<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Western Publishing Group, Inc.
(Name of Issuer)
Common Stock, par value
(Title of Class of Securities)
959263104
(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
January 31, 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 [x]. (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>
SCHEDULE 13D
- -------------------- ------------------------------------
CUSIP No. 959263104 Page 2 of 20 Pages
- -------------------- ------------------------------------
- -------------------------------------------------------------------------------
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)
[ ]
(b)
[x]
- -------------------------------------------------------------------------------
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
0
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
---------------------------------------------------------
8 SHARED VOTING POWER
3,996,771
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,996,771
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9%
- -------------------------------------------------------------------------------
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>
SCHEDULE 13D
- ---------------------- -------------------------------------
CUSIP No 959263104 Page 3 of 20 Pages
- ---------------------- -------------------------------------
- -------------------------------------------------------------------------------
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)
[ ]
(b)
[x]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
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
0
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
---------------------------------------------------------
8 SHARED VOTING POWER
3,996,771
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,996,771
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- -------------------------------------------------------------------------------
*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>
SCHEDULE 13D
- ------------------- -----------------------------------
CUSIP No 959263104 Page 4 of 20 Pages
- ------------------- ------------------------------------
- -------------------------------------------------------------------------------
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)
[ ]
(b)
[x]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
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
0
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
---------------------------------------------------------
8 SHARED VOTING POWER
3,996,771
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,996,771
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9%
- -------------------------------------------------------------------------------
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>
SCHEDULE 13D
- -------------------- -------------------------------------
CUSIP No. 959263104 Page 5 of 20 Pages
- -------------------- -------------------------------------
- -------------------------------------------------------------------------------
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)
[ ]
(b)
[x]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
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
0
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
---------------------------------------------------------
8 SHARED VOTING POWER
3,996,771
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,996,771
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9%
- -------------------------------------------------------------------------------
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>
This Schedule 13D is being filed on behalf of Golden Press
Holding, L.L.C., a Delaware limited liability company ("GP Holding"),
Warburg, Pincus Ventures, L.P., a Delaware limited partnership ("Ventures"),
Warburg, Pincus & Co., a New York general partnership ("WP"), and E.M. Warburg,
Pincus & Company, a New York general partnership ("E.M. Warburg"), relating
to the Common Stock, par value $.01 per share (the "Common Stock"), of
Western Publishing Group, Inc., a Delaware corporation (the "Company"). GP
Holding, Ventures, WP and E.M. Warburg are hereinafter collectively referred
to as the "Reporting Entities." Of the Reporting Entities, only GP Holding has
acquired direct ownership of voting power relating to the Common Stock.
Item 1. Security and Issuer.
This statement relates to the Company's Common Stock. The
principal executive offices of the Company are located at 444 Madison Avenue,
New York, NY 10022.
Item 2. Identity and Background.
(a) This statement is filed by GP Holding, Ventures, WP and
E.M. Warburg. Ventures owns 93.08% of the membership interests in GP Holding
and may be deemed to control it. The sole general partner of Ventures is WP.
Lionel I. Pincus is the managing partner of WP and may be deemed to
control it. E.M. Warburg, which has the same general partners as WP,
manages Ventures. WP has a 15% interest in the profits of Ventures as the
general partner, and also owns approximately 1.24% of the limited
partnership interests in Ventures. The general partners of WP and E.M.
Warburg are described in Schedule I hereto. Each of the general partners of WP
and E.M. Warburg disclaim beneficial ownership (within the meaning of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or
otherwise) of the securities deemed to be beneficially owned by GP Holding.
Richard E. Snyder and Arrow Holdings, LLC, an entity controlled by Barry
Diller, own the balance of the membership interests of GP Holding. The
Reporting Entities may be deemed to be a "group" under the Federal
securities laws. Lionel I. Pincus disclaims any beneficial ownership of the
Shares reported herein as being beneficially owned by the Reporting Entities.
(b) The address of the principal business and principal office of
each of the Reporting Entities is 466 Lexington Avenue, New York, New York
10017.
(c) GP Holding is a newly formed entity whose principal business is
to acquire, hold, sell or otherwise dispose of interests in the Company.
The principal business of Ventures is that of a partnership engaged in
<PAGE>
making venture capital and related investments. The principal business of WP
is acting as general partner of Ventures, Warburg Pincus Investors, L.P.,
Warburg, Pincus Capital Company, L.P., Warburg, Pincus Capital Partners,
L.P. and Warburg, Pincus Associates, L.P., and as a holding company for
its ownership of securities of E.M. Warburg, Pincus & Co., Inc., the
principal business of which is providing specialized financial advisory and
investment counseling services. The principal business of E.M. Warburg is
acting as manager of Ventures and Warburg, Pincus Investors, L.P.
(d) None of the Reporting Entities, nor, to the best of
their knowledge, any of the directors, executive officers or general partners
referred to in paragraph (a) has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) None of the Reporting Entities nor, to the best of their
knowledge, any of the directors, executive officers or general partners
referred to in paragraph (a) above has, during the last five years, been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Except as otherwise indicated on Schedule I hereto, each of
the individuals referred to in paragraph (a) above is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
GP Holding acquired beneficial ownership within the meaning of
Rule 13d-3 under the Exchange Act, with respect to 3,996,771 shares of the
Common Stock (the "Shares") pursuant to the several Irrevocable Proxies
attached hereto as Exhibits 2 through 4, and incorporated herein by
reference, between GP Holding and Richard A. Bernstein, Chairman and Chief
Executive Officer of the Company, and certain of his affiliates (the
"Irrevocable Proxies"). Pursuant to the Irrevocable Proxies, 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, dated as of January 31, 1996, between GP Holding and the Company
(the "Securities Purchase Agreement"). The Irrevocable Proxies grant sole
voting power to GP Holding with respect to the Shares in connection with
certain matters, as more fully described therein and in Item 4 below. The
<PAGE>
terms of the Securities Purchase Agreement are further described in Item 4
and Item 6 below.
Item 4. Purpose of Transaction.
On January 31, 1996, GP Holding and the Company entered into
the Securities Purchase Agreement, pursuant to which, among other things, GP
Holding agreed to purchase, 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") 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. Upon consummation of the transactions contemplated by
the Securities Purchase Agreement, GP Holding may be deemed beneficially
to own 44.6% of the voting power relating to the Common Stock within the
meaning of Rule 13d-3 under the Exchange Act, and may be deemed to control the
Company. See Item 6 below.
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, except that, until the consummation
of the Securities Purchase, the Irrevocable Proxies do not allow GP Holding
to vote against, or for the removal of, existing members of the Company's
Board of Directors, except as contemplated by the Securities Purchase
Agreement. The Irrevocable Proxies terminate upon the earlier to occur of (i)
the termination of the Securities Purchase Agreement in accordance with its
terms prior to the (as defined in Rule 13d-3 under the Exchange Act) of GP
Holding and certain of its affiliates, at any time following the
consummation of the Securities Purchase, to constitute 15% or more of the
outstanding Common Stock (determined as set forth in the Irrevocable Proxies).
Pursuant to the Securities Purchase Agreement, GP Holding has agreed to direct
the vote of the Shares in favor of authorizing the Securities Purchase
Agreement and the transactions contemplated thereby, as set forth therein. The
foregoing summary description of the Securities Purchase Agreement and the
Irrevocable Proxies is qualified in its entirety by reference to Exhibits 1
through 4 hereto.
In addition to the contemplated consummation of the Securities
Purchase, the Reporting Entities may from time to time acquire additional
securities of the Company or dispose of securities of the Company through open
market or privately negotiated transactions, tender offer
<PAGE>
or otherwise, depending on existing market conditions and other
considerations discussed below. In addition, the Reporting Entities
intend to assist the Company in seeking, evaluating and negotiating strategic
transactions with other entities. The Reporting Entities intend to review
their investment in the Company on a continuing basis and, depending upon the
price and availability of securities of the Company, subsequent developments
affecting the Company, the Company's business and prospects, other
investment and business opportunities available to the Reporting Entities,
general stock market and economic conditions, tax considerations and other
relevant factors, may decide at any time to increase or to decrease the size of
their investment in the Company.
In connection with the execution of the Securities Purchase Agreement,
Richard E. Snyder was appointed President of the Company. Mr. Snyder also
purchased 599,465 shares of Common Stock from the Company. See Item 6 below.
Item 5. Interest in Securities of the Issuer.
(a) At present, GP Holding may be deemed to own beneficially
the 3,996,771 Shares to which the Irrevocable Proxies relate. This
number is expected to be decreased, as such Shares are entitled to be
transferred, subject to certain restrictions set forth in the Irrevocable
Proxies. Upon the closing of the Securities Purchase Agreement and the
transactions contemplated thereby, GP Holding will beneficially own
13,746,771 shares of Common Stock within the meaning of Rule 13d-3 under the
Exchange Act, consisting of 13,000 Preferred Shares, convertible into an
aggregate of 6,500,000 shares of Common Stock, the 3,250,000 shares of Common
Stock underlying the Warrant and the 3,996,771 Shares to which the
Irrevocable Proxies relate. By reason of their respective relationships
with GP Holding, each of the Reporting Entities may be deemed under Rule
13d-3 to own beneficially all of the shares of Common Stock which GP Holding
beneficially owns. Based on the 21,076,074 shares of Common Stock
outstanding on January 31, 1996 (as represented by the Company in the
Securities Purchase Agreement and treating as outstanding the shares of
Common Stock into which the Preferred Shares will be convertible and into
which the Warrant will be exercisable, if such securities are issued),
the Reporting Entities immediately after the closing (the "Closing") of
the Securities Purchase Agreement will be deemed to own beneficially
approximately 44.6% of the voting power relating to the Common Stock. In
addition, GP Holding will be entitled to receive 780,000 shares of Common
Stock annually as a dividend on the Preferred Shares for each of the four
years following the issuance of the Preferred Shares, subject to
adjustment, as described in Item 6.
(b) The Reporting Entities together share the power to vote or
to direct the vote of the Shares to which the Irrevocable Proxies relate. To
the knowledge of the Reporting Entities, the power to direct the disposition of
<PAGE>
such Shares is held by Richard Bernstein and certain of his affiliates.
(c) Except for the execution of the Securities Purchase Agreement
and the transactions contemplated thereby, none of the Reporting Entities
nor, to the best of their knowledge, any person listed in Schedule I
hereto, has effected any transactions in the Common Stock during 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 3,501,000 of such
shares, by Richard Bernstein; (ii) 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 (iii) 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, Understandings or Relationships with
Respect to Securities of the Issuer.
The information set forth in Item 4 above is incorporated herein
by reference. Pursuant to Rule 13d-1(f) promulgated under the Act, the
Reporting Persons have entered into an agreement with respect to the joint
filing of this statement, and any amendment or amendments hereto, which is
attached hereto as Exhibit 5 and is incorporated herein by reference.
Securities to be Issued. Pursuant to the Securities Purchase
Agreement and the form of Certificate of Designations relating to the
Preferred Shares attached as an exhibit thereto (the "Certificate of
Designations"), the Preferred Shares, when issued, will be convertible into
Common Stock at $10 per share and will be redeemable at the option of the
Company, from the fourth anniversary of issuance thereof. For the first
four years from issuance of the Preferred Shares, dividends thereon will be
payable, on a quarterly basis, in Common Stock at the rate of 780,000
shares per annum, subject to certain adjustments based on the market
price of the Common Stock at the time such dividends are paid. Thereafter,
dividends on the Preferred Shares will be payable in cash at the quarterly
rate of $150 per share, subject to adjustment as set forth in the Certificate
of Designations. The Preferred Shares will vote with the Common Stock based on
the number of shares of underlying Common Stock issuable upon conversion.
<PAGE>
As described below, so long as GP Holding retains a significant ownership
interest of the Preferred Shares, the Preferred Shares will also have
separate class voting rights with respect to certain material corporate
transactions and the election of up to one-third of the Company's board of
directors. The Warrant will be exercisable at $10 per share, will
terminate seven years after issuance thereof, and will generally not
be exercisable for the first two years after issuance. Consummation of
the Securities Purchase is subject to numerous conditions, as set forth
in the Securities Purchase Agreement, including approval by the
stockholders of the Company.
Board Representation. Pursuant to the Securities Purchase Agreement
and the Certificate of Designations, GP Holding will have certain
rights of representation on the Company's Board of Directors as set forth
below:
1. A majority of the Company's Board of Directors, to be elected at
a special meeting of the Company's shareholders called to consider the
Securities Purchase, will be designated by GP Holding.
2. For as long as at least (i) 40% of the initially issued
Preferred Shares (after taking into account certain adjustments) (the "Initial
Preferred Shares") are owned by GP Holding, any of its members, any Affiliates
(as defined therein) of such members (other than Ventures) and WP
(collectively, the "GP Holding Parties"), the holders of Preferred Shares
will have the exclusive right, voting separately as a class, to elect
one-third of the members of the Company's Board of Directors (the
"Preferred Directors"), (ii) 30% of the Initial Preferred Shares are owned by
GP Holding Holding Parties, the holders of Preferred Shares will have the
exclusive right, voting separately as a class, to elect two Preferred
Directors and (iii) 20% of the Initial Preferred Shares are owned by GP Holding
Parties, the holders of Preferred Shares will have the exclusive right,
voting separately as a class, to elect one Preferred Director. Such voting
rights will terminate if the Preferred Shares are held by more than ten
holders.
Veto Rights of the Preferred Shares. Pursuant to the Certificate
of Designations, as long as at least one-half of the Initial Preferred Shares
are owned by GP Holding Parties, the Company (and, in the case of clauses
(ii), (iii), (iv) and (v) below, any of its subsidiaries), without first
obtaining the affirmative vote or written consent of the holders of record
of a majority of the Preferred Shares, voting as a separate class, will be
precluded from:
<PAGE>
(i) amending or repealing any provision of the Company's
Certificate of Incorporation or By-Laws, including without limitation
a change in the number of members of the Board of Directors of
the Company;
(ii) authorizing or effecting the incurrence or issuance of
any Indebtedness (as defined therein) or shares of capital stock;
(iii) authorizing or effecting (A) in one or in a series
of two or more related transactions, any sale, lease, license,
transfer or other disposition of assets for consideration in excess
of $5,000,000 (other than in the ordinary course of business or among
the Company and its subsidiaries), (B) any merger or
consolidation or other reorganization involving the Company or any
of its subsidiaries (other than with one another or in respect
of which the aggregate consideration paid to or received by the
Company or its subsidiaries is less than $5,000,000) or (C) a
liquidation, winding up, dissolution or adoption of any plan for the
same other than the liquidation, winding up, dissolution or
adoption of any plan for the same of a subsidiary into the Company or
another subsidiary thereof;
(iv) authorizing or effecting, in one or in a series of two
or more related transactions, (A) any acquisition or lease of
assets or (B) any license of patent, trademark or other rights
relating to any intellectual property, in each case, that involves
by its terms a per annum payment in excess of $5,000,000 as
determined in good faith by the Company's Board of Directors, other
than among the Company and its subsidiaries or in the ordinary course
of business; or
(v) terminating the employment of the chief executive officer
of the Company.
Such restrictions will terminate if the Preferred Shares are held by more
than ten holders.
Registration Rights. Under the Securities Purchase Agreement and
the form of Registration Rights Agreement, between the Company and GP
Holding, attached as an Exhibit thereto (the "GP Holding Registration Rights
Agreement"), GP Holding will have the right, at any time after the Closing,
to require the Company to effect a registration of (i) the Preferred Shares,
(ii) any Common Stock issued as a dividend or upon conversion thereon; (iii)
the Warrant (or any portion thereof), (iv) any Common Stock issuable on
<PAGE>
exercise thereof, and (v) any capital stock of the Company issued with
respect to the foregoing securities. GP Holding is entitled to three (3)
such registrations. In addition, in the event the Company proposes to register
any of its securities for its own account or the account of any of its
shareholders, GP Holding will have the right (the "Piggyback Registration
Right") to have its shares included in an unlimited number of such
registrations. If shares to be registered are to be distributed by means of
an underwriting, the number of shares to be registered may be reduced, as set
forth in the GP Holding Registration Rights Agreement. In addition to the
foregoing registration rights, GP Holding shall have the right to require the
Company to effect unlimited registrations on Form S-3 under the Securities
Act of 1933, as amended (the "Securities Act"), and to require a shelf
registration statement pursuant to Rule 415 promulgated under the
Securities Act to be kept effective for a period of 18 months.
All expenses of registration must be borne by the Company, but
all underwriters' fees, discounts or commissions must be borne by the
holders participating in the registration. GP Holding's registration rights
under the Securities Purchase Agreement may be assigned to a transferee of at
least 5% of the then outstanding registrable securities or certain affiliates
and associates of the Reporting Entities.
Shares Purchased by Richard E. Snyder. To the knowledge of
the Reporting Entities, on January 31, 1996, Richard E. Snyder purchased
599,465 shares of Common Stock from the Company in connection with his
employment with the Company. To the knowledge of such persons, such shares
were purchased by means of a nonrecourse promissory note from Mr. Snyder in
favor of the Company, secured by such shares. The Reporting Entities do not
share in the voting or investment power relating to such shares owned by
Mr. Snyder and disclaim beneficial ownership of such shares within the
meaning of Rule 13d-3 or otherwise.
THE FOREGOING DESCRIPTIONS OF THE SECURITIES PURCHASE AGREEMENT,
THE CERTIFICATE OF DESIGNATIONS, THE GP HOLDING REGISTRATION RIGHTS
AGREEMENT AND THE IRREVOCABLE PROXIES ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO THE SECURITIES PURCHASE AGREEMENT, THE EXHIBITS THERETO AND THE
IRREVOCABLE PROXIES, WHICH ARE ATTACHED HERETO AS EXHIBITS AND ARE INCORPORATED
HEREIN BY REFERENCE.
Except as described herein and by reference to Item 4 above, there
are no contracts, arrangements, understandings or relationships among the
persons named in Item 2 or between such persons and any other person with
<PAGE>
respect to any securities of the Company.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 Securities Purchase Agreement, dated as of January
31, 1996, between Western Publishing Group, Inc. and
Golden Press Holding, L.L.C., including the exhibits
thereto.
Exhibit 2 Irrevocable Proxy, dated as of January 31, 1996,
between Golden Press Holding, L.L.C. and Richard A.
Bernstein.
Exhibit 3 Irrevocable Proxy, dated as of January 31, 1996,
between Golden Press Holding, L.L.C. and the Trust,
fbo Richard A. Bernstein u/a March 16, 1978, Richard
A. Bernstein and Stuart Turner, as Trustees.
Exhibit 4 Irrevocable Proxy, dated as of January 31, 1996,
between Golden Press Holding, L.L.C. and the Trust,
fbo Richard A. Bernstein u/a April 5, 1986, Fleet
National Bank of Connecticut, as Trustee.
Exhibit 5 Joint Filing Agreement, dated as of February 9,
1996, between Golden Press Holding, L.L.C., Warburg,
Pincus Ventures, L.P., Warburg, Pincus & Co., and
E.M. Warburg & Company.
<PAGE>
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: February 12, 1996
GOLDEN PRESS HOLDING, L.L.C.
By: Warburg, Pincus Ventures, L.P.,
Member
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
Stephen Distler
Partner
WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
Stephen Distler
Partner
WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
Stephen Distler
Partner
E.M. WARBURG, PINCUS & COMPANY
By: /s/ Stephen Distler
Stephen Distler
Partner
<PAGE>
SCHEDULE I
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
Reporting Entities
Name
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
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>
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
<PAGE>
Peter Stalker III Partner, E.M. Warburg
David A. Tanner Partner, E.M. Warburg
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 the Reporting Entities
Name
Susan Black Partner, WP
Christopher W. Brody Partner, WP
Harold Brown Partner, WP
Dale C. Christensen1 Managing Director
Errol M. Cook Partner, WP
Elizabeth B. Dater Partner, WP
Stephen Distler Partner, WP
Louis G. Elson Partner, WP
______________________________
1 Citizen of Canada.
<PAGE>
John L. Furth Partner, WP
Stuart M. Goode Partner, WP
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. King2
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
Daly Pathak3 Partner, WP
Daphne D. Philipson Partner, WP
____________________________________
2 Citizen of United Kingdom.
3 Citizen of India.
<PAGE>
Lionel I. Pincus Managing Partner, WP; Managing
Partner, Pincus & Co.
Eugene L. Podsiadlo Partner, WP
Ernest H. Pomerantz Partner, WP
Arnold M. Reichman Partner, WP
Roger Reinlieb Partner, WP
John D. Santoleri Partner, WP
Sheila N. Scott Partner, WP
Dominic H. Shorthouse4
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
1 Securities Purchase Agreement, dated as of January
31, 1996, between Golden Press Holding, L.L.C., and
Western Publishing Group, Inc., including the
exhibits thereto
2 Irrevocable Proxy, dated as of January 31, 1996,
between Golden Press Holding, L.L.C. and Richard A.
Bernstein.
3 Irrevocable Proxy, dated as of January 31, 1996,
between Golden Press Holding, L.L.C. and the Trust,
fbo Richard A. Bernstein u/a March 16, 1978, Richard
A. Bernstein and Stuart Turner, as Trustees.
4 Irrevocable Proxy, dated as of January 31, 1996,
between Golden Press Holding, L.L.C. and the Trust,
fbo Richard A. Bernstein u/a April 5, 1986, Fleet
National Bank of Connecticut, as Trustee.
5 Joint Filing Agreement, dated as of February 9, 1996,
between Golden Press Holding, L.L.C., Warburg, Pincus
Ventures, L.P., Warburg, Pincus & Co., and E.M.
Warburg & Company
<PAGE>
Exhibit 1
SECURITIES PURCHASE AGREEMENT
DATED AS OF
JANUARY 31, 1996
BETWEEN
GOLDEN PRESS HOLDING, L.L.C.
AND
WESTERN PUBLISHING GROUP, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I. SALE AND PURCHASE
<S> <C> <S>
Section 1.1. Agreement to Sell and to Purchase................................................................2
Section 1.2. Closing..........................................................................................3
Section 1.3. Purchase Price...................................................................................3
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF BUYER
Section 2.1. Organization and Qualification...................................................................4
Section 2.2. Authority Relative to this Agreement.............................................................4
Section 2.3. Financing Arrangements...........................................................................5
Section 2.4. Investment Intent................................................................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization and Qualification...................................................................6
Section 3.2. Capitalization...................................................................................6
Section 3.3. Subsidiaries and Equity Investments..............................................................7
Section 3.4. Authority Relative to this Agreement.............................................................9
Section 3.5. Reports and Financial Statements; Undisclosed Liabilities.......................................10
Section 3.6. Absence of Certain Changes or Events............................................................11
Section 3.7. Litigation......................................................................................12
Section 3.8. Disclosure......................................................................................12
Section 3.9. Employee Benefit Plans..........................................................................14
Section 3.10. ERISA..........................................................................................15
Section 3.11. Compliance with Applicable Laws................................................................16
Section 3.12. Taxes..........................................................................................17
Section 3.13. Certain Agreements.............................................................................18
Section 3.14. Takeover Provisions Inapplicable...............................................................19
Section 3.15. Company Action.................................................................................19
Section 3.16. Fairness Opinions..............................................................................19
Section 3.17. Financial Advisors; Expenses...................................................................20
Section 3.18. Title to Property..............................................................................20
Section 3.19. Intellectual Property..........................................................................21
Section 3.20. Licenses, Permits and Authorizations...........................................................21
Section 3.21. Insurance......................................................................................22
Section 3.22. Environment....................................................................................22
Section 3.23. Related Party Transactions.....................................................................23
Section 3.24. No Company Material Adverse Effect.............................................................24
ARTICLE IV. CONDUCT OF BUSINESS PENDING THE SALE AND PURCHASE
Section 4.1. Conduct of Business by the Company..............................................................24
Section 4.2. Notice of Breach................................................................................28
ARTICLE V. ADDITIONAL AGREEMENTS
Section 5.1. Access and Information..........................................................................29
Section 5.2. Company Proxy Statement.........................................................................29
Section 5.3. Stockholders' Meeting...........................................................................30
Section 5.4. HSR Act.........................................................................................31
Section 5.5. Additional Agreements...........................................................................31
<PAGE>
Section 5.6. No Solicitation.................................................................................32
Section 5.7. Transfer Restriction............................................................................33
Section 5.8. Director and Officer Indemnification and Insurance..............................................33
Section 5.9. Board of Directors..............................................................................34
Section 5.10. Redemption of Company Preferred Stock..........................................................34
Section 5.11. Expenses.......................................................................................34
Section 5.12. Related Party Transactions.....................................................................35
Section 5.13. Moore Termination..............................................................................35
ARTICLE VI. CONDITIONS PRECEDENT
Section 6.1. Conditions to Each Party's Obligation to Effect the Sale and Purchase...........................35
Section 6.2. Conditions to Obligation of the Company to Effect the Sale and Purchase.........................36
Section 6.3. Conditions to Obligations of Buyer to Effect the Sale and Purchase..............................37
ARTICLE VII. TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination.....................................................................................39
Section 7.2. Effect of Termination...........................................................................41
Section 7.3. Amendment.......................................................................................41
Section 7.4. Waiver..........................................................................................41
ARTICLE VIII. GENERAL PROVISIONS
Section 8.1. Non-Survival of Representations, Warranties and Agreements......................................42
Section 8.2. Notices.........................................................................................42
Section 8.3. Expenses; Termination Fees......................................................................44
Section 8.4. Publicity.......................................................................................46
Section 8.5. Specific Performance............................................................................46
Section 8.6. Interpretation..................................................................................46
Section 8.7. Miscellaneous...................................................................................46
Exhibit A -- Form of Series B Certificate of Designations
Exhibit B -- Form of Warrant
Exhibit C -- Form of Registration Rights Agreement
Exhibit D -- Form of Opinion of Willkie Farr & Gallagher
Exhibit E -- Form of Opinion of Milbank, Tweed, Hadley & McCloy
</TABLE>
<PAGE>
INDEX OF DEFINED TERMS
PAGE
Beneficial ownership......................................36
Bernstein..................................................5
Business Combination Proposal.............................26
Buyer......................................................1
Buyer Disclosure Schedule..................................3
Buyer Material Adverse Effect..............................3
CERCLA....................................................18
Closing....................................................2
Closing Date...............................................2
Code......................................................11
Commission.................................................6
Companies..................................................6
Company Benefit Plans.....................................10
Company Common Stock.......................................1
Company Disclosure Schedule................................4
Company Material Adverse Effect............................4
Company Meeting...........................................24
Company Preferred Stock....................................5
Company Proxy Statement...................................10
Company SEC Reports........................................8
Company Voting Matters....................................25
Confidentiality Agreement.................................23
Continuing Directors......................................27
Environmental Laws........................................18
ERISA.....................................................10
Exchange Act...............................................3
Excluded Employees........................................20
Expenses..................................................34
GAAP.......................................................8
Governmental Entity.......................................13
HSR Act....................................................3
Intellectual Property.....................................16
Interim SEC Reports........................................8
Irrevocable Proxies.......................................31
Moore.....................................................11
New Preferred Shares.......................................1
New Preferred Stock........................................1
Purchase Price.............................................2
Registration Rights Agreement..............................3
Securities Act.............................................3
Series B Certificate of Designations.......................1
Significant Agreements....................................14
Significant Subsidiary.....................................6
Snyder....................................................19
Stock Option Plan..........................................5
Subsidiaries...............................................6
Subsidiary.................................................6
Superior Proposal.........................................26
Tax Subsidiaries..........................................13
Third Party...............................................35
Third Party Business Combination..........................35
Warrant....................................................1
WPV.......................................................25
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of January
31, 1996, between Western Publishing Group, Inc., a Delaware corporation
(the "Company"), and Golden Press Holding, L.L.C., a Delaware limited
liability company ("Buyer").
W I T N E S S E T H:
WHEREAS, the Company desires to create a series of
its Preferred Stock, no par value, consisting of 13,000 shares ("New
Preferred Shares") designated as its "Series B Convertible Preferred
Stock" (the "New Preferred Stock"). The terms, limitations and relative rights
and preferences of the New Preferred Stock are set forth in the
Certificate of Designations, Number, Voting Powers, Preferences and Rights
of Series B Convertible Preferred Stock of the Company, substantially in
the form of Exhibit A attached hereto (the "Series B Certificate of
Designations");
WHEREAS, the Company desires to issue a warrant
(the "Warrant") to purchase an aggregate of 3,250,000 shares (subject to
adjustment) of the common stock, par value $.01 per share, of the Company
("Company Common Stock"), substantially in the form of Exhibit B attached
hereto;
WHEREAS, Buyer desires to purchase the New Preferred
Shares and the Warrant from the Company, and the Company desires to
sell the New Preferred Shares and the Warrant to Buyer, in each case
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the members of Buyer and the Board of Directors
of the Company have approved, and deem it advisable and in the best
interests of their members and stockholders, respectively, to consummate
the purchase and sale of the New Preferred Shares and the Warrant, upon the
terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company, subject
to Section 5.3 hereof, has resolved to recommend approval of the purchase and
sale of the New Preferred Shares and the Warrant and the other
transactions contemplated herein to the holders of all the issued and
outstanding shares of Company Common Stock;
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties and agreements contained herein, and for
other good and valuable consideration, the parties hereto agree as follows:
<PAGE>
ARTICLE I.
SALE AND PURCHASE
Section 1.1. Agreement to Sell and to Purchase. On the Closing
Date (as defined below) and upon the terms and subject to the conditions set
forth in this Agreement, the Company shall issue, sell, and deliver the
New Preferred Shares and the Warrant to Buyer, and Buyer shall purchase and
accept the New Preferred Shares and the Warrant from the Company.
Section 1.2. Closing. The closing of such sale and purchase
(the "Closing") shall take place (i) at the offices of Willkie Farr &
Gallagher, 153 East 53rd Street, New York, New York, at 10:00 a.m. on the day
on which the last of the conditions set forth in Article VI is satisfied or
waived, or (ii) at such other time and place as the parties hereto shall
agree in writing. The date on which the Closing is to occur is herein referred
to as the "Closing Date."
At the Closing, the Company shall deliver to Buyer or its designees
a stock certificate representing the New Preferred Shares and the Warrant,
each of which shall be duly executed on behalf of the Company and registered
in the name of Buyer (or its nominee). In full consideration for the New
Preferred Shares and the Warrant, Buyer shall thereupon pay to the
Company the Purchase Price (as defined below) as provided in Section 1.3
hereof.
Section 1.3. Purchase Price. The aggregate purchase price for the
New Preferred Shares and the Warrant ("Purchase Price")shall be $65,000,000.
At the Closing, Buyer shall deliver to the Company $65,000,000 by wire
transfer of immediately available funds to such account as the Company
shall designate not less than three business days prior to the Closing
Date.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company as follows:
Section 2.1. Organization and Qualification. Buyer is a limited
liability company duly authorized and validly existing under the laws of the
state of Delaware and has the requisite power to carry on its business as it
is now being conducted and currently proposed to be conducted. Buyer is
duly qualified to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary,
except where the failure to be so qualified would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on its
<PAGE>
business, properties, assets, condition (financial or otherwise),
liabilities or operations (a "Buyer Material Adverse Effect"). Complete and
correct copies as of the date hereof of the certificate of formation of
Buyer have been delivered to the Company as part of a disclosure schedule
delivered by Buyer to the Company on the date of this Agreement (the "Buyer
Disclosure Schedule").
