Document:

EXHIBIT 10.10
                     GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
                             1999 EQUITY AWARD PLAN

                                   ARTICLE I.

                                     PURPOSE

     The purpose of the Golden Books Family Entertainment, Inc. 1999 Equity
Award Plan is to enhance the profitability and value of the Company for the
benefit of its stockholders by enabling the Company to offer employees and
consultants of the Company and its Affiliates who are in position to contribute
materially to the long-term success of the Company, stock based incentives in
the Company in order to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and the Company's
stockholders. The Plan is effective as of the date set forth in Article XIV.

                                   ARTICLE II.

                                   DEFINITIONS

     For purposes of the Plan, the following terms shall have the following
meanings:

          2.1. "Acquisition Events" shall have the meaning set forth in Section
     4.2(d).

          2.2. "Affiliate" shall mean other than the Company, (i) any
     corporation in an unbroken chain of corporations beginning with the
     Company, or in the event the Company is a Subsidiary, beginning with the
     Company's Parent, which owns stock possessing fifty percent (50%) or more
     of the total combined voting power of all classes of stock in one of the
     other corporations in such chain; (ii) any corporation, trade or business
     (including, without limitation, a partnership or limited liability company)
     which is controlled fifty percent (50%) or more (whether by ownership of
     stock, assets or an equivalent ownership interest or voting interest) by
     the Company or one of its Affiliates; or (iii) any other entity, approved
     by the Committee as an Affiliate under the Plan, in which the Company or
     any of its Affiliates has a material equity interest.

          2.3. "Award" shall mean, individually or collectively, a grant under
     this Plan of Stock Options or Restricted Stock or Performance Shares.

          2.4. "Award Agreement" shall mean the written agreement, as approved
     by the Committee, entered into between a Participant and the Company
     setting forth the terms and conditions of any Award hereunder.

          2.5. "Board" shall mean the Board of Directors of the Company.

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          2.6. "Cause" shall mean , unless otherwise determined by the Committee
     at grant, or, if no rights of the Participant are reduced, thereafter,
     termination due to a Participant's, fraud, willful misconduct or refusal to
     attempt to perform services (for any reason other than illness or
     incapacity), as determined by the Committee in its sole discretion;
     provided that with respect to any Eligible Employee who has entered into an
     Employment Agreement with the Company or any Affiliate, "Cause" shall have
     the meaning specified in such agreement at the time of grant.

          2.7. "Change of Control" shall have the meaning set forth in Article X
     of this Plan.

          2.8. "Code" shall mean the Internal Revenue Code of 1986, as amended.
     Any reference to any section of the Code shall also be a reference to any
     successor provision.

          2.9. "Committee" shall mean a committee or subcommittee of the Board
     appointed from time to time by the Board, which committee or subcommittee
     shall be intended to consist of two (2) or more non-employee directors,
     each of whom shall be, to the extent required by Rule 16b-3 a "non-employee
     director" as defined in Rule 16b-3 and, to the extent required by Section
     162(m) of the Code, an "outside director" as defined under Section 162(m)
     of the Code. Notwithstanding the foregoing, if and to the extent that no
     Committee exists which has the authority to administer the Plan, the
     functions of the Committee under this Plan shall be exercised by the Board.
     If for any reason the appointed Committee does not meet the requirements of
     Rule 16b-3 or Section 162(m) of the Code, such noncompliance with the
     requirements of Rule 16b-3 or Section 162(m) of the Code shall not affect
     the validity of the Awards, grants, interpretations or other actions of the
     Committee.

          2.10. "Common Stock" shall mean, subject to Section 4 hereof, the
     common stock, $.01 par value per share, of the Company.

          2.11. "Company" shall mean Golden Books Family Entertainment, Inc., a
     Delaware corporation, and its successors and assigns.

          2.12. "Consultant" shall mean any person who is engaged to perform
     services for the Company and/or its Affiliates other than as an employee or
     director of the Company or any Affiliate.

          2.13. "Disability" shall mean, unless otherwise determined by the
     Committee at grant or, if no rights of the Participant are reduced,
     thereafter, an individual's inability, as determined by the Committee, to
     engage in any substantial gainful activity by reason of any medically
     determinable physical or mental impairment which can be expected to result
     in death or which has lasted or can be expected to last for a continuous
     period of not less than twelve (12) months, provided, that with respect to
     any Eligible Employee who has entered into an Employment Agreement with the
     Company or any Affiliate, "Disability" shall have the meaning specified in
     such agreement at the time of grant.

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          2.14. "Eligible Employee" shall mean an employee of the Company or an
     Affiliate who is eligible to be granted Stock Options, Restricted Stock and
     Performance Shares under the Plan.

          2.15. "Employment Agreement" shall mean an agreement between the
     Eligible Employee and the Company or any Affiliate, that governs an
     Eligible Employee's employment relationship with the Company or any
     Affiliate, as amended from time to time.

          2.16. "Exchange Act" shall mean the Securities Exchange Act of 1934,
     as amended.

          2.17. "Fair Market Value" for purposes of the Plan, unless otherwise
     required by any applicable provision of the Code or any regulations issued
     thereunder, shall mean, as of any date, the last sales price reported for
     the Common Stock on the applicable date (i) as reported on the principal
     national securities exchange on which it is then traded or the Nasdaq Stock
     Market, Inc. or (ii) if not traded on any such national securities exchange
     or the Nasdaq Stock Market, Inc., as quoted on an automated quotation
     system sponsored by the National Association of Securities Dealers. If the
     Common Stock is not readily tradable on a national securities exchange, the
     Nasdaq Stock Market, Inc., or any automated quotation system sponsored by
     the National Association of Securities Dealers, its Fair Market Value shall
     be set in good faith by the Committee. For purposes of the grant of any
     Stock Option, the applicable date shall be the date on which the Option is
     granted or, if the sale of the Common Stock shall not have been reported or
     quoted on such date, on the first day prior thereto on which the sale of
     the Common Stock was reported or quoted. Notwithstanding anything in this
     Section 2.17 to the contrary, unless otherwise required by any applicable
     provision of the Code or any regulations issued thereunder, the "Fair
     Market Value" of any Stock Option granted under this Plan as of the
     "effective date" (as defined in the Joint Plan of Reorganization) (the
     "Reorganization Effective Date"), shall mean the average of the last sales
     price reported for the Common Stock on the Nasdaq Stock Market, Inc for
     each of the trading days during the thirty (30) day period commencing on
     the Reorganization Effective Date.

          2.18. "Good Reason" with respect to any Eligible Employee who has
     entered into an Employment Agreement with the Company or any Affiliate,
     shall have the meaning specified in such agreement as of the Award's grant
     date (which meaning shall be incorporated into the Eligible Employee's
     Award Agreement). With respect to any other Eligible Employee, unless
     otherwise determined by the Committee at grant, or, if no rights of the
     Participant are reduced, thereafter, without an Eligible Employee's consent
     (i) a change in the employee's location of employment beyond a 75 mile
     radius from New York City that is not part of a general relocation of
     corporate officers, (ii) a material diminution in the nature and scope of
     the Eligible Employee's authority and duties from those exercised or
     performed by the employee as of the Reorganization Effective Date or (iii)
     a reduction in the Eligible Employee's salary or benefits unless such
     reduction is applicable to substantially all officers of the Company or any
     applicable Affiliate;

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     provided that the Eligible Employee shall be deemed to have consented to
     any such action if the employee does not notify the Company in writing to
     the contrary within sixty (60) days following the occurrence of any such
     event, and further provided that the Company shall have thirty (30) days
     after receipt of such notice to cure the deficiency.

          2.19. "Incentive Stock Option" shall mean any Stock Option awarded
     under the Plan intended to be and designated as an "incentive stock option"
     within the meaning of Section 422 of the Code.

          2.20. "Joint Plan of Reorganization" shall mean the Golden Books
     Family Entertainment, Inc. Joint Plan of Reorganization Under Chapter 11 of
     the Bankruptcy Code, dated as of May 13, 1999.

          2.21. "Non-Qualified Stock Option" shall mean any Stock Option awarded
     under the Plan that is not an Incentive Stock Option.

          2.22. "Parent" shall mean any parent corporation of the Company within
     the meaning of Section 424(e) of the Code.

          2.23. "Participant" shall mean any Eligible Employee or Consultant to
     whom an Award has been made under this Plan.

          2.24. "Performance Criteria" shall have the meaning set forth in
     Exhibit A appended hereto.

          2.25. "Performance Goal" shall mean the objective performance goals
     established by the Committee in accordance with Section 162(m) of the Code
     and based on or more Performance Criteria.

          2.26. "Performance Period" shall have the meaning set forth in Section
     8.1.

          2.27. "Performance Share" shall mean an Award made pursuant to Article
     VIII of this Plan of the right to receive Common Stock or, as determined by
     the Committee in its sole discretion, cash of an equivalent value at the
     end of the Performance Period or thereafter.

          2.28. "Plan" shall mean the Golden Book Family Entertainment, Inc.
     1999 Equity Award Plan.

          2.29. "Restricted Stock" shall mean any Common Stock issued pursuant
     to Article VII herein.

          2.30. "Restriction Period" shall mean the period set forth in Section
     7.3(a) with respect to Restricted Stock.

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          2.31. "Retirement" shall mean a Termination of Employment by a
     Participant who has attained (i) at least age sixty-five (65); or (ii) such
     earlier date after age fifty-five (55) as approved by the Committee, in its
     sole discretion, without regard to whether the termination is treated as a
     "retirement" for any other purposes.

          2.32. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the
     Exchange Act as then in effect or any successor provisions.

          2.33. "Stock Option" shall mean any option to purchase shares of
     Common Stock granted to an Eligible Employee or Consultant under the Plan.

          2.34. "Subsidiary" shall mean any subsidiary corporation of the
     Company within the meaning of Section 424(f) of the Code.

          2.35. "Ten Percent Stockholder" shall mean a person owning stock of
     the Company possessing more than 10% of the total combined voting power of
     all classes of stock of the Company or its Subsidiaries or its Parent.

          2.36. "Termination of Consultancy" shall mean the termination of a
     Consultant's consultancy arrangement with the Company and all Affiliates.
     In the event an entity shall cease to be an Affiliate, there shall be
     deemed a Termination of Consultancy of any individual who is not otherwise
     a Consultant to the Company or another Affiliate at the time the entity
     ceases to be an Affiliate.

          2.37. "Termination of Employment," except as provided in the next
     sentence, shall mean (i) a termination of a Participant's employment with
     the Company and all Affiliates (for reasons other than a military or
     personal leave of absence granted by the Company or any Affiliate); or (ii)
     when an entity that is employing a Participant ceases to be an Affiliate,
     unless the Participant thereupon is or becomes employed by the Company or
     another Affiliate. The Committee may otherwise define Termination of
     Employment in the Option grant or, if no rights of the Participant are
     reduced, may otherwise define Termination of Employment thereafter,
     including, but not limited to, defining Termination of Employment with
     regard to entities controlling, under common control with or controlled by
     the Company rather than just the Company and its Affiliates and/or entities
     that provide substantial services to the Company or its Affiliates to which
     the Participant has transferred directly from the Company or its Affiliates
     at the request of the Company.

          2.38. "Transfer" or "Transferred" shall mean anticipate, alienate,
     attach, sell, assign, pledge, encumber, charge or otherwise transfer.

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                                  ARTICLE III.

                                 ADMINISTRATION

          3.1. THE COMMITTEE. The Plan shall be administered and interpreted by
     the Committee.

          3.2. AWARDS. The Committee shall have full authority to grant,
     pursuant to the terms of the Plan, Awards to Eligible Employees and
     Consultants and to otherwise administer the Plan. All Awards shall be
     granted by, confirmed by, and subject to the terms of an Award Agreement.
     In particular, the Committee shall have the authority:

               (a) to select the Eligible Employees and Consultants to whom
          Awards may from time to time be granted hereunder;

               (b) to determine whether and to what extent Awards are to be
          granted hereunder to one or more Eligible Employees or Consultants;

               (c) to determine, in accordance with the terms of the Plan, the
          number of shares of Common Stock to be covered by each Award granted
          hereunder;

               (d) to determine the terms and conditions, not inconsistent with
          the terms of the Plan, of any Award granted hereunder (including, but
          not limited to, the exercise or purchase price (if any), any
          restriction or limitation, any vesting schedule or acceleration
          thereof, or any forfeiture restrictions or waiver thereof, regarding
          any Award, and the shares of Common Stock relating thereto, based on
          such factors, if any, as the Committee shall determine, in its sole
          discretion);

               (e) to determine whether, to what extent and under what
          circumstances to provide loans that shall be on a recourse basis and
          shall bear interest at the rate the Committee shall provide) to
          Eligible Employees and Consultants in order to exercise Stock Options
          under this Plan or to purchase Restricted Stock under the Plan;

               (f) to determine whether a Stock Option is an Incentive Stock
          Option or Non-Qualified Stock Option or whether an Award is intended
          to satisfy Section 162(m) of the Code; and

               (g) to determine whether to require an Eligible Employee or
          Consultant, as a condition of the granting of any Award, not to sell
          or otherwise dispose of shares of Common Stock acquired pursuant to
          the exercise of a Stock Option or any other Award for a period of time
          as determined by the Committee, in its sole discretion, following the
          date of the acquisition of such Stock Option or Award.

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          3.3. GUIDELINES. Subject to Article XI hereof, the Committee shall
     have the authority to adopt, alter and repeal such administrative rules,
     guidelines and practices governing the Plan and perform all acts, including
     the delegation of its administrative responsibilities, as it shall, from
     time to time, deem advisable; to construe and interpret the terms and
     provisions of the Plan and any Award issued under the Plan (and any
     agreements relating thereto); and to otherwise supervise the administration
     of the Plan. The Committee may correct any defect, supply any omission or
     reconcile any inconsistency in the Plan or in any agreement relating
     thereto in the manner and to the extent it shall deem necessary to carry
     the Plan into effect, but only to the extent any such action would be
     permitted under the applicable provisions of both Rule 16b-3 and Section
     162(m) of the Code. The Committee may adopt special guidelines and
     provisions for persons who are residing in, or subject to, the taxes of,
     countries other than the United States to comply with applicable tax and
     securities laws. To the extent applicable, the Plan is intended to comply
     with the applicable requirements of Rule 16b-3 and Section 162(m) of the
     Code and shall be limited, construed and interpreted in a manner so as to
     comply therewith.

          3.4. DECISIONS FINAL. Any decision, interpretation or other action
     made or taken in good faith by or at the direction of the Company, the
     Board, or the Committee (or any of its members) arising out of or in
     connection with the Plan shall be within the absolute discretion of the
     Company, the Board or the Committee, as the case may be, and shall be
     final, binding and conclusive on the Company and all employees and
     Participants and their respective heirs, executors, administrators,
     successors and assigns.

