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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 24, 1999 0-14399
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Date of Report (Date of earliest Commission File Number
event reported)
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1104930
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
888 Seventh Avenue, 40th Floor
New York, New York 10106
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(Address of Principal Executive Offices) (Zip Code)
(212) 547-6700
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(Registrant's telephone number, including area code)
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<PAGE>
Item 3. Bankruptcy or Receivership
Under date of September 24, 1999, the United States Bankruptcy Court for
the Southern District of New York (the "Court") signed an order (the
"Confirmation Order") confirming the Golden Books Family Entertainment, Inc. and
its subsidiaries' Amended Joint Plan of Reorganization (the "Plan"). The Plan
only becomes effective upon consummation. Upon consummation of the Plan, a Form
8-K under this Item 3 with information regarding the number of shares issued,
outstanding and reserved, and the assets and liabilities of the Registrant will
be filed.
The Plan was attached as an exhibit to a Form 8-K filed by the Registrant
under date of May 13, 1999. Modifications to the Plan were filed with the Court
on September 1, 1999. A monthly operating statement for the period August 29,
1999 through September 25, 1999, which includes information concerning the
assets and liabilities of the Registrant, was filed with the Court under date of
October 13, 1999. The Confirmation Order dated September 24, 1999 and the
filings made with the Court under dates of September 1 and October 13, 1999 are
set forth as Exhibits hereto.
On October 12, 1999, the United States District Court for the Southern
District of New York approved the settlement of the consolidated class-action
complaint filed on behalf of all persons who purchased the Common Stock of the
Company between May 13, 1997 and August 4, 1998, inclusive, and by the holders
of the Company's 8 3/4% Convertible Trust Originated Preferred Securities. A
copy of the order approving the settlement is set forth as an exhibit hereto.
Confirmation of the Plan will require the Registrant, among other things,
to complete negotiations regarding the terms of the indenture governing the new
$87.0 million secured notes called for under the Plan and completing
arrangements to obtain exit financing.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits. The following exhibits are filed herewith and
incorporated herein by reference:
Exhibit No. Description
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2.1 Order Confirming Debtors' Amended Joint Plan
of Reorganization under Chapter 11 of the
Bankruptcy Code, dated September 24, 1999
2.2 Modification of Debtors' Amended Joint Plan of
Reorganization under Chapter 11 of the
Bankruptcy Code, dated September 1, 1999
2.3 Monthly Operating Statement for the Period
August 29, 1999 through September 25, 1999,
dated October 13, 1999
2.4 Order and Final Judgment, dated October 12,
1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
Date: October 18, 1999 By: /s/ Philip Galanes
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Name: Philip Galanes
Title: Chief Administrative Officer,
Executive Vice President,
General Counsel & Secretary
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Exhibit Index
2.1 Order Confirming Debtors' Amended Joint Plan
of Reorganization under Chapter 11 of the
Bankruptcy Code, dated September 24, 1999
2.2 Modification of Debtors' Amended Joint Plan of
Reorganization under Chapter 11 of the
Bankruptcy Code, dated September 1, 1999
2.3 Monthly Operating Statement for the Period
August 29, 1999 through September 25, 1999,
dated October 13, 1999
2.4 Order and Final Judgment, dated October
12, 1999
4
PROSKAUER ROSE LLP
Counsel for Debtors and Debtors-in-Possession
1585 Broadway
New York, New York 10036
(212) 969-3000
Alan B. Hyman (AH-6655)
Scott K. Rutsky (SR-0712)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: :
: (Chapter 11)
GOLDEN BOOKS FAMILY : Case Nos. 99-10030
ENTERTAINMENT, INC., et al., : Through 99-10032 (TLB)
:
: (Jointly Administered)
Debtors. :
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ORDER CONFIRMING DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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Golden Books Family Entertainment, Inc., Golden Books Publishing
Company, Inc. and Golden Books Home Video, Inc. (collectively, "Golden Books" or
the "Debtors"), debtors and debtors-in-possession, having filed with this Court
their respective voluntary petitions for relief under Chapter 11 of Title 11,
United States Code, 11 U.S.C. ss.ss. 101 et seq. (the "Bankruptcy Code") on
February 26, 1999 (the "Petition Date"); and the Debtors having filed with this
Court (i) an Amended Joint Plan of Reorganization dated May 13, 1999 (as
modified pursuant to the Modification (as hereinafter defined) the "Plan"), and
(ii) an Amended Disclosure Statement dated May 13, 1999 (the "Disclosure
Statement");1 and the Disclosure
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1 Capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the Plan or the Disclosure Statement, as the case
may be.
<PAGE>
Statement having been approved as containing adequate information, as such term
is defined in Section 1125 of the Bankruptcy Code, by order of the Court dated
May 13, 1999 (the "Disclosure Statement Order"); and the Disclosure Statement
Order having, inter alia, (i) authorized the Debtors to solicit acceptances or
rejections of the Plan, (ii) approved the form of ballots to be transmitted with
the Plan and Disclosure Statement for voting purposes, (iii) fixed July 6, 1999,
at 4:00 p.m. as the deadline (a) for submitting acceptances or rejections to the
Plan (the "Voting Deadline"), and (b) for filing objections to Confirmation of
the Plan (the "Objection Deadline"); (iv) fixed an initial date and time for a
hearing to consider Confirmation of the Plan pursuant to Section 1129 of the
Bankruptcy Code, which hearing was adjourned from time to time and was held on
September 1, 1999 (the "Confirmation Hearing"); and the Debtors having solicited
votes on the Plan by transmitting copies of the Disclosure Statement (including
the Plan) and a ballot and/or master ballot to all impaired creditors and equity
security holders entitled to vote on the Plan; and the Court having considered
the Affidavit of Laura Campbell Certifying the Ballots Accepting or Rejecting
the Plan sworn to on August 9, 1999 (the "Ballot Declaration"); and it appearing
that due notice of the Voting Deadline, Confirmation Hearing, and the Objection
Deadline having been given by the Debtors to their creditors, equity security
holders and other parties-in-interest in accordance with the Disclosure
Statement Order, the Bankruptcy Code and the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules") as evidenced by the affidavits of mailing and
of publication filed or to be filed with this Court; and the Debtors having
filed with this Court a Modification of the Plan dated September 1, 1999 (the
"Modification"); and the Debtors having filed with this Court a Memorandum of
Law In Support of Confirmation of the Plan, dated September 1, 1999, and an
Affidavit of Colin Finkelstein in support of same, sworn to on September 1,
1999; and objections (collectively, the
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"Objections") to confirmation of the Plan having been filed by (i) MindGames,
Inc., (ii) Richard A. Bernstein et al., (iii) Central States, Southeast and
Southwest Areas Pension Fund, and (iv) Troll Communications, L.L.C. ("Troll");
and it appearing that all Objections have been withdrawn pursuant to
stipulations approved by this Court or, in the case of the Troll Objection, as
set forth on the record of the Confirmation Hearing; and upon all the documents
and the evidence of record adduced at the Confirmation Hearing and the
statements of the parties appearing at such hearing; and upon all the pleadings
and proceedings heretofore had in the Chapter 11 Cases; and after due
deliberation and consideration; and sufficient cause appearing therefor; and
IT HAVING BEEN FOUND AND DETERMINED by this Court that:
A. Jurisdiction and Venue. This Court has jurisdiction over the Chapter
11 Cases and the subject matter of the Confirmation Hearing pursuant to 28
U.S.C. ss.ss. 157 and 1334. Confirmation of the Plan is a "core proceeding"
pursuant to 28 U.S.C. ss. 157(b)(2)(L) and this Court has jurisdiction to enter
a Final Order with respect thereto. Venue of the Chapter 11 Cases in this
district is proper pursuant to 28 U.S.C. ss.ss. 1408 and 1409. The Debtors are
entities eligible for relief under Section 109 of the Bankruptcy Code.
B. Notice. In accordance with the Disclosure Statement Order, the Debtors timely
(i) mailed notice of the Voting Deadline, of the date, time and place for the
Confirmation Hearing, and of the deadline and procedures for filing objections
to Confirmation of the Plan, upon the parties set forth in the Disclosure
Statement Order, and (ii) published such notice in the periodicals set forth in
the Disclosure Statement Order. Adequate and sufficient notice of the
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Confirmation Hearing (including the Objection Deadline) and other requirements,
deadlines, hearings and matters described in the Disclosure Statement Order was
provided in compliance with the Disclosure Statement Order and the Bankruptcy
Rules, and no other and further notice is required. All parties-in-interest had
the opportunity to appear and be heard at the Confirmation Hearing.
C. Reasonable Classification of Claims and Equity Interests (Section
1122(a)). The classification of Claims and Equity Interests in Article 3 of the
Plan is reasonable and necessary, and places Claims or Equity Interests in a
particular Class where such Claim or Equity Interest is substantially similar to
the other Claims or Equity Interests of such Class, and therefore the Plan
satisfies the requirements of Section 1122(a) of the Bankruptcy Code. D.
Designation of Classes (Section 1123(a)(1)). Article 3 of the Plan properly
designates all Classes of Claims and Equity Interests, and therefore the Plan
satisfies the requirements of Section 1123(a)(1) of the Bankruptcy Code. E.
Specification of Unimpaired Classes (Section 1123(a)(2)). Article 4 of the Plan
specifies the Classes of Claims and Equity Interests which are unimpaired or
impaired, and therefore the Plan satisfies the requirements of Section
1123(a)(2) of the Bankruptcy Code. F. Specification of Treatment of Impaired
Classes (Section 1123(a)(3)). The Plan specifies the treatment of each impaired
Class of Claims and Equity Interests, and therefore the Plan satisfies the
requirements of Section 1123(a)(3) of the Bankruptcy Code.
