<PAGE>
As filed with the Securities and Exchange Commission
on August 20, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
06-1104930
(I.R.S. Employer Identification No.)
850 Third Avenue
New York, New York 10022
(212) 583-6700
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Philip Galanes, Esq.
General Counsel and Vice President, Legal Affairs
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
850 Third Avenue
New York, New York 10022
(212) 583-6700
Copy to:
Andre Weiss, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
(212) 756-2431
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of Proposed Proposed
each class of maximum maximum Amount
securities Amount offering aggregate of
to be to be price per offering registration
registered registered share(1) price(1) fee
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Common Stock, 901,408 shares $9.875 $8,901,404 $2,698.00
par value
$.01 per
share
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act, based on the average of the
high and low prices ($9.875) of the Common Stock as reported on The Nasdaq
National Market on August 18, 1997.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 20, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF
ANY SUCH STATE.
PROSPECTUS
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
Common Stock, par value $.01 per share
901,408 Shares
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This Prospectus relates to 901,408 shares of common stock, par
value $0.01 per share (the "Common Stock"), of Golden Books Family
Entertainment, Inc., a Delaware corporation ("Golden Books" or the "Company"),
which may be offered from time to time by certain stockholders of the Company
(such stockholders being hereinafter described as the "Selling Stockholders").
The Selling Stockholders acquired the Common Stock in a transaction exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"). The Company will not receive any proceeds from the
sale of the shares offered hereby.
The Common Stock of the Company is quoted on The Nasdaq National
Market under the symbol "GBFE." The last reported sales price of the Company's
Common Stock on The Nasdaq National Market on August 18, 1997 was $9.875 per
share.
The Selling Stockholders, directly or through agents,
broker-dealers or underwriters, may sell the Common Stock offered hereby from
time to time on terms to be determined at the time of sale, in transactions on
The Nasdaq National Market, in privately negotiated transactions or otherwise.
The Selling Stockholders and any agents, broker-dealers or underwriters that
participate in the distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Common Stock purchased by
them may be deemed to be underwriting discounts or commissions under the
Securities Act. See "Plan of Distribution."
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SEE "RISK FACTORS" COMMENCING ON PAGE 9 OF THIS PROSPECTUS FOR CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Company will not receive any of the proceeds from the sale of
the shares of Common Stock covered by this Prospectus. All such proceeds will
be received by the Selling Stockholders. All expenses of the offering of the
shares of Common Stock covered by this Prospectus will be paid by the Company,
except for commissions and discounts of any underwriters, brokers, dealers or
agents retained by any Selling Stockholder. Expenses payable by the Company in
connection with the offering of the shares of Common Stock covered by this
Prospectus are estimated to be approximately $68,000.
The date of this Prospectus is August , 1997.
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE
HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR
REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER
PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL
FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
Page
Available Information................................................... 5
Incorporation of Certain Documents by Reference......................... 6
Special Note Regarding Forward-Looking Statements....................... 7
The Company............................................................. 8
Risk Factors............................................................ 9
Use of Proceeds.........................................................15
Selling Stockholders....................................................15
Plan of Distribution....................................................17
Experts.................................................................18
Legal Matters...........................................................18
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"), which may be
inspected and copied, at prescribed rates, at the public reference facilities
maintained by the Commission located at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C., 20549, and at the regional offices of the
Commission located at 7 World Trade Center, Suite 1300, New York, New York
10048, and at the Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Such
materials can also be inspected at the offices of the National Association of
Securities Dealers, Inc., at 33 Whitehall Street, 10th Floor, New York, New
York 10004. Additionally, the Company files such reports, proxy statements
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and other information with the Commission pursuant to the Commission's EDGAR
system. The Commission maintains a Web site that contains reports, proxy
statements and other information regarding registrants that file
electronically with the Commission pursuant to the EDGAR system. The address
of the Commission's web site is http://www.sec.gov. A copy of any document
incorporated by reference in the Registration Statement (not including
exhibits to the information that is incorporated by reference, unless such
exhibits are specifically incorporated by reference into the information that
the Registration Statement incorporates) of which this Prospectus forms a part
but which is not delivered with this Prospectus will be provided by the
Company without charge to any person to whom this Prospectus has been
delivered, upon the oral or written request of such person. Such requests
should be mailed to Corporate Secretary, Golden Books Family Entertainment,
Inc., 850 Third Avenue, New York, New York 10022. Telephone requests may be
directed to the Corporate Secretary at 212-583-6700.
The Company has filed with the Commission a Registration Statement
under the Securities Act with respect to the securities offered hereby. This
Prospectus omits certain information contained in the Registration Statement.
The information omitted may be obtained from the Commission upon payment of
the regular charge therefor.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are filed under File No. 0-14399 by
the Company with the Commission under the Exchange Act, are hereby
incorporated herein by reference:
(i) the Annual Report on Form 10-K, as amended by the Form 10-K/A,
for the year ended December 28, 1996;
(ii) the Quarterly Report on Form 10-Q for the quarter ended
March 29, 1997;
(iii) the Quarterly Report on Form 10-Q for the quarter ended
June 28, 1997; and
(iv) the Company's Registration Statement on Form 8-A filed with
the Commission on April 9, 1986.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the filing of a post-effective amendment that indicates the
termination of the offering of the securities offered hereby shall be deemed
to be incorporated in this Prospectus by reference and to be a part hereof
from the date of filing of such documents.
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Any statements contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of the offering of the securities offered hereby to
the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
A copy of any document incorporated by reference in the
Registration Statement (not including exhibits to the information that is
incorporated by reference, unless such exhibits are specifically incorporated
by reference into the information that the Registration Statement
incorporates) of which this Prospectus forms a part but which is not delivered
with this Prospectus will be provided by the Company without charge to any
person to whom this Prospectus has been delivered, upon the oral or written
request of such person. Such requests should be mailed to Corporate Secretary,
Golden Books Family Entertainment, Inc., 850 Third Avenue, New York, New York
10022. Telephone requests may be directed to the Corporate Secretary at
212-583-6700.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
THE STATEMENTS CONTAINED IN THIS PROSPECTUS OR IN DOCUMENTS
INCORPORATED HEREIN BY REFERENCE THAT ARE NOT HISTORICAL FACTS, INCLUDING,
WITHOUT LIMITATION, IN PARTICULAR, STATEMENTS MADE (1) UNDER THE CAPTION
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" IN THE COMPANY'S ANNUAL REPORTS ON FORM 10-K, IN THE COMPANY'S
QUARTERLY REPORTS ON FORM 10-Q AND IN ANY AMENDMENTS TO SUCH REPORTS AND (2)
IN THE COMPANY'S CURRENT REPORTS ON FORM 8-K AND IN ANY AMENDMENTS TO SUCH
REPORTS MAY, IN SOME CASES, INCLUDE STATEMENTS OF FUTURE EXPECTATIONS,
PROJECTIONS OF REVENUE AND INCOME, STATEMENTS OF FUTURE ECONOMIC PERFORMANCE
AND OTHER FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO IMPORTANT FACTORS
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN ANY SUCH
FORWARD-LOOKING STATEMENTS, INCLUDING, WITHOUT LIMITATION, THE RISKS OF
IMPLEMENTING THE COMPANY'S NEW STRATEGY, THE ABILITY OF MANAGEMENT OF THE
COMPANY TO MAINTAIN AND IMPROVE ITS RELATIONSHIPS WITH KEY CUSTOMERS AND
LICENSORS, PRODUCT DEMAND AND MARKET ACCEPTANCE RISKS, THE EFFECT OF ECONOMIC
CONDITIONS, THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING, PRODUCT
DEVELOPMENT AND OTHER RISKS DETAILED HEREIN IN THE SECTION ENTITLED "RISK
FACTORS," ELSEWHERE HEREIN AND IN THE COMPANY'S OTHER SECURITIES AND EXCHANGE
COMMISSION FILINGS.