          3.5. RELIANCE ON COUNSEL. The Company, the Board or the Committee may
     consult with legal counsel, who may be counsel for the Company or other
     counsel, with respect to its obligations or duties hereunder, or with
     respect to any action or proceeding or any question of law, and shall not
     be liable with respect to any action taken or omitted by it in good faith
     pursuant to the advice of such counsel.

               3.6. PROCEDURES. The Board may, but need not, designate one of
          the members of the Committee as chairman and the Committee shall hold
          meetings, subject to the By-Laws of the Company, at such times and
          places including, without limitation, by telephone conference or by
          written consent, as the Committee shall deem advisable. A majority of
          the Committee members shall constitute a quorum. All determinations of
          the Committee shall be made by a majority of its members. Any decision
          or determination reduced to writing and signed by all the Committee
          members in accordance with the By-Laws of the Company shall be fully
          as effective as if it had been made by a vote at a meeting duly called
          and held. The Committee may keep minutes of its meetings and may make
          such rules and regulations for the conduct of its business as it shall
          deem advisable.

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          3.7. DESIGNATION OF CONSULTANTS/LIABILITY.

               (a) The Committee may designate officers of the Company and
          professional advisors to assist the Committee in the administration of
          the Plan and may grant authority to officers to execute agreements or
          other documents on behalf of the Committee.

               (b) The Committee may employ such legal counsel, consultants and
          agents as it may deem desirable for the administration of the Plan and
          may rely upon any opinion received from any such counsel or consultant
          and any computation received from any such consultant or agent.
          Expenses incurred by the Committee or Board in the engagement of any
          such counsel, consultant or agent shall be paid by the Company. The
          Committee, its members and any person designated pursuant to paragraph
          (a) above shall not be liable for any action or determination made in
          good faith with respect to the Plan. To the maximum extent permitted
          by applicable law, no officer of the Company or member or former
          member of the Committee or of the Board shall be liable for any action
          or determination made in good faith with respect to the Plan or any
          Award granted under it. To the maximum extent permitted by applicable
          law and the Certificate of Incorporation and By-Laws of the Company
          and to the extent not covered by insurance, each officer and member or
          former member of the Committee or of the Board shall be indemnified
          and held harmless by the Company against any cost or expense
          (including reasonable fees of counsel reasonably acceptable to the
          Company) or liability (including any sum paid in settlement of a claim
          with the approval of the Company), and advanced amounts necessary to
          pay the foregoing at the earliest time and to the fullest extent
          permitted, arising out of any act or omission to act in connection
          with the Plan, except to the extent arising out of such officer's,
          member's or former member's own fraud or bad faith. Such
          indemnification shall be in addition to any rights of indemnification
          the officers, directors or members or former officers, directors or
          members may have under applicable law or under the Certificate of
          Incorporation or By-Laws of the Company or Affiliate. Notwithstanding
          anything else herein, this indemnification will not apply to the
          actions or determinations made by an individual with regard to Awards
          granted to him under the Plan.

                                   ARTICLE IV.

                           SHARE AND OTHER LIMITATIONS

          4.1. SHARES.

               (a) GENERAL LIMITATION. The aggregate number of shares of Common
          Stock that may be issued under the Plan shall not exceed ten percent
          (10%), on a fully diluted basis, of the shares of the Common Stock
          outstanding on the

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          Reorganization Effective Date (subject to any increase or decrease
          pursuant to Section 4.2), which may be either authorized and unissued
          Common Stock or Common Stock held in or acquired for the treasury of
          the Company or both. Notwithstanding the preceding sentence, the
          aggregate number of shares of Common Stock that may be issued under
          the Plan subject to the Award of ISO's shall be 400,000. To the extent
          that an Incentive Stock Option is disqualified and no longer an
          Incentive Stock Option, the number of shares of Common Stock
          underlying the Stock Option shall continue to count against the
          aggregate limit of shares of Common Stock that may be subject to
          Awards hereunder. If any Stock Option granted under this Plan expires,
          terminates or is canceled for any reason without having been exercised
          in full or the Company repurchases any Stock Option, the number of
          shares of Common Stock underlying such unexercised or repurchased
          Stock Option shall again be available for the purposes of Awards under
          this Plan. If any shares of Restricted Stock or Performance Shares
          awarded under this Plan to a Participant are forfeited or repurchased
          by the Company for any reason, the number of forfeited or repurchased
          shares of Restricted Stock or Performance Shares shall again be
          available for the purposes of Awards under this Plan.

               (b) INDIVIDUAL PARTICIPANT LIMITATIONS. (i) The maximum number of
          shares of Common Stock subject to any award of Performance Shares or
          shares of Restricted Stock for which the grant of such Award or the
          lapse of the relevant Restriction Period is subject to the attainment
          of Performance Goals, that may be granted under this Plan during any
          fiscal year of the Company to an Eligible Employee or Consultant shall
          be 500,000 shares per type of Award (subject to any increase or
          decrease pursuant to Section 4.2).

                    (ii) The maximum number of shares of Common Stock subject to
               the award of any Stock Option that may be granted under this Plan
               during any fiscal year by the Company to an Eligible Employee or
               Consultant shall be 500,000 shares.

                    (iii) There are no annual individual Eligible Employee or
               Consultant share limitations on Restricted Stock for which the
               grant of such Award or the lapse of the relevant Restriction
               Period is not subject to attainment of Performance Goals in
               accordance with Section 7.3(a)(ii) hereof.

                    (iv) The individual Participant limitations set forth in
               this Section 4.1(b) shall be cumulative; that is, to the extent
               that shares of Common Stock for which Awards are permitted to be
               granted to an Eligible Employee or a Consultant during a fiscal
               year are not covered by an Award to such Eligible Employee or
               Consultant in a fiscal year, the number of shares of Common Stock
               available for Awards to such Eligible

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               Employee or Consultant shall automatically increase in the
               subsequent fiscal years during the term of the Plan until used.

          4.2. CHANGES.

               (a) The existence of the Plan and the Awards granted hereunder
          shall not affect in any way the right or power of the Board or the
          stockholders of the Company to make or authorize any adjustment,
          recapitalization, reorganization or other change in the Company's
          capital structure or its business, any merger or consolidation of the
          Company or Affiliates, any issue of bonds, debentures, preferred or
          prior preference stock ahead of or affecting Common Stock, the
          authorization or issuance of additional shares of Common Stock, the
          dissolution or liquidation of the Company or Affiliates, any sale or
          transfer of all or part of its assets or business or any other
          corporate act or proceeding.

               (b) Subject to Section 4.2(d), in the event of any change in the
          capital structure or business of the Company by reason of any stock
          dividend or extraordinary dividend, stock split or reverse stock
          split, recapitalization, reorganization, merger, consolidation,
          split-up, combination or exchange of shares, non-cash distributions
          with respect to its outstanding Common Stock or capital stock other
          than Common Stock, reclassification of its capital stock, any sale or
          transfer of all or part of the Company's assets or business, or any
          similar change affecting the Company's capital structure or business
          and the Committee determines in good faith that an adjustment is
          necessary or appropriate under the Plan to prevent substantial
          dilution or enlargement of the rights granted to, or available for,
          Participants under the Plan or as otherwise necessary to reflect the
          change, then the aggregate number and kind of shares which may be
          issued under Section 4.1 of the Plan, the number and kind of shares or
          other property (including cash) subject to outstanding Awards under
          the Plan and the purchase or exercise price thereof shall be
          appropriately adjusted consistent with such change in such manner as
          the Committee may deem equitable to prevent substantial dilution or
          enlargement of the rights granted to, or available for, Participants
          under the Plan or as otherwise necessary to reflect the change, and
          any such adjustment determined by the Committee in good faith shall be
          binding and conclusive on the Company and all Participants and
          employees and their respective heirs, executors, administrators,
          successors and assigns.

               (c) Fractional shares of Common Stock resulting from any
          adjustment in Awards pursuant to Section 4.2(a) or (b) shall be
          aggregated until, and eliminated at, the time of exercise. No
          fractional shares of Common Stock shall be issued under the Plan. The
          Committee may, in its sole discretion, pay cash in lieu of any
          fractional shares of Common Stock in settlement of Awards under the
          Plan. Notice of any adjustment shall be given by the Committee to each
          Participant whose Award has been adjusted and such adjustment (whether
          or not such notice is given) shall be effective and binding for all
          purposes of the Plan.

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               (d) In the event of a merger or consolidation in which the
          Company is not the surviving entity or in the event of any transaction
          that results in the acquisition of all or substantially all of the
          Company's outstanding Common Stock by a single person or entity or by
          a group of persons and/or entities acting in concert, or in the event
          of the sale or transfer of all or substantially all of the Company's
          assets (all of the foregoing being referred to as "Acquisition
          Events"), then the Committee may, in its sole discretion, terminate
          all outstanding Stock Options granted to Eligible Employees and
          Consultants, effective as of the date of the Acquisition Event, by
          delivering notice of termination to each such Participant at least
          twenty (20) days prior to the date of consummation of the Acquisition
          Event; provided, that during the period commencing on the date on
          which such notice of termination is delivered to the Participant and
          ending immediately prior to the consummation of the Acquisition Event,
          each such Participant shall have the right to exercise in full all of
          his other Stock Options that are then outstanding (whether vested or
          not vested and without regard to any limitations on exercisability
          otherwise contained in the Stock Option) but any such exercise
          contingent on the occurrence of the Acquisition Event, and, provided
          that, if the Acquisition Event does not take place within a specified
          period after giving such notice for any reason whatsoever, the notice
          and exercise shall be null and void. If an Acquisition Event occurs,
          to the extent the Committee does not terminate the outstanding Stock
          Options pursuant to this Section 4.2(d), then the provisions of
          Section 4.2(b) shall apply.

                                   ARTICLE V.

                                   ELIGIBILITY

     5.1. GENERAL ELIGIBILITY. All Eligible Employees and Consultants and
prospective employees of and consultants to the Company and its Affiliates are
eligible to be granted Non-Qualified Stock Options, Restricted Stock and
Performance Shares under this Plan. Eligibility for the grant of an Award and
actual participation in this Plan shall be determined by the Committee in its
sole discretion. The vesting and exercise of Awards granted to a prospective
employee or consultant shall be conditioned upon such individual actually
becoming an Eligible Employee or Consultant.

     5.2. INCENTIVE STOCK OPTIONS. All Eligible Employees of the Company, its
Subsidiaries and Parent are eligible to be granted Incentive Stock Options under
this Plan. Eligibility for the grant of an Award and actual participation in
this Plan shall be determined by the Committee in its sole discretion.

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                                   ARTICLE VI.

                               STOCK OPTION GRANTS

     6.1. OPTIONS. Stock Options granted hereunder shall be one of two types:
(i) an Incentive Stock Option or (ii) a Non-Qualified Stock Option.

     6.2. GRANTS. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options. To the extent that any Stock Option
does not qualify as an Incentive Stock Option (whether because of its provisions
or the time or manner of its exercise or otherwise), such Stock Option or the
portion thereof which does not so qualify, shall constitute a separate
Non-Qualified Stock Option. The Committee shall have the authority to grant any
Consultant one or more Non-Qualified Stock Options. Notwithstanding any other
provision of this Plan or any provision of an Award Agreement, any Stock Option
granted to an Eligible Employee of an Affiliate that is not a Parent or
Subsidiary, shall be a Non-Qualified Option.

     6.3. TERMS OF STOCK OPTIONS. Stock Options granted under this Article VI
shall be subject to the following terms and conditions and shall be in such form
and contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable:

          (a) EXERCISE PRICE. The exercise price per share of Common Stock
     subject to an Incentive Stock Option or a Non-Qualified Stock Option, shall
     be determined by the Committee at the time of grant, but shall not be less
     than 100% of the Fair Market Value of a share of Common Stock at the time
     of grant; provided, however, that if an Incentive Stock Option is granted
     to a Ten Percent Stockholder, the exercise price shall be no less than 110%
     of the Fair Market Value of the Common Stock at the time of grant.

          (b) STOCK OPTION TERM. The term of each Stock Option shall be fixed by
     the Committee, provided that no Stock Option shall be exercisable more than
     ten (10) years after the date the Stock Option is granted; and further
     provided that, the term of an Incentive Stock Option granted to a Ten
     Percent Stockholder shall not exceed five (5) years.

          (c) EXERCISABILITY. Stock Options shall be exercisable at such time or
     times and subject to such terms and conditions as shall be determined by
     the Committee at the time of grant. If the Committee provides, in its sole
     discretion, that any Stock Option is exercisable subject to certain
     limitations (including, without limitation, that such Stock Option is
     exercisable only in installments or within certain time periods), the
     Committee may waive such limitations on the exercisability at any time at,
     or after, grant in whole or in part (including, without limitation, waiver
     of the installment exercise provisions or acceleration of the

                                       12

<PAGE>

     time at which such Stock Options may be exercised), based on such factors,
     if any, as the Committee shall determine, in its sole discretion.

          (d) METHOD OF EXERCISE. Subject to any limitations placed on the
     exercisability of a Stock Option under subsection (c) above, Stock Options
     may be exercised in whole or in part at any time during the Stock Option
     term, by giving written notice of exercise to the Company specifying the
     number of shares to be purchased. Such notice shall be accompanied by
     payment in full of the purchase price as follows: (i) in cash or by check,
     bank draft or money order payable to the order of the Company; (ii) if the
     Common Stock is traded on a national securities exchange, the Nasdaq Stock
     Market, Inc. or quoted on a national quotation system sponsored by the
     National Association of Securities Dealers, through a "cashless exercise"
     procedure whereby the Participant delivers irrevocable instructions to a
     broker to deliver promptly to the Company an amount equal to the purchase
     price; or (iii) on such other terms and conditions as may be acceptable to
     the Committee. No shares of Common Stock shall be issued until payment
     therefor, as provided herein, has been made or provided for.

          (e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the
     aggregate Fair Market Value (determined as of the time of grant) of the
     Common Stock with respect to which Incentive Stock Options are exercisable
     for the first time by an Eligible Employee during any calendar year under
     the Plan and/or any other stock option plan of the Company, any Subsidiary
     or Parent exceeds $100,000, such Options shall be treated as Stock Options
     that are not Incentive Stock Options. In addition, if an Eligible Employee
     does not remain employed by the Company, any Subsidiary or Parent at all
     times from the time the Stock Option is granted until three (3) months
     prior to the date of exercise (or such other period as required by
     applicable law), such option shall be treated as Non-Qualified Stock
     Option. Should any provision of this Plan not be necessary in order for the
     Stock Options to qualify as Incentive Stock Options or should any
     additional provisions be required, the Committee may amend this Plan
     accordingly, without the necessity of obtaining the approval of the
     Stockholders of the Company.

