<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 1)
Under the Securities Exchange Act of 1934
Golden Books Family Entertainment, Inc.
(Name of Issuer)
Common Stock, par value
(Title of Class of Securities)
380804104
(CUSIP Number)
Reuben S. Leibowitz
E.M. Warburg Pincus & Co., Inc.
466 Lexington Avenue
New York, New York 10017
(212) 878-0600
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
- with a copy to -
Laurence D. Weltman, Esq.
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
May 8, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ]
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
<PAGE>2
SCHEDULE 13D
CUSIP No. 380804104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Ventures, L.P. I.D. # 13-3784037
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 10,496,771
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH
10 SHARED DISPOSITIVE POWER
6,500,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,496,771
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.3%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>3
SCHEDULE 13D
CUSIP No 380804104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus & Co. I.D. # 13-6358475
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 10,496,771
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH
10 SHARED DISPOSITIVE POWER
6,500,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,496,771
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.3%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>4
SCHEDULE 13D
CUSIP No 380804104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Golden Press Holding, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 10,496,771
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH
10 SHARED DISPOSITIVE POWER
6,500,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,496,771
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.3%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>5
SCHEDULE 13D
CUSIP No. 380804104
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E.M. Warburg, Pincus & Company I.D. # 13-3536050
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 10,496,771
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH
10 SHARED DISPOSITIVE POWER
6,500,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,496,771
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.3%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
<PAGE>6
This Amendment No. 1 amends the Schedule 13D filed by the Reporting
Entities on February 13, 1996 (the "Schedule 13D"), relating to the Common
Stock, par value $0.01 per share (the "Common Stock"), of Golden Books Family
Entertainment, Inc., a Delaware corporation (formerly known as Western
Publishing Group, Inc., the "Company"), and is being filed pursuant to Rule
13d-2 of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Unless otherwise indicated, all
capitalized terms used but not defined herein shall have the same meaning as
set forth in the Schedule 13D.
Item 1. Security and Issuer
Item 1 of the Schedule 13D is hereby amended in its entirety to read
as follows:
This statement relates to the Company's Common Stock. The principal
executive offices of the Company are located at 850 Third Avenue, New York, NY
10022.
Item 3. Source and Amount of Funds or Other Consideration
Item 3 of the Schedule 13D is hereby amended in its entirety to read
as follows:
GP Holding acquired beneficial ownership (i) with respect to
3,996,771 shares of the Common Stock on January 31, 1996, pursuant to the
several Irrevocable Proxies attached hereto as Exhibits 2, 3, 4 and 6, and
incorporated herein by reference, between GP Holding and Richard A. Bernstein,
the former Chairman and Chief Executive Officer of the Company, and certain of
his affiliates (the "Irrevocable Proxies"), and (ii) with respect to 6,500,000
shares of the Common Stock on May 8, 1996 upon consummation of the
transactions contemplated by the Securities Purchase Agreement, dated as of
January 31, 1996, between GP Holding and the Company (the "Securities Purchase
Agreement").
Mr. Bernstein and certain of his affiliates granted the Irrevocable
Proxies to GP Holding in consideration of GP Holding's entering into the
Securities Purchase Agreement. The total amount of funds required by GP
Holding to purchase the Company's securities issued pursuant to the Securities
Purchase Agreement was $65,000,000 and was furnished from the working capital
of GP Holding.
<PAGE>7
Item 4. Purpose of Transaction
Item 4 of the Schedule 13D is hereby amended by deleting the first
two paragraphs and replacing them with the following:
On January 31, 1996, GP Holding and the Company entered into the
Securities Purchase Agreement. Pursuant thereto, on May 8, 1996, GP Holding
purchased, for an aggregate purchase price of $65,000,000, (i) 13,000 shares
of the Company's Series B Convertible Preferred Stock, no par value (the
"Preferred Shares"), convertible into an aggregate of 6,500,000 shares of the
Common Stock, and (ii) a warrant (the "Warrant") to purchase 3,250,000 shares
of the Common Stock at an exercise price of $10.00 per share. The Warrant is
exercisable during the period beginning May 8, 1998 (subject to acceleration
in the event of a public announcement of certain business combination
proposals or the initiation of a proxy solicitation for control of the
Company's Board of Directors by certain persons other than the GP Holding
Parties) and ending May 8, 2003. See Item 6 below for a summary of the terms
of the Preferred Shares and the Warrant.
As an inducement to enter into the Securities Purchase Agreement, and
pursuant to the Irrevocable Proxies, Mr. Bernstein and certain of his
affiliates granted GP Holding the right to vote any or all of the shares of
Common Stock owned by such persons on any matter presented for the vote or
consent of the Company's stockholders. The Irrevocable Proxies terminate upon
the failure of the GP Holding Parties (as defined in Item 6) to beneficially
own 15% or more of the Common Stock (determined as set forth in the
Irrevocable Proxies). The foregoing summary description of the Securities
Purchase Agreement and the Irrevocable Proxies is qualified in its entirety by
reference to Exhibits 1, 2, 3, 4 and 6 hereto.
Item 5. Interest in Securities of the Issuer
Item 5 of the Schedule 13D is hereby amended in its entirety to read
as follows:
(a) and (b) GP Holding may be deemed to beneficially own the
3,996,771 shares of Common Stock to which the Irrevocable Proxies relate. This
number is expected to decrease, as such shares are entitled to be transferred
to third parties pursuant to the terms of the Irrevocable Proxies. Each of the
Reporting Entities may be deemed to share the power to vote or direct the
voting of such shares and therefore to beneficially own such shares. To the
knowledge of the Reporting Entities, the power to direct the
<PAGE>8
disposition of such shares is held by Richard Bernstein and certain of his
affiliates. GP Holding may also be deemed to beneficially own the 6,500,000
shares of Common Stock issuable upon conversion of the Preferred Shares. Each
of the Reporting Entities may be deemed to share the power to vote and dispose
of such shares and therefore to beneficially own such shares. Based on the
21,666,739 shares of Common Stock outstanding on April 9, 1996 (as reported by
the Company in its Annual Report on Form 10-K dated May 3, 1996 and treating
as outstanding the shares of Common Stock issuable upon conversion of the
Preferred Shares), the Reporting Entities beneficially own approximately 37.3%
of the voting power relating to the Common Stock. In addition, GP Holding is
entitled to receive 780,000 shares of Common Stock annually as a dividend on
the Preferred Shares through May 8, 2000, subject to adjustment, as described
in Item 6.
(c) Except for the purchase of the Preferred Shares and the Warrant
on May 8, 1996, none of the Reporting Entities nor, to the best of their
knowledge, any person listed in Schedule I hereto, has effected any
transaction in the Common Stock in the preceding 60 days.
(d) To the knowledge of the Reporting Entities, the right to receive
dividends with respect to the shares to which the Irrevocable Proxies relate
and the power to direct the receipt of dividends from, or the proceeds from
the sale of, such shares is as follows: (i) as to 2,501,000 of such shares, by
Richard Bernstein; (ii) as to 1,000,000 of such shares, by the Amelia
Bernstein 1996 Trust u/a May 7, 1996, Fleet National Bank of Connecticut, as
Trustee; (iii) as to 400,000 of such shares, by the Trust, for the benefit of
Richard A. Bernstein u/a March 16, 1978, Richard A. Bernstein and Stuart
Turner, as Trustees; and (iv) as to 95,771 of such shares, by the Trust, for
the benefit of Richard A. Bernstein u/a April 5, 1986, Fleet National Bank of
Connecticut, as Trustee.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships
with Respect to Securities of the Issuer
Item 6 of the Schedule 13D is hereby amended by deleting the second
to last paragraph therein and replacing it with the following:
LLC Agreement. Ventures, Snyder 1996 Family Limited Partnership, an
entity controlled by Richard E. Snyder, and Arrow Holdings, LLC, an entity
controlled by Barry Diller, entered into an Amended and Restated Limited
Liability
<PAGE>9
Company Agreement of GP Holding, dated as of May 8, 1996 (the "LLC
Agreement"), for the purpose of acquiring, holding, selling and disposing of
interests in the Company and holding proceeds from any such disposition. The
LLC Agreement, which, among other things, governs the allocations of profits
and losses among the members of GP Holding, is attached hereto as Exhibit 7.