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G. No Discrimination (Section 1123(a)(4)). The Plan provides the same
treatment for each Claim or Equity Interest of a particular Class, and therefore
the Plan satisfies the requirements of Section 1123(a)(4) of the Bankruptcy
Code.
H. Implementation of the Plan (Section 1123(a)(5)). Article 5 and the
other provisions of the Plan provide adequate means for the Plan's
implementation, and therefore the Plan satisfies the requirements of Section
1123(a)(5) of the Bankruptcy Code.
I. Equity Securities (Section 1123(a)(6)). The Plan provides for (i)
the inclusion of a provision in the Reorganized Debtors' Charters that prohibits
the issuance of nonvoting equity securities, and (ii) the issuance of a single
class of common equity, and therefore satisfies Section 1123(a)(6) of the
Bankruptcy Code.
J. Selection of Officers and Directors (Section 1123(a)(7)). The Plan
provides for the management and governance of the Reorganized Debtors in a
manner that is consistent with the interests of creditors and equity security
holders and with public policy with respect to the manner of selection of any
officer, director or trustee under the Plan, and any successor to such officer,
director or trustee, and therefore the Plan satisfies the requirements of
Section 1123(a)(7) of the Bankruptcy Code.
K. Impairment or Unimpairment of Claims or Interests (Section
1123(b)(1)). The Plan impairs or leaves unimpaired, as the case may be, each
Class of Claims or Equity Interests, and therefore complies with Section
1123(b)(1) of the Bankruptcy Code.
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L. Assumption or Rejection of Executory Contracts and Unexpired Leases
(Section 1123(b)(2)). The Plan provides for (i) the rejection of all outstanding
unexercised stock options, warrants and similar rights, and (ii) the assumption
of all other executory contracts and unexpired leases which have not been
expressly rejected by the Debtors with this Court's approval on or prior to the
Confirmation Date, or which as of such date are not the subject of a motion to
reject, and therefore the Plan complies with Section 1123(b)(2) of the
Bankruptcy Code.
M. Settlement and Compromise (Section 1123(b)(3)). The Plan complies
with Section 1123(b)(3)(A) of the Bankruptcy Code because any settlement and
compromise incorporated in the Plan including, without limitation, the
Restructuring Agreement, the treatment of the Old Senior Note Claims, the GPH
Claims and the TOPrS Claims: (i) reflects a reasonable balance of the risks and
expenses of litigation against the benefits and early resolution of the
disputes; (ii) falls within the range of reasonableness for the resolution of
complex litigation or litigable issues and claims; and (iii) is fair and
equitable and in the best interests of the Debtors, their Estates, and all
holders of Claims and Equity Interests.
N. Plan Compliance With Provisions of the Bankruptcy Code (Section
1129(a)(1)). The Plan complies with all applicable provisions of the Bankruptcy
Code including, without limitation, Sections 1122 and 1123 and, as required
pursuant to Bankruptcy Rule 3016(b), is dated and identifies the Debtors as the
proponents of the Plan, and therefore the Plan satisfies the requirements of
Section 1129(a)(1) of the Bankruptcy Code.
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O. Proponent Compliance With Provisions of the Bankruptcy Code
(1129(a)(2)). The Debtors, as proponents of the Plan, have complied with the
applicable provisions of the Bankruptcy Code including, without limitation,
Sections 1125 and 1126, and therefore the Debtors have satisfied the
requirements of Section 1129(a)(2) of the Bankruptcy Code.
P. Plan Proposed in Good Faith (Section 1129(a)(3)). The Plan has been
proposed in good faith, for the valid business purposes of restructuring
operations and substantial indebtedness and other obligations of the Debtors,
and resolving disputes, and has not been proposed by any means forbidden by law,
and therefore the Plan satisfies the requirements of Section 1129(a)(3) of the
Bankruptcy Code.
Q. Payment of Costs and Expenses (Section 1129(a)(4)). Any payment made
or to be made by the Debtors, or any person issuing securities or acquiring
property under the Plan, for services or for costs and expenses in or in
connection with the Chapter 11 Cases, or in connection with the Plan and
incident to the Chapter 11 Cases, has been approved by, or will be subject to
the approval of, this Court as reasonable, and therefore the Plan satisfies the
requirements of Section 1129(a)(4) of the Bankruptcy Code.
R. Disclosure of Identities of Officers, Directors and Insiders
(Section 1129(a)(5)). The Debtors have disclosed the identity and other relevant
information of all individuals, including insiders, proposed to serve, after
Confirmation of the Plan, as a director or officer of the Debtors pursuant to a
Designation of Officers and Directors dated September 1, 1999 (the "Designation
of Officers and Directors") which was filed with this Court, and the
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appointment to, or continuance in such office of each such individual is
consistent with the interests of creditors and equity security holders and with
public policy, and therefore the Plan satisfies the requirements of Section
1129(a)(5) of the Bankruptcy Code.
S. No Rate Change (Section 1129(a)(6)). Section 1129(a)(6) is
inapplicable to the Plan since there are no rate changes provided for in the
Plan for which a governmental regulatory commission will have jurisdiction over
the Debtors after Confirmation.
T. Best Interests of Creditors (Section 1129(a)(7)). With respect to
each impaired Class of Claims and Equity Interests, each holder of a Claim or
Equity Interest of such Class has accepted the Plan, or will receive or retain
under the Plan on account of such Claim or Interest, property of a value, as of
the Effective Date of the Plan, that is not less than the amount that such
holder would so receive or retain if the Debtors were liquidated under Chapter 7
of the Bankruptcy Code on such date. Therefore, the Plan satisfies the
requirements of Section 1129(a)(7) of the Bankruptcy Code.
U. Plan Acceptance (Section 1129(a)(8)). Pursuant to a Stipulation and
Order Resolving Disputes Between the Debtors and Richard A. Bernstein, Et Al.,
Relating to the Debtors' Amended Joint Plan of Reorganization entered by this
Court on September 1, 1999, the ballots rejecting the Plan submitted by the
Voting Objectants (as defined in such Stipulation and Order) were withdrawn.
Therefore, each Class has accepted the Plan, or is not impaired under the Plan
and thus is conclusively presumed to have accepted the Plan pursuant to Section
1126(f) of the Bankruptcy Code, and therefore the Plan satisfies the
requirements of Section 1129(a)(8) of the Bankruptcy Code.
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V. Plan Treatment of Administrative Expense Claims, Priority Claims and
Tax Claims (Section 1129(a)(9)). The Plan satisfies the requirements of Section
1129(a)(9) of the Bankruptcy Code because, except to the extent that the holder
of a particular Claim has agreed to a different treatment of such Claim, the
Plan provides that Administrative Expense Claims, Priority Claims, and Priority
Tax Claims shall be treated in accordance with the provisions of Section
1129(a)(9) of the Bankruptcy Code.
W. Acceptance By At Least One Impaired Class (Section 1129(a)(10)). At
least one Class of Claims that is impaired under the Plan has accepted the Plan,
determined without including any acceptance of the Plan by any insider holding a
Claim in such Class, and therefore the Plan satisfies the requirements of
Section 1129(a)(10) of the Bankruptcy Code.
X. Feasibility (Section 1129(a)(11)). Confirmation of the Plan is not
likely to be followed by the liquidation, or the need for further financial
reorganization, of the Debtors, and therefore the Plan satisfies the
requirements of Section 1129(a)(11) of the Bankruptcy Code.
Y. Payment of Fees (Section 1129(a)(12)). The Debtors have paid or,
pursuant to Section 5.19 of the Plan, shall pay, on or prior to the Effective
Date, all amounts due under 28 U.S.C. ss. 1930, and therefore the Plan satisfies
the requirements of Section 1129(a)(12) of the Bankruptcy Code.
Z. Retiree Benefits (Section 1129(a)(13)). To the extent applicable to
the Debtors, the Plan provides that all retiree benefits shall be continued
solely to the extent, and for
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the duration of the period, the Debtors are contractually or legally
obligated to provide such benefits, and therefore the Plan complies with Section
1129(a)(13) of the Bankruptcy Code.
AA. Cramdown (Section 1129(b)). As evidenced by the Ballot Declaration,
all impaired Classes of Claims and Equity Interests have voted to accept the
Plan, and therefore Section 1129(b) is inapplicable with respect to Confirmation
of the Plan.
BB. No Other Plan (Section 1129(c)). No other plan of reorganization
has been filed with respect to the Debtors' Chapter 11 Cases.
CC. Avoidance of Taxes or Application of Securities Laws (Section
1129(d)). No party-in-interest that is a governmental unit has requested that
the Plan not be confirmed on the grounds the principal purpose of the Plan is
the avoidance of taxes or the avoidance of the application of Section 5 of the
Securities Act of 1933, and therefore the Plan satisfies the requirements of
Section 1129(d) of the Bankruptcy Code.
DD. Release, Discharge, and Injunction. The release, discharge, and
injunction provisions set forth in Article 9 of the Plan (i) are within the
jurisdiction of this Court under 28 U.S.C. ss.ss. 1334(a), (b) and (d); (ii) are
each an essential means of implementing the Plan pursuant to Section 1123(a)(5)
of the Bankruptcy Code; (iii) are integral elements of the settlements and
compromises incorporated in the Plan; (iv) confer material benefits on, and thus
are in the best interests of, the Estate; and (v) are, in the facts and
circumstances of this case, consistent with and permitted pursuant to Sections
105, 524, 1123, 1129 and all other applicable provisions of the Bankruptcy Code.
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EE. Solicitation and Tabulation of Acceptances. As evidenced by the
Ballot Declaration, the solicitation and tabulation of acceptances and
rejections of the Plan was accomplished in a proper, fair and lawful manner in
accordance with the Disclosure Statement Order and/or all applicable Bankruptcy
Rules. The Plan has been duly accepted by the holders of Claims and Equity
Interests whose acceptance is required in accordance with the provisions of
Section 1126(b) of the Bankruptcy Code.
