH at least thirty (30) days' prior written
notice clearly describing such new name, identity, corporate
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structure or new location and providing such other information in connection
therewith as GPH may reasonably request, and (ii) taking all action necessary
and reasonably satisfactory to GPH, as may be required by law or as GPH may
reasonably request, to maintain the security interest of GPH in the Collateral
intended to be granted hereby at all times fully perfected with the same or
better priority than exists on the date hereof and in full force and effect. All
Accounts, Chattel Paper, Documents and Records of each of GBHV and GBFE will
continue to be maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from, such chief executive office
or a location identified as a location at which Accounts, Chattel Paper,
Documents or Records are maintained, controlled and directed on Schedule 3.4, or
such new locations as GBHV or GBFE, as applicable, may establish in accordance
with this Section 4.2.
Section 4.3. MAINTAIN RECORDS. Each of GBFE and GBHV will keep and maintain
at its own cost and expense satisfactory and complete records of the Collateral,
including, but not limited to, the originals of all documentation with respect
to all Accounts and records of all payments received and all credits granted on
the Accounts, and all other dealings therewith.
Section 4.4. PAYMENT OF OBLIGATIONS. GBHV or GBFE, as the case may be, will
pay, prior to the date when material penalties would attach thereto, all taxes,
assessments and governmental charges or levies imposed upon the Collateral, as
well as all claims of any kind (including, without limitation, claims for labor,
materials, supplies and services) against or with respect to the Collateral,
except that no such tax, assessment, charge, claim or levy need be paid if (i)
the validity thereof is being contested in good faith by appropriate proceedings
properly instituted and diligently conducted for which adequate reserves, to the
extent required under GAAP, have been taken and (ii) such proceedings do not
involve, in the reasonable opinion of GPH, any material danger of the sale,
forfeiture or loss of any of the Collateral or any interest therein.
Section 4.5. NEGATIVE PLEDGE. Neither GBFE nor GBHV will create, incur or
permit to exist, and each of GBFE and GBHV will defend the Collateral against,
and will take such other action as is necessary to remove, any Lien or claim on
or to the Collateral, other than the Security Interests created hereby and, in
the case of Additional GBHV Collateral, Permitted Encumbrances.
Section 4.6. LIMITATIONS ON DISPOSITIONS OF COLLATERAL. Neither GBFE nor
GBHV will sell, transfer, lease or otherwise dispose of any of the Collateral,
or attempt, offer or contract to do so, without the prior written consent of the
Holders of 66-2/3% of the outstanding Notes.
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Section 4.7. PERFORMANCE BY GPH OF THE OBLIGATIONS OF GBHV AND GBFE;
REIMBURSEMENT. If any of GBFE, GBPC or GBHV fails to perform or comply with any
of its agreements contained herein GPH may, without the consent of any of GBFE,
GBPC or GBHV, perform or comply or cause performance or compliance therewith,
and the reasonable expenses of GPH incurred in connection with such performance
or compliance, together with interest thereon at a rate per annum borne by the
Notes, shall be payable by GBHV to GPH on demand and such reimbursement
obligation shall be secured hereby.
Section 4.8. NO IMPAIRMENT. Except as expressly permitted herein or in the
Note Purchase Agreement (including, without limitation, in the case of
Additional GBHV Collateral, the creation of Permitted Encumbrances) neither GBFE
nor GBHV will take or knowingly permit to be taken (to the extent of its power)
any action which could impair GPH's rights in the Collateral. GBFE or GBHV shall
promptly notify GPH of any changes in fact or circumstance represented or
warranted by GBFE or GBHV or that could reasonably be expected to have a
material adverse effect with respect to any material portion of the Collateral,
of any material impairment of the Collateral and of any claim, action or
proceeding affecting title to all or any of the Collateral.
Section 4.9. INTELLECTUAL PROPERTY AND PROGRAMS.
(a) Each of GBFE, GBPC and GBHV and each of GBPC's subsidiaries (i) will
not do any act, or omit to do any act, whereby any Copyrights may become
invalid, unenforceable, abandoned or dedicated and (ii) will take any and all
steps necessary to maintain such Copyrights throughout the world.