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THE COMPANY
The Company is the largest publisher of children's books in the
North America retail market. The Company, through its Children's and Adult
Publishing Divisions, creates, publishes and markets an extensive range of
entertainment products, including "Little Golden Books" and other storybooks,
coloring/activity books, electronic storybooks, puzzles, educational
workbooks, reference books and novelty book formats. The Company has published
its flagship product line, "Little Golden Books," for over 50 years.
The Company believes that Golden Books is one of the strongest
consumer brand franchises of children's products in the United States.
Management believes that the Golden Books brand name not only has strong
consumer recognition, but also a reputation among consumers for wholesomeness,
entertainment and spending quality time with a child.
The Company's products utilize both owned and licensed characters.
The Company's owned characters include The Pokey Little Puppy and Little Lulu.
Many of the Company's products, particularly its coloring/activity books, use
characters licensed from Children's Television Workshop (the creator of Sesame
Street), DC Comics Inc., Mattel, Inc., Mercer Mayer (the creator of Little
Critters) and The Walt Disney Company ("Disney"). Characters licensed from
these and other companies include Sesame Street, Barbie, the Muppets, Superman
and Barney. The Disney character license allows the Company to use, in
selected product categories, all of Disney's animated characters, including
Mickey Mouse, Winnie the Pooh and Pinnochio and characters from The Little
Mermaid, The Lion King, Aladdin and Pocahontas, as well as characters from
more recent releases such as The Hunchback of Notre Dame, Toy Story, 101
Dalmatians and Hercules. In addition, the Company has licensing arrangements
in connection with the theatrical re-release of the Star Wars trilogy and the
recent Batman movie. The Company believes that the variety and popularity of
its owned and licensed characters are among its most important competitive
strengths.
On August 20, 1996, the Company acquired an extensive library of
character-based properties which constituted substantially all of the family
entertainment assets of Broadway Video Entertainment, L.P. (the "Broadway
Video Acquisition"). The library is comprised of copyrights, distribution
rights, trademarks and licenses relating to characters, television programs
and motion pictures, both animation and live action, and includes individual
specials and multiple episode series. Among the library titles are Rudolph the
Red-Nosed Reindeer, Frosty the Snowman, Santa Claus Is Coming to Town, Lassie,
26 half-hour episodes of Felix the Cat, Underdog, 52 half-hour episodes of
Abbott and Costello, The Lone Ranger and Tennessee Tuxedo. The Company
operates the business acquired in the Broadway Video Acquisition
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through its Golden Books Entertainment Group ("GBEG") division. The Company
licenses properties from its GBEG division library to third parties, both
domestically and internationally, for use on television, on home video and in
ancillary media, and intends to utilize selected properties and characters in
the GBEG division library in its children's publishing products, particularly
in the storybook, coloring/activity book and home video categories.
The Company's commercial printing division provides creative
printing and publishing services to third parties. The commercial printing
division's activities are grouped into three business categories: graphic art
services and commercial printing; educational kit manufacturing; and custom
publishing services.
The Company is a Delaware corporation. Its executive offices are
located at 850 Third Avenue, New York, NY 10022; telephone (212) 583-6700.
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should
consider carefully the information set forth or incorporated by reference in
this Prospectus and, in particular, should evaluate the following risks in
connection with an investment in the Common Stock.
LOSSES
During the fiscal year ended January 28, 1995, the fiscal year
ended February 3, 1996 and the eleven months ended December 28, 1996, the
Company experienced net losses of $17.6 million, $67.0 million and $197.5
million, respectively. For the six months ended June 28, 1997, the Company
experienced a net loss of $20.2 million. As part of the plan of new management
(which has joined the Company on or after May 8, 1996) to return the Company's
core publishing business to profitability and to redeploy its assets, new
management has taken a number of strategic actions and, accordingly, made
decisions with respect to certain of the Company's assets and recorded
write-downs and other charges in the consolidated financial statements of the
Company for the eleven months ended December 28, 1996 of $132.3 million. For
the six months ended June 28, 1997, the Company also incurred transition costs
in connection with the strategic redirection of the Company of $5.1 million.
The Company expects to record additional charges of approximately $16.0
million and $5.0 million attributable to transition costs to be incurred in
connection with the strategic redirection of the Company during the remainder
of fiscal 1997 and during fiscal 1998, respectively.
The Company's new management has adopted a new strategy to build a
leading family entertainment company that creates, publishes and licenses
children's entertainment products. The Company intends to build on the
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Company's position as a leader in the children's publishing market, utilizing
the strength of the Golden Books brand to provide family-oriented content
through multiple media. If the Company's strategy is successful, the Company
still does not expect to generate positive net income until fiscal 1998 at the
earliest. The Company's return to profitability is dependent in part on the
successful implementation of management's new strategy. There can be no
assurance that this strategy will be successful, that the Company will not
continue to experience net losses or that the Company's net losses will not
increase. See "--Risks of Implementation of New Strategy."
LEVERAGE
The Company has substantial indebtedness in relation to its
stockholders' deficit and there can be no assurance that the Company's
operating results will be sufficient for payment of all of its indebtedness.
The degree to which the Company is leveraged could have important consequences
to holders of the Common Stock, including the following: (i) the Company's
ability to obtain other financing in the future may be impaired; (ii) a
substantial portion of the Company's cash flow from operations must be
dedicated to the payment of principal and interest on its indebtedness; and
(iii) a high degree of leverage may make the Company more vulnerable to
economic downturns and may limit its ability to withstand competitive
pressures. The Company's ability to make scheduled payments on or, to the
extent not restricted pursuant to the terms thereof, refinance its
indebtedness depends on its financial and operating performance, which may
fluctuate significantly from quarter to quarter and is subject to prevailing
economic conditions and to financial, business and other factors beyond its
control. The Indenture pertaining to the 7.65% Senior Notes due 2002 of
Golden Books Publishing Company, Inc. ("GBP"), the principal operating
subsidiary of the Company, limits the amount of additional indebtedness that
GBP or any of its subsidiaries can create, incur, assume or guarantee.