          (f) FORM, MODIFICATION, EXTENSION AND RENEWAL OF STOCK OPTIONS.
     Subject to the terms and conditions and within the limitations of the Plan,
     Stock Options shall be evidenced by an Award Agreement, and the Committee
     may (i) modify, extend or renew outstanding Stock Options granted under the
     Plan (provided that the rights of a Participant are not reduced without his
     consent) and (ii) accept the surrender of outstanding Stock Options (up to
     the extent not theretofore exercised) and authorize the granting of new
     Stock Options in substitution therefor (to the extent not theretofore
     exercised).

          (g) OTHER TERMS AND CONDITIONS. Options may contain such other
     provisions, which shall not be inconsistent with any of the terms of the
     Plan, as the Committee shall deem appropriate.

                                       13

<PAGE>

                                  ARTICLE VII.

                                RESTRICTED STOCK

          7.1. AWARDS OF RESTRICTED STOCK. Shares of Restricted Stock may be
     issued to Eligible Employees or Consultants either alone or in addition to
     other Awards granted under this Plan. The Committee shall determine the
     eligible persons to whom, and the time or times at which, grants of
     Restricted Stock will be made, the number of shares to be awarded, subject
     to Section 7.2, the price (if any) to be paid by the recipient, the time or
     times within which such Awards may be subject to forfeiture, the vesting
     schedule and rights to acceleration thereof, and all other terms and
     conditions of the Awards. The Committee may condition the grant or vesting
     of Restricted Stock upon the attainment of specified performance goals,
     including established Performance Goals in accordance with Section 162(m)
     of the Code, or such other factors as the Committee may determine, in its
     sole discretion.

          7.2. AWARDS AND CERTIFICATES. An Eligible Employee or Consultant
     selected to receive Restricted Stock shall not have any rights with respect
     to such Award, unless and until such Participant has delivered to the
     Company a fully executed copy of the applicable Award Agreement relating
     thereto and has otherwise complied with the applicable terms and conditions
     of such Award. Further, such Award shall be subject to the following
     conditions:

               (a) PURCHASE PRICE. The purchase price of Restricted Stock shall
          be fixed by the Committee, provided that any such purchase price may
          be zero to the extent permitted by applicable law, and, to the extent
          not so permitted, such purchase price may not be less than par value.

               (b) ACCEPTANCE. Awards of Restricted Stock must be accepted
          within a period of 90 days (or such shorter period as the Committee
          may specify at grant) after the Award date by executing a Restricted
          Stock Award Agreement and by paying whatever price (if any) the
          Committee has designated thereunder.

               (c) LEGEND. Each Participant receiving shares of Restricted Stock
          shall be issued a stock certificate in respect of such shares of
          Restricted Stock, unless the Committee elects to use another system,
          such as book entries by the transfer agent, as evidencing ownership of
          shares of Restricted Stock. Such certificate shall be registered in
          the name of such Participant, and shall bear an appropriate legend
          referring to the terms, conditions, and restrictions applicable to
          such Award, substantially in the following form:

               "The anticipation, alienation, attachment, sale, transfer,
          assignment, pledge, encumbrance or charge of the shares of stock
          represented hereby are subject to the terms and conditions (including
          forfeiture) of the Golden Books

                                       14

<PAGE>

          Family Entertainment Inc. (the "Company") 1999 Equity Award Plan (the
          "Plan") and an Agreement entered into between the registered owner and
          the Company dated ____________. Copies of such Plan and Agreement are
          on file at the principal office of the Company."

               (d) CUSTODY. The Committee may require that any stock
          certificates evidencing such shares be held in custody by the Company
          until the restrictions thereon shall have lapsed and that, as a
          condition to the grant of such Award of Restricted Stock, the
          Participant shall have delivered a duly signed stock power, endorsed
          in blank, relating to the Common Stock covered by such Award.

          7.3. RESTRICTIONS AND CONDITIONS ON RESTRICTED STOCK AWARDS. Shares of
     Restricted Stock awarded pursuant to this Plan shall be subject to Article
     IX and the following restrictions and conditions:

               (a) RESTRICTION PERIOD; VESTING AND ACCELERATION OF VESTING.

                    (i) Shares of Restricted Stock shall (x) vest in accordance
               with the terms and conditions determined by the Committee in its
               sole discretion, (including, without limitation, any service and
               Performance Goal criteria) and (y) may not be Transferred during
               the period or periods set by the Committee (the "Restriction
               Period"). The Committee may, in its sole discretion, (x) provide
               for the lapse of any restrictions in installments (in whole or in
               part), (y) accelerate the vesting of all or any portion of any
               Restricted Stock Award or (z) waive the deferral limitations for
               all or any part of any Restricted Stock Award.

                    (ii) OBJECTIVE PERFORMANCE GOALS, FORMULAE OR STANDARDS. If
               the grant of shares of Restricted Stock or the lapse of
               restrictions is based on the attainment of Performance Goals, the
               Committee shall establish the Performance Goals and the
               applicable vesting percentage of the Restricted Stock award
               applicable to each Participant or class of Participants in
               writing prior to the beginning of the applicable fiscal year or
               at such later date as otherwise determined by the Committee and
               while the outcome of the Performance Goals are substantially
               uncertain. Such Performance Goals may incorporate provisions for
               disregarding (or adjusting for) changes in accounting methods,
               corporate transactions (including, without limitation,
               dispositions and acquisitions) and other similar type events or
               circumstances. With regard to a Restricted Stock Award that is
               intended to comply with Section 162(m) of the Code, to the extent
               any such provision would create impermissible discretion under
               Section 162(m) of the Code or otherwise violate Section 162(m) of
               the Code, such provision shall be of no force or effect. The
               applicable Performance Goals shall be based on one or more of the
               Performance Criteria set forth in Exhibit A hereto.

                                       15

<PAGE>

               (b) RIGHTS AS STOCKHOLDER. Except as provided in this subsection
          (b) and subsection (a) above and as otherwise determined by the
          Committee, a Participant shall have, with respect to the shares of
          Restricted Stock, all of the rights of a holder of shares of Common
          Stock of the Company including, without limitation, the right to
          receive any dividends, the right to vote such shares and, subject to
          and conditioned upon the full vesting of shares of Restricted Stock,
          the right to tender such shares. The Committee may, in its sole
          discretion, determine at the time of grant that the payment of
          dividends shall be deferred until, and conditioned upon, the
          expiration of the applicable Restriction Period.

               (c) LAPSE OF RESTRICTIONS. Any stock certificates representing
          shares of Restricted Stock awarded hereunder that (i) have not been
          forfeited and (ii) have not previously been delivered to a
          Participant, shall be delivered to the Participant upon the expiration
          of any applicable Restriction Period. All legends shall be removed
          from said certificates at the expiration of the Restriction Period
          except as otherwise required by applicable law.

                                  ARTICLE VIII.

                               PERFORMANCE SHARES

          8.1. AWARD OF PERFORMANCE SHARES. Performance Shares may be awarded
     either alone or in addition to other Awards granted under this Plan. The
     Committee shall, in its sole discretion, determine the Eligible Employees
     and Consultants to whom and the time or times at which such Performance
     Shares shall be awarded, the duration of the period (the "Performance
     Period") during which, and the conditions under which, a Participant's
     right to Performance Shares will be vested and the other terms and
     conditions of the Award in addition to those set forth in Section 8.2.

          Each Performance Share awarded shall be referenced to one share of
     Common Stock. Except as otherwise provided herein, the Committee shall
     condition the right to payment of any Performance Share Award upon the
     attainment of objective Performance Goals established pursuant to Section
     8.2(c) below and such other non-performance based factors or criteria as
     the Committee may determine in its sole discretion.

          8.2. TERMS AND CONDITIONS. A Participant selected to receive
     Performance Shares shall not have any rights with respect to such shares,
     unless and until such Participant has delivered a fully executed copy of a
     Performance Share Award Agreement evidencing the Award to the Company and
     has otherwise complied with the following terms and conditions:

               (a) EARNING OF PERFORMANCE SHARE AWARD. At the expiration of the
          applicable Performance Period, the Committee shall determine the
          extent to which

                                       16

<PAGE>

          the Performance Goals established pursuant to Section 8.2(c) are
          achieved and the percentage of each Performance Share Award that has
          been earned.

               (b) PAYMENT. Following the Committee's determination in
          accordance with subsection (a) above, shares of Common Stock or, as
          determined by the Committee in its sole discretion, the cash
          equivalent of such shares shall be delivered to the Participant, in an
          amount equal to such Participant's earned Performance Share Award.
          Notwithstanding the foregoing, except as may be set forth in the Award
          Agreement covering the Award, the Committee may, in its sole
          discretion and in accordance with Section 162(m) of the Code, award an
          amount less than the earned Performance Share Award and/or subject the
          payment of all or part of any Performance Share Award to additional
          vesting and forfeiture conditions as it deems appropriate.

               (c) OBJECTIVE PERFORMANCE GOALS, FORMULAE OR STANDARDS. The
          Committee shall establish the objective Performance Goals for the
          earning of Performance Shares based on a Performance Period applicable
          to each Participant or class of Participants in writing prior to the
          beginning of the applicable Performance Period or at such later date
          as permitted under Section 162(m) of the Code and while the outcome of
          the Performance Goals are substantially uncertain. Such Performance
          Goals may incorporate, if and only to the extent permitted under
          Section 162(m) of the Code, provisions for disregarding (or adjusting
          for) changes in accounting methods, corporate transactions (including,
          without limitation, dispositions and acquisitions) and other similar
          type events or circumstances. To the extent any such provision would
          create impermissible discretion under Section 162(m) of the Code or
          otherwise violate Section 162(m) of the Code, such provision shall be
          of no force or effect. The applicable Performance Goals shall be based
          on one or more of the Performance Criteria set forth in Exhibit A
          hereto.

               (d) DIVIDENDS AND OTHER DISTRIBUTIONS. At the time of any award
          of Performance Shares, the Committee may, in its sole discretion,
          award an Eligible Employee or Consultant the right to receive the cash
          value of any dividends and other distributions that would have been
          received had Eligible Employee or Consultant held each share of Common
          Stock referenced by the earned Performance Share Award from the last
          day of the first year of the Performance Period until the actual
          distribution to such Participant of the related share of Common Stock
          or cash value thereof. Such amounts, if awarded, shall be paid to the
          Participant as and when the shares of Common Stock or cash value
          thereof are distributed to such Participant.

                                       17

<PAGE>

                                   ARTICLE IX.

                     NON-TRANSFERABILITY AND TERMINATION OF
                             EMPLOYMENT/CONSULTANCY

          9.1. NON-TRANSFERABILITY. No Stock Option or Performance Share shall
     be Transferable by the Participant otherwise than by will or by the laws of
     descent and distribution. All Stock Options shall be exercisable, during
     the Participant's lifetime, only by the Participant. Shares of Restricted
     Stock under Article VII may not be Transferred prior to the date on which
     shares are issued, or, if later, the date on which any applicable
     restriction, performance or deferral period lapses. No Award shall, except
     as otherwise specifically provided by law or herein, be Transferable in any
     manner, and any attempt to Transfer any such Award shall be void, and no
     such Award shall in any manner be liable for or subject to the debts,
     contracts, liabilities, engagements or torts of any person who shall be
     entitled to such Award, nor shall it be subject to attachment or legal
     process for or against such person. Notwithstanding the foregoing, the
     Committee may determine at the time of grant or thereafter, that a
     Non-Qualified Stock Option granted pursuant to Article VI that is otherwise
     not transferable pursuant to this Article XII is transferable in whole or
     part and in such circumstances, and under such conditions, as specified by
     the Committee.

          9.2. TERMINATION OF EMPLOYMENT OR TERMINATION OF CONSULTANCY. The
     following rules apply with respect to a Participant's Termination of
     Employment or Termination of Consultancy (the "Plan Default Termination
     Rules"), unless otherwise provided under Section 9.3 or determined by the
     Committee at grant or, if no rights of the Participant or Consultant are
     reduced, thereafter:

               (a) RULES APPLICABLE TO STOCK OPTIONS.

                    (i) TERMINATION BY REASON OF DEATH, DISABILITY OR
               RETIREMENT. If a Participant's Termination of Employment or
               Termination of Consultancy is by reason of death, Disability or
               Retirement, all Stock Options held by such Participant may be
               exercised, to the extent exercisable at the Participant's
               Termination of Employment or Termination of Consultancy, by the
               Participant (or, in the case of death, by the legal
               representative of the Participant's estate) at any time within a
               period of one year from the date of such Termination of
               Employment or Termination of Consultancy, but in no event beyond
               the expiration of the stated respective terms of such Stock
               Options; provided, however, that, in the case of Retirement, if
               the Participant dies within such exercise period, all unexercised
               Stock Options held by such Participant shall thereafter be
               exercisable, to the extent to which they were exercisable at the
               time of death, for a period of one year from the date of such
               death, but in no event beyond the expiration of the stated term
               of such Stock Options.

                                       18

<PAGE>

                    (ii) TERMINATION BY THE COMPANY WITHOUT CAUSE; TERMINATION
               FOR GOOD REASON. If (a) a Participant's Termination of Employment
               or Termination of Consultancy is by involuntary termination
               without Cause or (b) an Eligible Employee's Termination of
               Employment is by such individual for Good Reason, then all Stock
               Options held by such Participant may be exercised, to the extent
               exercisable at Termination of Employment or Termination of
               Consultancy, by such Participant at any time within a period of
               90 days from the date of such Termination of Employment or
               Termination of Consultancy, but in no event beyond the expiration
               of the stated term of such Stock Options.

                    (iii) VOLUNTARY TERMINATION. If a Participant's Termination
               of Employment or Termination of Consultancy is voluntarily
               terminated (other than a voluntary termination described in
               Section 9(a)(iv)(B) below), all Stock Options held by such
               Participant may be exercised, to the extent exercisable at
               Termination of Employment or Termination of Consultancy, by the
               Participant at any time within a period of 30 days from the date
               of such Termination of Employment or Termination of Consultancy,
               but in no event beyond the expiration of the stated terms of such
               Stock Options and Stock Appreciation Rights.

                    (iv) TERMINATION FOR CAUSE. If a Participant's Termination
               of Employment or Termination of Consultancy (A) is for Cause or
               (B) is a voluntary termination (as provided in subsection (iii)
               above) within 90 days after an event which would be grounds for a
               Termination of Employment or Termination of Consultancy for
               Cause, all Stock Options held by such Participant shall thereupon
               terminate and expire as of the date of such Termination of
               Employment or Termination of Consultancy.

               (b) RULES APPLICABLE TO RESTRICTED STOCK. Subject to the
          applicable provisions of the Restricted Stock Award Agreement and this
          Plan, upon a Participant's Termination of Employment or Termination of
          Consultancy for any reason during the relevant Restriction Period, all
          Restricted Stock still subject to restriction will vest or be
          forfeited in accordance with the terms and conditions established by
          the Committee at grant or thereafter.