THE FOREGOING DESCRIPTIONS OF THE SECURITIES PURCHASE AGREEMENT, THE
CERTIFICATE OF DESIGNATIONS, THE WARRANT, THE GP HOLDING REGISTRATION RIGHTS
AGREEMENT, THE IRREVOCABLE PROXIES AND THE LLC AGREEMENT ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO THE SECURITIES PURCHASE AGREEMENT, THE EXHIBITS
THERETO, THE IRREVOCABLE PROXIES AND THE LLC AGREEMENT, WHICH ARE ATTACHED
HERETO AS EXHIBITS AND INCORPORATED HEREIN BY REFERENCE.
Item 7. Material to be Filed as Exhibits.
Item 7 of the Schedule 13D is hereby amended by adding the following:
Exhibit 6 Irrevocable Proxy, dated as of May 7, 1996, between Golden Press
Holding, L.L.C. and the Amelia Bernstein 1996 Trust u/a May 7,
1996, Fleet National Bank of Connecticut, as Trustee.
Exhibit 7 Amended and Restated Limited Liability Company
Agreement of Golden Press Holding, L.L.C., dated as of May 8,
1996, by and among Warburg, Pincus Ventures, L.P., Snyder 1996
Family Limited Partnership and Arrow Holdings, LLC.
<PAGE>10
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: May 16, 1996
GOLDEN PRESS HOLDING, L.L.C.
By: Warburg, Pincus Ventures, L.P.,
Member
By: Warburg, Pincus & Co.,
General Partner
By: /s/ David A. Tanner
Name: David A. Tanner
Title: Partner
WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ David A. Tanner
Name: David A. Tanner
Title: Partner
WARBURG, PINCUS & CO.
By: /s/ David A. Tanner
Name: David A. Tanner
Title: Partner
E.M. WARBURG, PINCUS & COMPANY
By: /s/ David A. Tanner
Name: David A. Tanner
Title: Partner
<PAGE>11
SCHEDULE I
Schedule I of the Schedule 13D is hereby amended in its entirety to
read as follows:
Set forth below is the name, position and present principal
occupation of each of the general partners of Warburg, Pincus & Co. ("WP") and
E.M. Warburg, Pincus & Company ("E.M. Warburg"). The sole general partner of
Warburg, Pincus Ventures, L.P. ("Ventures") is WP. WP, EMW and Ventures are
hereinafter collectively referred to as the "Reporting Entities." Except as
otherwise indicated, the business address of each of such persons is 466
Lexington Avenue, New York, New York 10017, and each of such persons is a
citizen of the United States.
General Partners
of WP
----------------
Present Principal Occupation in
Addition to Position with WP,
and Positions with the
Name Reporting Entities
- ---- -------------------------------
Susan Black Partner, E.M. Warburg
Christopher W. Brody Partner, E.M. Warburg
Harold Brown Partner, E.M. Warburg
Errol M. Cook Partner, E.M. Warburg
W. Boman Cutter Partner, E.M. Warburg
Elizabeth B. Dater Partner, E.M. Warburg
Stephen Distler Partner, E.M. Warburg
Louis G. Elson Partner, E.M. Warburg
John L. Furth Partner, E.M. Warburg
Stuart M. Goode Partner, E.M. Warburg
Stewart K.P. Gross Partner, E.M. Warburg
Patrick T. Hackett Partner, E.M. Warburg
Jeffrey A. Harris Partner, E.M. Warburg
<PAGE>12
Robert S. Hillas Partner, E.M. Warburg
A. Michael Hoffman Partner, E.M. Warburg
William H. Janeway Partner, E.M. Warburg
Douglas M. Karp Partner, E.M. Warburg
Charles R. Kaye Partner, E.M. Warburg
Henry Kressel Partner, E.M. Warburg
Joseph P. Landy Partner, E.M. Warburg
Sidney Lapidus Partner, E.M. Warburg
Reuben S. Leibowitz Partner, E.M. Warburg
Stephen J. Lurito Partner, E.M. Warburg
Spencer S. Marsh III Partner, E.M. Warburg
Edward J. McKinley Partner, E.M. Warburg
Rodman W. Moorhead III Partner, E.M. Warburg
Howard H. Newman Partner, E.M. Warburg
Anthony G. Orphanos Partner, E.M. Warburg
Daphne D. Philipson Partner, E.M. Warburg
Lionel I. Pincus Managing Partner, E.M. Warburg;
Managing Partner, Pincus & Co.
Eugene L. Podsiadlo Partner, E.M. Warburg
Ernest H. Pomerantz Partner, E.M. Warburg
Arnold M. Reichman Partner, E.M. Warburg
Roger Reinlieb Partner, E.M. Warburg
John D. Santoleri Partner, E.M. Warburg
Sheila N. Scott Partner, E.M. Warburg
Peter Stalker III Partner, E.M. Warburg
David A. Tanner Partner, E.M. Warburg
<PAGE>13
James E. Thomas Partner, E.M. Warburg
John L. Vogelstein Partner, E.M. Warburg
Elizabeth H. Weatherman Partner, E.M. Warburg
Joanne R. Wenig Partner, E.M. Warburg
George U. Wyper Partner, E.M. Warburg
Pincus & Co.
NL & Co.
General Partners
of E.M. Warburg
----------------
Present Principal Occupation in
Addition to Position with E.M.
Warburg, and Positions with
Name the Reporting Entities
- ---- -------------------------------
Susan Black Partner, WP
Christopher W. Brody Partner, WP
Harold Brown Partner, WP
Dale C. Christensen(1) Managing Director
Errol M. Cook Partner, WP
W. Boman Cutter Partner, WP
Elizabeth B. Dater Partner, WP
Stephen Distler Partner, WP
Louis G. Elson Partner, WP
John L. Furth Partner, WP
Stuart M. Goode Partner, WP
- -----------------------------
(1) Citizen of Canada.
<PAGE>14
Stewart K.P. Gross Partner, WP
Patrick T. Hackett Partner, WP
Jeffrey A. Harris Partner, WP
Robert S. Hillas Partner, WP
A. Michael Hoffman Partner, WP
William H. Janeway Partner, WP
Douglas M. Karp Partner, WP
Charles R. Kaye Partner, WP
Richard H. King(2)
Henry Kressel Partner, WP
Joseph P. Landy Partner, WP
Sidney Lapidus Partner, WP
Reuben S. Leibowitz Partner, WP
Stephen J. Lurito Partner, WP
Spencer S. Marsh III Partner, WP
Edward J. McKinley Partner, WP
Rodman W. Moorhead III Partner, WP
Howard H. Newman Partner, WP
Anthony G. Orphanos Partner, WP
Dalip Pathak(3) Partner, WP
Daphne D. Philipson Partner, WP
Lionel I. Pincus Managing Partner, WP; Managing
Partner, Pincus & Co.
Eugene L. Podsiadlo Partner, WP
Ernest H. Pomerantz Partner, WP
- -------------------------
(2) Citizen of United Kingdom.
(3) Citizen of India.
<PAGE>15
Arnold M. Reichman Partner, WP
Roger Reinlieb Partner, WP
John D. Santoleri Partner, WP
Sheila N. Scott Partner, WP
Dominic H. Shorthouse(4)
Peter Stalker III Partner, WP
David A. Tanner Partner, WP
James E. Thomas Partner, WP
John L. Vogelstein Partner, WP
Elizabeth H. Weatherman Partner, WP
Joanne R. Wenig Partner, WP
George U. Wyper Partner, WP
Pincus & Co.
- -------------------------
(4) Citizen of the United Kingdom.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
6 Irrevocable Proxy, dated as of May 7, 1996, between
Golden Press Holding, L.L.C. and the Amelia Bernstein
1996 Trust u/a May 7, 1996, Fleet National Bank of
Connecticut, as Trustee.
7 Amended and Restated Limited Liability Company
Agreement of Golden Press Holding, L.L.C., dated as of
May 8, 1996, by and among Warburg, Pincus Ventures,
L.P., Snyder 1996 Family Limited Partnership and Arrow
Holdings, LLC.