RISKS OF IMPLEMENTATION OF NEW STRATEGY
The Company's management team is in the process of implementing a
new strategy for the Company. As part of its new strategy, the Company is
making changes in its existing product lines, introducing new product lines,
enlarging the Golden Books character library and exploiting new distribution
channels for its products. The Company's strategy also involves revitalizing
its editorial, sales and marketing functions. Management also has initiated an
expense reduction program that builds upon the Company's already-taken
cost-saving measures. There can be no assurance that the Company will be able
to successfully implement all or any part of its strategy, including its
expense reduction program, or that the implementation of this strategy will
increase the profitability of the Company or improve its cash flow. In
addition, the Company's restructuring measures will in part be offset by the
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incurrence of additional expenses in retaining new management and editorial
staff as well as other upgrading measures relating to the Company's new
strategy.
DEPENDENCE ON AND RELATIONSHIPS WITH KEY CUSTOMERS AND LICENSORS
During the six months ended June 28, 1997, approximately 30% of
the Company's publishing revenues and 20% of the Company's revenues generally
were attributable to sales to the Company's four largest customers. The loss
of any such customer or a substantial decrease in business from any such
customer would have a material adverse effect on the Company.
The Company believes that the variety and popularity of its
characters (whether licensed or owned) is among the most important factors
that differentiate the Company's products from those of its competitors.
Approximately 77% of the Company's publishing revenues for the six months
ended June 28, 1997 were attributable to products utilizing characters and
other properties licensed by the Company from third parties. Approximately 58%
of publishing revenues for the six months ended June 28, 1997 were
attributable to products incorporating characters and properties licensed from
the Company's five largest sources of licensed property. The character
licenses covering characters licensed by the Company generally have two to
three year terms. The Company's main character license from Disney pertaining
to the use in children's storybooks and color/activity books of Disney
characters expires on December 31, 1997. Management is in the process of
seeking the renewal of this license. While the Company believes that its
relationship with Disney is good, competition for licenses is strong and there
can be no assurance that such license, or any of the Company's other licenses,
will be renewed on favorable terms if at all. See "--Competition." The loss of
any of the Company's principal licenses would have a material adverse effect
on the Company. In addition, the loss of a significant license by the Company
would impair its distribution capabilities which, in turn, could adversely
affect its ability to obtain new licenses and to renew existing licenses on
favorable terms, if at all.
The Company's relationships with a number of its significant
customers and licensors have been contentious from time to time because of
disputes, in the case of its customers, relating to prior pricing, return and
merchandising policies and, in the case of its licensors, alleged
non-compliance by the Company with certain license terms. New management
(which has joined the Company on or after May 8, 1996) has taken steps to
repair these relationships and believes that it has been successful in this
regard. However, there can be no assurance that such relationships, or other
relationships with customers and/or licensors, will not again become
contentious in the future, which could have a material adverse effect on the
Company.
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DEPENDENCE ON KEY PERSONNEL
The implementation of the Company's strategy requires the active
participation of its new management team and, in particular, Richard E.
Snyder, the Company's Chairman and Chief Executive Officer. The loss of the
services of Mr. Snyder could have a material adverse effect on the ability of
the Company to implement its strategy. The loss of any of the other members of
the Company's management team could adversely affect the implementation of
selected aspects of the Company's strategy or delay the implementation of such
aspects until a qualified replacement can be obtained. In addition to
adversely affecting the ability of the Company to implement its strategy, the
loss of any of the foregoing key employees of the Company could otherwise have
a material adverse effect on the Company. The Company does not maintain
"key-man" insurance in respect of Mr. Snyder or any of its other key
employees.
COMPETITION
The children's publishing market is highly competitive.
Competition is based primarily on price, quality, distribution, marketing and
licenses. In mass market sales, the Company faces competition primarily from
smaller competitors. In the trade and specialty trade categories, the
Company's principal competitors are large publishing companies. The Company
also competes for a share of consumer spending on children's entertainment and
educational products against companies that market a broad range of products
utilizing a broad range of technologies that are unrelated to those marketed
by the Company.
The market for licenses also is highly competitive and the Company
competes against many other licensees for significant licenses. In recent
years, licensors have fragmented licenses, which has reduced the cost of
purchasing a license. As a result, smaller bidders have been able to enter the
market for licenses, which has resulted in increased competition in this
market.
The Company also experiences strong competition for its other
products and services, based on a number of factors, including, but not
limited to, price, quality, formats, delivery and licenses. Many of the
Company's current competitors have greater financial resources than the
Company and, in selected markets, greater experience than the Company. The
markets which the Company intends to enter as part of its growth strategy each
contain a number of competing entities, many of which have greater resources
and experience with respect to these markets than the Company.
The Company's operations also may be adversely affected by a
number of factors beyond its control, including economic downturns, cyclical
variations in the markets for its products and related products of other
companies and changes in consumer preferences.
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RISKS RELATING TO INTELLECTUAL PROPERTIES
The value of the materials in the Company's library, both to the
Company as a licensor and as an end user, is subject to consumer taste. There
can be no assurance that these properties will be attractive to third-party
licensees or that they will be suitable for inclusion in the Company's
products. If properties that are being exploited cease to be attractive to
third-party licensees, licensing revenue from such licenses will decrease.
In view of the complex nature of the Company's intellectual
property rights, there is a risk of third parties asserting claims of
ownership or infringement or asserting a right to payment with respect to the
past, present or future exploitation of such properties. There can be no
assurance that the Company would prevail in any such claim. In addition, the
Company's ability to demonstrate, maintain or enforce these rights may be
difficult. Impairments or difficulties in demonstrating the Company's
ownership or license rights in such properties could adversely affect the
ability of the Company to generate revenue from or use such properties. In
many cases, the rights owned or being acquired by the Company are limited in
scope, do not extend to exploitation in all present or future media or in
perpetuity and may not include the right to create derivative works, such as
merchandising and character rights, remakes or sequels.
COST OF PAPER SUPPLIES AND OTHER MATERIAL COSTS
For the six months ended June 28, 1997, paper supply purchases
totaled approximately $16 million. Paper supplies and other material costs
constitute a significant portion of the Company's product costs and are
susceptible to numerous factors beyond the control of the Company. Significant
increases in these costs could have a material adverse effect on the Company's
operating results.