               (c) RULES APPLICABLE TO PERFORMANCE SHARES. Subject to the
          applicable provisions of the Award Agreement and this Plan, upon a
          Participant's Termination of Employment or Termination of Consultancy
          for any reason during a Performance Period or other period or
          restriction as may be applicable for a given Award, the Performance
          Shares in question will vest (to the extent applicable and to the
          extent permissible under Section 162(m) of the Code) or be forfeited
          in accordance with the terms and conditions established by the
          Committee at grant or thereafter.

                                       19

<PAGE>

          9.3. RULES APPLICABLE TO ELIGIBLE EMPLOYEES WITH EMPLOYMENT
     AGREEMENTS. Notwithstanding anything in this Plan to the contrary, to the
     extent that the terms of an Eligible Employee's Employment Agreement are
     inconsistent with the Plan Termination Default Provisions at the time of
     grant of an Award, then, unless otherwise required by law or agreed to by
     the employee, the terms of such Employment Agreement shall be incorporated
     into the Eligible Employees Award Agreement hereunder.

                                   ARTICLE X.

                          CHANGE OF CONTROL PROVISIONS

          10.1. BENEFITS. Upon the occurrence of a Change of Control of the
     Company (as defined below), except as determined by the Committee upon the
     grant of an Award or, if no rights of the Participant are reduced,
     thereafter, the Participant shall be entitled to the following benefits:

               (a) Subject to paragraph (b) and Section 10.3 below, all
          outstanding Stock Options granted shall be fully vested and
          immediately exercisable in their entirety. The Committee, in its sole
          discretion, may provide for the purchase of any Stock Options by the
          Company or its Affiliates for an amount of cash equal to the excess of
          the Change of Control Price (as defined below) of the shares of Common
          Stock covered by such Stock Options, over the aggregate exercise price
          of such Stock Options. For purposes of this Section 10.1, Change of
          Control Price shall mean the the highest price per share of Common
          Stock paid in any transaction related to the Change of Control of the
          Company.

               (b) Notwithstanding anything to the contrary herein, unless the
          Committee provides otherwise, at the time a Stock Option is granted to
          a Participant hereunder or, if no rights of the Participant are
          reduced, thereafter, no acceleration of exercisability shall occur
          with respect to such Stock Option if the Committee reasonably
          determines in good faith, prior to the occurrence of the Change of
          Control, that the Options shall be honored or assumed, or new rights
          substituted therefor (each such honored, assumed or substituted option
          hereinafter called an "Alternative Option"), by a Participant's
          employer (or the parent or a subsidiary of such employer) immediately
          following the Change of Control, provided that any such Alternative
          Option must meet the following criteria:

                    (i) the Alternative Option must be based on stock which is
               traded on an established securities market, or which will be so
               traded within thirty (30) days of the Change of Control;

                    (ii) the Alternative Option must provide such Participant
               with rights and entitlements substantially equivalent to or
               better than the rights,

                                       20

<PAGE>

               terms and conditions applicable under such Option, including, but
               not limited to, an identical or more favorable exercise schedule;
               and

                    (iii) the Alternative Option must have economic value
               substantially equivalent to the value of such Option (determined
               at the time of the Change of Control).

          For purposes of Incentive Stock Options, any assumed or substituted
     Option shall comply with the requirements of Treasury Regulation ss.
     1.425-1 (and any amendments thereto).

               (c) Any Period of Restriction or other restrictions with respect
          to outstanding Restricted Stock awards shall lapse.

               (d) The target payout opportunities attainable under all
          outstanding Awards of Restricted Stock Performance Units and
          Performance Shares shall be deemed to have been fully earned for the
          entire Performance Period(s) as of the effective date of the Change in
          Control. The vesting of all Awards denominated in Shares shall be
          accelerated as of the effective date of the Change in Control, and
          there shall be paid out in cash to Participants within thirty (30)
          days following the effective date of the Change in Control a pro rata
          amount based upon an assumed achievement of all relevant performance
          goals and upon the length of time within the Performance Period which
          has elapsed prior to the Change in Control.

          10.2. CHANGE OF CONTROL. With respect to any Eligible Employee or a
     Consultant, a "Change in Control" shall have the meaning set forth in the
     individual's Award Agreement or if any such individual is covered by an
     Employment Agreement, the meaning set forth in such Employment Agreement.

                                   ARTICLE XI.

                      TERMINATION OR AMENDMENT OF THE PLAN

          11.1. TERMINATION OR AMENDMENT. Notwithstanding any other provision of
     the Plan, the Board or the Committee may at any time, and from time to
     time, amend, in whole or in part, any or all of the provisions of the Plan
     (including any amendment deemed necessary to ensure that the Company may
     comply with any regulatory requirement referred to in this Article XI), or
     suspend or terminate it entirely, retroactively or otherwise; provided,
     however, that, unless otherwise required by law or specifically provided
     herein, the rights of a Participant with respect to Awards granted prior to
     such amendment, suspension or termination, may not be impaired without the
     consent of such Participant and, provided further, that without the
     approval of the stockholders of the Company in accordance with the laws of
     the State of Delaware, to the

                                       21

<PAGE>

     extent required by the applicable provisions of Rule 16b-3 or Section
     162(m) of the Code, or to the extent applicable to Incentive Stock Options,
     Section 422 of the Code, no amendment may be made that would (i) increase
     the aggregate number of shares of Common Stock that may be issued under
     this Plan; (ii) increase the maximum individual Participant limitations for
     a fiscal year under Section 4.1(b); (iii) change the classification of
     employees or consultants eligible for Award grants under the Plan; (iv)
     extend the maximum Stock Option term under Section 6.3(b); (v) decrease the
     minimum option price of any Stock Option; (vi) extend the maximum option
     period under Section 6.3; (vii) materially alter the Performance Criteria
     for the Award of Restricted Stock or Performance Shares as set forth in
     Exhibit A; or (viii) require stockholder approval in order for this Plan to
     continue to comply with the applicable provisions of Section 162(m) of the
     Code or, to the extent applicable to Incentive Stock Options, Section 422
     of the Code. In no event may this Plan be amended without shareholder
     approval in a manner that would require such approval under the rules of
     any exchange or system on which the Company's securities are listed or
     traded at the request of the Company.

          The Committee may amend the terms of any Award theretofore granted,
     prospectively or retroactively, but, subject to Article IV above or as
     otherwise specifically provided herein, no such amendment or other action
     by the Committee shall impair the rights of any Participant without the
     Participant's consent.

                                  ARTICLE XII.

                                  UNFUNDED PLAN

          12.1. UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
     "unfunded" plan for incentive and deferred compensation. With respect to
     any payments as to which a Participant has a fixed and vested interest but
     which are not yet made to a Participant by the Company, nothing contained
     herein shall give any such Participant any rights that are greater than
     those of a general creditor of the Company.

                                  ARTICLE XIII.

                               GENERAL PROVISIONS

          13.1. LEGEND. The Committee may require each person receiving shares
     pursuant to an Award under the Plan to represent to and agree with the
     Company in writing that the Participant is acquiring the shares without a
     view to distribution thereof. In addition to any legend required by the
     Plan, the certificates for such shares may include any legend which the
     Committee deems appropriate to reflect any restrictions on Transfer.

                                       22

<PAGE>

          All certificates for shares of Common Stock delivered under the Plan
     shall be subject to such stock transfer orders and other restrictions as
     the Committee may deem advisable under the rules, regulations and other
     requirements of the Securities and Exchange Commission, any stock exchange
     upon which the Common Stock is then listed or any national securities
     association system upon whose system the Common Stock is then quoted, any
     applicable Federal or state securities law, and any applicable corporate
     law, and the Committee may cause a legend or legends to be put on any such
     certificates to make appropriate reference to such restrictions.

          13.2. OTHER PLANS. Nothing contained in the Plan shall prevent the
     Board from adopting other or additional compensation arrangements, subject
     to stockholder approval if such approval is required; and such arrangements
     may be either generally applicable or applicable only in specific cases.

          13.3. NO RIGHT TO EMPLOYMENT/CONSULTANCY. Neither the Plan nor the
     grant of any Award hereunder shall give any Participant or other employee
     or Consultant any right with respect to continuance of employment by the
     Company or any Affiliate, nor shall they be a limitation in any way on the
     right of the Company or any Affiliate by which an employee or Consultant is
     employed to terminate his employment or Consultancy at any time.

          13.4. WITHHOLDING OF TAXES. The Company shall have the right to deduct
     from any payment to be made to a Participant, or to otherwise require,
     prior to the issuance or delivery of any shares of Common Stock or the
     payment of any cash hereunder, payment by the Participant of, any Federal,
     state or local taxes required by law to be withheld. Upon the vesting of
     Restricted Stock, or upon making an election under Section 83(b) of the
     Code, a Participant shall pay all required withholding to the Company.

          Any such withholding obligation with regard to any Participant may be
     satisfied, subject to the consent of the Committee, by reducing the number
     of shares of Common Stock otherwise deliverable or by delivering shares of
     Common Stock already owned. Any fraction of a share of Common Stock
     required to satisfy such tax obligations shall be disregarded and the
     amount due shall be paid instead in cash by the Participant.

          13.5. LISTING AND OTHER CONDITIONS.

               (a) Unless otherwise determined by the Committee, as long as the
          Common Stock is listed on a national securities exchange or system
          sponsored by a national securities association, the issuance of any
          shares of Common Stock pursuant to an Award shall be conditioned upon
          such shares being listed on such exchange or system. The Company shall
          have no obligation to issue such shares unless and until, such shares
          are so listed, and the right to exercise any Option with respect to
          such shares shall be suspended until such listing has been effected.

                                       23

<PAGE>

               (b) If at any time counsel to the Company shall be of the opinion
          that any sale or delivery of shares of Common Stock pursuant to an
          Award is or may in the circumstances be unlawful or result in the
          imposition of excise taxes on the Company under the statutes, rules or
          regulations of any applicable jurisdiction, the Company shall have no
          obligation to make such sale or delivery, or to make any application
          or to effect or to maintain any qualification or registration under
          the Securities Act of 1933, as amended, or otherwise with respect to
          shares of Common Stock or Awards, and the right to exercise any Option
          shall be suspended until, in the opinion of said counsel, such sale or
          delivery shall be lawful or will not result in the imposition of
          excise taxes on the Company.

               (c) Upon termination of any period of suspension under this
          Section 14.5, any Award affected by such suspension which shall not
          then have expired or terminated shall be reinstated as to all shares
          available before such suspension and as to shares which would
          otherwise have become available during the period of such suspension,
          but no such suspension shall extend the term of any Option.

               (d) A Participant shall be required to supply the Company with
          any certificates, representations and information that the Company
          requests and otherwise cooperate with the Company in obtaining any
          listing, registration, qualification, exemption, consent or approval
          the Company deems necessary or appropriate.

          13.6. GOVERNING LAW. The Plan shall be governed and construed in
     accordance with the laws of the State of Delaware (regardless of the law
     that might otherwise govern under applicable Delaware principles of
     conflict of laws).

          13.7. CONSTRUCTION. Wherever any words are used in the Plan in the
     masculine gender they shall be construed as though they were also used in
     the feminine gender in all cases where they would so apply, and wherever
     any words are used herein in the singular form they shall be construed as
     though they were also used in the plural form in all cases where they would
     so apply.

          13.8. OTHER BENEFITS. No Award payment under the Plan shall be deemed
     compensation for purposes of computing benefits under any retirement plan
     of the Company or its Affiliates nor affect any benefits under any other
     benefit plan now or subsequently in effect under which the availability or
     amount of benefits is related to the level of compensation unless
     specifically provided to the contrary under the plan.

          13.9. COSTS. The Company shall bear all expenses included in
     administering the Plan, including expenses of issuing Common Stock pursuant
     to any Awards hereunder.

          13.10. NO RIGHT TO SAME BENEFITS. The provisions and terms of Awards
     need not be the same with respect to each Participant, and such Awards to
     individual Participants need not be the same in subsequent years.

                                       24

<PAGE>

          13.11. DEATH/DISABILITY. The Committee may in its discretion require
     the transferee of a Participant to supply it with written notice of the
     Participant's death or Disability and to supply it with a copy of the will
     (in the case of the Participant's death) or such other evidence as the
     Committee deems necessary to establish the validity of the Transfer of an
     Award. The Committee may also require that the agreement of the transferee
     be bound by all of the terms and conditions of the Plan.

          13.12. SECTION 16(B) OF THE EXCHANGE ACT. All elections and
     transactions under the Plan by persons subject to Section 16 of the
     Exchange Act involving shares of Common Stock are intended to comply with
     any applicable exemptive condition under Rule 16b-3. The Committee may
     establish and adopt written administrative guidelines, designed to
     facilitate compliance with Section 16(b) of the Exchange Act, as it may
     deem necessary or proper for the administration and operation of the Plan
     and the transaction of business thereunder.

          13.13. SEVERABILITY OF PROVISIONS. If any provision of the Plan shall
     be held invalid or unenforceable, such invalidity or unenforceability shall
     not affect any other provisions hereof, and the Plan shall be construed and
     enforced as if such provisions had not been included.

          13.14. HEADINGS AND CAPTIONS. The headings and captions herein are
     provided for reference and convenience only, shall not be considered part
     of the Plan, and shall not be employed in the construction of the Plan.

                                  ARTICLE XIV.

                             EFFECTIVE DATE OF PLAN

     The Plan shall become effective upon adoption by the Board, subject to the
approval of this Plan by the stockholders of the Company in accordance with the
laws of the State of Delaware and the requirements of any applicable national
securities exchange or automated quotation system or such later date as provided
in the adopting resolution, provided, that, the stockholders' approval of the
Joint Plan of Reorganization shall be deemed to satisfy the stockholder and
approval requirement set forth in the foregoing sentence.

                                   ARTICLE XV.

                                  TERM OF PLAN

     No Award shall be granted pursuant to the Plan on or after the tenth (10th)
anniversary of the earlier of the date this Plan is adopted or the date of
stockholder approval, but Awards granted prior to such tenth (10th) anniversary
may extend beyond that date.

                                       25

<PAGE>

                                  ARTICLE XVI.

                                  NAME OF PLAN

     The Plan shall be known as the "Golden Books Family Entertainment, Inc.
1999 Equity Award Plan."