FF. Plan Transfers. All transfers, issuances or exchanges of securities
by the Debtors and Reorganized Debtors are transfers under the Plan free from
the imposition of taxes of the kind specified in Section 1146(c) of the
Bankruptcy Code and are subject to the exemptions of Section 1145 of the
Bankruptcy Code.
GG. Debtors Duties. The Debtors have completed and fulfilled all of
their obligations and duties with respect to their Estates pursuant to Section
1107 of the Bankruptcy Code.
HH. Modification of the Plan. The modifications of the Plan pursuant to
the Modification are non-material and do not adversely change the treatment of
the holder of any Claim or Equity Interest in the Debtors under the Plan. In
accordance with Section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019,
all holders of Claims and Equity Interests who voted to accept the Plan are
hereby deemed to have accepted the Plan, as amended in accordance with the
Modification. No holder of a Claim or Equity Interest who has voted to accept
the Plan shall be permitted to change its acceptance to a rejection as a
consequence of the
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Modification. Disclosure of the Modification on the record of the Confirmation
Hearing constitutes due and sufficient notice thereof.
THEREFORE, NOW, after due deliberation, the Court hereby ORDERS,
ADJUDGES AND DECREES THAT:
1. Confirmation. The Plan, as modified pursuant to the Modification,
shall be, and hereby is, confirmed as of September 1, 1999 (the date of the
Confirmation Hearing, and hereinafter, the "Confirmation Date") having met the
requirements of Section 1129 of the Bankruptcy Code, and, as used herein, the
term "Plan" shall mean the Plan as modified by the Modification. The terms of
the Plan are incorporated by reference into, and are an integral part of, this
Order.
2. Objections Withdrawn. All Objections to confirmation of the Plan
have been withdrawn prior to entry of this Order, and all such withdrawn
Objections shall be, and they hereby are, deemed withdrawn with prejudice.
3. Record Date. Pursuant to the Plan, and in accordance with Bankruptcy
Rule 3021, the Distribution Record Date for the purposes of determining those
holders of Claims or Equity Interests entitled to receive distributions under
the Plan shall be the Confirmation Date.
4. Allowance of Claims. Pursuant to Section 4.3(a) of the Plan, the Old
Senior Note Claims shall be, and they hereby are, Allowed in an aggregate amount
of $150 million plus accrued and unpaid interest relating to the period up to
but not including the Petition Date. Pursuant to Section 4.4(a) of the Plan, the
GPH Claims shall be, and they hereby
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are, Allowed in an aggregate amount of $10 million plus accrued and unpaid
interest relating to the period up to but not including the Petition Date.
Pursuant to Section 4.5(a) of the Plan, the TOPrS Claims shall be, and they
hereby are, Allowed in an aggregate amount of $105 million plus accrued and
unpaid interest relating to the period up to but not including the Petition
Date. Each of the foregoing Allowed Claims shall receive the respective
treatment and distributions provided in the Plan.
5. Implementation of the Plan. In accordance with Section 1142 of the
Bankruptcy Code, the implementation and consummation of the Plan in accordance
with its terms shall be, and hereby is, authorized and approved, and the
Debtors, Reorganized Debtors or any other Person shall be, and they hereby are,
authorized, empowered and directed to issue, execute, deliver, file and record
any document, whether or not any such document is specifically referred to in
the Plan, the Disclosure Statement, or any exhibit thereto, and to take any
action necessary or appropriate to consummate the Plan in accordance with its
terms, including, without limitation, execution and delivery of (i) the New
Senior Note Indenture, the New Senior Note Security Agreement and all other
documents relating to the New Senior Notes (collectively, the "New Senior Note
Documents"), (ii) the Post-Effective Date Financing Facility Documents, and
(iii) the issuance of the New Parent Common Stock and the New Warrants, all
without further application to or order of this Court. Without in any manner
limiting the foregoing, the execution and delivery, performance, filing or
recordation by the Debtors, Reorganized Debtors or any other entity or Person
designated pursuant to the Plan, of each of the documents, instruments and
agreements contemplated by or necessary in connection with consummation of the
Plan, are hereby authorized and approved, including, without limitation, all
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documents to be included in the Plan Supplement. Prior to the Effective Date,
the Plan Supplement shall be filed with this Court containing the Plan
Documents, which documents shall (i) in all respects be acceptable to
the Debtors, the Informal Committees and GPH, and (ii) include, without
limitation, the final forms of the following: (a) the New Senior Note Documents,
(b) the Post-Effective Date Financing Facility Documents, (c) the Reorganized
Debtors' Charters, (b) the employment agreement of Richard E. Snyder, and the
amendments to the employment agreements of Philip Galanes, Richard Collins and
Colin Finkelstein, (c) the Management Stock Option Plan, (d) the Warrant
Agreement, and (e) the Registration Rights Agreement. The forms of documents to
be contained in the Plan Supplement shall be subject to the final approval of
this Court pursuant to a further order to be submitted to the Court
contemporaneously with the filing of the Plan Supplement.
6. Binding Effect. In accordance with Section 1141(a) of the Bankruptcy
Code, the Plan and all of its provisions shall be, and hereby are, binding upon
the Debtors, Reorganized Debtors, any Person acquiring or receiving property or
a distribution under the Plan, any lessor or lessee of property to or from the
Debtors, any creditor of the Debtors and any holder of a Claim against or Equity
Interest in the Debtors, whether or not the Claim or Equity Interest of such
holder is impaired under the Plan and whether or not such holder (a) has filed,
or is deemed to have filed, a proof of Claim or Equity Interest, (b) has
accepted or rejected the Plan or (c) will or will not receive a distribution
under the Plan.
7. Section 1146(c) Exemption. In accordance with Section
1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of any
security under the Plan or the making, delivery, filing or recording of the
various instruments of transfer (including, without
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limitation, mortgages in connection with the Exit Credit Facility and the New
Senior Note Documents) pursuant to, in implementation of, or as contemplated by
the Plan, shall not be subject to any recording tax, stamp tax, transfer tax or
other similar tax. Consistent with the foregoing, each recorder of deeds or
similar official for any county, city or governmental unit in which any
instrument of transfer hereunder is to be recorded shall be, and hereby is,
directed to accept such instrument, without requiring the payment of any
recording tax, stamp tax, transfer tax or other similar tax.
8. Acceptance and Execution of Documents. Without in any manner
limiting the relief granted pursuant to the preceding decretal paragraph, each
and every federal, state and local governmental agency or department is hereby
directed to accept, and lessors and holders of liens are directed to execute,
any and all documents and instruments necessary and appropriate to consummate
the transactions contemplated by the Plan including, without limitation,
documents and instruments for recording in (a) county recording offices
necessary to transfer title to, or record or continue liens and encumbrances
against, real estate, (b) county and state offices wherein financing or
termination statements under the Uniform Commercial Code are authorized to be
filed and (c) county and state offices wherein the Reorganized Debtors' Charter
or other documents may need to be filed in order to effectuate the Plan.
9. Exemption From Securities Laws. The exemption from the requirements
of Section 5 of the Securities Act of 1933, 15 U.S.C. ss. 77e, and any state or
local law requiring registration for the offer or sale of a security provided
for in Section 1145 of the Bankruptcy Code, shall apply to the New Senior Notes,
New Parent Common Stock and New Warrants to be issued pursuant to the Plan.
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10. Binding Effect of Prior Bankruptcy Court Orders. Subject to the
terms of the Plan and this Order, all prior orders of this Court entered in the
Chapter 11 Cases, all documents and agreements executed by the Debtors as
authorized and directed thereunder, and all motions or requests for relief by
the Debtors pending before the Court as of the Effective Date shall be, and
hereby are, binding upon, and shall inure to the benefit of the Debtors,
Reorganized Debtors and their respective successors and assigns. Without in any
manner limiting the foregoing, the Stipulation and Order Resolving Disputes
Respecting Proof of Claim of MindGames, Inc. (Claim Number 844) and Related
Matters, entered by this Court on September 1, 1999, is hereby ratified in all
respects.
11. Carrying Out of Terms. Except as may otherwise be required pursuant
to the Plan or any documents or agreements implemented in connection therewith,
pursuant to Section 303 of the Delaware General Corporation Law, all terms of
the Plan, and all documents which are contemplated to be executed in connection
with the Plan, may be put into effect and carried out, without further action by
the directors or shareholders of the Debtors or Reorganized Debtors, who shall
be deemed to have unanimously approved the Plan and all agreements and
transactions provided for or contemplated therein, including, without
limitation: (i) the adoption of the Reorganized Debtors' Charters, (ii) the
initial selection of director and officers of the Reorganized Debtors, and (iii)
the distribution of New Parent Common Stock, New Senior Notes and New Warrants
pursuant to the Plan.
12. Post-Effective Date Authority. On and after the Effective Date, the
Reorganized Debtors may operate their businesses and may use, acquire and
dispose of their properties and compromise or settle any post-Effective Date
claims or interests without
16
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supervision or approval by the Bankruptcy Court and free of any restrictions of
the Bankruptcy Code or Bankruptcy Rules, other than restrictions expressly
imposed by the Plan or this Order.
13. Disbursing Agent. The Reorganized Debtors (or a disbursing agent
designated by the Debtors) shall be, and hereby are, authorized and directed to
serve as disbursing agent to make all distributions required under the Plan (a)
to the holders of Allowed Claims and Equity Interests and (b) thereafter, to the
extent Disputed Claims become Allowed, to the holders of such Allowed Claims.
All distributions shall be made pursuant to, and accordance with, the provisions
of Article 6 of the Plan.