<PAGE>
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GOLDEN PRESS HOLDING, L.L.C.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND CHARACTERIZATION......................1
1.1. Definitions.............................................1
1.2. Tax Characterization and Additional Tax Terms...........4
ARTICLE II. FORMATION............................................5
2.1. Organization............................................5
2.2. Name ...................................................6
2.3. Term....................................................6
2.4. Registered Agent and Office.............................6
2.5. Principal Office........................................6
ARTICLE III. PURPOSE; NATURE OF BUSINESS.........................6
3.1. Purpose.................................................6
ARTICLE IV. ACCOUNTING AND RECORDS...............................6
4.1. Records to be Maintained................................6
4.2. Tax Returns and Reports.................................7
ARTICLE V. MEMBERS...............................................7
5.1. Names and Addresses.....................................7
5.2. Admission of New Members................................7
5.3. Pre-emptive Rights......................................7
ARTICLE VI. RIGHTS AND DUTIES OF MEMBERS.........................8
6.1. Management..............................................8
6.2. Liability of Members....................................9
6.3. Conflicts of Interest...................................9
6.4. Exculpation and Indemnification of Members.............10
ARTICLE VII. CONTRIBUTIONS AND CAPITAL ACCOUNTS.................11
7.1. Contributions..........................................11
7.2. No Obligation to Restore Deficit Balance...............11
7.3. Withdrawal; Successors.................................11
7.4. Interest...............................................11
7.5. No Personal Liability..................................11
7.6. Capital Account........................................11
ARTICLE VIII. ALLOCATIONS AND DISTRIBUTIONS.....................11
8.1. Determination of Profits and Losses....................11
8.2. Allocations............................................11
8.3. Distributions..........................................12
ARTICLE IX. TAX MATTERS.........................................15
9.1. Tax Matters Member.....................................15
9.2. Mandatory Section 754 Election.........................15
<PAGE>
ARTICLE X. TRANSFER OF MEMBERSHIP INTERESTS...............................15
10.1. Transfer of Securities..........................................15
10.2. Transfer to Affiliates..........................................15
10.3. Conditions to Transfer..........................................16
10.4. Call and Put Option Upon Termination of Snyder's Employment.....17
10.5 Withdrawal By Diller............................................18
10.6. Injunctive Relief...............................................18
ARTICLE XI. DISSOLUTION AND WINDING UP....................................19
11.1. Dissolution.....................................................19
11.2. Effect of Dissolution...........................................19
11.3. Distribution of Assets on Dissolution...........................19
11.4. Winding Up and Filing Articles of Cancellation..................20
ARTICLE XII. MISCELLANEOUS................................................21
12.1. Notices.........................................................21
12.2. Waiver..........................................................21
12.3. Headings........................................................21
12.4. Binding Agreement...............................................21
12.5. Saving Clause...................................................21
12.6. Counterparts....................................................22
12.7. Governing Law...................................................22
12.8. No Partnership Intended for Non-Tax Purposes....................22
12.9. No Rights of Creditors and Third Parties under Agreement........22
12.10. General Interpretive Principles................................22
12.11. Waiver of Partition............................................23
12.12. Entire Agreement...............................................23
<PAGE>1
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
GOLDEN PRESS HOLDING, L.L.C.
This Amended and Restated Limited Liability Company Agreement of Golden Press
Holding, L.L.C., a Delaware limited liability company, by and among the Company
and the Persons executing this Agreement, is entered into as of May 8, 1996,
shall be effective as of the Effective Date and amends and restates the Limited
Liability Company Agreement of Golden Press Holding, L.L.C. entered into among
said Persons (or Affiliates thereof) as of January 31, 1996.
ARTICLE I.
DEFINITIONS AND CHARACTERIZATION
1.1. Definitions. For purposes of this Agreement (as defined
below), unless the context clearly indicates otherwise, the following terms
shall have the following meanings:
Act. Delaware Limited Liability Company Act, as amended.
Affiliate. Any Person, directly or indirectly, controlling,
controlled by or under common control with such Person. For such purposes,
"control" is used as defined in Rule 405 under the Securities Act; provided
that, in respect of WPV, Affiliate shall not include any portfolio company of
WPV or of any other investment fund managed by WPV or its Affiliates (other
than the Portfolio Company).
Agreement. This Amended and Restated Limited Liability
Company Agreement including all amendments adopted in accordance with this
Agreement and the Act.
Business Day. Any day other than Saturday, Sunday or such
other day on which banking institutions in New York, New York, are authorized or
obligated to close.
Capital Account. The account maintained for a Member
determined in accordance with Article VII.
Capital Contribution. Any contribution of Property made by
or on behalf of a Member.
Cause shall have the meaning set forth in the Employment
Agreement.
<PAGE>2
Certificate. The Certificate of Formation of the Company,
as amended from time to time and filed with the Department of State of
Delaware.
Combined Regular Membership Interest Percentage. The sum of
WPV's and RS's Regular Membership Interest Percentages.
Company. Golden Press Holding, L.L.C., a limited liability
company formed under the laws of the State of Delaware, and any successor
limited liability company.
Diller. Barry Diller or any permitted transferee thereof
under Section 10.2 hereof (including, without limitation, Arrow Holdings, LLC,
a California limited liability company).
Disability shall have the meaning set forth in the
Employment Agreement.
Dissolution Event. An event, the occurrence of which will
result in the dissolution of the Company under Article XII.
Distribution. A transfer of Property to a Member on account
of a Membership Interest as described in Article VIII.
Effective Date. January 31, 1996.
Employment Agreement means the Employment Agreement between
the Portfolio Company and Snyder dated as of the Effective Date, and the
successor agreement therto entered into between the Portfolio Company and
Synder, including any Stock Option Agreements entered into in connection
thereto.
Employment Period shall have the meaning set forth in the
Employment Agreement.
Fiscal Year. The calendar year.
Good Reason shall have the meaning set forth in the
Employment Agreement.
Liquid Securities. Securities that are tradable on a
Recognized Securities Exchange, without any legal or contractual restriction
other than the rules of such Recognized Securities Exchange.
Liquidation Notice shall have the meaning set forth in
Section 10.4(b) and 11.1(d) hereof.
Majority Members. Members whose Regular Membership Interest
Percentages represent a majority of the Regular Membership Interest
Percentages outstanding.
Member. A Person executing this Agreement as a Member.
<PAGE>3
Membership Admission. The sale or issuance by the Company of
any Membership Interest to any Person, whether or not such Person, immediately
prior to the time of such sale or issuance, was a Member.
Membership Interest. The rights of a Member to
Distributions (liquidating or otherwise) and allocations of the Profits and
Losses, gains, deductions and credits of the Company.
Person. An individual, trust, estate, corporation,
partnership, joint venture, limited liability company, business trust or
unincorporated association.
Portfolio Company. Golden Books Family Entertainment, Inc.
(f/k/a Western Publishing Group, Inc.), a Delaware corporation, or any
successor thereto.
Principal Office. The Principal Office of the Company set
forth in Section 2.6.
Property. Any property, real or personal, tangible or
intangible, including money and securities, and any legal or equitable
interest in such property, but excluding services and promises to perform
services in the future.
Purchase Closing. The consummation of the sale and purchase
of securities of the Portfolio Company pursuant to the Securities Purchase
Agreement.
Recognized Securities Exchange. The Nasdaq National Market,
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., the
International Stock Exchange of the United Kingdom and the Republic of
Ireland, Ltd. or the Toronto Stock Exchange.
Registration Rights Agreement. The registration rights
agreement, dated as of the Purchase Closing between the Portfolio Company and
the Company, as the same may be hereafter modified or amended.
Regular Membership Interest. A Membership Interest (or
portion thereof) that does not have any right to distributions set forth in
clause (y) of Section 8.3(a)(ii), (iii), (iv) and (v).
Regular Membership Interest Percentage. With respect to each
Member, the percentage of all the Members' aggregate Capital Contributions as
is represented by such Member's aggregate Capital Contributions, such that the
sum of all the Members' Regular Membership Interest Percentages shall equal
100%.
RS. Snyder or any permitted transferee thereof under
Section 10.2 hereof.
<PAGE>4
Securities Purchase Agreement. Securities Purchase
Agreement, dated as of the Effective Date, between the Company and the
Portfolio Company.
Snyder. Richard E. Snyder.
Transfer. Any direct or indirect sale, assignment, pledge,
hypothecation or other disposition or encumbrance of Membership Interests or
the right to receive allocations of Profits and Losses (as defined in Section
1.2) or Distributions in connection therewith, whether voluntary or
involuntary. For this purpose, an "indirect transfer" includes a transfer of
an interest in an entity holding an interest in the Company; provided, that a
Transfer shall not include a Transfer of an interest in WPV.
WPV. Warburg, Pincus Ventures, L.P., a Delaware limited
partnership, or any permitted transferee thereof pursuant to Section 10.2
hereof.
1.2. Tax Characterization and Additional Tax Terms. It is intended
that the Company be characterized and treated as a partnership for, and solely
for, federal, state and local income tax purposes. For such purpose, (i) the
Company shall be subject to all the provisions of Subchapter K of Chapter 1 of
Subtitle A of the Code (as defined below), (ii) all references to a "Partner,"
to "Partners" and to the "Partnership" in the provisions of the Code and Tax
Regulations (as defined below) cited in this Agreement shall be deemed to
refer to a Member, Members and the Company, respectively. In addition, the
following terms shall have the following meanings:
Book Value. (a) In General. Except as set forth below,
Book Value of any Property is its adjusted basis for federal income tax
purposes.
