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                             EMPLOYMENT AGREEMENT


                  AGREEMENT by and between Golden Books Publishing Company,
Inc. (the "Company"), and Richard K. Collins (the "Executive"), effective as
of July 28, 1997 (the "Effective Date").

                  1.       Employment Term.

                  The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to continue within the employ of the Company,
commencing on the Effective Date and continuing through and including December
31, 2000, unless terminated earlier in accordance with Section 4 below (the
"Employment Term").

                  2.       Title, Reporting and Duties.

                           (a) As of the Effective Date and for the remainder
                  of the Employment Term, the Executive shall serve as the
                  Company's Executive Vice President, Director of Sales and
                  Retail Marketing, Golden Books Children's Publishing Group,
                  with such duties, responsibilities and authorities as shall
                  be consistent therewith in the reasonable judgment of the
                  Company. The Executive shall report to the President of
                  Golden Books Children's Publishing Group. The Executive
                  shall be based in New York, New York.

                           (b) During the Employment Term, and excluding any
                  periods of vacation, holiday and sick leave to which the
                  Executive is entitled, the Executive agrees to devote full
                  time during normal business hours to the business and
                  affairs of the Company and to use the Executive's best
                  efforts to perform faithfully and efficiently such
                  responsibilities.

                  3.       Compensation and Benefits.

                           (a) Base Salary. During the Employment Term, the
                  Executive shall receive a minimum annual base salary
                  ("Annual Base Salary") of $212,000. The Annual Base Salary
                  shall be paid in equal biweekly installments. The Company
                  and the Executive agree to meet on an annual basis, at a
                  date mutually convenient to both on or around the
                  anniversary of this Agreement, to review Executive's Annual
                  Base Salary; provided that this agreement to meet shall
                  create no additional obligation or duty on the part of
                  either party hereto with respect to Executive's Annual Base
                  Salary.

                           (b) Annual Bonus. In addition to the Annual Base
                  Salary, the Executive shall be awarded, for each fiscal year
                  during the Employment Term, an annual bonus (the "Annual
                  Bonus") pursuant to the Company's annual incentive plans
                  (the "Annual Plans", which term includes, as of the date
                  hereof, the Company's Executive Officer Bonus Plan). The
                  Executive shall have a target Annual Bonus of 100% of his
                  Annual Base Salary earned in such year (the "Target Bonus"),
                  subject in each case to attainment of the performance goals
                  set forth in the Annual Plans (provided that the Executive's
                  target Annual Bonus for 1997 shall be computed pro rata
                  based on his actual salary earned during the year).


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                  Each such Annual Bonus shall be paid no later than the end
                  of the third month of the fiscal year next following the
                  fiscal year for which the Annual Bonus is awarded, unless
                  the Executive shall elect to defer the receipt of such
                  Annual Bonus. Notwithstanding the above, it is the intent of
                  the parties hereto that the Annual Plans meet all applicable
                  requirements for the exemption of the payments thereunder
                  from the limitations of Section 162(m) of the Internal
                  Revenue Code of 1986, as amended, including the requirement
                  that the Annual Plans be approved by the shareholders of the
                  Company prior to the payment of any bonuses thereunder. The
                  Board may award the Executive bonuses other than pursuant to
                  the Annual Plans in its discretion.

                           (c) Stock Options. The Executive will be granted,
                  as of the Effective date hereof, a stock option (the
                  "Option") to purchase 25,000 shares of the common stock
                  ("Stock") of Golden Books Family Entertainment, Inc. The
                  parties agree that the Company's Board of Directors and the
                  Compensation Committee shall take all action necessary to
                  effectuate such Option grant. The exercise price with
                  respect to each share of Stock subject to the Option will be
                  the last transaction price of the Stock on the NASDAQ market
                  on the Effective Date. The Option will become exercisable as
                  to one-third of the shares of Stock subject thereto on the
                  first anniversary of the date of grant, as to an additional
                  one-third of such shares on the second anniversary of the
                  date of grant and as to an additional one-third of such
                  shares on the third anniversary of the date of grant. The
                  Option will have a term of seven years (the "Option Term").
                  Upon the termination of Executive's employment:

