<PAGE>


                                    RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                     GOLDEN BOOKS FAMILY ENTERTAINMENT,INC.


                         PURSUANT TO SECTION 245 OF THE
                         GENERAL CORPORATION LAW OF THE
                               STATE OF DELAWARE


     The undersigned, the Chairman and Chief Executive Officer of Golden Books
Family Entertainment, Inc. (the "Corporation"), certifies that:

     1. The Corporation was originally incorporated under the name of R.A.B.
Holdings, Inc. and the Corporation's original certificate of incorporation was
filed with the Delaware Secretary of State on January 4, 1984.

     2. The restated certificate of incorporation has been duly adopted by the
Corporation's Board of Directors in accordance with Section 245 of the General
Corporation Law of the State of Delaware, and only restates and integrates and
does not further amend the provisions of the Corporation's Certificate of
Incorporation as heretofore amended and supplemented, and there is no
discrepancy between such provisions and the provisions of the restated
certificate as set forth herein.

     3. The certificate of incorporation as heretofore amended is hereby
restated to read in its entirety as set forth below:

     FIRST: The name of the corporation (the "Corporation") is Golden Books
Family Entertainment, Inc.

     SECOND: The registered office of the Corporation is c/o United Corporate
Services, Inc., 15 East North Street in the city of Dover, County of Kent,
State of Delaware. The name of its registered agent at that address is United
Corporate Services, Inc.

     THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

     FOURTH: The Corporation shall have the authority to issue 60,100,000
shares, consisting of 60,000,000 shares of common stock, par value $.01, and
100,000 shares of preferred stock, without par value. The board of directors
may authorize the issuance from time to time of the preferred stock in one or
more series and with such designations, preferences, relative,



<PAGE>

participating, optional and other special rights, and qualifications,
limitations or restrictions (which may differ with respect to each series) as
the board may fix by resolution.

     FIFTH: The Corporation shall have the authority to issue a series of
13,000 shares of preferred stock, with the designations and preferences,
rights, qualifications, limitations and restrictions 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 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

                                      -2-
<PAGE>

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.

     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

                                      -3-




<PAGE>

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 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

                                      -4-
<PAGE>


funds of the Corporation available for distribution to its stockholders.

     (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 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


                                      -5-
<PAGE>

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:

          (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


                                      -6-
<PAGE>

     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

          (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


                                      -7-
<PAGE>

Sries 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 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

                                      -8-

<PAGE>

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 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


                                      -9-
<PAGE>

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.

     (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 canceled
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.




                                     -10-
<PAGE>

     (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 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)


                                     -11-
<PAGE>


     Common 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 conversion or exchange thereof, by (y) the
     total maximum number of shares of Common Stock issuable upon the
     conversion or exchange of all such


                                     -12-
<PAGE>

     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 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.



                                      -13-
<PAGE>


     (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 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)



                                     -14-
<PAGE>



     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 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


                                     -15-
<PAGE>

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


                                     -16-

<PAGE>

     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, 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:

                                     -17-


<PAGE>


          (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 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

                                     -18-

<PAGE>

Series B Preferred Stock have been paid, provided, however, that, without the
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 canceled. 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 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


                                     -19-


<PAGE>

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.

     SIXTH: Unless, and except to the extent that, the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.

     SEVENTH: The Board of Directors may from time to time adopt, amend or
repeal the by-laws of the corporation, subject to the power of the stockholders
to adopt any by-laws or to amend or repeal any by-laws adopted, amended or
repealed by the Board of Directors.



                                 GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.


Dated:  March 25, 1998



                                 By:   /s/ Richard E. Snyder
                                     -----------------------
                                    Name:  Richard E. Snyder
                                    Title: Chairman and Chief
                                             Executive Officer





By:   /s/ Philip E. Rowley
   -----------------------
   Name:  Philip E. Rowley
   Title: Executive Vice President



                                     -20-