Section 2.2. Authority Relative to this Agreement. Buyer has
the requisite power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
Registration Rights Agreement between the Company and Buyer to be entered
into on the Closing Date (the "Registration Rights Agreement"),
substantially in the form of Exhibit C attached hereto, and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary actions on the part of Buyer. This
Agreement and the Registration Rights Agreement, upon its execution, each
constitute a valid and binding obligation of Buyer, enforceable in
accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of
the court before which any proceeding therefor may be brought. No other
proceedings on the part of Buyer are necessary to authorize this Agreement or
the Registration Rights Agreement and the transactions contemplated hereby
and thereby. Buyer is not subject to or obligated under (i) any operating
agreement, indenture or other loan document provision or (ii) any other
contract, license, franchise, permit, order, decree, concession, lease,
instrument, judgment, statute, law, ordinance, rule or regulation applicable
to Buyer or its properties or assets, that would be breached or violated, or
under which there would be a default (with or without notice or lapse of
time, or both), or under which there would arise a right of termination,
cancellation or acceleration of any obligation or the loss of a material
benefit, by its executing and carrying out this Agreement other than, in the
case of clause (ii) only, (A) any breaches, violations, defaults,
terminations, cancellations, accelerations or losses which, either singly
or in the aggregate, will not have a Buyer Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby and (B) the
laws and regulations referred to in the next sentence. Except as disclosed
in Section 2.2 of the Buyer Disclosure Schedule or, in connection, or in
compliance, with the provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Securities Act
of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the corporation, securities or blue
sky laws or regulations of the various states, no filing or registration with,
or authorization, consent or approval of, any public body or authority is
necessary for the consummation by Buyer of the transactions
contemplated by this Agreement, other than
<PAGE>
filings, registrations, authorizations, consents or approvals the failure of
which to make or obtain would not reasonably be expected to have a Buyer
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby.
Section 2.3. Financing Arrangements. Buyer has funds available to
it sufficient to effect the transactions contemplated by this Agreement.
Section 2.4. Investment Intent. Buyer is acquiring the New
Preferred Shares and the Warrant for investment for its own (or an
affiliate's) account, not as a nominee or agent and not with a view to the
distribution of any part thereof in violation of law. Buyer has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as follows:
Section 3.1. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power to carry on its
business as it is now being conducted and currently proposed to be
conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to
be so qualified would not reasonably be expected to have a material adverse
effect on the business, properties, assets, condition (financial or
otherwise), liabilities or operations of the Company and its subsidiaries
taken as a whole (a "Company Material Adverse Effect"). Complete and correct
copies as of the date hereof of the Restated Certificate of Incorporation and
By-laws of the Company and each of its subsidiaries have been delivered to
Buyer or its representatives as part of a disclosure schedule delivered
by the Company to Buyer on the date of this Agreement (the "Company
Disclosure Schedule").
Section 3.2. Capitalization. The authorized capital stock of
the Company consists of 40,000,000 shares of Company Common Stock and
100,000 shares of preferred stock, no par value. As of the date hereof,
21,276,074 shares of Company Common Stock are validly issued and outstanding,
fully paid and nonassessable (which figure does not include shares issued
upon exercise of employee stock options granted after October 28, 1995),
208,800 shares of Company Common Stock are held in the Company's
<PAGE>
treasury, 19,970 shares of preferred stock designated as Series A Preferred
Stock ("Company Preferred Stock") are outstanding, and no shares of Company
Preferred Stock are held in the Company's treasury. As of October 28, 1995,
employee stock options to acquire up to 1,705,300 shares of Company Common
Stock were outstanding, and employee stock options to purchase 311,500
shares of Company Common Stock were issued from such date through the date
hereof. As of the date hereof, there are no bonds, debentures, notes or
other evidences of indebtedness having the right to vote on any matters on
which the Company's stockholders may vote issued or outstanding. As of the
date hereof, except for (i) options to acquire up to 1,725,133 shares of
Company Common Stock issued to employees of the Company pursuant to the
Amended and Restated 1986 Employee Stock Option Plan of the Company (the
"Stock Option Plan") and (ii) 416,042 shares of Company Common Stock
issuable upon conversion of the Company Preferred Stock, there are no
options, warrants, calls or other rights, agreements or commitments
outstanding obligating the Company to issue, deliver or sell shares of its
capital stock or debt securities, or obligating the Company to grant,
extend or enter into any such option, warrant, call or other such right,
agreement or commitment. Section 3.2 of the Company Disclosure Schedule
sets forth a complete and correct list of (a) all agreements, offering
memoranda, registration statements, prospectuses or offering circulars
concerning sales or attempted sales of the Company's securities (whether by
the Company or by a substantial stockholder) since January 1, 1992 and
(b) all written proposals concerning the acquisition or proposed
acquisition of the Company's securities since January 1, 1992. As of the
date hereof, the New Preferred Shares, including the Series B Certificate of
Designations, and the Warrant were duly authorized by the Company's Board of
Directors. On or prior to the Closing Date, assuming approval of the Company
Voting Matters (as defined in Section 5.3 hereof) by holders of the Company
Common Stock, the Series B Certificate of Designations will have become
effective in accordance with the DGCL, and all of the New Preferred Shares
and all of the shares of Company Common Stock issuable in payment of
dividends in respect of or upon conversion of the New Preferred Shares and
upon exercise of the Warrant will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and shall be delivered free and
clear of all liens, claims, charges and encumbrances of any kind or nature
whatsoever. The Company has duly reserved 3,250,000 shares of Company Common
Stock for issuance upon exercise of the Warrant and 9,620,000 shares of
Company Common Stock for issuance upon conversion of the New Preferred Stock
and upon payment of stock dividends in respect thereof. The Company has
not agreed to register any securities under the Securities Act (other
than pursuant to the Registration Rights Agreement and the Registration
Rights Agreement, dated as of even date herewith, between Richard A.
Bernstein ("Bernstein") and certain of his affiliates and the Company).
<PAGE>
Section 3.3. Subsidiaries and Equity Investments.
(a) Section 3.3 of the Company Disclosure Schedule sets forth (i)
the name of each corporation that is a "Significant Subsidiary" (as
such term is defined in Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "Commission") (such subsidiaries hereinafter
referred to collectively as "Subsidiaries" and individually as a "Subsidiary",
and collectively with the Company, the "Companies")), (ii) the name of
each corporation, partnership, joint venture or other entity (other than
the Subsidiaries) in which any of the Companies has, or pursuant to any
agreement has the right or obligation to acquire at any time by any
means, directly or indirectly, an equity interest or investment; (iii) in the
case of each of such corporations described in clauses (i) and (ii) above,
(A) the jurisdiction of incorporation, (B) the capitalization thereof
and the percentage of each class of voting capital stock owned by any of the
Companies, (C) a description of any contractual limitations on the holder's
ability to vote or alienate such securities, (D) a description of any
outstanding options or other rights to acquire securities of such
corporation, and (E) a description of any other contractual charge
or impediment which would materially limit or impair any of the Companies'
ownership of such entity or interest or its ability effectively to exercise
the full rights of ownership of such entity or interest; and (iv) in the
case of each of such unincorporated entities, information substantially
equivalent to that provided pursuant to clause (iii) above with regard to
corporate entities.
(b) Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted. Each
Subsidiary is duly qualified to do business as a foreign corporation in
every jurisdiction in which the character of the properties owned or leased
by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would
not reasonably be expected to have a Company Material Adverse Effect.
All the outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable, and
(except as specified in Section 3.3 of the Company Disclosure Schedule)
are owned of record and beneficially, directly or indirectly, by the Company,
free and clear of any liens, claims, charges, security interests or other
legal or equitable encumbrances, limitations or restrictions. There
are no outstanding options, warrants, agreements, conversion rights,
preemptive rights or other rights to subscribe for, purchase or otherwise
acquire any issued or unissued shares of capital stock of any
Subsidiary. Except as set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended January 28, 1995 or as disclosed in Section 3.3
of the Company Disclosure Schedule, the Company
<PAGE>
does not own, directly or indirectly, any interest in any other
corporation, partnership, joint venture or other business association or
entity.
Section 3.4. Authority Relative to this Agreement. The Company
has the corporate power to enter into this Agreement and the Registration
Rights Agreement and to issue the Warrant and, subject to approval of the
Company Voting Matters by holders of the Company Common Stock, to carry
out its obligations hereunder and thereunder. The execution and delivery of
this Agreement, the Registration Rights Agreement and the Warrant and
the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the Company's Board of Directors. Each of
this Agreement, the Registration Rights Agreement (when executed) and
the Warrant (when issued) constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms except as enforcement
may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding
therefor may be brought. Except for the approval of the holders of Company
Common Stock described in Section 5.3, no other proceedings on the part of
the Company are necessary to authorize this Agreement, the Registration
Rights Agreement and the Warrant and the transactions contemplated hereby
and thereby.
Except as set forth in Section 3.4 of the Company Disclosure
Schedule, neither the Company nor any subsidiary is subject to or
obligated under (i) any charter, by-law, indenture or other loan document
provision or (ii) any other contract, license, franchise, permit, order,
decree, concession, lease, instrument, judgment, statute, law, ordinance,
rule or regulation applicable to the Company or any of its subsidiaries
or their respective properties or assets, that would be breached or
violated, or under which there would be a default (with or without notice or
lapse of time, or both), or under which there would arise a right of
termination, cancellation or acceleration of any obligation or the loss of
a material benefit, or a right to receive a severance or other similar
payment, by its executing and carrying out this Agreement and the
transactions contemplated herein, except, in the case of clause (ii),
where such breach, violation or default would not reasonably be expected to
have a Company Material Adverse Effect. Except as disclosed in Section
3.4 of the Company Disclosure Schedule or, in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act, the
Exchange Act, and the corporation, securities or blue sky laws or
regulations of the various states, no filing or registration with, or
authorization, consent or approval of, any public body or authority is
necessary for the consummation by the Company of the transactions
contemplated hereby, except where the failure to so file or register or to
receive an authorization, consent or approval would not reasonably be
<PAGE>
expected to have a Company Material Adverse Effect.
Section 3.5. Reports and Financial Statements; Undisclosed
Liabilities.
(a) The Company has furnished Buyer with true and complete copies
of its (i) Annual Reports on Form 10-K for the fiscal years ended January
29, 1994 and January 28, 1995, as filed with the Commission, (ii) Quarterly
Reports on Form 10-Q for the quarters ended April 29, 1995, July 29, 1995 and
October 28, 1995, as filed with the Commission, (iii) proxy statements
related to all meetings of its stockholders (whether annual or special)
held since January 1, 1993 and (iv) all other reports filed with, or
registration statements declared effective by, the Commission since
December 31, 1992, except registration statements on Form S-8 relating to
employee benefit plans, which are all the documents (other than
preliminary material) that the Company filed or was required to file with
the Commission from that date through the date hereof (clauses (i) through
(iv) being referred to herein collectively as the "Company SEC Reports").
From the date hereof through the Closing Date, the Company will furnish to
Buyer copies of any reports and registration statements to be filed with
the Commission (the "Interim SEC Reports") within a reasonable amount
of time prior to filing thereof. As of the their respective dates, the
Company SEC Reports (or the Interim SEC Reports, as the case may be)
complied in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations
of the Commission thereunder applicable to such reports and registration
statements. As of their respective dates, the Company SEC Reports (or the
Interim SEC Reports, as the case may be) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were, or will be, made, not
misleading. The audited consolidated financial statements and unaudited
interim financial statements of the Company included in the Company SEC
Reports (or the Interim SEC Reports, as the case may be) comply as to form
in all material respects with applicable accounting requirements of the
Securities Act or the Exchange Act, as applicable, and with the published
rules and regulations of the Commission with respect thereto. The
financial statements and the condensed financial statements, as
applicable, included in the Company SEC Reports (or in the Interim SEC
Reports, as the case may be) (i) have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent
basis (except as may be indicated therein or in the notes thereto), (ii)
present fairly, in all material respects, the financial position of the
Company and its subsidiaries as at the dates thereof and the results of
their operations and cash flows for the periods then ended subject, in the
case of the unaudited interim financial statements, to normal year-end audit
adjustments and any other adjustments described
<PAGE>
therein and the fact that certain information and notes have been condensed
or omitted in accordance with the Exchange Act and the rules promulgated
thereunder, and (iii) are in all material respects in accordance with
the books and records of the Company.
(b) Except as set forth in Section 3.5(b) or Section 3.17 of the
Company Disclosure Schedule and except for indebtedness or liabilities
that are reflected or reserved against in the most recent financial
statements included in the Company SEC Reports or that have been
incurred since October 28, 1995 in the ordinary course of business, the
Company does not have any liabilities, whether absolute, accrued,
contingent or otherwise.
Section 3.6. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports or as disclosed in Section 3.6 of
the Company Disclosure Schedule and except for the transactions contemplated
by this Agreement, since October 28, 1995, there has not been (i) any
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of
business) individually or in the aggregate having, or which could
reasonably be expected to have, a Company Material Adverse Effect (other than
as a result of changes in laws or regulations of general applicability),
(ii) any damage, destruction or loss, whether or not covered by insurance,
which, individually or in the aggregate, has had or, insofar as reasonably
can be foreseen, in the future would reasonably be expected to have, a
Company Material Adverse Effect, or (iii) any entry into any commitment
or transaction material to the Company and its subsidiaries taken as a whole
(including, without limitation, any borrowing or sale or purchase of
assets) except in the ordinary course of business consistent with past
practice.
Section 3.7. Litigation. Except as disclosed in the Company's
Annual Report on Form 10-K for the year ended January 28, 1995, or the
Company's Quarterly Reports on Form 10-Q for the quarters ended April 29,
1995, July 29, 1995 and October 28, 1995, or as disclosed in Section
3.7 of the Company Disclosure Schedule, there is no claim, suit, action or
proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any subsidiary which, either alone
or in the aggregate, would reasonably be expected to have a Company Material
Adverse Effect, nor is there any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Company or any subsidiary having, or
which in the future could reasonably be expected to have, either alone or in
the aggregate, any such Company Material Adverse Effect.
Section 3.8. Disclosure . None of the information with respect to
the Company or its subsidiaries to be included or incorporated by reference
in the proxy statement of the Company, including any amendments or supplements
<PAGE>
thereto (collectively, the "Company Proxy Statement"), to be mailed to the
stockholders of the Company in connection with the transactions
contemplated herein will, at the time of the mailing of the Company Proxy
Statement and at the time of the Company Meeting (as defined in Section
5.3), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading; provided, however, that this provision shall not
apply to statements or omissions in the Company Proxy Statement based upon
information expressly furnished by or on behalf of Buyer for use therein.
The Company Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. No representation or warranty made by the Company contained in
this Agreement and no statement contained in any certificate, list, exhibit or
other instrument specified in this Agreement, including without
limitation the Company Disclosure Schedule, contains any untrue statement of
a material fact or omits or will omit to state a material fact necessary to
make the statements contained therein, in light of the circumstances under
which they were made, not misleading, and no fact or circumstance exists
or has occurred which has, or in the future can reasonably be expected
to have, a Company Material Adverse Effect which has not been disclosed
in this Agreement, the Company Disclosure Schedule or the Company SEC Reports.
Prior to the date hereof, the Company has provided or made available to
Buyer or its representatives complete and accurate copies of (i) all
unredacted minutes of meetings and written consents of the Board of Directors
of the Company and committees thereof since January 1, 1993 and (ii) all
documents and agreements, including any amendments, renewals or
modifications thereof, referenced in the Company Disclosure Schedule.
Section 3.9. Employee Benefit Plans. (a) Except as disclosed in
the Company SEC Reports or as disclosed in Section 3.9(a) of the Company
Disclosure Schedule, there are no material employee benefit or compensation
plans, agreements or arrangements, including, but not limited to, "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and including, but not
limited to, plans, agreements or arrangements relating to former employees,
including, but not limited to, retiree medical plans, maintained by the
Company or any of its subsidiaries or to which the Company or any of its
subsidiaries has an obligation to make contributions or material collective
bargaining agreements to which the Company or any of its subsidiaries is a
party (together, "Company Benefit Plans"). No default exists with respect to
the obligations of the Company or any of its subsidiaries under any such
Company Benefit Plan, which default, either alone or in the aggregate,
would reasonably be expected to have a Company Material Adverse Effect.
Since January 1, 1993, there have been no disputes or grievances subject to
<PAGE>
any grievance procedure, unfair labor practice proceedings, arbitration or
litigation under such Company Benefit Plans, that have not been finally
resolved, settled or otherwise disposed of, nor is there any default, or any
condition which, with notice or lapse of time or both, would constitute such a
default, under any such Company Benefit Plans, by the Company or its
subsidiaries or, to the best knowledge of the Company, any other party
thereto, which failure to resolve, settle or otherwise dispose of or
default, either alone or in the aggregate, would reasonably be expected
have a Company Material Adverse Effect. Since January 1, 1993 there have
been no strikes, lockouts or work stoppages or slowdowns, or to the best
knowledge of the Company and its subsidiaries, jurisdictional disputes or
organizing activity occurring or threatened with respect to the business or
operations of the Company or its subsidiaries that, individually or in the
aggregate, have had or would reasonably be expected to have a Company
Material Adverse Effect.
(b) All of the approximately 175 employees of the Company
or its subsidiaries who, pursuant to letters distributed in December 1993,
were made beneficiaries of certain benefits payable upon a "change of
control" of the Company have subsequently received letters in July 1994
effectively terminating such benefits, and no such person has or will, or
could in the future, under any circumstances, become eligible for such
benefits. Section 3.9(b) of the Company Disclosure Schedule sets forth in
reasonable detail the amount of benefits that would have been payable to such
beneficiaries who are employed by the Company or any of its subsidiaries
on the date hereof pursuant to such letters had all the requisite conditions
therefor been subsequently satisfied in December 1993 and assuming that
such benefits had never been revoked.
(c) The employment of John F. Moore ("Moore") with the Company
and its subsidiaries was terminated as of January 26, 1996. The terms of
such termination are set forth in Section 3.9(c) of the Company
Disclosure Schedule.
Section 3.10. ERISA. All Company Benefit Plans have been
administered in accordance with, and are in compliance with, the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the
"Code") and all other Laws, domestic or foreign, except where such
failures to administer or comply would not reasonably be expected to have
a Company Material Adverse Effect. Except as disclosed in Section 3.10 of the
Company Disclosure Schedule, each of the Company Benefit Plans which is
intended to meet the requirements of Section 401(a) of the Code has been
determined, or, as described in Section 3.10 of the Company Disclosure
Schedule, is in the process of being determined by the Internal Revenue
Service to be "qualified," within the meaning of such section of the
Code, and the Company knows of no fact which is likely to have an adverse
effect on the qualified status of such plans, including any failure to
request a determination letter from the Internal Revenue Service regarding
<PAGE>
any such plan's compliance with the applicable requirements of the Tax Reform
Act of 1986 within the Code Section 401(b) remedial amendment period.
None of the Company Benefit Plans which are defined benefit
pension plans have incurred any "accumulated funding deficiency" (whether or
not waived) as that term is defined in Section 412 of the Code and, as
disclosed in the Coopers & Lybrand actuarial report dated April 7, 1995
delivered by the Company to the Buyer prior to the date hereof, the fair
market value of the assets of each such plan equal or exceed the accrued
liabilities of such plan. To the best knowledge of the Company, there are
not now nor have there been any non-exempt "prohibited transactions," as such
term is defined in Section 4975 of the Code or Section 406 of ERISA,
involving the Company's Benefit Plans which could subject the Company,
its subsidiaries or Buyer to the penalty or tax imposed under Section
502(i) of ERISA or Section 4975 of the Code and which would reasonably be
expected to have a Company Material Adverse Effect. Except as set forth in
Section 3.10 of the Company Disclosure Schedule, no Company Benefit Plan
which is subject to Title IV of ERISA has been completely or partially
terminated; no proceedings to completely or partially terminate any Company
Benefit Plan have been instituted by the Pension Benefit Guaranty
Corporation under Title IV of ERISA; and no reportable event within the
meaning of Section 4043(c) of ERISA has occurred with respect to any
Company Benefit Plan. Neither the Company nor any of its subsidiaries
has any outstanding liability under Section 4062, 4063 or 4064 of ERISA
with respect to any "single-employer plan", as defined in Section
4001(a)(15) of ERISA, and, to the best knowledge of the Company, no event has
occurred which could reasonably be expected to result in any such liability
except for any such liability which would not reasonably be expected to
have a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries has made a complete or partial withdrawal, within the meaning of
Section 4201 of ERISA, from any "multiemployer plan", as defined in Section
4001(a)(3) of ERISA, which has resulted in, or is reasonably expected to
result in, any withdrawal liability to the Company or any of its subsidiaries
except for any such liability which would not reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries has engaged in any transaction described in Section 4069 of
ERISA within the last five years except for any such transaction which would
not reasonably be expected to have a Company Material Adverse Effect. The
Company and its subsidiaries have complied with all requirements of
the Worker Adjustment and Retraining Notification Act and any similar state
or local "plant closing" law with respect to the employees of the Company and
its subsidiaries, except for such failures to comply as would not reasonably
be expected to have a Company Material Adverse Effect. Except as
disclosed in Section 3.10 of the Company Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due
to any current, former or retired employee of
<PAGE>
the Company and its subsidiaries, (ii) increase any benefits otherwise
payable under any Company Benefit Plan or (iii) result in the acceleration
of the time for payment or vesting of any benefits under any Company Benefit
Plan.
Section 3.11. Compliance with Applicable Laws. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement or in
Section 3.11 of the Company Disclosure Schedule, the businesses of the
Company and its subsidiaries are not being conducted in violation of any
law, ordinance, regulation, order or writ of any governmental or regulatory
authority, domestic or foreign ("Governmental Entity"), except for possible
violations that individually or in the aggregate do not and would not
reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any of its subsidiaries has received notice of violation of
any law, ordinance, regulation, order or writ, or is in default with
respect to any order, writ, judgment, award, injunction or decree of any
Governmental Entity, that would affect any of their respective assets,
properties or operations, except for such violations or defaults as would
not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Except as disclosed in Section 3.11 of the
Company Disclosure Schedule, no investigation or review by any Governmental
Entity with respect to the Company or any of its subsidiaries (a) is
pending, nor (b) to the knowledge of the Company, (i) is threatened nor
(ii) has any Governmental Entity indicated an intention to conduct the
same, other than those the outcome of which would not reasonably be
expected to have a Company Material Adverse Effect. Section 3.11 of the
Company Disclosure Schedule sets forth a complete and correct list as of
the date hereof of all material filings and correspondence with, reports
to, and transcripts of any significant proceedings (including dates
thereof) before, any Governmental Entity since January 1, 1993.
Section 3.12. Taxes.
(a) Each of the Company and the subsidiaries of which it owns 50%
or more of the capital stock (the "Tax Subsidiaries") has filed all
tax returns required to be filed by any of them and has paid (or the Company
has paid on its behalf), or has set up an adequate reserve for the payment
of, all taxes required to be paid in respect of the periods covered by such
returns, except where the failure to pay would not reasonably be expected to
have a Company Material Adverse Effect. The information contained in such tax
returns is true, complete and accurate in all material respects, except
where a failure to be so would not reasonably be expected to have a Company
Material Adverse Effect. Except as disclosed
<PAGE>
in Section 3.12 of the Company Disclosure Schedule, neither the Company nor
any Tax Subsidiary is delinquent in the payment of any assessed tax or
other assessed governmental charge, except where such delinquency would not
reasonably be expected to have a Company Material Adverse Effect.
Except as disclosed in Section 3.12 of the Company Disclosure
Schedule, no deficiencies for any taxes have been proposed, asserted
or assessed against the Company or any of its Tax Subsidiaries that have not
been finally settled or paid in full, which would reasonably be expected
to have a Company Material Adverse Effect, and no requests for waivers of
the time to assess any such tax are pending.
(b) Neither the Company nor any of its subsidiaries is a party to
any contract or arrangement which would result in an "excess parachute
payment" within the meaning of Section 280G of the Code as a
consequence of the transactions contemplated hereby, assuming for
this purpose satisfaction of the requirements of Section
280(G)(b)(2)(A)(i) of the Code.
Section 3.13. Certain Agreements. Neither the Company nor any
of its subsidiaries is in default (or would be in default with notice or
lapse of time, or both) under, is in violation (or would be in violation with
notice or lapse of time, or both) of, or has otherwise breached, any
indenture, note, credit agreement, loan document, lease, license or other
agreement, including, without limitation, any Significant Agreement (as
defined below), whether or not such default has been waived, which default,
alone or in the aggregate with all other such defaults, would reasonably
be expected to have a Company Material Adverse Effect. Section 3.13(a) of the
Company Disclosure Schedule contains a complete and correct list as of the
date hereof of each agreement, contract and commitment of the following
types, written or oral, to which the Company or its subsidiaries is a party or
by which they or any of their assets are bound: (a) mortgages,
indentures, security agreements, guarantees, pledges and other agreements
and instruments relating to the borrowing of money or extension of credit;
(b) employment, severance and material consulting agreements; (c) licenses of
patent, trademark and other rights relating to any Intellectual Property (as
defined below) and any other licenses, permits and authorizations
relating to the businesses of the Company and its subsidiaries (whether as
licensor or licensee) that involve by their terms a per annum payment in
excess of $100,000 or resulted in a payment obligation in excess of
$100,000 in the calendar year ended December 31, 1995; (d) joint venture or
partnership contract or agreement; and (e) consignment sales contracts and
franchise agreements (whether as franchisor or franchisee) granting the
franchisee the privilege to sell the franchisor's products or services in a
specified geographic area ((a) through (e) collectively, "Significant
Agreements"). Prior to the date hereof, the Company has delivered or made
available to Buyer or its representatives complete and correct copies of
all written Significant Agreements together will all amendments thereto,
and accurate descriptions of all oral Significant Agreements. Each
Significant Agreement is in full force and effect and is binding upon the
Company and, to the Company's knowledge, is binding upon such other
parties, in each case in accordance with its terms. There are no material
<PAGE>
unresolved disputes involving the Company or any of its subsidiaries under
any Significant Agreement.
Section 3.14. Takeover Provisions Inapplicable. As of the date
hereof and at all times on or prior to the Closing Date, Section 203 of the
DGCL is, and shall be, inapplicable to the transactions contemplated by
this Agreement (including the granting of an irrevocable proxy by Bernstein
to Buyer). Section 3.14 of the Company Disclosure Schedule sets forth a
complete and correct copy of the resolutions of the Board of Directors of
the Company to the effect that such section of the DGCL is, and shall be,
inapplicable to the transactions contemplated by this Agreement.
Section 3.15. Company Action. The Board of Directors of the
Company (at a meeting duly called and held) has by unanimous vote of the
directors (i) determined that the transactions that are the subject of the
Company Voting Matters (as defined in Section 5.3 hereof) are advisable and
in the best interests of the Company and its stockholders, (ii) recommended
the approval of this Agreement, the transactions that are the subject of
the Company Voting Matters and the other matters to be voted upon at
the Company Meeting as contemplated hereby by the holders of the Company
Common Stock and directed that the transactions that are the subject of
the Company Voting Matters and the other matters to be voted upon at
the Company Meeting as contemplated hereby be submitted for consideration by
the Company's stockholders at the Company Meeting, and (iii) adopted a
resolution having the effect of causing the Company not to be subject, to
the extent permitted by applicable law, to any state takeover law that may
purport to be applicable to the transactions contemplated by this
Agreement.
Section 3.16. Fairness Opinions. The Company has received, and has
furnished the Buyer with a complete and correct copy of, the written opinion
of each of Bear, Stearns & Co. Inc. ("Bear Stearns") and Jefferies & Company,
Inc. ("Jefferies"), the financial advisors to the Company, dated the date
hereof, to the effect that the consideration to be received by the Company for
the New Preferred Shares and the Warrant is fair to the Company from a
financial point of view, and such opinions have not been withdrawn or
otherwise modified.
Section 3.17. Financial Advisors; Expenses.
(a) Except for Bear Stearns and Jefferies, a complete and correct
copy of the engagement letter between each of whom and the Company has been
furnished to Buyer, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company.
<PAGE>
(b) The fees, costs and expenses (including without
limitation, all attorneys' and accountants' fees and expenses but
excluding the fees, costs and expenses incurred by Buyer and its
affiliates) incurred through the date hereof by each of the Company and its
subsidiaries, any committees of the Company's Board of Directors and
Bernstein in connection with the transactions contemplated hereby, including,
without limitation, all severance and related costs, consulting fees,
payments made for non-compete agreements and all fees and commissions
(including expenses) payable to Bear Stearns and Jefferies, as well
as a good faith projection of all such fees, costs and expenses that will
be incurred by each such party from the date hereof through the Closing
Date, are set forth in reasonable detail on Section 3.17 of the Company
Disclosure Schedule.
Section 3.18. Title to Property. Except as set forth on Section 3.18
of the Company Disclosure Schedule, the Company and its subsidiaries have
good, marketable and unencumbered title, or valid leasehold rights in the case
of leased property, to all real property and all personal property purported
to be owned or leased by them or that is required for the conduct of the
businesses of the Company or its subsidiaries as presently conducted, free
and clear of all liens, security interests, claims, encumbrances and
charges, excluding (i) liens for fees, taxes, levies, duties or
governmental charges of any kind that are not yet delinquent or are being
contested in good faith by appropriate proceedings which suspend the
collection thereof, (ii) liens for mechanics, materialmen, laborers,
employees, suppliers or other liens arising by operation of law for sums
which are not yet delinquent or are being contested in good faith by
appropriate proceedings, (iii) easements and similar encumbrances
ordinarily created for fuller utilization and enjoyment of property, and
(iv) liens or defects in title or leasehold rights that, in the aggregate, do
not and would not reasonably be expected to have a Company Material
Adverse Effect.
Section 3.19. Intellectual Property. The Companies own or
possess adequate licenses or other valid rights to use all patents, patent
rights, copyrights, service marks, service mark rights, trademarks,
trademark rights, trade names, trade name rights, proprietary characters and
products (or any likeness or other attribute thereof) and proprietary
information used or held for use in connection with the businesses of the
Company and its subsidiaries (collectively, the "Intellectual Property") as
currently being conducted and are unaware of any assertions or claims
challenging the validity of any of the foregoing that, individually or in
the aggregate, would reasonably be expected to have a Company Material Adverse
<PAGE>
Effect; and the conduct of the businesses of the Company and its subsidiaries
as now conducted or now proposed to be conducted by the Company does not and
will not conflict with any patents, patent rights, copyrights, service
marks, service mark rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in any way that would
reasonably be expected to have a Company Material Adverse Effect. No known
existing infringement of any proprietary right owned by or licensed by or
to the Company and its subsidiaries would reasonably be expected to have a
Company Material Adverse Effect. Other than as set forth in the Company SEC
Reports or Section 3.19 of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries, since January 1, 1993, has transferred,
assigned, hypothecated or otherwise disposed of any rights to use, produce,
market or in any way exploit through any electronic medium (including
computer software) any Intellectual Property. Except as set forth in Section
3.19 of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries, orally or in writing, has assigned, transferred,
hypothecated or otherwise disposed of (or agreed to do any of the foregoing)
any of its rights with respect to any Intellectual Property to any
affiliates of the Company, or any officers, directors or affiliates of
any officers or directors of the Company, except to wholly owned
subsidiaries of the Company or the Company.