(b) Adjustments. The Book Values of all the
Property may be adjusted by the Company to equal gross fair market value, as
reasonably determined by the Majority Members, as of the following times: (i)
the admission of a new Member to the Company or acquisition by an existing
Member of an additional interest in the Company from the Company; (ii) the
distribution by the Company of money or property to a retiring or continuing
Member in consideration for the retirement of all or a portion of such
Member's interest in the Company; (iii) the termination of the Company for
Federal income tax purposes pursuant to section 708(b)(2)(b) of the Code; and
(iv) such other times as determined by the Majority Members.
(c) Depreciation and Amortization. The Book
Value of Property shall be adjusted for the depreciation and amortization of
such asset taken into account in computing
<PAGE>5
Profits and Losses and for Company expenditures and transactions that increase
or decrease the asset's federal income tax basis.
Code. The Internal Revenue Code of 1986, as amended.
Profits and Losses. For each Fiscal Year, an amount equal to
the Company's taxable income or loss for such Fiscal Year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing
Profits or Losses shall be added to such taxable income or loss;
(ii) Any expenditures of the Company described in
Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of
the Code expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Tax Regulations, and not otherwise taken into account in computing
Profits or Losses, shall be subtracted from such taxable income or
loss;
(iii) Any adjustment made to Book Value of Property
of the Company pursuant to this Section 1.2.
Tax Matters Member. WPV or such other Member designated
pursuant to Section 9.1.
Tax Regulations. The federal income tax regulations
promulgated by the United States Treasury Department under the Code as such
Tax Regulations may be amended from time to time. All references herein to a
specific section of the Tax Regulations shall be deemed also to refer to any
corresponding provision of succeeding Tax Regulations.
ARTICLE II.
FORMATION
2.1. Organization. The Members hereby organize the Company as a
Delaware limited liability company pursuant to the provisions of the Act.
Except to the extent a provision of this Agreement expressly
incorporates federal income tax rules by reference to sections of the Code or
Tax Regulations or is expressly prohibited or ineffective under the Act, this
Agreement shall govern, even when inconsistent with, or different than, the
provisions of the Act or any other law or rule. To the extent any provision of
this Agreement is prohibited or ineffective under the Act, this Agreement
shall be deemed to be amended to the least extent
<PAGE>6
necessary in order to make this Agreement effective under the Act. In the
event the Act is subsequently amended or interpreted in such a way to make any
provision of this Agreement that was formerly invalid valid, such provision
shall be considered to be valid from the effective date of such interpretation
or amendment.
2.2. Name. The name of the Company is Golden Press Holding, L.L.C.,
and all business of the Company shall be conducted under that name.
2.3. Term. The Company shall be dissolved and its affairs wound up in
accordance with the Act and this Agreement on December 31, 2095 unless the
term shall be extended by amendment to this Agreement, or unless the Company
shall be sooner dissolved and its affairs wound up in accordance with the Act
or this Agreement.
2.4. Registered Agent and Office. The registered agent for the
service of process and the registered office of the Company shall be that
Person and location set forth in the Certificate. The Majority Members may,
from time to time, change the registered agent or office through appropriate
filings with the Department of State of Delaware. In the event the registered
agent ceases to act as such for any reason or the registered office shall
change, the Majority Members shall promptly designate a replacement registered
agent or file a notice of change of address, as the case may be.
2.5. Principal Office. The Principal Office of the Company shall be
located at: c/o Warburg, Pincus Ventures, L.P., 466 Lexington Avenue, New
York 10017.
ARTICLE III.
PURPOSE; NATURE OF BUSINESS
3.1. Purpose. (a) The purpose of the Company is to acquire, hold,
sell or otherwise dispose of interests in the Portfolio Company and to hold
proceeds from any such disposition.
(b) The Company shall have the authority to do all things
necessary or convenient to accomplish its purpose and operate its business as
described in this Article III. The Company exists only for the purpose specified
in this Article III and may not conduct any other business without the unanimous
consent of the Members.
<PAGE>7
ARTICLE IV.
ACCOUNTING AND RECORDS
4.1. Records to be Maintained. The Company shall maintain the
following records at the Principal Office:
(a) a current list of the full name set forth in
alphabetical order and last known mailing address of each Member,
together with information relating to each Member's Capital
Contributions and Membership Interest;
(b) a copy of the Certificate and all amendments thereto,
together with executed copies of any powers of attorney pursuant to
which the Certificate or any such amendment has been executed;
(c) a copy of the Company's federal, state and local income
or information tax returns and reports for the three most recent
Fiscal Years; and
(d) the Company's books and records, including financial
statements of the Company, which shall be open to inspections by the
Members or their agents at reasonable times.
4.2. Tax Returns and Reports. The Tax Matters Member, at the Company's
expense, shall cause the Company's accountants to prepare and timely file income
tax returns of the Company in all jurisdictions where such filings are required,
and the Company shall cause the Company's accountants to prepare and deliver to
each Member, within ninety (90) days after the expiration of each Fiscal Year or
as soon as practicable thereafter, at the Company's expense, all information
with respect to the Company required by the Code and Tax Regulations for the
preparation of the Members' federal income tax returns.
ARTICLE V.
MEMBERS
5.1. Names and Addresses. The names and addresses of the Members
are as stated on the signature page hereof.
5.2. Admission of New Members. (a) The Majority Members may effect,
at their sole discretion, a Membership Admission in respect of which the
consideration to be paid for the Membership Interest to be issued or sold is
solely cash.
<PAGE>8
(b) Any Membership Admission not described in clause (a) above shall
require the prior written consent of all the Members.
5.3. Pre-emptive Rights. Except with respect to a Membership Admission
occurring pursuant to Section 5.2(b), no later than ten (10) Business Days
before the consummation of a Membership Admission in respect of which WPV or any
Affiliate thereof (other than the Portfolio Company or its subsidiaries)
acquires a Membership Interest, WPV, on behalf of the Company, shall give a
written notice (a "Preemption Notice") thereof to Diller and RS. Such notice
shall contain: the identity of the purchaser that is the subject of the
Membership Admission, the amount of consideration to be paid by such purchaser;
and a binding offer by the Company to sell to Diller and RS, as the case may be,
an amount of Membership Interests, on the same terms and conditions offered to
the proposed purchaser, in an amount not to exceed the lesser of (i) the amount
which may be designated by Diller and RS, as the case may be, in their
respective Acceptance Notice (as defined below) or (ii) an amount which, after
giving effect to such Membership Admission, will cause the ratio of the Regular
Membership Interest Percentage of Diller and RS, as the case may be, to that of
all the Members, computed immediately before consummation of such Membership
Admission, to equal the ratio of the Regular Membership Interest Percentage of
Diller and RS, as the case may be, to that of all the Members, computed
immediately after such consummation. Diller and RS, as the case may be, may
accept such offer, in whole or in part, only by sending a notice of acceptance
(an "Acceptance Notice") to the Company no later than eight (8) Business Days
after the date the Preemption Notice was given. Diller and RS, as the case may
be, shall specify in the Acceptance Notice the amount of Membership Interests
that they respectively agree to purchase. The Acceptance Notice shall constitute
a binding agreement of Diller and RS, as the case may be, to purchase such
interests. If Diller or RS gives such Acceptance Notice, then, on the date on
which such Membership Admission is consummated, the Company shall issue and sell
to Diller and RS, as the case may be, and Diller and RS, as the case may be,
shall purchase from the Company, the Membership Interests subject to the
Acceptance Notice at the price per unit contained in the Preemption Notice. In
the event that an Acceptance Notice is not given by Diller or RS, as the case
may be, by the end of such eight (8) Business Day period or Diller or RS, as the
case may be, notifies the Company during such period of his or its intention not
to exercise his or its pre-emptive rights under this Section 5.3 (the
"Preemptive Refusal Notice"), the Company shall have ninety (90) days from the
earlier of the date such Preemptive Refusal Notice is given and the end of such
eight (8) Business Day period to sell the Membership Interests subject to the
Preemption Notice given to Diller or RS, as the case may be, to the proposed
purchaser named therein (or their Affiliates), but such sale must be upon terms
and conditions that are no more favorable to such purchaser or less favorable to
the Company than
<PAGE>9
those set forth in such Preemption Notice. If the Membership Interests subject
to such Preemption Notice are (a) not sold before the expiration of such
ninety (90) day period, (b) are proposed to be sold to purchasers other than
those identified in such Preemption Notice (or their Affiliates) or (c) are
proposed to be sold on terms more favorable to the proposed purchaser or less
favorable to the Company, the Company shall give another Preemption Notice to
Diller and RS. Nothing in this Agreement shall require the Company to
consummate any proposed Membership Admission.