CONTROL OF THE COMPANY
Golden Press Holding, L.L.C. ("GPH"), which is controlled by
Warburg, Pincus Ventures, L.P., owns 975,000 shares of Common Stock and 13,000
shares of Series B Convertible Preferred Stock, no par value, of the Company
(the "Series B Preferred Stock"), convertible into an aggregate of 6,500,000
shares of Common Stock (an aggregate of 22.5% of the issued and outstanding
shares of Common Stock after giving effect to such conversion). The Series B
Preferred Stock votes on an as-converted basis with the Common Stock on all
matters submitted to a vote of the stockholders of the Company, including the
election of directors. GPH also has irrevocable proxies with respect to
3,986,771 shares of Common Stock (12.0% of the issued and outstanding shares
of Common Stock after giving effect to the conversion of the Series B
Preferred Stock) owned by Richard A. Bernstein and certain trusts affiliated
with Mr. Bernstein. Pursuant to such proxy, GPH generally has the power to
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vote such shares in such manner as it deems proper. As a consequence of such
Common Stock and Series B Preferred Stock ownership and proxy, GPH controls
approximately 34.5% of the total voting power of the Company. The Series B
Preferred Stock entitles GPH, during the first four years following issuance,
to receive dividends of approximately 195,000 shares of Common Stock per
fiscal quarter of the Company (subject to certain adjustments). GPH also holds
a Warrant (the "Warrant") to purchase 3,250,000 shares of Common Stock
(subject to anti-dilution adjustments) that will be exercisable beginning on
May 8, 1998, subject to acceleration upon certain circumstances. The Warrant
will be exercisable until May 8, 2003.
For so long as at least one-half of the shares of Series B
Preferred Stock initially issued are owned by GPH and certain of its
affiliates, certain matters will be subject to the consent of the holders of a
majority of the shares of Series B Preferred Stock. Furthermore, the holders
of the Series B Preferred Stock will have the right to elect up to one-third
of the members of the Board of Directors (the "Series B Directors"), each of
the current members of which was nominated by GPH in connection with its
investment in the Company. At present, GPH has the right to designate two
additional directors; however, GPH has advised the Company that it does not
presently intend to exercise such right, although it reserves the right to do
so in the future.
The foregoing factors provide GPH with significant influence over
the management and policies of the Company. The foregoing factors also may
render it more difficult for a third party to effect a change of control of
the Company without the consent of GPH and may thereby discourage third
parties from any attempt to acquire control of the Company.
ENVIRONMENTAL REGULATION
The Company's operations are subject to extensive and evolving
environmental laws and regulations regarding the clean-up and protection of
the environment and worker health and safety. The Company believes that it is
in material compliance with applicable environmental requirements. However,
there can be no assurance that in the future the Company will not receive
notices that certain of its operations are not in compliance with its permits
or other environmental requirements, that current environmental requirements
will not become more onerous or that new laws and regulations will not be
adopted or become applicable to the Company. Any of the foregoing could result
in the imposition of fines or penalties, operating constraints, the issuance
of judicial or administrative orders requiring the Company to cease operating
a facility, increased operating and capital expenditures or other liabilities,
any of which could have a material adverse effect on the Company's business,
financial condition or results of operations.
- 14 -
<PAGE>
SHARES OF COMMON STOCK ELIGIBLE FOR SALE
GPH and Richard A. Bernstein have the right (subject to certain
conditions) to require the Company to register for offer and sale issued and
outstanding shares of Common Stock and/or shares of Common Stock issuable upon
the exercise or conversion, as applicable, of options, warrants and
convertible securities. See "--Control of the Company." H C Crown Corp., a
subsidiary of Hallmark Cards, Incorporated ("Hallmark"), also has registration
rights with respect to shares of Common Stock acquired by it from the Company.
Sales of substantial amounts of such shares could adversely affect the market
value of the Common Stock and, in the case of convertible securities, may
effect a dilution of the book value per share of Common Stock.
In connection with the original offering to GPH, GPH agreed to
certain restrictions on its ability to sell securities of the Company held by
GPH. The 2,356,198 shares acquired by Hallmark in connection with the
September 6, 1996 purchase by Hallmark of $25 million of Common Stock are
subject to certain transfer restrictions, including restrictions under the
Securities Act. The shares held by Mr. Bernstein are not subject to
contractual restrictions on transfer, although the transfer of such shares is
restricted under the Securities Act and any such transfers (unless such shares
are sold pursuant to an effective registration statement under the Securities
Act) may be subject to certain volume limitations thereunder.
USE OF PROCEEDS
The proceeds from the sale of the shares of Common Stock offered
hereby are solely for the account of the Selling Stockholders. Accordingly,
the Company will receive none of the proceeds from the sale thereof.
SELLING STOCKHOLDERS
The Selling Stockholders acquired the shares of Common Stock offered
pursuant to this Prospectus in connection with the Broadway Video Acquisition.
The following table sets forth the name of each Selling
Stockholder, the number of shares of Common Stock owned by each Selling
Stockholder as of August 20, 1997, and the number of shares which may be
offered for resale pursuant to this Prospectus.
The information included below is based upon information provided
by the Selling Stockholders. Because each Selling Stockholder may offer all,
some or none of its shares of Common Stock, no definitive estimate as to the
number of shares thereof that will be held by each such Selling Stockholder
after such offering can be provided and the following table has been prepared
on the assumption that all shares of Common Stock offered under this
Prospectus will be sold to parties unaffiliated with the Selling Stockholders.
- 15 -
<PAGE>
<TABLE>
<CAPTION>
Shares Of Shares Of
Common Stock Shares of Common Stock
Owned Prior Common Stock Owned After
Name To Offering (1) Being Offered Offering (1)(2)
<S> <C> <C> <C>
Eric Ellenbogen (3) 199,055 99,055 100,000
Engelman Family Limited
Partnership 39,675 39,675 0
Lorne Michaels (4) 249,550 241,550 8,000
Michaels Family Limited
Partnership 200,000 200,000 0
Stephen W. Shippee 14,000 14,000 0
TCW Capital (Fund II Separate Account) 2,500 2,500 0
TCW Capital (Fund III Separate Account) 15,186 15,186 0
TCW Special Placements Fund II 83,839 83,839 0
TCW Special Placements Fund III 205,603 205,603 0
</TABLE>
(1) For purposes of computing the number of shares held by each person
named above on a given date, any security that such person has the
right to acquire within sixty days is deemed to be owned by such
person.
(2) Assumes the sale of all shares offered hereby to persons who are not
affiliates of the Selling Stockholders.
(3) Includes non-qualified stock options to purchase 100,000 shares of
Common Stock granted pursuant to the 1995 Stock Option Plan of the
Company. Such options are presently exercisable.
(4) Includes non-qualified stock options to purchase 8,000 shares of
Common Stock granted pursuant to the 1995 Stock Option Plan of the
Company. Such options are presently exercisable.