                                    (1) by reason of death, the Executive's
                           estate may exercise the Option (to the extent
                           exercisable at the time of death) until the
                           earliest of one year following the Executive's
                           death or the end of the Option Term, following
                           which time the Option shall terminate and be no
                           longer exercisable;

                                    (2) by the Company for "cause" (except the
                           Executive's disability) or by the Executive
                           voluntarily without "good reason" (as each such
                           term is defined in Section 4 below), the Option
                           shall terminate and no longer be exercisable on the
                           date the Executive is advised by the Board that he
                           is being terminated for cause, or the effective
                           date of the Executive's voluntary termination
                           without good reason, as applicable; or

                                    (3) by the Company without Cause or by the
                           Executive with good reason, or because of the
                           Executive's disability, the entire Option shall
                           become fully and immediately exercisable and the
                           Executive may exercise the Option until the
                           earliest of one year following the Executive's
                           termination or the end of the Option Term,
                           following which time the Option shall terminate and
                           be no longer exercisable.

                                    The Executive shall be entitled to
                           participate in other Company stock option grants or
                           other equity plans or programs, if any, in which
                           comparable executives of the Company are eligible
                           to participate generally as may be determined by
                           the Compensation Committee, including, without



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                           limitation, the Exchange Option Program pursuant to
                           the Executive Officer Bonus Plan.

                                    Other than as stated above, the Option
                           will be governed by the terms and conditions of the
                           Company's Stock Option Plan and the standard Stock
                           Option Agreement thereunder to be executed by the
                           Executive and the Company.

                           (d) Incentive, Savings and Retirement Plans. During
                  the Employment Term, the Executive shall be eligible to
                  participate in all incentive, savings and retirement plans,
                  practices, policies and programs, if any, that are
                  applicable generally to other comparable executives of the
                  Company and its affiliated companies. The Company intends to
                  establish incentive, savings and retirement plans that are
                  comparable in level of benefits to such plans as generally
                  exist in the Company's industry. It is acknowledged that the
                  Executive's participation in these plans shall be consistent
                  with an executive of his stature in the Company and in the
                  Company's industry.

                           (e) Welfare Benefit Plans. During the Employment
                  Term, the Executive and/or the Executive's family, as the
                  case may be, shall be eligible for participation in and
                  shall receive all benefits under welfare benefit plans,
                  practices, policies and programs provided by the Company and
                  its affiliated companies (including, without limitation,
                  medical, prescription, dental, disability, salary
                  continuance, employee term life, group life, accidental
                  death and travel accident insurance plans and programs, if
                  any) that are applicable generally to other comparable
                  executives of the Company and its affiliated companies
                  (including, without limitation, the Company's 1997 Executive
                  Benefit Program). The Company intends to establish new
                  welfare benefit plans that are comparable in level of
                  benefits to such plans as generally exist in the Company's
                  industry. It is acknowledged that the Executive's level of
                  participation in these plans shall be consistent with an
                  executive of his stature in the Company and in the Company's
                  industry.

                           (f) Expenses. During the Employment Term, the
                  Company shall pay or promptly reimburse the Executive for
                  all reasonable business expenses upon presentation of
                  receipts therefor in accordance with the normal practices of
                  the Company.

                           (g) Fringe Benefits. During the Employment Term,
                  the Executive shall be entitled to fringe benefits
                  appropriate to an executive of Executive's stature in the
                  Company's industry. The Company shall pay the Executive's
                  reasonable legal fees for preparation and review of this
                  Employment Agreement, and shall reimburse the Executive, up
                  to $7,500.00 per year, for personal tax and legal counsel in
                  connection with the Company stock option plan. Furthermore,
                  the Company shall pay the Executive an annual car and
                  parking allowance of $15,000.00 per year, such amount to be
                  paid with Executive's salary.

                           (h) Vacation and Holidays. During the Employment
                  Term, the Executive shall be entitled to four weeks of paid
                  vacation per year and all other paid holidays, sick and
                  personal days given to employees of the Company.



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                  4.       Termination of Employment.