Section 3.20. Licenses, Permits and Authorizations. No license,
permit or authorization that is currently held by the Company or any of
its subsidiaries with respect to the businesses of the Company and its
subsidiaries, or which is required for the conduct of the businesses of the
Company or its subsidiaries as presently conducted, is subject to any
restriction or condition that limits in any material respect the businesses of
the Company and its subsidiaries as presently conducted, and there are no
applications by the Company or any of its subsidiaries with respect to any
material aspect of the businesses of the Company or its subsidiaries, or
complaints by other persons or entities pending or threatened as of the date
hereof before any Governmental Entity relating to any material licenses,
permits or authorizations applicable to the businesses of the Company or its
subsidiaries, where such complaints have or would reasonably be expected to
have a Company Material Adverse Effect. The Company has provided the
Buyer or its representatives with copies of all material licenses,
permits, and authorizations that are currently held by the Company or any
of its subsidiaries. Except as set forth on Section 3.20 of the Company
Disclosure Schedule, no consents or approvals of a Governmental Entity are
necessary for the material licenses, permits and authorizations of the
Companies to continue in full force and effect following consummation
of the transactions contemplated by this Agreement.
Section 3.21. Insurance. The insurance policies in force at the
date hereof, with respect to the assets, properties or operations of each of
the Company and its subsidiaries are in full force and effect with reputable
insurers in such amounts and insure against such losses and risks
(including product liability) as are consistent with historical practices and
customary to protect the properties and businesses of the Company and its
subsidiaries.
<PAGE>
Section 3.22. Environment.
(a) As used herein, the term "Environmental Laws" means all
federal, state, local or foreign laws relating to pollution or protection
of human health or the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or
industrial, toxic or hazardous substances or wastes into the environment,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of chemicals,
pollutants, contaminants, or industrial, toxic or hazardous substances or
wastes, as well as all authorizations, codes, decrees, demands or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(b) Except as disclosed on Section 3.22 of the Company Disclosure
Schedule or in the Company SEC Reports, there are, with respect to the
Company and its subsidiaries, and all real property currently or formerly
owned, leased, or otherwise used by the Company or its subsidiaries, no past
or present violations of Environmental Laws, releases of any material into
the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
or other legal liability, including, without limitation, liability
under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA") or similar state or local laws, which
liabilities, either individually or in the aggregate, would have a Company
Material Adverse Effect. Except as disclosed on Schedule 3.22 hereto or
in the Company SEC Reports, to the knowledge of the Company, there have been
and are no (i) polychlorinated biphenyls, (ii) underground storage tanks, or
(iii) asbestos-containing materials located on, under, or in any portion
of real property currently or formerly owned, leased, or otherwise used by
the Company or its subsidiaries.
(c) The Company has provided to Buyer all environmental studies
and reports pertaining to the previous and current real property and the
improvements thereon of the Company and its subsidiaries that they are
aware of, have commissioned or have in their possession. To the knowledge of
the Company and its subsidiaries, the information furnished by the
Company to Willkie Farr & Gallagher under cover of a letter dated December
14, 1995 is true and correct in all material respects, and there is no
environmental condition or noncompliance that has resulted in, or would
reasonably be expected to result in, a Company Material Adverse Effect.
Section 3.23. Related Party Transactions. Section 3.23(a) of the
Company Disclosure Schedule and the Company SEC Reports together set
<PAGE>
forth the transactions and agreements (whether oral or written) during the
past five years between the Company and its subsidiaries on the one hand, and
(i) any employee, officer or director of the Companies, (ii) a record or
beneficial owner of five percent (5%) or more of Company Common Stock, or
(iii) any affiliate of any such employee, officer, director or beneficial
owner, on the other hand, other than payment of employee compensation.
Except as disclosed in the Company SEC Reports or in Section 3.23(a) of the
Company Disclosure Schedule, during the past three years no employee,
officer or director of the Companies, or any spouse or relative of any
of such persons, has been a director or officer of, or has had any
direct or indirect interest in, any firm, corporation, association or
business enterprise which during such period has been a supplier, customer,
sales agent, or licensor or licensee of real or personal property or
Intellectual Property, of the Company or any of its subsidiaries or has
competed with or been engaged in any business of the kind being conducted by
the businesses of the Company and its subsidiaries.
Section 3.24. No Company Material Adverse Effect. Except as
disclosed in the Company SEC Reports filed prior to the date hereof or in
Section 3.24 or any other Section of the Company Disclosure Schedule,
there does not exist any fact or circumstance which, alone or together with
another fact or circumstance, would reasonably be expected to result in
a Company Material Adverse Effect.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE SALE AND PURCHASE
Section 4.1. Conduct of Business by the Company. From the date
hereof through the Closing Date, unless either Buyer or Richard E.
Snyder ("Snyder") shall otherwise agree in writing:
(i) the Company shall, and shall cause its subsidiaries to, carry
on their respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted,
and shall, and shall cause its subsidiaries to, use their best
efforts to preserve intact their present business organizations,
keep available the services of their present officers and employees
and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that
their goodwill and on-going businesses shall be unimpaired on
the Closing Date, except such impairment as would not
reasonably be expected to have a Company Material Adverse
Effect. The Company shall, and shall cause its subsidiaries
to, (A) maintain insurance coverages and its books and records in
a manner consistent with prior practices, (B) comply in all material
respects with all laws, ordinances and regulations of
Governmental Entities applicable to the Company and its
subsidiaries,
<PAGE>
(C) maintain and keep its properties and equipment in good repair,
working order and condition, ordinary wear and tear excepted, and (D)
perform in all material respects its obligations under all contracts
and commitments to which it is a party or by which it is bound, except
in each case where the failure to so maintain, comply or perform,
either individually or in the aggregate, would not reasonably be
expected to result in a Company Material Adverse Effect;
(ii) the Company shall not, nor shall it propose to, except as
required by this Agreement, (A) sell or pledge or agree to sell
or pledge any capital stock owned by it in any of its subsidiaries,
(B) amend its Certificate of Incorporation or By-laws, (C) split,
combine or reclassify its outstanding capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of the capital
stock, or, except as contemplated by this Agreement, declare, set
aside or pay any dividend or other distribution payable in cash,
stock or property (other than dividends payable on the Company
Preferred Stock, to the extent otherwise permitted), or (D)
directly or indirectly redeem, purchase or otherwise acquire or agree
to redeem, purchase or otherwise acquire any shares of its capital
stock, except as contemplated by this Agreement or except pursuant
to (x) the exercise of rights granted to such party to repurchase
shares of its capital stock from employees upon termination of
employment or (y) contractual obligations arising under agreements
existing on the date hereof and disclosed in the Company
Disclosure Schedule;
(iii) the Company shall not, nor shall it permit any of its
subsidiaries to, (A) except as required by this Agreement,
issue, deliver or sell or agree to issue, deliver or sell any
additional shares of, or stock appreciation rights or rights
of any kind to acquire any shares of, its capital stock of any
class, or any option, rights or warrants to acquire, or securities
convertible into, shares of capital stock other than (x) issuances
of Company Common Stock pursuant to the exercise of warrants or
stock options outstanding on the date hereof and disclosed on
Section 4.1(iii) of the Company Disclosure Schedule, or (y) the
grant of employee stock options and the issuance of Company Common
Stock upon exercise thereof, at fair market value at the time of
grant of the options, in each case in the ordinary course of business
and consistent with past practice, to employees (other than
Richard A. Bernstein, James A. Cohen, Ilan K. Reich, Steven M.
Grossman and Ira A. Gomberg (collectively, the "Excluded
Employees")), provided that such employees are not affiliates
or immediate family members of Excluded Employees, and provided
further that the sum of the number of shares of Company Common Stock
issuable upon exercise of all employee stock options outstanding
on the date
<PAGE>
hereof and the aggregate number of such options granted pursuant to
this clause (y) shall not exceed the sum of 1,874,300 and such number
of options outstanding on the date hereof that expire or are canceled
(but not exercised) after the date hereof, (B) except for the sale of
the facility located in Fayetteville, North Carolina, acquire, lease or
dispose or agree to acquire, lease or dispose of any capital assets or
any other assets other than in the ordinary course of business, (C)
incur additional indebtedness or encumber or grant a security interest
in any asset or enter into any transaction other than in the ordinary
course of business, (D) incur any liability or obligation, or
contribute any asset, to a subsidiary of the Company other than in the
ordinary course of business, (E) acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial equity interest
in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, in each case in this clause (E) which are material,
individually or in the aggregate, to the Company and its subsidiaries
taken as a whole, or (F) adopt, enter into, amend or terminate any
contract, agreement, commitment or arrangement with respect to any of
the foregoing that is not otherwise permitted by the exceptions
applicable to the foregoing;
(iv) the Company shall not, nor shall it permit any of its
subsidiaries to, except as required to comply with applicable law,
(A) except as set forth in Section 4.1(iv) of the Company
Disclosure Schedule, adopt, enter into, terminate or amend any
bonus, profit sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, employment or
other Company Benefit Plan agreement, trust, fund or other
arrangement for the benefit or welfare of any director, officer or
current or former employee, (B) increase in any manner the
compensation or fringe benefits of any director, officer or
employee (except for normal increases in the ordinary course of
business that are consistent with past practice and that, in the
aggregate, do not result in a material increase in benefits or
compensation expense to such party and its subsidiaries relative to
the level in effect prior to such increase), (C) pay any benefit
not provided under any Company Benefit Plan disclosed to Buyer in
Section 3.9(a) of the Company Disclosure Schedule or any employee
benefit or compensation plan or agreement of the Company or any of
its subsidiaries which, by its terms, is not required to be
disclosed therein, in each case, that is in existence on the
date hereof, provided that the aggregate amount of bonuses
under the Company's Management Incentive Plan, which is the
only bonus plan for the Excluded Employees, paid pursuant to
this clause (C) to Excluded Employees shall not exceed $375,000,
(D) except for benefits that have already been earned or vested
without acceleration, grant any awards or
<PAGE>
make any payments under any bonus, incentive, performance or other
compensation plan or arrangement or Company Benefit Plan (including,
without limitation, the grant of stock options, stock appreciation
rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any
benefit plans or agreements or awards made thereunder), except for (x)
making of matching and annual contributions to 401(k) plans and (y) the
grant of employee stock options (and the issuance of Company Common
Stock upon exercise thereof), at fair market value at the time of grant
of the options, to employees (other than Excluded Employees), provided
that such employees are not affiliates or immediate family members of
Excluded Employees, and provided further that the sum of the number of
shares of Company Common Stock issuable upon exercise of all employee
stock options outstanding on the date hereof and the aggregate number
of such options granted pursuant to this clause (y) shall not exceed
the sum of 1,874,300 and such number of options outstanding on the date
hereof that expire or are canceled (but not exercised) after the date
hereof, in the case of each of clause (x) and (y), in the ordinary
course of business and consistent with past practice, (E) take any
action to fund or in any other way secure the payment of compensation
or benefits under any employee plan, agreement, contract or arrangement
or Company Benefit Plan, other than in the ordinary course of business
consistent with past practice, or (F) adopt, enter into, amend or
terminate any contract, agreement, commitment or arrangement to do any
of the foregoing that is not otherwise permitted by the exceptions
applicable to the foregoing;
(v) the Company shall not, nor shall it permit any of its
subsidiaries to, make any investments in non-investment grade
securities;
(vi) the Company shall not, nor shall it permit its
subsidiaries to make any change in its accounting policies
or procedures except as required under statutory accounting
practices or GAAP, as applicable;
(vii) the Company shall use its best reasonable efforts to
refrain from taking, nor shall it permit any of its subsidiaries
to take, any action that would, or reasonably might be expected to,
result in any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect,
or in any of the conditions set forth in Article VI not being
satisfied, or (unless such action is required by applicable
law) which would adversely affect the ability of the Company
to obtain any of the regulatory approvals required to
consummate the transactions contemplated hereby;
<PAGE>
(viii) the Company shall use its best efforts to maintain in full
force and effect each of the Significant Agreements;
(ix) the Company shall not terminate or materially modify the
employment arrangements of Snyder, including the employment
agreement, dated as of even date herewith, between the Company and
Snyder, other than for "cause" (as defined in the 1/31/96 draft
of the employment agreement to be entered into between the
Company and Snyder on the Closing Date); and
(x) the Company shall not enter into any agreement to perform any
of the actions prohibited under this Section 4.1 and not otherwise
permitted by the exceptions contained therein.
Section 4.2. Notice of Breach. Each party shall promptly give
written notice to the other party upon becoming aware of the occurrence or,
to its knowledge, impending or threatened occurrence, of any event which
would cause any of its representations or warranties to be untrue on the
Closing Date or cause a material breach of any covenant contained or
referenced in this Agreement and will use its best reasonable efforts to
prevent or promptly remedy the same. Any such notification shall not be
deemed an amendment of the Company Disclosure Schedule or the Buyer
Disclosure Schedule.
ARTICLE V.
ADDITIONAL AGREEMENTS
Section 5.1. Access and Information. The Company and its
subsidiaries shall afford to Buyer and to Buyer's accountants,
counsel and other representatives full access during normal business hours
(and at such other times as the parties may mutually agree) throughout the
period prior to the Closing to all of its properties, books, contracts,
commitments, records and personnel and, during such period, the Company shall
furnish promptly to Buyer a copy of (i) each report, schedule and other
document filed or received by it pursuant to the requirements of federal or
state securities laws, and (ii) monthly financial statements and all
other information concerning its business, properties and personnel as
the Buyer or its representatives may reasonably request. Buyer shall hold,
and shall cause its employees and agents to hold, in confidence all such
information in accordance with the terms of the Confidentiality Agreement,
dated May 19, 1995, between Buyer, Snyder and the Company (the
"Confidentiality Agreement").
<PAGE>
Section 5.2. Company Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file with the Commission
preliminary proxy materials which shall constitute the preliminary
Company Proxy Statement. Buyer shall furnish to the Company such information
regarding Buyer as the Company may reasonably request in writing and as shall
be reasonably required in connection with preparation of the Company
Proxy Statement. As promptly as practicable after comments are received
from the Commission with respect to such preliminary materials and after the
furnishing by the Company of all information required to be contained
therein, the Company shall file with the Commission the definitive
Company Proxy Statement.
The Company shall mail the foregoing to its stockholders as
promptly as practicable after clearance by the Commission. The Company
shall provide Buyer for its review a copy of the preliminary and the final
Company Proxy Statement at least such amount of time prior to its filing and
mailing as is customary in transactions of the type contemplated hereby and
shall not file or mail such Company Proxy Statement without the prior written
consent of Buyer, which consent shall not be unreasonably withheld or delayed.
(b) The Company shall retain the services of a proxy
soliciting firm mutually acceptable to Buyer and the Company for the
purpose of communicating to the Company's stockholders the recommendation of
the Company's Board of Directors in favor of the transactions contemplated
hereby and of seeking to obtain sufficient votes to satisfy the requirements
of Section 5.3 and of applicable law for the completion of the transactions
contemplated hereby.
(c) Buyer and the Company shall make all necessary filings
applicable to it with respect to the transactions contemplated
hereby under the Securities Act and the Exchange Act and the rules and
regulations thereunder and under applicable Blue Sky or similar securities
laws and shall use its best reasonable efforts to obtain required approvals
and clearances with respect thereto.
Section 5.3. Stockholders' Meeting. The Company shall take all
action necessary, in accordance with applicable law, including the rules
and regulations of the National Association of Securities Dealers, Inc.,
and the Company's Certificate of Incorporation and By-laws, to convene
a meeting of the holders of Company Common Stock (the "Company Meeting") as
promptly as practicable for the purpose of considering and taking action to
authorize this Agreement and the transactions contemplated hereby,
including the transactions contemplated by Section 6.1(d) hereof and
(subject to the consummation of the transactions contemplated hereby) the
election as directors of the Company of the individuals set forth on
Schedule 5.9 hereof (collectively, the "Company Voting Matters"), as well as
<PAGE>
amendments to the Restated Certificate of Incorporation of the Company
changing the name of the Company to "Golden Press, Inc." and increasing the
authorized number of shares of Company Common Stock from 40,000,000 to
50,000,000 and the authorized number of shares of preferred stock from
100,000 to 200,000. Subject to its fiduciary duties as advised by outside
counsel in connection with the receipt by the Company of a Business
Combination Proposal (as defined in Section 5.6) that the Board of
Directors of the Company reasonably believes is likely to result in a
Superior Proposal (as defined in Section 5.6), the Board of Directors of
the Company will recommend that holders of Company Common Stock vote in
favor of and approve the Company Voting Matters and the other matters
described above at the Company Meeting. At the Company Meeting, all of the
shares of Company Common Stock then owned by Buyer, each member thereof,
any affiliates of any member (other than of Warburg, Pincus Ventures, L.P.
("WPV")) and the general partnership that acts as a general partner of WPV, or
with respect to which such persons or entities hold the power to direct the
voting, will be voted in favor of the Company Voting Matters and the other
matters described above. Prior to Closing, the Company shall take all actions
necessary to permit the change of the name of the Company as
contemplated above, including changing the name of any subsidiary of the
Company that presently has the desired name and reserving the desired name
with the Secretary of State of the State of Delaware.
Section 5.4. HSR Act. The Company and Buyer shall use their
reasonable best efforts to file as soon as practicable notifications under the
HSR Act in connection with the transactions contemplated hereby, and to
respond as promptly as practicable to any inquiries received from the
Federal Trade Commission and the Antitrust Division of the Department of
Justice for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any
State Attorney General or other governmental authority in connection with
antitrust matters relating to the transactions contemplated by this Agreement.
Section 5.5. Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of
the parties hereto agrees to cooperate with each other and use its best
reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its best
reasonable efforts to obtain all necessary waivers, consents and approvals,
and to effect all necessary registrations and filings (including, but not
limited to, filings under the HSR Act and with all applicable Governmental
Entities).
<PAGE>
(b) In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, Buyer
and the Company shall take all such necessary action.
Section 5.6. No Solicitation.
(a) Except as contemplated by this Agreement, the Company shall
not, nor shall any of its subsidiaries, directly or indirectly, take (nor
shall the Company authorize or permit its subsidiaries, officers,
directors, employees, representatives, investment bankers, attorneys,
accountants or other agents or affiliates, to take) any action to (i)
solicit or initiate the submission of any Business Combination Proposal
(as defined below), (ii) enter into any agreement with respect to any
Business Combination Proposal or (iii) participate in any way in
discussions or negotiations with, or furnish any information to,
any person or entity in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Business
Combination Proposal; provided, however, that (A) the Company may
participate in discussions or negotiations with or furnish information to
any Third Party (as defined in Section 8.3(b)) which makes an unsolicited
proposal of a transaction which the Board of Directors of the Company
reasonably believes is likely to result in a Superior Proposal (as
defined below) and (B) the Company may recommend to its shareholders a
Business Combination Proposal which it has reasonably determined is likely
to result in a Superior Proposal. For purposes of this Agreement,
"Business Combination Proposal" shall mean, with respect to the Company,
any tender or exchange offer, proposal for a merger, consolidation or other
series of related transactions in a business combination involving the
Company or any Subsidiary of the Company or any other proposal or offer to
enter into a Third Party Business Combination (as defined in Section
8.3(b)), and "Superior Proposal" shall mean, with respect to the Company,
any Business Combination Proposal pursuant to which a Third Party would, or
would have the right to, acquire more than 25% of the outstanding voting
capital stock of the Company and which the Board of Directors of the Company
reasonably determines, based upon advice of its financial advisors, is
financially superior than the transactions contemplated hereby and is likely
to be consummated.
(b) In addition to the obligations of the Company set forth in
Section 5.6(a), the Company shall promptly advise Buyer of any request for
information or of any Business Combination Proposal, or any inquiry with
respect to or which appears to be intended to or could reasonably be
expected to lead to any Business Combination Proposal, the material terms and
conditions of such request, Business Combination Proposal or inquiry, and
the identity of the person or entity making any such request, Business
Combination Proposal or inquiry. The Company shall keep Buyer fully informed
of the status and details of any such request,
<PAGE>
Business Combination Proposal or inquiry and shall promptly furnish
Buyer a copy of any written proposal in connection therewith.
Section 5.7. Transfer Restriction. Until the earlier to occur of
(i) the second anniversary of the issuance of the Warrant and (ii) the date
on which a bona fide Business Combination Proposal is publicly announced or a
proxy solicitation for control of the Company's Board of Directors is
initiated by any person or entity (other than Buyer, each member thereof,
any affiliates of such members (other than of WPV) and the general
partnership that acts as a general partner of WPV), Buyer shall not sell,
transfer or assign the Warrant other than to any members of Buyer or to any
affiliate of Buyer or such members.
Section 5.8. Director and Officer Indemnification and Insurance.
From the date hereof through the third anniversary of the Closing Date and
for so long as any claim asserted prior to such date has not been fully
adjudicated by a court of competent jurisdiction, the Company (i) shall at
all times maintain liability insurance coverage with respect to each of the
Company's and its subsidiaries' respective current and former directors and
officers and persons serving in a fiduciary capacity at the direction of
the board of directors or of any officer of the Company or any of its
subsidiaries (at least to the extent covered by the current Company
liability insurance policies), insuring each such individual against
liability for their actions in such capacities occurring prior to the
Closing and in scope of coverage and in amounts and having deductibles at
least equivalent to that maintained by the Company on the date hereof and
otherwise reasonably comparable to the coverage maintained by the Company on
the date hereof and (ii) shall not amend or modify any of the provisions of
Article Eight of the Company's Restated Certificate of Incorporation or
Article 6 of the Company's By-laws in any manner that would adversely
affect such individuals, unless required by law.
Section 5.9. Board of Directors. The individuals set forth on
Schedule 5.9 hereto (the "Continuing Directors"), subject to their election
at the Company Meeting by the holders of Company Common Stock as contemplated
by Section 5.3 and to the applicable provisions of the Restated Certificate of
Incorporation and By-laws of the Company, shall be the directors of the
Company until their respective successors shall be duly elected or
appointed and qualified. A majority of the Continuing Directors set forth on
Schedule 5.9 shall be designated by Buyer (the "Designated Directors").
Schedule 5.9 will be provided subsequent to the date hereof but prior to
the filing of the preliminary Company Proxy Statement, and the Designated
Directors set forth thereon shall be approved by the Company's Board of
Directors, subject only to their fiduciary duties.
<PAGE>
Section 5.10. Redemption of Company Preferred Stock. Effective
upon the Closing, the Company shall duly cause all of the shares of the
Company Preferred Stock then outstanding to be redeemed for cash, including
payment of all accumulated and unpaid dividends thereon, pursuant to the
terms of the Company's Restated Certificate of Incorporation.
Section 5.11. Expenses. The expenses incurred (or to be incurred)
by the Company or its subsidiaries at any time from the commencement of
discussions among the parties hereto and their representatives in
connection with the transactions contemplated hereby (including, without
limitation, the proposed transactions that ultimately evolved into the
transactions contemplated hereby) through the Closing Date relating to (i)
severance and related costs in respect of employees located at 444 Madison
Avenue and payments made for non-compete agreements and all fees and
commissions (including expenses) payable to Bear Stearns and Jefferies and
(ii) any independent committees of the Company's Board of Directors, shall
not exceed $3,925,000 in the aggregate.
Section 5.12. Related Party Transactions. Except as set forth in
Section 5.12 of the Company Disclosure Schedule, any and all transactions set
forth in Section 3.23 of the Company Disclosure Schedule between the Company
or any of its subsidiaries and any of the persons or entities described in
clauses (i), (ii) and (iii) of Section 3.23 shall be canceled by the
Closing Date such that the Company and its subsidiaries will have no rights to
any assets or properties of such persons or entities or obligations
whatsoever with respect to such transactions, and such other persons or
entities will have no rights to any assets or property (including
Intellectual Property) of the Company or any of its subsidiaries or
obligations whatsoever with respect to such transactions.
Section 5.13. Moore Termination. The Company shall deliver to
Buyer prior to the Closing Date copies of written agreements duly
executed by the Company (or the appropriate subsidiary of the Company) and
Moore, in form and substance reasonably satisfactory to Buyer, implementing
the terms of the termination of Moore as described in Section 3.9(c) of
the Company Disclosure Schedule.
ARTICLE VI.
CONDITIONS PRECEDENT
Section 6.1. Conditions to Each Party's Obligation to Effect the
Sale and Purchase. The respective obligations of each party to effect
the transactions contemplated by this Agreement shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
one or more of which may be waived in a writing executed by Buyer and the
Company subject to and in accordance with Section 7.4 hereof:
<PAGE>
(a) This Agreement and the other Company Voting Matters shall have
been approved and adopted by the requisite vote of the holders of the Company
Common Stock.
(b) The waiting period applicable to the consummation of the sale
and purchase of the New Preferred Shares under the HSR Act shall have
expired or been terminated.
(c) No preliminary or permanent injunction or other order by any
federal or state court in the United States which prevents the consummation
of the transactions contemplated hereby shall have been issued and remain in
effect, and no other legal proceedings, challenge or litigation
challenging the legality of or threatening the consummation of,
or otherwise arising out of, the transactions contemplated hereby or
seeking an injunction in order to prevent the consummation of the
transactions contemplated hereby shall be pending.
(d) The amendments to the Stock Option Plan adopted by the Company's
Board of Directors on the date hereof and the Company's Incentive Bonus
Plan in the form delivered to Buyer on the date hereof shall have been
approved by the Company's Board of Directors (and such approval shall not
have been modified or rescinded) and by the requisite vote of the holders of
Company Common Stock in a manner that complies with the requirements of
Rule 16b-3 of the Exchange Act and Section 162(m) of the Code.
Section 6.2. Conditions to Obligation of the Company to Effect the
Sale and Purchase. The obligation of the Company to effect the
transactions contemplated by this Agreement shall be subject to the
satisfaction on or prior to the Closing Date of the additional following
conditions, unless waived in writing by the Company in accordance with
Section 7.4 hereof:
(a) Buyer shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior
to the Closing Date, and the representations and warranties of Buyer
contained in this Agreement shall be true in all respects when made and on
and as of the Closing Date as if made on and as of such date (except to the
extent they are expressly made as of another specific date and except if
any breaches of such representations and warranties have not, in the
aggregate, resulted in, and would not reasonably be expected to result
in, a Buyer Material Adverse Effect), and the Company shall have
received, on behalf of Buyer, a certificate executed by an authorized
member of Buyer to that effect. For purposes of this Section 6.2(a), all
representation and warranties qualified by materiality shall not be deemed
to be so qualified.
(b) All permits, consents, authorizations, approvals,
registrations, qualifications, designations and declarations set forth in
Section 2.2 of the Buyer Disclosure Schedule shall have been
<PAGE>
obtained, and, to the extent required to be submitted prior to the Closing,
all filings and notices set forth in Section 2.2 of the Buyer Disclosure
Schedule shall have been submitted by Buyer.
(c) The Company shall have received an opinion of Willkie Farr &
Gallagher relating to certain matters set forth in Article II, substantially
in the form of Exhibit D attached hereto.
Section 6.3. Conditions to Obligations of Buyer to Effect the
Sale and Purchase. The obligations of Buyer to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction on or
prior to the Closing Date of the additional following conditions, unless
waived in writing by Buyer in accordance with Section 7.4 hereof:
(a) The Company shall have performed in all material respects
its agreements contained in this Agreement required to be performed on
or prior to the Closing Date, and the representations and warranties of
the Company contained in this Agreement shall be true in all respects when
made and on and as of the Closing Date as if made on and as of such date
(except to the extent they are expressly made as of another specific
date and except if any breaches of such representations and warranties have
not, in the aggregate, resulted in, and would not reasonably be
expected to result in, a Company Material Adverse Effect) and Buyer
shall have received a certificate executed by the Chief Executive
Officer and the Chief Financial Officer of the Company on behalf of the
Company to that effect. For purposes of this Section 6.3(a), all
representation and warranties qualified by materiality shall not be deemed
to be so qualified.
(b) All permits, consents, authorizations, approvals,
registrations, qualifications, designations and declarations set
forth in Sections 3.4 and 6.3(b) of the Company Disclosure Schedule shall
have been obtained and, to the extent required to be submitted prior to
the Closing, all filings and notices set forth in Sections 3.4 and 6.3(b) of
the Company Disclosure Schedule shall have been submitted by the Company.
(c) Neither the Board of Directors of the Company nor any committee
thereof shall have amended, modified, rescinded or repealed the
recommendation of the Company's Board of Directors to the stockholders of
the Company to approve the adoption of this Agreement, and neither the Board
of Directors of the Company nor any committee thereof shall have adopted any
other resolutions in connection with this Agreement and the transactions
contemplated hereby inconsistent with such recommendation of the
consummation of the transactions contemplated hereby.
(d) The Registration Rights Agreement shall have been entered
into by the Company.
<PAGE>
(e) Buyer shall have received opinions from Milbank, Tweed,
Hadley & McCloy, substantially in the form of Exhibit E attached hereto.
(f) The Irrevocable Proxies, dated as of even date herewith,
between Buyer and each of Bernstein and certain of his affiliates (the
"Irrevocable Proxies") shall be in full force and effect and no
representation, warranty, covenant or agreement set forth therein shall
have been breached in any material respect on the part of Bernstein or any of
his affiliates, as the case may be.
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any
time prior to the Closing, whether before or after approval of the Company
Voting Matters by the stockholders of the Company:
(a) by mutual consent of the members of Buyer and the Board of
Directors of the Company;
(b) by either Buyer or the Company if the transactions
contemplated by this Agreement shall not have been consummated on or
before May 1, 1996 (provided the terminating party is not otherwise (i) in
material breach of its covenants or agreements under this Agreement or (ii)
in breach (determined without regard to any materiality qualifier
therein) of its representations and warranties contained in this Agreement
such that such breaches of representations and warranties, in the
aggregate, have resulted, or would reasonably be expected to result in (A) if
Buyer is the terminating party, a Buyer Material Adverse Effect or (B) if
the Company is the terminating party, a Company Material Adverse Effect);
(c) by the Company if any of the conditions specified in Sections
6.1 or 6.2 have not been met or waived by the Company at such time as
such condition is no longer capable of satisfaction, including the failure
to obtain any required approval of the Company Voting Matters at a duly held
meeting of stockholders or at an adjournment thereof (provided the
Company is not otherwise (i) in material breach of its covenants or
agreements under this Agreement or (ii) in breach (determined without regard
to any materiality qualifier therein) of its representations and warranties
contained in this Agreement such that such breaches of representations and
warranties, in the aggregate, have resulted, or would reasonably be
expected to result in, a Company Material Adverse Effect, and provided
further that the failure to obtain such approval is not due to a breach
by Bernstein or any of his affiliates of their respective obligations
under the Irrevocable Proxies);
<PAGE>
(d) by Buyer if any of the conditions specified in Sections
6.1 or 6.3 have not been met or waived by Buyer at such time as such
condition is no longer capable of satisfaction, including the failure to
obtain any required approval of the Company's stockholders at the Company
Meeting or at an adjournment thereof (provided Buyer is not otherwise (i)
in material breach of its covenants or agreements under this Agreement
or (ii) in breach (determined without regard to any materiality qualifier
therein) of its representations and warranties contained in this
Agreement such that such breaches of representations and
warranties, in the aggregate, have resulted, or would reasonably be
expected to result in, a Buyer Material Adverse Effect);
(e) by either Buyer or the Company if there has been a breach
on the part of the other of any of (i) its covenants or agreements
under this Agreement in a material respect or (ii) its representations
and warranties contained in this Agreement (determined without regard to any
materiality qualifier therein) such that such breaches of representations and
warranties, in the aggregate, have resulted, or would reasonably be
expected to result in, (A) if Buyer is the terminating party, a Company
Material Adverse Effect or (B) if the Company is the terminating party, a
Buyer Material Adverse Effect), or by Buyer if there has been a material
breach on the part of Bernstein or any of his affiliates of any
representation, warranty, covenant or agreement set forth in any of the
Irrevocable Proxies, which breach has not been cured within fifteen
business days following receipt by the breaching party of written notice of
such breach;
(f) by either Buyer or the Company upon written notice to the other
party if any Governmental Entity of competent jurisdiction shall have
issued a final permanent order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement, and in any
such case the time for appeal or petition for reconsideration of
such order shall have expired without such appeal or petition being granted;
or
(g) by either Buyer or the Company if the Board of Directors
of the Company reasonably determines that a Business Combination Proposal
is likely to result in a Superior Proposal; provided, however, that
termination of this Agreement under this Section 7.1(g) by the Company shall
not be effective unless and until (i) simultaneously with such termination the
Company enters into a definitive agreement to effect the Business Combination
Proposal and (ii) the Company has made payment in full of the fee required
in Section 8.3(b) hereof.