Eric Ellenbogen has served as the President of the Golden Books
Entertainment Group division of GBP, the principal operating subsidiary of the
Company, and as an Executive Vice President of the Company since August 20,
1996. Mr. Ellenbogen has served as a director of the Company since September
17, 1996.
Lorne Michaels has been a director of the Company since September
17, 1996 and is a member of the Compensation Committee of the Board of
Directors of the Company.
All of the shares of Common Stock to be sold by the Selling
Stockholders hereunder were acquired in connection with the Broadway Video
Acquisition.
- 16 -
<PAGE>
PLAN OF DISTRIBUTION
The Company is registering the shares of Common Stock offered by
the Selling Stockholders hereunder pursuant to registration rights contained in
the Registration Rights Agreement, dated August 20, 1996, between the Company
and Broadway Video Entertainment, L.P. (the "Registration Rights Agreement"),
under which the Selling Stockholders have certain rights. The Registration
Rights Agreement requires the Company to file a registration statement on an
appropriate form with the Commission with respect to the offering and sale or
other disposition of the Common Stock owned by the Selling Stockholders.
The shares of Common Stock offered hereunder may be sold from time
to time by the Selling Stockholders, or by pledgees, donees, transferees or
other successors in interest. Such sales may be made on The Nasdaq National
Market or otherwise at prices and on terms then prevailing or related to the
then current market price, or in negotiated transactions. The shares of Common
Stock may be sold to or through one or more broker-dealers acting as agent or
principal in underwritten offerings, block trades, agency placements, exchange
distributions, brokerage transactions, privately negotiated transactions,
short sales or otherwise, or in any combination of transactions.
In connection with any transaction involving the shares of Common
Stock offered hereunder, broker-dealers or others may receive from the Selling
Stockholders, and may in turn pay to other broker-dealers or others,
compensation in the form of commissions, discounts or concessions in amounts
to be negotiated at the time. Broker-dealers and any other persons
participating in a distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with
such distribution, and any such commissions, discounts or concessions may be
deemed to be underwriting discounts or commissions under the Securities Act.
Any or all of the sales or other transactions involving the Common
Stock described above, whether effected by a Selling Stockholder, any
broker-dealer or others, may be made pursuant to this Prospectus. In addition,
any shares of Common Stock that qualify for sale pursuant to Rule 144 under
the Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
To comply with the securities laws of certain states, if
applicable, the Common Stock may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, shares of Common Stock
may not be sold unless they have been registered or qualified for sale or an
exemption from registration or qualification requirements is available and is
complied with under applicable state securities laws.
The Company and the Selling Stockholders (certain of which are
directors and/or officers of the Company) have agreed to indemnify each other
and their respective officers and directors and certain other persons against
liabilities in connection with any offering of the Common Stock, including
liabilities arising under the Securities Act.
- 17 -
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
EXPERTS
The consolidated financial statements of Golden Books Family
Entertainment, Inc. and Subsidiaries (formerly Western Publishing Group, Inc.
and Subsidiaries) (the "Company") appearing in the Company's Annual Report, as
amended (Form 10-K), at December 28, 1996, and for the eleven months then
ended, have been audited by Ernst & Young LLP, independent auditors, and at
February 3, 1996, and for each of the two years in the period ended February
3, 1996, by Deloitte & Touche LLP, independent auditors, as set forth in their
respective reports thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock being
offered hereby are being passed upon by Schulte Roth & Zabel LLP, 900 Third
Avenue, New York, New York 10022, counsel for the Company.
- 18 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC Filing Fee . . . . . . . . . . . . . $ 2,698
Legal Fees . . . . . . . . . . . . . . . 50,000
Accounting Fees . . . . . . . . . . . . 15,000
-------
Total $67,698
Item 15. Indemnification of Directors and Officers.
Limitation on Directors' Liability.
The Company's Certificate of Incorporation provides that no
director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for the breach of any fiduciary duty as a
director, except (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, as amended from time to
time, or (iv) for any transaction from which the director derived an improper
personal benefit. The effect of these provisions will be to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of fiduciary duty as a director (including breaches resulting from
grossly negligent behavior), except in the situations described above.
Limitation on Liability under Registration Rights Agreement
Under the Registration Rights Agreement, the Company and the
Selling Stockholders (certain of which are directors and/or officers of the
Company) have agreed to indemnify each other and their respective officers and
directors and certain other persons against liabilities in connection with any
offering of the Common Stock, including liabilities arising under the
Securities Act.
Item 16. Exhibits.
The following is a complete list of exhibits filed as a part of
this Registration Statement:
- 19 -
<PAGE>
Exhibit No. Document
4.1 Registration Rights Agreement between the Company
and Broadway Video Entertainment, L.P., dated
August 20, 1996, under which the Selling Stockholders
have certain rights.
5.1* Opinion of Schulte Roth & Zabel LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
23.3* Consent of Schulte Roth & Zabel LLP
(included in Exhibit 5)
24.1 Powers of Attorney (included with the Signature
Pages to this Registration Statement)
- --------
*To be filed.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from
the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
- 20 -
<PAGE>
Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(1)(i) and (1)(ii) above do not apply if the information required to
be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. Incorporation of Subsequent Exchange Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. Indemnification of Officers and Directors.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
- 21 -
<PAGE>
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
- 22 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on this
20th day of August, 1997.
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
By: /S/ Philip E. Rowley
----------------------
Philip E. Rowley
Executive Vice President
and Chief Financial
Officer
POWER OF ATTORNEY
The Registrant and each person whose signature appears below
hereby appoints Philip Galanes, as its attorney-in-fact, with full power of
substitution, to execute on behalf of the Registrant and each such person,
individually and in each capacity stated below, one or more amendments
(including post-effective amendments) to this Registration Statement as the
attorney-in-fact acting on the premise shall from time to time deem
appropriate and to file any such amendment to this Registration Statement with
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated, on this 18th day of August, 1997.
Name and Signature Title
- ----------------------------- -----------------------------
/s/ Richard E. Snyder Chairman of the Board and
- ----------------------------- Chief Executive Officer
Richard E. Snyder (Principal Executive Officer)
/s/ Philip E. Rowley Executive Vice President and
- ----------------------------- Chief Financial Officer (Principal
Philip E. Rowley Financial and Accounting Officer)
- 23 -
<PAGE>
/s/ Eric Ellenbogen Executive Vice President and
- ----------------------------- Director
Eric Ellenbogen
/s/ Shahara Ahmad-Llewellyn Director
- -----------------------------
Shahara Ahmad-Llewellyn
Director
- -----------------------------
Barry Diller
/s/ Linda L. Janklow Director
- -----------------------------
Linda L. Janklow
/s/ Lorne Michaels Director
- -----------------------------
Lorne Michaels
/s/ Marshall Rose Director
- -----------------------------
Marshall Rose
Director
- -----------------------------
David A. Tanner
/s/ H. Brian Thompson Director
- -----------------------------
H. Brian Thompson
/s/ John L. Vogelstein Director
- -----------------------------
John L. Vogelstein
- 24 -
<PAGE>
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into this 20th day of August,
1996, among Golden Books Family Entertainment, Inc., a Delaware corporation
("Parent") and Broadway Video Entertainment, L.P., a New York limited
partnership ("BVEL").