14. Discharge. Subject to, and upon the occurrence of, the Effective
Date, and except as otherwise expressly provided in Section 1141 of the
Bankruptcy Code or the Plan, the distributions made pursuant to and in
accordance with the applicable terms and conditions of the Plan are in full and
final satisfaction, settlement, release and discharge as against the Debtors of
any debt that arose before the Effective Date, and any debt of a kind specified
in Section 502(g), 502(h), or 502(i) of the Bankruptcy Code, and all Claims and
Equity Interests of any nature, including, without limitation, any interest
accrued thereon from and after the Petition Date, whether or not (i) a proof of
Claim or Equity Interest based on such debt, obligation or equity interest is
filed or deemed filed under Section 501 of the Bankruptcy Code, (ii) such Claim
or Equity Interest is Allowed under Section 502 of the Bankruptcy Code or (iii)
the holder of such Claim or Equity Interest has accepted the Plan; provided,
however, that the foregoing discharge shall not apply to rights of holders of
Recission or Damage Claims, and Indemnification Claims arising from or related
thereto, to pursue such Claims against the Debtors solely to obtain a right of
recovery against any applicable insurance coverage of the
17
<PAGE>
Debtors or to seek indemnification, all as otherwise provided by Section 7.3 of
the Plan (but not to enforce a judgment against any other property of the
Debtors or Reorganized Debtors).
15. Releases. (a) Without limiting the provisions of Section 9.2 of
the Plan and except as otherwise provided in the Plan, as of the Effective Date,
in consideration for, and as part of the treatment afforded to, the holders of
Claims and Equity Interests under the Plan, and for other valuable
consideration, each of the Released Parties shall be deemed forever released
from any and all Causes of Action that any Person may have asserted, could have
asserted, or could in the future assert, directly or indirectly, against any of
the Released Parties relating to the Debtors or the Chapter 11 Cases on or prior
to the Effective Date, provided, however, that the foregoing release shall not
apply to (i) liability of any Released Party arising solely from such party's
willful misconduct or gross negligence, (ii) Causes of Action that arise from
obligations or rights created under or in connection with the Plan or any
agreement provided for or contemplated in the Plan, and (iii) the rights of
holders of Recission or Damage Claims to pursue such Claims against present or
former officers and directors of the Debtors as named defendants in litigations
respecting such Recission or Damage Claims solely for purposes of preserving or
obtaining a right of recovery against any applicable insurance coverage of the
Debtors but not to enforce a judgment against any property of any present or
former officers and directors of the Debtors except to the extent of such
insurance proceeds and any other proceeds made available under the
indemnification rights as provided for in Section 7.3 of the Plan.
Notwithstanding anything in the Plan to the contrary, nothing in the Plan or
this Order shall discharge, release or exculpate any non-Debtor from (a) any
liability to the United States of America and/or its agencies, (b) any liability
arising under any state, city or municipal (i) tax
18
<PAGE>
code, (ii) environmental code, or (iii) criminal law, (c) any "withdrawal
liability" pursuant to 29 U.S.C. ss.ss. 1383 and 1385, to the Central States,
Southeast and Southwest Areas Pension Fund, (d) any liability with respect to
any Excluded Claims, or (e) any and all claims or causes of action that
(i) Richard A. Bernstein; (ii) the Richard A. Bernstein Trust of 1986, Fleet
National Bank as Trustee; (iii) the Richard A. Bernstein and Stuart
Turner Trust of 1978 f/b/o Richard A. Bernstein; (iv) the Amelia Bernstein 1996
Trust, Fleet National Bank, as Trustee; (v) the Stuart Turner Trust, Mitchell N.
Baron, Trustee; (vi) James A. Cohen; (vii) Martin E. Weisberg; and (vii) Stuart
Turner and Gail Turner JTWROS (collectively, the "Excluded Entities"), may have
against GPH and its members, viz. Warburg, Pincus Ventures, L.P., Richard E.
Snyder and Barry Diller, and its appointees to the Board of Directors of Golden
Books Family Entertainment, Inc.
(b) Except as, and only to the extent, provided otherwise in the Plan,
as of the Effective Date, each of the Released Parties forever releases, waives
and discharges all known and unknown Causes of Action of any nature that such
Released Party has, had or may have against any other Released Party for all
acts and omissions related to the Debtors arising from or related to the Chapter
11 Cases through the Effective Date, other than Causes of Action that arise from
obligations or rights created under or in connection with the Plan or any
agreement provided for or contemplated in the Plan.
16. Injunctions. (a) As of the Effective Date, all Persons that have
held, currently hold or may have asserted a Claim, a Cause of Action or other
debt, or liability, or an Equity Interest or other right of a holder of an
Equity Interest that is discharged, released or terminated pursuant to the
Plan, are hereby permanently enjoined from commencing or
19
<PAGE>
continuing, in any manner or in any place, any action or other proceeding,
enforcing, attaching, collecting or recovering in any manner any judgment,
award, decree or order, creating, perfecting or enforcing any lien or
encumbrance, asserting a set-off, right or subrogation or recoupment of any kind
against any debt, liability or obligation due to any such releasing Person, and
from commencing or continuing any action, in any manner or in any place where
the foregoing does not comply with or is inconsistent with the provisions
hereof, provided, however, that the foregoing injunctions shall not apply to
rights of the holders of Recission or Damage Claims, and Indemnification Claims
arising from or related thereto, to pursue such Claims against any Person that
is discharged or released pursuant to this Plan solely to obtain a right of
recovery against any applicable insurance coverage or to seek indemnification as
otherwise provided by Section 7.3 of the Plan but not to enforce a judgment
against any property of any Person that is discharged or released pursuant to
this Plan except to the extent of insurance proceeds or to seek indemnification
as otherwise provided by Section 7.3 of the Plan.
(b) As of the Effective Date, except as otherwise provided in the Plan,
all Persons are hereby permanently enjoined from commencing or continuing, in
any manner or in any place, any action or other proceeding, whether directly,
derivatively or otherwise against any or all of the Released Parties, on account
of or respecting any claims, debts, rights, Causes of Action or liabilities
released or discharged pursuant to the Plan, except to the extent expressly
permitted under the Plan.
(c) Without limitation to the scope, extent, validity or
enforceability of the injunctive relief set forth in the Plan and in the
Confirmation Order, by accepting distributions
20
<PAGE>
pursuant to the Plan, each holder of an Allowed Claim or Equity Interest
receiving distributions pursuant to the Plan is hereby deemed to have
specifically consented to the releases and injunctions set forth in this Plan.
17. Exculpation. Neither the Debtors, the Reorganized Debtors, the
Informal Committees, or GPH, nor any of their respective members, officers,
directors, employees, advisors, agents or Professionals shall have or incur any
liability to any holder of a Claim or Equity Interest for any act or omission in
connection with, related to, or arising out of, the Chapter 11 Cases, the
preparation or formulation of the Plan, the pursuit of confirmation of the Plan,
the consummation of the Plan or the administration of the Plan or the property
to be distributed under the Plan, except for willful misconduct or gross
negligence, and, in all respects, the Debtors, Reorganized Debtors and each of
their respective members, officers, directors, employees, advisors, agents and
Professionals shall be entitled to rely upon the advice of counsel with respect
to their duties and responsibilities under the Plan; provided, however, that
nothing in the Plan shall, or shall be deemed to, release the Debtors or
Reorganized Debtors from, or exculpate the Debtors or Reorganized Debtors with
respect to, their respective obligations or covenants arising pursuant to this
Order and the Plan.
18. Settlements and Compromises. All settlements and compromises
contained in the Plan are approved pursuant to Bankruptcy Rule 9019 as fair,
prudent and reasonable compromises of the controversies and Claims resolved by
such settlements and are binding upon all entities affected thereby.
21
<PAGE>
19. Indemnification. Upon the Effective Date, Section 7.3(a) of the
Plan (as modified by the Modification) shall be operative and Section 7.3(b) of
the Plan shall be inoperative and of no force and effect. Thus, notwithstanding
the discharge, release and injunction provisions contained in Article 9 of the
Plan or in this Order, and in accordance with Section 7.3(a) of the Plan, all
Persons holding or asserting Indemnification Claims (whether directly, by
subrogation or otherwise) shall be entitled to obtain recovery on account of
such Claims solely from the proceeds of any applicable directors' and officers'
insurance policy maintained by the Debtors or Reorganized Debtors, as the case
may be, and shall not, under any circumstances, be entitled to obtain a recovery
in respect of such Indemnification Claims from the Reorganized Debtors;
provided, however, that the Reorganized Debtors shall remain responsible for,
and shall pay, in respect of any and all Indemnification Claims, all retention
amounts and coinsurance obligations arising under, or necessary to maintain, its
directors' and officers' insurance policies; and provided, further, that all
Indemnification Claims arising solely in respect of the following shall be
assumed by the Reorganized Debtors without limitation: (a) any liability to the
United States of America and/or its agencies, (b) any liability arising under
any state, city or municipal (i) tax code, (ii) environmental code, or (iii)
criminal law, (c) any "withdrawal liability" pursuant to 29 U.S.C. ss.ss. 1383
and 1385, to the Central States, Southeast and Southwest Areas Pension Fund, (d)
any liability with respect to any Excluded Claims, or (e) any and all claims or
causes of action that the Excluded Entities may have against GPH and its
members, viz. Warburg, Pincus Ventures, L.P., Richard E. Snyder and Barry
Diller, and its appointees to the Board of Directors of Golden Books Family
Entertainment, Inc. The Debtors or Reorganized Debtors, as the case may be,
shall continue and maintain all presently existing directors' and officers'
insurance policies, and all such policies shall remain in full force and
22
<PAGE>
effect following Confirmation. The Debtors shall maintain any prior directors'
and officers' insurance policies and renew existing policies as they expire at
comparable or greater coverage levels.
