SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No.1)
Marvel Enterprises,Inc.
(formerly Toy Biz, Inc.
-----------------------
(Name of Issuer)
Common Stock, $.01 par value
----------------------------
(Title of Class of Securities)
57383M 10 8
-----------
(CUSIP Number)
Alan S. Cooper
Dickstein Partners Inc.
660 Madison Avenue, 16th Floor
New York, New York 10021
(212) 754-4000
--------------
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
October 1, 1998
---------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13(d)-1(f) or 13d-1(g), check the following
box: |_|
Page 1 of 67 pages
Exhibit Index appears on page 6
<PAGE>
This Statement amends the Schedule 13D, dated October 13, 1998 (the
"Schedule 13D") filed by Dickstein & Co., L.P., Dickstein Focus Fund L.P.,
Dickstein International Limited, Dickstein Partners, L.P., Dickstein Partners
Inc., Elyssa Dickstein, Jeffrey Schwarz, and Alan Cooper as trustees U/T/A/D
12/27/88, Mark Dickstein, Grantor, Mark and Elyssa Dickstein, as trustees of the
Mark and Elyssa Dickstein Foundation, Mark Dickstein and Elyssa Dickstein with
respect to the Common Stock, $.01 par value, of Marvel Enterprises, Inc.
(formerly Toy Biz, Inc.) Notwithstanding this Amendment No. 1, the Schedule 13D
speaks as of its date. Capitalized terms used without definition have the
meanings ascribed to them in the Schedule 13D.
This Amendment file the forms of the Stockholders' Agreement and
Registration Rights Agreement which have now been finalized. See Items 4,5 and
6.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Agreement of joint filing pursuant to Rule 13d-1(k)(1)
promulgated under the Securities Exchange Act of 1934, as
amended (Previously Filed)
Exhibit 2 Stockholders' Agreement
Exhibit 3 Registration Rights Agreement
2
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Date: October 22, 1998
DICKSTEIN & CO., L.P.
By: Alan S. Cooper, as Vice President of
Dickstein Partners Inc., the general
partner of Dickstein Partners, L.P., the
general partner of Dickstein & Co., L.P.
By: /s/ Alan S. Cooper
-----------------------------
Name: Alan S. Cooper
DICKSTEIN FOCUS FUND L.P.
By: Alan S. Cooper, as Vice President of
Dickstein Partners Inc., the general
partner of Dickstein Partners, L.P., the
general partner of Dickstein Focus
Fund L.P.
By: /s/ Alan S. Cooper
-----------------------------
Name: Alan S. Cooper
3
<PAGE>
DICKSTEIN INTERNATIONAL LIMITED
By: Alan S. Cooper, as Vice President of
Dickstein Partners Inc., the agent of
Dickstein International Limited
By: /s/ Alan S. Cooper
-----------------------------
Name: Alan S. Cooper
DICKSTEIN PARTNERS, L.P.
By: Alan S. Cooper, as Vice President of
Dickstein Partners Inc., the general
partner of Dickstein Partners, L.P.
By: /s/ Alan S. Cooper
-----------------------------
Name: Alan S. Cooper
DICKSTEIN PARTNERS INC.
By: Alan S. Cooper, as Vice President
By: /s/ Alan S. Cooper
-----------------------------
Name: Alan S. Cooper
MARK DICKSTEIN
By: /s/ Mark Dickstein
-----------------------------
Name: Mark Dickstein
ELYSSA DICKSTEIN
By: /s/ Elyssa Dickstein
-----------------------------
Name: Elyssa Dickstein
4
<PAGE>
DICKSTEIN TRUST
Elyssa Dickstein, Jeffrey Schwarz, and
Alan S. Cooper as Trustees
U/T/A/D 12/27/88,
Mark Dickstein, Grantor
By /s/ Alan S. Cooper
-----------------------------
Name: Alan S. Cooper
DICKSTEIN FOUNDATION
Mark Dickstein and Elyssa Dickstein,
as Trustees
By /s/ Mark Dickstein
-----------------------------
Name: Mark Dickstein
5
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
1 Agreement of joint filing pursuant to Rule (Previously
13d-1(k)(1) promulgated under the Securities Filed)
Exchange Act of 1934, as amended
2 Stockholders' Agreement 7
3 Registration Rights Agreement 45
6
EXHIBIT 2
STOCKHOLDERS' AGREEMENT
by and among
AVI ARAD,
VARIOUS DICKSTEIN ENTITIES AND INDIVIDUALS,
ISAAC PERLMUTTER,
ISAAC PERLMUTTER T.A.,
THE LAURA & ISAAC PERLMUTTER FOUNDATION INC.,
OBJECT TRADING CORP.,
ZIB INC.,
VARIOUS SECURED LENDERS,
and
TOY BIZ, INC.
Dated as of October 1, 1998
7
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> ............. <C> ......... <C> <C>
ARTICLE I DEFINITIONS
Section 1.1 Definitions...................................................................3
ARTICLE II MANAGEMENT
Section 2.1 Board Representation..........................................................7
Section 2.2 Loss of Board Representation.................................................12
Section 2.3 Committee Representation.....................................................15
Section 2.4 Computation and Notice of Common Equivalent Shares Ownership.................19
Section 2.5 Restriction on Disposition of Stock Held by Subsidiary.......................21
ARTICLE III REPRESENTATIONS
Section 3.1 Representations of the Dickstein Entities....................................22
Section 3.2 Representations of the Perlmutter/Arad Group.................................22
Section 3.3 Representations of the Lender Group..........................................22
ARTICLE IV MISCELLANEOUS
Section 4.1 Effective Date...............................................................23
Section 4.2 Termination..................................................................23
Section 4.3 Secretary to Retain Copy.....................................................25
Section 4.4 Further Actions..............................................................25
Section 4.5 Specific Performance.........................................................25
Section 4.6 Entire Agreement.............................................................26
Section 4.7 Notices......................................................................26
Section 4.8 Waivers; Amendment...........................................................29
Section 4.9 Binding Effect; Heirs and Successors.........................................29
Section 4.10 No Third Party Beneficiaries.................................................30
Section 4.11 Separability.................................................................30
Section 4.12 Headings.....................................................................30
Section 4.13 Pronouns.....................................................................30
Section 4.14 Counterparts.................................................................30
Section 4.15 Governing Law................................................................30
Section 4.16 No Restriction on Transferability............................................31
Section 4.17 Whippoorwill Obligations Several and Not Joint...............................31
</TABLE>
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of October 1, 1998
among Avi Arad ("Arad"); the various Dickstein entities and individuals listed
on the signature pages hereto (the "Dickstein Entities"); Isaac Perlmutter
("Perlmutter"); Isaac Perlmutter T.A., a Florida trust (the "Trust"); the Laura
& Isaac Perlmutter Foundation Inc., a Florida corporation (the "Foundation");
Object Trading Corp., a Delaware corporation ("Object Trading"); Zib Inc., a
Delaware corporation ("Zib" and together with Perlmutter, the Trust, the
Foundation, and Object Trading, the "Perlmutter Entities"; the Perlmutter
Entities together with Arad, the "Perlmutter/Arad Group"; the Perlmutter/Arad
Group together with the Dickstein Entities, the "Investor Group"); The Chase
Manhattan Bank ("Chase"); Morgan Stanley & Co. Incorporated ("Morgan Stanley");
Whippoorwill Associates, Incorporated, as agent for or general partner of each
institution (a "Whippoorwill Account") set forth on Schedule 1 (collectively,
"Whippoorwill"); and Toy Biz, Inc., a Delaware corporation (the "Company"). Each
of Chase, Morgan Stanley and each Whippoorwill Account shall be a "Secured
Lender" for so long as each remains bound hereby, and all Secured Lenders bound
hereby shall collectively constitute, the "Lender Group"). The Secured Lenders
are some of the "Secured Lenders" referred to in the Fourth Amended Joint Plan
of Reorganization Proposed by those "Secured Lenders" and the Company in the
bankruptcy matter of In Re: Marvel Entertainment Group, Inc. et al. (case No.
97-638-RRM) in the United States District Court for the District of Delaware
(the "Plan"); and all of the "Secured Lenders" as that term
8
<PAGE>
is defined more broadly in the Plan (other than any Dickstein Entity or any of
its Affiliates) are referred to in this Agreement collectively as the "Plan
Secured Lender Group".
W I T N E S S E T H
WHEREAS, the Perlmutter Entities, Arad and the Dickstein Entities will
own shares of common stock, par value $.01 per share, of the Company (the
"Common Stock"), and the Perlmutter Entities and the Dickstein Entities will own
shares of 8% Cumulative Convertible Exchangeable Preferred Stock of the Company
(the "Preferred Stock"; together with the Common Stock and any other security of
the Company which is then currently convertible or exchangeable for Common Stock
without the payment of additional consideration, the "Capital Stock"),
immediately after the consummation of the Plan;
WHEREAS, immediately after the consummation of the Plan, the Secured
Lenders will own shares of Common Stock and Preferred Stock;
WHEREAS, pursuant to the Plan, the Board of Directors of the Company
(the "Board") shall consist of eleven (11) Directors, six (6) of whom, subject
to Section 2.2 hereof, are to be designated by the Investor Group (the "Investor
Group Designees"), and five (5) of whom, subject to Section 2.2 hereof, are to
be designated by the Lender Group (the "Lender Group Designees"); provided, that
unless and until the occurrence of a Dickstein Forfeiture Event, one (1) of the
Investor Group Designees is to be designated by the Dickstein Entities (the
"Dickstein Designee");
9
<PAGE>
WHEREAS, each of the parties hereto desires to enter into this
Agreement in order to set forth certain provisions regarding the management of
the Company.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:
"Affiliate" and "Affiliated" shall have the meanings set forth in Rule
12b-2 of the Securities Exchange Act of 1934, as amended, and any successor
regulation thereto.
"Agreement" shall have the meaning set forth in the Preamble hereto.
"Arad" shall have the meaning set forth in the Preamble hereto.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 of
the Securities Exchange Act of 1934, as amended, and any successor regulation
thereto; provided that, a person shall not be deemed to be a Beneficial Owner of
a security merely because that person has the right to acquire Beneficial
Ownership of that security if that right may be exercised only upon the payment
of consideration (other than solely by conversion or exchange of Capital Stock)
nor shall a person be deemed to be a Beneficial Owner of a security merely
because of the provisions of this Agreement. For the purposes of this
definition, "Beneficial Ownership" and "Beneficially Own" shall refer to the
ownership interest of a Beneficial Owner. With respect to Whippoorwill,
"Beneficially Owned" shall mean only such Capital
10
<PAGE>
Stock Beneficially Owned by Whippoorwill Accounts with respect to which
Whippoorwill Associates, Incorporated has the power to direct the vote.