                           (a) Cause. The Company may terminate the
                  Executive's employment during the Employment Period for
                  Cause. For purposes of this Agreement, "Cause" shall mean:
                  (i) the conviction of, or pleading guilty to, a felony or
                  crime involving moral turpitude, or (ii) the Executive's
                  failure to perform, in any material respect, his obligations
                  under this Agreement unless said failure is remedied by the
                  Executive to the Company's satisfaction within twenty (20)
                  days after notice by the Company, which specifically
                  identifies the manner in which the Board or Chief Executive
                  Officer believes that the Executive has not performed the
                  Executive's duties (provided that upon such notice, the
                  Executive shall be given an opportunity to meet with the
                  President of Golden Books Publishing Group or other senior
                  management of the Company to discuss the substance thereof);
                  or (iii) a disability that prohibits the Executive from
                  substantially meeting his responsibilities as a senior
                  executive of the Company on a full-time basis for 90 out of
                  120 consecutive business days.

                           (b) Good Reason. The Executive's employment may be
                  terminated by the Executive for Good Reason. For purposes of
                  this Agreement, "Good Reason" shall mean in each case,
                  without the Executive's prior written consent:

                                    (i) the assignment to the Executive of any
                           duties materially inconsistent with the Executive's
                           position (including status, offices, titles and
                           reporting requirements), authority, duties or
                           responsibilities as contemplated by Section 2 of
                           this Agreement, or any other action by the Company
                           which results in a diminution in such position,
                           authority, duties or responsibilities, excluding
                           for this purpose any action not taken in bad faith
                           and which is remedied by the Company to the
                           Executive's satisfaction within twenty (20) days
                           after receipt of written notice thereof given by
                           the Executive;

                                    (ii) any failure by the Company, in any
                           material respect, to comply with any of the
                           compensation and benefits provisions of Section 3
                           of this Agreement, other than failure not occurring
                           in bad faith and which is remedied by the Company
                           to the Executive's satisfaction within twenty (20)
                           days after receipt of written notice thereof given
                           by the Executive;

                                    (iii) the Company's requiring the
                           Executive to be based at any office or location
                           outside a twenty-five mile radius of New York, New
                           York;

                                    (iv) any failure by the Company to comply
                           with and satisfy any covenant or agreement
                           contained in this Agreement, excluding for this
                           purpose any failure or omission not occurring in
                           bad faith or any action not taken in bad faith and
                           which is remedied by the Company to the Executive's
                           satisfaction within twenty (20) days after receipt
                           of written notice thereof given by the Executive.

                           (c) Death. The Executive's employment shall
                  terminate automatically upon the Executive's death during
                  the Employment Period.



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                           (d) Notice of Termination. Any termination by the
                  Company for Cause, or by the Executive for Good Reason,
                  shall be communicated by Notice of Termination to the other
                  party hereto given in accordance with Section 11(b) of this
                  Agreement. For purposes of this Agreement, a "Notice of
                  Termination" means a written notice which (i) indicates the
                  specific termination provision in this Agreement relied
                  upon, (ii) to the extent applicable, sets forth in
                  reasonable detail the facts and circumstances claimed to
                  provide a basis for termination of the Executive's
                  employment under the provision so indicated and (iii) if the
                  Date of Termination (as defined below) is other than the
                  date of receipt of such notice, specifies the termination
                  date (which date shall be not more than thirty days after
                  the giving of such notice). The failure by the Executive or
                  the Company to set forth in the Notice of Termination any
                  fact or circumstance which contributes to a showing of Good
                  Reason or Cause shall not waive any right of the Executive
                  or the Company, respectively, hereunder or preclude the
                  Executive or the Company, respectively, from asserting such
                  fact or circumstance in enforcing the Executive's or the
                  Company's rights hereunder.

                           (e) Date of Termination. "Date of Termination"
                  means (i) if the Executive's employment is terminated by the
                  Company for Cause, or by the Executive for Good Reason, the
                  date of receipt of the Notice of Termination or any later
                  date specified therein, as the case may be (although such
                  Date of Termination shall retroactively cease to apply if
                  the circumstances providing the basis of termination for
                  Cause or Good Reason are cured in accordance with Section
                  4(a) or 4(b) of this Agreement, respectively), (ii) if the
                  Executive's employment is terminated by the Company other
                  than for Cause, the Date of Termination shall be the date on
                  which the Company notifies the Executive of such termination
                  and (iii) if the Executive's employment is terminated by
                  reason of death, the Date of Termination shall be the date
                  of death of the Executive.