Section 7.2. Effect of Termination. In the event of termination
of this Agreement by either Buyer or the Company as provided above, this
Agreement shall forthwith become void and (except for termination of this
Agreement pursuant to Section 7.1(e) resulting from a breach of a covenant
<PAGE>
set forth in this Agreement) there shall be no liability on the part of
either the Company or Buyer or their respective officers or directors;
provided that Section 3.17, the last sentence of Section 5.1, this
Section 7.2 and Sections 8.3, 8.6 and 8.7 shall survive the termination.
Section 7.3. Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by Buyer's members and the
Company's Board of Directors, at any time before or after approval hereof
by the stockholders of the Company, but, after such approval, no amendment
shall be made which in any way materially adversely affects the rights of
such stockholders, without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
Section 7.4. Waiver. At any time prior to the Closing, the
parties hereto, by or pursuant to action taken by Buyer's members and the
Company's Board of Directors, may (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties of any other party
contained herein or in any documents delivered pursuant hereto by any other
party and (iii) waive compliance with any of the agreements or conditions
contained herein; provided, however, that no such waiver shall materially
adversely affect the rights of the stockholders of the Company or Buyer, as
the case may be. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1. Non-Survival of Representations, Warranties and
Agreements. All representations and warranties set forth in this
Agreement shall terminate at the earlier of (x) the Closing and (y)
termination of this Agreement in accordance with Article VII hereof.
All covenants and agreements set forth in this Agreement shall survive in
accordance with their terms.
Section 8.2. Notices. All notices or other communications under
this Agreement shall be in writing and shall be given (and shall be deemed
to have been duly given upon receipt) by delivery in person, by cable,
telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company:
Western Publishing Group, Inc.
<PAGE>
444 Madison Avenue
Suite 601
New York, New York 10022
Attention: Richard A. Bernstein
Telecopy No.: (212) 888-5025
With a copy to:
James A. Cohen, Esq.
Senior Vice President -
Legal Affairs
Western Publishing Group, Inc.
444 Madison Avenue
New York, New York 10022
Telecopy No.: (212) 888-5025
and a copy to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Attention: Lawrence Lederman, Esq.
Telecopy No.: (212) 530-5219
If to Buyer:
Golden Press Holding, L.L.C.
c/o Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
Attention: Joanne R. Wenig
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
or to such other address as any party may have furnished to the other parties
in writing in accordance with this Section 8.2.
Section 8.3. Expenses; Termination Fees.
(a) Except in cases in which a fee is paid pursuant to Section
8.3(b), all costs, fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (collectively,
"Expenses") shall be paid by the party incurring such costs and expenses,
provided that (i) if the transactions contemplated by this Agreement are
consummated or if they are not consummated as a result of a breach
(determined without regard to any materiality qualifier therein) by the
<PAGE>
Company of any representation or warranty made as of the date hereof in
this Agreement (such that such breach, in the aggregate, has resulted, or
would reasonably be expected to result in, a Company Material Adverse
Effect), all Expenses incurred by Buyer shall be paid by the Company and
(ii) if the transactions contemplated by this Agreement are not consummated
for any other reason, all Expenses incurred by Buyer from and after December
14, 1995 shall be paid by the Company, in each case not to exceed an
aggregate amount of $4,000,000.
(b) If (i) the transactions contemplated by this Agreement are not
consummated as a result of a material breach by the Company of Section 5.6
hereof, (ii) the Agreement is terminated pursuant to Section 7.1(g) hereof,
or (iii) a Third Party Business Combination (as defined below) shall occur
either prior to the termination of this Agreement pursuant to Section
7.1(a), 7.1(b), 7.1(c) (other than by the Company as a result of the
failure of a condition specified in Section 6.2 to be satisfied), 7.1(d)
or 7.1(g) hereof or within nine months following the date this Agreement
is terminated pursuant to Section 7.1(e) hereof (unless properly terminated
by the Company pursuant to Section 7.1(e)), then the Company shall pay to
Buyer, within five business days after receipt of a written request
therefor in the case of clause (i) and immediately after the termination of
this Agreement pursuant to Section 7.1(g) or the occurrence of a Third
Party Business Combination in the case of clauses (ii) and (iii),
respectively, an amount in same day funds equal to $2,000,000. For
purposes of this Agreement, the term "Third Party Business Combination"
of the Company hereto means the occurrence of any of the following events:
(A) the Company or any Subsidiary of the Company is acquired by merger or
otherwise by any person, entity or group, other than the other party hereto
or any affiliate thereof (a "Third Party"); (B) the Company or any
subsidiary of the Company enters into an agreement with a Third Party which
contemplates the acquisition of 25% or more of the total assets of the
Company and its subsidiaries taken as a whole; (C) the Company enters into
a merger or other agreement with a Third Party which contemplates the
acquisition of beneficial ownership of more than 25% of the outstanding
shares of the Company Common Stock (or securities convertible thereinto or
exercisable therefor); (D) a Third Party acquires more than 25% of the
total assets of the Company and its subsidiaries taken as a whole; (E) a
Third Party who, as of the date 10 days preceding the date hereof,
beneficially owns less than 10% of the outstanding shares of the Company
Common Stock obtains beneficial ownership of such number of shares of
Company Common Stock such that it beneficially owns more than 25% of the
outstanding shares of the Company Common Stock, or any person, entity or
group which beneficially owns (or has the right to acquire) 10% or more
of the outstanding shares of the Company Common Stock increases its
beneficial ownership of the outstanding shares of Company Common Stock
by 10% or more; (F) the Company adopts a plan of liquidation
<PAGE>
relating to more than 25% of the total assets of the Company and its
subsidiaries taken as a whole; (G) the Company repurchases more than 25% of
the outstanding shares of the Company's capital stock; or (H) there is a
public announcement or written proposal with respect to a plan or
intention by the Company or a Third Party to effect any of the foregoing
transactions (provided such transaction is consummated during the nine month
period following such public announcement or written proposal). For purposes
of this Agreement, the term "beneficial ownership" shall have the meaning
set forth in Rule 13d-3 of the Exchange Act.
Section 8.4. Publicity. So long as this Agreement is in effect,
Buyer and the Company agree to consult with each other in issuing any press
release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement, and none of them shall issue
any press release or make any public statement prior to such
consultation. The commencement of litigation relating to this Agreement or
the transactions contemplated hereby or any proceedings in connection
therewith shall not be deemed a violation of this Section 8.4.
Section 8.5. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in
equity.
Section 8.6. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 8.7. Miscellaneous. This Agreement (including the
documents, exhibits, schedules and instruments referred to herein), together
with the Confidentiality Agreement, (i) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof, (ii) except for certain persons under Section 5.8 hereof, is
not intended to confer upon any other person or entity any rights or
remedies hereunder and shall be binding upon and inure to the benefit solely
of each party hereto, and their respective successors and assigns, (iii)
shall not be assigned by operation of law or otherwise, and (iv) shall be
governed in all respects, including validity, interpretation and effect, by
the laws of the State of New York (without giving effect to the provisions
thereof relating to conflicts of law); provided, however, that the law of the
State of Delaware shall govern as to internal corporate matters. This
Agreement may be executed in any number of counterparts which
<PAGE>
together shall constitute a single agreement.
<PAGE>
IN WITNESS WHEREOF, each of Buyer and the Company has caused this
Agreement to be duly signed on its behalf all as of the date first written
above.
GOLDEN PRESS HOLDING, L.L.C.
By: WARBURG, PINCUS VENTURES, L.P.
Member
By: ______________________
Name:
Title: General Partner
WESTERN PUBLISHING GROUP, INC.
By:_________________________
Name:
Title:
<PAGE>
Exhibit A
CERTIFICATE OF DESIGNATIONS, NUMBER, VOTING POWERS,
PREFERENCES AND RIGHTS OF SERIES B CONVERTIBLE
PREFERRED STOCK
OF
[WESTERN PUBLISHING GROUP, INC.]
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the
following resolution was duly adopted by the Board of Directors of [Western
Publishing Group, Inc.], a Delaware corporation (hereinafter called the
"Corporation"), with the preferences and rights set forth therein
relating to dividends, conversion, redemption, dissolution and
distribution of assets of the Corporation having been fixed by the Board
of Directors pursuant to authority granted to it under Article FOURTH
of the Corporation's Certificate of Incorporation and in accordance with
the provisions of Section 151 of the General Corporation Law of the State
of Delaware:
RESOLVED: That, pursuant to authority conferred upon the
Board of Directors by the Certificate of Incorporation of the Corporation,
the Board of Directors hereby authorizes the issuance of 13,000 shares
of Series B Convertible Preferred Stock of the Corporation, and
hereby fixes the designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such shares, in addition to those set
forth in the Certificate of Incorporation of the Corporation, as follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock") and the number of shares constituting such series shall be 13,000.
2. DIVIDENDS.
(a) The holders of Series B Preferred Stock (i) shall
receive on the first day of February, May, August and November (each a
"Dividend Date") of each twelve-month period following the date of initial
issuance of the Series B Preferred Stock (the "Initial Issuance Date") through
the fourth anniversary of the Initial Issuance Date, a stock dividend per
share of Series B Preferred Stock equal to a number of shares of Common Stock
<PAGE>
of the Corporation ("Common Stock") determined by multiplying the Conversion
Rate (as determined pursuant to Sections 5 and 6 below) by .03 (such that at
the initial Conversion Rate the holders of the Series B Preferred Stock
shall receive in the aggregate 195,000 shares of Common Stock on a quarterly
basis, resulting in the receipt of an aggregate of 780,000 shares of
Common Stock in each of the first four years after the Initial Issuance
Date, subject to adjustment in the event of any dividend, stock split,
stock distribution or combination with respect to any such shares),
provided, however, that (x) in the event that the product of the number of
shares of Common Stock per share of Series B Preferred Stock to be
distributed in any quarter and the Market Price (as defined below)
(the "Dividend Value") is less than $93.75, then, in addition to such
shares of Common Stock, the holders shall receive on such date, out of legally
available funds of the Corporation, cash per share of Series B Preferred
Stock in an amount equal to the excess of $93.75 over the Dividend
Value, compounded quarterly, and (y) in the event that the Dividend Value
exceeds $187.50, then the number of shares of Common Stock to be so
distributed shall be reduced by an amount sufficient to cause the Dividend
Value to equal $187.50 (subject in each case to adjustment in the event of any
dividend, stock split, stock distribution or combination with respect to any
such shares), and (ii) shall be entitled to receive thereafter, beginning
on the first to occur of the first day of February, May, August or
November after the fourth anniversary of the Initial Issuance Date, when and
as declared, out of legally available funds of the Corporation, cash
dividends (computed on the basis of a 360-day year of twelve 30-day months) at
the rate of $150 per share (subject to adjustment in the event of any dividend,
stock split, stock distribution or combination with respect to any such
shares), compounded quarterly, payable quarterly on the first day of
February, May, August and November of each twelve-month period after the
fourth anniversary of the Initial Issuance Date, on a pari passu basis with
the Series A Preferred Stock of the Corporation (the "Series A Preferred
Stock") (such stock and any other class or series of the preferred stock of
the Corporation which shall rank with respect to the payment of dividends on
a parity with the Series B Preferred Stock being referred to hereinafter,
collectively, as "Parity Stock") and before any dividends shall be set apart
for or paid upon the Common Stock or any other stock ranking with respect to
the payment of dividends junior to the Series B Preferred Stock (such stock
being referred to hereinafter collectively as "Junior Stock") in any year.
All dividends declared upon Series B Preferred Stock shall be declared pro
rata per share.
<PAGE>
For purposes of this Section 2, the term "Market Price"
shall mean the average closing price of a share of Common Stock for
the ten consecutive trading days immediately preceding the Dividend Date
or the conversion date, as the case may be, as reported on the principal
national securities exchange on which the shares of Common Stock or securities
are listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, the average of the closing bid and asked
prices during such ten trading day period in the over-the-counter market as
reported by the Nasdaq National Market or any comparable system, or, if no such
firm is then engaged in the business of reporting such prices, as reported by
The Wall Street Journal, or, if not so reported, as furnished by any member
of the National Association of Securities Dealers, Inc. selected by the
Corporation or, if the shares of Common Stock or securities are not publicly
traded, the Market Price for such date shall be the fair market value
thereof determined jointly by the Corporation and the holders of record
of a majority of the Series B Preferred Stock then outstanding; provided,
however, that if such parties are unable to reach agreement within a
reasonable period of time, the Market Price shall be determined in good faith
by an independent investment banking firm selected jointly by the
Corporation and the holders of record of a majority of the Series B Preferred
Stock then outstanding or, if that selection cannot be made within ten days,
by an independent investment banking firm selected by the American
Arbitration Association in accordance with its rules, and provided further,
that the Corporation shall pay all of the fees and expenses of any third
parties incurred in connection with determining the Market Price.
(b) Dividends on the Series B Preferred Stock shall
be cumulative, whether or not in any fiscal year there shall be net
profits or surplus available for the payment of dividends in such fiscal
year, so that if in any fiscal year or years, dividends in whole or in part are
not paid upon the Series B Preferred Stock, (i) unpaid dividends shall
accumulate and no sums in any years shall be paid to the holders of the Junior
Stock until all dividends payable on the Series B Preferred Stock have been
paid in full, and (ii) no full dividends shall be declared or paid or set apart
for payment on any Parity Stock for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for such payment on the
Series B Preferred Stock for all dividend payment periods terminating on
or prior to the date of payment of such full cumulative dividends. If at
any time the Corporation shall have failed to pay full dividends which have
accrued (whether or not earned or declared) on the shares of the Series B
Preferred Stock and any other Parity Stock, all dividends (other than Series B
<PAGE>
Preferred Stock dividends paid in shares of Common Stock) declared upon
shares of the Series B Preferred Stock and any other Parity Stock shall be
declared pro rata so that the amount of dividends declared per share on the
Series B Preferred Stock and such other Parity Stock shall in all cases bear to
each other the same ratio that accrued dividends per share on the Series B
Preferred Stock and other such Parity Stock bear to each other.
3. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of
shares of Series B Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, after and subject to the payment in full of all amounts
required to be distributed to the holders of any other Preferred Stock of the
Corporation ranking on liquidation prior and in preference to the Series B
Preferred Stock (such Preferred Stock being referred to hereinafter as
"Senior Preferred Stock") upon such liquidation, dissolution or winding
up, but before any payment shall be made to the holders of Junior Stock, an
amount equal to $5,000 per share plus any dividends thereon cumulated or
accrued but unpaid, whether or not declared (subject to adjustment in the
event of any stock dividend, stock split, stock distribution or
combination with respect to such shares). If upon any such liquidation,
dissolution or winding up of the Corporation the remaining assets of the
Corporation available for the distribution to its stockholders after
payment in full of amounts required to be paid or distributed to holders
of Senior Preferred Stock shall be insufficient to pay the holders of
shares of Series B Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Series B Preferred Stock and shares of
Parity Stock shall share ratably in any distribution of the remaining
assets and funds of the Corporation in proportion to the respective amounts
which would otherwise be payable in respect to the shares held by them upon
such distribution if all amounts payable on or with respect to said shares
were paid in full.
(b) After the payment of all preferential amounts required
to be paid to the holders of Senior Preferred Stock, Series B Preferred Stock
and Parity Stock and any other series of Preferred Stock upon the
dissolution, liquidation or winding up of the Corporation, the holders of
shares of Common Stock then outstanding shall be entitled to receive the
remaining assets and funds of the Corporation available for distribution to
its stockholders.
<PAGE>
(c) The merger or consolidation of the Corporation into
or with another corporation, the merger or consolidation of any other
corporation into or with the Corporation, or the sale, conveyance, mortgage,
pledge or lease of all or substantially all the assets of the Corporation shall
not be deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section 3.
4. VOTING.
(a) Each issued and outstanding share of Series B
Preferred Stock shall be entitled to the number of votes equal to the number
of shares of Common Stock into which each such share of Series B
Preferred Stock is convertible (as adjusted from time to time pursuant to
Section 5 thereof), at each meeting of stockholders of the Corporation
with respect to any and all matters presented to the stockholders of the
Corporation for their action or consideration, including, without limitation,
the election of all directors (the "Non-Series B Directors") other than
those as to which the Series B Preferred Stock has rights voting separately as
a class as set out in paragraphs (b) and (c) below. Except as provided by
law, by the provisions of paragraphs (b), (c) and (d) below or by the
provisions establishing any other series of Preferred Stock, holders of
Series B Preferred Stock, and of any other outstanding Preferred Stock
that is entitled to vote together with the holders of Common Stock as a
single class, shall vote together with the holders of Common Stock as a single
class.
(b) In addition to the right of the holders of Series
B Preferred Stock to vote together with the holders of Common Stock as a
single class with respect to the election of the Non-Series B Directors, for as
long as at least (i) 40% of the shares of Series B Preferred Stock issued on
the Initial Issuance Date (after taking into account any adjustments
provided for hereunder)(the "Initial Series B Shares") are owned by Golden
Press Holding, L.L.C. ("GP Holding"), any of its members, any Affiliates (as
defined below) of such members (other than of Warburg, Pincus Ventures,
L.P. ("WPV")) and the general partnership that acts as a general partner
of WPV (GP Holding, its members, such Affiliates, WPV and such general
partnership being herein collectively referred to as the "GP Holding
Parties"), the holders of Series B Preferred Stock shall have the exclusive
right, voting separately as a class, to elect one-third of the members of the
Corporation's Board of Directors (herein referred to as the "Series B
Directors"), (ii) 30% of the Initial Series B Shares are owned by GP Holding
<PAGE>
Parties, the holders of Series B Preferred Stock shall have the exclusive
right, voting separately as a class, to elect two Series B Directors, and
(iii) 20% of the Initial Series B Shares are owned by GP Holding Parties, the
holders of Series B Preferred Stock shall have the exclusive right,
voting separately as a class, to elect one Series B Director. In case such
number of members calculated pursuant to clause (i) of the immediately
preceding sentence is not an integer, the number of Series B Directors
shall be rounded up to the next integer. All such Series B Directors shall be
elected by the affirmative vote of the holders of record of a majority of the
outstanding shares of Series B Preferred Stock either at meetings of
stockholders at which directors are elected, a special meeting of holders
of Series B Preferred Stock or by written consent without a meeting in
accordance with the General Corporation Law of Delaware. Each Series B
Director so elected shall serve for a term of one year and until his
successor is elected and qualified, provided, however, that promptly upon
any decrease in the number of Series B Directors that the holders of the Series
B Preferred Stock are entitled to elect pursuant to the first sentence of this
paragraph (b), the appropriate number of Series B Directors shall resign
from the Corporation's Board of Directors. Any vacancy in the position
of a Series B Director, other than pursuant to the proviso in the
immediately preceding sentence, may be filled only by the holders of the
Series B Preferred Stock. Each Series B Director may, during his term of
office, be removed at any time, with or without cause, by and only by the
affirmative vote, at a special meeting of holders of Series B Preferred
Stock called for such purpose, or the written consent, of the holders of
record of a majority of the outstanding shares of Series B Preferred Stock.
Any vacancy created by such removal may also be filled at such meeting or
by such consent. On the Initial Issuance Date, the Board of Directors of
the Corporation shall consist of nine members. For purposes hereof,
"Affiliates" shall include persons included under the definition thereof in
Rule 405 under the Securities Act of 1933, as amended, immediate family members
and trusts, 25% or more of the beneficial interests of which are owned by such
persons or one or more of their immediate family members.
(c) In addition to any other rights provided by law, for
as long as at least one-half (1/2) of the Initial Series B Shares are owned
by GP Holding Parties, the Corporation shall not (nor shall it, in the case of
clauses (ii), (iii), (iv) and (v), permit any of its subsidiaries to),
without first obtaining the affirmative vote or written consent of the holders
of record of a majority of the shares of the Series B Preferred Stock,
voting as a separate class:
<PAGE>
(i) amend or repeal any provision of the
Corporation's Certificate of Incorporation or By-Laws, including
without limitation a change in the number of members of the Board
of Directors of the Corporation;
(ii) authorize or effect the incurrence or issuance of
any Indebtedness (as defined below) (other than pursuant to an
agreement to incur the same which has been approved in writing by
holders of a majority of outstanding shares of Series B Preferred
Stock, and other than pursuant to that certain Credit Agreement,
dated September 29, 1995, between Western Publishing Company, Inc.
and Heller Financial, Inc.) or shares of capital stock or rights to
acquire capital stock other than, in the case of shares of Common
Stock, (x) options to acquire up to 1,874,300 shares of Common
Stock issued to employees of the Corporation pursuant to the Amended
and Restated 1986 Employee Stock Option Plan of the Corporation
(the "Stock Option Plan") or (y) thereafter approved with the
consent of the holders of record of a majority of the then
outstanding shares of Series B Preferred Stock; provided, however,
that the incurrence of Indebtedness among the Corporation and its
subsidiaries shall not require such consent;
(iii) authorize or effect (A) in one or in a series of two
or more related transactions, any sale, lease, license, transfer or
other disposition of assets for consideration in excess of $5,000,000
(other than in the ordinary course of business or among the
Corporation and its subsidiaries); (B) any merger or
consolidation or other reorganization involving the Corporation
or any of its subsidiaries (other than with one another or in
respect of which the aggregate consideration paid to or
received by the Corporation or its subsidiaries is less than
$5,000,000) or (C) a liquidation, winding up, dissolution or
adoption of any plan for the same other than the liquidation,
winding up, dissolution or adoption of any plan for the same of a
subsidiary into the Corporation or another subsidiary thereof;
(iv) authorize or effect, in one or in a series of two or
more related transactions, (A) any acquisition or lease of assets or
(B) any license of patent, trademark or other rights relating
to any intellectual property, in each case, that involves by its
terms a per annum payment in excess of $5,000,000 as determined in
good faith by the Corporation's Board of Directors, other than among
the Corporation and its subsidiaries or in the ordinary course of
business; or
<PAGE>
(v) terminate the employment of the chief executive officer
of the Corporation.
For purposes of this Section 4(c), "Indebtedness" means liability for
borrowed money or the deferred purchase price of property or services (except
payables arising in the ordinary course of business) and including any
guaranties thereof.
Notwithstanding anything in paragraphs (b) or (c) to
the contrary, in the event that the shares of Series B Preferred Stock are
held by more than 10 holders, then (i) the right of the holders of Series B
Preferred Stock to vote separately as a class to elect the Series B
Directors shall terminate, and the holders of the Series B Preferred Stock
shall have the right to vote together with the holders of Common Stock with
respect to the election of all directors as set forth in paragraph (a) above
and (ii) the restrictions on the Corporation set forth in this paragraph (c)
shall terminate, provided that for purposes of this sentence, each member
of GP Holding (other than WPV) together with the Affiliates of such member
shall be deemed to be one holder (if such member or Affiliate directly owns
shares of Series B Preferred Stock) and WPV and the general partnership that
acts as a general partner of WPV together shall be deemed to be one holder (if
any such entity directly owns shares of Series B Preferred Stock).
(d) The Corporation shall not amend, alter or repeal
the preferences, special rights or other powers of the Series B Preferred
Stock so as to affect adversely the Series B Preferred Stock, without the
written consent or affirmative vote of the holders of record of at least a
majority of the then outstanding aggregate number of shares of such
adversely affected Series B Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class. For
this purpose, without limiting the generality of the foregoing, the
authorization or issuance of any series of Preferred Stock with preference or
priority over, or being on a parity with, the Series B Preferred Stock as to
the right to receive either dividends or amounts distributable upon
liquidation, dissolution or winding up of the Corporation shall be deemed so
to affect adversely the Series B Preferred Stock.
5. OPTIONAL CONVERSION. Each share of Series B Preferred
Stock may be converted at any time from and after the Initial Issuance Date,
at the option of the holder thereof, in the manner hereinafter
provided, into fully-paid and nonassessable shares of Common Stock, provided,
however, that on any redemption of any Series B Preferred Stock or any
liquidation of the Corporation, the right of conversion shall terminate at the
<PAGE>
close of business on the date fixed for such redemption or for the
payment of any amounts distributable on liquidation to the holders of
Series B Preferred Stock, as the case may be (unless the Corporation
defaults upon the payment due upon such redemption or liquidation).
(a) The applicable conversion rate ("Conversion Rate")
and conversion price ("Conversion Price") of the Series B Preferred Stock from
time to time in effect is subject to adjustment as hereinafter provided. The
initial Conversion Rate shall be 500 shares of Common Stock for each one share
of Series B Preferred Stock surrendered for conversion representing an initial
Conversion Price (for purposes of Section 6) of $10.00 per share of Common
Stock. Exercise of the conversion right set forth herein by the exercising
holder shall not extinguish such holder's right to receive, and of the
Corporation's obligation to pay, any and all accrued but unpaid dividends,
whether or not declared, up to and including the time of conversion in
respect of any shares of Series B Preferred Stock then being converted. In
the event any such accrued but unpaid dividends are not paid at the time of
such conversion, interest on the unpaid amount of such dividends shall
continue to accrue at the rate of 12% per annum, compounded quarterly, until
such amount is paid.
(b) The Corporation shall not issue fractions of shares
of Common Stock upon conversion of Series B Preferred Stock or scrip in
lieu thereof. If any fraction of a share of Common Stock would, except
for the provisions of this paragraph (b), be issuable upon conversion of any
Series B Preferred Stock, the Corporation shall in lieu thereof pay to
the person entitled thereto an amount in cash equal to such fraction
multiplied by the Market Price of one share of Common Stock,
calculated to the nearest one-hundredth (1/100) of a share.
(c) Whenever the Conversion Rate and Conversion Price shall
be adjusted as provided in Section 6 hereof, the Corporation shall forthwith
file at each office designated for the conversion of Series B Preferred
Stock, a statement, signed by the Chairman of the Board, the President,
any Vice President or Treasurer of the Corporation, showing in reasonable
detail the facts requiring such adjustment and the Conversion Rate that will
be effective after such adjustment. The Corporation shall also cause a notice
setting forth any such adjustments to be sent by mail, first class, postage
prepaid, to each holder of record of Series B Preferred Stock at his or its
address appearing on the stock register. If such notice relates to an
adjustment resulting from an event referred to in paragraph 6(g), such
<PAGE>
notice shall be included as part of the notice required to be mailed and
published under the provisions of paragraph 6(g) hereof.
(d) In order to exercise the conversion privilege, the
holder of record of any Series B Preferred Stock to be converted shall
surrender his or its certificate or certificates therefor to the principal
office of the transfer agent for the Series B Preferred Stock (or if no
transfer agent is at the time appointed, then the Corporation at its principal
office), and shall give written notice to the Corporation at such office that
the holder elects to convert the Series B Preferred Stock represented by
such certificates, or any number thereof. Such notice shall also state the
name or names (with address) in which the certificate or certificates for
shares of Common Stock which shall be issuable on such conversion shall be
issued, subject to any restrictions on transfer relating to shares of the
Series B Preferred Stock or shares of Common Stock upon conversion thereof. If
so required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly authorized in writing.
The date of receipt by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) of the certificates and
notice shall be the conversion date. As soon as practicable after receipt
of such notice and the surrender of the certificate or certificates
for Series B Preferred Stock as aforesaid, the Corporation shall cause to be
issued and delivered at such office to such holder, or on his or its written
order, a certificate or certificates for the number of full shares of Common
Stock issuable on such conversion in accordance with the provisions
hereof and cash as provided in paragraph (b) of this Section 5 in respect of
any fraction of a share of Common Stock otherwise issuable upon such
conversion.
(e) The Corporation shall at all times when the Series
B Preferred Stock shall be outstanding reserve and keep available out of
its authorized but unissued stock, for the purposes of effecting the
conversion of the Series B Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding Series B Preferred Stock. Before
taking any action which would cause an adjustment reducing the Conversion Price
below the then par value of the shares of Common Stock issuable upon conversion
of the Series B Preferred Stock, the Corporation will take any corporate
action which may, in the opinion of its counsel, be necessary in order that
the Corporation may validly and legally issue fully-paid and nonassessable
shares of such Common Stock at such adjusted Conversion Price.
<PAGE>
(f) All shares of Series B Preferred Stock which shall
have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares, including
the rights, if any, to receive notices and to vote, shall forthwith cease
and terminate except the right of the holder thereof to receive payment of
any accrued but unpaid dividends thereon and shares of Common Stock in
exchange therefor. Any shares of Series B Preferred Stock so converted
shall be retired and cancelled and shall not be reissued, and the Corporation
may from time to time take such appropriate action as may be necessary to
reduce the authorized Series B Preferred Stock accordingly.
6. ANTI-DILUTION PROVISIONS.
(a) In order to prevent dilution of the right
granted hereunder, the Conversion Price shall be subject to adjustment from
time to time in accordance with this paragraph 6(a). At any given time the
Conversion Price, whether as the initial price of $10.00 per share or as last
adjusted, shall be that dollar (or part of a dollar) amount the payment
of which shall be sufficient at the given time to acquire one share of
Common Stock upon conversion of shares of Series B Preferred Stock. Upon
each adjustment of the Conversion Price pursuant to Section 6, the
Conversion Rate shall be adjusted such that the registered holders of shares
of Series B Preferred Stock shall thereafter be entitled to acquire upon
exercise, at the Conversion Price resulting from such adjustment, the
number of shares of Common Stock obtainable by multiplying the Conversion
Price in effect immediately prior to such adjustment by the number of
shares of Common Stock acquirable immediately prior to such adjustment and
dividing the product thereof by the Conversion Price resulting from such
adjustment. For purposes of this Section 6, the term "Number of Common Shares
Deemed Outstanding" at any given time shall mean the sum of (x) the number of
shares of Common Stock outstanding at such time, (y) the number of shares of
Common Stock issuable assuming conversion at such time of the
Corporation's Series A Preferred Stock and Series B Preferred Stock and (z)
the number of shares of Common Stock deemed to be outstanding under
subparagraphs 6(b)(1) to (9), inclusive, at such time.