"Board" shall have the meaning set forth in the Preamble hereto.
"Capital Stock" shall have the meaning set forth in the Recitals
hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Equivalent Shares" Beneficially Owned by any person shall mean
the number of shares of Common Stock Beneficially Owned by such person.
"Common Stock" shall have the meaning set forth in the Recitals hereto,
together with any other security of the Company for which the Common Stock shall
have been exchanged in any recapitalization or similar transaction.
"Designee" and "Designees" shall have the meaning set forth in Section
2.1(a) hereof.
"Dickstein Designator" shall mean Mark Dickstein or, upon the death or
other incapacity of Mark Dickstein, Elyssa Dickstein or, upon the death or other
incapacity of Elyssa Dickstein, such other person identified by Dickstein
Partners Inc. by written notice to the Secretary of the Company.
"Dickstein Designee" shall have the meaning set forth in the Recitals
hereto.
"Dickstein Entities" shall have the meaning set forth in the Preamble
hereto.
"Dickstein Forfeiture Event" shall mean a decrease in the Dickstein
Entities' Beneficial Ownership of Capital Stock to less than 1,500,000 Common
Equivalent Shares, calculated in accordance with Section 2.4 hereof and
appropriately adjusted for any stock splits, reverse stock splits,
recapitalization of the Capital Stock or capital transaction of a similar
nature.
"Director" shall mean a member of the Board of Directors of the Company.
11
<PAGE>
"Effective Date" shall mean the date on which the Agreement becomes
effective in accordance with Section 4.1 hereof.
"Election Meeting" shall have the meaning set forth in Section 2.1(b)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Independent Director" shall mean either Investor Group Designees or
Lender Group Designees who satisfy the requirements of Paragraph 303.00 of the
New York Stock Exchange Listed Company Manual (or any successor provision) and
who are (a) "non-employee directors" or any related successor concepts under
Rule 16b-3 (or any successor provision) promulgated pursuant to Section 16 of
the Exchange Act, and (b) "outside directors" or any related successor concepts
under Section 162(m) (or any successor provision) of the Code.
"Investor Group" shall have the meaning set forth in the Recitals
hereto.
"Investor Group Designator" shall mean Isaac Perlmutter until his
death, disability or resignation. The person serving at any time as Investor
Group Designator shall have the right to appoint (or to change), by written
notice to the Secretary of the Company, a successor Investor Group Designator
who shall become the Investor Group Designator upon the death, disability, or
resignation of the Investor Group Designator.
"Investor Group Designee" shall have the meaning set forth in the
Recitals hereto.
"Lender Group" shall have the meaning set forth in the Preamble hereto.
"Lender Group Designator" shall mean (i) with respect to the initial
configuration of the Board following the Effective Time, a subcommittee of the
Lender Group consisting of Chase, Morgan Stanley and Whippoorwill, and (ii)
thereafter, any one or more Secured Lenders that Beneficially Own a majority of
the Common Equivalent Shares Beneficially
12
<PAGE>
Owned by the Lender Group; provided however that, whenever the Company is
required to deliver a notice under this Agreement to the Lender Group
Designator, such notice shall be delivered to Morgan Stanley, and Morgan Stanley
shall promptly deliver a copy thereof to each other Secured Lender still bound
hereby
"Lender Group Designee" shall have the meaning set forth in the
Preamble hereto.
"Notice of Designee" shall have the meaning set forth in Section 2.1(b)
hereof.
"Perlmutter Entities" shall have the meaning set forth in the Preamble
hereto.
"Perlmutter/Arad Group" shall have the meaning set forth in the
Preamble hereto.
"Plan" shall have the meaning set forth in the Recitals hereto.
"Plan Secured Lender Group" shall have the meaning set forth in the
Preamble hereto.
"Preferred Stock" shall have the meaning set forth in the Recitals
hereto, together with any other security of the Company for which the Preferred
Stock shall have been exchanged in any recapitalization or similar transaction.
"Secured Lenders" shall have the meaning set forth in the Preamble
hereto.
"Stockholder Group Designators" shall mean the Investor Group
Designator, the Lender Group Designator and the Dickstein Designator.
"Stockholder Groups" shall mean the Investor Group, the Lender Group
and the Dickstein Entities.
"Whippoorwill Account" shall have the meaning set forth in the
Preamble.
ARTICLE 2
MANAGEMENT
Section 2.1. Board Representation.
13
<PAGE>
(1) Subject to Section 2.2 hereof, at and following the Effective Date,
each party to this agreement will take such action as may reasonably be in its
power to cause the Board to include (i) six (6) Investor Group Designees, one
(1) of whom, unless and until a Dickstein Forfeiture Event has occurred, shall
be the Dickstein Designee, and (ii) five (5) Lender Group Designees. The
Investor Group Designees (including the Dickstein Designee) and the Lender Group
Designees are sometimes collectively referred to herein as the "Designees" and
individually as a "Designee."
(2)
(1) The Investor Group Designator, the Lender Group Designator and the
Dickstein Designator shall each give the Company timely notice (the "Notice
of Designee") of the name of each person whom the relevant Stockholder
Group wishes to be nominated by the Company for election or re-election to
the Board at the next meeting of stockholders, or taking of action by
written consent of stockholders, at which Directors are to be elected (an
"Election Meeting"). At the option of any Stockholder Group Designator, the
Notice of Designee may also specify one or more alternates (an "Alternate
Designee") to serve in the event of the incapacity or other inability to
serve of a Designee, as provided herein. The Investor Group Designees and
the Lender Group Designees shall at all times include such number of
Independent Directors as shall be required to comply with the provisions of
Sections 2.3(b) and 2.3(c) hereof. Each Notice of Designee shall be in
writing and shall be timely if delivered to the Secretary of the Company at
the Company's principal executive offices
14
<PAGE>
not later than the close of business on the 60th day prior to the first
anniversary of the preceding year's annual meeting; provided, however, that
in the event that the date of the Election Meeting is more than 30 days
before or after such anniversary date, the Notice of Designee to be timely
must be so delivered not later than the later of (x) the close of business
on the later of the 60th day prior to the Election Meeting and (y) the 20th
day following the day on which public announcement of the date of the
Election Meeting is first made by the Company. In no event shall the public
announcement of an adjournment of an Election Meeting commence a new time
period for the giving of the Notice of Designee as described above. If the
Company has not received a Notice of Designee from any Stockholder Group
Designator at a time when the relevant Stockholder Group is entitled to
name one or more Designee on or before the 10th day before the latest date
for delivery of the Notice of Designee specified in the proviso to the next
preceding sentence, the Company shall so inform the relevant Stockholder
Group Designator by written notice. If the Company has not received a
Notice of Designee from any Stockholder Group Designator at a time when the
relevant Stockholder Group is entitled to name one or more Designee on or
before the latest date for delivery of such Notice, then such Stockholder
Group Designator shall be deemed to have delivered on such date a Notice of
Designee designating the Designees specified in the most recently delivered
Notice of Designee for any prior Election Meeting, or, if any such Designee
is unable to serve and an Alternate Designee has been specified therefor,
such Alternate Designee.
15
<PAGE>
(2) By means of written notice given to a Stockholder Group Designator
within ten days of the Company's receipt of a Notice of Designee sent by
that Stockholder Group Designator, the Board may reject a Designee if, in
the exercise of its fiduciary duties, it reasonably determines that such
Designee fails to meet the moral or professional standards required of a
director of a public corporation such as the Company. The Company's notice
of rejection shall specify the basis for such rejection in accordance with
this subsection in reasonable detail. If the Board shall reject any
Designee as aforesaid, the relevant Stockholder Group Designator may send a
supplemental Notice of Designee designating a replacement for the rejected
Designee, which notice shall be timely if received by the Company within
fifteen days of that Stockholder Group Designator's receipt of a notice of
rejection under the first sentence of this paragraph. If the Stockholder
Group Designator does not send a supplemental Notice of Designee within the
aforesaid time period and an Alternate Designee was designated for the
rejected Designee in the original Notice of Designee, the Alternate
Designee, unless rejected in accordance with this subsection, shall be
deemed nominated by the Stockholder Group Designator in replacement of the
rejected Designee.
(3) Each Notice of Designee shall set forth, as to each person whom the
Stockholder Group wishes the Company to nominate for election or
re-election as a Director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act and Rule
16
<PAGE>
14a-11 thereunder (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a Director if
elected); provided, however, that a Notice of Designee shall not be deemed
defective for failure to supply such information unless, after request
therefor by the Company to the relevant Stockholder Group Designator, such
Stockholder Group Designator fails to supply such information on a timely
basis for inclusion in the proxy materials for the relevant Election
Meeting.
(4) If the parties to this Agreement have received notice from the
Company that there are any directorships to be filled at a forthcoming
Election Meeting as to which no timely Notice of Designee was received or
deemed received, the parties to this Agreement may vote their shares as to
those directorships without constraint by this Agreement.
(3) The Company shall nominate and recommend those Designees as to whom
it has received or is deemed to have received a timely Notice of Designee to
the stockholders of the Company for election or re-election as Directors and
shall otherwise use its best efforts to cause those Designees to be elected to
the Board. Each party to this Agreement agrees to vote, or cause to be voted,
all of the shares of Capital Stock Beneficially Owned by it at any Election
Meeting and agrees to take all actions otherwise reasonably in its power as a
stockholder of the Company to cause the Investor Group Designees (including, in
the absence of a Dickstein Forfeiture Event, the Dickstein Designee) and the
Lender Group Designees to be elected to the Board as described herein.
(4)
17
<PAGE>
(1) If, following his election to the Board, a Lender Group Designee
shall vacate his position on the Board for any reason, including, but not
limited to, the death, removal or retirement of that Designee, but
excluding any changes in Board representation pursuant to Section 2.2
hereof, then the Lender Group Designator shall have the right to nominate a
successor Designee to fill the vacancy.
(2) If, following his election to the Board, the Dickstein Designee
shall vacate his position on the Board for any reason, including, but not
limited to, the death, removal or retirement of that Designee, but
excluding any changes in Board representation pursuant to Section 2.2
hereof, then the Dickstein Designator shall have the right to nominate a
successor Designee to fill the vacancy.