(b) GBFE, GBPC and GBHV will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Copyright Office, or any court or tribunal throughout the world, to maintain and
pursue each application (and to obtain the relevant registration) and to
maintain each registration of the Copyrights throughout the world and
participate in opposition, cancellation, infringement and misappropriation
proceedings throughout the world.
(c) In the event that any of the Copyrights is infringed or misappropriated
by a third party, GBFE, GBPC or GBHV shall promptly notify GPH of such
infringement or misappropriation and shall promptly xxx for infringement or
misappropriation, to seek injunctive relief where appropriate and seek to
recover any and all damages for such infringement or misappropriation, or take
such other actions as GBFE or GPH shall reasonably deem appropriate under the
circumstances to protect such Copyrights.
(d) Inasmuch as GBPC may, from time to time, license to GBHV the
distribution rights on home video in additional and/or new Proprietary Programs
in connection with which GBPC may possess trademark rights, including trademark
registrations, in
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the titles, characters and/or other indicia, each of GBFE, GBPC and GBHV and
each of GBPC's subsidiaries (i) will not do any act, or omit to do any act,
whereby any such trademarks or trademark registrations may become invalid,
unenforceable, abandoned or dedicated, and (ii) will take any and all steps
necessary to maintain such trademarks and trademark registrations.
Section 4.10. CONCERNING GBPC. GBPC is executing and delivering this
Agreement for the sole purpose of making the representations and warranties set
forth in Section 3.7 and 3.8 hereof and the covenants set forth in Section 4.9
hereof. Notwithstanding anything to the contrary contained herein, in no event
shall anything in this Agreement be construed as a grant by or creation of any
Lien by GBPC on any of its assets or properties.
ARTICLE V.
POWER OF ATTORNEY
Each of GBFE and GBHV hereby irrevocably constitutes and appoints GPH and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of GBFE or GBHV, as the case may be, and in the name of GBFE or GBHV,
as the case may be, from time to time in GPH's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action, and to execute in any appropriate manner any and all documents and
instruments which may be necessary to accomplish the purposes of this Agreement.
This power of attorney is a power coupled with an interest and shall be
irrevocable until termination of this Agreement pursuant to Section 7.7 hereof.
ARTICLE VI.
REMEDIES; RIGHTS; RIGHTS UPON DEFAULT
Section 6.1. RIGHTS AND REMEDIES GENERALLY. If an Event of Default or
Potential Event of Default occurs and is continuing, then and in every such
case, GPH shall have all the rights of a secured party under the UCC, shall have
all rights now or hereafter existing under all other applicable laws, and,
subject to any mandatory requirements of applicable law then in effect, shall
have all the rights set forth in this Agreement and all the rights set forth
with respect to the Collateral or this Agreement in any other agreement between
the parties.
Section 6.2. ASSEMBLY OF COLLATERAL. If an Event of Default or Potential
Event of Default occurs and is continuing, upon written notice from GPH to GBFE
and GBHV, GBFE and GBHV shall forthwith, at their own expense, and to the extent
commercially practicable, assemble the Collateral (or from time to time any
portion thereof) and make it available to GPH at any
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place or places designated by GPH which is reasonably convenient to the parties.
Section 6.3. DISPOSITION OF COLLATERAL. If an Event of Default or Potential
Event of Default occurs and is continuing, GPH will determine the circumstances
and manner in which the Collateral will be disposed of, including, but not
limited to, the determination of whether to foreclose on the Collateral if an
Event of Default or Potential Event of Default occurs and is continuing. GPH
will give GBHV and GBFE reasonable written notice of the time and place of any
public sale of the Collateral or any part thereof or of the time after which any
private sale or any other intended disposition thereof is to be made. GBHV and
GBFE agree that the requirements of reasonable notice to it shall be met if such
notice is delivered to its address specified in and in accordance with Section
7.3 hereof (or such other address that GBFE may provide to GPH in writing) at
least ten days before the time of any public sale or after which any private
sale may be made.