20. Revesting of Assets. Except as otherwise provided by the Plan, upon
the Effective Date, title to all properties and assets dealt with by the Plan
shall pass to the Reorganized Debtors free and clear of all Claims, Liens,
encumbrances and interests of creditors and of equity security holders (except
those Claims, Liens, encumbrances and interests created pursuant to the Plan)
and the Confirmation Order shall be a judicial determination of discharge and
extinguishment of all Claims, Liens or Equity Interests (except those created
pursuant to this Plan). Notwithstanding the foregoing, nothing in the Plan shall
impact, discharge or extinguish any restriction contained in any license
agreements (or rights thereunder) to which the Debtors are a party.
21. Plan Documents. Each of the Debtors or Reorganized Debtors, as the
case may be, is authorized to execute, deliver, file or record such contracts,
instruments, releases, indentures and other agreements or documents and take
such actions as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan and any notes or securities issued
pursuant to the Plan.
22. Executory Contracts and Unexpired Leases. Any unexpired lease or
executory contract that has not been expressly rejected by the Debtors or
treated in the Plan with the Bankruptcy Court's approval on or prior to the
Confirmation Date shall, as of the Confirmation Date (subject to the occurrence
of the Effective Date), be deemed to have been
23
<PAGE>
assumed by the Debtors unless there is pending before the Bankruptcy Court on
the Confirmation Date a motion to reject such unexpired lease or executory
contract, or such executory contract or unexpired lease is otherwise designated
for rejection, provided that (a) such lease or executory contract is ultimately
rejected, and (b) the filing of the Confirmation Order shall be deemed to be a
rejection of all outstanding unexercised stock options, warrants and similar
rights. In accordance with Section 1123(a)(5)(G) of the Bankruptcy Code, on the
Effective Date, or as soon as practicable thereafter, the Reorganized Debtors
shall cure all defaults under any executory contract or unexpired lease assumed
pursuant to the Plan by making a Cash payment in an amount agreed to between the
Reorganized Debtors and the claimant, or as otherwise fixed pursuant to a Final
Order.
23. Retention of Jurisdiction. Pursuant to Section 11.1 of the Plan
(except that Section 11.1(a) shall be, and hereby is, deemed modified as set
forth in clause (a) of this paragraph 23), this Court shall have exclusive
jurisdiction of all matters arising out of, and related to, the Chapter 11 Cases
and the Plan pursuant to, and for the purposes of, Sections 105(a) and 1142 of
the Bankruptcy Code and for, among other things, the following purposes: (a) to
hear and determine any and all objections to the allowance of any Claims or any
controversies as to the classification of any Claims; (b) to hear and determine
any and all applications by Professionals for compensation and reimbursement of
expenses; (c) to hear and determine any and all pending applications for the
rejection and disaffirmance of executory contracts and unexpired leases, and to
fix and allow any Claims resulting therefrom; (d) to liquidate any Disputed
Claim; (e) to enforce the provisions of the Plan including, without limitation,
the injunction, exculpation and releases provisions contained in the Plan; (f)
to enable
24
<PAGE>
the Debtors or Reorganized Debtors to prosecute any and all proceedings
which have been or may be brought prior to the Effective Date to set aside liens
or encumbrances and to recover any transfers, assets, properties, or damages to
which the Debtors or Reorganized Debtors may be entitled under applicable
provisions of the Bankruptcy Code or any federal state, or local laws; (g) to
correct any defect, cure any omission, or reconcile any inconsistency in the
Plan or in the Confirmation Order as may be necessary to carry out its purpose
and the intent of the Plan; (h) to determine any Claim or liability to a
governmental unit which may be asserted as a result of the transactions
contemplated herein and in the Plan; (i) to hear and determine matters
concerning state, local, and federal taxes in accordance with Sections 346, 505
and 1146 of the Bankruptcy Code; and (j) to determine such other matters as may
be provided for in this Order or as may be authorized under the provisions of
the Bankruptcy Code.
24. Authority With Regard to Chapter 11 Cases. Following the Effective
Date, the Reorganized Debtors shall be, and they hereby are, ordered and
appointed to represent the Estates, assume the authority of the Debtors in
respect thereof and complete the responsibilities of the Debtors in regard to
matters in relation to the Chapter 11 Cases including, inter alia, actions in
relation to objection to Claims, post-confirmation notices, reports and the
final report and decree in accordance with Bankruptcy Rule 3022.
25. Professional Compensation and Expense Reimbursement Claims. All
entities seeking an award by the Bankruptcy Court of Professional Fees, or of
compensation for services rendered or reimbursement of expenses incurred through
and including the Confirmation Date under Sections 503(b)(2), 503(b)(3),
503(b)(4) or 503(b)(5) of the Bankruptcy Code, (a) shall file their respective
final applications for allowances of compensation
25
<PAGE>
for services rendered and reimbursement of expenses incurred through the
Confirmation Date by 4:00 p.m. on September 24, 1999, and (b) if granted such
an award by this Court, shall be paid in full in such amounts as are allowed
by this Court (i) on the later of the Effective Date or the date such
Administrative Expense Claim becomes an Allowed Administrative Expense Claim,
or as soon thereafter as is practicable, (ii) upon such other terms as may
be mutually agreed upon between such holder of an Allowed Administrative
Expense Claim and the Debtors or, on and after the Effective Date, the
Reorganized Debtors, or (iii) in accordance with the terms of any applicable
administrative procedures order entered by the Bankruptcy Court. All
Professional Fees for services rendered in connection with the Chapter 11 Cases
and the Plan after the Confirmation Date, including, without limitation, those
relating to the occurrence of the Effective Date, the prosecution of Causes of
Action preserved hereunder and the resolution of Disputed Claims, shall be paid
by the Reorganized Debtors upon receipt of an invoice therefor, or on such other
terms as the Reorganized Debtors may agree to, without the need for further
Bankruptcy Court authorization or entry of a Final Order. If the Reorganized
Debtors and any Professional cannot agree on the amount of post- Confirmation
Date fees and expenses to be paid to such Professional, such amount shall be
determined by this Court.
26. Treatment of Claims of DIP Lender. Simultaneously with the closing
of the Post-Effective Date Financing Facility, all of the Debtors' obligations
to the DIP Lender pursuant to the DIP Loan Documents shall be fully and finally
satisfied in accordance with the terms thereof.
27. Notice. Notice of entry of this Confirmation Order and of the
Effective Date of the Plan, substantially in the form annexed hereto as Exhibit
A (which notice is hereby
26
<PAGE>
approved in all respects) shall be, and hereby is, deemed sufficient (a) if
served by first-class mail within twenty (20) days following the Effective
Date, upon (i) all persons having filed a notice of appearance herein, and
(ii) all holders Claims and Equity Interests which are impaired under the
Plan; and (b) if published once within twenty (20) days from the Effective
Date in the national edition of The Wall Street Journal.
28. Effect of Reference to Plan in this Confirmation Order. The failure
to reference or discuss any particular provision of the Plan in this Order shall
have no effect on the validity, binding effect and enforceability of such
provision, and each provision of the Plan shall have the same validity, binding
effect and enforceability as if fully set forth in this Order.
29. Headings. Headings utilized herein are for the convenience of
reference only, and shall not constitute a part of the Plan or this Order for
any other purpose.
30. Inconsistencies. In the event of any inconsistencies between the
Plan or other agreement, instrument or document intended to implement the
provisions of the Plan, the provisions of the Plan shall govern unless otherwise
explicitly provided for in such agreements, instruments or documents. In the
event of any inconsistency between the Plan and any agreement, instrument or
document intended to implement the Plan and this Order, the provisions of the
Plan and any such agreement, instrument or document shall govern, unless
explicitly provided for in this Order.
31. Integration of Confirmation Order Provisions. The Provisions of
this Order are integrated with each other and are nonseverable and mutually
dependent.
27
<PAGE>
32. Finalization of Plan Documents. Notwithstanding anything to the
contrary contained in the Plan or this Order, the Debtors shall file the Plan
Documents with this Court as soon as practicable following the date hereof. In
addition to the conditions precedent to the Effective Date contained in Section
10.1 of the Plan, it shall be a condition precedent to the Effective Date that
the Plan Documents (including, without limitation, the New Senior Note
Indenture, the New Senior Note Security Agreement, the Post-Effective Date
Financing Facility Documents and the documents effectuating and perfecting the
respective liens and security interests to be granted to the New Senior Note
Trustee and the Exit Agent (as defined below) on behalf of the Exit Lenders (as
defined below) be acceptable to each of the Debtors, GPH and the Informal
Committees in each of their respective sole judgment. In accordance with Section
10.2 of the Plan, if such parties fail to reach agreement on the forms of the
Plan Documents within one hundred and twenty (120) days following the
Confirmation Date, this Order shall be automatically vacated and the remaining
provisions of Section 10.2 of the Plan shall control.
33. Survival of Provisions of Final Financing Order Until Effective
Date. Notwithstanding anything to the contrary contained in this Confirmation
Order or in the Plan, the Obligations under and as defined in the DIP Loan
Documents (the "DIP Obligations") and the rights, liens, priorities, and other
protections provided to the Lenders under and as defined in the DIP Loan
Documents (the "DIP Lenders") and the "Final Order (1) Authorizing Incurrence of
Indebtedness With Administrative Super-Priority and Secured by Senior Liens
and Junior Liens on the Security Interests in Substantially all Assets of the
Debtors Pursuant to Sections 364(c)(1), (2) and (3) of the Bankruptcy Code and
(2) Granting Other Relief," dated April 5,
28
<PAGE>
1999 (the "Final Financing Order"), shall survive the occurrence of the
Confirmation Date and continue in full force and effect until the
Effective Date.