(3) If, following his election to the Board, an Investor Group Designee
shall vacate his position on the Board for any reason, including, but not
limited to, the death, removal or retirement of that Designee, or the
occurrence of a Dickstein Forfeiture Event, but excluding any other changes
in Board representation pursuant to Section 2.2 hereof, then the Investor
Group Designator, except in cases covered by Section 2.1(d)(ii), shall have
the right to nominate a successor Designee to fill the vacancy.
(4) The Company shall cause any successor Designee nominated pursuant
to Section 2.1(d)(i)-(iii) (a "Nominated Successor") to be elected to fill
such vacancy as promptly as practicable at a special meeting of the Board
called for that purpose or by action of the Board by unanimous written
consent. If for any reason the Nominated Successor is not made a Director
as aforesaid, the parties hereto shall promptly use their
18
<PAGE>
respective best efforts (i) to bring about a special meeting of
stockholders for the purpose of (A) removing from the Board any Director
appointed instead of the Nominated Successor and/or (B) electing the
Nominated Successor to the Board or (ii) to execute a written consent in
lieu of a meeting of stockholders (A) to remove from the Board any Director
appointed instead of the Nominated Successor and/or (B) to elect the
Nominated Successor to the Board.
(5) Each Stockholder Group Designator shall have the right, at any
time, to identify any of that Stockholder Group's Designees whom that
Stockholder Group wishes to have removed from his position on the Board and to
nominate a successor Designee to fill the resulting vacancy. The parties hereto
shall promptly use their respective best efforts (i) to bring about a special
meeting of stockholders, and each shall vote, or cause to be voted, all of the
shares of Capital Stock Beneficially Owned by it at that meeting, for the
purpose of removing from the Board any such Designee(s) so identified and
electing the nominated successor(s) to the Board or (ii) to execute a written
consent in lieu of a meeting of stockholders to remove from the Board any such
Designees so identified and to elect the nominated successor(s) to the Board.
(6) The parties to this Agreement shall not, and shall use their best
efforts to cause their respective Designees not to, take any action to change
from eleven (11) the number of Directors which shall constitute the entire Board
without the unanimous written agreement of the Investor Group Designator, the
Lender Group Designator and, unless and until a Dickstein Forfeiture Event has
occurred, the Dickstein Designator.
19
<PAGE>
Section 2.2. Loss of Board Representation.
(1) Decreases in Beneficial Ownership of Capital Stock (including
decreases occurring prior to the expiration of twenty-one months after the date
of the consummation of the Plan) shall cause decreases in the Stockholder
Groups' right to designate Directors, and shall cause forfeitures of Board
seats, in accordance with this Section 2.2(a); provided, that such decreases in
Stockholder Groups' right to designate Directors, and such forfeitures of Board
seats, shall take effect on the first day after the expiration of twenty-one
months after the consummation of the Plan and not before. For purposes of this
Section 2.2 and Section 2.3(e) hereof, the parties have agreed that such
decreases in the Beneficial Ownership of Capital Stock of the Plan Secured
Lender Group in the aggregate shall cause such decreases in the Lender Group's
right to designate Directors and such forfeitures of Board seats as provided in
those sections.
(1) If either the Investor Group or the Plan Secured Lender Group, as
the case may be, shall decrease its Beneficial Ownership of Common
Equivalent Shares at least twenty percent (20%), but less than forty
percent (40%), then the Investor Group or the Lender Group, as the case may
be, shall forfeit one (1) Board seat.
(2) If either the Investor Group or the Plan Secured Lender Group, as
the case may be, shall decrease its Beneficial Ownership of Common
Equivalent Shares at least forty percent (40%), but less than sixty percent
(60%), then the Investor Group or the Lender Group, as the case may be,
shall forfeit two (2) Board seats.
(3) If either the Investor Group or the Plan Secured Lender Group, as
the case may be, shall decrease its Beneficial Ownership of Common
Equivalent Shares at
20
<PAGE>
least sixty percent (60%), but less than eighty percent (80%), then the
Investor Group or the Lender Group, as the case may be, shall forfeit three
(3) Board seats.
(4) If either the Investor Group or the Plan Secured Lender Group, as
the case may be, shall decrease its Beneficial Ownership of Common
Equivalent Shares at least eighty percent (80%), but less than ninety
percent (90%), then the Investor Group or the Lender Group, as the case may
be, shall forfeit four (4) Board seats.
(5) (A) If the Investor Group shall decrease its Beneficial Ownership
of Common Equivalent Shares at least ninety percent (90%), but less than
ninety-five percent (95%), then the Investor Group shall forfeit five (5)
Board seats, and (B) if the Plan Secured Lender Group shall decrease its
Beneficial Ownership of Common Equivalent Shares at least ninety percent
(90%), then the Lender Group shall forfeit all five (5) of its Board seats.
(6) Upon the occurrence of a Dickstein Forfeiture Event, the Dickstein
Entities shall forfeit their one (1) Board seat, but that forfeiture shall
not cause a reduction in the number of Directors which the Investor Group
has the right to designate unless the Investor Group shall have decreased
its Beneficial Ownership of Common Equivalent Shares at least ninety-five
percent (95%), in which case the Investor Group shall forfeit all six (6)
of its Board seats. If a Dickstein Forfeiture Event has not occurred, none
of the Board seats forfeited by the Investor Group under Section
2.2(a)(i)-(v) shall be the Board seat of the Dickstein Designee.
(2) In the event of a decrease in Beneficial Ownership that decreases a
Stockholder Group's right to name Directors under Section 2.2(a) hereof, that
Stockholder
21
<PAGE>
Group's Designator shall name the Designee(s) to be removed from the Board in
accordance with that section and the parties to this Agreement shall use their
respective best efforts to cause the resignations from the Board of any
Designee(s) so named. If the number of Designees of a Stockholder Group serving
on the Board is not promptly decreased in accordance with Section 2.2(a) hereof,
the parties hereto shall promptly use their respective best efforts (i) to bring
about a special meeting of stockholders, and each shall vote, or cause to be
voted, all of the shares of Capital Stock Beneficially Owned by it at that
meeting, for the purpose of removing from the Board such number of the Designees
of that Stockholder Group as shall be required in order to comply with Section
2.2(a) or (ii) to execute a written consent in lieu of a meeting of stockholders
to remove from the Board such number of Designees of that Stockholder Group.
Section 2.3. Committee Representation.
(1) Each party to this Agreement shall vote, or cause to be voted, its
Capital Stock Beneficially Owned, and shall use its best efforts to cause its
respective Stockholder Group's Designees on the Board, subject to the exercise
of their fiduciary obligations, to establish the following committees of the
Board and to cause those committees of the Board to be comprised and have the
functions, powers and authorizations, as set forth below.
(2) The Audit Committee shall consist of five (5) Independent
Directors, three (3) of whom will be Lender Group Designees named by a majority
of the Lender Group Designees then serving on the Board and two (2) of whom will
be Investor Group Designees named by a majority of the Investor Group Designees
then serving on the Board. The Audit Committee shall exercise, subject to
applicable provisions of laws, the functions regularly
22
<PAGE>
administered by committees of such type including, without limitation, (A) to
review the professional services and independence of the Company's independent
auditors and the scope of the annual external audit as recommended by the
independent auditors, (B) to ensure that the scope of the annual external audit
by the independent auditors of the Company is sufficiently comprehensive, (C) to
review, in consultation with the independent auditors and the internal auditors,
the plan and results of the annual external audit, the adequacy of the Company's
internal control systems and the results of the Company's internal audits, (D)
to review with management and the independent auditors, the Company's annual
financial statements, financial reporting practices and the results of each
external audit, and (E) to consider the qualification of the Company's
independent auditors, to make recommendations to the Board as to their selection
and to review the relationship between such independent auditors and management.
(3) The Compensation and Nominating Committee shall consist of five (5)
Directors, two (2) of whom shall be Lender Group Designees named by a majority
of the Lender Group Designees then serving on the Board and three (3) of whom
shall be Investor Group Designees named, subject to the following sentence, by a
majority of the Investor Group Designees then serving on the Board. Unless a
Dickstein Forfeiture Event has occurred, one (1) of the three Investor Group
Designees on the Compensation and Nominating Committee shall be the Dickstein
Designee. At least one of the Lender Group Designees and at least one of the
Investor Group Designees (other than the Dickstein Designee) serving on the
Compensation and Nominating Committee shall be an Independent Director. The
Compensation and Nominating Committee shall exercise, subject to applicable
provisions of
23
<PAGE>
law, the functions regularly administered by committees of such type including,
without limitation, the power to review and recommend to the Board the
compensation and benefit arrangements for the officers of the Company, the
administering of the stock option plans and executive compensation programs of
the Company, including bonus and incentive plans applicable to officers and key
employees of the Company and to recommend to the Board nominees for election as
Directors.
(4) The Finance Committee shall consist of five (5) Directors, two (2)
of whom will be Lender Group Designees named by a majority of the Lender Group
Designees then serving on the Board and three (3) of whom will be Investor Group
Designees named by a majority of the Investor Group Designees then serving on
the Board. The Finance Committee shall exercise, subject to applicable
provisions of law, the functions regularly administered by committees of such
type including, without limitation, to make recommendations to the Board with
respect to the Company's credit arrangements, the issuance of equity and long
term debt instruments and other financial matters.
(5)
(1) If the Investor Group shall decrease its Beneficial Ownership of
Common Equivalent Shares by more than (33 1/3%), it will forfeit one Audit
Committee Seat. If the Investor Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than sixty six and two thirds
percent (66 2/3%), it will forfeit both of its Audit Committee seats. If
the Plan Secured Lender Group shall decrease its Beneficial Ownership of
Common Equivalent Shares by more than twenty five percent (25%), the Lender
Group will forfeit one Audit Committee seat. If the Plan Secured Lender
Group
24
<PAGE>
shall decrease its Beneficial Ownership of Common Equivalent Shares by more
than fifty percent (50%), the Lender Group will forfeit two Audit Committee
seats. If the Plan Secured Lender Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than seventy five percent
(75%), the Lender Group will forfeit all three of its Audit Committee
seats.
(2) If the Plan Secured Lender Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than (33 1/3%), the Lender
Group will forfeit one Compensation and Nominating Committee seat. If the
Plan Secured Lender Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than sixty six and two thirds percent (66 2/3%),
the Lender Group will forfeit both of its Compensation and Nominating
Committee seats. If the Investor Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than twenty five percent
(25%), it will forfeit one Compensation and Nominating Committee seat. If
the Investor Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than fifty percent (50%), it will forfeit two
Compensation and Nominating Committee seats. If the Investor Group shall
decrease its Beneficial Ownership of Common Equivalent Shares by more than
seventy five percent (75%) and a Dickstein Forfeiture Event shall have
occurred, it will forfeit all three of its Compensation and Nominating
Committee seats. If a Dickstein Forfeiture Event has not occurred, none of
the Compensation and Nominating Committee seats forfeited by the Investor
Group under this Section 2.3(e)(ii) shall be the Compensation and
Nominating Committee seat of the Dickstein Designee.