                  5.       Obligations of the Company Upon Termination.

                           (a) Good Reason; Other Than for Cause. If, during
                  the Employment Term, the Company shall terminate the
                  Executive's employment other than for Cause or the Executive
                  shall terminate employment for Good Reason:

                                    (i) The Executive shall (a) continue to
                           receive his Annual Base Salary for the balance of
                           the term of this Agreement (the "Continuation
                           Period") and (b) receive a payment, no later than
                           30 days following the Date of Termination, equal to
                           any compensation previously deferred by the
                           Executive (together with any accrued interest or
                           earnings thereon) and any accrued vacation pay, in
                           each case to the extent not theretofore paid.
                           Further, during the Continuation Period the Company
                           shall continue to provide the Executive with
                           medical and life insurance benefits at the level
                           such benefits would have been provided to him had
                           his employment not been terminated, subject to the
                           Executive's making any required contributions to
                           the cost thereof at a rate no less favorable than
                           that applicable to active employees of the Company.
                           If within the Continuation Period the Executive
                           obtains other employment, (i) the Company's
                           obligation to pay the Executive's salary will be
                           reduced by 100% of the new compensation earned over
                           the balance of that period, and


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                           (ii) the Company's obligation to provide the
                           Executive with medical and life insurance benefits
                           shall be suspended during the period that the
                           Executive is eligible to obtain such benefits from
                           his new employer. Nothing in this paragraph 5 shall
                           be deemed a waiver by Executive of any rights he
                           has or may have under COBRA or ERISA. The Executive
                           agrees to promptly report to the Company any such
                           other employment and the compensation earned by him
                           thereunder during the Continuation Period. In the
                           event of the Executive's death, the Company shall
                           continue to pay his estate his salary at the time
                           of death, through the anniversary of the Effective
                           Date next following the date of death;

                                     (ii) on the Date of Termination, all of
                           the Executive's stock options, restricted stock and
                           other stock-based compensation shall become
                           exercisable or vested pursuant to Section 3(c)(3)
                           herein;

                                     (iii) the Company shall provide to the
                           Executive six (6) months of executive outplacement
                           service, which service shall be mutually agreed
                           upon by the parties, to assist the Executive in
                           securing employment; and

                                    (iv) The Executive shall have the right to
                           approve, such approval not be unreasonably
                           withheld, any written announcement, if any, of the
                           termination of the Executive's employment with the
                           Company.

                           (b) Death. If the Executive's employment is
                  terminated by reason of the Executive's death during the
                  Employment Period, this Agreement shall terminate without
                  further obligations to the Executive's legal representatives
                  under this Agreement, other than for payment of Accrued
                  Obligations, the right to exercise the Executive's Stock
                  Option under Section 3(c)(1) herein, and the timely payment
                  or provision of Other Benefits. Accrued Obligations shall be
                  paid to the Executive's estate or beneficiary, as
                  applicable, in a lump sum in cash within 30 days of the Date
                  of Termination.

                           (c) Cause; Other Than for Good Reason. If, during
                  the Employment Term, the Executive's employment shall be
                  terminated by the Company for Cause or by the Executive
                  without Good Reason, this Agreement shall terminate without
                  further obligations to the Executive other than the payment
                  of Accrued Obligations, and the payment or provision of
                  Other Benefits. All Accrued Obligations shall be paid to the
                  Executive in a lump sum in cash within 30 days of the Date
                  of Termination. Upon a termination of the Executive's
                  employment for Cause by the Company or by the Executive
                  without Good Reason, the Executive shall forfeit all stock
                  options that are not vested on the Date of Termination. If
                  the Executive's employment is terminated for Cause, nothing
                  in this Agreement shall prevent the Company from pursuing
                  any other available remedies against the Executive.

                  6.       Non-Exclusivity of Rights.

                  Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify nor shall anything herein limit or


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otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.

                  7.       Full Settlement.

                  The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others.