Section 6.4. PROCEEDS. In respect of Pledged Securities (and Proceeds
thereof) or, if an Event of Default or Potential Event of Default occurs and is
continuing, in respect of all other Collateral (i) all proceeds and
distributions on such Collateral received by (or on behalf of) any of GBFE, GBPC
or GBHV shall be held in trust for GPH, segregated from other funds of any of
GBFE, GBPC or GBHV in a separate deposit account containing only such proceeds
and distributions, and shall forthwith upon receipt thereof, be turned over to
GPH in the same form received (appropriately endorsed or assigned to the order
of GPH or in such other manner as shall be satisfactory to GPH) and (ii) any and
all such proceeds and distributions received by GPH (whether from GBFE or GBHV
or otherwise), or any part thereof, may, in the sole discretion of GPH, be held
by GPH in a separate account as Collateral hereunder and/or be applied by GPH
against the Obligations (whether matured or unmatured) and related expenses,
including attorney's fees as provided in Section 6.6 hereof. If any Collateral
is sold or leased by GPH on credit terms or for future delivery, the Obligations
shall not be reduced as a result thereof until payment is actually and
indefeasibly collected by GPH.
Section 6.5. CERTAIN RIGHTS UNDER COLLATERAL. In respect of the Publishing
Notes (and all Proceeds in respect thereof), or, if an Event of Default or
Potential Event of Default occurs and is continuing, in respect of all other
Collateral, GPH shall assume all rights and privileges of GBHV and GBFE in such
Collateral (including without limitation the Distribution Agreement and the
License Agreement), may enforce any provision of or right or as may be otherwise
included in such Collateral, and may demand payment of and collect any Accounts
and Chattel Paper included in the Collateral and, in connection therewith, each
of GBHV and GBFE irrevocably authorizes GPH to endorse or sign the name of each
of GBHV and GBFE on all collections,
13
receipts, Instruments and other documents, to take possession of and open mail
addressed to each of GBHV and GBFE and remove therefrom payments made with
respect to any item of Collateral or proceeds thereof and, in GPH's sole
discretion, to grant extensions of time to pay, compromise claims and settle
Accounts relating to the Collateral and the like for less than face value.
Section 6.6. RECOURSE. GBHV or GBFE shall pay or remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to satisfy the Obligations. GBFE and GBHV shall also be liable
for all reasonable expenses of GPH incurred in connection with collecting such
deficiency, including, without limitation, the reasonable fees and disbursements
of any attorneys employed by GPH to collect such deficiency.
Section 6.7. EXPENSES; ATTORNEYS FEES. GBHV or GBFE shall pay or reimburse
GPH for all its reasonable expenses in connection with the exercise of its
rights hereunder, including, without limitation, (i) all reasonable attorneys'
fees and reasonable legal expenses incurred by GPH and (ii) all filing fees and
related expenses contemplated by Section 4.1 hereof. Expenses of retaking,
holding, preparing for sale, selling or the like shall include the reasonable
attorneys' fees and reasonable legal expenses of GPH. All such expenses shall be
secured hereby.
Section 6.8. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
(a) GPH's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the UCC
or otherwise, shall be to deal with it in the same manner as GPH deals with
similar property for its own account;
(b) GPH shall have no obligation to take any steps to preserve rights
against prior parties to any Collateral; and
(c) Neither GPH nor any of its directors, officers, members, employees,
representatives or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligations to sell or otherwise dispose of any Collateral
upon the request of the Company or otherwise, except with respect to actions
taken or omitted with negligence, willful misconduct or in bad faith.
Section 6.9. RIGHTS NON-EXCLUSIVE. In addition to the rights and remedies
set forth above, GPH shall have all the other rights and remedies accorded a
secured party after default under the UCC and under all other applicable laws,
and under any other Document, and all of such rights and remedies are cumulative
and non-exclusive. Exercise or partial exercise by GPH of one or
14
more of its rights or remedies shall not be deemed an election or bar GPH from
subsequent exercise or partial exercise of any other rights or remedies. The
failure or delay of GPH to exercise any rights or remedies shall not operate as
a waiver thereof, but all rights and remedies shall continue in full force and
effect until all of the Obligations have been fully and indefeasibly paid and
performed.
Section 6.10. RIGHTS IN PLEDGED SECURITIES.