25
<PAGE>
(3) If the Plan Secured Lender Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than (33 1/3%), the Lender
Group will forfeit one Finance Committee seat. If the Plan Secured Lender
Group shall decrease its Beneficial Ownership of Common Equivalent Shares
by more than sixty six and two thirds percent (66 2/3%), the Lender Group
will forfeit both of its Finance Committee seats. If the Investor Group
shall decrease its Beneficial Ownership of Common Equivalent Shares by more
than twenty five percent (25%), it will forfeit one Finance Committee seat.
If the Investor Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than fifty percent (50%), it will forfeit two
Finance Committee seats. If the Investor Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than seventy five
percent (75%), it will forfeit all three of its Finance Committee seats.
(6) If a Stockholder Group's right to committee representation decreases
under Section 2.3(e) hereof, each party to this Agreement shall use its
respective best efforts to cause the required number of the Designees of
that Stockholder Group to resign their Committee(s) assignments. (7) The
parties to this Agreement shall not, and shall use their best efforts to
cause their respective Designees not to, take any action to create any
committee of the Board other than as provided in this Agreement without the
unanimous written agreement of the Investor Group Designator, the Lender
Group Designator and, unless and until a Dickstein Forfeiture Event has
occurred, the Dickstein Designator.
26
<PAGE>
Section 2.4. Computation and Notice of Common Equivalent Shares
Ownership.
(1) For the purposes of this Agreement, the Investor Group's Beneficial
Ownership of Common Equivalent Shares shall be determined with reference only to
the Perlmutter/Arad Group's Beneficial Ownership of Common Equivalent Shares and
shall not be determined by reference to, or affected by, any change in the
Dickstein Entities' Beneficial Ownership of Common Equivalent Shares.
(2) For the purposes of Section 2.2 and Section 2.3 hereof, a group's
reduction in its Beneficial Ownership of Common Equivalent Shares shall be
determined by comparing, at any particular time, that group's Beneficial
Ownership of Common Equivalent Shares (including after-acquired Capital Stock)
to that group's Beneficial Ownership of Common Equivalent Shares immediately
following the consummation of the Plan, as adjusted for any stock splits,
reverse stock splits, recapitalization of the Common Equivalent Shares or
capital transaction of a similar nature. Any of the Investor Group, the
Dickstein Group, the Lender Group and the Plan Secured Lender Group may use the
Common Equivalent Shares held by Affiliates of its members to calculate its
total Common Equivalent Shares ownership if such Affiliates have agreed in
writing, for the benefit of all parties to this Agreement, to be bound by this
Agreement.
(3) Any reduction in Common Equivalent Shares Beneficially Owned by any
Secured Lender shall constitute a reduction in the number of Common Equivalent
Shares Beneficially Owned by the Plan Secured Lender Group for purposes of
Section 2.2, 2.3 and
27
<PAGE>
4.2(e)(iii) hereof, except to the extent that (i) any or all of the Common
Equivalent Shares no longer so Beneficially Owned are Beneficially Owned by any
member of the Plan Secured Lender Group (or any Affiliate of such a member) who
is, or who agrees to be, bound hereby or (ii) the Lender Group Designator
delivers to the Investor Group Designator, on or prior to the date on which the
Lender Group Designator delivers a Notice of Designee with respect to an
Election Meeting, an irrevocable proxy from one or more members of the Plan
Secured Lender Group (which are not Secured Lenders), authorizing the Investor
Group Designator and the Dickstein Group Designator, acting jointly, to vote a
specified number Common Equivalent Shares Beneficially Owned by such member in
the manner required by this Agreement with respect to the election of directors
at such Election Meeting; provided that even if such an irrevocable proxy has
been delivered this clause (ii) shall not apply with respect to the Common
Equivalent Shares covered thereby with respect to any period after that meeting
if such Common Equivalent Shares fail to be voted in a manner in which such
Common Equivalent Shares would otherwise be required to be voted under this
Agreement if they were Beneficially Owned by a party to this Agreement. For
example, (x) if a Secured Lender sells two million Common Equivalent Shares to a
third party which is not and does not agree to be bound by this Agreement and
does not deliver an irrevocable proxy as provided in the preceding sentence, the
number of Common Equivalent Shares Beneficially Owned by the Plan Secured Lender
Group shall be deemed to have been reduced by two million Common Equivalent
Shares, whether or not offsetting acquisitions of Common Equivalent Shares have
been made by other members of the Plan Secured Lender Group, (y) if, the facts
are the same as in clause (x) but another member of the Plan Secured Lender
Group delivers a proxy
28
<PAGE>
described in the preceding sentence and after the meeting to which the proxy
relates the holder of those shares fails to take an action required by Section
2.1, 2.2 or 2.3 of this Agreement, clause (ii) of Section 2.4(c) shall no longer
apply with respect to those shares.
(4) If at any time a Stockholder Group Designator has actual knowledge
(but without any duty of inquiry) that the Beneficial Ownership of Common
Equivalent Shares of the related Stockholder Group (including, for purposes of
the Lender Group Designator, the Plan Secured Lender Group) has been reduced
such that such Stockholder Group would be required to forfeit one or more or any
additional Board seats pursuant to Section 2.2 or Committee seats pursuant to
Section 2.3, it shall as promptly as practicable thereafter notify the Company
and the other parties to this Agreement.
Section 2.5. Restriction on Disposition of Stock Held by Subsidiary.
The parties to this Agreement shall not, and shall use their best efforts to
cause their respective Designees not to, (i) permit Marvel Characters, Inc. to
transfer or otherwise convey any interest in any of the shares of Common Stock
held by Marvel Characters, Inc. unless such transfer or other conveyance (A) has
been approved in writing by a majority in voting power of each Stockholder
Group, or (B) is to the Company, or (ii) allow such shares of Common Stock to be
entitled to vote with respect to matters to be voted upon or consented to by the
stockholders of the Company unless adequate provision is made to assure that
such shares of Common Stock will thereafter be voted, on all such matters,
proportionately with all other outstanding shares of Common Stock voting on all
such matters.
29
<PAGE>
ARTICLE 3
REPRESENTATIONS
Section 3.1. Representations of the Dickstein Entities. The Dickstein
Entities represent to the other parties to this Agreement that they will
Beneficially Own approximately 6,115,000 Common Equivalent Shares in the
aggregate immediately following the consummation of the Plan.
Section 3.2. Representations of the Perlmutter/Arad Group. The
Perlmutter/Arad Group represents to the other parties to this Agreement that it
will Beneficially Own approximately 17,318,000 Common Equivalent Shares in the
aggregate immediately following the consummation of the Plan.
Section 3.3. Representations of the Lender Group.
(1) The Chase Manhattan Bank represents to the other parties to this
Agreement that it will Beneficially Own approximately 2,096,291 Common
Equivalent Shares immediately following the consummation of the Plan and that it
does not share Beneficial Ownership of any of those shares with any other member
of the Lender Group.
(2) Morgan Stanley & Co. Incorporated represents to the other parties
to this Agreement that it will Beneficially Own approximately 4,020,592 Common
Equivalent Shares immediately following the consummation of the Plan and that it
does not share Beneficial Ownership of any of those shares with any other member
of the Lender Group.
(3) Whippoorwill represents to the other parties to this Agreement that
each Whippoorwill Account will Beneficially Own approximately the number of
shares of Capital Stock set forth on Schedule 1 to this Agreement immediately
following the consummation of
30
<PAGE>
the Plan and that none of the Whippoorwill Accounts shares Beneficial Ownership
of any of those shares with any other member of the Lender Group.
ARTICLE 4
MISCELLANEOUS
Section 4.1. Effective Date. This Agreement shall become effective upon
the consummation of the Plan.
Section 4.2. Termination. (a) This Agreement shall terminate:
(1) Upon consent of all of the parties hereto who are then subject to
this Agreement;
(2) As to the Perlmutter/Arad Group, in the event that the Investor
Group, or any of its Affiliates that have agreed to be bound by this
Agreement, shall cease to be entitled to the election of any Designee
(exclusive of the Dickstein Designee) to the Board hereunder;
(3) As to the Lender Group, in the event that the Lender Group, or any
of their Affiliates that have agreed to be bound by this Agreement, shall
cease to be entitled to the election of any Designee to the Board hereunder
and, with respect to any individual Secured Lender, when the Common
Equivalent Shares Beneficially Owned by such Secured Lender have been less
than 10% of the Common Equivalent Shares Beneficially Owned by such Secured
Lender immediately following the consummation of the Plan for a period of
184 consecutive calendar days; provided, that this Agreement shall
terminate with respect to Whippoorwill Associates, Incorporated and each
31
<PAGE>
Whippoorwill Account when the Common Equivalent Shares Beneficially Owed by
all of them in the aggregate have totaled less than 10% of all Common
Equivalent Shares Beneficially Owed by all of them immediately following
the consummation of the Plan for a period of 184 consecutive calendar days;
and provided further, that the termination of this Agreement with respect
to any Secured Lender shall be deemed to result in a reduction in the total
amount of Common Equivalent Shares Beneficially Owed by the Plan Secured
Lender Group by an amount equal to the amount of Common Equivalent Shares
Beneficially Owned by such Secured Lender at such time;
(4) As to the Dickstein Entities, in the event that the Dickstein
Entities, or any of their Affiliates that have agreed to be bound by this
Agreement, shall cease to be entitled to the election of their Designee to
the Board hereunder.
(b) In the event that a material violation of any covenant hereunder by
a member of a Stockholder Group that is not cured within thirty days of written
notice thereof by a member of one of the other Stockholder Groups shall occur
and be continuing, the Stockholder Group of the breaching party shall not be
deemed to be the Beneficial Owner of any Capital Stock for purposes of Board
representation under Section 2.2 hereof or committee representation under
Section 2.3 hereof, and shall have no further rights under this Agreement. Such
member and such Stockholder Group shall nonetheless continue to be deemed to
Beneficially Own its Capital Stock for all other purposes and to be bound to
perform its obligations under this Agreement.
Section 4.3. Secretary to Retain Copy. A copy of this Agreement shall
be filed with the Secretary of the Company.