ARTICLE VI.
RIGHTS AND DUTIES OF MEMBERS
6.1. Management. (a) General Provisions. The management of the Company
shall be vested exclusively in the Majority Members in their capacity as
Members. Such Members shall have all authority, rights and powers in the
management of the Company's business to do any and all acts and things
necessary, proper, appropriate, advisable, incidental or convenient to
effectuate the purposes of this Agreement, including, without limitation, the
acquisition, disposition and voting of securities of the Portfolio Company. Any
action taken by the Members on behalf of the Company in accordance with the
foregoing provisions shall constitute the act of and shall serve to bind the
Company.
(b) Delegation of Powers. The Majority Members
may, by instrument in writing, delegate their powers, but not their
responsibilities, to officers or agents or employees of the Company or of any
Member or to any other Person, provided, however, that no Person shall be
entitled to rely on such delegation unless presented with a copy of such
written instrument.
(c) Fees and Expenses. No Member shall receive
any remuneration from the Company as a result of being a Member or from any
activity in which the Company is engaged.
6.2. Liability of Members. No Member shall be liable as such for
the liabilities of the Company.
6.3. Conflicts of Interest.
(a) Subject to clause (c) below, a Member may lend money to,
and transact other business with, the Company. The rights and obligations of a
Member who lends money to, or transacts business with, the Company shall be the
same as those of a person who is not a Member, subject to applicable law and
clause (c) below.
<PAGE>10
(b) A Member shall only devote such amount of its time as it
deems necessary to advance the interests of the Company.
(c) Without the written consent of all the Members, no Member
or its Affiliates shall engage in any transaction with the Company or its
Affiliates, except for (i) transactions solely between the Company, the
Portfolio Company and their respective subsidiaries,(ii) transactions pursuant
to the Employment Agreement, (iii) transactions that are fair to the Company,
the Portfolio Company and their respective subsidiaries, (iv) transactions in
respect of which all Members participate ratably on substantially the same
basis, in proportion to their respective Regular Membership Interests, (v) loans
from WPV (or its Affiliates) to the Company to cover operating expenses of the
Company on terms that the Majority Members deem to be commercially reasonable
and (vi) transactions otherwise permitted under this Agreement. Nothing in this
Section 6.3(c) shall limit transactions between the Portfolio Company and its
controlled Affiliates, on the one hand, and Diller and his Affiliates, on the
other.
(d) Unless otherwise prohibited by this Agreement, nothing
herein shall prohibit any Member from engaging in any transactions whatsoever,
including those that are competitive with the Company, the Portfolio Company or
any of their respective subsidiaries.
6.4. Exculpation and Indemnification of Members. (a) No Member
shall be liable, directly or indirectly, to the Company or to any other Member
for any loss, claim, damage or liability arising from any act or omission
performed or omitted by it in connection with this Agreement or in its capacity
as a Member or Tax Matters Member of the Company, except to the extent any such
losses, claims, damages or liabilities are primarily attributable to such
Member's gross negligence, fraud or willful misconduct.
(b) The Company shall, to the fullest extent permitted by
applicable law, indemnify and hold harmless each Member against all losses,
claims, damages or liabilities to which such Member, as such, may become subject
in connection with any matter arising out of or related to the Company's
business or affairs, except (i) to the extent any such loss, claim, damage or
liability is finally judicially determined to be primarily attributable to such
Member's gross negligence, fraud or willful misconduct or (ii) for economic loss
to such Member's Membership Interest. If a Member becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter arising out of or related to the Company's business or affairs, the
Company will periodically reimburse such Member for its legal and other expenses
incurred in connection therewith, provided that such Member shall promptly repay
to the Company the amount
<PAGE>11
of any such reimbursed expenses paid to it if it shall be finally judicially
determined that such Member is not entitled to be indemnified by the Company in
connection with such action proceeding or investigation. If for any reason
(other than the gross negligence, fraud or willful misconduct of such Member)
the foregoing indemnification is unavailable to such Member, or insufficient to
hold it harmless, then the Company shall contribute to the amount paid or
payable by such Member as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and such Member on the other hand or, if such
allocation is not permitted by applicable law, to reflect not only the relative
benefits (if permitted by applicable law to be taken into account in respect of
such contribution) referred to above but also any other relevant equitable
consideration.
(c) The reimbursement, indemnity and contribution provisions
of this Section 6.4 shall (i) extend upon the same terms and conditions (but
only to the extent any loss, claim, damage or liability relates to the business
or affairs of the Company) to the directors, officers, employees and Affiliates
and agents of the applicable Member and (ii) be reduced (and, if applicable,
refunded) by the amount of any insurance or other payments from third parties,
including the Portfolio Company, in respect of an indemnifiable claim hereunder.
ARTICLE VII.
CONTRIBUTIONS AND CAPITAL ACCOUNTS
7.1. Contributions. In connection with the Purchase Closing, each
Member has contributed cash to the Company in the respective amount mutually
agreed upon by all the Members.
7.2. No Obligation to Restore Deficit Balance. Except as required
by law, no Member shall be required to restore any deficit balance in its
Capital Account.
7.3. Withdrawal; Successors. A Member shall not be entitled to withdraw
any part of its Capital Account or to receive any distribution from the Company,
except as specifically provided in this Agreement. Any Member whose interest in
the Company shall be increased by means of a transfer to it of all or portion of
the interest of another Member shall have a Capital Account with respect to such
other Member's interest initially equal to the Capital Account with respect to
such interest of the Member from whom such interest is acquired, except as
otherwise required to account for any step up in basis resulting from a
termination of the Company under Section 708 of the Code by reason of such
interest transfer.
<PAGE>12
7.4. Interest. No Member shall be entitled to interest on such
Member's Capital Contribution or on any profits retained by the Company.
7.5. No Personal Liability. No Member shall have any personal
liability for the repayment of any Capital Contributions of any other Member.
7.6. Capital Account. An account shall be established and
maintained for each Member in accordance with Section 1.704-1(b)(2)(iv) of the
Tax Regulations.
ARTICLE VIII.
ALLOCATIONS AND DISTRIBUTIONS
8.1. Determination of Profits and Losses. Profits and Losses of the
Company shall be determined (i) annually as of the close of the Company's Fiscal
Year, (ii) as of a Membership Admission, (iii) as of the withdrawal of all or a
portion of a Member's Membership Interest and (iv) as of the date of a
Dissolution Event. Such determination shall be made by the Majority Members in
accordance with generally accepted accounting principles.
8.2. Allocations. Except as required pursuant to Section 704 or any
other provision of the Code, all items of income, gain, deduction, loss and
credit shall be allocated among the Members so that the Capital Accounts of the
Members reflect, to the greatest extent possible, the amounts that would be
distributed to each Member if the Company were to dispose of all its assets at
Book Value and were to distribute the proceeds of such disposition in accordance
with Section 11.3 hereof.