34. Authorization to Pay Obligations Under DIP Loan Documents in Full.
The Debtors shall be, and hereby are, authorized and directed, on the Effective
Date, to pay in full in cash to CIT, as agent for the DIP Lenders (in such
capacity, the "DIP Agent"), all DIP Obligations owing under the DIP Loan
Documents (except for any contingent reimbursement obligations owed by the
Debtors to the DIP Agent and/or the DIP Lenders regarding certain outstanding
letters of credit which, upon the Effective Date, shall constitute letters of
credit under the Exit Credit Facility (as hereinafter defined). Upon the
Effective Date and the receipt of the DIP Agent of all such amounts, in full and
in cash, the DIP Lenders' commitments to make revolving loans or to issue
letters of credit under the DIP Loan Documents and/or the Final Financing Order
shall be terminated.
35. Approval of Exit Credit Facility. The Credit Agreement, to be
entered into pursuant to the Post-Effective Date Financing Facility and to be
dated as of the Effective Date subject to it being finalized and executed by the
parties thereto, and to be subject to further approval by the Court, by and
among the Reorganized Debtors, as borrowers, certain Lenders (the "Exit
Lenders") and CIT, as agent for such lenders (in such capacity, the "Exit
Agent") (the "Exit Credit Facility"), substantially consistent with the terms
and provisions of the commitment letter, dated August 27, 1999 (the "Commitment
Letter") which was presented to and approved by the Court at the Confirmation
Hearing shall, upon the issuance of a final order by the Court approving the
Credit Agreement (the "Final Exit Credit Facility Order"), its execution and
implementation, be, and hereby is, preliminarily approved, and the Reorganized
Debtors shall be
29
<PAGE>
and hereby are, authorized and directed, subject to the further action of this
Court, to enter into such Exit Credit Facility and to take such actions and to
perform such acts as may be necessary or appropriate to implement the Exit
Credit Facility and to take such actions and to perform such acts as may be
necessary or appropriate to implement the Exit Credit Facility and all
documents, instruments, and agreements related thereto and annexes, exhibits,
and schedules appended thereto (together with the Exit Credit Facility, the
"Exit Financing Documents"), pursuant to which the Reorganized Debtors shall
have access to a term loan and revolving credit and letter of credit facility
from and after the Effective Date on the terms and conditions therein set
forth, and the obligations thereunder shall constitute legal, valid, binding,
and authorized obligations of the respective parties thereto, enforceable in
accordance with their terms, and shall create the security interests purported
to be created thereby. The security interests and liens to be granted to the
Exit Agent and the Exit Lenders under the Exit Financing Documents shall
constitute, as of the Effective Date, valid and duly perfected first priority
liens and security interests in and to the collateral specified therein,
subject only, where applicable, to the pre-existing liens and other security
interests specified therein or contemplated thereby, or in any inter-creditor
agreements between the New Senior Note Trustee (on behalf of the holders of the
New Senior Notes) and the Exit Agent (on behalf of the Exit Lenders).
36. Authorization to Take Acts Necessary to Enter Into Exit Credit
Facility. Subject to the entry of the Final Exit Credit Facility Order, the
Debtors shall be, and hereby are, authorized to do or perform all acts, to make,
execute, and deliver all instruments and documents and to pay all fees,
expenses, and other amounts to the Exit Agent and the Exit Lenders which are set
forth in the Exit Financing Documents, and which may be required or
30
<PAGE>
necessary for the Debtors' or the Reorganized Debtors' performance under the
Exit Financing Documents.
37. Final Order. This Order is a Final Order and the period in which an
appeal must be filed shall commence immediately upon the entry hereof.
Dated: New York, New York
September 24, 1999
/s/ Tina L. Brozman
-----------------------------------
THE HONORABLE TINA L. BROZMAN,
CHIEF UNITED STATES BANKRUPTCY JUDGE
31
<PAGE>
PROSKAUER ROSE LLP
Counsel for Debtors and Debtors-in-Possession
1585 Broadway
New York, New York 10036
(212) 969-3000
Alan B. Hyman (AH-6655)
Scott K. Rutsky (SR-0712)
Glenn S. Walter (GW-0133)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ------------------------------------------x
:
In re: : (Chapter 11)
:
GOLDEN BOOKS FAMILY :
ENTERTAINMENT, INC., et al., : Case Nos. 99-10030
: Through 99-10032 (TLB)
:
Debtors. : (Jointly Administered)
:
- ------------------------------------------x
MODIFICATION OF DEBTORS' AMENDED
JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Pursuant to 11 U.S.C. ss. 1127 and Rule 3019 of the Federal Rules of
Bankruptcy Procedure, Golden Books Family Entertainment, Inc., Golden Books
Publishing Company, Inc. and Golden Books Home Video, Inc., debtors and
debtors-in-possession (collectively, the "Debtors"), submit the following
modifications of the Debtors' Amended Joint Plan of Reorganization Under Chapter
11 of the Bankruptcy Code dated May 13, 1999 (the "Plan"):
1. Sections 1.22 and 1.34 of the Plan are modified by (i) deleting the
phrase "that certain consolidated litigation pending in the United States
District Court for the Southern District of New York encaptioned "Kevin Lemmer
v. Golden Books Family Entertainment, Inc.,
<PAGE>
et al., Case No. 98 CIV 5748 (AGS) and Green Fund and Cynthia Green Colin v.
Golden Books Family Entertainment, Inc., et al., Case No. 98 CIV 7072 (AGS)")"
and (ii) replacing it with the phrase "the Securities Litigation)."
2. Section 1.46 of the Plan is modified by deleting the phrase
"Stroock & Stroock & Lavan LLP" and replacing it with the phrase "Akin, Gump,
Strauss, Hauer & Feld L.L.P."
3. Sections 1.36 through 1.90 of the Plan are renumbered as Sections
1.37 through 1.91, respectively.
4. A new Section 1.36 of the Plan is added as follows:
"Excluded Claims" shall mean claims asserted by persons who choose to
be excluded from the class in connection with the Securities Litigation
Settlement Agreement and that arise from or are based upon matters
alleged in the Securities Litigation.
5. Sections 1.91 through 1.99 of the Plan are renumbered as Sections
1.94 through 1.102, respectively.
6. A new Section 1.92 of the Plan is added as follows:
"Securities Litigation" shall mean that certain consolidated litigation
pending in the United States District Court for the Southern District
of New York encaptioned "Kevin Lemmer v. Golden Books Family
Entertainment, Inc., et al., Case No. 98 CIV 5748 (AGS) and Green Fund
and Cynthia Green Colin v. Golden Books Family Entertainment, Inc., et
al., Case No. 98 CIV 7072 (AGS)."
7. A new Section 1.93 of the Plan is added as follows:
"Securities Litigation Settlement Agreement" shall mean that certain
Stipulation and Agreement of Settlement dated August 10, 1999 among
Parent, Milberg
2
<PAGE>
Weiss Bershad Hynes & Lerach LLP and Cahill Gordon & Reindel,
respecting the Securities Litigation.
8. Section 4.3(d) of the Plan is amended as follows:
(i) the subparagraph entitled "Interest" is deleted and replaced in its
entirety with the following:
"Interest: Payable in Cash at a rate of 10.75% per annum, or at the
sole election of the issuer, payable in kind in additional
New Senior Notes at a rate of 14.25% per annum, payable
semi-annually; provided, however, that commencing three
years after the Effective Date, interest on the New Senior
Notes shall be payable only in cash at a rate of 10.75% per
annum."
(ii) The subparagraph entitled "Call Protection" is modified by
deleting the redemption table set forth therein and replacing it in its
entirety with the following table:
Years From Redemption
Effective Date Price
1 year 105.375%
2 years 103.583%
3 years 101.792%
4 years 100.000%
9. Section 7.3(a) of the Plan is modified to add the following
phrase to the end of the first sentence thereof:
"and provided, further, that all Indemnification Claims arising solely
in respect of the following shall be assumed by the Reorganized Debtors
without limitation (a) any liability to the United States of America
and/or its agencies, (b) any liability arising under any state, city or
municipal (i) tax code, (ii) environmental code, or (iii) criminal law,
(c) any "withdrawal liability," pursuant to 29 U.S.C. ss.ss. 1383 and
1385, to the Central States, Southeast and Southwest Areas Pension
Fund, (d) any liability with respect to any Excluded Claims, and (e)
any and all claims or causes of action that (1) Richard A. Bernstein;
(2) the Richard A. Bernstein Trust of 1986, Fleet National Bank as
Trustee; (3) the Richard A. Bernstein and Stuart Turner Trust of 1978
f/b/o Richard A. Bernstein; (4) the Amelia Bernstein 1996 Trust, Fleet
National Bank, as Trustee; (5) the Stuart Turner Trust, Mitchell N.
Baron, Trustee; (6) James A. Cohen; (7) Martin E. Weisberg; and (8)
Stuart Turner and Gail Turner JTWROS (collectively, the
3
<PAGE>
"Excluded Entities"), may have against GPH and its members, viz.
Warburg, Pincus Ventures, L.P., Richard E. Snyder and Barry Diller,
and its appointees to the Board of Directors of Golden Books Family
Entertainment, Inc."
10. Section 9.1(a) of the Plan is modified by deleting the last
sentence thereof and replacing it in its entirety with the following:
"Notwithstanding anything in the Plan to the contrary, nothing in this
Plan shall discharge, release or exculpate any non-Debtor from (a) any
liability to the United States of America and/or its agencies, (b) any
liability arising under any state, city or municipal (i) tax code, (ii)
environmental code, or (iii) criminal law, (c) any "withdrawal
liability," pursuant to 29 U.S.C. ss.ss. 1383 and 1385, to the Central
States, Southeast and Southwest Areas Pension Fund, (d) any liability
with respect to any Excluded Claims, or (e) any and all claims or
causes of action that the Excluded Entities may have against GPH and
its members, viz. Warburg, Pincus Ventures, L.P., Richard E. Snyder and
Barry Diller, and its appointees to the Board of Directors of Golden
Books Family Entertainment, Inc."