32
<PAGE>
Section 4.4. Further Actions. At any time and from time to time each
party agrees, at its or his expense, to take such actions and to execute and
deliver such documents as may be necessary to effectuate the purposes of this
Agreement. Each party hereto will not take any action that would (x) result in a
breach of any covenant or any other obligation of such party under this
Agreement or (y) impede, interfere with or discourage the transactions
contemplated by this Agreement.
Section 4.5. Specific Performance. The parties hereto acknowledge that
failure on any of their parts to comply with the terms of this Agreement shall
cause the other parties hereto immediate and irreparable harm that cannot be
adequately compensated by the remedies at law, and that in the event of such
breach or violation, or threatened breach or violation, the other parties hereto
shall have such provisions of this Agreement specifically enforced by
preliminary and permanent injunctive relief without having to prove the
inadequacy of the available remedies at law or any actual damages and without
posting bond or other security. Any remedy sought or obtained by a party hereto
shall not be considered either exclusive or a waiver of the rights of a party
hereto or any other person to assert any other remedies they have in law or
equity. In any proceeding upon a motion for any such injunctive relief, a
party's ability to answer in damages shall not be a bar, or be interposed as a
defense, to the granting of such injunctive relief. Any rights under this
Section 4.5 may be enforced in any appropriate court in the State of Delaware.
Section 4.6. Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all
33
<PAGE>
prior and contemporaneous agreements and understandings among the parties hereto
except as herein contained, with any of the terms hereof.
Section 4.7. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally against receipt thereof,
or transmitted by telecopier or by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
If to the Company, to
Toy Biz, Inc.
685 Third Avenue
New York, New York 10017
Attention: Secretary
Telecopy: (212) 588-5100
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: John Turitzin, Esq.
Telecopy: (212) 856-7813
if to Perlmutter, the Trust, the Foundation, Object Trading or Zib, to:
P.O. Box 1028
Lake Worth, Florida 33460-1028
Telecopy:
c/o Daniel Golden (212) 806-6006
and
c/o Lawrence Mittman (212) 856-7807
34
<PAGE>
with a copy to:
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10004
Attention: Daniel Golden
Telecopy: (212) 806-6006
and
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Lawrence Mittman, Esq.
Telecopy: (212) 856-7807
if to Arad, to:
c/o Avi Arad & Associates
1698 Post Road East
Westport, Connecticut 06880
Telecopy: (203) 254-2613
with a copy to:
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10004
Attention: Daniel Golden
Telecopy: (212) 806-6006
and
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Lawrence Mittman, Esq.
Telecopy: (212) 856-7807
if to any of the Dickstein Entities, to:
Dickstein Partners, Inc.
600 Madison Avenue, 16th Floor
35
<PAGE>
New York, New York 10021
Attention: Alan Cooper
Telecopy: (212) 754-5825
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Abbe Dienstag, Esq.
Telecopy: (212) 715-8000
if to The Chase Manhattan Bank, to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Anthony J. Horan
Telecopy: (212) 270-4240
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Scott K. Charles, Esq.
Telecopy: (212) 403-1000
if to Morgan Stanley & Co. Incorporated, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Michael J. Petrick
Telecopy: (212) 761-0713
with a copy to:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10026
Attention: Laura DeForest, Esq.
Telecopy: (212) 762-8831
36
<PAGE>
if to any Whippoorwill Account, to:
Whippoorwill Associates, Incorporated
11 Martine Avenue
White Plains, New York 10606
Attention: Shelley
Telecopy: (914) 683-1242
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Thomas Mayer, Esq.
Telecopy: (212) 715-8000
Any notice shall be deemed to have been given on the date of receipt if
delivered personally or by overnight courier, the date of transmission with
confirmation back if transmitted by telecopier, or the third day following
posting if transmitted by mail.
Section 4.8. Waivers; Amendment. This Agreement may not be modified,
amended or waived other than by a written instrument executed by the parties
hereto. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement.
Section 4.9. Binding Effect; Heirs and Successors. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and shall be assignable only to an Affiliate of a party hereto and, with
respect to assignment by Secured
37
<PAGE>
Lenders, to any member of the Plan Secured Lender Group and any Affiliate of
such a member, and only if such Affiliate of a party hereto, member of the Plan
Secured Group or Affiliate of a member of the Plan Secured Lender Group agrees
in writing to be bound by this Agreement. The provisions of this Agreement shall
be binding upon and inure to the benefit of the heirs and successors of the
parties hereto.
Section 4.10. No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement (except as provided in Section 4.9).
Section 4.11. Separability. If any provision of this Agreement shall be
adjudicated to be invalid, illegal or unenforceable, such provision shall be
amended to delete therefrom the portion thus adjudicated to be invalid, illegal
or unenforceable, such deletion to apply only with respect to the operation of
such provision in the particular jurisdiction in which such adjudication is
made, and the balance of this Agreement shall remain in effect.
Section 4.12. Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of any provision of this Agreement.
Section 4.13. Pronouns. Any masculine personal pronoun shall be
considered to mean the corresponding feminine or neuter personal pronoun, as the
context requires.
Section 4.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
38
<PAGE>
Section 4.15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of the conflict of laws thereof.
Section 4.16. No Restriction on Transferability. Nothing in this
Agreement shall restrict the ability of any of the parties to this Agreement to
sell or otherwise transfer any shares of Common Stock, Preferred Stock or other
securities of the Company, nor shall a purchaser or other transferee of any
Capital Stock sold or transferred by a signatory hereto be subject to any of the
obligations created hereby unless such purchaser or transferee has agreed in
writing, for the benefit of all parties to this Agreement, to be so bound.
Section 4.17. Whippoorwill Obligations Several and Not Joint. With
respect to any obligations hereunder assumed by any Whippoorwill Account, such
obligations shall be several and not joint and shall be limited to the
percentage held by such Whippoorwill Account of the total Common Equivalent
Shares held by all such Whippoorwill Accounts, and no such Whippoorwill Account
shall be liable for any obligation of any other Whippoorwill Account.
39
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
----------------------------
Avi Arad
----------------------------
Mark Dickstein
DICKSTEIN & CO., L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
---------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN FOCUS FUND L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
---------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN INTERNATIONAL LIMITED
By: Dickstein Partners Inc.
By:
---------------------------
Name: Alan S. Cooper
Title: Vice President
40
<PAGE>
ELYSSA DICKSTEIN, JEFFREY SCHWARZ AND
ALAN COOPER AS TRUSTEES U/T/A/D
12/27/88, MARK DICKSTEIN, GRANTOR
By:
---------------------------
Alan S. Cooper
Trustee
MARK DICKSTEIN AND ELYSSA DICKSTEIN, AS
TRUSTEES OF THE MARK AND ELYSSA
DICKSTEIN FOUNDATION
By:
---------------------------
Mark Dickstein
Trustee
---------------------------
Elyssa Dickstein
---------------------------
Isaac Perlmutter
ISAAC PERLMUTTER T.A.
By:
---------------------------
Isaac Perlmutter
Trustee
THE LAURA & ISAAC PERLMUTTER FOUNDATION,
INC.
By:
---------------------------
Name: Isaac Perlmutter
Title: President
41
<PAGE>
OBJECT TRADING CORP.
By:
---------------------------
Name: Isaac Perlmutter
Title: President
ZIB INC.
By:
---------------------------
Name: Isaac Perlmutter
Title: President and Chief Executive Officer
THE CHASE MANHATTAN BANK
By:
---------------------------
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By:
---------------------------
Name: Mitchael J. Petrick
Title: Managing Director
42
<PAGE>
WHIPPOORWILL ASSOCIATES, INCORPORATED,
as agent of and/or general partner for
the accounts listed on Schedule 1 hereto
By:
---------------------------
Name: Shelley Greenhaus
Title: Managing Director
TOY BIZ, INC.
By:
---------------------------
Name: Joseph M. Ahearn
Title: President and Chief Executive Officer
43
<PAGE>
<TABLE>
<CAPTION>
Schedule 1
Fund/Account Common Preferred Common Share
Shares Shares Equivalents
<S> <C> <C> <C>
The President and Fellows of
Harvard College .................................. 484,997 551,300 1,057,776
The Rockefeller Foundation ....................... 121,546 208,495 338,164
Vega Partners II, L.P. ........................... 137,455 234,589 381,183
Vega Partners III, L.P. .......................... 317,587 543,269 882,022
Vega Partners IV, L.P. ........................... 200,821 342,659 556,830
Vega Offshore Fund Trust ......................... 86,108 138,552 230,058
Whippoorwill Profit Sharing Plan ................. 1,890 2,717 4,712
Total ............................................ 1,350,404 2,021,581 3,450,745
</TABLE>
44
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
October 1, 1998, is entered into by and among TOY BIZ, INC., a Delaware
corporation (the "Company"), and the undersigned stockholders (each, a "Buyer,"
and collectively, the "Buyers").
RECITALS:
---------
WHEREAS, the Buyers have entered into either (i) a Stock Purchase
Agreement, dated as of October 1, 1998 (the "Stock Purchase Agreement") with the
Company or (ii) have executed a Subscription Election Form (the "Subscription
Election Forms") with the Company, pursuant to which the Company is selling to
Buyers, and Buyers are purchasing from the Company, 9,000,000 shares (the
"Shares") of the Company's 8% cumulative convertible exchangeable preferred
stock, par value $0.01 per share (the "Preferred Stock");
WHEREAS, the Buyers are requiring the Company to enter into this
Agreement in connection with the Stock Purchase Agreement and the Subscription
Election Forms and as a condition to the purchase of the Shares by the Buyers;
WHEREAS, pursuant to the Fourth Amended and Restated Joint Plan of
Reorganization Plan Proposed by the Secured Lenders and the Company, In Re:
Marvel Entertainment Group, Inc. et al (case No. 97-638-RRM) in the United
States District Court for the District of Delaware (the "Plan"), those Buyers
who are Secured Lenders (as defined in the Plan) will receive shares of
Preferred Stock (the "Plan Preferred Shares") and shares of Common Stock (as
herein defined) (the "Plan Common Shares") in respect of their Allowed Fixed
Senior Secured Claims (as defined in the Plan);
WHEREAS, the Board of Directors of the Company has authorized the
officers of the Company to execute and deliver this Agreement in the name and on
behalf of the Company;
NOW, THEREFORE, in consideration of these premises and the mutual
promises herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Definitions.
Business Day: Any Monday, Tuesday, Wednesday, Thursday or Friday that
is not a day on which banking institutions in the City of New York are
authorized by law, regulation or executive order to close.