(b) Except as provided in paragraph 6(c) or 6(f) below, if
and whenever on or after the Initial Issuance Date, the Corporation shall
issue or sell, or shall in accordance with subparagraphs 6(b)(1) to (9),
inclusive, be deemed to have granted, issued or sold, any shares of its
Common Stock for a consideration per share less than the Conversion Price
in effect immediately prior to the time of such grant, issue or sale, then
<PAGE>
forthwith upon such grant, issue or sale (the "Triggering Transaction"),
the Conversion Price shall, subject to subparagraphs (1) to (9) of this
paragraph 6(b), be reduced to the Conversion Price (calculated to the
nearest tenth of a cent) determined by dividing:
(i) an amount equal to the sum of (x) the product derived
by multiplying the Number of Common Shares Deemed Outstanding
immediately prior to such Triggering Transaction by the Conversion
Price then in effect, plus (y) the consideration, if any, received by
the Corporation upon consummation of such Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of
Common Shares Deemed Outstanding immediately prior to such
Triggering Transaction, plus (y) the number of shares of Common
Stock granted, issued or sold (or deemed to be granted, issued or
sold in accordance with subparagraphs 6(b)(1) to (9) hereof) in
connection with such Triggering Transaction;
provided, however, that the Conversion Price shall not be so reduced if (A)
for so long as the holders of the Series B Preferred Stock have the right to
elect one or more Series B Directors pursuant to Section 4(b) hereof or to
approve certain transactions by the Corporation pursuant to Section 4(c)
hereof, such Triggering Transaction involves a grant, issuance or sale of
Common Stock to any GP Holding Party other than ratably to all holders of the
Common Stock, and such Triggering Transaction has not been approved by a
majority of the Non-Series B Directors (other than natural persons who are GP
Holding Parties or officers, directors or employees of entities that are
GP Holding Parties) or (B) the Triggering Transaction involves a grant,
issuance or sale of Common Stock that has not been registered pursuant to the
Securities Act of 1933, as amended, and an investment bank of national
standing and reputation, engaged for a fee by the Corporation pursuant to a
written engagement letter, has not been consulted by the Corporation with
respect to the structure of such Triggering Transaction and participated in the
negotiation of such Triggering Transaction.
For purposes of determining the adjusted Conversion
Price under this paragraph 6(b), the following subsections (1) to (9),
inclusive, shall be applicable:
(1) In case the Corporation at any time shall in
any manner grant (whether directly or by assumption in a
merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, (A) Common
<PAGE>
Stock or (B) any stock or other securities convertible
into or exchangeable for Common Stock (such rights or
options being herein called "Options" and such
convertible or exchangeable stock or securities being
herein called "Convertible Securities"), whether or not
such Options or the right to convert or exchange any
such Convertible Securities are immediately exercisable,
and the price per share for which the Common Stock is
issuable upon exercise, conversion or exchange
(determined by dividing (x) the total amount, if any,
received or receivable by the Corporation as
consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the exercise of all such
Options, plus, in the case of such Options which relate
to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion
or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities) shall be less than the Conversion Price in
effect immediately prior to the granting of such Option,
then the total maximum amount of Common Stock issuable upon
the exercise of such Options or in the case of Options
which relate to Convertible Securities, upon the conversion
or exchange of such Convertible Securities, shall (as of the
date of granting of such Options) be deemed to be
outstanding and to have been issued and sold by the
Corporation for such price per share. No adjustment of the
Conversion Price shall be made upon the actual issue of such
shares of Common Stock or such Convertible Securities upon
the exercise of such Options, except as otherwise provided
in subparagraph (3) below.
(2) In case the Corporation at any time shall in
any manner issue (whether directly or by assumption in a
merger or otherwise) or sell any Convertible Securities,
whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount
received or receivable by the Corporation as
consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the
<PAGE>
conversion or exchange thereof, by (y) the total maximum
number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible
Securities) shall be less than the Conversion Price in
respect of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion
or exchange of all such Convertible Securities shall (as of
the date of the issue or sale of such Convertible
Securities) be deemed to be outstanding and to have
been issued and sold by the Corporation for such price
per share. No adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon
exercise of the rights to exchange or convert under such
Convertible Securities, except as otherwise provided in
subparagraph (3) below.
(3) If the purchase price provided for in any
Options referred to in subparagraph (1), the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
subparagraphs (1) or (2), or the rate at which any
Convertible Securities referred to in subparagraph (1)
or (2) are convertible into or exchangeable for Common
Stock shall change at any time (other than under or by
reason of provisions designed to protect against
dilution of the type set forth in paragraphs 6(b) or 6(d)),
the Conversion Price in effect at the time of such change
shall forthwith be readjusted to the Conversion Price which
would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or
conversion rate, as the case may be, at the time
initially granted, issued or sold. If the purchase price
provided for in any Option referred to in subparagraph
(1) or the rate at which any Convertible Securities referred
to in subparagraphs (1) or (2) are convertible into or
exchangeable for Common Stock, shall be reduced at any time
under or by reason of provisions with respect thereto
designed to protect against dilution, then in case of the
delivery of Common Stock upon the exercise of any such Option
or upon conversion or exchange of any such Convertible
Security, the Conversion Price then in effect hereunder
shall forthwith be adjusted to such respective amount
as would have been obtained had such Option or
Convertible Security never been issued as to such Common
Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only
<PAGE>
if as a result of such adjustment the Conversion Price then
in effect hereunder is hereby reduced.
(4) On the expiration of any Option or
the termination of any right to convert or exchange
any Convertible Securities, the Conversion Price then in
effect hereunder shall forthwith be increased to the
Conversion Price which would have been in effect at the time
of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never
been issued.
(5) In case any Options shall be issued in
connection with the issue or sale of other securities of the
Corporation, together comprising one integral transaction
in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be
deemed to have been issued without consideration (but shall
otherwise be deemed issued for the specific consideration
allocated thereto).
(6) In case any shares of Common Stock, Options
or Convertible Securities shall be issued or sold or
deemed to have been issued or sold for cash, the
consideration received therefor less any underwriting
discounts, selling commissions and other expenses paid
or incurred in respect of such issuance or sale, shall be
deemed to be the amount received by the Corporation
therefor. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the
consideration other than cash received by the
Corporation shall be the fair value of such consideration as
determined in good faith by the Board of Directors of the
Corporation. In case any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger in which the Corporation is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the value attributable to such shares
in such merger, provided that, to the extent such value is
not readily ascertainable, such value shall be the fair value
of such consideration as determined in good faith by the
Board of Directors of the Corporation.
(7) The number of shares of Common Stock
outstanding at any given time shall not include shares owned
<PAGE>
or held by or for the account of the Corporation, and the
disposition of any shares so owned or held shall be
considered an issue or sale of Common Stock for the purpose
of this paragraph 6(b).
(8) In case the Corporation shall declare a
dividend or make any other distribution upon the
stock of the Corporation (other than dividends payable
on the Series B Preferred Stock pursuant to Section 2
hereof) payable in Common Stock, Options, or Convertible
Securities (other than a dividend or distribution payable
in Common Stock covered by subparagraph 6(c) or 6(d)),
then in such case any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued
or sold without consideration.
(9) For purposes of this paragraph 6(b), in case
the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them (x) to
receive a dividend or other distribution payable in
Common Stock, Options or in Convertible Securities, or (y)
to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right or
subscription or purchase, as the case may be.
(c) In the event the Corporation shall declare a dividend
upon the Common Stock payable otherwise than out of earnings or earned
surplus, determined in accordance with generally accepted accounting
principles, including the making of appropriate deductions for minority
interests, if any, in subsidiaries but without increasing the same as a
result of any write-up of assets related to such dividend or any gain from the
sale of any capital assets related to such dividend (herein referred to as
"Liquidating Dividends"), then, the Corporation shall pay to the holders of
the Series B Preferred Stock (in respect of each share of Class B Preferred
Stock), at the time such dividend is paid to holders of the Common Stock
and in addition to any other dividend required to be paid to the holders of
the Series B Preferred Stock, an amount equal to the product of the
Conversion Rate then in effect and the aggregate value at such time of all
Liquidating Dividends paid in respect of one share of Common Stock. For the
purposes of this paragraph 6(c), a dividend shall be considered payable out
<PAGE>
of earnings or earned surplus only if paid in cash and to the extent that such
earnings or earned surplus are charged an amount equal to the fair value of
such dividend as determined in good faith by the Board of Directors of the
Corporation.
(d) In case the Corporation shall at any time subdivide
its outstanding shares of Common Stock into a greater number of shares,
the Conversion Price in effect immediately prior to such subdivision
shall be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock of the Corporation shall be combined into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
(e) If any capital reorganization or reclassification of
the capital stock of the Corporation, or consolidation or merger of the
Corporation with another corporation, or the sale of all or substantially all
of its assets to another corporation (other than pursuant to a liquidation
subject to Section 3 hereof) shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities, cash or other
property with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger
or sale, lawful and adequate provision shall be made whereby the holders of the
Series B Preferred Stock shall have the right to acquire and receive upon
conversion of the Series B Preferred Stock, which right shall be pari passu
with the rights of holders of Parity Stock and prior to the rights of the
holders of Junior Stock (but after and subject to the rights of holders of
Senior Preferred Stock, if any), such shares of stock, securities, cash
or other property issuable or payable (as part of the reorganization,
reclassification, consolidation, merger or sale) with respect to or in exchange
for such number of outstanding shares of Common Stock as would have been
received upon conversion of the Series B Preferred Stock at the
Conversion Price then in effect. The Corporation will not effect any
such consolidation, merger or sale, unless prior to the consummation
thereof the successor corporation (if other than the Corporation)
resulting from such consolidation or merger or the corporation purchasing
such assets shall assume by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the outstanding
Series B Preferred Stock) mailed or delivered to the holders of the Series B
Preferred Stock at the last address of each such holder appearing on the
books of the Corporation, the obligation to deliver to each such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
(f) The provisions of this Section 6 shall not apply to
any Common Stock issued or issuable to any person or entity, or deemed
outstanding, under subparagraphs 6(b)(1) to (9) inclusive: (i) on
exercise of options outstanding as of the Initial Issuance Date to acquire up
to 1,874,300 shares of Common Stock issued to employees of the Corporation
pursuant to the Stock Option Plan or any options approved by the holders of
record of a majority of the outstanding shares of Series B Preferred Stock
pursuant to Section 4(c)(ii)(y) hereof, (ii) pursuant to options granted to
Richard E. Snyder under the Stock Option Plan, as amended by the Corporation's
Board of Directors on January 31, 1996, (iii) on conversion of the Series B
Preferred Stock or Series A Preferred Stock, (iv) as a dividend on the Series B
Preferred Stock, or (v) on exercise of the Warrant issued to GP Holding on the
Initial Issuance Date.
(g) In the event that:
(1) the Corporation shall declare any cash dividend upon its
Common Stock, or
(2) the Corporation shall declare any dividend upon its
Common Stock payable in stock or make any special dividend
or other distribution to the holders of its Common Stock, or
(3) the Corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of
any class or other rights, or
(4) there shall be any capital reorganization
or reclassification of the capital stock of the Corporation, including
any subdivision or combination of its outstanding shares of Common
Stock, or consolidation or merger of the Corporation with, or sale
of all or substantially all of its assets to, another individual or
entity, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in connection with such event, the Corporation shall give to the holders
of the Series B Preferred Stock:
(i) at least ten (10) days' prior written notice of
the date on which the books of the Corporation
shall close or a record shall be taken for such
dividend, distribution or subscription rights
or for determining rights to vote in respect
of any such reorganization, reclassification,
<PAGE>
consolidation, merger, sale, dissolution,
liquidation or winding up; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least
twenty (20) days' prior written notice of the date
when the same shall take place. Such notice in
accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend,
distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled
thereto, and such notice in accordance with the
foregoing clause (ii) shall also specify the date on
which the holders of Common Stock shall be entitled
to exchange their Common Stock for securities or
other property deliverable upon such reorganization,
reclassification consolidation, merger, sale,
dissolution, liquidation or winding up, as the case
may be. Each such written notice shall be given by
first class mail, postage prepaid, addressed to the
holders of the Series B Preferred Stock at the
address of each such holder as shown on the books of
the Corporation.
(h) If at any time or from time to time on or after
the Initial Issuance Date, the Corporation shall grant, issue or sell any
Options, Convertible Securities, rights to purchase property or evidences of
indebtedness (the "Purchase Rights") pro rata to the record holders of any
class of Common Stock and such grants, issuances or sales do not result in an
adjustment of the Conversion Price under paragraph 6(b) hereof, then each
holder of record of Series B Preferred Stock shall be entitled to acquire
(within thirty (30) days after the later to occur of the initial exercise date
of such Purchase Rights or receipt by such holder of the notice concerning
Purchase Rights to which such holder shall be entitled under paragraph 6(g))
and upon the terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder
could have acquired if it had held the number of
shares of Common Stock acquirable upon conversion of
the Series B Preferred Stock immediately before the
grant, issuance or sale of such Purchase Rights;
provided -------- that if any Purchase Rights were
distributed to holders of Common Stock without the
payment of additional consideration by such holders,
corresponding Purchase Rights shall be distributed
<PAGE>
to the exercising holders of the Series B Preferred
Stock as soon as possible after such exercise and it
shall not be necessary for the exercising holders of
the Series B Preferred Stock specifically to request
delivery of such rights; or
(ii) in the event that any such Purchase Rights shall
have expired or shall expire prior to the end
of said thirty (30) day period, the number of
shares of Common Stock or the amount of property
which such holder could have acquired upon such
exercise at the time or times at which the
Corporation granted, issued or sold such expired
Purchase Rights.
(i) If any event occurs as to which, in the opinion of
the Board of Directors of the Corporation, the provisions of this Section 6
are not strictly applicable or if strictly applicable would not fairly
protect the rights of the holders of the Series B Preferred Stock in
accordance with the essential intent and principles of such provisions, then
the Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as
to protect such rights as aforesaid, but in no event shall any adjustment
have the effect of increasing the Conversion Price as otherwise determined
pursuant to any of the provisions of this Section 6 except in the case of a
combination of shares of a type contemplated in paragraph 6(d) and then in
no event to an amount larger than the Conversion Price as adjusted pursuant to
paragraph 6(d).
7. REDEMPTION.
(a) The Corporation, at its option, may redeem (to the
extent that such redemption shall not violate any applicable provisions of the
laws of the State of Delaware) all or a portion of the shares of Series B
Preferred Stock at a price of $5,000 per share (subject to adjustment in the
event of any stock dividend, stock split, stock distribution or combination
with respect to such shares), plus an amount equal to any dividends thereon
cumulated or accrued but unpaid, whether or not declared (such amount is
hereinafter referred to as the "Redemption Price"), from time to time after
the fourth anniversary of the Initial Issuance Date (any such date of
redemption is hereafter referred to as a "Redemption Date"), if prior to such
redemption all accrued but unpaid dividends on all outstanding shares of Series
B Preferred Stock have been paid, provided, however, that, without the
<PAGE>
written consent of the holders of a majority of the outstanding shares of
Class A Preferred Stock, the Corporation shall not redeem any shares of Class B
Preferred Stock so long as any shares of Class A Preferred Stock remain
outstanding.
(b) In the event of any redemption of only a part of the
then outstanding Series B Preferred Stock, the Corporation shall effect
such redemption pro rata among the holders thereof (based on the number of
shares of Series B Preferred Stock held on the date of notice of redemption).
(c) At least thirty (30) days prior to any proposed
Redemption Date, written notice shall be mailed, postage prepaid, to each
holder of record of Series B Preferred Stock to be redeemed, at his or its
post office address last shown on the records of the Corporation,
notifying such holder of the number of shares so to be redeemed, specifying
the Redemption Date and the date on which such holder's conversion rights
(pursuant to Section 5 hereof) as to such shares terminate and calling
upon such holder to surrender to the Corporation, in the manner and at
the place designated, his or its certificate or certificates representing
the shares to be redeemed (such notice is hereinafter referred to as
the "Redemption Notice"). On or prior to each Redemption Date, each
holder of record of Series B Preferred Stock to be redeemed shall
surrender his or its certificate or certificates representing such shares to
the Corporation, in the manner and at the place designated in the Redemption
Notice, and thereupon the Redemption Price of such shares shall be payable to
the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall
be cancelled. In the event less than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the Redemption Date,
unless there shall have been a default in payment of the Redemption Price, all
rights of the holders of the Series B Preferred Stock designated for redemption
in the Redemption Notice as holders of Series B Preferred Stock of the
Corporation (except the right to receive the Redemption Price upon
surrender of their certificate or certificates) shall cease with respect
to such shares, and such shares shall not thereafter be transferred on the
books of the Corporation or be deemed to be outstanding for any purpose
whatsoever.
(d) Except as provided in paragraph (a) above, the
Corporation shall have no right to redeem the shares of Series B Preferred
Stock. Any shares of Series B Preferred Stock so redeemed shall be permanently
retired, shall no longer be deemed outstanding and shall not under any
circumstances be reissued, and the Corporation may from time to time take such
appropriate corporate action as may be necessary to reduce the amount of
<PAGE>
authorized Series B Preferred Stock accordingly. Nothing herein contained
shall prevent or restrict the purchase by the Corporation, from time to time
either at public or private sale, of the whole or any part of the Series B
Preferred Stock at such price or prices as the Corporation and the selling
holders of the Series B Preferred Stock may mutually determine, subject to the
provisions of applicable law.
<PAGE>
IN WITNESS WHEREOF, [Western Publishing Group, Inc.]
has caused this Certificate of Designations, Number, Voting Powers,
Preferences and Rights of Series B Convertible Preferred Stock to be duly
executed by its this day of , 1996.
[WESTERN PUBLISHING GROUP, INC.]
By:
Name:
Title:
<PAGE>
Index of Defined Terms
Affiliates.....................................................................6
Common Stock...................................................................1
Conversion Price...............................................................8
Conversion Rate................................................................8
Convertible Securities........................................................12
Corporation....................................................................1
Dividend Date..................................................................1
Dividend Value.................................................................2
GP Holding.....................................................................5
GP Holding Parties.............................................................5
Indebtedness...................................................................7
Initial Issuance Date..........................................................1
Initial Series B Shares........................................................5
Junior Stock...................................................................2
Liquidating Dividends.........................................................16
Market Price...................................................................2
Non-Series B Directors.........................................................5
Number of Common Shares Deemed Outstanding....................................11
Parity Stock...................................................................2
Redemption Date...............................................................20
Redemption Notice.............................................................21
Redemption Price..............................................................20
Senior Preferred Stock.........................................................4
Series A Preferred Stock.......................................................2
Series B Directors.............................................................5
Series B Preferred Stock.......................................................1
Stock Option Plan..............................................................7
Triggering Transaction........................................................11
WPV............................................................................5
<PAGE>
EXHIBIT B
FORM OF WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE
ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO [WESTERN PUBLISHING GROUP, INC.], QUALIFIES AS AN EXEMPT
TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
[WESTERN PUBLISHING GROUP, INC.]
Common Stock Purchase Warrant
[Western Publishing Group, Inc.], a Delaware corporation
(the "Company"), hereby certifies that, for value received, Golden Press
Holding, L.L.C. (the "Holder"), or assigns, is entitled, subject to the terms
set forth below, to purchase from the Company, at any time and from time to
time during the period beginning on the earlier to occur of (i) the second
anniversary of the date of issuance hereof and (ii) the date on which a
bona fide Business Combination Proposal (as defined in the Securities
Purchase Agreement, dated as of January 31, 1996, between the Company and the
Holder) is publicly announced or a proxy solicitation for control of the
Company's Board of Directors is initiated by any person or entity other
than a Holder Party (as defined in Section 3.1 hereof)(the "Earliest
Exercise Date"), and ending on , 2003, in whole or in part, an aggregate of
3,250,000 fully paid and non-assessable shares of the Common Stock of the
Company at a purchase price, subject to the provisions of Paragraph 3
hereof, of $10.00 per share (the "Purchase Price"). The Purchase Price
and the number and character of such shares are subject to adjustment as
provided below, and the term "Common Stock" shall mean, unless the context
otherwise requires, the stock or other securities or property at the time
deliverable upon the exercise of this Warrant.
1. EXERCISE OF WARRANT. The purchase rights evidenced by
this Warrant shall be exercised by the holder surrendering this Warrant,
with the form of subscription at the end hereof duly executed by such
holder, to the Company at its office in New York, New York, accompanied by
payment of an amount (the "Exercise Amount") equal to the Purchase Price
<PAGE>
multiplied by the number of shares being purchased pursuant to such exercise,
payable as follows: (i) by payment to the Company in cash, by certified or
official bank check, or by wire transfer of the Exercise Amount, (ii) by
surrender to the Company for cancellation of securities of the Company
having a Market Price (as hereinafter defined) in respect of such exercise
equal to the Exercise Amount, or (iii) by a combination of the methods
described in clauses (i) and (ii) above. In lieu of exercising this Warrant
pursuant to the immediately preceding sentence, the holder may elect to
receive a payment equal to the difference between (i) the Market Price
multiplied by the number of shares as to which this Warrant is then being
exercised and (ii) the Purchase Price with respect to such shares, payable by
the Company to the Holder only in shares of Common Stock valued at the Market
Price in respect of such exercise, by surrendering this Warrant, with the
form of subscription at the end hereof duly executed by such holder, to the
Company at its office in New York, New York. For purposes hereof, the term
"Market Price" shall mean the average closing price of a share of Common
Stock for the ten consecutive trading days immediately preceding the date of
exercise of this Warrant as reported on the principal national securities
exchange on which the shares of Common Stock or securities are listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices during
such ten trading day period in the over-the-counter market as reported by the
Nasdaq National Market or any comparable system, or, if no such firm is then
engaged in the business of reporting such prices, as reported by The Wall
Street Journal, or, if not so reported, as furnished by any member of the
National Association of Securities Dealers, Inc. selected by the Company
or, if the shares of Common Stock or securities are not publicly traded, the
Market Price for such day shall be the fair market value thereof determined
jointly by the Company and the holder of this Warrant; provided, however,
that if such parties are unable to reach agreement within a reasonable
period of time, the Market Price shall be determined in good faith by an
independent investment banking firm selected jointly by the Company and
the holder of this Warrant or, if that selection cannot be made within ten
days, by an independent investment banking firm selected by the American
Arbitration Association in accordance with its rules, and provided further,
that the Company shall pay all of the fees and expenses of any third parties
incurred in connection with determining the Market Price.
1.1 Partial Exercise. This Warrant may be exercised for
less than the full number of shares of Common Stock, in which case the
number of shares receivable upon the exercise of this Warrant as a whole,
<PAGE>
and the sum payable upon the exercise of this Warrant as a whole, shall be
proportionately reduced. Upon any such partial exercise, the Company at
its expense will forthwith issue to the holder hereof a new Warrant or
Warrants of like tenor calling for the number of shares of Common Stock as to
which rights have not been exercised, such Warrant or Warrants to be issued
in the name of the holder hereof or its nominee (upon payment by such holder
of any applicable transfer taxes).
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon
as practicable after the exercise of this Warrant and payment of the
Purchase Price, and in any event within ten (10) days thereafter, the
Company, at its expense, will cause to be issued in the name of and
delivered to the holder hereof a certificate or certificates for the
number of fully paid and non-assessable shares or other securities or
property to which such holder shall be entitled upon such exercise, plus, in
lieu of any fractional share to which such holder would otherwise be
entitled, cash in an amount determined in accordance with Paragraph 3.9
hereof. The Company agrees that the shares so purchased shall be deemed to
be issued to the holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid.
3. ANTI-DILUTION PROVISIONS AND OTHER ADJUSTMENTS. In order
to prevent dilution of the right granted hereunder, the Purchase Price
shall be subject to adjustment from time to time in accordance with this
Paragraph 3. Upon each adjustment of the Purchase Price pursuant to this
Paragraph 3, the registered Holder of this Warrant shall thereafter be
entitled to acquire upon exercise, at the Purchase Price resulting from such
adjustment, the number of shares of Common Stock obtainable by multiplying
the Purchase Price in effect immediately prior to such adjustment by the
number of shares of Common Stock acquirable immediately prior to such
adjustment and dividing the product thereof by the Purchase Price resulting
from such adjustment.
3.1. Adjustment for Issue or Sale of Common Stock at Less
than Purchase Price. Except as provided in Paragraph 3.2 or 3.5 below,
if and whenever on or after the date of issuance hereof the Company shall
grant, issue or sell, or shall in accordance with subparagraphs 3.1(1) to (9),
inclusive, be deemed to have granted, issued or sold, any shares of its
Common Stock for a consideration per share less than the Purchase Price in
effect immediately prior to the time of such grant, issue or sale, then
forthwith upon such grant, issue or sale (the "Triggering Transaction"), the
Purchase Price shall, subject to subparagraphs (1) to (9) of this Paragraph
<PAGE>
3.1, be reduced to the Purchase Price (calculated to the nearest tenth of a
cent) determined by dividing:
(i) an amount equal to the sum of (x) the product derived by multiplying
the Number of Common Shares Deemed Outstanding immediately prior to such
Triggering Transaction by the Purchase Price then in effect, plus (y) the
consideration, if any, received by the Company upon consummation of such
Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of Common Shares
Deemed Outstanding immediately prior to such Triggering Transaction plus (y)
the number of shares of Common Stock granted, issued or sold (or deemed to
be granted, issued or sold in accordance with subparagraphs 3.1(1) to (9))
in connection with the Triggering Transaction;
provided, however, that the Purchase Price shall not be so reduced if (i)
so long as the Holder has the right to elect as a class one or more directors
of the Company's Board of Directors or to approve certain transactions by
the Company pursuant to Section 4(b) or 4(c), respectively, of the
Certificate of Designations of the Company's Series B Convertible Preferred
Stock (the "Series B Preferred Stock"), such Triggering Transaction involves
a grant, issuance or sale of Common Stock to the Holder, any of its members,
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 (the
Holder, its members, such affiliates and such general partnership being herein
collectively referred to as the "Holder Parties"), other than ratably to all
holders of the Common Stock, and such Triggering Transaction has not been
approved by a majority of the Non-Series B Directors (as defined in said
Certificate of Designations and excluding natural persons who are Holder
Parties or officers, directors or employees of entities that are Holder
Parties) or (ii) the Triggering Transaction involves a grant, issuance or
sale of Common Stock that has not been registered pursuant to the Securities
Act of 1933, as amended, and an investment bank of national standing and
reputation, engaged for fee by the Company pursuant to a written
engagement letter, has not been consulted by the Company with respect to the
structure of such Triggering Transaction and participated in the negotiation of
such Triggering Transaction.
For purposes of this Paragraph 3, the term "Number of
Common Shares Deemed Outstanding" at any given time shall mean the sum of
(x) the number of shares of Common Stock outstanding at such time, (y) the
number of shares of Common Stock issuable assuming conversion at such
time of the Company's Series A Preferred Stock and Series B Convertible
<PAGE>
Preferred Stock and (z) the number of shares of the Company's Common Stock
deemed to be outstanding under subparagraphs 3.1(1) to (9), inclusive, at such
time.
For purposes of determining the adjusted Purchase Price
under this Paragraph 3.1, the following subsections (1) to (9), inclusive,
shall be applicable:
(1) In case the Company at any time shall in any
manner grant (whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities"), whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable and the price per share for which the Common Stock is issuable
upon exercise, conversion or exchange (determined by dividing (x) the total
amount, if any, received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such
Options, plus, in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (y) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities) shall be less than the Purchase Price
in effect immediately prior to the time of the granting of such Option, then
the total maximum amount of Common Stock issuable upon the exercise of such
Options, or, in the case of Options which relate to Convertible Securities,
upon the conversion or exchange of such Convertible Securities, shall (as of
the date of granting of such Options) be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. No
adjustment of the Purchase Price shall be made upon the actual issue of such
shares of Common Stock or such Convertible Securities upon the exercise of
such Options, except as otherwise provided in subparagraph (3) below.
(2) In case the Company at any time shall in any
manner issue (whether directly or by assumption in a merger or otherwise) or
sell any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined
<PAGE>
by dividing (x) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to
the Company upon the conversion or exchange thereof, by (y) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities) shall be less than the Purchase Price in
effect immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the
issue or sale of such Convertible Securities) be deemed to be outstanding and
to have been issued and sold by the Company for such price per share. No
adjustment of the Purchase Price shall be made upon the actual issue of such
Common Stock upon exercise of the rights to exchange or convert under such
Convertible Securities, except as otherwise provided in subparagraph (3) below.
(3) If the purchase price provided for in any
Options referred to in subparagraph (1), the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities
referred to in subparagraphs (1) or (2), or the rate at which any Convertible
Securities referred to in subparagraph (1) or (2) are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution of the type set
forth in Paragraph 3.1 or 3.3), the Purchase Price in effect at the time of
such change shall forthwith be readjusted to the Purchase Price which would
have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. If the purchase price provided for in any
Option referred to in subparagraph (1) or the rate at which any Convertible
Securities referred to in subparagraphs (1) or (2) are convertible into
or exchangeable for Common Stock, shall be reduced at any time under or by
reason of provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any such
Option or upon conversion or exchange of any such Convertible Security, the
Purchase Price then in effect hereunder shall forthwith be adjusted to such
respective amount as would have been obtained had such Option or Convertible
Security never been issued as to such Common Stock and had adjustments been
made upon the issuance of the shares of Common Stock delivered as aforesaid,
but only if as a result of such adjustment the Purchase Price then in effect
hereunder is hereby reduced.
<PAGE>
(4) On the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities, the
Purchase Price then in effect hereunder shall forthwith be increased to the
Purchase Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination,
never been issued.
(5) In case any Options shall be issued in
connection with the issue or sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued without consideration (but shall otherwise be
deemed issued for the specific consideration allocated thereto).
(6) In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor, less any underwriting
discounts, selling commissions and other expenses paid or incurred in
respect of such issuance or sale, shall be deemed to be the amount received
by the Company therefor. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration as determined in
good faith by the Board of Directors of the Company. In case any shares of
Common Stock, Options or Convertible Securities shall be issued in
connection with any merger in which the Company is the surviving
corporation, the amount of consideration therefor shall be deemed to
be the value attributable to such shares in such merger, provided that, to
the extent such value is not ascertainable, such value shall be the fair
value of such consideration as determined in good faith by the Board of
Directors of the Company.
(7) The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any shares so owned
or held shall be considered an issue or sale of Common Stock for the purpose of
this Paragraph 3.1.
(8) In case the Company shall declare a dividend or
make any other distribution upon the stock of the Company payable in Common
Stock, Options, or Convertible Securities (other than a dividend or
distribution payable in Common Stock covered by Section 3.3 or 3.4), then
<PAGE>
in such case any Common Stock, Options or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
(9) For purposes of this Paragraph 3.1, in case the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them (x) to receive a dividend or other distribution payable
in Common Stock, Options or in Convertible Securities, or (y) to
subscribe for or purchase Common Stock, Options or Convertible Securities,
then such record date shall be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right or subscription or purchase, as the
case may be.
