Exhibit 3
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 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:
(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.
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 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 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.
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-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 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.
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
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