45
<PAGE>
Common Stock: The common stock, par value $0.01 per share, of the
Company or any securities issued in exchange therefor in any recapitalization,
reclassification, merger, consolidation or similar transaction.
Debentures: The 8% Convertible Subordinated Voting Debentures of the
Company.
Effective Date: The Consummation Date (as defined in the Plan of
Reorganization).
Exchange Act: The Securities Exchange Act of 1934, as amended from time
to time, or any successor statute, and the rules and regulations of the SEC
thereunder, all as in effect at the time.
Holder: Each of the Buyers and any other Person that becomes an owner
of Registrable Securities; provided, however, that no Person shall become a
Holder unless such Person has executed and delivered to the Company, an
agreement, in the form of Annex A hereto, to be bound by the provisions of this
Agreement.
Person: An individual, partnership, corporation, limited liability
company, joint venture trust or unincorporated organization, a government or
agency or political subdivision thereof or any other entity.
Plan of Reorganization: The Fourth Amended Joint Plan of Reorganization
filed by the Secured Lenders and by the Company, as the same may be amended or
modified.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by a prospectus supplement with respect to the terms of
the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications or registrations (or the
obtaining of exemptions therefrom) of the Registrable Securities), printing
expenses (including expenses of printing Prospectuses), messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
fees and disbursements of its counsel and its independent certified public
accountants (including the expenses of any special audit or "comfort" letters
required by or incident to such performance or compliance), securities acts
liability insurance (if the Company elects to obtain such insurance), fees and
expenses of any special experts retained by the Company in connection with any
registration hereunder, and
46
<PAGE>
fees and expenses of other Persons retained by the Company; provided, however,
that Registration Expenses shall not include any underwriting discounts,
commissions or fees attributable to the sale of the Registrable Securities.
Registrable Securities: (i) The Shares, (ii) Plan Preferred Shares,
(iii) any shares of Common Stock into which the Shares or the Plan Preferred
Shares may be converted from time to time, (iv) any Debentures issued in
exchange for the Shares, or the Plan Preferred Shares, (v) if the Debentures are
issued, any shares of Common Stock issued or issuable upon conversion of the
Debentures, (vi) the Plan Common Shares, (vii) all other shares of Common Stock
held by any of the Buyers as of the date hereof and (viii) any other securities
issued or issuable as a result of or in connection with any stock dividend,
stock split or reverse stock split, combination, recapitalization,
reclassification, merger or consolidation, exchange or distribution in respect
of the securities referred to in clauses (i) through (v) above; provided,
however, that any Registrable Security shall cease to be such if (A) such
Registrable Security shall have been transferred pursuant to an effective
Registration Statement or in compliance with Rule 144 or (B) such Registrable
Securities may be sold pursuant to section (k) of Rule 144.
Registration Statement: Any registration statement of the Company,
including, without limitation, the Shelf Registration Statement, filed with the
SEC which provides for the registration for sale or other transfer of the
Registrable Securities, including the Prospectus included therein, all
amendments and any supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar successor rule thereto that may
be promulgated by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar successor rule thereto that may
be promulgated by the SEC.
SEC: The United States Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulation of the SEC
thereunder, all as in effect from time to time.
Underwritten Offering: A registered offering in which securities are
sold to one or more underwriters on a firm commitment basis for reoffering to
the public.
47
<PAGE>
Whippoorwill Account: Each partnership or account which enters into
this Agreement as a Buyer through execution and delivery hereof by Whippoorwill
Associates, Incorporated as its agent or General Partner.
2. Registration under the Securities Act
(a) Filing and Effectiveness. As soon as reasonably practicable
following the date hereof (and in no event later than fifty (50) days after the
Effective Date), the Company shall file with the SEC a shelf registration
statement under the Securities Act registering the resale of the Registrable
Securities by the Holders (the "Shelf Registration Statement"). The Company
shall use its reasonable best efforts to cause the Shelf Registration Statement
to be declared effective as soon as practicable after the filing thereof, and
thereafter to keep it continually effective until such time as there shall cease
to be outstanding any Registrable Securities.
(b) Subsequent Holders. If any Person becomes a Holder of Registrable
Securities that were included in the Shelf Registration Statement subsequent to
the time that the Shelf Registration Statement became effective, the Company
shall add such Holder to the Shelf Registration Statement, on a timely basis,
through a post-effective amendment or a supplement to the Prospectus, as shall
be necessary in accordance with the rules of the SEC under the Securities Act to
include such Holder as a selling securityholder in a distribution under the
Shelf Registration Statement.
(c) Methods of Distribution. The Registrable Securities may be sold or
distributed under the Shelf Registration Statement directly by the Holders as
principal or through one or more brokers, dealers or agents from time to time in
one or more transactions, including, without limitation, (i) on any securities
exchange (or quotation system operated by a national securities association) on
which the Registrable Securities are then listed, (ii) in private transactions,
(iii) in block trades, or (iv) though the writing of options (whether such
options are listed on an exchange or otherwise) on, or settlement of short sales
of, the Registrable Securities in compliance with applicable law. The Holders
may not sell or distribute the Registrable Securities under the Shelf
Registration Statement in an Underwritten Offering except as provided in Section
3 hereof.
Nothing in this Agreement shall in any way restrict any Holder from
selling or otherwise transferring the risk or benefit of ownership of securities
of the Company in any manner not provided in this Agreement in accordance with
the Securities Act and other applicable law.
3. Piggyback Registration.
(a) Piggyback Registration. If the Company at any time proposes to
effect an Underwritten Offering of any class of its equity securities for its
own account or for the
48
<PAGE>
account of a holder of securities of the Company pursuant to registration rights
granted by the Company (a "Requesting Shareholder"), whether under a previously
effective shelf registration statement or a registration statement filed for the
purpose of such Underwritten Offering (a "Piggyback Registration"), then the
Company shall in each case give written notice of such proposed offering to the
Holders at least ten (10) Business Days before the proposed date of filing of
such registration statement (or, in the case of a previously effective shelf
registration statement, the filing of any amendment or supplement to such shelf
registration statement to permit such Underwritten Offering), and such notice
shall offer to all Holders the opportunity to have any or all of the Registrable
Securities then held by the Holders included in such Underwritten Offering. Each
Holder desiring to have its Registrable Securities offered under this Section
shall so advise the Company in writing within five (5) Business Days after the
date of receipt of the Company's aforesaid notice (which request shall set forth
the amount of Registrable Securities proposed to be offered), and the Company
shall cause to be included in such Underwritten Offering all such Registrable
Securities so requested to be included therein, provided that the Holders
thereof execute and deliver the underwriting agreement and other customary
documents related to such offering including, if requested by the managing
underwriter or underwriters, selling stockholder questionnaires, powers of
attorney and custody agreements.
(b) Cutback. (i) Priority on Primary Registrations. If a Piggyback
Registration is an Underwritten Offering by the Company on a primary basis (a
"Primary Registration"), and the managing underwriters advise the Company in
writing that in their good faith opinion the amount of securities requested to
be included in such registration is sufficiently large as to be likely to
materially adversely affect the success of such offering, the Company will
include in such registration, to the extent such managing underwriters advise
the Company that such securities can be included in the Offering without being
likely to materially adversely affect the success of the Offering (i) first, the
securities the Company proposes to sell, and (ii) second, the securities
requested to be sold by any of the Holders and other holders of securities of
the Company exercising similar piggy-back registration rights with respect to
that Offering, pro rata, based on the number of securities requested to be sold
by the Holders and the holders.
(ii) Priority on Secondary Registrations. If a Piggyback Registration
is an Underwritten Offering other than a Primary Registration, and the managing
underwriters advise the Company in writing that in their good faith opinion the
amount of securities requested to be included in such registration is
sufficiently large as to be likely to materially adversely affect the success of
such registration, the Company will include in such registration, to the extent
such managing underwriters advise the Company that such securities can be
included in the Offering without being likely to materially adversely affect the
success of the Offering (i) first, the securities requested to be included
therein by a Requesting Shareholder exercising demand registration rights, (ii)
second, the securities requested to be included therein by the Company and (iii)
third, as requested by any other Holders and other holders of securities of the
Company exercising similar piggy-back registration rights with respect to that
49
<PAGE>
Offering, pro rata, based on the number of securities requested to be sold by
those Holders or holders.