R E C I T A L S
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated
as of July 30, 1996, as amended (the "Asset Purchase Agreement"), among the
Parent, Buyers (as defined therein) and Sellers (as defined therein), Buyer is
purchasing certain assets of Sellers more particularly described in the Asset
Purchase Agreement, primarily motion pictures, television programs and
interests in music and comic book publishing (the "Assets");
WHEREAS, the Buyers have agreed to purchase the Assets by paying
and delivering to BVEL the "Purchase Price", as such term is defined on
Schedule O attached to the Asset Purchase Agreement;
WHEREAS, a portion of the Purchase Price consists of shares of
common stock, $.01 par value, of Parent (the "Purchase Price Stock"); and
WHEREAS, Parent has agreed to provide the registration rights set
forth herein with respect to such Purchase Price Stock;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
l. Definitions and References.
For purposes of this Agreement, in addition to the definitions set
forth above and elsewhere herein, the following terms shall have the following
respective meanings:
"Affiliate" of a Holder shall mean a person who directly or
indirectly controls, is controlled by or is under common control
with such Holder, the spouse or children (or a trust exclusively
for the benefit of a spouse and/or children) of such Holder if
such Holder is a natural person or, in the case of a Holder which
is a partnership, its partners.
"Commission" shall mean the U.S. Securities and Exchange
Commission and any successor agency.
"Common Stock" shall mean shares of common stock, $.01 par
value, of Parent.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any successor federal statute, and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time. References herein to a particular
section of the Exchange Act shall include a reference to the
comparable section, if any, of any such successor federal statute.
"Holder" shall mean BVEL or any transferee or assignee
thereof to whom the rights under this Agreement are assigned in
accordance with the provisions of Section 12 hereof.
"Person" shall mean any individual, corporation,
partnership, limited liability company, trust, incorporated or
unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or
other entity of any kind.
"Purchase Date" shall mean the date upon which the Buyer
purchases the Assets and pays and delivers the Purchase Price
pursuant to the Asset Purchase Agreement.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities
Act and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Stock" shall mean (i) Purchase Price Stock and
(ii) any Related Registrable Stock. For the purposes of this
Agreement, any Registrable Stock shall cease to be Registrable
Stock when (x) a registration statement covering such Registrable
Stock has been declared effective and such Registrable Stock has
been disposed of pursuant to such effective registration
statement, (y) beneficial ownership of such Registrable Stock is
transferred in a transaction in which the rights and obligations
set forth herein are not assigned and assumed in accordance with
Section 12 hereof, or (z) all of the Registrable Stock may be
immediately sold pursuant to Rule 144(k) (or any similar provision
then in force) under the Securities Act without registration under
such Act.
"Related Registrable Stock" means any Common Stock or other
securities of Parent issued or issuable in exchange for or in
replacement of Purchase Price Stock by way of a dividend or stock
split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect at the time. References herein to a particular section
of the Securities Act shall include a reference to the comparable
section, if any, of any such successor federal statute.
2
<PAGE>
2. Restrictive Legend.
Each certificate representing Registrable Stock shall, except as
otherwise provided in this Section 2 or in Section 3, be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER THE
SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED
FOR SALE OR OTHERWISE HYPOTHECATED OR DISTRIBUTED EXCEPT (A) PURSUANT TO
ANY EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT
OR (B) PURSUANT TO A VALID EXEMPTION FROM SUCH REGISTRATION UNDER THE
ACT AND UNDER THE SECURITIES LAWS OF ANY STATE AND UPON RECEIPT BY
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC. OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT ANY SUCH SALE
IS IN COMPLIANCE WITH THE ACT AND THE STATE SECURITIES LAWS.
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to Parent the securities being sold thereby may be publicly sold
without registration under the Securities Act.
3. Notice of Proposed Transfer.
Prior to any proposed transfer of any Registrable Stock by a
Holder (other than under the circumstances described in Section 4), such
Holder shall give written notice to Parent of its intention to effect such
transfer (each such notice, a "Transfer Notice"). Each Transfer Notice shall
set forth the name and address of the transferee, identify the securities to
be transferred and describe the manner of the proposed transfer and, if
requested by Parent, shall be accompanied by an opinion of counsel reasonably
satisfactory to Parent to the effect that the proposed transfer, as described
in such Transfer Notice, may be effected without registration under the
Securities Act, whereupon, subject to the transferee's compliance with clause
(ii) of Section 12 hereof, such Holder shall be entitled to transfer such
Registrable Stock in accordance with the terms of such Transfer Notice. Each
certificate for Registrable Stock transferred as above provided shall bear the
legend set forth in Section 2, except that such certificate shall not bear
such legend if (i) the opinion of counsel referred to above is to the further
effect that the transferee and any subsequent transferee would be entitled to
transfer such securities in a public sale without registration under the
Securities Act or (ii) Parent is otherwise satisfied that such transfer is
made in accordance with the provisions of Rule 144 (or any other rule
permitting public sale without registration under the Securities Act). The
restrictions provided for in this Section 3 shall not apply to securities
which are not required to bear the legend prescribed by Section 2 in
accordance with the provisions of that Section.
3
<PAGE>
4. Shelf Registration.
Not later than the first anniversary of the Purchase Date, Parent
shall prepare and cause to be filed with the Commission a "shelf" registration
statement (including the prospectus required by the registration form
utilized) with respect to all of the Registrable Stock on any appropriate form
pursuant to Rule 415 under the Securities Act (the "Shelf Registration").
Parent shall use its best efforts to have the Shelf Registration declared
effective as soon as reasonably practicable after such filing and shall use
its best efforts to keep the Shelf Registration continuously effective from
the date such Shelf Registration is declared effective until the earlier of
(i) such time as all of the Registrable Stock shall cease to be Registrable
Stock and (ii) such time as all of the remaining Registrable Stock may be
distributed in a single broker's transaction in accordance with the volume
limitations of Rule 144(e) (or any successor provisions) under the Securities
Act.