                                       26

<PAGE>

                                    EXHIBIT A

                              PERFORMANCE CRITERIA

          Performance Goals established for purposes of conditioning the grant
of an Award of Restricted Stock based on performance or the vesting of
performance-based Awards of Restricted Stock or Performance Shares shall be
based on one or more of the following performance criteria ("Performance
Criteria"): (i) the attainment of certain target levels of, or a specified
percentage increase in, revenues, income before income taxes and extraordinary
items, net income, earnings before income tax, earnings before interest, taxes,
depreciation and amortization, funds from operation of real estate investments
or a combination of any or all of the foregoing; (ii) the attainment of certain
target levels of, or a percentage increase in, after-tax or pre-tax profits
including, without limitation, that attributable to continuing and/or other
operations; (iii) the attainment of certain target levels of, or a specified
increase in, operational cash flow; (iv) the achievement of a certain level of,
reduction of, or other specified objectives with regard to limiting the level of
increase in, all or a portion of, the Company's bank debt or other long-term or
short-term public or private debt or other similar financial obligations of the
Company, which may be calculated net of such cash balances and/or other offsets
and adjustments as may be established by the Committee; (v) the attainment of a
specified percentage increase in earnings per share or earnings per share from
continuing operations; (vi) the attainment of certain target levels of, or a
specified increase in return on capital employed or return on invested capital;
(vii) the attainment of certain target levels of, or a percentage increase in,
after-tax or pre-tax return on stockholders' equity; (viii) the attainment of
certain target levels of, or a specified increase in, economic value added
targets based on a cash flow return on investment formula; (ix) the attainment
of certain target levels in the fair market value of the shares of the Company's
common stock; and (x) the growth in the value of an investment in the Company's
common stock assuming the reinvestment of dividends. For purposes of item (i)
above, "extraordinary items" shall mean all items of gain, loss or expense for
the fiscal year determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to a corporate transaction (including,
without limitation, a disposition or acquisition) or related to a change in
accounting principle, all as determined in accordance with standards established
by Opinion No. 30 of the Accounting Principles Board.

     In addition, such Performance Criteria may be based upon the attainment of
specified levels of Company (or subsidiary, division or other operational unit
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations. To the extent permitted under
Code Section 162(m), but only to the extent permitted under Code Section 162(m)
(including, without limitation, compliance with any requirements for stockholder
approval), the Committee may: (i) designate additional business criteria on
which the Performance Criteria may be based or (ii) adjust, modify or amend the
aforementioned business criteria.EXHIBIT 10.11
                          REGISTRATION RIGHTS AGREEMENT

     REGISTRATION  RIGHTS  AGREEMENT,   dated  as  of  January  25,  2000  (this
"Agreement"),  by and among GOLDEN BOOKS  PUBLISHING  COMPANY,  INC., a Delaware
corporation ("Publishing"),  GOLDEN BOOKS FAMILY ENTERTAINMENT, INC., a Delaware
Corporation ("Parent"),  and the Holders (as hereinafter defined) of Registrable
Securities  (as  hereinafter  defined)  who are parties to this  Agreement.  For
purposes of this  Agreement,  the term "Company"  refers to (i) Publishing as it
relates to the registration of Senior Notes,  (ii) Parent,  as it relates to the
registration  of Common Stock and Warrants  and,  (iii) each of  Publishing  and
Parent,  on a joint  and  several  basis,  for  purposes  of  Section  9 of this
Agreement.

     This  Agreement  is  being  entered  into in  accordance  with the Plan (as
hereinafter  defined) in  connection  with the  acquisition  of  Securities  (as
hereinafter  defined) by certain  holders  named on the  signature  page to this
Agreement pursuant to the Plan. To induce the holders of Registrable  Securities
(as  hereinafter  defined)  to  vote in  favor  of the  Plan,  the  Company  has
undertaken to register the Registrable  Securities under the Act (as hereinafter
defined) and to take  certain  other  actions  with  respect to the  Registrable
Securities.  This  Agreement  sets  forth  the  terms  and  conditions  of  such
undertaking.

     The parties hereby agree as follows:

     1.  DEFINITIONS. As used in this Agreement, and unless the context requires
a different meaning, the following terms have the meanings indicated:

     "ACT"  means the  Securities  Act of 1933,  as  amended,  and the rules and
regulations of the SEC promulgated hereunder.

     "APPROVED  UNDERWRITER"  has the  meaning  assigned to such term in Section
4(b).

     "APPROVED  UNDERWRITER  AMOUNT"  has the  meaning  assigned to such term in
Section 4(a).

     "BUSINESS DAY" means any day other than a Saturday,  Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
or executive order to close.

     "COMMON STOCK" means the Common Stock,  $0.01 par value, of Parent,  or any
other  capital  stock  of  Parent  into  which  such  stock is  reclassified  or
reconstituted.

     "COMPANY  UNDERWRITER"  has the  meaning  assigned  to such term in Section
5(a).

     "DISADVANTAGEOUS  CONDITION"  has the  meaning  assigned  to  such  term in
Section 3(f).

     "EFFECTIVE DATE" means the effective date of the Plan pursuant to the terms
thereof.

<PAGE>

     "EFFECTIVENESS  PERIOD"  has the  meaning  assigned to such term in Section
3(d).

     "EXCHANGE ACT" means the Securities  Exchange Act of 1934, as amended,  and
the rules and regulations of the SEC thereunder.

     "HOLDER" has the meaning assigned to such term in Section 2(b).

     "INDEMNIFIED PARTY" has the meaning assigned to such term in Section 9(c).

     "INDEMNIFYING PARTY" has the meaning assigned to such term in Section 9(c).

     "INITIAL  SHELF  REGISTRATION"  has the  meaning  assigned  to such term in
Section 3(a) hereof.

     "INITIATING HOLDERS" has the meaning assigned to such term in Section 4(a).

     "INSPECTOR" has the meaning assigned to such term in Section 7(a)(ix).

     "NASD" has the meaning assigned to such term in Section 7(a)(xv).

     "NASDAQ" has the meaning assigned to such term in Section 7(a)(xvii).

     "PERSON" means any individual,  firm,  corporation,  company,  partnership,
trust,  incorporated or unincorporated  association,  limited liability company,
joint  venture,  joint  stock  company,  government  (or an agency or  political
subdivision  thereof)  or other  entity  of any  kind,  and  shall  include  any
successor (by merger or otherwise) of any such entity.

     "PLAN"  means the Joint  Plan of  Reorganization  of  Golden  Books  Family
Entertainment,  Inc., et al.,  under Chapter 11 of the United States  Bankruptcy
Code filed with the United States  Bankruptcy Court for the Southern District of
New York and  confirmed by such court on September  24, 1999, as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.

     "REGISTRABLE  SECURITIES" means, subject to Section 2(a), all securities in
each of the following: (1) a class comprising (a) shares of Common Stock held as
of the date hereof by the stockholders party hereto and (b) securities issued or
issuable in respect of shares of Common Stock issued,  issuable or held pursuant
to clause (1)(a) above by way of a dividend or stock split or in connection with
a  combination  of  shares,  recapitalization,  merger,  consolidation  or other
reorganization or otherwise;  (2) a class comprising (a) Senior Notes held as of
the date hereof by the  noteholders  party hereto and (b)  securities  issued or
issuable in respect of the Senior  Notes  issued,  issuable or held  pursuant to
clause (2)(a) above by way of interest  payments or  otherwise;  and (3) a class
comprising (a) Warrants held as of the date hereof by the  warrantholders  party
hereto and (b) securities  issued or issuable in respect of the Warrant  issued,
issuable  or held  pursuant  to clause  (3)(a)  above by way of  exercise  or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise.

                                        2

<PAGE>

     "REGISTRATION EXPENSES" has the meaning assigned to such term in Section 8.

     "REGISTRATION  STATEMENT"  shall  mean any  registration  statement  of the
Company  filed with the SEC in the  appropriate  form  pursuant to the Act which
covers any of the shares of Common Stock, the Senior Notes, the Warrants and any
other  Registrable  Securities  pursuant to the provisions of this Agreement and
all amendments and  supplements to any such  Registration  Statement,  including
post-effective  amendments,  in each case  including  the  prospectus  contained
therein,  all  exhibits  thereto and all  materials  incorporated  by  reference
therein.

     "SEC" means the Securities and Exchange Commission.

     "SENIOR   NOTES"  means  the  10.75%  Senior  Secured  Notes  due  2004  of
Publishing.

     "SUBSEQUENT  SHELF  REGISTRATION"  has the meaning assigned to such term in
Section 3(b).

     "TOTAL SECURITIES" has the meaning assigned to such term in Section 5(a).

     "WARRANTS"  means the  Warrants to purchase  shares of Common  Stock of the
Company at an exercise price of $23.03 per share of Common Stock.

     2.  SECURITIES SUBJECT TO THIS AGREEMENT.

     (a) REGISTRABLE SECURITIES. For the purposes of this Agreement, Registrable
Securities  will  cease to be  Registrable  Securities  when (i) a  registration
statement covering such Registrable Securities has been declared effective under
the Act by the  SEC and  such  Registrable  Securities  have  been  disposed  of
pursuant to such effective  registration  statement,  (ii) such  securities have
been sold to the  public  pursuant  to, or are  eligible  for sale to the public
without volume or manner of sale restrictions under, Rule 144(k) (or any similar
provision  then in force,  but not Rule 144A)  promulgated  under the Act, (iii)
such  securities  shall have been otherwise  sold or transferred  pursuant to an
exemption from the registration  requirements under the Act and new certificates
for such securities not bearing a legend restricting further transfer shall have
been delivered by the Company or its transfer  agent and subsequent  disposition
of such securities shall not require registration or qualification under the Act
or any similar state law then in force, or (iv) all such Securities  shall cease
to be outstanding

     (b) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a holder of
Registrable  Securities (a "HOLDER") whenever such Person (i) is a party to this
Agreement  (or a  permitted  transferee  thereof who has agreed in writing to be
bound by the terms of this Agreement) and (ii) owns Registrable  Securities.  If
the Company receives conflicting instructions,  notices or elections from two or
more persons with respect to the same  Registrable  Securities,  the Company may
act upon the basis of the  instructions,  notice or election  received  from the
registered owner of such Registrable Securities.

                                        3

<PAGE>

     3.  SHELF REGISTRATION UNDER THE ACT.

     (a) INITIAL SHELF REGISTRATION.  The Company shall (i) prepare and cause to
be filed with the SEC as soon as  practicable,  but not later than 75 days after
the  Effective  Date a  Registration  Statement  for an offering to be made on a
continuous  basis  pursuant  to Rule  415  under  the Act  (the  "INITIAL  SHELF
REGISTRATION")  covering all of the Registrable Securities and providing for the
sale of the  Registrable  Securities  by the  Holders  thereof  and (ii) use its
reasonable  best  efforts  to have  such  Initial  Shelf  Registration  declared
effective by the SEC as promptly as practicable thereafter.

     (b) SUBSEQUENT SHELF REGISTRATIONS.  If the Company determines to terminate
the  effectiveness  of the Initial  Shelf  Registration  prior to the end of the
Effectiveness  Period, then, subject to the provisions of this Agreement,  prior
to such  termination  the Company shall file, and shall use its reasonable  best
efforts  to  cause  the SEC to  declare  effective,  a  subsequent  Registration
Statement for an offering to be made on a continuous  basis pursuant to Rule 415
under  the  Act  (a  "SUBSEQUENT  SHELF  REGISTRATION")   covering  all  of  the
Registrable Securities then outstanding. The Subsequent Shelf Registration shall
be  filed  by the  Company  at such  time,  subject  to the  provisions  of this
Agreement,  prior to the termination of the  effectiveness  of the Initial Shelf
Registration  which is  reasonably  calculated  to cause  the  Subsequent  Shelf
Registration  to  become  effective  on or  prior  to  the  date  on  which  the
effectiveness of the Initial Shelf Registration terminates.

     (c) AMENDMENTS  TO  INITIAL   SHELF   REGISTRATION   OR  SUBSEQUENT   SHELF
REGISTRATIONS.  If the Initial Shelf Registration (except as provided in Section
3(b)) or any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the  Effectiveness  Period for any reason (other than because
of the sale of all of the Registrable  Securities covered thereby or Registrable
Securities cease to be  outstanding),  the Company shall use its reasonable best
efforts  to  obtain  the  prompt   withdrawal  of  any  order   suspending   the
effectiveness  thereof  or  take  such  other  actions  as may be  necessary  to
reinstate the effectiveness  thereof,  and in any event shall, within 60 days of
such   cessation  of   effectiveness,   either  (i)  amend  such  Initial  Shelf
Registration or Subsequent Shelf Registration in a manner reasonably  calculated
to obtain the withdrawal of the order suspending the effectiveness  thereof,  or
(ii) file a Subsequent Shelf  Registration  covering all Registrable  Securities
then  outstanding.  (Each of the Initial Shelf  Registration  and any Subsequent
Shelf  Registration  filed pursuant to paragraph 3(b) or this paragraph 3(c) are
referred to individually  herein as a "Shelf  Registration"  and collectively as
the "Shelf Registrations").

     (d) EFFECTIVENESS PERIOD. Subject to Section 3(f) hereof, the Company shall
use its reasonable  best efforts to keep the Shelf  Registration  (including the
Initial  Shelf   Registration   and/or  any   Subsequent   Shelf   Registration)
continuously  effective  under the Act from the date on which the Initial  Shelf
Registration  was  declared  effective  by the SEC  until  such  time  when  all
Registrable  Securities covered by the Initial Shelf Registration have been sold
(the  "Effectiveness  Period").  If a Subsequent  Shelf  Registration  is filed,
pursuant to Section 3(b) or 3(c) hereof,  the Company  shall use its  reasonable
best efforts to cause the Subsequent Shelf Registration to be declared effective
as soon as practicable after such filing and to keep such Registration Statement
continuously  effective  for a  period  after  such  effectiveness  equal to the
Effectiveness Period.

                                        4

<PAGE>

     (e) SUPPLEMENTS  AND  AMENDMENTS.  The  Company  shall  file  one  or  more
supplements or amendments to the Shelf  Registration  and the prospectus used in
connection  therewith if (i) required by the rules,  regulations or instructions
applicable  to the  registration  form used for such  Shelf  Registration,  (ii)
otherwise  required  by the SEC, or (iii)  requested  to do so in writing by any
Holder of Registrable  Securities to the extent necessary to include such Holder
as a selling securityholder in such registration statement.