4. Registration Procedures.
(a) General. In connection with the Company's registration obligations
pursuant to this Agreement, the Company shall:
(i) prepare and file with the SEC the Shelf Registration
Statement and such amendments and post-effective amendments thereto as
may be necessary to keep the Shelf Registration Statement continuously
effective for the time period set forth in Section 2, including as
required in accordance with Item 512(a) of Regulation S-K under the
Securities Act; provided that as soon as practicable, but in no event
later than three (3) Business Days before the filing of any
Registration Statement and any amendment thereto, any related
Prospectus or any amendment or supplement thereto (other than any
amendment or supplement made solely as result of incorporation by
reference of documents filed with the SEC subsequent to the filing of
such Registration Statement), the Company shall furnish to the Holders
of the Registrable Securities covered by such Registration Statement,
copies of all such documents proposed to be filed, which documents
shall be subject to the review of such Holders; not file any
Registration Statement or any amendment thereto or any Prospectus or
any supplement thereto (other than any amendment or supplement made
solely as a result of incorporation by reference of documents filed
with the SEC subsequent to the filing of such Registration Statement)
to which the Holders of a majority of the Registrable Securities shall
have reasonably objected in writing within (2) Business Days after
receipt of such documents to the effect that such Registration
Statement or amendment thereto or Prospectus or supplement thereto
does not comply in all material respects with the requirements of the
Securities Act; and comply with the provisions of the Securities Act
applicable to the Company with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus in accordance with this
Agreement;
(ii) notify the selling Holders of Registrable Securities
promptly (1) when a Registration Statement, Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or post-effective
amendment, when it has become effective, (2) of any request by the SEC
for amendments or supplements to any Registration Statement or
Prospectus or for additional information, (3) of the issuance by the
SEC of any comments with respect to any filing, (4) of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (5) of any suspension
of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation
50
<PAGE>
or threatening of any proceeding for such purpose and (6) of the
happening of any event which makes any statement of a material fact
made in any Registration Statement, Prospectus or any document
incorporated therein by reference untrue or which requires the making
of any changes in any Registration Statement, Prospectus or any
document incorporated therein by reference in order to make the
statements therein (in the case of any Prospectus, in the light of the
circumstances under which they were made) not misleading; and use
reasonable best efforts to obtain as promptly as practicable the
withdrawal of any order or other action suspending the effectiveness
of any Registration Statement or suspending the qualification or
registration (or exemption therefrom) of the Registrable Securities
for sale in any jurisdiction;
(iii) promptly after the filing of any document which is to be
incorporated by reference into a Registration Statement or Prospectus,
provide without charge copies of such document to the Holders of the
Registrable Securities covered thereby;
(iv) furnish to the selling Holders of Registrable Securities,
without charge, at least one manually signed or "edgarized" copy, and
as many conformed copies as may reasonably be requested, of the then
effective Registration Statement and any post-effective amendments
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(v) deliver to the selling Holders, without charge, as many
copies of the then effective Prospectus (including each prospectus
subject to completion) and any amendments or supplements thereto as
such Persons may reasonably request;
(vi) use reasonable best efforts to register or qualify or
cooperate with the selling Holders and their respective counsel in
connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of
such jurisdictions as any selling Holder reasonably requests in
writing and do any and all other acts or things reasonably necessary
or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the then effective Registration
Statement; provided, however, that the Company will not be required to
(1) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (vi) or (2)
subject itself to general taxation in any such jurisdiction;
(vii) cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and
registered in such names as the Holders may request at least
51
<PAGE>
two (2) Business Days prior to any sale of Registrable Securities to
the underwriters, if any;
(viii) upon the occurrence of any event contemplated by clause
(6) of paragraph (ii) above, promptly prepare a supplement or
post-effective amendment to the Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading;
(ix) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange (or quotation
system operated by a national securities association) on which
identical securities issued by the Company are then listed, and enter
into customary agreements to effect that listing, including, if
necessary, a listing application in customary form, and provide a
transfer agent for such Registrable Securities;
(x) if the Registrable Securities are to be sold in an
Underwritten Offering pursuant to Section 3 or in a block trade or
other private placement: (1) obtain an opinion of counsel covering
matters that are no more extensive in scope than would be customarily
covered in opinions obtained in such types of transactions by issuers
with similar market capitalization and reporting and financial
histories; (2) obtain a "cold comfort" letter from the independent
public accountants of the Company and covering matters that are no
more extensive in scope than would be customarily covered in "cold
comfort" letters and updates obtained in secondary Underwritten
Offerings by issuers with similar market capitalization and reporting
and financial histories, provided, however, that the letter described
in this clause (2) shall only be required in connection with a block
trade or other private placement to the extent such letters are being
issued in respect of such types of transactions under then prevailing
accounting practices and to the extent the Company's independent
public accountants do not have a policy against issuing such letters
in connection with such offerings; and (3) deliver a certificate of a
senior executive officer of the Company to cover matters no more
extensive in scope than those matters customarily covered in officer's
certificates delivered in connection with Underwritten Offerings by
issuers with similar market capitalization and reporting and financial
histories;
(xi) provide a CUSIP number for the Registrable Securities no
later than the effective date of a Registration Statement applicable
thereto;
(xii) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC relating to such
registration and the
52
<PAGE>
distribution of the securities being offered and make generally
available to its securities holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than 60
days after the end of any 12-month period (or 90 days, if such period
is a fiscal year) commencing at the end of any fiscal quarter in which
the Registrable Securities are sold in an Underwritten Offering, block
trade or other private placement, which earnings statements shall cover
such 12-month periods;
(xiii) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc.; and
(xiv) make available for inspection by representatives of the
Holders of the Registrable Securities, and any attorneys or
accountants retained by the Holders, all financial and other records,
pertinent corporate documents and properties of the Company and cause
the Company's officers, directors and employees to supply all
information reasonably requested by, and to reasonably cooperate with,
any such representative, attorney or accountant in connection with
such registration, and otherwise to cooperate fully in connection with
any due diligence investigation, including making reasonably available
its officers during ordinary business hours, and permitting
discussions with the independent public accountants who have certified
the Company's most recent annual financial statements, in each case to
the extent necessary to enable any Holder to conduct a "reasonable
investigation" for purposes of Section 11(a) of the Securities Act;
provided, however, that such representatives, attorneys or accountants
enter into a confidentiality agreement, in customary form and
substance reasonably satisfactory to the Company, prior to the release
or disclosure to them of any such information, records or documents.
(b) Holder Information. The Company may require each selling Holder to
furnish to the Company such information regarding such Holder and the
distribution of Registrable Securities to be sold by such Holder as the Company
may from time to time reasonably request in writing.
(c) Occurrence of Certain Events. Each Holder of Registrable Securities
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Subsection (a)(ii)(4), (5) or (6) above, such
Holder will forthwith refrain from disposing or discontinue disposition of
Registrable Securities pursuant to the then current Prospectus (but, in the case
of an event described in Subsection (a)(ii)(5), only in the affected
jurisdiction(s)) until such Holder is advised in writing by the Company that the
use of the Prospectus may be resumed. The Company shall use its best efforts to
limit the duration of any discontinuance with respect to the disposition of
Registrable Securities pursuant to this paragraph.
(d) Additional Procedures. If the Holders become entitled, pursuant to
an event described in clause (viii) of the definition of Registrable Securities,
to receive any
53
<PAGE>
securities in respect of Registrable Securities that were already included
in the Shelf Registration Statement subsequent to the date the Shelf
Registration Statement is declared effective, and the Company is unable under
the securities laws to add such securities to the Shelf Registration Statement,
the Company, as promptly as reasonably practicable, shall file, in accordance
with the procedures more particularly set forth in this Section, an additional
Shelf Registration Statement with respect to any such Registrable Securities.
The Company shall use its reasonable best efforts to have any such additional
Registration Statement declared effective as promptly as reasonably practicable
after such filing and to keep such additional Shelf Registration Statement
continuously effective during the period specified in Section 2.
5. Holdback Agreements.
(a) Hold-Back Election. Subject to subsection (c) and the final
sentence of this Subsection (a), in the case of any Underwritten Offering by the
Company, whether for its own account or for the account of a holder of
securities of the Company pursuant to registration rights granted by the
Company, each Holder agrees, if and to the extent requested in writing by the
managing underwriter or underwriters administering such offering as promptly as
reasonably practicable prior to the commencement of the 10-day period referred
to below (a "Hold-Back Election"), not to effect any public sale or distribution
of securities of the Company except as part of such Underwritten Offering,
during the period beginning ten (10) days prior to the closing date of such
underwritten offering and during the period ending on the earlier of (i) sixty
(60) days after such closing date and (ii) the date such sale or distribution is
permitted by such managing underwriter or underwriters, provided that, if and to
the extent it is reasonable to do so, the Company will request of the managing
underwriter or underwriters to permit such sale or distribution prior to the
date permitted under clause (i) above.
(b) Material Development Election. Subject to Subsection (c), the
Company shall be entitled, for a period of time not to exceed forty-five (45)
consecutive days, to require that the Holders refrain from effecting any
distribution of their Registrable Securities pursuant to the Shelf Registration
Statement if the chief executive officer of the Company determines in his
reasonable good faith judgment that, in accordance with his understanding of the
disclosure requirements of applicable securities law, such distribution would
require disclosure of any financing (other than an underwritten secondary
offering of any securities of the Company), acquisition, disposition, corporate
reorganization or other transaction or development involving the Company or any
subsidiary of the Company that is or would be material to the Company and that,
in the reasonable good faith business judgment of such chief executive officer,
such disclosure would not at that time be in the best interests of the Company
(a "Material Development Election"). The Company shall, as promptly as
practicable, give the Holders written notice of any such Material Development
Election. If the Holders have been required to refrain from disposing of their
Registrable Securities as a result of a Material Development Election, the
Company shall, as promptly as practicable following the determination that the
Holders may recommence such sales, notify such Holders in writing of such
determination (but in any event no later than the end of such 45-day period).
54
<PAGE>
(c) Limitation. In no event shall the restrictions under Subsection (a)
or Subsection (b), pursuant to one or more Hold-Back Elections or Material
Development Elections, remain in effect for more than ninety (90) days in the
aggregate in any calendar year.
6. Registration Expenses
The Company shall pay all Registration Expenses in connection with the
registration, offering and sale of the Registrable Securities pursuant to this
Agreement. The Holders shall pay any underwriting discounts, commissions or
fees, fees and expenses of their counsel and all other expenses incurred by them
which are attributable to the offering and sale of any Registrable Securities in
accordance with this Agreement.
7. Rule 144
The Company shall use its reasonable best efforts to make publicly
available, pursuant to Rule 144, such information as is necessary to enable the
Holders to make sales of Registrable Securities pursuant to that Rule. The
Company shall use its reasonable best efforts to file timely with the SEC all
documents and reports required of the Company under the Exchange Act. The
Company shall furnish to any Holder, upon request, a written statement executed
on behalf of the Company as to compliance with the current public information
requirements of Rule 144.
8. Indemnification.
(a) Indemnification by The Company. The Company agrees to indemnify, to
the extent permitted by law (or if indemnification is held by a court of
competent jurisdiction to be unavailable, to contribute to the amount paid or
payable by), each Holder and (as applicable) its officers and directors and each
person or entity who controls such Holder (within the meaning of the Securities
Act) and each person or entity which participates as or may be deemed to be an
underwriter in the offering or sale of such securities against all losses,
claims, damages, liabilities and expenses to which the Holders may be subject
under the Securities Act or any other statute or common law, insofar as such
losses, claims, damages, liabilities and expenses arise out of or are based upon
(i) any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (in the case of a prospectus, always in light of the
circumstances under which the statements are made) or (iii) any violation by the
Company of the Securities Act or any state securities law, "blue sky" law, or
any other law, applicable to the Company in connection with such registration,
qualification, or compliance; provided, however, that the Company will not be
liable to any holder in such case to the extent that any such loss, claim,
damage, liability or
55
<PAGE>
expense arises out of or is based upon (a) any untrue statement or omission made
in such Registration Statement or amendment or supplement thereto in reliance
upon and in conformity with the written information furnished to the Company by
such Holder expressly for use in the registration statement or (b) any untrue
statement or alleged untrue statement of a material fact contained in, or any
omission or alleged omission of a material fact from, a Registration Statement
if (x) such Registration Statement had been later amended or supplemented in a
manner that would correct the untrue statement or alleged untrue statement,
omission or alleged omission, which is the basis of the loss, liability, claim,
damage or expense for which indemnification is sought, (y) a copy of such
amendment or supplement had been timely provided to the Holder and had not been
sent to or given to a purchaser at or prior to confirmation of sale to such
purchaser and the Holder shall have been under an obligation to deliver such
amendment or supplement, and (z) there would have been no such liability but for
such failure to deliver such prospectus by the Holder. The Company will also
indemnify underwriters participating in the distribution, their officers,
directors, employees, partners and agents, and each Person who controls such
underwriters (within the meaning of the Securities Act), to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities, if so requested.