3.2. Dividends Not Paid Out of Earnings or Earned Surplus.
In the event the Company shall declare a dividend upon the Common Stock
payable otherwise than out of earnings or earned surplus, determined in
accordance with generally accepted accounting principles, including the
making of appropriate deductions for minority interests, if any, in
subsidiaries but without increasing the same as a result of any write-up
of assets related to such dividend or any gain from the sale of any
capital assets related to such dividend (herein referred to as
"Liquidating Dividends"), then, the Company shall pay to the holder of this
Warrant, at the time such dividend is paid to the holders of the Common
Stock, an amount equal to the product of (i) the number of shares of
Common Stock that the holder of this Warrant would be entitled to acquire
upon exercise of this Warrant at the Purchase Price then in effect and (ii)
the aggregate value at such time of all Liquidating Dividends paid in
respect of one share of Common Stock. For the purposes of this Paragraph 3.2, a
dividend shall be considered payable out of earnings or earned surplus only
if paid in cash and to the extent that such earnings or earned surplus are
charged an amount equal to the fair value of such dividend as determined in
good faith by the Board of Directors of the Company.
3.3. Subdivisions and Combinations. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately
prior to such subdivision shall be proportionately reduced, and,
conversely, in case the outstanding shares of Common Stock shall be combined
into a smaller number of shares, the Purchase Price in effect immediately
prior to such combination shall be proportionately increased.
<PAGE>
3.4. Reorganization, Reclassification, Consolidation,
Merger or Sale of Assets. If any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the
Company with another corporation, or the sale of all or substantially all of
its assets to another corporation shall be effected in such a way that holders
of Common Stock shall be entitled to receive stock, securities, cash or
other property with respect to or in exchange for Common Stock, then,
as a condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the
holder of this Warrant shall have the right to acquire and receive upon
exercise of this Warrant such shares of stock, securities, cash or other
property issuable or payable (as part of the reorganization, reclassification,
consolidation, merger or sale) with respect to or in exchange for such number
of outstanding shares of the Company's Common Stock as would have been
received upon exercise of this Warrant at the Purchase Price then in effect.
The Company will not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument (in
form and substance reasonably satisfactory to the holder of this Warrant)
mailed or delivered to the holder of this Warrant at the last address of
such holder appearing on the books of the Company, the obligation to deliver
to such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to purchase.
3.5. No Adjustment for Exercise of Certain Options,
Warrants, Etc. The provisions of this Section 3 shall not apply to any Common
Stock issued or issuable to any person or entity, or deemed outstanding, under
subparagraphs 3.1(1) to (9) inclusive: (i) on exercise of options outstanding
on the date of issuance hereof to acquire up to 1,874,300 shares of Common
Stock issued to employees of the Company pursuant to the Amended and
Restated 1986 Employee Stock Option Plan of the Company (the "Stock
Option Plan") or any options approved with the consent of the holders of
record of a majority of the outstanding shares of Series B Preferred Stock;
(ii) pursuant to options granted to Richard E. Snyder under the Stock Option
Plan, as amended by the Company's Board of Directors on January 31, 1996;
(iii) on conversion of the Series B Preferred Stock or the Series A
Preferred Stock of the Company; (iv) as a dividend on the Series B
Preferred Stock; or (v) on exercise of this Warrant.
3.6. Notices of Record Date, Etc. In the event that:
<PAGE>
(1) the Company shall declare any cash dividend
upon its Common Stock, or
(2) the Company shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock, or
(3) the Company shall offer for subscription pro
rata to the holders of its Common Stock any additional shares of stock of any
class or other rights, or
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Company, including any
subdivision or combination of its outstanding shares of Common Stock, or
consolidation or merger of the Company with, or sale of all or substantially
all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in connection with such event, the Company shall give to the holder
of this Warrant:
(i) at least ten (10) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up; and
(ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least
twenty (20) days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled
thereto, and such notice in accordance with the foregoing clause (ii) shall
also specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. Each such written
notice shall be given by first class mail, postage prepaid, addressed to
the holder of this Warrant at the address of such holder as shown on the books
of the Company.
<PAGE>
3.7. Grant, Issue or Sale of Options, Convertible
Securities, or Rights. If at any time or from time to time on or after the
date of issuance hereof, the Company shall grant, issue or sell any
Options, Convertible Securities, rights to purchase property or evidences
of indebtedness (the "Purchase Rights") pro rata to the record holders of
any class of Common Stock and such grants, issuances or sales do not result
in an adjustment of the Purchase Price under Paragraph 3.1 hereof, then the
holder of this Warrant shall be entitled to acquire (within thirty (30) days
after the later to occur of the initial exercise date of such Purchase Rights
or receipt by such holder of the notice concerning Purchase Rights to which
such holder shall be entitled under Paragraph 3.6) and upon the terms
applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could have acquired if
it had held the number of shares of Common Stock acquirable upon exercise of
this Warrant immediately before the grant, issuance or sale of such Purchase
Rights; provided that if any Purchase Rights were distributed to holders of
Common Stock without the payment of additional consideration by such holders,
corresponding Purchase Rights shall be distributed to the exercising holder of
this Warrant as soon as possible after such exercise and it shall not be
necessary for the exercising holder of this Warrant specifically to
request delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have expired or
shall expire prior to the end of said thirty (30) day period, the number of
shares of Common Stock or the amount of property which such holder could
have acquired upon such exercise at the time or times at which the Company
granted, issued or sold such expired Purchase Rights.
3.8. Adjustment by Board of Directors. If any event occurs
as to which, in the opinion of the Board of Directors of the Company,
the provisions of this Section 3 are not strictly applicable or if
strictly applicable would not fairly protect the rights of the holder of this
Warrant in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent
and principles, so as to protect such rights as aforesaid, but in no event
shall any adjustment have the effect of increasing the Purchase Price as
otherwise determined pursuant to any of the provisions of this Section 3
except in the case of a combination of shares of a type contemplated in
Paragraph 3.3 and then in no event to an amount larger than the Purchase Price
as adjusted pursuant to Paragraph 3.3.
<PAGE>
3.9. Fractional Shares. The Company shall not issue
fractions of shares of Common Stock upon exercise of this Warrant or
scrip in lieu thereof. If any fraction of a share of Common Stock would,
except for the provisions of this Paragraph 3.9, be issuable upon exercise of
this Warrant, the Company shall in lieu thereof pay to the person entitled
thereto an amount in cash equal to the current value of such fraction,
calculated to the nearest one-hundredth (1/100) of a share, to be computed
(i) if the Common Stock is listed on any national securities exchange on the
basis of the last sales price of the Common Stock on such exchange (or the
quoted closing bid price if there shall have been no sales) on the date of
conversion, or (ii) if the Common Stock shall not be listed, on the basis of
the mean between the closing bid and asked prices for the Common Stock on the
date of conversion as reported by the Nasdaq National Market, or its
successor, and if there are not such closing bid and asked prices, on the
basis of the fair market value per share as determined by the Board of
Directors of the Company.
3.10. Officers' Statement as to Adjustments. Whenever
the Purchase Price shall be adjusted as provided in Section 3 hereof, the
Company shall forthwith file at each office designated for the exercise of this
Warrant, a statement, signed by the Chairman of the Board, the President,
any Vice President or Treasurer of the Company, showing in reasonable detail
the facts requiring such adjustment and the Purchase Price that will be
effective after such adjustment. The Company shall also cause a notice
setting forth any such adjustments to be sent by mail, first class, postage
prepaid, to the record holder of this Warrant at his or its address appearing
on the stock register. If such notice relates to an adjustment resulting
from an event referred to in Paragraph 3.6, such notice shall be included as
part of the notice required to be mailed and published under the provisions of
Paragraph 3.6 hereof.
4. NO DILUTION OR IMPAIRMENT. The Company will not,
by amendment of its charter or through reorganization, consolidation,
merger, dissolution, sale of assets or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder hereof against
dilution or other impairment. Without limiting the generality of the
foregoing, the Company will not increase the par value of any shares of
stock receivable upon the exercise of this Warrant above the amount payable
therefor upon such exercise, and at all times will take all such action as may
<PAGE>
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable stock upon the exercise of this Warrant.
5. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE
OF WARRANTS. The Company shall at all times reserve and keep available out of
its authorized but unissued stock, solely for the issuance and delivery
upon the exercise of this Warrant and other similar Warrants, such number
of its duly authorized shares of Common Stock as from time to time shall be
issuable upon the exercise of this Warrant and all other similar
Warrants at the time outstanding.
6. REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement (with surety if reasonably required) in an
amount reasonably satisfactory to it, or (in the case of mutilation)
upon surrender and cancellation thereof, the Company will issue, in lieu
thereof, a new Warrant of like tenor.
7. REMEDIES. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate, and that the same may be specifically enforced.
8. NEGOTIABILITY, ETC. This Warrant is issued upon the
following terms, to all of which each taker or owner hereof consents and
agrees:
(a) Subject to the legend appearing on the first page
hereof, at any time beginning on the Earliest Exercise Date, title to this
Warrant may be transferred by endorsement (by the holder hereof executing
the form of assignment at the end hereof including guaranty of signature)
and delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery.
(b) Subject to Section 8(a), any person in possession of
this Warrant properly endorsed is authorized to represent himself as absolute
owner hereof and is granted power to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his equities or
rights in this Warrant in favor of every such bona fide purchaser, and
every such bona fide purchaser shall acquire title hereto and to all rights
represented hereby.
<PAGE>
(c) Until this Warrant is transferred on the books of
the Company, the Company may treat the registered holder of this Warrant
as the absolute owner hereof for all purposes without being affected by any
notice to the contrary.
(d) Prior to the exercise of this Warrant, the holder
hereof shall not be entitled to any rights of a shareholder of the Company with
respect to shares for which this Warrant shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except, in each case,
as provided herein.
(e) The Company shall not be required to pay any Federal
or state transfer tax or charge that may be payable in respect of any
transfer involved in the transfer or delivery of this Warrant or the
issuance or conversion or delivery of certificates for Common Stock in a
name other than that of the registered holder of this Warrant or to issue
or deliver any certificates for Common Stock upon the exercise of this
Warrant until any and all such taxes and charges shall have been paid by the
holder of this Warrant or until it has been established to the Company's
satisfaction that no such tax or charge is due.
9. SUBDIVISION OF RIGHTS. This Warrant (as well as any
new warrants issued pursuant to the provisions of this paragraph) is
exchangeable, upon the surrender hereof by the holder hereof, at the
principal office of the Company for any number of new warrants of like tenor
and date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder.
10. MAILING OF NOTICES, ETC. All notices and
other communications from the Company to the holder of this Warrant shall be
mailed by first-class certified mail, postage prepaid, to the address
furnished to the Company in writing by the last holder of this Warrant who
shall have furnished an address to the Company in writing.
11. HEADINGS, ETC. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect the meaning
hereof.
12. CHANGE, WAIVER, ETC. Neither this Warrant nor any term
hereof may be changed, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against which enforcement of the
<PAGE>
change, waiver, discharge or termination is sought.
13. SUCCESSORS AND ASSIGNS. This Warrant and the
rights evidenced hereby shall inure to the benefit of and be binding
upon the successors and assigns of the Company, the holder hereof and (to
the extent provided herein) the holders of shares Common Stock issued upon
exercise of this Warrant, and shall be enforceable by any such holder.
14. MODIFICATION AND SEVERABILITY. If, in any action
before any court or agency legally empowered to enforce any provision contained
herein, any provision hereof is found to be unenforceable, then such provision
shall be deemed modified to the extent necessary to make it enforceable by
such court of agency. If any such provision is not enforceable as set forth
in the preceding sentence, the unenforceablilty of such provision shall
not affect the other provisions of this Warrant, but this Warrant shall be
construed as if such unenforceable provision had never been contained herein.
15. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[WESTERN PUBLISHING GROUP, INC.]
By ___________________________
Name:
Title:
Dated: ________
Attest:
______________________
<PAGE>
[To be signed only upon exercise of Warrant]
To [Western Publishing Group, Inc.]
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ______ shares of Common Stock of [Western Publishing Group,
Inc.] and herewith makes payment of $_______________________________ [specify
amount of cash and/or number, market value and type of securities being paid or
whether a cashless exercise is elected], and requests that the certificates
for such shares be issued in the name of, and be delivered to_________________,
whose address is ________________________.
Dated:_________________
_____________________________________
(Signature must conform in all respects to name of Holder as
specified on the face of the Warrant)
________________________________
Address
<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________________________the right
represented by the within Warrant to purchase the ____________________
shares of the Common Stock of [Western Publishing Group, Inc.] to which the
within Warrant relates, and appoints ________________________________attorney
to transfer said right on the books of [Western Publishing Group, Inc.] with
full power of substitution in the premises.
Dated:
____________________
____________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant)
____________________________
Address
In the presence of
________________________
<PAGE>
Index of Defined Terms
ACT.....................................................................1
Common Stock............................................................1
Company.................................................................1
Convertible Securities..................................................5
Earliest Exercise Date..................................................1
Exercise Amount.........................................................2
Holder..................................................................1
Holder Parties..........................................................4
Liquidating Dividends...................................................8
Market Price............................................................2
Number of Common Shares Deemed Outstanding..............................4
Purchase Price..........................................................1
Purchase Rights........................................................11
Series B Preferred Stock................................................4
Stock Option Plan.......................................................9
Triggering Transaction..................................................4
WPV.....................................................................4
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of __________
__, 1996, is entered into by and among [Western Publishing Group, Inc.], a
Delaware corporation (the "Company"), and Golden Press Holding, L.L.C., a
Delaware limited liability company ("GP Holding").
WHEREAS, the Company has agreed to issue to GP Holding,
shares of its Series B Convertible Preferred Stock ("Preferred Stock") and a
Warrant (the "Warrant") to purchase shares of its Common Stock ("Common Stock")
and to grant to GP Holding and any subsequent holders of such Preferred Stock
and such Warrant certain rights to have such Preferred Stock, such Warrant and
certain shares of Common Stock registered under the Securities Act of 1933, as
amended (the "Act").
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises and covenants herein contained, the parties hereto hereby agree
as follows:
SECTION 1. Definitions.
As used in this Agreement:
(a) "Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time administering the
Act;
(b) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(c) the term "Holder" shall mean any holder of
Registrable Securities;
(d) the term "Initiating Holder" shall mean any
Holder or Holders who in the aggregate are Holders of more than 50% of the then
outstanding Registrable Securities;
(e) the terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Act (and any post-effective
amendments filed or required to be filed) and the declaration or ordering of
effectiveness of such registration statement;
<PAGE>
(f) (the term "Registrable Securities" means
(i) any shares of Preferred Stock, (ii) any shares of Common Stock issued upon
conversion of shares of Preferred Stock, (iii) the Warrant or any portion
thereof, (iv) ny shares of Common Stock issued upon exercise of the Warrant or
any portion thereof and (v) any capital stock of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of, any securities referred to in clauses (i) through (iv) above.
For purposes of this Agreement, a person will be deemed to be a Holder whenever
such person has the right to acquire directly or indirectly Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected;
(g) "Registration Expenses" shall mean all expenses
incurred by the Company in compliance with Sections 2, 3 and 4 hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company); and
(h) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for each of the Holders.
SECTION 2. Demand Registration.
(a) Request for Registration. If the
Company shall receive from an Initiating Holder, at any time, a written request
that the Company effect any registration with respect to all or a part of the
Registrable Securities, the Company will:
(i) within five (5) days of receipt of such
request, give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its diligent
best efforts to effect such registration (including, without
limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and
<PAGE>
appropriate compliance with applicable regulations issued
under the Act) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion
of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company
within ten (10) days after written notice from the Company is
given under Section 2(a)(i) above; provided that the Company
shall not be obligated to effect, or take any action to
effect, any such registration pursuant to this Section 2:
(x) In any particular jurisdiction in
which the Company would be required to execute a
general consent to service of process in effecting
such registration, qualification or compliance,
unless the Company is already subject to service in
such jurisdiction and except as may be required by
the Act or applicable rules or regulations
thereunder; or
(y) After the Company has effected
three (3) suchregistrations pursuant to this
Section 2 and such registrations have been declared
or ordered effective and the sales of such
Registrable Securities shall have closed.
The registration statement filed pursuant to the request of
the Initiating Holders may, subject to the provisions of Section 2(b) below,
include other securities of the Company which are held by officers or directors
of the Company, or which are held by persons who, by virtue of agreements with
the Company, are entitled to include their securities in any such registration,
but the Company shall have no absolute right to include any of its securities
in any such registration.
The registration rights set forth in this Section 2 shall be
assignable, in whole or in part, to any transferee of Registrable Securities
who is a transferee of at least 5% of the then outstanding Registrable
Securities, a member of GP Holding, an affiliate of E.M. Warburg, Pincus & Co.,
Inc. ("Warburg") or a limited or general partner of an investment fund
affiliated with Warburg, and such transferee shall be bound by all obligations
of this Section 2.
(b) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
<PAGE>
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 2(a).
If officers or directors of the Company holding other
securities of the Company shall request inclusion in any registration pursuant
to Section 2, or if holders of securities of the Company other than Registrable
Securities who are entitled, by contract with the Company or otherwise, to have
securities included in such a registration (the "Other Stockholders") request
such inclusion, the Holders shall offer to include the securities of such
officers, directors and Other Stockholders in the underwriting and may
condition such offer on their acceptance of the further applicable provisions
of this Section 2. The Holders whose shares are to be included in such
registration and the Company shall (together with all officers, directors and
Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such
underwriting by the Initiating Holders. Notwithstanding any other provision of
this Section 2, if the representative advises the Holders in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the securities of the Company held by officers or directors
(other than Registrable Securities) of the Company and the securities held by
Other Stockholders shall be excluded from such registration to the extent so
required by such limitation. If, after the exclusion of such shares, further
reductions are still required, the number of shares included in the
registration by each Holder shall be reduced on a pro rata basis (based on the
number of shares originally proposed to be registered by such Holder), by such
minimum number of shares as is necessary to comply with such request. No
Registrable Securities or any other securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration. If any of the Holders or any officer, director or Other
Stockholder who has requested inclusion in such registration as provided above
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. The securities so withdrawn shall also be withdrawn from
registration. If the underwriter has not limited the number of Registrable
<PAGE>
Securities or other securities to be underwritten, the Company may include its
securities for its own account in such registration if the representative so
agrees and if the number of Registrable Securities and other securities which
would otherwise have been included in such registration and underwriting will
not thereby be limited.
SECTION 3. Company Registration.
(a) Request For Registration. If the Company
shall determine to register any of its equity securities either for its own
account or for the account of a security holder or holders exercising their
respective demand registration rights, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction, or a registration on any registration form
which does not permit secondary sales or does not include substantially the
same information as would be required to be included in a registration
statement covering the sale of Registrable Securities, the Company will:
(i) promptly give to each of the Holders a
written notice thereof which shall describe in reasonable
detail the proposed registration and distribution (including
those jurisdictions in which the Company intends to attempt
to qualify such securities under the applicable blue sky or
other state securities laws); and
(ii) include in such registration (and any
related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all
the Registrable Securities specified in a written request or
requests, made by the Holders within fifteen (15) days after
receipt of the written notice from the Company described in
clause (i) above, except as set forth in Section 3(b) below.
Such written request may specify all or a part of the
Holders' Registrable Securities.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise each of the Holders as a part of the written notice
given pursuant to Section 3(a)(i). In such event, the right of each of the
Holders to registration pursuant to this Section 3 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein; provided, however, that GP Holding shall not be required to participate
in such underwriting if GP Holding, or an affiliate of GP Holding who is a
Holder, notifies the Company that it is seeking registration of its shares to
enable it to distribute such shares to its members or to affiliates of Warburg
or limited or general partners of investment funds affiliated with Warburg.
The Holders whose shares are to be included in such registration (other than GP
<PAGE>
Holding if GP Holding, or an affiliate of GP Holding who is a Holder, elects
not to participate in such underwriting) shall (together with the Company and
the Other Stockholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 3, if the representative
determines that marketing factors require a limitation on the number of shares
to be underwritten, the representative may (subject to the allocation priority
set forth below) limit the number of Registrable Securities to be included in
the registration and underwriting as the representative deems necessary and
appropriate. The Company shall so advise all holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated in the
following manner: The securities of the Company held by officers, directors
and Other Stockholders of the Company (other than Registrable Securities,
securities held by holders who by contractual right demanded such registration
("Demanding Holders") and securities held by "Holders" under the Registration
Rights Agreement, dated as of January __, 1996, between the Company, Richard A.
Bernstein, and certain of his affiliates (the "Bernstein Holders")) shall be
excluded from such registration and underwriting to the extent required by such
limitation, and, if a limitation on the number of shares is still required, the
number of shares that may be included in the registration and underwriting by
each of the Holders and the Bernstein Holders (if the Bernstein Holders are not
Demanding Holders) shall be reduced, on a pro rata basis (based on the number
of shares originally proposed to be registered by each such person), by such
minimum number of shares as is necessary to comply with such limitation. If
any of the Holders or any officer, director or Other Stockholder disapproves of
the terms of any such underwriting, such person may elect to withdraw therefrom
by written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(c) Number and Transferability. Each of the Holders
shall be entitled to have its shares included in an unlimited number of
registrations pursuant to this Section 3. The registration rights granted
pursuant to this Section 3 shall be assignable, in whole or in part, to any
transferee of Registrable Securities who is a transferee of at least 5% of the
then outstanding Registrable Securities, a member of GP Holding, an affiliate
of Warburg or a limited or general partner of an investment fund affiliated
<PAGE>
with Warburg, and such transferee shall be bound by all obligations of this
Section3.
SECTION 4. Form S-3 and Shelf Registration.
(a) Form S-3. The Company shall use its best efforts to
qualify for registration on Form S-3 for secondary sales. So long as the
Company is so qualified, Holders shall have the right to request unlimited
registrations on Form S-3 (such requests shall be in writing and shall state
the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of shares by such holders), subject only to the
following:
(i) The Company shall not be required to effect
a registration pursuant to this Section 4(a) within 120 days
of the effective date of the most recent registration
pursuant to this Section 4(a) in which securities held by the
requesting Holder could have been included for sale or
distribution.
(ii) The Company shall not be required to effect
a registration pursuant to this Section 4(a) if the Company
shall furnish to the Holders a certificate signed by the
President or Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors of
the Company, it would be materially detrimental to the
Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing
of such registration statement. In such event, the Company
shall have the right to defer the filing of the registration
statement no more than once during any twelve (12) month
period for a period of not more than 90 days after receipt of
the request of the Holder or Holders under this Section 4(a).
(iii) The Company shall not be obligated to
effect any registration pursuant to this Section 4(a) in any
particular jurisdiction in which the Company would be
required to execute a general consent to service of process
in effecting such registration, qualification or compliance,
unless the Company is already subject to service in such
jurisdiction and except as may be required by the Act or
applicable rules or regulations thereunder.
The Company shall, within five (5) days of receipt of request
for registration pursuant to this Section4(a), give written notice to all
<PAGE>
Holders of the receipt of such request and shall provide a reasonable
opportunity for other Holders to participate in the registration, provided that
if the registration is for an underwritten offering, the terms of Section 2(b)
shall apply to all participants in such offering. Subject to the foregoing,
the Company will use its diligent best efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to the extent
requested by the Holder or Holders thereof for purposes of disposition.
(b) Shelf Registration. If the Company shall receive from
an Initiating Holder, at any time, a written request that the Company effect a
registration pursuant to Rule 415, or any successor rule under the Act, that
would permit the sale of all or a part of the Registrable Securities from time
to time:
(i) The Company shall use its best efforts to
file with the Commission and thereafter to cause to be
declared effective as promptly as practicable a registration
statement on an appropriate form under the Act as reasonably
determined by the Company relating to the offer and sale of
the Registrable Securities by the Holders from time to time
pursuant to Rule 415, or any successor rule under the Act, in
accordance with the methods of distribution set forth in such
registration statement (a "Shelf Registration Statement").
(ii) The Company shall use its best efforts to
keep the Shelf Registration Statement continuously effective
in order to permit the prospectus forming part thereof to be
usable by Holders for a period of 18 months from the
effective date thereof or such shorter period that will
terminate when all the Registrable Securities covered by the
Shelf Registration Statement have been sold. Notwithstanding
any other provision hereof, the Company may postpone or
suspend the filing or the effectiveness of the Shelf
Registration Statement (or any amendments or supplements
thereto) if (i)such action is required by applicable law, or
(ii) such action is taken by the Company in good faith and
for valid business reasons (not including avoidance of the
Company's obligations hereunder), including the acquisition
or divestiture of assets, other pending corporate
developments, public filings with the Commission or other
similar events, so long as the Company promptly thereafter
complies with the requirements of Section 6(a)(v) hereof, if
<PAGE>
applicable. The Company shall be deemed not to have used its
best efforts to keep the Shelf Registration Statement
effective during the requisite period if it intentionally
takes any action not contemplated by clause (i) or (ii) above
that would result in holders of Registrable Securities
covered thereby not being able to offer and sell such
Registrable Securities during the period.
SECTION 5. Expenses of Registration. All Registration
Expenses incurred in connection with any registration, qualification or
compliance pursuant to this Agreement shall be borne by the Company, and all
Selling Expenses shall be borne by the Holders of the securities so registered
pro rata on the basis of the number of their shares so registered.
SECTION 6. Registration Procedures.
(a) In the case of each registration effected by the Company
pursuant to this Agreement, the Company will:
(i) provide the Holders of Registrable Securities to
be registered under the registration statement, their
underwriters, if any, and their respective counsel and
accountants, a reasonable opportunity to participate in the
preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each
amendment thereof or supplement thereto (reflecting in each
such document such comments as such persons may reasonably
propose), and provide each of them such access to its books
and records and such opportunities to discuss the business of
the Company with its officers and the independent public
accountants who have certified its financial statements as
shall be necessary, in the opinion of such Holders' and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Act;
(ii) notify each Holder as to the filing of the
registration statement and of all amendments or supplements
thereto filed prior to the effective date of such
registration statement;
(iii) notify each Holder, promptly after it shall
receive notice thereof, of the time when such registration
statement becomes effective or when any amendment or
supplement to any prospectus forming a part of such
registration statement has been filed;
<PAGE>
(iv) notify each Holder promptly of any request by
the Commission for the amending or supplementing of such
registration statement or prospectus or for additional
information;
(v) prepare and promptly file with the Commission,
and promptly notify each Holder of the filing of, any
amendments or supplements to such registration statement or
prospectus as may be necessary to correct any statements or
omissions if, at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the
Act, any event with respect to the Company shall have
occurred as a result of which any such prospectus or any
other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not
misleading, and, in addition, prepare and file with the
Commission, promptly upon the written request of any Holder,
any amendments or supplements to such registration statement
or prospectus which may be reasonably necessary or advisable
in connection with the distribution of the Registrable
Securities;
(vi) prepare promptly upon request of the Holders or
any underwriters for the Holders such amendment or amendments
to such registration statement and such prospectus or
prospectuses as may be reasonably necessary to permit
compliance with the requirements of Section 10(a)(3) of the
Act;
(vii) advise each Holder promptly after the Company
shall receive notice or obtain knowledge of the issuance of
any stop order by the Commission suspending the effectiveness
of any such registration statement or amendment thereto or of
the initiation or threatening of any proceeding for that
purpose, and promptly use its best efforts to prevent the
issuance of any stop order or obtain its withdrawal promptly
if such stop order should be issued;
(viii) use its best efforts to qualify as soon as
reasonably practicable the Registrable Securities included in
the registration statement for sale under the blue sky or
other state securities laws of such states and jurisdictions
within the United States as shall be reasonably requested by
any Holder, provided that the Company shall not be required
<PAGE>
in connection therewith or as a condition thereto to qualify
to do business, to become subject to taxation or to file a
consent to service of process generally in any of the
aforesaid states or jurisdictions;
(ix) furnish each Holder, as soon as available,
copies of any registration statement and each preliminary or
final prospectus, or supplement or amendment required to be
prepared pursuant hereto, all in such quantities as any
Holder may from time to time reasonably request;
(x) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this
Agreement, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a
registration pursuant to this Agreement, if such securities
are being sold through underwriters or, if such securities
are not being sold through underwriters, on the date that the
registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given
by company counsel to the underwriters in an underwritten
public offering, addressed to the underwriters, if any, and
to the holders requesting registration of Registrable
Securities, and (ii) a letter, dated such date, from the
independent certified public accountant of the Company, in
form and substance as is customarily given by independent
certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters,
if any, and, if customarily given to holders of securities to
be sold in a registration, to the Holders requesting
registration of Registrable Securities;
(xi) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make available to its security holders as soon as reasonably
practicable, but not later than 16 months after the effective
date of the registration statement, an earnings statement
covering a period of at least twelve (12) months beginning
after the effective date of the registration statement, which
earnings statement shall satisfy the provision of Section
11(a) of the Act; and
<PAGE>
(xii) enter into and perform an underwriting
agreement with the managing underwriter, if any, selected as
provided in Section 2(b) or 3(b), containing customary (y)
terms of offer and sale of the securities, payment
provisions, underwriting discounts and commissions, and (z)
representations, warranties, covenants, indemnities, terms
and conditions, provided that the Holders may, at their
option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such Holders and that
any or all of the conditions precedent to the obligations of
the Company shall also be conditions precedent to the
obligations of such Holders, and provided further that such
Holders shall not be required to make any representations or
warranties to or agreements with the Company or the
underwriters other than representations, warranties or
agreements regarding such Holders and such Holders' intended
method of distribution and any other representation required
by law.
(b) At its expense, the Company will: keep each
registration effected by the Company pursuant to this Agreement effective for a
period of nine (9) months or until the Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs; provided, however, that in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous or
delayed basis, such nine-month period shall be extended until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the Act governing the obligation
to file a post-effective amendment permit, in lieu of filing a post-effective
amendment which (y) includes any prospectus required by Section 10(a) of the
Act or (z) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference in the registration statement of information
required to be included in (y) and (z) above to be contained in periodic
reports filed pursuant to Section 12 or 15(d) of the Exchange Act.
<PAGE>
SECTION 7. Indemnification.
(a) To the extent permitted by law, the Company will
indemnify each of the Holders, each of its officers, directors, partners,
members, managers, agents, representatives and affiliates of the foregoing,
each underwriter (as defined in the Act), if any, and each person controlling
each of the Holders or such underwriter within the meaning of the Act and the
rules and regulations thereunder, with respect to each registration which has
been effected pursuant to this Agreement, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
the Company of the Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each of the Holders, each of its officers, directors, partners,
members, managers, agents, representatives and their affiliates, each such
underwriter and each person controlling any such Holder or underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by the Holders or underwriter and stated to be
specifically for use therein.
(b) To the extent permitted by law, each of the Holders
will, if Registrable Securities held by it are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, agents and
representatives and each underwriter, if any, and each person controlling the
Company or such underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document made by such Holder, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements by such Holder therein not misleading, and will reimburse the
<PAGE>
Company and such directors, officers, agents, representatives, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein; provided, however, that the indemnity agreement contained in this
Section 7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holders, and provided further that the obligations of each of
the Holders hereunder shall be limited to an amount equal to the proceeds to
such Holder of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this
Section 7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of counsel shall be at the expense of the
Indemnifying Party), and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Section 7 unless the Indemnifying Party is
materially prejudiced thereby. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
<PAGE>
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 7 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations, provided, however, that the obligations of each Holder shall be
limited to an amount equal to the proceeds to such Holder from the sale of
Registrable Securities as contemplated herein. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act), shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing provisions,
the provisions in such underwriting agreement shall be controlling.