                  8.       Confidential Information; Non-Solicitation.

                           (a) The Executive shall hold in a fiduciary
                  capacity for the benefit of the Company all secret or
                  confidential information, knowledge or data relating to the
                  Company or any of its affiliated companies, and their
                  respective businesses, which shall have been obtained by the
                  Executive during the Executive's employment by the Company
                  or any of its affiliated companies and which shall not be or
                  become public knowledge (other than by acts by the Executive
                  or representatives of the Executive in violation of this
                  Agreement). After termination of the Executive's employment
                  with the Company, the Executive shall not, without the prior
                  written consent of the Company or as may otherwise be
                  required by law or legal process, communicate or divulge any
                  such information, knowledge or data to anyone other than the
                  Company and those designated by it. In no event shall an
                  asserted violation of the provisions of this Section 8
                  constitute a basis for deferring or withholding any amounts
                  otherwise payable to the Executive under this Agreement.


                           (b) For a period of one year following the
                  termination of the Executive's employment for any reason,
                  the Executive shall not, directly or indirectly, employ or
                  seek to employ any person who is at the Date of Termination,
                  or was at any time within the six-month period preceding the
                  Date of Termination, an employee of the Company or any of
                  its subsidiaries or affiliates or otherwise cause or induce
                  any employee of the Company or any of its subsidiaries or
                  affiliates to terminate such employee's employment with the
                  Company or such subsidiary or affiliate for the employment
                  of another company.



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                  9.       Successors.

                           (a) This Agreement is personal to the Executive and
                  without the prior written consent of the Company shall not
                  be assignable by the Executive otherwise than by will or the
                  laws of descent and distribution. This Agreement shall inure
                  to the benefit of and be enforceable by the Executive's
                  executors, successors and legal representatives.

                           (b) This Agreement shall inure to the benefit of
                  and be binding upon the Company and its successors and
                  assigns.

                           (c) The Agreement shall not be assignable in the
                  event of insolvency by the Company.

                  10.      Pre-Termination Meeting.

                           (a) On or before June 1, 2000, the Company and the
                  Executive agree to meet to discuss each others intentions
                  with respect to Executive's employment with the Company
                  after the termination of this Agreement; provided, however,
                  that this paragraph shall create no duty or obligation on
                  behalf of either the Company or the Executive with respect
                  to such discussion.

                  11.      Miscellaneous.

                           (a) This Agreement shall be governed by and
                  construed in accordance with the laws of the State of
                  Delaware, without reference to principles of conflict of
                  laws. The captions of this Agreement are not part of the
                  provisions hereof and shall have no force or effect. This
                  Agreement may not be amended or modified otherwise than by a
                  written agreement executed by the parties hereto or their
                  respective successors and legal representatives.

                           (b) All notices and other communications hereunder
                  shall be in writing and shall be given by hand delivery to
                  the other party or by registered or certified mail, return
                  receipt requested, postage prepaid, addressed as follows:

                                    If to the Executive:

                                    Mr. Richard K. Collins
                                    41 Georgian Road
                                    Morristown, NJ  07960

                                    If to the Company:

                                    Golden Books Family Entertainment, Inc.
                                    850 Third Avenue
                                    New York, New York 10022
                                    Attention:  General Counsel



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                  or to such other address as either party shall have
                  furnished to the other in writing in accordance herewith.
                  Notice and communications shall be effective when actually
                  received by the addressee.

                           (c) The invalidity or unenforceability of any
                  provision of this Agreement shall not affect the validity or
                  enforceability of any other provision of this Agreement.

                           (d) The Company may withhold from any amounts
                  payable under this Agreement such Federal, state, local or
                  foreign taxes as shall be required to be withheld pursuant
                  to any applicable law or regulation.

                           (e) The Executive's or the Company's failure to
                  insist upon strict compliance with any provision hereof or
                  any other provision of this Agreement or the failure to
                  assert any right the Executive or the Company may have
                  hereunder, including, without limitation, the right of the
                  Executive to terminate employment for Good Reason pursuant
                  to Section 4 (b) of this Agreement, shall not be deemed to
                  be a waiver of such provision or right or any other
                  provision or right of this Agreement.

                  IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.


                                   GOLDEN BOOKS PUBLISHING COMPANY, INC.


                                   By:  /s/ Willa Perlman
                                      --------------------------------------




                                        /s/ Richard K. Collins
                                   -----------------------------------------
                                   Richard K. Collins