11. Sections 10.1(d) and 10.1(e) of the Plan are renumbered as
Sections 10.1(e) and 10.1(f), respectively.
12. A new section 10.1(d) is added as follows:
"(d) the Securities Litigation Settlement Agreement shall have become
effective in accordance with its terms."
[concluded on the next page]
4
<PAGE>
13. Section 12.8 of the Plan is modified by deleting the following:
"c/o Stroock & Stroock & Lavan, LLP
180 Maiden Lane
New York, New York 10035-4982
tel: 212.806.5642
fax: 212.806.6006"
and replacing it with,
"c/o Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
tel: 212.872.1000
fax: 212.872.8170"
Dated: New York, New York
September 1, 1999
PROSKAUER ROSE LLP
Counsel for the Debtors
and Debtors-in-Possession
By: /s/ Alan B. Hyman
Alan B. Hyman (AH-6655)
A Member of the Firm
1585 Broadway
New York, New York 10036
(212) 969-3000
5
PROSKAUER ROSE LLP
Counsels for Debtors and Debtors-in-Possession
1585 Broadway
New York, New York 10036
(212) 969-3000
Alan B. Hyman (AH-6655)
Scott K. Rutsky (SR-0712)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ----------------------------------x
In re: : (Chapter 11)
:
GOLDEN BOOKS FAMILY : Case Nos. 99-10030
ENTERTAINMENT, INC., et al., : through 99-10032 (TLB)
:
Debtors. : (Jointly Administered)
- ----------------------------------x
MONTHLY OPERATING STATEMENT FOR
THE PERIOD AUGUST 29, 1999 THROUGH SEPTEMBER 25, 1999
MONTHLY DISBURSEMENTS: $14,074,593*
MONTHLY OPERATING PROFIT (LOSS): ($3,136,000)
THIS OPERATING STATEMENT MUST BE SIGNED BY A REPRESENTATIVE OF
THE DEBTORS
The undersigned, having reviewed the attached report and being
familiar with the Debtors' financial affairs, verifies under the penalty of
perjury, that the information contained therein is complete, accurate and
truthful to the best of my knowledge.
DATE: OCTOBER 13, 1999 /s/ Colin Finkelstein
--------------------------------
Colin Finkelstein,
Chief Financial Officer
Indicate if this is an amended statement by checking here:
AMENDED STATEMENT o
* The operating statement is submitted on a consolidated basis for all
of the above referenced debtors. Disbursements were only made by Golden Books
Publishing, Inc., Case No. 90-10031.
<PAGE>
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC., et al.
(DEBTORS-IN-POSSESSION)
TABLE OF CONTENTS
Page
Unaudited Monthly Financial Statements:
o Statement of Operations 1
o Balance Sheet 2
o Statement of Cash Flows 3
<PAGE>
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC. AND SUBSIDIARIES
DEBTORS-IN-POSSESSION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)
For the
month ended
September 25, 1999
Revenues:
Net sales $ 17,059
Royalties and other income 140
Total revenues 17,199
Cost and Expenses:
Cost of sales 10,405
Selling, general and administrative 5,689
Total costs and expenses 16,094
Income Before Restructuring, Interest Income,
Distributions & Tax 1,105
Restructuring 4,118
Loss Before Interest Income, Distributions & Tax (3,013)
Interest Income -
Interest Expense 165
Loss Before Income Taxes (3,178)
Income Tax Expense (42)
Net Loss $ (3,136)
1
<PAGE>
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC. AND SUBSIDIARIES
DEBTORS-IN-POSSESSION
CONSOLIDATED BALANCE SHEET
(In Thousands)
September 25, 1999
<TABLE>
<CAPTION>
ASSETS LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT ASSETS: CURRENT LIABILITIES:
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 4,634 ACCOUNTS PAYABLE $ 30,514
ACCOUNTS RECEIVABLE 42,607 ACCRUED COMPENSATION AND FRINGE BENEFITS 5,922
INVENTORIES 29,981 REVOLVING LINE OF CREDIT 11,363
ROYALTY ADVANCES 6,407 CIT TERM LOAN 7,500
REFUNDABLE INCOME TAXES 1,782 OTHER CURRENT LIABILITIES 41,023
NET ASSETS HELD FOR SALE 411 TOTAL CURRENT LIABILITIES 96,322
DEPOSITS 5,832
OTHER CURRENT ASSETS 11,027
TOTAL CURRENT ASSETS 102,681 NONCURRENT LIABILITIES:
ACCUMULATED POST-RETIREMENT BENEFIT OBLIGATION 29,398
OTHER ASSETS: DEFERRED COMPENSATION AND OTHER DEFERRED LIABLITIES 24,916
LIABILITIES SUBJECT TO COMPROMISE 288,704
ACCOUNTS RECEIVABLE - LONG TERM 3,829 TOTAL NONCURRENT LIABILITIES 343,018
OTHER NONCURRENT ASSETS 8,112
TOTAL OTHER ASSETS 11,941 STOCKHOLDERS' DEFICIT:
CONVERTIBLE PREFERRED STOCK - SERIES B 65,000
PROPERTY PLANT AND EQUIPMENT: COMMON STOCK 283
FIXED ASSETS AT COST 67,856 ADDITIONAL PAID-IN CAPITAL 132,034
LESS ACCUMULATED DEPRECIATION (40,816) RETAINED EARNINGS - BEGINNING (379,390)
RETAINED EARNINGS - CURRENT YEAR (29,292)
TOTAL PROPERTY PLANT AND EQUIPMENT 27,040 ACCUMULATED OTHER COMPREHENSIVE LOSS (929)
TOTAL STOCKHOLDERS' DEFICIT (212,294)
FILM LIBRARY, NET 54,137 TREASURY STOCK (2,822)
GOODWILL, NET 28,425 TOTAL DEFICIT (215,116)
TOTAL ASSETS $ 224,224 TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 224,224
</TABLE>
2
<PAGE>
Golden Books Family Entertainment, Inc. and Subsidiaries
Debtors-in-Possession
Consolidated Statement of Cash Flow
for the month ended
September 26,1999
(In Thousands)
<TABLE>
<CAPTION>
<S> <C>
Cash Flows from Operating Activities
Net loss $ (3,136)
Adjustments to reconcile net income to net cash used
in operating activities:
Depreciation & Amortization 490
Amortization of intangibles 691
Restructuring 4,118
Changes in assets and liabilities, net of effect of
acquisition & dispositions:
Increase in accounts receivable (11,885)
Decrease in inventories 1,080
Increase in other current assets, deposits
and royalty advances (2,409)
Increase in accounts payable 4,473
Increase in accrued compensation
and fringe benefits 948
Increase in deferred compensation and
other deferred liabilities
Increase in current liabilities 3,666
Other 173
Net cash used in operating activities before restructuring (1,791)
Restructuring (4,118)
Net cash used in operating activities (5,909)
Cash Flows from Investing Activities:
Acquisitions of property, plant, equipment (102)
Additions to film library (25)
Net cash used in investing activities (127)
Cash Flows from Financing Activities
Borrowings under CIT Revolving Line of Credit 5,163
Net repayment under short-term credit
facility (post petition) CIT 0
Net cash provided by financing activities 5,163
Effect of Exchange Rate Changes on Cash 60
Net decrease in Cash and Cash Equivalents (813)
Cash & Cash Equivalents, Beginning of Period 5,447
Cash & Cash Equivalents, End of Period $ 4,634
</TABLE>
3
<PAGE>
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------------x
KEVIN LEMMER, )
)
Plaintiffs, )
)
v. ) CASE NO. 98 CIV 5748 (AGS)
)
GOLDEN BOOKS FAMILY ENTERTAINMENT )
INC., et al., )
)
Defendants. )
)
- --------------------------------------------x
GREEN FUND and CYNTHIA GREEN COLIN, )
)
Plaintiffs, )
)
v. ) CASE NO. 98 CIV 7072 (AGS)
)
GOLDEN BOOKS FAMILY ENTERTAINMENT )
INC., et al., )
)
Defendants. )
)
- --------------------------------------------x
ORDER AND FINAL JUDGMENT
------------------------
On this 12th day of October, 1999, a hearing having been held before this
Court to determine: (1) whether the terms and conditions of the Stipulation and
Agreement of Settlement, dated August 10, 1999 (the "Settlement Stipulation")
are fair, reasonable and adequate for the settlement of all claims asserted by
the Class against the Defendants in the complaint now pending in this Court
under the above caption, including the release of the Defendants and the
Released Parties and should be approved; (2) whether judgment should be entered
dismissing the complaint on the merits and with prejudice in favor of the
Defendants and as against all persons or entities who
1
<PAGE>
are members of the Class herein who have not requested exclusion therefrom; (3)
whether to approve the Plan of Allocation as a fair and reasonable method to
allocate the settlement proceeds among the members of the Class; and (4) whether
and in what amount to award counsel for plaintiffs and the Class fees and
reimbursement of expenses. The Court having considered all matters submitted to
it at the hearing and otherwise; and it appearing that a notice of the hearing
substantially in the form approved by the Court was mailed to all persons or
entities reasonably identifiable, who purchased common stock and/or 8.75%
convertible trust originated preferred securities ("TOPRS") of Golden Books
Family Entertainment, Inc. ("Golden Books") during the period between May 13,
1997, and August 4, 1998, inclusive (the "Class Period"), except those persons
or entities excluded from the definition of the Class, as shown by the records
of Golden Books' transfer agent, at the respective addresses set forth in such
records, and that a summary notice of the hearing substantially in the form
approved by the Court was published in The New York Times pursuant to the
specifications of the Court; and the Court having considered and determined the
fairness and reasonableness of the Plan of Allocation; the Bankruptcy Court in
the Chapter 11 proceeding entitled In re Golden Books Family Entertainment,
Inc., et al., Case Nos. 99-B-10030 to 99-B-10032 (TLB) (Jointly Administered)
(Bankr. S.D.N.Y.) having issued orders approving the participation of Golden
Books in this Settlement, and confirming a Plan of Reorganization for Golden
Books which expressly provides that its effectiveness is dependent on the
Effective Date of this Settlement occurring, and which further expressly
provides for the survival of any present of former officer's or director's
entitlement to indemnification and advancement of expenses to the fullest extent
permitted by the Delaware General Corporation Law, as amended from time to time,
with respect to any matter encompassed within the definition of Settled Claims
if any such matter is asserted by the persons
2
<PAGE>
who would otherwise be entitled to participate in this Settlement but who
excluded themselves from the Class herein, and such orders are no longer subject
to appeal or other judicial review; and the Court having considered and
determined the fairness and reasonableness of the award of attorneys' fees and
expenses requested; and all capitalized terms used herein having the meanings as
set forth and defined in the Settlement Stipulation.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. The Court has jurisdiction over the subject matter of the
litigation, the Plaintiffs, all Class Members and the Defendants.