(f) The foregoing indemnity agreements are subject to the
condition that, insofar as they relate to any loss, claim, liability or damage
made in a preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement
in question becomes effective or the amended prospectus filed with the
Commission pursuant to Commission Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any underwriter if a copy
of the Final Prospectus was furnished to the underwriter and was not furnished
<PAGE>
to the person asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Act.
(g) The obligations of the Company and the Holders under
this Section 7 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Agreement and otherwise.
(h) The foregoing indemnity agreements shall include
reasonable fees and expenses of counsel incurred by the Indemnified Party in
any action or proceeding between the Indemnifying Party and the Indemnified
Party or between the Indemnified Party and any third party or otherwise.
SECTION 8. Information by the Holders. Each of the Holders
shall furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
SECTION 9. Rule 144 Reporting. With a view to making
available the benefits of certain rules and regulations of the Commission which
may permit the sale of restricted securities to the public without
registration, the Company agrees to use its reasonable best efforts:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the
Act;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the
Act and the Exchange Act; and
(c) furnish to any Holder upon request, (i)a written
statement by the Company as to its compliance with the
reporting requirements of Rule 144, the Act and the Exchange
Act, (ii)a copy of the most recent annual or quarterly
report of the Company filed with the Commission and such
other reports and documents so filed by the Company and
(iii)such other information as a Holder may reasonably
request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any such securities
without registration.
SECTION 10. Assignability. The rights to cause the Company
to register Registrable Securities pursuant to this Agreement may be assigned
<PAGE>
by a Holder to any transferee or assignee of Registrable Securities who is a
transferee or assignee of at least 5% of the then outstanding Registrable
Securities, a member of GP Holding, an affiliate of Warburg or a limited or
general partner of an investment fund affiliated with Warburg. The Company may
not assign or transfer its rights or obligations hereunder without the prior
written consent of all the Holders.
SECTION 11. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 12. Amendment. Any modification,
amendment or waiver of this Agreement or any provision hereof shall be in
writing and executed by the Company and the Holders of not less than 50% of the
Registrable Securities then outstanding, provided, however, that no such
modification, amendment or waiver shall reduce the aforesaid percentage of
Registrable Securities without the consent of all of the Holders of the
Registrable Securities.
SECTION 13. Notices. All notices, requests,
consents and demands shall be in writing and shall be personally delivered,
mailed, postage prepaid, telecopied or telegraphed or delivered by any
nationally recognized overnight delivery service to the Company at:
to the Company:
[Western Publishing Group, Inc.]
444 Madison Avenue
Suite 601
New York, New York 10022
Telecopy: (212) 888-5025
Attn: Richard A. Bernstein
with a copy to:
James A. Cohen, Esq.
Senior Vice President - Legal Affairs
[Western Publishing Group, Inc.]
444 Madison Avenue
New York, New York 10022
Telecopy: (212) 888-5025
<PAGE>
and a copy to:
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10028
Telecopy: (212) 530-5219
Attn: Lawrence Lederman, Esq.
and to each Holder at such address set forth on the signature page hereof or as
shall be furnished in writing to the Company. All such notices, requests,
demands and other communication shall, when mailed (registered or certified
mail, return receipt requested, postage prepared), personally delivered, or
telegraphed, be effective four (4) days after deposit in the mails, when
personally delivered, or when delivered to the telegraph company, respectively,
addressed as aforesaid, unless otherwise provided herein and, when telecopied
or delivered by any nationally recognized overnight delivery service, shall be
effective upon actual receipt.
SECTION 14. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 15. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
SECTION 16. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 17. Headings. The various headings of
this Agreement are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or any provisions hereof or
thereof.
<PAGE>
SECTION 18. 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.
<PAGE>
IN WITNESS WHEREOF, the Company and each of the undersigned
parties has executed this Agreement effective for all purposes as of the date
first above written.
[WESTERN PUBLISHING GROUP, INC.]
By:
Name:
Title:
GOLDEN PRESS HOLDING, L.L.C.
By: WARBURG, PINCUS VENTURES, L.P
Member
By:
Name:
Title:
Address for notices:
Golden Press Holding, L.L.C.
c/o Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
Telecopy: (212) 878-9351
Attn: Joanne R. Wenig
with a copy to:
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Telecopy: (212) 821-8111
Attn: Jack H. Nusbaum, Esq.
<PAGE>
Index of Defined Terms
Act............................................................1
Bernstein Holders..............................................6
Commission.....................................................1
Common Stock...................................................1
Company........................................................1
Demanding Holders..............................................6
Exchange Act...................................................1
Final Prospectus..............................................15
GP Holding.....................................................1
Holder.........................................................1
Indemnified Party.............................................14
Indemnifying Party............................................14
Initiating Holder..............................................1
Other Stockholders.............................................4
Preferred Stock................................................1
Registrable Securities.........................................2
Registration Expenses..........................................2
Selling Expenses...............................................2
Shelf Registration Statement...................................8
Warburg........................................................3
Warrant........................................................1
<PAGE>
Exhibit D
[FORM OF OPINION OF WILLKIE FARR & GALLAGHER]
_________ __, 1996
Western Publishing Group, Inc.
444 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
We have acted as counsel to Golden Press Holding, L.L.C., a
Delaware limited liability company ("GP Holding"), in connection with
the Securities Purchase Agreement (the "Securities Purchase Agreement"), dated
as of January 31, 1996, between GP Holding and Western Publishing Group,
Inc., a Delaware corporation (the "Company"), and the transactions
contemplated thereby. This opinion is being delivered to you pursuant to
Section 6.2(c) of the Securities Purchase Agreement. Capitalized terms not
otherwise defined herein are used as defined in the Securities Purchase
Agreement.
In connection with this opinion, we have examined original
copies of the following:
(a) the Securities Purchase Agreement;
(b) the Irrevocable Proxies;
(c) the Series B Certificate of Designations;
(d) the Warrant;
(e) the Registration Rights Agreement; and
(f) the Registration Rights Agreement by and among the
Company, Richard A. Bernstein ("Bernstein"), the
Trust, fbo Richard A. Bernstein u/a March 16, 1978,
Richard A. Bernstein and Stuart Turner, as trustees
(the "Bernstein Trust"), The Richard A. and Amelia
Bernstein Foundation, Inc. a not-for-profit
corporation (the "Bernstein Foundation"), and the
Trust fbo Richard A. Bernstein u/a Barry S.
Bernstein dated April 5, 1986, Fleet National Bank
of Connecticut, as trustee (the "Fleet Trust").
<PAGE>
The agreements, documents and instruments referred to in clauses (a) through
(f) above are hereinafter collectively referred to as the "Transaction
Documents". The Company, all of its subsidiaries, Bernstein, the Bernstein
Trust, the Bernstein Foundation and the Shawmut Trust are hereinafter
collectively referred to as the "Company Parties".
In connection with this opinion, we have also examined
such documents and records of GP Holding and such agreements, certificates of
public officials or officers or other representatives of GP Holding as we
have deemed necessary or appropriate for the purposes of this opinion.
In our examination, we have assumed (i) the genuineness of
all signatures of all parties other than the signatures of GP Holding on
the Transaction Documents; (ii) the authenticity of all records,
agreements, documents, instruments and certificates submitted to us as
originals, the conformity to original documents and agreements of all
documents and agreements submitted to us as conformed, certified or
photostatic copies thereof and the authenticity of the originals of such
conformed, certified or photostatic copies; (iii) the due authorization,
execution and delivery of all documents and agreements by all parties other
than the authorization, execution and delivery of the Transaction Documents
by GP Holding; and (iv) the legal right and power of all parties under all
applicable laws and regulations to enter into, execute and deliver such
agreements and documents other than the legal right and power of GP Holding to
enter into, execute and deliver the Transaction Documents. As to questions of
fact material to such opinions, we have, when relevant facts were not
independently established by us, relied upon representations of GP Holding
and of their respective officers and of public officials. We have further
assumed (a) the absence of any requirement of consent, approval or
authorization by any person or entity or by any Governmental Entity with
respect to the Company Parties and (b) that the Transaction Documents are
legal, valid and binding obligations of the Company Parties enforceable
against in accordance with their respective terms.
Based upon the foregoing and subject to the assumptions,
qualifications and exceptions set forth below, we are of the opinion that:
1. GP Holding is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
2. GP Holding has the requisite power and authority to
execute and deliver each Transaction Document to which it is party and to
perform its obligations thereunder.
3. Each Transaction Document to which GP Holding is party
has been duly executed and delivered on behalf of GP Holding, and the
consummation of the transactions contemplated thereby have been duly
authorized by all requisite actions on the part of GP Holding. Each
Transaction Document to which GP Holding is party constitutes a legal, valid
and binding obligation of GP Holding, enforceable against GP Holding in
accordance with its terms.
4. The execution, delivery and performance by GP Holding
of the Transaction Documents to which GP Holding is party do not and will not
(i) conflict with the constituent documents of GP Holding, (ii) contravene
(x) any state or federal law, rule or regulation or (y) any judgment, writ,
injunction, decree or order of any Governmental Entity applicable to GP
Holding of which we have knowledge or (iii) contravene, conflict with,
result in a breach of or cause a default under any material contractual
obligation known to us to which GP Holding is party.
5. The execution, delivery and performance by GP Holding
of the Transaction Documents to which GP Holding is party do not and will
not require any registration by GP Holding with, consent or approval of, or
notice to, or other action by, any Governmental Entity, except routine filings
required to be made after the date hereof to maintain good standing and to
maintain or renew licenses and permits required for GP Holding to operate
its business in the ordinary course of business.
<PAGE>
The foregoing opinions are subject to the following
assumptions, qualifications and exceptions:
A. The opinions expressed above are qualified (i) by
the effects of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the enforcement of
creditors' rights generally, (ii) insofar as the remedies of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and the discretion of the court before which any
enforcement thereof may be brought and (iii) insofar as proceedings therefor
may be limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity), including,
without limitation, principles of commercial reasonableness and an implied
covenant of good faith and fair dealing. In addition, the enforcement of
certain provisions, including those providing for indemnification, may be
limited by public policy considerations. Such opinions are further subject to
the qualification that certain remedial provisions of the Transaction Documents
are or may be unenforceable in whole or in part under the laws of the State of
New York, but the inclusion of such provisions does not affect the validity
of any such Transaction Document in which any such provision is included, and
such Transaction Documents contain adequate provisions for enforcing
payment of the obligations thereunder and for the practical realization
of the rights and benefits afforded thereby.
B. We express no opinion as to any provisions of the
Transaction Documents insofar as they relate to (i) the subject matter
jurisdiction of the federal courts to adjudicate any controversy relating to
the Transaction Documents or (ii) the waiver of inconvenient forum.
We are members of the bar of the State of New York and do
not herein intend to express any opinion as to any matters governed by any
laws other than the laws of the State of New York, the United States of
America or the DGCL.
No person other than you may rely or claim reliance upon
this opinion letter. This opinion letter is limited to the matters stated
herein and no opinion is implied or may be inferred beyond the matters
expressly stated. This opinion letter may not be quoted, distributed or
disclosed, except to your counsel or, to the extent necessary, to an
applicable regulatory authority or pursuant to legal process, without our
prior written consent.
This letter speaks only as of the date hereof and is
limited to present statutes, regulations and administrative and
judicial interpretations. We undertake no responsibility to update or
supplement this letter after the date hereof.
Very truly yours,
<PAGE>
Exhibit E
[FORM OF OPINION OF MILBANK, TWEED, HADLEY & MCCLOY]
____________ ___, 1996
Golden Press Holding, L.L.C.
466 Lexington Avenue
New York, New York 10017
Re: Western Publishing Group, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Western Publishing
Group, Inc., a Delaware corporation (the "Company"), and certain of its
affiliates in connection with the Securities Purchase Agreement, dated as of
January ___, 1996 (the "Securities Purchase Agreement"), between the
Company and Golden Press Holding, L.L.C., a Delaware limited liability
company ("GP Holding"), and the transactions contemplated thereby. This
opinion is being delivered to you pursuant to Section 6.3(e) of the
Securities Purchase Agreement. Capitalized terms not otherwise defined
herein are used as defined in the Securities Purchase Agreement.
In connection with this opinion, we have examined
original copies of the following:
a) the Securities Purchase Agreement;
b) the Irrevocable Proxies;
c) the Series B Certificate of Designations;
d) the Warrant;
e) the Registration Rights Agreement;
f) the Registration Rights Agreement by and among the
Company, Richard A. Bernstein ("Bernstein"), the
Trust, fbo Richard A. Bernstein u/a March 16, 1978,
Richard A. Bernstein and Stuart Turner, as trustees
(the "Bernstein Trust"), The Richard A. and Amelia
Bernstein Foundation, Inc., a not-for-profit
corporation (the "Bernstein Foundation"), and the
Trust fbo Richard A. Bernstein u/a Barry S.
Bernstein dated April 5, 1986, Shawmut Bank
Connecticut, N.A., as trustee (the "Shawmut Trust");
and
<PAGE>
g) the Employment Agreement, dated the date hereof,
between the Company and Richard E. Snyder
(including any related stock option agreements).
The agreements, documents and instruments referred to in clauses (a) through
(g) above are hereinafter collectively referred to as the "Transaction
Documents". The Company, all of its subsidiaries, Bernstein, the
Bernstein Trust, the Bernstein Foundation and the Shawmut Trust are
hereinafter collectively referred to as the "Company Parties".
In connection with this opinion, we have also examined
such documents and records of the Company and each of the other Company
Parties and such agreements, certificates of public officials or
officers or other representatives of the Company and each of the other
Company Parties as we have deemed necessary or appropriate for the purposes of
this opinion.
In our examination, we have assumed (i) the genuineness of
all signatures of all parties other than the signatures of the Company
on the Transaction Documents; (ii) the authenticity of all records,
agreements, documents, instruments and certificates submitted to us as
originals, the conformity to original documents and agreements of all
documents and agreements submitted to us as conformed, certified or
photostatic copies thereof and the authenticity of the originals of such
conformed, certified or photostatic copies; (iii) the due authorization,
execution and delivery of all documents and agreements by all parties other
than the authorization, execution and delivery of the Transaction Documents
by the Company; and (iv) the legal right and power of all parties under all
applicable laws and regulations to enter into, execute and deliver all
agreements and documents other than the legal right and power of the Company to
enter into, execute and deliver the Transaction Documents. As to questions of
fact material to such opinions, we have, when relevant facts were not
independently established by us, relied upon representations of the Company
Parties and of their respective officers and of public officials. We
have further assumed (a) the absence of any requirement of consent,
approval or authorization by any person or entity or by any Governmental Entity
with respect to all parties other than the Company and (b) that the Transaction
Documents are legal, valid and binding obligations of all parties other
than the Company Parties enforceable against such parties in accordance with
their respective terms.
Based upon and subject to the foregoing and subject also
to the assumptions, qualifications and exceptions set forth below, and
having considered such questions of law as we deemed necessary as a basis
for the opinions expressed below, we are of the opinion that:
<PAGE>
1. Each of the Company, Penn Corporation and
Western Publishing Company, Inc. is a corporation duly incorporated, validly
existing and in good standing under the laws of its state of incorporation.
2. The Company has the requisite corporate
power and authority to execute and deliver each Transaction Document to which
it is party and to perform its obligations thereunder.
3. Each Transaction Document to which the
Company is party has been duly executed and delivered on behalf of the
Company, and the consummation of the transactions contemplated thereby
have been duly authorized by all requisite corporate actions on the part of
the Company. Each Transaction Document to which any of the Company Parties is
party constitutes a legal, valid and binding obligation of such party,
enforceable against such party in accordance with its terms.
4. The Series B Certificate of Designations
is effective in accordance with the DGCL, and all the New Preferred Shares
and all the shares of Company Common Stock issuable upon conversion of the
New Preferred Shares and in payment of stock dividends in respect thereof
and upon exercise of the Warrant will be, when so issued in accordance
with the terms of the applicable Transaction Documents, duly authorized,
validly issued, fully paid and nonassessable. The Company has duly reserved
8,880,000 shares of Company Common Stock for issuance upon conversion of the
New Preferred Stock and in payment of stock dividends in respect thereof and
3,000,000 shares of Company Common Stock for issuance upon exercise of the
Warrant.
5. All the outstanding shares of capital
stock of each of Penn Corporation and Western Publishing Company, Inc. have
been duly authorized, validly issued, fully paid and nonassessable and
(except as specified in Section 3.3 of the Company Disclosure Schedule)
are owned of record, and, to our knowledge, beneficially, directly or
indirectly, by the Company, and, to our knowledge, are free and clear of any
claims, liens, charges, security interests or the legal or equitable
encumbrances, limitations or restrictions. [To be given by Jim Cohen in his
capacity as Senior Vice President of Legal Affairs of the Company.]
6. The execution, delivery and performance by
the Company of the Transaction Documents to which it is party (including the
proposed redemption of the Company Preferred Stock by the Company) do not
and will not (i) conflict with the constituent documents of such party,
(ii) contravene any New York State or federal law, rule or regulation or
(iii) contravene, conflict with, result in a breach of or cause a default
under any material contractual obligation known to us to which Company is
party.
<PAGE>
7. The execution, delivery and performance by
each Company Party of the Transaction Documents to which it is party do not
and will not require any registration with, consent or approval of, or notice
to, or other action by, any Governmental Entity, except (i) filing of the
Company Proxy Statement with the Commission, (ii) routine corporate filings
required to be made after the date hereof to maintain good standing and to
maintain or renew licenses and permits required for the Company and its
subsidiaries to operate their business in the ordinary course of business and
(iii) in compliance with the HSR Act.
8. Based upon the representations and
warranties of the Company and GP Holding contained in the Securities Purchase
Agreement, the issuance and sale by the Company of the New Preferred Stock and
the Warrant, in the manner and under the circumstances contemplated by the
Securities Purchase Agreement, is exempt from the registration requirements
of Section 5 of the Securities Act. For the purposes of this paragraph 8,
we have assumed that (a) the issuance and sale by the Company of the New
Preferred Stock and the Warrant on the date hereof will be conducted solely
in the manner contemplated and intended in the Securities Purchase Agreement
and (b) GP Holding will not offer, transfer, sell or otherwise dispose
of any of the New Preferred Stock or the Warrant except in accordance with
the terms of the Securities Purchase Agreement.
In addition, we have reviewed that certain letter from
the Company to Mr. Roman Chojnacki dated December 20, 1993 that has been
furnished to us by the Company (the "First Chojnacki Letter") and that certain
letter from the Company to Mr. Roman Chojnacki dated July 8, 1994 (the
"Second Chojnacki Letter"). We have been advised by the Company, and assume
for purposes of the opinion set forth in this paragraph, that letters
substantially similar to the First Chojnacki Letter were delivered by the
Company to a number of employees (such letters, together with the First
Chojnacki Letter, being referred to herein as the "Change of Control
Benefits Agreements"). We have also been advised by the Company and assume
for purposes of the opinion set forth in this paragraph, that each recipient
of a Change of Control Benefits Agreement also received a letter from the
Company substantially similar to the Second Chojnacki Letter. Subject to (i)
the foregoing assumptions, (ii) equitable considerations arising out of the
individual circumstances of which we are not aware and (iii) the fact that the
applicable laws of other jurisdictions may be different from those of the
State of New York with respect to the matters to which this paragraph
relates, and having considered such questions of law as we deemed necessary
as a basis for the opinion set forth in this paragraph, we are of the opinion
that the Change of Control Benefits Agreements have been effectively
rescinded by the Company such that no person has or will in the future
become eligible for the benefits described in the Change of Control
Benefits Agreements.
<PAGE>
The foregoing opinions are subject to the
following assumptions, qualifications and exceptions:
A. The opinions expressed above are qualified (i) by
the effects of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the enforcement of
creditors' rights generally, (ii) insofar as the remedies of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and the discretion of the court before which any
enforcement thereof may be brought and (iii) insofar as proceedings therefor
may be limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity), including,
without limitation, principles of commercial reasonableness and an implied
covenant of good faith and fair dealing. In addition, the enforcement of
certain provisions, including those providing for indemnification, may be
limited by public policy considerations. Such opinions are further subject to
the qualification that certain remedial provisions of the Transaction
Documents are or may be unenforceable in whole or in part under the laws of the
State of New York, but the inclusion of such provisions does not affect the
validity of any such Transaction Document in which any such provision is
included, and such Transaction Documents contain adequate provisions for
enforcing payment of the obligations thereunder and for the
practical realization of the rights and benefits afforded thereby.
B. We express no opinion as to any provisions of
the Transaction Documents insofar as they relate to (i) the subject
matter jurisdiction of the federal courts to adjudicate any controversy
relating to the Transaction Documents or (ii) the waiver of inconvenient forum.
We are members of the bar of the State of New York and do
not herein intend to express any opinion as to any matters governed by any
laws other than the laws of the State of New York, the United States of
America or the DGCL.
No person, other than you, any holder from time to time of
the New Preferred Stock, the Warrant or the Company Common Stock issued
upon conversion or exercise thereof or payment of stock dividends in respect
thereof and Richard E. Snyder in respect of the Employment Agreement, may rely
or claim reliance upon this opinion letter. This opinion letter is limited to
the matters stated herein and no opinion is implied or may be inferred
beyond the matters expressly stated. This opinion letter may not be
quoted, distributed or disclosed, except to your counsel, to transferees of
the New Preferred Stock, the Warrant or the Company Common Stock issuable
upon exchange of the New Preferred Stock or as a stock dividend thereon
or upon conversion of the Warrant, to the extent necessary, to an
applicable regulatory authority or pursuant to legal process, without our
prior written consent.
<PAGE>
This letter speaks only as of the date hereof and is
limited to present statutes, regulations and administrative and
judicial interpretations. We undertake no responsibility to update or
supplement this letter after the date hereof.
Very truly yours,
<PAGE>
Exhibit 2
IRREVOCABLE PROXY
THIS AGREEMENT, dated as of January 31, 1996, between
Golden Press Holding, L.L.C., a Delaware limited liability company (the
"Buyer"), and Richard A. Bernstein (the "Shareholder"), a shareholder of
Western Publishing Group, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution of this
Agreement, the Company and the Buyer are entering into a Securities Purchase
Agreement (the "Securities Purchase Agreement") pursuant to which the Buyer
will purchase (the "Securities Purchase") 13,000 shares of the Company's
Series B Convertible Preferred Stock, no par value ("Series B Preferred
Stock"), and a warrant (the "Warrant") to purchase 3,250,000 shares (subject
to adjustment) of the Company's common stock, par value $.01 per share
("Company Common Stock");
WHEREAS, contemporaneously with the execution of this
Agreement, Buyer is entering into an agreement substantially similar to
this Agreement with each of (i) the Trust, fbo Richard A. Bernstein u/a
March 16, 1978, Richard A. Bernstein and Stuart Turner, as trustees, and
(ii) the Trust fbo Richard A. Bernstein u/a Barry S. Bernstein dated April
5, 1986, Fleet National Bank of Connecticut, as trustee
(collectively, the "Other Shareholders"), which own 400,000 and 95,771
shares of Company Common Stock, respectively; and
WHEREAS, the Buyer, as a condition to its willingness to
enter into the Securities Purchase Agreement, has required the Shareholder
to grant the Buyer an irrevocable proxy with respect to all of the shares
of Company Common Stock owned by the Shareholder, together with any
additional shares of Company Common Stock hereafter acquired by the
Shareholder (such specified number of shares, and any additional shares
when and if they are acquired by Shareholder or any "Affiliate" (as defined
in Rule 405 under the Securities Act of 1933, as amended (the "Securities
Act"), and including, without limitation, immediate family members and
trusts, 25% or more of the beneficial interests of which are owned by such
person or one or more members of his immediate family members; provided
that the Company shall not be deemed an "Affiliate" of the Shareholder for
purposes of this Agreement), being referred to as the "Shares") on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
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
Stock, provided, however, that the shares of Company
<PAGE>
Common Stock issuable upon exercise of the Warrant shall be taken into
account only in the amount of the excess, if any, of the number of such
shares over the number of shares of Company Common Stock issued to such
parties as dividends on the Series B Preferred Stock). If the proxy granted
in this Section 1 shall be determined to be invalid for any reason, the
Shareholder hereby agrees to vote the Shares, in any circumstances set forth in
this Section 1, in accordance with the written instructions of Buyer.
Notwithstanding any implication to the contrary in this Agreement, the proxy
granted in this Section 1 shall be revoked, and the agreement set forth in the
immediately preceding sentence shall be terminated, with respect to any
Shares upon the sale or transfer of such Shares to a third party (other
than an Affiliate of the Shareholder), provided that such sale or transfer is
otherwise permitted under the terms of this Agreement.
2. Legending of Certificates; Nominee Shares. The
Shareholder agrees to submit to the Buyer contemporaneously with or
promptly following execution of this Agreement (or promptly following
receipt of any additional certificates representing any additional Shares)
all certificates representing the Shares so that the Buyer may note thereon a
legend referring to the transfer restrictions in this Agreement. If any of the
Shares beneficially owned by the Shareholder are held of record by a
brokerage firm in "street name" or in the name of any other nominee (a
"Nominee," and, as to the Shares, "Nominee Shares"), the Shareholder
agrees that, upon written notice by the Buyer requesting it, the
Shareholder will within five days of the giving of such notice execute and
deliver to the Buyer a limited power of attorney in such form as shall be
reasonably satisfactory to the Buyer enabling the Buyer to require the
Nominee to grant to the Buyer an irrevocable proxy to the same effect as
Section 1 hereof with respect to the Nominee Shares held by such Nominee and
to submit to the Buyer the certificates representing such Nominee Shares
for notation of the foregoing legend thereon.
3. [Intentionally omitted.]
4. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to the Buyer that:
(a) On the date hereof, the Shareholder is the sole, true,
lawful, record and beneficial owner of 3,501,000 shares of Company Common
Stock. All of the Shares are validly issued, fully paid and nonassessable,
with no personal liability attaching to the ownership thereof; and the
Shareholder has good and valid title to the Shares, free and clear of any
<PAGE>
agreements, liens, adverse claims or encumbrances whatsoever with respect
to the ownership of or the right to vote the Shares. The Shareholder has
not granted any proxies with respect to the Shares except as contemplated by
this Agreement.
(b) The Shareholder has the full right, power and authority
to enter into this Agreement, and this Agreement has been duly and validly
executed and delivered by the Shareholder.
(c) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not, with or without the giving of notice or the passage of time,
(i) violate any judgment, injunction or order of any court, arbitrator or
governmental agency applicable to the Shareholder, or (ii) conflict with,
result in the breach of any provision of, constitute a default under, or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of the Shareholder under, or require the consent of any third party
under, any agreement, instrument, judgment, order or decree to which the
Shareholder is a party or by which the Shareholder may be bound.
(d) This Agreement is the valid and binding Agreement of the
Shareholder, enforceable against the Shareholder in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
(e) The Shares and the shares of Company Common Stock owned
of record by the Other Shareholders (in the case of Fleet National Bank of
Connecticut, in its capacity as trustee under the trust referred to above)
and the 60,000 shares of Company Common Stock owned of record by The Richard A.
and Amelia Bernstein Foundation, Inc., a New York not-for-profit corporation
(the "Bernstein Foundation"), are the only shares of Company Common Stock
beneficially owned or owned of record by the Shareholder, the Other
Shareholders and the Bernstein Foundation and, except for the 9,200 shares of
Series A Preferred Stock, no par value, of the Company owned by the
Shareholder and the 67,500 shares of Company Common Stock issuable to the
Shareholder upon the exercise of options granted to him pursuant to the
Company's Amended and Restated 1986 Employee Stock Option Plan, the
Shareholder does not own any options to purchase or rights to subscribe for
or otherwise acquire any securities of the Company and has no other
interest in or voting rights with respect to any securities of the Company.
The Shareholder shall not permit the Bernstein Foundation to acquire,
<PAGE>
directly or indirectly, any additional shares of Company Common Stock during
the term of this Agreement.
(f) No investment banker, broker or finder is entitled to a
commission or fee from the Shareholder or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of the
Shareholder.
5. Additional Covenants of the Shareholder. The Shareholder
hereby covenants and agrees that:
(a) Neither the Shareholder nor any Affiliate will enter
into any transaction, take any action, or by inaction permit any event to
occur, that would result in any of the representations or warranties of the
Shareholder herein contained not being true and correct at and as of the time
immediately after the occurrence of such transaction, action or event.
(b) Until the termination of this Agreement, neither the
Shareholder nor any Affliate, whether directly, indirectly, or through any
employee, agent or otherwise shall: (i) solicit or initiate any inquiry or
submission of a proposal or an offer from any person or entity relating to any
acquisition or purchase of (A) the assets, business or property of the Company
or any subsidiary thereof, or (B) any equity interest in, or any merger,
consolidation or business combination with, the Company or any of its
subsidiaries (an "acquisition proposal"), or (ii) participate in any
discussions or negotiations regarding, or furnish to any other person or
entity any information with respect to, or otherwise cooperate in any way
or assist or facilitate any acquisition proposal by any other person or
entity; provided, however, that the Shareholder, in his capacity as the
Chairman of the Company's Board of Directors and the Company's Chief
Executive Officer, may participate in discussions or negotiations with or
furnish information to any other person or entity if the Company's Board
of Directors, on advice of counsel, determines that the Shareholder, in
his capacity as Chairman of the Company's Board of Directors and the Company's
Chief Executive Officer, should so participate or furnish such information.
Subject to his fiduciary duties to the Company, the Shareholder shall
promptly advise the Buyer of any communication (including the identity of
the person or entity making such communication and the terms thereof) that
the Shareholder may receive relating to any of the foregoing.
(c) Until the termination of this Agreement, subject to his
fiduciary duties to the Company, the Shareholder will at all times use his
<PAGE>
best efforts to prevent the Company from taking any action in violation
of the Securities Purchase Agreement, including, but not limited to, any
such action that would (i) amend or otherwise change its Certificate of
Incorporation or Bylaws, (ii) issue or sell or authorize for issuance or
sale any stock appreciation rights, stock options (other than pursuant to
stock option plans in effect on the date hereof), warrants or additional
shares of any class of capital stock, including the Company Common Stock, or
any securities convertible into or exchangeable for shares of any class of
capital stock, (iii) declare, set aside, make, pay or accelerate the time
for declaration or payment of, any dividend or other distribution with
respect to its capital stock, or (iv) redeem, purchase, or otherwise acquire,
directly or indirectly, any of its capital stock.