8.3. Distributions. (a) The Company shall distribute, at such times as
determined by the Majority Members, but in any event promptly upon receipt of
cash or Liquid Securities (or promptly after a Dissolution Event pursuant to
Section 11.1(d) or (e) hereof has occurred, as the case may be), in each case
after payment of all current liabilities of the Company and the creation of such
reserves to fund liabilities (contingent or otherwise) of the Company as
reasonably determined by the Majority Members (subject to the reasonable
approval of RS and Diller), cash and Liquid Securities (and in the case of a
Dissolution Event pursuant to Section 11.1(d) or (e) hereof, securities of the
Portfolio Company) to the Members as follows:
(i) First, to each Member in accordance with its
Regular Membership Interest Percentage, until the amounts
<PAGE>13
theretofore and then distributed under this Section 8.3 (a)(i) are
equal to the aggregate Capital Contributions of all Members plus such
additional amount so as to cause the internal rate of return on such
Capital Contributions to equal 10%, compounded annually;
(ii) Second, (x) Diller's Regular Membership Interest
Percentage to Diller, (y) a percentage equal to the product of the
Combined Regular Membership Interest Percentage and 5% to RS and (z)
the balance to each Member (other than Diller) in accordance with the
ratio of its Regular Membership Interest Percentage to the sum of all
Members' (other than Diller's) Regular Membership Interest Percentages,
until the amounts theretofore and then distributed to WPV and RS under
Sections 8.3(a)(i) and (ii)(z) are equal to the aggregate Capital
Contributions of all such Members plus such additional amount so as to
cause the internal rate of return on such Capital Contributions to
equal 15%, compounded annually;
(iii) Third, (x) Diller's Regular Membership Interest
Percentage to Diller, (y) a percentage equal to the product of the
Combined Regular Membership Interest Percentage and 7.5% to RS and (z)
the balance to each Member (other than Diller) in accordance with the
ratio of its Regular Membership Interest Percentage to the sum of all
Members' (other than Diller's) Regular Membership Interest Percentages,
until the amounts theretofore and then distributed to WPV and RS under
Sections 8.3(a)(i), (ii)(z) and (iii)(z) are equal to the aggregate
Capital Contributions of all such Members plus such additional amount
so as to cause the internal rate of return on such Capital
Contributions to equal 20%, compounded annually;
(iv) Fourth, (x) Diller's Regular Membership Interest
Percentage to Diller, (y) a percentage equal to the product of the
Combined Regular Membership Interest Percentage and 15% to RS and (z)
the balance to each Member (other than Diller) in accordance with the
ratio of its Regular Membership Interest Percentage to the sum of all
Members' (other than Diller's) Regular Membership Interest Percentages,
until the amounts theretofore and then distributed to WPV and RS under
Sections 8.3(a)(i), (ii)(z), (iii)(z) and (iv)(z) are equal to the
Capital Contributions of all such Members plus such additional amounts
so as to cause the internal rate of return on such Capital
Contributions to equal 40%, compounded annually; and
(v) Fifth, (x) Diller's Regular Membership Interest
Percentage to Diller, (y) a percentage equal to the product of the
Combined Regular Membership Interest Percentage and 20% to RS and (z)
the balance to each Member (other than Diller) in accordance with the
ratio of its Regular Membership Interest Percentage to the sum of all
<PAGE>14
Members' (other than Diller's) Regular Membership Interest
Percentages.
(b) Distributions consisting of both cash and Liquid
Securities (and, in the case of a Dissolution Event described in Section 11.1(d)
or (e) hereof, securities of the Portfolio Company) shall be made, to the extent
practicable, in equal proportions of cash and such Liquid Securities (and in the
case of a Dissolution Event described in Section 11.1(d) or (e) hereof,
securities of the Portfolio Company) as to each Member receiving such
distributions.
(c) From and after (i) the date Snyder terminates his
employment with the Portfolio Company for Good Reason, the date of the Portfolio
Company's termination of Snyder's employment, other than for Cause, or the
termination of the employment of Snyder with the Portfolio Company due to death
or disability of Snyder or to the expiration of the Employment Period, if (x) RS
has elected, pursuant to Section 10.4(b) hereof, to cause its Membership
Interest to be converted into a Regular Membership Interest or (y) WPV has
delivered a Liquidation Notice pursuant to Section 10.4(b) hereof, or (ii) the
Company's beneficially owning (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and assuming for such purposes that
all rights, options and warrants to purchase, and all securities convertible
into, common stock of the Portfolio Company are fully exercised or converted, as
the case may be) less than 5% of the outstanding common stock of the Portfolio
Company, then WPV may elect, in the case of clause (ii) above, by giving notice
to the Company and RS no later than 30 Business Days after the occurrence of any
such event, to cause RS's Membership Interest to be, and, in the case of clause
(i) above, RS's Membership Interest shall be, converted into a Regular
Membership Interest on the following basis: (w) the fair market value of the
respective Membership Interests of the Members shall be determined in accordance
with Section 10.4(c) hereof, as of the end of the fiscal quarter of the Company
which immediately precedes such termination or election, as the case may be (the
"Valuation Date"); (x) each Member's Regular Membership Interest Percentage
shall, as of the Valuation Date, be readjusted so that such percentage in
respect of such Member equals the ratio of the fair market value of such
Member's Membership Interest divided by the fair market value of all Members'
Membership Interests; (y) Section 8.3(a)(i), (ii), (iii), (iv) and (v) shall, as
of the Valuation Date, be replaced by the following: "To each Member in the
ratio that the Regular Membership Interest of such Member bears to the Regular
Membership Interests of all the Members."; and (z) (A) if, at the time a
Liquidation Notice is given, the Company has the right to cause the Portfolio
Company (I) to effect two demand registrations pursuant to the Registration
Rights Agreement, the Company's rights to initiate one such registration shall
be assigned to RS and the Company's rights to initiate the other shall be
assigned to WPV and (II) to effect
<PAGE>15
one demand registration pursuant to the Registration Rights Agreement, the
Company's rights to initiate the same will be assigned to WPV; provided that
this clause (A) shall only apply in the case of a Liquidation Notice given
pursuant to Section 10.4(b) hereof; and (B) each Member will have the right to
participate in all registrations effected pursuant to the Registration Rights
Agreement on a pari-passu basis; provided that, other than in respect of the
one demand registration right assigned to RS pursuant to clause (A) above, WPV
shall have the sole right to initiate all demand registrations.
(d) For purposes of this Section 8.3, Liquid Securities shall
be valued at their fair market value determined in accordance with Section
10.4(c) hereof.
(e) No Property other than cash and Liquid Securities (and in
the case of a Dissolution Event described in Section 11.1(d) or (e) hereof,
securities of the Portfolio Company) shall be distributed to the Members without
the consent of all the Members.
ARTICLE IX.
TAX MATTERS
9.1. Tax Matters Member. WPV shall be the Tax Matters Member of the
Company pursuant to Section 6231(a)(7) of the Code. Such Member shall not resign
as the Tax Matters Member unless, on the effective date of such resignation, the
Company has designated another Member as Tax Matters Member and such Member has
given its consent in writing to its appointment as Tax Matters Member. The Tax
Matters Member shall receive no additional compensation from the Company for its
services in that capacity, but all expenses incurred by the Tax Matters Member
in such capacity shall be borne by the Company. The Tax Matters Member is
authorized to employ such accountants, attorneys and agents as it, in its sole
discretion, determines is necessary to or useful in the performance of its
duties. In addition, such Member shall serve in a similar capacity with respect
to any similar tax-related matters under state or local laws.
9.2. Mandatory Section 754 Election. Upon a Transfer by a Member of
its Membership Interest, which Transfer is permitted by the terms of this
Agreement or effected by operation of law, or upon the death of a Member or
Snyder or the distribution of any Property of the Company to one or more
Members, the Members, upon the request of RS or one or more of the transferees
or distributees, shall cause the Company to file an election on behalf of the
Company, pursuant to Section 754 of the Code, to cause the basis of the
Company's Property to be adjusted for federal income tax purposes in the
manner prescribed in Section 734 or Section 743 of the Code, as the case may
be. The cost of
<PAGE>16
preparing such election, and any additional accounting expenses of the Company
occasioned by such election, shall be borne by such transferees or
distributees.
ARTICLE X.
TRANSFER OF MEMBERSHIP INTERESTS
10.1. Transfer of Securities. No Member shall Transfer all or any
portion of its Membership Interest other than in accordance with the provisions
of this Article X. Any Transfer or purported Transfer made in violation of this
Article X shall be null and void and of no effect.
10.2. Transfer to Affiliates. Subject to the provisions of Section
10.3, (i) any Member who is a natural person may effect a Transfer of all or a
portion of his Membership Interest (or any direct or indirect interest in any
Person holding such Membership Interest) to such Member's spouse, immediate
family members or lineal descendants or a trust the primary beneficiaries of
which are such Persons, (ii) any Person may effect a Transfer of all or a
portion of its Membership Interest (or any direct or indirect interest in any
Person directly or indirectly holding such Membership Interest) to an Affiliate
of WPV, in the case of Transfers by WPV or Affiliates of WPV, of RS, in the case
of Transfers by RS or Affiliates of RS, or of Diller, in the case of Transfers
by Diller or Affiliates of Diller; all such transferees (and RS) shall transfer
such Membership Interest (or direct or indirect interest in any Person directly
or indirectly holding such Membership Interest) to an Affiliate of WPV, RS or
Diller, as the case may be, prior to such transferee's no longer being an
Affiliate of WPV, RS or Diller, as the case may be. In addition, (i) Snyder may
effect a Transfer of all or a portion of his Membership Interest (or any direct
or indirect interest in any Person directly or indirectly holding such
Membership Interest) to a partnership of which (a) Snyder is a general partner
at the time of the Transfer to the partnership (the "Snyder Family
Partnership"), and/or (b) a trust primarily for the benefit of Snyder and/or his
spouse and/or his descendants, of which at least one Trustee is Snyder (the
"Holdings Trust"), is a general partner at the time of the Transfer to the
partnership and (ii) the Snyder Family Partnership may effect a Transfer of all
or a portion of its Membership Interest (or any direct or indirect interest in
any Person directly or indirectly holding such Membership Interest) to Snyder,
Snyder's spouse, Snyder's immediate family members or lineal descendants or a
trust the primary beneficiaries of which are such Persons.