     (f) BLACKOUT PERIODS.  With respect to a Shelf  Registration filed or to be
filed  pursuant to Section 3 hereof,  if a majority of the Board of Directors of
the Company shall  determine,  in its good faith  reasonable  judgment,  that to
maintain the continued  effectiveness  of such Shelf  Registration  or to permit
such  Shelf   Registration  to  become  effective  (or  if  a  Subsequent  Shelf
Registration is otherwise required to be filed, to file such Shelf Registration)
would be materially adverse to the Company's  financial  condition,  business or
operations  or may  require  a  disclosure  that  is not in the  Company's  best
interests   and  that   would  be   materially   adverse   to  the   Company  (a
"Disadvantageous  Condition") in light of the existence, or in anticipation,  of
(i)  any  acquisition  or  financing  activity  involving  the  Company,  or any
subsidiary  of the  Company,  including  a proposed  public  offering of debt or
equity securities,  (ii) an undisclosed material event, the public disclosure of
which  would have a material  adverse  effect on the  Company,  (iii) a proposed
material  transaction  involving  the  Company  or a  substantial  amount of its
assets,  or (iv) any other  circumstance  or condition  the  disclosure of which
would  materially  disadvantage  the Company),  and the existence of which would
render a  Subsequent  Shelf  Registration  to be  filed,  or  renders  any Shelf
Registration then filed or effective,  inadequate as failing to include material
information,  then the Company  may,  until Such  Disadvantageous  Condition  no
longer  exists (but not with  respect to more than one  occasion or more than 90
days in the aggregate  during any continuous  12-month  period) cause such Shelf
Registration  to be  withdrawn  and/or  cause  the  right  of  Holders  to  make
dispositions of Registrable Securities pursuant to such Shelf Registration to be
suspended,  or, in the case of a Subsequent Shelf  Registration that has not yet
been filed,  elect not to file Such  Subsequent  Shelf  Registration;  PROVIDED,
HOWEVER,  that the Company may not take any such action  until the elapse of 120
days  following the  commencement  of the  Effectiveness  Period;  and PROVIDED,
FURTHER,  that the Company may not take any such action unless it simultaneously
takes similar  action with respect to any other  Registration  Statements of the
Company  that are then  effective  or that are  contemplated  or  required to be
filed.  If the Company  determines to take any action  pursuant to the preceding
sentence,  the  Company  shall  deliver a notice to each  Holder of  Registrable
Securities  covered  or to be  covered  under  such  Shelf  Registration,  which
indicates that the Shelf  Registration is no longer  effective or usable or will
not be filed. Upon the receipt of any such notice,  such Holders shall forthwith
discontinue  any  sale  of  Registrable   Securities   pursuant  to  such  Shelf
Registration and any use of the prospectus contained in such Shelf Registration.
If any  Disadvantageous  Condition  shall  cease to  exist,  the  Company  shall
promptly notify any Holders who shall have ceased selling Registrable Securities
pursuant to an effective Shelf Registration as a result of such  Disadvantageous
Condition,  indicating  such cessation and  disclosing in reasonable  detail the
nature and outcome of such Disadvantageous  Condition. The Company shall, if any
Shelf  Registration  required to be filed or maintained under this Agreement has
been  withdrawn or not filed,  file  promptly,  at such time as it in good faith
reasonably  deems the earliest  practicable  time,  and shall use its reasonable
best  efforts to cause the SEC to declare  effective,  a new Shelf  Registration
covering the Registrable

                                        5

<PAGE>

Securities  that were  covered by such  withdrawn  Shelf  Registration  or to be
covered by such unfiled Shelf Registration.

     4.  UNDERWRITTEN OFFERINGS.

     (a) REQUEST FOR UNDERWRITING OFFERINGS. At any time, if one or more Holders
holding at least 25% of the Registrable  Securities covered by any Initial Shelf
Registration  or any Subsequent  Shelf  Registration  ("INITIATING  HOLDERS") so
elect,  an offering of  Registrable  Securities  pursuant to such Initial  Shelf
Registration or Subsequent  Shelf  Registration  may be effected on no more than
three (3) occasions in the form of a firm commitment  underwritten  offering and
the managing underwriter or underwriters selected for such offering shall be the
Approved  Underwriter selected in accordance with Section 4(b). Upon the receipt
of a written  request for an underwritten  offering,  the Company shall promptly
take such steps as are necessary or  appropriate  to prepare for such  offering.
Promptly,  but in no event  later than ten (10) days  after the  receipt of such
written  request for an  underwritten  offering,  the Company shall give written
notice  thereof  to all other  Holders  and  include  in such  underwriting  all
Registrable  Securities  held by any Holder from whom the Company has received a
written request for inclusion therein.  In such event, the Company shall use its
reasonable  best  efforts to include all  Registrable  Securities  of such class
requested by the Holders to be included in such  offering.  Such offering  shall
include  any  securities  requested  by  the  Company  to be  included  in  such
registration  to the extent  permitted  herein.  Notwithstanding  the  foregoing
sentence,  if the  Approved  Underwriter  advises the Company and the Holders in
writing  that,  in  its  opinion,  the  aggregate  amount  of  such  Registrable
Securities  requested to be included by the Holders in such offering  (including
those  securities  requested by the Company to be included in such  underwritten
offering) is sufficiently large to have an adverse effect on the success of such
offering, then the Company shall include in such registration only the aggregate
amount of Registrable Securities that in the opinion of the Approved Underwriter
may be sold without any such adverse effect on the success of such offering (the
"APPROVED UNDERWRITER AMOUNT"),  and (i) if the number of Registrable Securities
to be included in such  registration  is greater than the  Approved  Underwriter
Amount, then each Holder shall be entitled to have included in such registration
Registrable  Securities  of such  class  equal  to its pro rata  portion  of the
Approved Underwriter Amount,  based on the amounts of Registrable  Securities of
such class sought to be sold by the Holders in their requests for  participation
in the underwritten offering, and the Company and any Person who is not a Holder
shall not be entitled to include any securities therein,  and (ii) to the extent
that the number of  Registrable  Securities  of such class to be included by the
Holders  is less  than the  Approved  Underwriter  Amount,  securities  that the
Company  and any Person who is not a Holder  proposes  to  register  may also be
included  with such  priority  as the  Company  may in its  discretion  consider
appropriate.

     If, as a result of the  pro-ration  provision  of this  Section  4(a),  any
Holder  shall not be  entitled  to include  in a  registration  all  Registrable
Securities  of such class that such Holder has  requested to be  included,  such
Holder may elect to withdraw its request to include  Registrable  Securities  of
such  class in such  registration  or may  reduce  the  number  requested  to be
included; provided, however, that (i) such request must be made in writing prior
to the earlier of the execution of the  underwriting  agreement or the execution
of the  custody  agreement  with  respect  to such  registration  and (ii)  such
withdrawal or reduction shall be irrevocable.  Notwithstanding the foregoing, if
by the withdrawal

                                        6

<PAGE>

of such Registrable  Securities a greater number of Registrable  Securities held
by other Holders may be included in such  underwriting (up to the maximum of any
limitation  imposed by the  underwriters),  then the Company  shall offer to all
participating   Holders  who  have  included   Registrable   Securities  in  the
underwritten offering the right to include additional  Registrable Securities in
the same  proportion  used in  determining  the  underwriter  limitation in this
Section 4(a).

     The  Company  shall  cooperate  with the  Holders  in  order to  facilitate
communications  among such  Holders  solely for the  purpose  of  obtaining  the
consent of sufficient  Holders to request an underwritten  offering  pursuant to
this  Section  4,  including,   without  limitation,  by  providing  a  list  of
stockholders  of the Company  with their  respective  ownership  of  Registrable
Securities and contact  information,  which shall be used solely for purposes of
this Agreement.

     (b) SELECTION OF UNDERWRITERS. If any offering pursuant to an Initial Shelf
Registration  or  a  Subsequent  Shelf   Registration  is  in  the  form  of  an
underwritten  offering,  the majority of the Initiating Holders shall (i) select
and obtain an  investment  banking  firm of  national  reputation  to act as the
managing  underwriter  of the offering (the "APPROVED  UNDERWRITER");  provided,
that such underwriter shall be reasonably  satisfactory to the Company, and (ii)
the Company  and the  Holders  shall  enter into an  underwriting  agreement  in
customary  form  reasonably  satisfactory  to  the  Company  with  the  Approved
Underwriter.

     (c) EFFECTIVE  UNDERWRITTEN OFFERING. An underwritten offering requested by
the Holders  pursuant to Section 4(a) hereof shall not count as one of the three
(3) underwritten  offerings to which the Holders are entitled under Section 4(a)
unless (i) all of the  Registrable  Securities  requested  to be included in the
underwritten  offering  are so included and sold  pursuant to such  underwritten
offering  or (ii)  Registrable  Securities  in an amount  equal to the  Approved
Underwriter Amount is included and sold pursuant to such underwritten  offering;
provided that the Approved  Underwriter  Amount include not less than 75% of all
Registrable Securities requested to be included in such underwritten offering.

     5.  PIGGY-BACK REGISTRATION

     (a) PIGGY-BACK  RIGHTS.  If  the Company  proposes  to file a  registration
statement  under the Act with  respect to an offering by the Company for its own
account of any class of security  (other than a  registration  statement on Form
S-4 or S-8 or any  successor  form) under the Act,  then the Company  shall give
written  notice of such  proposed  filing to each of the  Holders,  which notice
shall  be  delivered  as soon as  practicable  (but in no  event  fewer  than 15
business  days before the  anticipated  filing  date or 10 business  days if the
Company is subject to the filing  requirements  of the Exchange Act and eligible
to use Form S-3 (or F-3) under the Act) and shall describe in reasonable  detail
the proposed  registration  and intended method of  distribution  and offer such
Holders the opportunity to register the number of Registrable Securities as each
such Holder may request.  The Company shall use its  reasonable  best efforts to
permit the Holders who have  requested to participate  in the  registration  for
such offering  within twenty (20) days of the delivery of notice provided for in
the preceding  sentence to include such Registrable  Securities in such offering
on the same terms and  conditions  as the  securities  of the  Company  included
therein.  Notwithstanding  the  foregoing,  if  such  registration  involves  an
underwritten offering and the managing underwriters or underwriters (the

                                        7

<PAGE>

"COMPANY  UNDERWRITER")  shall advise the Holders of  Registrable  Securities in
writing  that, in its opinion,  the total amount of  securities  requested to be
included in such offering (the "TOTAL  SECURITIES") is sufficiently  large so as
to have an  adverse  effect  on the  success  of the  distribution  of the Total
Securities,  then the Company shall  include in such  registration,  first,  all
securities  that the Company  proposed to register for its own account,  second,
all  securities  requested to be registered by the Holders,  pro rata among such
Holders (based upon the number of Registrable  Securities which each such Holder
requested to be included in such registration),  and third, all other securities
proposed  to be  registered,  in each  case,  to the  extent  of the  number  of
securities  which the  Company is so advised  can be sold in (or during the time
of) such offering without having such adverse effect.

     (b) PRIORITY  OF  REGISTRATIONS.  If  the  Company   proposes  to  register
securities for its own account or for the account of any selling  stockholder at
a time when Holders have requested an underwritten  offering pursuant to Section
4 hereof, then the underwritten  offering requested pursuant to Section 4 hereof
shall be given priority.

     (c) EXPENSES.   The  Company  shall  bear  all  Registration   Expenses  in
connection with any  registration  pursuant to this Section 5 in accordance with
Section 8.

     (d) CONDITIONS AND LIMITATIONS ON PIGGYBACK REGISTRATIONS.  If, at any time
after giving  written  notice of its  intention to register any  securities  and
prior to the effective date of the  registration  statement  filed in connection
with such  registration,  the  Company  shall  determine  for any  reason not to
register or to delay  registration of such  securities,  the Company may, at its
election,   give  written  notice  of  such  determination  to  all  Holders  of
Registrable  Securities and, (i) in the case of a determination not to register,
shall be relieved of its  obligation to register the  Registrable  Securities in
connection  with  such  abandoned  registration  and  (ii)  in  the  case  of  a
determination to delay the registration of its securities, shall be permitted to
delay the registration of such Registrable Securities for the same period as the
delay in registering such other securities.

     Any Holder  shall have the right to withdraw  its request for  inclusion of
its  Registrable  Securities  in any  registration  statement  pursuant  to this
Section 5 by giving  written  notice to the Company of its request to  withdraw;
PROVIDED,  HOWEVER,  that (i) such request must be made in writing  prior to the
earlier of the execution of the  underwriting  agreement or the execution of the
custody  agreement with respect to such  registration  and (ii) such  withdrawal
shall be irrevocable and, after making such withdrawal, a Holder shall no longer
have any right to include Registrable Securities in the registration as to which
such withdrawal was made.

     6.  HOLDBACK AGREEMENTS.

     (a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS.  Each Holder whose  Registrable
Securities are covered by a Registration  Statement  filed pursuant to Section 4
or  Section 5 agrees  not to  effect  any  public  sale or  distribution  of any
Registrable Securities being registered or of any securities convertible into or
exchangeable or exercisable for such  Registrable  Securities,  including a sale
pursuant to Rule 144 under the Act, during a period of not more than one hundred
and twenty (120 days (which period, in any case, shall not exceed the applicable
period under Section 6(b))  commencing on the effective  date of such  piggyback
registration or underwritten offering pursuant

                                        8

<PAGE>

to  Section  4  hereof  (except  as  part of such  registration)  (the  "Lock-Up
Period"),  as may  be  requested  by the  Approved  Underwriter  or the  Company
Underwriter, in the case of an underwritten public offering;  PROVIDED, HOWEVER,
that if any other  holder of  securities  of the  Company  shall be subject to a
shorter  period,  then the Lock-Up  Period  shall be such shorter  period.  Each
Holder also agrees that during the Lock-Up  Period,  it shall not, to the extent
requested  by the Company and such  underwriter,  directly or  indirectly  sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise  transfer or dispose of (other than to
donees who agree to be similarly bound) any Registrable Securities held by it at
any time during  such period  (except  Registrable  Securities  included in such
registration).

     (b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY.  The  Company agrees not to
effect any public sale or distribution of any Registrable Securities for its own
account (except  pursuant to  registrations  on Form S-4 or S-8 or any successor
form under the Act) during a period of not more than ninety (90) days commencing
on the  effective  date of any  registration  statement in which the Holders are
participating, as may be reasonably requested by the Approved Underwriter or the
Company Underwriter (except for securities being sold by the Company for its own
account under such registration statement).

