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
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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
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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
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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 Affiliate, 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.
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(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
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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
7
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.
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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
9
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.
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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.
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IN WITNESS WHEREOF, this Agreement has been executed by the
parties as of the date first above written.
GOLDEN PRESS HOLDING, L.L.C.
By: WARBURG, XXXXXX VENTURES, L.P.
Member
By: ________________________________
Name:
Title: General Partner
-----------------------------------
Xxxxxxx X. Xxxxxxxxx
00
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