Parent shall promptly supplement or amend, if necessary, the Shelf
Registration, as required by the registration form utilized by Parent or by
the instructions applicable to such registration form or by the Securities Act
or the rules and regulations promulgated thereunder or as reasonably requested
by the holder or holders of a majority of the Registrable Stock (the "Majority
Holders"), and Parent shall furnish to the holders of the Registrable Stock to
which the Shelf Registration relates copies of any such supplement or
amendment prior to its being used and/or filed with the Commission. In no
event shall the Shelf Registration include securities other than Registrable
Stock, unless (i) Parent and the Majority Holders consent to such inclusion,
(ii) Parent has a shelf registration statement in effect covering all Common
Stock whose holders are entitled to registration by Parent or (iii) such
securities are included pursuant to "tag along" rights of security holders of
Parent existing on the date hereof, except that in no event shall the number
of shares of Registrable Stock included in the Shelf Registration be reduced
as a result of the inclusion of such other securities.
Notwithstanding the above, Parent may, by providing written notice
to the Holders, delay or suspend Holders' rights to sell shares of Registrable
Stock pursuant to this Section 4 for a specified period of time (a "Suspension
Period"), if Parent shall have determined upon advice of counsel that it would
be required to disclose any actions taken or proposed to be taken by Parent in
good faith and for valid business reasons, including without limitation, the
acquisition or divestiture of assets, which disclosure would have a material
effect on Parent or on such actions. The Suspension Period shall not exceed
ninety (90) days in any three hundred and sixty (360) day period during which
a registration statement on Form S-3 of Parent would otherwise be effective.
5. Registration Procedures.
In connection with the registration of any securities by Parent
under this Agreement, the parties agree as follows:
(i) Parent shall furnish each Holder and its underwriter(s)
such number of copies of a summary prospectus or other prospectus,
including a preliminary prospectus in conformity with the
requirements of the Securities Act,
4
<PAGE>
and such other documents as such Holder may reasonably request in
order to facilitate the public sale or other disposition of such
securities;
(ii) Parent shall use its best efforts to register or
qualify the securities covered by the registration statement under
the securities or "blue sky" laws of such jurisdictions as each
Holder shall reasonably request (provided, however, that Parent
shall not be required (i) to consent to, or take any action which
would subject it to, general service of process for all purposes
or (ii) to qualify to do business in any jurisdiction where it is
not then subject or qualified) and do any and all other acts or
things which may be reasonably necessary or advisable to enable
the Holders to consummate the public sale or other disposition of
such securities in such jurisdictions;
(iii) At any time when a sale or other public disposition
pursuant to the registration statement is subject to a prospectus
delivery requirement, Parent shall immediately notify each Holder
and its underwriter(s) of the occurrence of any event as a result
of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing. Upon receipt of such a
notice, each Holder shall immediately discontinue sales or other
dispositions of Registrable Stock pursuant to the registration
statement. The Holders may resume sales pursuant to the
registration statement only upon receipt of amended prospectuses
or after such Holders have been advised by Parent that the use of
the previous prospectus may be legally resumed; and
(iv) Parent shall advise each Holder, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the effectiveness
of the registration statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts
(with the reasonable cooperation of the Holders) to prevent the
issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
6. Listing
Parent shall use its best efforts to list the Registrable Stock
covered by the registration statement on any securities exchange or market on
which securities issued by Parent, which are of the same type, class and par
value as such Registrable Stock, are then listed.
7. Information to be Furnished.
It shall be a condition precedent to the obligations of Parent to
take any action pursuant to this Agreement that the Holders shall furnish to
Parent such information regarding themselves, the Registrable Stock held by
them, and the intended method of disposition of such
5
<PAGE>
securities as Parent shall reasonably request and as shall be required under
the Securities Act in connection with the actions to be taken by Parent.
8. Expenses of Registration.
All expenses (other than commissions and similar costs and other
than fees and expenses of attorneys and accountants representing the Holders)
incurred in connection with each registration pursuant to Section 4 of this
Agreement, including without limitation all registration, filing and
qualification fees, word processing, duplicating, printers' and accounting
fees (including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance), fees of the
National Association of Securities Dealers, Inc. or listing fees, messenger
and delivery expenses, all fees and expenses of complying with state
securities or blue sky laws, fees and disbursements of counsel for Parent,
shall be paid by Parent.
9. Rule 144 and Rule 144A Information.
With a view to making available the benefits of certain rules and
regulations of the Commission which may, under certain circumstances, permit
the sale of Registrable Stock to the public without registration, (a) at all
times after the Purchase Date, Parent agrees to:
(i) make and keep public information available, as those
terms are understood and defined under Rule 144 under the
Securities Act;
(ii) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of Parent
under the Securities Act and the Exchange Act; and
(iii) furnish to any Holder of Registrable Stock, as soon as
reasonably practicable following a written request by such Holder,
a written statement by Parent as to its compliance with the
reporting requirements of the Securities Act, including Rule 144,
and the Exchange Act, a copy of the most recent annual or
quarterly report of Parent, and such other reports and documents
filed with the Commission by Parent as such Holder may reasonably
request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any Registrable Stock
without registration.
(b) at all times during which Parent is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act,
Parent agrees in addition to the requirements of Section 9(a) above, to
provide to any prospective buyer of Registrable Stock designated by
Holder, as soon as reasonably practicable following a written request by
such Holder, all information required by Rule 144A(d)(4)(i) promulgated
by the Commission under the Securities Act.
10. Indemnification.
In the event any Registrable Stock is included in a registration
statement under this Agreement:
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(a) Parent shall indemnify and hold harmless each Holder, such
Holder's agents, partners, directors, officers and underwriters, and
each Person, if any, who controls such Holder within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which they may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or proceedings in respect thereof) arise out of or are based on any
untrue or alleged untrue statement of any material fact contained in
such registration statement on the effective date thereof (including any
prospectus filed under Rule 424 under the Securities Act or any
amendments or supplements thereto) or arise out of or are based upon the
omission or alleged omission therein of a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and shall reimburse each such Holder and such Holder's
agents, partners, directors, officers, underwriters or controlling
Persons for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement
contained in this Section 10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the written consent of Parent (which
consent shall not be unreasonably withheld, delayed or conditioned); and
provided further, that Parent shall not be liable to any Holder, such
Holder's agents, partners, directors, officers, underwriters or
controlling Person, in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished by any such Holder, such Holder's agents, partners, directors,
officers, underwriters or controlling Person, expressly for use in
connection with such registration. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
any such Holder, such Holder's agents, partners, directors, officers,
underwriters or controlling Person, and shall survive the transfer of
such securities by such Holder.