(b) Indemnification by the Holders. Each Holder agrees to indemnify, to
the extent permitted by law (or if indemnification is held by a court of
competent jurisdiction to be unavailable, to contribute to the amount paid or
payable by), the Company, its directors and officers and each person or entity
who controls the Company (within the meaning of the Securities Act) and each
person or entity which participates as or may be deemed to be an underwriter in
the offering or sale of such securities against any losses, claims, damages,
liabilities and expenses resulting from (i) any untrue or alleged untrue
statement of material fact contained in the Registration Statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or (ii)
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, (in the case
of a prospectus, always in light of the circumstances under which the statements
are made) or (iii) any violation by the Company of the Securities Act or any
state securities law, "blue sky" law, or any other law, applicable to the
Company in connection with such registration, qualification, or compliance, but
only to the extent that such loss, claim, damage, liability or expense arises
out of or is based upon any untrue statement or omission made in such
registration statement or amendment or supplement thereto or any document in
reliance upon and in conformity with the written information furnished to the
Company by such Holder expressly for use in the registration statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification;
provided, however, that failure to give such notice will not prejudice such
person's or entity's right to indemnification from the indemnifying party,
except as to any losses suffered by such Person which are attributable to such
Person's failure to promptly give such notice to such indemnifying party and
(ii) (A) have
56
<PAGE>
the right to assume the defense of any claim with respect to which it seeks
indemnification and with respect to which it has given the notice required by
clause (i) of this Subsection if (x) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to
the indemnified party in a timely manner or (y) in the reasonable judgment of
such Person, based upon advise of its counsel, a conflict of interest may exist
between such person and the indemnifying party with respect to such claims (in
which case, if such Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person) or (B) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. The indemnifying party will not be subject to any liability
for any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim (as well as
one local counsel in each relevant jurisdiction), unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim. The indemnifying party will not consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the indemnified party of a release from
all liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in
this Section is unavailable to an indemnified party or insufficient to hold it
harmless as contemplated by this Section, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the indemnified party
in connection with the statements or omissions that resulted in such loss,
claim, damage or liability, as well as any other relevant equitable
considerations, provided, however, that no indemnifying Holder shall be required
to contribute an amount greater than the dollar amount of the net proceeds
received by such indemnifying Holder with respect to the sale of the Registrable
Securities giving rise to such indemnification obligation. The relative fault of
any indemnifying or indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by such indemnifying or indemnified party or its affiliates or
representatives, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Subsection were determined by (i) pro rata allocation (even if
all Holders or any agents for the Holders or any underwriters of the Registrable
Securities, or all of them, were treated as one entity for such purpose), or
(ii) by any other method that does not take into account the equitable
consideration referred to in this Subsection. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or
57
<PAGE>
proceedings in respect thereof) referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or claim.
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 misrepresentations.
(e) The indemnification and contribution provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling person or entity of such indemnified party and will survive the
transfer of securities and the termination of this Agreement.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into and
will not on or after the date of this Agreement enter into any agreement which
is inconsistent with the rights granted in this Agreement to the Holders or
which otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, without the consent in writing of the Company and all affected Holders.
(c) Notices. All notices, requests, demands, deliveries and other
communications (collectively, "Notices") that are required or may be given under
this Agreement shall be in writing. All Notices shall be deemed to have been
duly given or made: if by hand, immediately upon delivery; if by telecopier or
similar device, immediately upon sending, provided notice is sent on a business
day during the hours of 9:00 a.m. and 6:00 p.m. at the location of the party
receiving the Notice, but if not, then immediately upon the beginning of the
first business day after being sent; if by Federal Express, United States Postal
Service, Express Mail or any other reputable overnight delivery service, on the
scheduled delivery date thereof; and if mailed by certified mail, return receipt
requested, ten Business Days after mailing. Notwithstanding the foregoing, with
respect to any Notice given or made by telecopier or similar device, such Notice
shall not be effective unless and until (i) the telecopier or similar device
being used prints a written confirmation of the successful completion of such
communication by the party sending the Notice, and (ii) a copy of such Notice is
deposited in first class mail to the appropriate address for the party to whom
the Notice is sent. In addition, notwithstanding the foregoing, a Notice of a
change of address by a party hereto shall not be effective until received by the
party to whom such Notice of a change of address is sent. All notices are to be
given or made to the parties at the following addresses (or to such other
address as either party may designate by Notice in accordance with the
provisions of this Section):
58
<PAGE>
i. if to any of the Holders, to its address set forth on
Schedule 1 hereto or on the Secured Lender Execution Pages attached:
ii. If to Toy Biz, to
Toy Biz, Inc.
685 Third Avenue
New York, New York 10017
Attention: Secretary
Facsimile No.: 212-682-5272
Confirm: 212-558-5100
with a copy to
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Lawrence Mittman, Esq.
Facsimile No.: 212-856-7807
Confirm: 212-856-7000
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
(g) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(h) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective
59
<PAGE>
successors and assigns of the parties hereto whether so expressed or not. In
addition, whether or not any express assignment has been made, the provisions of
this Agreement which are for the benefit of Holders are also for the benefit of,
and enforceable by, any subsequent holder of Registrable Securities.
(i) Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically or to recover
damages or to exercise any other remedy available to it at law or in equity. The
foregoing rights and remedies shall be cumulative and the exercise of any right
or remedy provided herein shall not preclude any Person from exercising any
other right or remedy provided herein. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(j) Jurisdiction; Forum. Each party hereto consents and submits to the
non-exclusive jurisdiction of any state court sitting in the County of New York
or federal court sitting in the Southern District of the State of New York in
connection with any dispute arising out of or relating to this Agreement. Each
party hereto waives any objection to the laying of venue in such courts and any
claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of or
relating to this Agreement may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified copy of such
judgment being conclusive evidence of the fact and amount of such judgment. Each
party hereto agrees that personal service of process may be effected by any of
the means specified in Subsection (c), addressed to such party. The foregoing
shall not limit the rights of any party to serve process in any other manner
permitted by law.
(k) Whippoorwill Obligations Several and Not Joint. With respect to any
obligations hereunder assumed by any Whippoorwill Account, such obligations
shall be several and not joint and shall be limited to the percentage held by
such Whippoorwill Account of the total Registrable Shares held by all such
Whippoorwill Accounts, and no such Whippoorwill Account shall be liable for any
obligation of any other Whippoorwill Account.
60
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TOY BIZ, INC.
By:
----------------------------------------
Name: Joseph Ahearn
Title: President and Chief Executive Officer
DICKSTEIN & CO., L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
----------------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN FOCUS FUND L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
----------------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN INTERNATIONAL LIMITED
By: Dickstein Partners Inc.
By:
----------------------------------------
Name: Alan S. Cooper
Title: Vice President
61
<PAGE>
ELYSSA DICKSTEIN, JEFFREY SCHWARZ
AND ALAN COOPER AS TRUSTEES
U/T/A/D 12/27/88, MARK DICKSTEIN,
GRANTOR
By:
-----------------------------------------
Alan S. Cooper
Trustee
MARK DICKSTEIN AND ELYSSA
DICKSTEIN, AS TRUSTEES OF THE
MARK AND ELYSSA DICKSTEIN
FOUNDATION
By:
-----------------------------------------
Mark Dickstein
Trustee
-----------------------------------------
Elyssa Dickstein
OBJECT TRADING CORP.
By:
-----------------------------------------
Name: Isaac Perlmutter
Title: President
WHIPPOORWILL/MARVEL OBLIGATIONS TRUST - 1997
By; Whippoorwill Associates, Inc.,
solely in its capacity as
investment advisor for the
Whippoorwill/Marvel Obligations
Trust - 1997, and not in its
individual capacity
By:
-------------------------------------
Name: Shelley Greenhaus
Title: Managing Director
62
<PAGE>
WHIPPOORWILL ASSOCIATES, INCORPORATED, as
agent for and/or general partner for the
accounts listed on Schedule 1 hereto
By:
---------------------------------------
Name: Shelley Greenhaus
Title: Managing Director
63
<PAGE>
Schedule 1
----------
Name and Address
- ----------------
Dickstein Parties:
DICKSTEIN & CO., L.P.
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
DICKSTEIN FOCUS FUND L.P.
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
DICKSTEIN INTERNATIONAL
LIMITED
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
ELYSSA DICKSTEIN, JEFFREY
SCHWARZ AND ALAN COOPER AS
TRUSTEES U/T/A/D 12/27/88,
MARK DICKSTEIN, GRANTOR
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
MARK DICKSTEIN AND ELYSSA
DICKSTEIN, AS TRUSTEES OF THE
MARK AND ELYSSA DICKSTEIN FOUNDATION
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
Elyssa Dickstein
c/o Dickstein Partners, Inc.
64
<PAGE>
Name and Address
- ----------------
660 Madison Avenue
New York, New York 10021
OBJECT TRADING CORP.
P. O. Box 1028
Lake Worth, Florida
WHIPPOORWILL/MARVEL OBLIGATIONS TRUST - 1997
c/o Whippoorwill Associates, Incorporated
11 Martine Avenue
White Plains, NY 10606
WHIPPOORWILL ASSOCIATES, INCORPORATED, as agent for or
general partner of each account or partnership listed on
the Addendum to Schedule 1
11 Martine Avenue
White Plains, NY 10606
65
<PAGE>
Addendum to Schedule 1
----------------------
Fund/Account
- ------------
President and Fellows of Harvard College
The Rockefeller Foundation
Vega Partners II, L.P. Vega Partners III, L.P.
Vega Partners IV, L.P.
Vega Offshore Fund Trust
Whippoorwill Profit Sharing Plan
Saranac Partners, L.P.
25307 Partners
Vega Partners, L.P.
66
<PAGE>
SECURED LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to
be bound by the Registration Rights Agreement, dated October 1, 1998, by and
among Object Trading Corp., Toy Biz, Inc., certain affiliates of Dickstein
Partners, Inc., Whippoorwill Marvel Obligations Trust - 1997 and certain
purchasers of Preferred Stock who have executed subscription election forms with
the Chase Manhattan Bank.
NAME OF SECURED LENDER
By:
-------------------------------------
Name:
---------------------
Title:
---------------------
Address for Notices:
-------------------------------
-------------------------------
-------------------------------
Telecopy No.
------------------
67