10.3. Conditions to Transfer. No Member shall Transfer any portion
of its Membership Interest under Section 10.2 unless (i) the transferee (if
other than another Member) agrees to be bound by
<PAGE>17
this Agreement and executes a counterpart hereof and such further documents as
may be necessary, in the opinion of the Company and its counsel, to make it a
party hereto (and any such transferee shall then be deemed a Member for all
purposes of this Agreement but no such agreement shall relieve the transferor
from liability herein); and (ii) such Transfer is made pursuant to either an
effective registration statement under the Securities Act and any applicable
state securities laws or an available exemption from the registration
requirements of the Securities Act and such laws.
10.4. Call and Put Option Upon Termination of Snyder's Employment.
(a) If Snyder shall voluntarily terminate his employment with
the Portfolio Company (other than for (i) Good Reason or (ii) death or
Disability or expiration of the Employment Period) or the Portfolio Company
shall terminate his employment for Cause, WPV shall have the option, exercisable
within 30 days after such termination of employment, to purchase from RS and RS
shall be required to sell the entire Membership Interest of RS (or its
transferee) for cash in an amount equal to the lesser of (x) the Capital Account
(determined as if Section 1.2(b) hereof did not apply at all times) of RS as of
the end of the fiscal quarter immediately preceding such termination and (y) the
fair market value of the Membership Interest of RS.
(b) If (i) Snyder shall voluntarily terminate his employment
with the Portfolio Company for Good Reason, (ii) Snyder's employment with the
Portfolio Company is terminated due to death, disability or expiration of the
Employment Period or (iii) the Portfolio Company shall terminate his employment
other than for Cause, RS shall have the option, exercisable by providing written
notice to WPV within 30 days after such termination of employment, (x) to sell
to WPV, and WPV shall be required to purchase, the entire Membership Interest of
RS (or its transferee) for fair market value or (y) to cause its Membership
Interest to be converted into a Regular Membership Interest as provided in
Section 8.3(c) hereof; provided, however, that whether or not either such option
is exercised by RS, WPV may, upon notice (the "Liquidation Notice") given to RS
and Diller within 10 days after WPV receives such notice of exercise or 40 days
after the occurrence of any such event, whichever period is shorter, elect to
dissolve the Company in accordance with Article XI hereof. If Snyder elects to
cause RS's Membership Interest to be sold pursuant to this Section 10.4(b),
Diller shall also sell his Membership Interest to WPV (and WPV shall purchase
the same) for fair market value, so long as WPV has not given a Liquidation
Notice.
(c) For purposes of this Section 10.4 and Section 8.3
hereof, the fair market value of the Membership Interest of any
<PAGE>18
Member shall be equal to the amount that such Member would receive if the
Company were to sell for cash all its assets at fair market value (as
determined in good faith by RS and Diller, on the one hand, and WPV, on the
other) and then liquidate in accordance with Article XI hereof. If RS and
Diller, on the one hand, and WPV, on the other, cannot in good faith reach
agreement as to such value within 50 days after the date of termination, such
value shall be determined in good faith by an independent investment banking
firm selected jointly by RS and Diller, on the one hand, and WPV, on the other
hand, or, if they cannot agree upon such a selection within 60 days after the
date of termination, by an independent investment banking firm selected by the
American Arbitration Association in accordance with its rules. The Company
shall pay all the fees and expenses of any third parties incurred in
connection with determining such value.
(d) Within the later of 30 days of notice of exercise of the
call or put option pursuant to this Section 10.4 and 20 days of the date of
determination of fair market value, RS (or their transferees, as applicable)
and, in case the last sentence of Section 10.4(b) applies, Diller (or his
transferees, if applicable) will convey to WPV their entire respective
Membership Interests, free and clear of all liens, claims and encumbrances and
WPV shall deliver cash to RS and Diller, as the case may be (or their respective
transferees, if applicable), in the appropriate amount in consideration
therefor, at a closing to be held at the Principal Office.
10.5. Withdrawal By Diller. At any time following the second
anniversary of the Purchase Closing, Diller, upon written notice given to the
Company, may cause the Company to distribute to him, in exchange for the
complete termination of his Membership Interest, a number of each type of
securities of the Portfolio Company then owned by the Company (and such portion
of any other property then owned by the Company), as shall equal the product of
(a) Diller's Regular Membership Interest Percentage then in effect and (b) the
aggregate number or amount of each type of security and other property then
owned by the Company. In the event that at the time of such distribution, there
exist liabilities of the Company (whether accrued, contingent or otherwise), the
value of such liabilities shall be determined in good faith by the Majority
Members, which value shall be subject to Diller's reasonable approval. If Diller
and the Majority Members cannot agree upon such value within 30 days after the
date of determination by the Majority Members, then Diller and WPV shall agree
to the selection of an independent investment banking firm to make such
determination, whose determination shall be final and binding on the parties.
Diller, at his option, shall pay his Regular Membership Interest Percentage of
the aggregate value of such liabilities either by crediting against the
distribution otherwise being made to him securities or other property with a
fair market value equal to his proportionate share of the
<PAGE>19
liabilities or by paying cash. Diller shall elect such method of payment by
notice given to the Company within 10 business days of the final determination
of the value of the Company's liabilities. The Company shall pay all the fees
and expenses of any third parties incurred in connection with determining such
value. All securities and other property shall be distributed to Diller free
and clear of all liens, claims and encumbrances. Diller shall not have any
rights in respect of the Registration Rights Agreement other than piggy-back
registration rights.
10.6. Injunctive Relief. The Company and the Members hereby declare
that it is impossible to measure in money the damages which will accrue to the
parties hereto by reason of the failure of any Member to perform any of its
obligations set forth in this Article X. Therefore, the Company and the Members
shall have the right to specific performance of such obligations, and if any
party hereto shall institute any action or proceeding to enforce the provisions
hereof, each of the Company and the Members hereby waives the claim or defense
that the party instituting such action or proceeding has an adequate remedy at
law.
ARTICLE XI.
DISSOLUTION AND WINDING UP
11.1. Dissolution. The Company shall be dissolved and its affairs
wound up, upon the first to occur of any of the following events (each of
which shall constitute a Dissolution Event):
(a) the disposition for cash and/or Liquid Securities of all
the securities and substantially all of the other Property held by the
Company, unless the Company is continued with the consent of all the
Members;
(b) the expiration of the term of this Agreement, unless
the Company is continued with the consent of all the Members;
(c) the unanimous written consent of all the Members;
(d) the date on which WPV gives a Liquidation Notice
pursuant to Section 10.4(b) hereof;
(e) from and after the date on which RS (and its transferees)
is no longer a Member, upon notice given by WPV to Diller; and
(f) the bankruptcy, death, dissolution, expulsion, incapacity
or withdrawal of any Member unless, within 90 days after such event,
the Company is continued by the written consent of the remaining
Majority Members.
<PAGE>20
11.2. Effect of Dissolution. Upon dissolution, the Company shall
not be terminated and shall continue until the winding up of the affairs of
the Company is completed and a certificate of cancellation has been issued by
the Secretary of State of Delaware.
11.3. Distribution of Assets on Dissolution. Upon the winding up of the
Company, the Members designated by the remaining Majority Members shall take
full account of the assets and liabilities of the Company and shall liquidate
the assets of the Company as promptly as is consistent with obtaining the fair
value thereof; provided that no such liquidation shall be required in respect of
a Dissolution Event described in Section 11.1(d) or (e) hereof. The proceeds of
any liquidation (and, in the case of a Dissolution Event described in Section
11.1(d) or (e) hereof, securities of the Portfolio Company) shall be applied and
distributed in the following order:
(a) first, to the payment of the debts and liabilities of the
Company to creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of such debts and liabilities
and to the payment of necessary expenses of liquidation;
(b) second, to the setting up of any reserves which such
Members may deem necessary or appropriate for any anticipated
obligations or contingencies of the Company arising out of or in
connection with the operation or business of the Company. Such reserves
may be paid over by such Members to an escrow agent or trustee selected
by such Members to be disbursed by such escrow agent or trustee in
payment of any of the aforementioned obligations or contingencies and,
if any balance remains at the expiration of such period as such Members
shall deem advisable, shall be distributed by such escrow agent or
trustee in the manner hereinafter provided;
(c) then, to the Members in accordance with Section 8.3
hereof.
