Exhibit 2
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 Xxxxxxx X. Xxxxxxxxx (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) the Trust, fbo Xxxxxxx X. Xxxxxxxxx u/a
March 16, 1978, Xxxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxx, as trustees, 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 400,000 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 or any "Affiliate" (as defined
in Rule 405 under the Securities Act of 1933, as amended (the "Securities
Act"), and including, 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; provided
that the Company shall not be deemed an "Affiliate" of the Shareholder for
purposes of this Agreement), 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.
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 sole, true,
lawful, record and beneficial owner of 3,501,000 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 by 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 and the shares of Company Common Stock owned
of record by the Other Shareholders (in the case of Fleet National Bank of
Connecticut, in its capacity as trustee under the trust referred to above)
and the 60,000 shares of Company Common Stock owned of record by The Xxxxxxx X.
and Xxxxxx Xxxxxxxxx Foundation, Inc., a New York not-for-profit corporation
(the "Xxxxxxxxx Foundation"), are the only shares of Company Common Stock
beneficially owned or owned of record by the Shareholder, the Other
Shareholders and the Xxxxxxxxx Foundation and, except for the 9,200 shares of
Series A Preferred Stock, no par value, of the Company owned by the
Shareholder and the 67,500 shares of Company Common Stock issuable to the
Shareholder upon the exercise of options granted to him pursuant to the
Company's Amended and Restated 1986 Employee Stock Option Plan, 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.
The Shareholder shall not permit the Xxxxxxxxx Foundation to acquire,
directly or indirectly, any additional shares of Company Common Stock during
the term of this Agreement.
(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) Neither the Shareholder nor any Affiliate will 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, neither the
Shareholder nor any Affliate, whether directly, indirectly, or through any
employee, agent or otherwise shall: (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; provided, however, that the Shareholder, in his capacity as the
Chairman of the Company's Board of Directors and the Company's Chief
Executive Officer, may participate in discussions or negotiations with or
furnish information to any other person or entity if the Company's Board
of Directors, on advice of counsel, determines that the Shareholder, in
his capacity as Chairman of the Company's Board of Directors and the Company's
Chief Executive Officer, should so participate or furnish such information.
Subject to his fiduciary duties to the Company, 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, subject to his
fiduciary duties to the Company, the Shareholder will at all times use his
best efforts to prevent the Company from taking any action in violation
of the Securities Purchase Agreement, including, but not limited to, any
such action that would (i) amend or otherwise change its Certificate of
Incorporation or Bylaws, (ii) issue or sell or authorize for issuance or
sale any stock appreciation rights, stock options (other than pursuant to
stock option plans in effect on the date hereof), warrants or additional
shares of any class of capital stock, including the Company Common Stock, or
any securities convertible into or exchangeable for shares of any class of
capital stock, (iii) declare, set aside, make, pay or accelerate the time
for declaration or payment of, any dividend or other distribution with
respect to its capital stock, or (iv) redeem, purchase, or otherwise acquire,
directly or indirectly, any of its capital stock.
(d) Until the termination of this Agreement, neither the
Shareholder nor any Affiliate shall, 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. Neither the Shareholder
nor any Affiliate shall 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 (and any
Affiliate) shall be entitled, (i) so long as the Shareholder at all times,
until the earlier to occur of the consummation of the Securities Purchase and
the termination of this Agreement, retains the right to vote (and give
consent in respect of) such Shares (subject to the terms of this Agreement), to
transfer for no consideration up to 400,000 Shares in the aggregate to an
organization that is described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, and (x) that is not an Affiliate of the Shareholder
and (y) that is not a person or entity in respect of which the Shareholder
or any Affiliate serves as trustee or in any other fiduciary capacity, (ii) 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 his
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), (iii) 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
(iv) to transfer Shares by will or pursuant to the laws of descent and
distribution to an Affiliate of the Shareholder, provided that, at the time
of such transfer, such transferee enters 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(d) 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.
(e) 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.
(f) Effective upon consummation of the Securities
Purchase, the Shareholder shall resign from all of the positions then held
by him with the Company and its subsidiaries, including, without
limitation, from the offices of Chairman and Chief Executive Officer and from
the Board of Directors of the Company, from the office of Chairman and from
the Board of Directors of Western Publishing Company, Inc. and from the
offices of Chairman, President and Chief Executive Officer and from the Board
of Directors of Penn Corporation.
(g) The Shareholder hereby agrees promptly to cause the
amendment, in a manner reasonably acceptable to the Buyer, of the trademark
license agreement, dated September 11, 0000, xxxxxxx X&X Properties, Inc.
("P&E") and Western Publishing Company, Inc. relating to the right to display
"The Poky Little Puppy" trademark on a corporate jet owned by P&E, provided
that no royalties shall be payable for such right and that such right shall be
not be assignable and shall terminate when such jet is no longer owned by
P&E or an Affiliate thereof.
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 Xxxxxxxxx Foundation) 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: Xxxxx X. Xxxxx, Esq.
000 Xxxxxxx Xxxxxx
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
Index of Defined Terms
Affiliate.............................................1
beneficial ownership..................................2
Xxxxxxxxx Foundation..................................4
Buyer.................................................1
Company...............................................1
Company Common Stock..................................1
Nominee...............................................3
Nominee Shares........................................3
Other Shareholders....................................1
P&E...................................................8
Proxy.................................................2
Publicly Disclosed....................................7
Securities Act........................................1
Securities Purchase...................................1
Securities Purchase Agreement.........................1
Series B Preferred Stock..............................1
Shareholder...........................................1
Shares................................................1
Warrant...............................................1
WPV...................................................2