(i) With respect to the Pledged Securities (other than the Publishing
Notes) so long as no Event of Default or Potential Event of Default shall have
occurred and be continuing:
(A) GBFE shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Securities (other than the
Publishing Notes) or any part thereof for any purpose not inconsistent with the
terms of purposes of this Agreement or the Note Purchase Agreement; provided,
however, that GBFE shall not in any event exercise such rights in any manner
which may have an adverse effect on the value of the Collateral, the rights
inuring to a holder of the Pledged Securities under this Agreement, the Note
Purchase Agreement or any other Document or the ability of GPH to exercise the
same.
(B) GPH shall be deemed without further action or formality to have granted
to GBFE all necessary consents relating to voting rights and shall, if
necessary, upon written request of GBFE and at the sole cost and expense of
GBFE, from time to time execute and deliver (or cause to be executed and
delivered) to GBFE all such instruments as may reasonably request in order to
permit GBFE to exercise the voting which it is entitled to exercise pursuant to
Section 6.10(i)(A).
(ii) With respect to the Publishing Notes and, upon the occurrence and
during the continuance of any Event of Default or Potential Event of Default:
(A) All rights of GBFE to exercise the voting and other consensual rights
it would otherwise be entitled to exercise pursuant to Section 6.10(i)(A) hereof
shall cease, and all such rights shall thereupon become vested in GPH, which
shall thereupon have the sole right to exercise such voting and consensual
rights.
(B) GBFE and GBHV shall, at their sole cost and expense, from time to time
execute and deliver to GPH appropriate instruments as GPH may reasonably request
in order to permit GPH to exercise the voting and other rights which it may be
entitled to exercise pursuant to Section 6.1(ii)(A) hereof and to receive all
Distributions which it may be entitled to receive under this Agreement.
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(iii) All Distributions which are received by GBFE contrary to the
provisions hereof shall be received in trust for the benefit of GPH, shall be
segregated from other funds of GBFE and shall immediately be paid over to GPH as
Collateral in the same form as so received (with any necessary endorsement).
ARTICLE VII.
MISCELLANEOUS
Section 7.1. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS).
Section 7.2. NOTICES. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telegram, telex
or other standard form of telecommunications, or be registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
IF TO GBPC, GBHV OR GBFE:
c/o Golden Books Family Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO GPH:
Golden Press Holdings, L.L.C.
c/o Warburg, Xxxxxx Ventures, L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxxx Xxxx & Xxxxxxxxx
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000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 7.2.
Section 7.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of GBFE, GBPC, GBHV, GPH, all future holders of the
Obligations and their respective successors and assigns, except that GBFE, GBPC
and GBHV may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of GPH.
Section 7.4. WAIVERS AND AMENDMENTS. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with the terms of Section 9.3 of the Note Purchase Agreement.
Section 7.5. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of GPH in exercising any right, power or privilege hereunder and no course
of dealing between GBHV, GBPC and GBFE and GPH shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy which GPH would otherwise have on any
future occasion. The rights and remedies herein expressly provided are
cumulative and may be exercised singly or concurrently and as often and in such
order as GPH deems expedient and are in addition to any other rights and
remedies that GPH would otherwise have whether by security agreement or now or
hereafter existing under applicable law. No notice to or demand on either GBFE
or GBHV in any case shall entitle GBHV or GBFE to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
GPH to any other or future action in any circumstances without notice or demand.
Section 7.6. TERMINATION; RELEASE. When the Obligations have been
completely paid and performed in full, this Agreement shall terminate, and GPH,
at the request and sole expense of GBFE and GBHV, and subject to and in
accordance with the applicable terms of the Note Purchase Agreement, will
execute and deliver to GBFE and GBHV the proper instruments (including, without
limitation, UCC termination statements) acknowledging the termination of this
Agreement, and will duly assign, transfer and deliver to GBFE and GBHV, without
recourse, representation or warranty of any kind whatsoever, such of the
Collateral as may be in possession of GPH and that has not theretofore been
disposed of, applied or released, all in accordance with the terms and
conditions of the Note Purchase Agreement.
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Section 7.7. HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Section 7.8. SEVERABILITY. In case any provision in or obligation under
this Agreement or the Obligations shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
GOLDEN BOOKS HOME VIDEO, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
GOLDEN BOOKS PUBLISHING COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
GOLDEN PRESS HOLDING, LLC
By: WARBURG, XXXXXX VENTURES, L.P.,
Member
By: WARBURG, XXXXXX & CO.,
General Partner
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Partner