2. The Court finds the prerequisites to a class action under Fed. R.
Civ. P. 23(a) and (b)(3) have been satisfied in that: (a) the number of Class
Members is so numerous that joinder of all members thereof is impracticable; (b)
there are questions of law and fact common to Class; (c) the claims of the Class
Representatives are typical of the claims of the Class they seek to represent;
(d) the Class Representatives have and will fairly and adequately represent the
interests of the Class; (e) the questions of law and fact common to the members
of the Class predominate over any questions affecting only individual members of
the Class; and (f) a class action is superior to other available methods for the
fair and efficient adjudication of the controversy.
3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and for
the purposes of the settlement only, this Court hereby finally certifies this
action as a class action on behalf of all persons who, during the period between
May 13, 1997, and August 4, 1998, inclusive, purchased common stock or TOPRS of
Golden Books. Excluded from the Class are the Individual Defendants, the
officers and directors of Golden Books, members of their immediate families and
their legal representatives, heirs, successors or assigns and any entity in
which Golden Books or the
3
<PAGE>
Individual Defendants have or had a controlling interest, and Golden Press
Holdings, L.L.C. ("GPH") and its investors. Also excluded from the Class are the
persons and/or entities who requested exclusion from the Class as listed on
Exhibit A annexed hereto.
4. The Settlement Stipulation is approved as fair, reasonable and
adequate, and in the best interests of the Class, and the Class Members and the
Parties are directed to consummate the Settlement Stipulation in accordance with
its terms and provisions.
5. The Complaint is hereby dismissed with prejudice and without
costs, except as provided in the Settlement Stipulation, as against any and all
of the Defendants, their past or present subsidiaries, parents, affiliates,
partners, successors and predecessors, officers, directors, shareholders,
insurers, reinsurers, agents, employees, attorneys, advisors, and investment
advisors, accountants and any person, firm, trust, corporation, officer,
director or other individual or entity in which any Defendant has a controlling
interest or which is related to or affiliated with any of the Defendants, and
the legal representatives, heirs, successors in interest or assigns of the
Defendants.
6. Members of the Class and the successors and assigns of any of them,
are hereby permanently barred and enjoined from instituting, commencing, or
prosecuting, either directly or in any other capacity, any and all claims,
rights or causes of action or liabilities whatsoever, whether based on federal,
state, local, statutory or common law or any other law, rule or regulation,
including both known and unknown claims, that have been or could have been
asserted in any forum by Plaintiffs or Class Members or any of them against any
of the Released Parties (as defined below) which arise out of or relate in any
way to the allegations, transactions, facts, matters or occurrences,
representations or omissions involved, set forth, referred to or that could have
been asserted in the Complaint relating to the purchase of shares of the common
stock or TOPRS of
4
<PAGE>
Golden Books during the Class Period (the "Settled Claims") against any and all
of the Defendants their past or present subsidiaries, parents, successors and
predecessors, officers, directors, shareholders, agents, employees, attorneys,
advisors, and investment advisors, accountants and any person, firm, trust,
corporation, officer, director or other individual or entity in which any
Defendant has a controlling interest or which is related to or affiliated with
any of the Defendants, and the legal representatives, heirs, successors in
interest or assigns of the Defendants (the "Released Parties"). The Settled
Claims are hereby compromised, settled, released, discharged and dismissed as
against the Released Parties on the merits and with prejudice by virtue of the
proceedings herein and this Order and Final Judgment.
7. The Defendants and the successors and assigns of any of them, are
hereby permanently barred and enjoined from instituting, commencing or
prosecuting, either directly or in any other capacity, any Settled Defendants'
Claims against any of the Plaintiffs, Class Members or their attorneys. The
Settled Defendants' Claims are hereby compromised, settled, released, discharged
and dismissed on the merits and with prejudice by virtue of the proceedings
herein and this Order and Final Judgment.
8. Neither the Settlement Stipulation, nor any of its terms and
provisions, nor any of the negotiations or proceedings connected with it, nor
any of the documents or statements referred to therein shall be:
(a) offered or received against the Defendants as evidence of or
construed as or deemed to be evidence of any presumption, concession, or
admission by any of the Defendants of the truth of any fact alleged by
Plaintiffs or the validity of any claim that had been or could have been
asserted in the Action or in any litigation, or the deficiency of any defense
that has been or
5
<PAGE>
could have been asserted in the Action or in any litigation, or of any
liability, negligence, fault, or wrongdoing of Defendants;
(b) offered or received against the Defendants as evidence of a
presumption, concession or admission of any fault, misrepresentation or omission
with respect to any statement or written document approved or made by any
Defendant, or against the Plaintiffs and the Class as evidence of any infirmity
in the claims of Plaintiffs and the Class;
(c) offered or received against the Defendants as evidence of a
presumption, concession or admission of any liability, negligence, fault or
wrongdoing, or in any way referred to for any other reason as against any of the
parties to this Stipulation, in any other civil, criminal or administrative
action or proceeding, other than such proceedings as may be necessary to
effectuate the provisions of this Stipulation; provided, however, that if this
Stipulation is approved by the Court, Defendants may refer to it to effectuate
the liability protection granted them hereunder; and
(d) construed against the Defendants or the Plaintiffs and the Class
as an admission or concession that the consideration to be given hereunder
represents the amount which could be or would have been recovered after trial.
(e) construed as or received in evidence as an admission, concession
or presumption against plaintiffs or the Class or any of them that any of their
claims are without merit or that damages recoverable under the Complaint would
not have exceeded the Settlement Fund.
9. The Plan of Allocation is approved as fair and reasonable, and in
the best interests of the Class, and Plaintiffs' Counsel and the Claims
Administrator are directed to administer the Stipulation in accordance with its
terms and provisions.
6
<PAGE>
10. Counsel for plaintiffs and the Class are hereby awarded the sum of
$1,750,000 in fees, which sum the Court finds to be fair and reasonable, and
$27,366.43 in reimbursement of expenses, which shall be paid to Plaintiffs' Lead
Counsel from the Settlement Fund with interest from the date such Settlement
Fund was funded to the date of payment at the same rate that the Settlement
Amount earns. The award of attorneys' fees shall be allocated among counsel for
plaintiffs and the Class in a fashion which, in the opinion of Plaintiffs' Lead
Counsel, fairly compensates counsel for the plaintiffs and the Class for their
respective contributions in the prosecution of the litigation.
11. Exclusive jurisdiction is hereby retained over the Parties and the
Class Members for all matters relating to this litigation, including the
administration, interpretation, effectuation or enforcement of the Settlement
Stipulation and this Order and Final Judgment, and including any application for
fees and expenses incurred in connection with administering and distributing the
settlement proceeds to the members of the Class.
12. Without further order of the Court, the Parties may agree to
reasonable extensions of time to carry out any of the provisions of the
Settlement Stipulation.
13. Ther is no just reason for delay in the entry of this Order and
Final Judgment and immediate entry by the Clerk of the Court is expressly
directed pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.
Dated: New York, New York
October 12, 1999
-----------------------------------
UNITED STATES DISTRICT JUDGE
7
<PAGE>
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------------x
KEVIN LEMMER,
Plaintiff, ORDER
-----
v. 98 Civ. 5748 (AGS)
GOLDEN BOOKS FAMILY ENTERTAINMENT
INC., et al.,
Defendants.
- --------------------------------------------x
GREEN FUND and CYNTHIA GREEN COLIN,
Plaintiffs, 98 Civ. 7072 (AGS)
v.
GOLDEN BOOKS FAMILY ENTERTAINMENT
INC., et al.,
Defendants.
- --------------------------------------------x
ALLEN G. SCHWARTZ, DISTRICT JUDGE:
This consolidated class action is brought on behalf of all persons who
purchased common or preferred stock during the period from May 13, 1997 through
August 4, 1998 (the "Class Period") from defendant Golden Books Family
Entertainment ("Golden Books" or the "Company"). (Second Amended Consolidated
Class Action Complaint ("Complaint") P. 20.) On April 14, 1999, defendants moved
to dismiss the Complaint pursuant to Federal Rules of Civil Procedure ("Fed. R.
Civ. P.")12(b)(6) and 9(b), and Sections 21D(b)(3)(A) and 21E(c)(1)(B) of the
Securities and Exchange Act. The Court was subsequently informed that the
parties wished to commence settlement proceedings, and, on August 20, 1999, the
Court entered a Preliminary Order In
1
<PAGE>
Connection With Settlement Proceedings, in order to provide notice to the class
and schedule the appropriate hearings. A hearing was held and an Order and Final
Judgment entered on October 12, 1999.
For these reasons, defendants' motion to dismiss is denied as moot. The
Clerk of the Court is directed to close the file in this action.
SO ORDERED.
----------------------------------
ALLEN G. SCHWARTZ, U.S.D.J.
Dated: New York, New York
October 13, 1999
2