     7.  REGISTRATION PROCEDURES.

     (a) OBLIGATIONS  OF  THE  COMPANY.  Whenever  registration  of  Registrable
Securities  is  required  pursuant to Section 3, 4 or 5 of this  Agreement,  the
Company shall use its  reasonable  best efforts to effect the  registration  and
sale of such  Registrable  Securities in accordance  with the intended method of
distribution thereof as quickly as practicable,  and in connection with any such
request, the Company shall, as expeditiously as possible:

         (i)   prepare and file with the SEC (in any event not later than ninety
(90) Days  after  receipt  of a request to file a  registration  statement  with
respect  to  Registrable  Securities,  or  with  respect  to the  Initial  Shelf
Registration  not later  than  sixty  (60)  days  after  the  Effective  Date) a
registration  statement on any form on which the Company then  qualifies,  which
counsel  for the  Company  shall deem  appropriate  and  pursuant  to which such
offering  may be made in  accordance  with the intended  method of  distribution
thereof (except that the  registration  statement shall contain such information
required  to be  included  in a  registration  statement  on  Form  S-1  as  may
reasonably  be  requested  for  marketing  or  other  purposes  by the  Approved
Underwriter or the Company Underwriter),  and use its reasonable best efforts to
cause any Shelf Registration  requested hereunder to become effective as soon as
reasonably  practicable  after the initial  filing thereof (and in any event not
later than  seventy-five  (75) days  thereafter),  subject to the  provisions of
Section 4(f) and Section 5(d) of this Agreement;

         (ii)  notify   each   seller   of  Registrable   Securities  under  any
registration  statement  of any stop order issued or  threatened  by the SEC and
take all reasonable  action  required to prevent the entry of such stop order or
to remove it if entered;

                                        9

<PAGE>

         (iii) prepare   and  file  with  the  SEC  such  amendments,  including
post-effective  amendments to each Registration Statement as may be necessary to
keep such Registration  Statement continuously effective for the applicable time
period required  hereunder;  cause the related  prospectus to be supplemented by
any required prospectus supplement,  and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) promulgated under the Act;
and comply with the  provisions  of the Act and the Exchange Act with respect to
the disposition of all securities covered by such Registration  Statement during
such  period in  accordance  with the  intended  methods of  disposition  by the
sellers  thereof set forth in such  Registration  Statement  as so amended or in
such prospectus as so supplemented;

         (iv)  as  soon  as  reasonably  possible,  furnish  to  each  seller of
Registrable  Securities  to be included in a  registration  statement,  prior to
filing a registration  statement or any supplement or amendment thereto,  copies
of such registration statement,  supplement or amendment as it is proposed to be
filed,  and after  such  filing  such  number  of  copies  of such  registration
statement,  each  amendment and  supplement  thereto (in each case including all
exhibits  thereto),  the  prospectus  included  in such  registration  statement
(including  each  preliminary  prospectus) and such other documents as each such
seller may  reasonably  request in order to facilitate  the  disposition  of the
Registrable Securities owned by such seller;

         (v)   use its  reasonable  best  efforts to  register or  qualify  such
Registrable  Securities  under  such other  securities  or blue sky laws of such
jurisdictions  as any  seller of  Registrable  Securities  may  request,  and to
continue such  qualification in effect in each such  jurisdiction for as long as
is permissible pursuant to the laws of such jurisdiction, or for as long, as any
such  seller  requests  or until all of such  Registrable  Securities  are sold,
whichever  is  shortest,  and do any and all other acts and things  which may be
reasonably  necessary or advisable to enable any such seller to  consummate  the
disposition in such  jurisdictions  of the Registrable  Securities owned by such
seller; provided, however, that the Company shall not be required to (A) qualify
generally  to do business in any  jurisdiction  where it would not  otherwise be
required to qualify but for this Section 7(a)(v), (B) subject itself to taxation
in any such  jurisdiction  or (C)  consent to general  service of process in any
such jurisdiction;

         (vi)  use its reasonable  best efforts to  obtain  all other approvals,
consents,  exemptions  or  authorizations  from such  governmental  agencies  or
authorities  as may be  necessary  to enable  the  sellers  of such  Registrable
Securities to consummate the disposition of such Registrable Securities;

         (vii) notify each seller of Registrable  Securities  at any time when a
prospectus  relating  thereto is  required  to be  delivered  under the Act upon
discovery  that,  or upon the  happening of any event as a result of which,  the
prospectus included in such registration  statement contains an untrue statement
of a material  fact or omits to state any  material  fact  required to be stated
therein or necessary to make the  statements  therein not misleading in light of
the  circumstances  under which they were made,  and the Company shall  promptly
prepare a supplement or amendment to such prospectus so that,  after delivery of
such supplement or amendment to the purchasers of such  Registrable  Securities,
such  prospectus,  as so amended or  supplemented,  shall not  contain an untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or

                                       10

<PAGE>

necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances under which they were made;

         (viii) enter  into  customary  agreements  (including  an  underwriting
agreement in customary  form) and take such other  actions as may be  reasonably
required in order to expedite or facilitate the disposition of such  Registrable
Securities;

         (ix)   make  available  for  inspection  by  any  seller of Registrable
Securities,  any underwriter  participating in any disposition  pursuant to such
registration statement, and any attorney,  accountant or other agent retained by
any  seller  or  underwriter  (each,  an  "Inspector"  and,  collectively,   the
"INSPECTORS"),  all financial and other books and records,  pertinent  corporate
documents and properties of the Company and any subsidiaries thereof as shall be
reasonably   necessary   to  enable  them  to  exercise   their  due   diligence
responsibility  under the Act,  and cause the  Company's  and any  subsidiaries'
officers,   directors  and  employees,  and  counsel  to  the  Company  and  the
independent  public  accountants  of the  Company,  to  supply  all  information
reasonably  requested by any such Inspector in connection with such registration
statement;

         (x)    if  requested  by any  underwriter  of  Registrable  Securities,
obtain a "cold comfort" letter from the Company's independent public accountants
in customary form and covering such matters of the type  customarily  covered by
"cold comfort" letters, as the managing underwriter may reasonably request;

         (xi)   if  requested  by  any  underwriter of  Registrable  Securities,
furnish on the date such securities are delivered to the  underwriters  for sale
pursuant  to  such  registration,  an  opinion,  dated  such  date,  of  counsel
representing the Company for the purposes of such registration, addressed to the
underwriters,  covering such legal matters with respect to the  registration  in
respect of which such opinion is being given as such  underwriter may reasonably
request and as are customarily included in such opinions;

         (xii)  otherwise  use  its  reasonable  best  efforts  to  comply  with
all  applicable  rules and  regulations  of the SEC,  and make  available to its
security  holders,  as soon as reasonably  practicable but no later than fifteen
(15) months after the effective date of the registration  statement, an earnings
statement  covering a period of twelve (12) months beginning after the effective
date of the registration  statement,  in a manner which satisfies the provisions
of Section 11(a) of the Act and Rule 158 thereunder;

         (xiii) keep a  single representative  of the  sellers of each  class of
Registrable Securities (appointed by the Holders of a majority of the respective
classes  of  Registrable  Securities  in  the  registration)  advised  as to the
initiation and progress of any registration under Section 3, 4 or 5 hereunder;

         (xiv)  provide  officers'  certificates  and  other  customary  closing
documents;

                                       11

<PAGE>

         (xv)    cooperate   with  each  seller of  Registrable  Securities  and
each underwriter participating in the disposition of such Registrable Securities
and  underwriters'  counsel in connection  with any filings  required to be made
with the National Association of Securities Dealers, Inc. (the "NASD");

         (xvi)   cause  appropriate officers as are  requested  by  an  Approved
Underwriter or a Company  Underwriter to participate in a "road show" or similar
marketing  effort  being  conducted  by  such  underwriter  with  respect  to an
underwritten offering pursuant to a Shelf Registration or underwritten piggyback
registration including Registrable Securities;

         (xvii)  use its reasonable best efforts  to cause all such  Registrable
Securities (other than the Warrants) to be listed on each securities exchange on
which similar securities issued by the Company are then listed and, with respect
to Registrable  Securities  constituting Common Stock, if no such securities are
so  listed,  to use its  reasonable  best  efforts  to  cause  such  Registrable
Securities  to be listed on the New York  Stock  Exchange,  the  American  Stock
Exchange or the Nasdaq Stock Market ("NASDAQ") and, if listed on Nasdaq, use its
reasonable  best  efforts  to (A)  secure  designation  of all such  Registrable
Securities as a Nasdaq  "national  market system security" within the meaning of
Rule 11 Aa2-1 under the Exchange Act and (B) cause such  Registrable  Securities
to be listed on the Nasdaq  National  Market or,  failing that, to secure Nasdaq
authorization for such Registrable Securities; and

         (xviii) use  its  reasonable  best  efforts to  take all  other actions
necessary to effect the registration of the Registrable Securities  contemplated
hereby.

     (b) SELLER INFORMATION. The Company may require as a condition precedent of
the Company's  obligations tinder this Section 7 that each seller of Registrable
Securities as to which any registration is being effected furnish to the Company
such information  regarding such seller and the distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing.

     (c) NOTICE TO  DISCONTINUE.  Each Holder whose  Registrable  Securities are
covered by a Registration  Statement filed pursuant to Sections 3, 4 or 5 agrees
that,  upon receipt of any notice from the Company of the happening of any event
of the  kind  described  in  Section  7(a)(vii),  such  Holder  shall  forthwith
discontinue  disposition of Registrable  Securities pursuant to the registration
statement  covering such  Registrable  Securities until such Holder's receipt of
the copies of the  supplemented  or amended  prospectus  contemplated by Section
7(a)(vii)  and, if so directed by the Company in the case of an event  described
in Section 7(a)(vii), such Holder shall deliver to the Company (at the Company's
expense)  all copies,  other than  permanent  file copies then in such  Holder's
possession,  of the prospectus  covering such  Registrable  Securities  which is
current at the time of receipt of such  notice.  If the  Company  shall give any
such notice,  the Company shall extend the period during which such registration
statement shall be maintained  effective pursuant to this Agreement  (including,
without limitation,  the period referred to in Section 7(a)(ii) by the number of
days during the period from and  including the date of the giving of such notice
pursuant to Section  7(a)(vii) to and  including  the date when the Holder shall
have received the copies of the

                                       12

<PAGE>

supplemented or amended prospectus contemplated by, and meeting the requirements
of, Section 7(a)(vii).

     8.  REGISTRATION EXPENSES. The Company shall pay all of the expenses (other
than  underwriting  discounts and  commissions)  arising from or incident to the
performance  of,  or  compliance  with,  this  Agreement,   including,   without
limitation,  (a) SEC, stock exchange and NASD  registration and filing fees, (b)
all fees and expenses  incurred in connection  with complying with securities or
blue sky laws  (including,  without  limitation,  reasonable  fees,  charges and
disbursements  of  counsel in  connection  with blue sky  qualifications  of the
Registrable Securities),  (c) all printing, messenger and delivery expenses, (d)
the fees,  charges  and  disbursements  of  counsel  to the  Company  and of its
independent  public accountants and any other accounting and legal fees, charges
and  expenses  incurred  by the  Company  (including,  without  limitation,  any
expenses  arising  from any  special  audits  required  in  connection  with any
registration)  and (e) the reasonable  fees,  charges and  disbursements  of any
special  experts  retained by the Company in  connection  with any  registration
pursuant to the terms of this Agreement,  regardless of whether the registration
statement filed in connection with such registration is declared effective.  The
Company  shall also pay the  reasonable  fees,  charges and  disbursements  of a
single counsel to all of the Holders participating in any requested underwritten
offering  pursuant to Section 4 hereof.  All of the  expenses  described in this
Section  8 are  referred  to  in  this  Agreement  as  "REGISTRATION  EXPENSES".
Notwithstanding  the foregoing  provisions of this Section 8, in connection with
any registration or underwritten offering hereunder,  each Holder of Registrable
Securities  being   registered   shall  pay  all   underwriting   discounts  and
commissions,  all  expenses  of counsel  (except  as set forth in the  preceding
sentence) and experts retained by such Holder, and any capital gains,  income or
transfer taxes, if any, attributable to the sale of such Registrable  Securities
(pro rata in the case of payments of discounts  and  commissions  in  accordance
with the number of shares sold in the offering).

     9.  INDEMNIFICATION; CONTRIBUTION.

     (a) INDEMNIFICATION  BY THE COMPANY.  The Company  agrees to  indemnify and
hold harmless to the full extent  permitted by law each Holder,  its  directors,
officers, partners, employees, advisors and agents, and each Person who controls
(within  the  meaning  of the Act or the  Exchange  Act) such  Holder,  from and
against  any and all  losses,  claims,  damages,  expenses  (including,  without
limitation,  reasonable costs of investigation and fees, disbursements and other
charges of counsel)  or other  liabilities  resulting  from or arising out of or
based upon any untrue, or alleged untrue, statement of a material fact contained
in any registration statement,  prospectus or preliminary prospectus (as amended
or  supplemented)  or  any  document  incorporated  by  reference  in any of the
foregoing  or  resulting  from or arising  out of or based upon any  omission or
alleged  omission to state therein a material fact required to be stated therein
or necessary to make the  statements  therein (in the case of a  prospectus,  in
light of the circumstances  under which they were made), not misleading,  except
insofar  as the same are  caused by or  contained  in any  material  information
furnished  in writing to the Company by such Holder  expressly  for use therein.
The Company shall also indemnify any underwriters of the Registrable Securities,
their officers,  directors and employees,  and each Person who controls any such
underwriter  (within  the meaning of the Act and the  Exchange  Act) to the same
extent as provided above with respect to the  indemnification  of the Holders of
Registrable Securities.

                                       13

<PAGE>

     (b) INDEMNIFICATION   BY  HOLDERS.   In  connection   with   any   proposed
registration  in which a Holder is  participating  pursuant to Section 3, 4 or 5
hereof,  each  such  Holder  shall  furnish  to  the  Company  in  writing  such
information with respect to such Holder as the Company may reasonably request or
as may be required by law for use in connection with any registration  statement
or prospectus  or  preliminary  prospectus  to be used in  connection  with such
registration  and each Holder agrees to indemnify and hold harmless the Company,
any  underwriter  retained  by  the  Company  and  their  respective  directors,
officers,  employees and each Person who controls (within the meaning of the Act
and the Exchange Act) the Company or such  underwriter to the same extent as the
foregoing  indemnity from the Company to the Holders  (subject to the exceptions
set  forth  in the  foregoing  indemnity,  the  proviso  to  this  sentence  and
applicable  law),  but only with  respect to any such  information  furnished in
writing by such Holder expressly for use therein;  provided,  however,  that the
liability  of any Holder  under this Section 9(b) shall be limited to the amount
of the net proceeds  received by such Holder in the offering giving rise to such
liability.