(b) Each Holder joining in a registration severally and not
jointly shall indemnify and hold harmless Parent, each of its directors
and officers and agents and, each Person, if any, who controls Parent
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which Parent or any such
director, officer, controlling Person, or agent may become subject,
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of
any material fact contained in such registration statement on the
effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or
arise out of or are based upon the omission or alleged omission therein
of a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, or amendments or supplements
thereto, in reliance upon and in
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conformity with written information furnished by or on behalf of such
Holder expressly for use in connection with such registration; and each
such Holder shall reimburse any legal or other expenses reasonably
incurred by Parent or any such director, officer, agent or controlling
Person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 10(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the written consent of
such Holder (which consent shall not be unreasonably withheld, delayed
or conditioned), and provided, further, that the liability of each
Holder hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense which is equal to the proportion
that the net proceeds expected from the sale of the shares sold by such
Holder under such registration statement bears to the total net proceeds
expected from the sale of all securities sold thereunder, but in no
event shall the liability of such Holder exceed the net proceeds
actually received by such Holder from the sale of Registrable Stock
covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall
have the right to participate in and assume the defense thereof with
counsel selected by the indemnifying party and reasonably satisfactory
to the indemnified party; provided, however, that an indemnified party
shall have the right to retain its own counsel, with all fees and
expenses thereof to be paid by such indemnified party, and to be
apprised of all progress in any proceeding the defense of which has been
assumed by the indemnifying party. The failure to notify an indemnifying
party promptly of the commencement of any such action, if and to the
extent materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the
indemnified party under this Section, but the omission so to notify the
indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section. No
indemnifying party, in the defense of any such claim or action, shall,
except with the consent of each indemnified party (which shall not be
unreasonably withheld, delayed or conditioned), consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or action.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, 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 or liabilities in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative fault 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 material fact or
8
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omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims,
damages or liabilities referred to above shall be deemed to include any
legal or other fees 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 10(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 Securities
Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
11. [Intentionally Omitted]
12. Assignment of Registration Rights. The registration rights of
any Holder under this Agreement with respect to any Registrable Stock may be
assigned in connection with a transfer of such Registrable Stock to any
transferee of such Registrable Stock who (a) is an Affiliate, partner, officer
or former officer (which includes, without limitation, Eric Ellenbogen) of
such Holder, (b) is an Affiliate of Trust Company of the West or (c) acquires
at least twenty per cent (20%) of such Holder's shares of Registrable Stock
(adjusted for stock splits and stock consolidations after the effective date
of this Agreement); provided, however, that (i) the transferring Holder shall
have complied with the notice requirements set forth in Section 3 hereof, (ii)
the transferee shall have agreed in writing, in form and substance reasonably
satisfactory to Parent, to be bound as a Holder by the provisions of this
Agreement and (iii) immediately following such transfer, the further
disposition of such securities by such transferee is restricted under the
Securities Act, unless the certificates of the shares of Registrable Stock to
be transferred are not required to bear the legend set forth in Section 2
hereof, as provided in Sections 2 and 3 hereof. Any merger, consolidation,
sale or other transaction with respect to a Holder which would result in a
transfer of Registrable Stock shall be subject to the provisions of this
Section 12.
13. Successors and Assigns. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and permitted assigns of the
parties hereto. Except as expressly provided in this Agreement, nothing in
this Agreement, express or implied, is intended to confer upon any Person
other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations, or liabilities under or by reason
of this Agreement. Each Person who acquires Registrable Stock by means of
succession, inheritance or operation of law shall, as soon as reasonably
practicable following such acquisition, (a) provide a written notice to Parent
containing the information required to be set forth in a Transfer Notice
pursuant to Section 3 hereof and (b) execute the agreement described in clause
(ii) of Section 12 hereof. The
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acquisition of Registrable Stock by any other Person shall be subject to
compliance with the provisions of Section 12 hereof.
14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A faxed signature shall
have the same effect as an original signature, provided that an original
signed copy shall be provided promptly thereafter.
16. Titles. The titles of the Sections of this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
17. Notices. Any notice required or permitted under this Agreement
shall be in writing and shall be delivered by personal service, telecopy,
Federal Express or comparable overnight service or certified mail (if such
service is not available, then by first class mail), postage prepaid, directed
to (a) Parent at the address set forth below its signature hereof, (b) to a
Holder at the address therefor as set forth in Parent's records or (iii) if
appropriate, to Parent at any address furnished by Parent, or, in any such
case, at such other address or addresses as shall have been furnished in
writing by such party to the others. The giving of any notice required
hereunder may be waived in writing by the parties hereto. Any notice sent by
certified mail shall be deemed to have been given three (3) days after the
date on which it is mailed. All other notices shall be deemed given when
received. No objection may be made to the manner of delivery of any notice
actually received in writing by an authorized agent of a party.
18. Amendments and Waivers. Any provision of this Agreement may be
amended and the observance of any provision of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Parent, Buyer (if applicable)
and the Holders of at least a majority of all Registrable Stock then in
existence. Any amendment or waiver effected in accordance with this Section 18
shall be binding upon Parent, Buyer, each Holder and each future Holder of any
securities subject to this Agreement at the time outstanding (including
securities into which such securities are convertible).
19. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.
20. Entire Agreement. All prior agreements of the parties
concerning the subject matter of this Agreement are expressly superseded by
this Agreement. This Agreement contains the entire Agreement of the parties
concerning the subject matter hereof. Any oral representations or
modifications of this Agreement shall be of no effect.
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IN WITNESS WHEREOF, the parties have entered into this Agreement
as of the day and year set forth above.
BROADWAY VIDEO ENTERTAINMENT, L.P.
By: Broadway Video Enterprises, Inc.,
its General Partner
By: /s/ Stephen W. Shippee
---------------------------------
Name: Stephen W. Shippee
Title: Chief Operating Officer and
Chief Financial Officer
Address for Notices: 1619 Broadway
Ninth Floor
New York, New York 10019
Attention: Stephen W. Shippee
Telecopy: (212) 582-8097
<PAGE>
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
By: /s/ Richard E. Snyder
---------------------------------
Name: Richard E. Snyder
Title: Chairman of the Board of Directors
and Chief Executive Officer
Address for Notices: 850 Third Avenue
New York, New York 10022
Attention: Phillip Rowley
Telecopy: (212) 371-1091
<PAGE>
Exhibit 23.1
Consent
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Golden Books
Family Entertainment, Inc. and Subsidiaries (formerly Western Publishing
Group, Inc. and Subsidiaries) (the "Company") for the registration of 901,408
shares of its common stock and to the incorporation by reference therein of
our report dated March 21, 1997, with respect to the consolidated financial
statements and schedules of the Company included in its Annual Report, as
amended (Form 10K), for the eleven months ended December 28, 1996, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
New York, New York
August 20, 1997
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Golden Books Family Entertainment, Inc. and Subsidiaries (formerly Western
Publishing Group, Inc. and Subsidiaries) on Form S-3 of our report dated April
2, 1996, appearing in the Annual Report on Form 10-K of Golden Books Family
Entertainment, Inc. and Subsidiaries for the period ended December 28, 1996,
and to the reference to us under the heading "Experts" in the prospectus,
which is part of this Registration Statement.
/S/ DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
August 20, 1997