(d) Until the termination of this Agreement, neither the
Shareholder nor any Affiliate shall, directly or indirectly, (i) grant any
proxies or enter into any voting trust or other agreement or arrangement with
respect to the voting of any Shares or (ii) acquire, sell, assign, transfer,
encumber or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the direct or indirect
acquisition or sale, assignment, transfer, encumbrance or other disposition
of, any shares of capital stock of the Company during the term of this
Agreement other than with the Other Shareholders. Neither the Shareholder
nor any Affiliate shall seek or solicit any such acquisition or sale,
assignment, transfer, encumbrance or other disposition or any such contract,
option or other arrangement or assignment or understanding and the
Shareholder agrees to notify the Buyer promptly and to provide all details
requested by the Buyer if the Shareholder shall be approached or
solicited, directly or indirectly, by any person or entity with respect to
any of the foregoing. Notwithstanding the foregoing, the Shareholder (and any
Affiliate) shall be entitled, (i) so long as the Shareholder at all times,
until the earlier to occur of the consummation of the Securities Purchase and
the termination of this Agreement, retains the right to vote (and give
consent in respect of) such Shares (subject to the terms of this Agreement), to
transfer for no consideration up to 400,000 Shares in the aggregate to an
organization that is described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, and (x) that is not an Affiliate of the Shareholder
and (y) that is not a person or entity in respect of which the Shareholder
or any Affiliate serves as trustee or in any other fiduciary capacity, (ii) at
any time beginning three business days after the financial results of the
Company for the fiscal year ending February 3, 1996 have been Publicly
<PAGE>
Disclosed (as defined below) by the Company, but not before consummation of
the Securities Purchase, to sell all or a portion of the Shares to any
purchaser, (x) in the case of non-negotiated, public, open-market
transactions, in amounts not to exceed the limitations set forth in Rule
144(e) under the Securities Act (provided that the Shareholder and his
Affiliates shall be considered one person for purposes of such limitations)
and (y) in all other cases, other than to an Entrepreneurial Investor (as
defined below), (iii) to pledge Shares in order to secure a loan from a bona
fide lending institution, provided that (x) prior to such pledge such
institution agrees in writing to enter into an agreement with the Buyer
substantially identical to this Agreement and reasonably satisfactory in
all respects to the Buyer, such agreement to take effect immediately prior to
such institution's foreclosing or receiving any rights (other than a
security interest therein) in respect of such Shares, and (y) prior to such
foreclosure, the rights of such institution in respect of such Shares shall
be limited to a security interest therein and be subject to this Agreement and
(iv) to transfer Shares by will or pursuant to the laws of descent and
distribution to an Affiliate of the Shareholder, provided that, at the time
of such transfer, such transferee enters into an agreement with the Buyer
substantially identical to this Agreement and reasonably satisfactory in
all respects to the Buyer. The Shareholder shall provide the Buyer with prior
written notice of any proposed transfer of Shares pursuant to this Section
5(d) and evidence of compliance therewith. For purposes of this Agreement,
"Publicly Disclosed" means the Company's publicly announcing (which may
include disclosure in the Proxy Statement mailed to the holders of Company
Common Stock in connection with the Securities Purchase) the consolidated
financial results of the Company and its consolidated subsidiaries for the
fiscal year ending February 3, 1996 in the same detail as the Company's
public announcement of such results for the fiscal year ended January 28, 1995
(containing at least the consolidated revenues, operating income and net
income of the Company and its consolidated subsidiaries), and an
"Entrepreneurial Investor" means any investor that (or any investor, any of
whose Affiliates) (x) is listed on Schedule I hereto or (y) is unacceptable to
John Vogelstein, in his sole discretion, provided that no individual or
entity listed on Schedule II hereto shall be deemed an Entrepreneurial
Investor.
(e) The Shareholder shall execute and deliver any
additional documents reasonably necessary or desirable, in the reasonable
opinions of both the Buyer's counsel and the Shareholder's counsel, to
evidence the Proxy granted in Section 1 with respect to the Shares or otherwise
<PAGE>
implement and effect the provisions of this Agreement.
(f) Effective upon consummation of the Securities
Purchase, the Shareholder shall resign from all of the positions then held
by him with the Company and its subsidiaries, including, without
limitation, from the offices of Chairman and Chief Executive Officer and from
the Board of Directors of the Company, from the office of Chairman and from
the Board of Directors of Western Publishing Company, Inc. and from the
offices of Chairman, President and Chief Executive Officer and from the Board
of Directors of Penn Corporation.
(g) The Shareholder hereby agrees promptly to cause the
amendment, in a manner reasonably acceptable to the Buyer, of the trademark
license agreement, dated September 11, 1995, between P&E Properties, Inc.
("P&E") and Western Publishing Company, Inc. relating to the right to display
"The Poky Little Puppy" trademark on a corporate jet owned by P&E, provided
that no royalties shall be payable for such right and that such right shall be
not be assignable and shall terminate when such jet is no longer owned by
P&E or an Affiliate thereof.
6. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Shareholder that:
(a) The Buyer has all requisite power and authority to
enter into and perform all of its obligations under this Agreement. The
execution, delivery and performance of this Agreement and all of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Buyer. This Agreement has been duly executed and
delivered by the Buyer.
(b) Neither the execution, delivery or performance of this
Agreement by the Buyer nor the consummation of the transactions contemplated
herein will violate the organizational documents of the Buyer or will
conflict with or result in the breach of any material term, condition or
provision of any instrument, indenture, contract, lease or other document or
understanding, oral or written, to which the Buyer is a party or is otherwise
bound or affected in such a manner as to materially and adversely affect the
business of the Buyer.
7. Termination. This Agreement may be terminated by any
party hereto on or after the day of termination of the Securities Purchase
<PAGE>
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 Bernstein Foundation) in bona fide
transactions that do not violate this Agreement.
8. Binding Effect; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties and their respective
successors and permitted assigns. Except as contemplated by Section 5(d), the
Shareholder shall not assign its rights or obligations hereunder without the
Buyer's consent. The Buyer may assign its rights and obligations hereunder to
an Affiliate.
9. Notices. All notices and communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally or by Federal Express or other courier service or sent by express
mail, postage prepaid, return receipt requested, addressed to the respective
party at the applicable address below, on the date of such personal delivery
or on the date received:
If to the Buyer: Golden Press Holding, L.L.C.
c/o Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
Attention: Joanne R. Wenig
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: Richard A. Bernstein
444 Madison Avenue
Suite 601
New York, New York 10022
Telecopy No.: (212) 888-5025
<PAGE>
with a copy to: James A. Cohen, Esq.
444 Madison Avenue
New York, New York 10022
Telecopy No.: (212) 888-5025
with a copy to: Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Attention: Lawrence Lederman, Esq.
Telecopy No.: (212) 530-5219
Any party may change the foregoing address from time to time by giving the
other party notice thereof.
10. Injunctive Relief; Remedies Cumulative.
(a) Each party hereto acknowledges that the other party
will be irreparably harmed and that there will be no adequate remedy at law
for a violation of any of the covenants or agreements of such party that are
contained in this Agreement. It is accordingly agreed that, in addition
to any other remedies that may be available to the non-breaching party upon
the breach by any other party of such covenants and agreements, the
non-breaching party shall have the right to obtain injunctive relief to
restrain any breach or threatened breach of such covenants or agreements or
otherwise to obtain specific performance of any of such covenants or
agreements.
(b) No remedy conferred upon or reserved to any party
herein is intended to be exclusive of any other remedy, and every remedy
shall be cumulative and in addition to every other remedy herein or now or
hereafter existing at law, in equity or by statute.
11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of laws thereof; provided, however, that
the laws of the State of Delaware shall govern as to internal corporate
matters.
12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
agreement.
13. Effect of Partial Invalidity. Whenever possible, each
provision of this Agreement shall be construed in such a manner as to
<PAGE>
be effective and valid under applicable law. If any provision of this
Agreement or the application thereof to any party or circumstance shall be
prohibited by or invalid under applicable law, such provisions shall be
ineffective to the extent of such prohibition without invalidating the
remainder of such provision or any other provisions of this Agreement or the
application of such provision to the other party or other circumstances.
14. Entire Agreement. This Agreement constitutes the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersedes any prior agreements, written or oral, with respect
thereto.
15. Jurisdiction and Process. Each party hereto irrevocably
submits to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York state court
sitting in New York City for the purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated hereby.
Each party hereto irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an
inconvenient forum. Each party hereto agrees that a final judgment in any
such proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party hereto consents to process being served in any such proceeding by
mailing a copy thereof by registered or certified mail, postage prepaid,
return receipt requested to such party at its address specified in Section 9
or at such other address of which such party shall then have been notified
pursuant to said Section. Each party hereto agrees that such service upon
receipt (i) shall be deemed in every respect effective service of process
upon it in any such proceeding and (ii) shall, to the fullest extent
permitted by applicable law, be taken and held be valid personal service
upon and personal delivery to such party. Such service shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the
United States Postal Service or any reputable commercial delivery service.
<PAGE>
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:________________________________
Name:
Title: General Partner
-----------------------------------
Richard A. Bernstein
<PAGE>
Index of Defined Terms
Affiliate.............................................1
beneficial ownership..................................2
Bernstein Foundation..................................4
Buyer.................................................1
Company...............................................1
Company Common Stock..................................1
Nominee...............................................3
Nominee Shares........................................3
Other Shareholders....................................1
P&E...................................................8
Proxy.................................................2
Publicly Disclosed....................................7
Securities Act........................................1
Securities Purchase...................................1
Securities Purchase Agreement.........................1
Series B Preferred Stock..............................1
Shareholder...........................................1
Shares................................................1
Warrant...............................................1
WPV...................................................2
<PAGE>
Exhibit 3
IRREVOCABLE PROXY
THIS AGREEMENT, dated as of January 31, 1996, between
Golden Press Holding, L.L.C., a Delaware limited liability company (the
"Buyer"), and the Trust, fbo Richard A. Bernstein u/a March 16, 1978, Richard
A. Bernstein and Stuart Turner, as trustees (the "Shareholder"), a
shareholder of Western Publishing Group, Inc., a Delaware corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution of
this Agreement, the Company and the Buyer are entering into a Securities
Purchase Agreement (the "Securities Purchase Agreement") pursuant to which the
Buyer will purchase (the "Securities Purchase") 13,000 shares of the
Company's Series B Convertible Preferred Stock, no par value ("Series B
Preferred Stock"), and a warrant (the "Warrant") to purchase 3,250,000
shares (subject to adjustment) of the Company's common stock, par value $.01
per share ("Company Common Stock");
WHEREAS, contemporaneously with the execution of
this Agreement, Buyer is entering into an agreement substantially similar
to this Agreement with each of (i) Richard A. Bernstein and (ii) the Trust
fbo Richard A. Bernstein u/a Barry S. Bernstein dated April 5, 1986, Fleet
National Bank of Connecticut, as trustee (collectively, the "Other
Shareholders"), which own 3,501,000 and 95,771 shares of Company Common Stock,
respectively; and
WHEREAS, the Buyer, as a condition to its willingness to
enter into the Securities Purchase Agreement, has required the Shareholder
to grant the Buyer an irrevocable proxy with respect to all of the shares
of Company Common Stock owned by the Shareholder, together with any
additional shares of Company Common Stock hereafter acquired by the
Shareholder (such specified number of shares, and any additional shares
when and if they are acquired by Shareholder, being referred to as the
"Shares") on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Irrevocable Proxy. By entering into this Agreement,
the Shareholder hereby grants a proxy (the "Proxy") appointing the Buyer
(or any designee of the Buyer) as the Shareholder's lawful agent,
attorney-in-fact and proxy, with full power of substitution, for and in the
Shareholder's name, to
<PAGE>
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 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
<PAGE>
sentence shall be terminated, with respect to any Shares upon the sale
or transfer of such Shares to a third party (other than an Affiliate of
the Shareholder), provided that such sale or transfer is otherwise permitted
under the terms of this Agreement. For purposes of this Agreement, "Affiliate"
is used as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"), and includes, without limitation, immediate
family members and trusts, 25% or more of the beneficial interests of which
are owned by such person or one or more members of his immediate family
members.
2. Legending of Certificates; Nominee Shares. The
Shareholder agrees to submit to the Buyer contemporaneously with or
promptly following execution of this Agreement (or promptly following
receipt of any additional certificates representing any additional Shares)
all certificates representing the Shares so that the Buyer may note thereon a
legend referring to the transfer restrictions in this Agreement. If any of the
Shares beneficially owned by the Shareholder are held of record by a
brokerage firm in "street name" or in the name of any other nominee (a
"Nominee," and, as to the Shares, "Nominee Shares"), the Shareholder
agrees that, upon written notice by the Buyer requesting it, the
Shareholder will within five days of the giving of such notice execute and
deliver to the Buyer a limited power of attorney in such form as shall be
reasonably satisfactory to the Buyer enabling the Buyer to require the
Nominee to grant to the Buyer an irrevocable proxy to the same effect as
Section 1 hereof with respect to the Nominee Shares held by such Nominee and
to submit to the Buyer the certificates representing such Nominee Shares
for notation of the foregoing legend thereon.
3. [Intentionally omitted.]
4. Representations and Warranties of the Shareholder.
The Shareholder represents and warrants to the Buyer that:
(a) On the date hereof, the Shareholder is the
owner of record of 400,000 shares of Company Common Stock. All of the Shares
are validly issued, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof; and the Shareholder has good
and valid title to the Shares, free and clear of any agreements, liens,
adverse claims or encumbrances whatsoever with respect to
<PAGE>
the ownership of or the right to vote the Shares. The Shareholder has
not granted any proxies with respect to the Shares except as contemplated by
this Agreement.
(b) The Shareholder has the full right, power and
authority to enter into this Agreement, and this Agreement has been duly and
validly executed and delivered on behalf of the Shareholder.
(c) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not, with or without the giving of notice or the passage of time,
(i) violate any judgment, injunction or order of any court, arbitrator or
governmental agency applicable to the Shareholder, or (ii) conflict with,
result in the breach of any provision of, constitute a default under, or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of the Shareholder under, or require the consent of any third party
under, any agreement, instrument, judgment, order or decree to which the
Shareholder is a party or by which the Shareholder may be bound.
(d) This Agreement is the valid and binding
Agreement of the Shareholder, enforceable against the Shareholder in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally.
(e) The Shares are the only shares of Company
Common Stock owned of record by the Shareholder, and the Shareholder does not
own any options to purchase or rights to subscribe for or otherwise acquire
any securities of the Company and has no other interest in or voting rights
with respect to any securities of the Company.
(f) No investment banker, broker or finder is
entitled to a commission or fee from the Shareholder or the Company in
respect of this Agreement based upon any arrangement or agreement made by or
on behalf of the Shareholder.
5. Additional Covenants of the Shareholder. The
Shareholder hereby covenants and agrees that:
(a) The Shareholder will not enter into any
transaction, take any action, or by inaction permit any event to occur,
that would result in any of the representations or warranties of the
Shareholder herein contained not being true
<PAGE>
and correct at and as of the time immediately after the occurrence of
such transaction, action or event.
(b) Until the termination of this Agreement,
the Shareholder, whether directly, indirectly, or through any employee, agent
or otherwise shall not: (i) solicit or initiate any inquiry or submission of a
proposal or an offer from any person or entity relating to any acquisition or
purchase of (A) the assets, business or property of the Company or any
subsidiary thereof, or (B) any equity interest in, or any merger,
consolidation or business combination with, the Company or any of its
subsidiaries (an "acquisition proposal"), or (ii) participate in any
discussions or negotiations regarding, or furnish to any other person or
entity any information with respect to, or otherwise cooperate in any way or
assist or facilitate any acquisition proposal by any other person or
entity. The Shareholder shall promptly advise the Buyer of any communication
(including the identity of the person or entity making such
communication and the terms thereof) that the Shareholder may receive relating
to any of the foregoing.
(c) Until the termination of this Agreement,
the Shareholder shall not, directly or indirectly, (i) grant any proxies or
enter into any voting trust or other agreement or arrangement with respect
to the voting of any Shares or (ii) acquire, sell, assign, transfer, encumber
or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the direct or indirect
acquisition or sale, assignment, transfer, encumbrance or other disposition
of, any shares of capital stock of the Company during the term of this
Agreement other than with the Other Shareholders. The Shareholder shall not
seek or solicit any such acquisition or sale, assignment, transfer,
encumbrance or other disposition or any such contract, option or
other arrangement or assignment or understanding and the Shareholder agrees to
notify the Buyer promptly and to provide all details requested by the
Buyer if the Shareholder shall be approached or solicited, directly or
indirectly, by any person or entity with respect to any of the foregoing.
Notwithstanding the foregoing, the Shareholder shall be entitled, (i) at
any time beginning three business days after the financial results of the
Company for the fiscal year ending February 3, 1996 have been Publicly
Disclosed (as defined below) by the Company, but not before consummation of the
Securities Purchase, to sell all or a portion of the Shares to any
purchaser, (x) in the case of non-negotiated, public, open-market
transactions, in amounts not to exceed the limitations set forth in Rule
144(e) under the Securities Act (provided that the Shareholder and
<PAGE>
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.
(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.
<PAGE>
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. 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
<PAGE>
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: Joanne R. Wenig
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: Richard A. Bernstein
444 Madison Avenue
Suite 601
New York, New York 10022
Telecopy No.: (212) 888-5025
with a copy to: Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Attention: Lawrence Lederman, Esq.
Telecopy No.: (212) 530-5219
Any party may change the foregoing address from time to time by giving the
other party notice thereof.
10. Injunctive Relief; Remedies Cumulative.
(a) Each party hereto acknowledges that the
other party will be irreparably harmed and that there will be no adequate
remedy at law for a violation of any of the covenants or agreements of such
party that are contained in this Agreement. It is accordingly agreed that,
in addition to any other remedies that may be available to the non-breaching
party upon the breach by any other party of such covenants and agreements, the
non-breaching party shall have the right to obtain injunctive relief to
restrain any breach or threatened breach of such covenants or agreements or
otherwise to obtain specific performance of any of such covenants or
agreements.
<PAGE>
(b) No remedy conferred upon or reserved to any
party herein is intended to be exclusive of any other remedy, and every
remedy shall be cumulative and in addition to every other remedy herein or
now or hereafter existing at law, in equity or by statute.
11. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of laws thereof; provided, however, that
the laws of the State of Delaware shall govern as to internal corporate
matters.
12. Counterparts. This Agreement may be executed in
any number of counterparts, all of which together shall constitute a single
agreement.
13. Effect of Partial Invalidity. Whenever possible,
each provision of this Agreement shall be construed in such a manner as
to be effective and valid under applicable law. If any provision of this
Agreement or the application thereof to any party or circumstance shall be
prohibited by or invalid under applicable law, such provisions shall be
ineffective to the extent of such prohibition without invalidating the
remainder of such provision or any other provisions of this Agreement or the
application of such provision to the other party or other circumstances.
14. Entire Agreement. This Agreement constitutes the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersedes any prior agreements, written or oral, with respect
thereto.
15. Jurisdiction and Process. Each party hereto
irrevocably submits to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York state
court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. Each party hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of
the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum. Each party hereto agrees that a final judgment in any
such proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party hereto consents to process being served
<PAGE>
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>
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:___________________________
Name:
Title: General Partner
RICHARD A. BERNSTEIN AND
STUART TURNER, trustees, u/a
March 16, 1978 fbo Richard
A. Bernstein
By:________________________________
Richard A. Bernstein
Trustee
By:________________________________
Stuart Turner
Trustee
<PAGE>
Index of Defined Terms
beneficial ownership...................................2
Buyer..................................................1
Company................................................1
Company Common Stock...................................1
Nominee................................................3
Nominee Shares.........................................3
Other Shareholders.....................................1
Proxy..................................................1
Publicly Disclosed.....................................6
Securities Purchase....................................1
Securities Purchase Agreement..........................1
Series B Preferred Stock...............................1
Shareholder............................................1
Shares.................................................1
Warrant................................................1
<PAGE>1
Exhibit 4
IRREVOCABLE PROXY
THIS AGREEMENT, dated as of January 31, 1996, between Golden
Press Holding, L.L.C., a Delaware limited liability company (the "Buyer"), and
the Trust, fbo Richard A. Bernstein u/a April 5, 1986, 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, contemporaneously with the execution of this
Agreement, the Company and the Buyer are entering into a Securities Purchase
Agreement (the "Securities Purchase Agreement") pursuant to which the Buyer will
purchase (the "Securities Purchase") 13,000 shares of the Company's Series B
Convertible Preferred Stock, no par value ("Series B Preferred Stock"), and a
warrant (the "Warrant") to purchase 3,250,000 shares (subject to adjustment) of
the Company's common stock, par value $.01 per share ("Company Common Stock");
WHEREAS, contemporaneously with the execution of this
Agreement, Buyer is entering into an agreement substantially similar to this
Agreement with each of (i) Richard A. Bernstein and (ii) the Trust fbo Richard
A. Bernstein u/a March 16, 1978, Richard A. Bernstein and Stuart Turner, as
trustees (collectively, the "Other Shareholders"), which own 3,501,000 and
400,000 shares of Company Common Stock, respectively; and
WHEREAS, the Buyer, as a condition to its willingness to enter
into the Securities Purchase Agreement, has required the Shareholder to grant
the Buyer an irrevocable proxy with respect to all of the shares of Company
Common Stock owned by the Shareholder, together with any additional shares of
Company Common Stock hereafter acquired by the Shareholder (such specified
number of shares, and any additional shares when and if they are acquired by
Shareholder, being referred to as the "Shares") on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Irrevocable Proxy. By entering into this Agreement, the
Shareholder hereby grants a proxy (the "Proxy") appointing the Buyer (or any
designee of the Buyer) as the Shareholder's lawful agent, attorney-in-fact and
proxy, with full power of substitution, for and in the Shareholder's name, to
vote, express consent or dissent, or otherwise to utilize such voting power in
such manner and upon such matters as the Buyer or its proxy or substitute shall,
<PAGE>
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 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
<PAGE>
implication to the contrary in this Agreement, the proxy granted in this Section
1 shall be revoked, and the agreement set forth in the immediately preceding
sentence shall be terminated, with respect to any Shares upon the sale or
transfer of such Shares to a third party (other than an Affiliate of the
Shareholder), provided that such sale or transfer is otherwise permitted under
the terms of this Agreement. For purposes of this Agreement, "Affiliate" is used
as defined in Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act"), and includes, without limitation, immediate family members
and trusts, 25% or more of the beneficial interests of which are owned by such
person or one or more members of his immediate family members.
2. Legending of Certificates; Nominee Shares. The
Shareholder agrees to submit to the Buyer contemporaneously with or
promptly following execution of this Agreement (or promptly following
receipt of any additional certificates representing any additional Shares)
all certificates representing the Shares so that the Buyer may note thereon a
legend referring to the transfer restrictions in this Agreement. If any of the
Shares beneficially owned by the Shareholder are held of record by a
brokerage firm in "street name" or in the name of any other nominee (a
"Nominee," and, as to the Shares, "Nominee Shares"), the Shareholder
agrees that, upon written notice by the Buyer requesting it, the
Shareholder will within five days of the giving of such notice execute and
deliver to the Buyer a limited power of attorney in such form as shall be
reasonably satisfactory to the Buyer enabling the Buyer to require the
Nominee to grant to the Buyer an irrevocable proxy to the same effect as
Section 1 hereof with respect to the Nominee Shares held by such Nominee and to
submit to the Buyer the certificates representing such Nominee Shares for
notation of the foregoing legend thereon.
3. [Intentionally omitted.]
4. Representations and Warranties of the Shareholder.
The Shareholder represents and warrants to the Buyer that:
(a) On the date hereof, the Shareholder is the
owner of record of 95,771 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
<PAGE>
granted any proxies with respect to the Shares except as contemplated by
this Agreement.
(b) The Shareholder has the full right, power and
authority to enter into this Agreement, and this Agreement has been duly and
validly executed and delivered on behalf of the Shareholder.
(c) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not, with or without the giving of notice or the passage of time,
(i) violate any judgment, injunction or order of any court, arbitrator or
governmental agency applicable to the Shareholder, or (ii) conflict with,
result in the breach of any provision of, constitute a default under, or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of the Shareholder under, or require the consent of any third party
under, any agreement, instrument, judgment, order or decree to which the
Shareholder is a party or by which the Shareholder may be bound.
(d) This Agreement is the valid and binding
Agreement of the Shareholder, enforceable against the Shareholder in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally.
(e) The Shares are the only shares of Company
Common Stock owned of record by the Shareholder, and the Shareholder does not
own any options to purchase or rights to subscribe for or otherwise acquire
any securities of the Company and has no other interest in or voting rights
with respect to any securities of the Company.
(f) No investment banker, broker or finder is
entitled to a commission or fee from the Shareholder or the Company in
respect of this Agreement based upon any arrangement or agreement made by or
on behalf of the Shareholder.
5. Additional Covenants of the Shareholder. The
Shareholder hereby covenants and agrees that:
(a) The Shareholder will not enter into any
transaction, take any action, or by inaction permit any event to occur,
that would result in any of the representations or warranties of the
Shareholder herein contained not being true
<PAGE>
and correct at and as of the time immediately after the occurrence of
such transaction, action or event.
(b) Until the termination of this Agreement,
the Shareholder, whether directly, indirectly, or through any employee, agent
or otherwise shall not: (i) solicit or initiate any inquiry or submission of a
proposal or an offer from any person or entity relating to any acquisition or
purchase of (A) the assets, business or property of the Company or any
subsidiary thereof, or (B) any equity interest in, or any merger,
consolidation or business combination with, the Company or any of its
subsidiaries (an "acquisition proposal"), or (ii) participate in any
discussions or negotiations regarding, or furnish to any other person or
entity any information with respect to, or otherwise cooperate in any way or
assist or facilitate any acquisition proposal by any other person or
entity. The Shareholder shall promptly advise the Buyer of any communication
(including the identity of the person or entity making such
communication and the terms thereof) that the Shareholder may receive relating
to any of the foregoing.
(c) Until the termination of this Agreement,
the Shareholder shall not, directly or indirectly, (i) grant any proxies or
enter into any voting trust or other agreement or arrangement with respect
to the voting of any Shares or (ii) acquire, sell, assign, transfer, encumber
or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the direct or indirect
acquisition or sale, assignment, transfer, encumbrance or other disposition
of, any shares of capital stock of the Company during the term of this
Agreement other than with the Other Shareholders. The Shareholder shall not
seek or solicit any such acquisition or sale, assignment, transfer,
encumbrance or other disposition or any such contract, option or
other arrangement or assignment or understanding and the Shareholder agrees to
notify the Buyer promptly and to provide all details requested by the
Buyer if the Shareholder shall be approached or solicited, directly or
indirectly, by any person or entity with respect to any of the foregoing.
Notwithstanding the foregoing, the Shareholder shall be entitled, (i) at
any time beginning three business days after the financial results of the
Company for the fiscal year ending February 3, 1996 have been Publicly
Disclosed (as defined below) by the Company, but not before consummation of the
Securities Purchase, to sell all or a portion of the Shares to any
purchaser, (x) in the case of non-negotiated, public, open-market
transactions, in amounts not to exceed the limitations set forth in Rule
144(e) under the Securities Act (provided that the Shareholder and
<PAGE>
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.
(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.
<PAGE>
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. 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
<PAGE>
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: Joanne R. Wenig
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.:_____________________
Any party may change the foregoing address from time to time by giving the
other party notice thereof.
10. Injunctive Relief; Remedies Cumulative.
(a) Each party hereto acknowledges that the
other party will be irreparably harmed and that there will be no adequate
remedy at law for a violation of any of the covenants or agreements of such
party that are contained in this Agreement. It is accordingly agreed that,
in addition to any other remedies that may be available to the non-breaching
party upon the breach by any other party of such covenants and agreements, the
non-breaching party shall have the right to obtain injunctive relief to
restrain any breach or threatened breach of such covenants or agreements or
otherwise to obtain specific performance of any of such covenants or
agreements.
(b) No remedy conferred upon or reserved to any
party herein is intended to be exclusive of any other remedy, and every
remedy shall be cumulative and in
<PAGE>
addition to every other remedy herein or now or hereafter existing at law,
in equity or by statute.
11. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of laws thereof; provided, however, that
the laws of the State of Delaware shall govern as to internal corporate
matters.
12. Counterparts. This Agreement may be executed in
any number of counterparts, all of which together shall constitute a single
agreement.
13. Effect of Partial Invalidity. Whenever possible,
each provision of this Agreement shall be construed in such a manner as
to be effective and valid under applicable law. If any provision of this
Agreement or the application thereof to any party or circumstance shall be
prohibited by or invalid under applicable law, such provisions shall be
ineffective to the extent of such prohibition without invalidating the
remainder of such provision or any other provisions of this Agreement or the
application of such provision to the other party or other circumstances.
14. Entire Agreement. This Agreement constitutes
the entire understanding among the parties hereto with respect to the subject
matter hereof and supersedes any prior agreements, written or oral, with
respect thereto.
15. Jurisdiction and Process. Each party hereto
irrevocably submits to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York state
court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. Each party hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of
the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum. Each party hereto agrees that a final judgment in any
such proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party hereto consents to process being served in any such proceeding by
mailing a copy thereof by registered or certified mail, postage prepaid,
return receipt requested to such party at its address specified in Section 9
or at such other address of which such party shall then
<PAGE>
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>
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:___________________________
Name:
Title: General Partner
FLEET NATIONAL BANK OF CONNECTICUT
trustee u/a April 5, 1985
fbo Richard A. Bernstein
By:________________________________
Name:
Title:
<PAGE>
Index of Defined Terms
beneficial ownership..................................2
Buyer.................................................1
Company...............................................1
Company Common Stock..................................1
Nominee...............................................3
Nominee Shares........................................3
Other Shareholders....................................1
Proxy.................................................1
Publicly Disclosed....................................6
Securities Purchase...................................1
Securities Purchase Agreement.........................1
Series B Preferred Stock..............................1
Shareholder...........................................1
Shares................................................1
Warrant...............................................1
<PAGE>
AGREEMENT
This Agreement dated as of February 12, 1996 among Warburg, Pincus
Ventures, L.P., a Delaware limited partnership; Warburg, Pincus & Co., a New
York general partnership; and E.M. Warburg, Pincus & Company, a New York general
partnership (collectively, the "Reporting Entities").
W I T N E S S E T H
WHEREAS, the Reporting Entities may be required to file a statement,
and amendments thereto, containing the information required by Schedule 13D
pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), and Rule 13d-1 promulgated thereunder, in connection with the
transactions contemplated by the Securities Purchase Agreement, dated as of
January 31, 1996, between Golden Press Holding, L.L.C., a Delaware limited
liability company, and Western Publishing Group, Inc., a Delaware corporation;
and
WHEREAS, pursuant to Paragraph (f) of Rule 13d-1, the undersigned
desire to satisfy any Schedule 13D filing obligation under Rule 13d-1 by a
single joint filing.
NOW, THEREFORE, in consideration of the premises, the undersigned
hereto agree as follows:
1. The undersigned parties agree that any Statement on Schedule 13D
to which this Agreement is attached, and any Amendments to such Statement,
are filed on behalf of each one of them.
2. This Agreement may be executed in any number of counterparts and all
of such counterparts taken together shall be deemed to constitute one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be duly executed and delivered on the date above indicated.
GOLDEN PRESS HOLDING, L.L.C.
By: Warburg, Pincus Ventures,
L.P., Member
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
Stephen Distler
Partner
WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
Stephen Distler
Partner
WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
Stephen Distler
Partner
E.M. WARBURG, PINCUS & COMPANY
By: /s/ Stephen Distler
Stephen Distler
Partner