     (c) CONDUCT  OF  INDEMNIFICATION   PROCEEDINGS.  Any  Person  entitled   to
indemnification  hereunder  (the  "INDEMNIFIED  PARTY")  agrees  to give  prompt
written notice to the indemnifying  party (the  "INDEMNIFYING  PARTY") after the
receipt by the  Indemnified  Party of any written notice of the  commencement of
any action, suit,  proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant  to this  Agreement;  provided  that,  the  failure  so to  notify  the
Indemnifying  Party shall not relieve the  Indemnifying  Party of any  liability
that it may have to the  Indemnified  Party hereunder  unless such  Indemnifying
Party is materially prejudiced by such failure. If notice of commencement of any
such  action  is  given  to  the  Indemnifying  Party  as  above  provided,  the
Indemnifying Party shall be entitled to participate in and, to the extent it may
wish, jointly with any other Indemnifying  Party similarly  notified,  to assume
the defense of such action at its own  expense,  with  counsel  chosen by it and
reasonably  satisfactory to such Indemnified  Party. The Indemnified Party shall
have the right to employ separate  counsel in any such action and participate in
the defense thereof,  but the fees and expenses of such counsel shall be paid by
the Indemnified Party unless (i) the Indemnifying  Party agrees to pay the same,
(ii) the  Indemnifying  Party  fails to assume the  defense of such  action with
counsel  satisfactory to the Indemnified  Party in its reasonable  judgment,  or
(iii) the named parties to any such action  (including  any  impleaded  parties)
have been advised by such counsel that  representation of such Indemnified Party
and the  Indemnifying  Party by the same counsel  would be  inappropriate  under
applicable  standards  of  professional  conduct;  PROVIDED,  HOWEVER,  that the
Indemnifying  Party shall only have to pay the fees and  expenses of one firm of
counsel for all Indemnified Parties in each jurisdiction.  In the case of clause
(ii) and (iii) above, the Indemnifying  Party shall not have the right to assume
the defense of such action on behalf of such Indemnified  Party. No Indemnifying
Party  shall be liable for any  settlement  entered  into  without  its  written
consent, which consent shall not be unreasonably withheld. No Indemnifying Party
shall,  without  the  written  consent  of the  Indemnified  Party,  effect  the
settlement  or  compromise  of, or  consent  to the entry of any  judgment  with
respect  to,  any  pending  or  threatened  action or claim in  respect of which
indemnification  or  contribution  may be sought  hereunder  (whether or not the
Indemnified  Party is an  actual  or  potential  party to such  action or claim)
unless such  settlement,  compromise  or judgment (A) includes an  unconditional
release of the Indemnified  Party from all liability  arising out of such action
or claim and (B) does not include a statement as to, or an admission  of, fault,
culpability or a failure to act by or on behalf of any  Indemnified  Party.  The
rights afforded to any

                                       14

<PAGE>

Indemnified  Party  hereunder  shall be in  addition  to any  rights  that  such
Indemnified Party may have at common law, by separate agreement or otherwise.

     (d) CONTRIBUTION. If the indemnification provided for in Section 9 from the
Indemnifying  Party is  unavailable  to an  Indemnified  Party in respect of any
losses, claims, damages, expenses or other liabilities referred to therein, then
the Indemnifying  Party, in lieu of indemnifying such Indemnified  Party,  shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of  such  losses,  claims,  damages,  expenses  or  other  liabilities  in  such
proportion as is appropriate  to reflect the relative fault of the  Indemnifying
Party  and  the  Indemnified  Party  as  well as any  other  relevant  equitable
considerations.  The relative faults of such Indemnifying  Party and Indemnified
Party shall be  determined  by  reference  to, among other  things,  whether any
action in  question,  including  any untrue or  alleged  untrue  statement  of a
material fact or omission or alleged omission to state a material fact, was made
by,  or  relates  to  information   supplied  by,  such  Indemnifying  Party  or
Indemnified Party, and the Indemnifying Party's and Indemnified Party's relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  action;  PROVIDED,  HOWEVER,  that the  liability of any Holder under this
Section 9(d) shall be limited to the amount of the net proceeds received by such
Holder in the offering giving rise to such liability. The amount paid or payable
by a party  as a  result  of the  losses,  claims,  damages,  expenses  or other
liabilities  referred  to above  shall be  deemed  to  include,  subject  to the
limitations  set forth in Sections 9(a), 9(b) and 9(c), any legal or other fees,
charges or expenses  reasonably  incurred by such party in  connection  with any
investigation or proceeding.

     The  parties  hereto  agree  that it  would  not be just and  equitable  if
contribution  pursuant  to  this  Section  9(d)  were  determined  by  pro  rata
allocation or by any other method of  allocation  which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent  misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled  to  contribution  pursuant to this  Section
9(d).

     10. RULE 144;  OTHER  EXEMPTIONS.  With a view to making  available  to the
Holders the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without  registration or pursuant to a registration on
Form S-3,  the  Company  covenants  that it shall  file in a timely  manner  all
reports  required  to be filed by it under  the  Exchange  Act and the rules and
regulations  adopted by the SEC thereunder,  and that it shall take such further
action as each Holder may  reasonably  request  (including,  but not limited to,
providing  any  information  necessary  to  comply  with  Rules 144 and 144A (if
available with respect to resales of the Registrable Securities) under the Act),
all to the  extent  required  from  time to time to enable  such  Holder to sell
Registrable  Securities without registration under the Act within the limitation
of the  exemptions  provided  by (i) Rule 144 or Rule  144A (if  available  with
respect to resales of the Registrable  Securities)  under the Act, as such rules
may be amended  from time to time,  or (ii) any other rules or  regulations  now
existing or hereafter adopted by the SEC.

     11. CERTAIN  LIMITATIONS  ON   REGISTRATION   RIGHTS.  In  the  case  of  a
registration  under  Section 5, if the Company has  determined  to enter into an
underwriting  agreement in connection  therewith,  no Holder may  participate in
such registration unless such Holder (a) agrees to sell such Holder's

                                       15

<PAGE>

securities  on the basis  provided  therein and (b)  completes  and executes all
questionnaires,  powers-of-attorney,  custody agreements,  indemnities,  lock-up
agreements, underwriting agreements and other documents required under the terms
of such underwriting agreement.

     12. MISCELLANEOUS.

     (a) TERMINATION.  This  Agreement  shall  terminate  at such  time when  no
Registrable Securities are outstanding.

     (b) NO INCONSISTENT  AGREEMENTS;  OTHER  REGISTRATION  RIGHTS.  The Company
shall not enter  into any  agreement  with  respect  to its  securities  that is
inconsistent with the rights granted to the Holders in this Agreement other than
any lock-up  agreement with the  underwriters in connection with an underwritten
offering pursuant to which the Company agrees, for a period not in excess of one
hundred  eighty  (180)  days,  not to  register  for  sale,  and  not to sell or
otherwise  dispose  of,  Common  Stock  or any  securities  convertible  into or
exercisable or  exchangeable  for Common Stock.  The Company shall not grant any
other contractual registration rights in respect of the Common Stock which would
be inconsistent with the registration rights provided under this Agreement.

     (c) REMEDIES.  The Holders,  in addition to being  entitled to exercise all
rights  granted by law,  including  recovery  of  damages,  shall be entitled to
specific  performance of their rights under this  Agreement.  The Company agrees
that monetary  damages would not be adequate  compensation for any loss incurred
by reason of a breach  by it of the  provisions  of this  Agreement  and  hereby
agrees to waive in any action for specific performance the defense that a remedy
at law would be adequate.

     (d) AMENDMENTS  AND WAIVERS.  Except  as  otherwise  provided  herein,  the
provisions of this Agreement may not be amended,  modified or supplemented,  and
waivers or consents to departures from the provisions of such section may not be
given,  unless the Company has  obtained  the prior  written  consent of Holders
holding  at least  51% of each  class of the  Registrable  Securities  or,  with
respect to Sections 3(a),  3(b),  3(d), 4(a), 12(b) and 12(d) of this Agreement,
Holders holding at least 66 2/3% of each class of the Registrable Securities.

     (e) NOTICES. All notices,  demands and other communications provided for or
permitted  hereunder  shall be made in  writing  and shall be by  registered  or
certified  first-class  mail,  return  receipt  requested,  telecopier,  courier
service or personal delivery:

                 (i)    if to the Company:

                        Golden Books Publishing Company, Inc.
                        888 Seventh Avenue
                        New York, New York  10106-4100
                        Attention:  Philip Galanes, General Counsel
                        Telephone Number:  (212) 547-4466
                        Facsimile Number:  (212) 547-6771

                                       16

<PAGE>

                        or, as applicable:

                        Golden Books Family Entertainment, Inc.
                        888 Seventh Avenue
                        New York, New York 10106-4100
                        Attention:  Philip Galanes, General Counsel
                        Telephone Number:  (212) 547-4466
                        Facsimile Number:  (212) 547-6771

                 (ii)  if to Holders:

                       at the address set forth in the Company's records.

     Each such notice,  request or other  communication will be effective (a) if
given by certified mail, 96 hours after such  communication  is deposited in the
mails with certified  postage prepaid  addressed as aforesaid,  (b) one Business
Day after being furnished to a nationally  recognized overnight courier for next
Business Day delivery,  and (c) on the date sent if sent by electronic facsimile
transmission, receipt confirmed followed by a hard copy by mail.

     (f) SUCCESSORS AND ASSIGNS.  This  Agreement  shall inure to the benefit of
and be binding upon the successors and assigns of the parties hereto;  provided,
however,  that the registration  rights of the Holders and the other obligations
of  the  Company  contained  in  this  Agreement  shall,  with  respect  to  any
Registrable  Security,  be  automatically  transferred  from  a  Holder  to  any
subsequent  holder of such  Registrable  Security so long as such  security is a
Registrable  Security.  Notwithstanding  any transfer of such rights, all of the
obligations of the Company  hereunder  shall survive any such transfer and shall
continue to inure to the benefit of all transferees.

     (g) COUNTERPARTS.  This  Agreement  may  be  executed  in  any   number  of
counterparts and by the parties hereto in separate  counterparts,  each of which
when so  executed  shall be  deemed  to be an  original  and all of which  taken
together shall constitute one and the same agreement.

     (h) HEADINGS.  The  headings  in  this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

     (i) GOVERNING  LAW. This  Agreement  shall be governed by and  construed in
accordance  with  the laws of the  State  of New  York,  without  regard  to the
principles of conflicts of law of such State.

     (j) JURISDICTION.  Each party to this Agreement hereby  irrevocably  agrees
that any legal action or proceeding arising out of or relating to this Agreement
or any  agreements  or  transactions  contemplated  hereby may be brought in the
courts  of the State of New York or of the  United  States  of  America  for the
Southern  District  of New York and hereby  expressly  submits  to the  personal
jurisdiction  and venue of such courts for the  purposes  thereof and  expressly
waives  any  claim of  improper  venue and any claim  that  such  courts  are an
inconvenient  forum.  Each party hereby  irrevocably  consents to the service of
process of any of the aforementioned courts in any such suit,

                                       17

<PAGE>

action or proceeding by the mailing of copies thereof by registered or certified
mail,  postage prepaid,  to the address set forth in Section 12(e), such service
to become effective 10 days after such mailing.

     (k) SEVERABILITY. If any one or more of the provisions contained herein, or
the  application  thereof  in any  circumstance,  is held  invalid,  illegal  or
unenforceable  in any  respect  for  any  reason,  the  validity,  legality  and
enforceability of any such provision in every other respect and of the remaining
provisions  hereof shall not be in any way impaired,  it being intended that all
of the rights and  privileges of the Holders shall be enforceable to the fullest
extent permitted by law.

     (l) RULES OF CONSTRUCTION.  Unless the context otherwise requires,  "or" is
not exclusive,  and  references to sections or subsections  refer to sections or
subsections of this Agreement.

     (m) ENTIRE AGREEMENT.  This Agreement is intended by the parties as a final
expression  of their  agreement  and  intended  to be a complete  and  exclusive
statement of the agreement and understanding of the parties hereto in respect of
the  subject  matter  contained  herein.  There are no  restrictions,  promises,
warranties or  undertakings in respect of the subject matter  contained  herein,
other than those set forth or referred to herein. This Agreement  supersedes all
prior  agreements  and  understandings  between the parties with respect to such
subject matter.

     (n) INTERPRETATION.   This   Agreement  is   the   result  of   arms-length
negotiations  between the parties  hereto and has been  prepared  jointly by the
parties.  In applying and interpreting  the provisions of this Agreement,  there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.

     (o) FURTHER ASSURANCES.  Each of the parties shall execute such,  documents
and perform  such  further  acts as may be  reasonably  required or desirable to
carry out or to perform the provisions of this Agreement.

                                       18

<PAGE>

     IN WITNESS  WHEREOF,  the  undersigned  have  caused this  Agreement  to be
executed and delivered by their respective  officers hereunto duly authorized on
the date first above written.

                        GOLDEN BOOKS PUBLISHING
                        COMPANY, INC.

                        By: /s/
                            -------------------------------------
                            Name:   Philip Galares
                            Title:  Secretary

                        GOLDEN BOOKS FAMILY
                        ENTERTAINMENT, INC.

                        By: /s/
                            -------------------------------------
                            Name:   Philip Galares
                            Title:  Secretary

                        HOLDERS: BENNETT RESTRUCTURING FUND, L.P.

                        [   /s/
                         ----------------------------------------
                        By: Restructuring Capital Associates, L.P.
                            its General Partner

                        By: /s/  BENNETT CAPITAL CORPORATION,
                            -------------------------------------
                        Its General Partner
                            Name:   James D. Bennett
                            Title:] President

                        BENNETT OFFSHORE RESTRUCTURING FUND, INC.

                        [   JAMES D. BENNETT
                         ----------------------------------------

                                       19

<PAGE>

                        By:
                            -------------------------------------
                            Name:   James D. Bennett
                            Title:] Director

                        [
                         ----------------------------------------

                        By:
                            -------------------------------------
                            Name:
                            Title:]

                        [
                         ----------------------------------------

                        By:
                            -------------------------------------
                            Name:
                            Title:]

                                       20

<PAGE>

     IN WITNESS  WHEREOF,  the  undersigned  have  caused this  Agreement  to be
executed and delivered by their respective  officers hereunto duly authorized on
the date first above written.

                        GOLDEN BOOKS PUBLISHING
                        COMPANY, INC.

                        By:
                            -------------------------------------
                            Name:
                            Title:

                        GOLDEN BOOKS FAMILY
                        ENTERTAINMENT, INC.

                        By:
                            -------------------------------------
                            Name:
                            Title:

                               HOLDERS

                               PRINCIPAL LIFE INSURANCE COMPANY

                               By: Principal Capital Management, LLC, a Delaware
                                   limited liability company, its authorized
                                   signatory

By: DEBRA SVOBODA EPP          By: /s/
    ------------------------       ---------------------------------------
    Name:  Debra Svoboda Epp       Name: CHRISTOPHER J. HENDERSON, Counsel
    Title:  Counsel                Title:]

                               [   /s/  JAMES D. BENNETT
                                ------------------------------------------

                               BENNETT RESTRUCTURING FUND, L.P.
                               By: Restructuring Capital Associates, its General
                                   Partner

                               By: Bennett Capital Corporation, its General
                                   Partner

                               By: ---------------------------------------
                                   Name:
                                   Title:]

                                       21

<PAGE>

                            BENNETT OFFSHORE RESTRUCTURING FUND, INC.

                            [
                             ----------------------------------------

                            BY: /s/  JAMES D. BENNETT
                                -------------------------------------
                                Name:  James D. Bennett
                                Title:]  Director

                                       22

<PAGE>

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