In the case of a dissolution pursuant to Section 11.1(d) or
11.1(e) hereof, but subject, in the case of Section 11.1(d), to RS's
rights under Section 8.3(c) hereof, WPV shall be assigned the
Registration Rights Agreement which agreement shall be deemed to have
no value for this purpose.
11.4. Winding Up and Filing Articles of Cancellation. Upon the
commencement of the winding up of the Company, articles of cancellation shall
be delivered by the Company to the
<PAGE>21
Secretary of State of Delaware for filing. The articles of cancellation shall
set forth the information required by the Act. The winding up of the Company
shall be completed when all debts, liabilities, and obligations of the Company
have been paid and discharged or reasonably adequate provision therefor has
been made and all the remaining Property of the Company has been distributed
to the Members.
ARTICLE XII.
MISCELLANEOUS
12.1. Notices. Notices to the Company shall be sent to the Principal
Office of the Company. Notices to the Members shall be sent to their addresses
set forth on the signature page hereof. Any Member may require notices to be
sent to a different address by giving notice to the Company and the other
Members in accordance with this Section 12.1. Any notice or other communication
required or permitted hereunder shall be in writing, and shall be deemed to have
been given with receipt confirmed if and when delivered personally, given by
prepaid telegram or mailed first class, postage prepaid, delivered by courier,
or sent by facsimile, to such Members at such addresses.
12.2. Amendment; Waiver. Amendments to this Agreement may be made from
time to time, provided, however, that, except as otherwise provided in the last
sentence of this Section 12.2 or elsewhere in this Agreement, no amendment,
modification or waiver of this Agreement or any provision hereof shall be valid
or effective unless in writing and signed by each and every Member. No waiver of
any breach or condition of this Agreement shall be deemed to be a waiver of any
other subsequent breach or condition, whether of like or different nature. The
Majority Members may amend this Agreement in any way necessary, in their
reasonable judgment, to effectuate a Membership Admission; provided that, in the
case of a Membership Admission in respect of which the other Members'
pre-emptive rights pursuant to Section 5.3 hereof do not apply, no such
amendment shall materially adversely affect the rights of other Members herein
so long as Snyder remains the Chief Executive Officer of the Portfolio Company.
12.3. Headings. All Article and Section headings in this Agreement
are for convenience of reference only and are not intended to qualify the
meaning of any Article or Section.
12.4. Binding Agreement. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, their successors, heirs,
legatees, devisees, assigns, legal representatives, executors and
administrators, except as otherwise provided herein.
<PAGE>22
12.5. Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby. If the operation of any provision of this
Agreement would contravene the provisions of the Act, such provision shall be
void and ineffectual.
12.6. Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall constitute one instrument.
12.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the conflicts of laws or provisions thereof.
12.8. No Partnership Intended for Non-Tax Purposes. The Members have
formed the Company under the Act and expressly do not intend hereby to form a
partnership, either general or limited, under any statute or law. The Members do
not intend to be partners one to another or partners as to any third party. To
the extent any Member, by word or action, represents to another person that any
Member is a partner or that the Company is a partnership, the Member making such
wrongful representation shall be liable to any other Members who incur personal
liability by reason of such wrongful representation.
12.9. No Rights of Creditors and Third Parties under Agreement. This
Agreement is entered into among the Company and the Members for the exclusive
benefit of the Company, its Members, and their successors and assignees. This
Agreement is expressly not intended for the benefit of any creditor of the
Company or any other Person. Except and only to the extent provided by
applicable statute, no such creditor or any third party shall have any rights
under this Agreement or any agreement between the Company and any Member with
respect to any Capital Contribution or otherwise.
12.10.General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender;
<PAGE>23
(b) accounting terms not otherwise defined herein have the
meanings given to them in the United States in accordance with generally
accepted accounting principles;
(c) references herein to "Articles", "Sections" and other
subdivisions without reference to a document are to designated Articles,
Sections and other subdivisions of this Agreement;
(d) a reference to a paragraph without further reference to
a Section is a reference to such paragraph as contained in the same Section in
which the reference appears, and this rule shall also apply to other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
12.11. Waiver of Partition. Each Member hereby waives its right to
bring an action for partition of any of the Property owned by the Company.
12.12. Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any prior agreements, written or oral, with respect
thereto. Nothing herein shall change the rights or duties of any Person under
the Employment Agreement or under the letter agreement, dated as of the
Effective Date, between the Company and Snyder.
<PAGE>24
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands as of the Effective Date.
WARBURG, PINCUS VENTURES, L.P.
By: WARBURG, PINCUS & CO., its
general partner
By: /s/ David A. Tanner
Name: David A. Tanner
Title: Partner
Address:
466 Lexington Avenue
New York, New York 10017
SNYDER 1996 FAMILY LIMITED PARTNERSHIP
(as transferee of Richard E. Snyder
under Section 10.2)
By: /s/ Richard E. Synder
Richard E. Snyder
General Partner
Address:
c/o Richard E. Snyder
44 West 77th Street
New York, New York 10024
ARROW HOLDINGS, LLC
By: ARROW INVESTMENTS, INC.,
its Manager
By: /s/ Barry Diller
Name: Barry Diller
1940 Coldwater Canyon
Beverly Hills, California 90210
<PAGE>1
IRREVOCABLE PROXY
THIS AGREEMENT, dated as of May 7, 1996, between Golden
Press Holding, L.L.C., a Delaware limited liability company (the "Buyer"), and
The Amelia Bernstein 1996 Trust, Fleet National Bank of Connecticut, as
trustee (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, the Company and the Buyer have entered into a
Securities Purchase Agreement dated as of January 31, 1996 (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 the
Securities Purchase Agreement, Buyer entered into an agreement substantially
similar to this Agreement with each of (i) Richard A. Bernstein ("Bernstein"),
(ii) the Trust, fbo Richard A. Bernstein u/a Barry S. Bernstein dated April 5,
1986, Fleet National Bank of Connecticut, as trustee and (iii) the Trust, fbo
Richard A. Bernstein u/a March 16, 1978, Richard A. Bernstein and Stuart Turner,
as trustees (collectively, the "Other Shareholders"), which, as the date of
execution of such agreements, owned 3,501,000, 95,771 and 400,000 shares of
Company Common Stock, respectively;
WHEREAS, Bernstein desires to transfer 1,000,000 shares of
Company Common Stock to the Shareholder and the Buyer, as a condition to its
willingness to consent to such transfer, has required the Shareholder to grant
the Buyer an irrevocable proxy with respect to all of the shares of Company
Common Stock to be received by the Shareholder as a result of such transfer,
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:
<PAGE>2
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, Pincus 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
<PAGE>3
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.
<PAGE>4
The Shareholder represents and warrants to the Buyer that:
(a) On the date hereof, the Shareholder is the
owner of record of 1,000,000 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
<PAGE>5
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
<PAGE>6
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 John Vogelstein, in his sole discretion, provided that no
individual or entity listed on Schedule II hereto shall be deemed an
Entrepreneurial Investor.
<PAGE>7
(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 Richard A. and Amelia Bernstein 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.
<PAGE>8
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, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
Attention: David A. Tanner
Telecopy No.: (212) 878-9351
with a copy to: Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Jack H. Nusbaum, Esq.
Telecopy No.: (212) 821-8111
If to the Shareholder: Fleet National Bank of Connecticut
P.O. Box 1454
One Landmark Square
Stamford, Connecticut 06904
Attention: Ms. Catherine Clark
Telecopy No.: (203) 358-2002
Any party may change the foregoing address from time to time by giving the
other party notice thereof.
<PAGE>9
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
<PAGE>10
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.
<PAGE>11
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, PINCUS VENTURES, L.P.
Member
By: Warburg, Pincus & Co.
its General Partner
By: /s/ David A. Tanner
Name: David A. Tanner
Title: Partner
FLEET NATIONAL BANK OF CONNECTICUT
trustee u/a May 7, 1996
fbo Amelia Bernstein
By: /s/ Catherine O. Clark
Name: Catherine O. Clark
Title: Vice President
<PAGE>
Index of Defined Terms
beneficial ownership..................................................2
Bernstein.............................................................1
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
Warrant...............................................................1
