SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) November 24, 1997
Toy Biz, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-13638 13-3711775
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
685 Third Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
(212) 682-4700
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, If Changed Since Last Report.)
657424.1
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ITEM 5. Other Events.
On November 19, 1997, the Registrant issued a press release, a
copy of which is attached hereto as Exhibit 99.1, announcing that it, along with
holders of more than two-thirds of the senior secured debt of Marvel
Entertainment Group, Inc. ("Marvel"), other than debt controlled by Marvel
insiders, had filed a joint plan of reorganization in Marvel's bankruptcy case
providing for the combination of the Registrant and Marvel. A copy of the
operative documents which include (a) the Joint Plan of Reorganization filed
with the United States Bankruptcy Court for the District of Delaware on November
21, 1997 by the Registrant and the secured lenders of Marvel, with attached
exhibits (the "Plan of Reorganization"), (b) an Amended and Restated Master
Agreement, dated November 19, 1997, by and among (i) the Registrant, (ii) the
secured creditors of Marvel and certain of its direct and indirect subsidiaries
(the "Consenting Lenders") and (iii) the Panini Lenders (as defined in the Plan
of Reorganization), with attached exhibits, (c) an Amended and Restated Proxy
and Stock Option Agreement, dated as of November 19, 1997, by and among Isaac
Perlmutter, Isaac Perlmutter T.A., Zib Inc. and the Consenting Lenders, (d) an
Amended and Restated Proxy and Stock Option Agreement, dated as of November 19,
1997, by and between Avi Arad and the Consenting Lenders, (e) a commitment
letter relating to the purchase of 8% Cumulative Convertible Preferred Stock,
dated as of November 19, 1997, among the Registrant, Dickstein Partners Inc. and
Zib, Inc. (the "Commitment Letter") and (f) an agreement, dated as of November
19, 1997, among Dickstein Partners, Inc., Isaac Perlmutter, Avi Arad and Joseph
M. Ahearn relating to the Commitment Letter are attached hereto as Exhibit 2.1,
Exhibit 2.2, Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4,
respectively.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
2.1. Amended and Restated Master Agreement, dated as of November 19,
1997, by and among Registrant, Consenting Lenders and the Panini
Lenders.
2.2 Joint Plan of Reorganization filed with the United States
Bankruptcy Court for the District of Delaware on November 21, 1997
by the secured lenders of Marvel and the Registrant.
10.1. Amended and Restated Proxy and Stock Option Agreement, dated as
of November 19, 1997, by and among Isaac Perlmutter, Isaac Perlmutter
T.A., Zib Inc. and the Consenting Lenders.
10.2. Amended and Restated Proxy and Stock Option Agreement, dated as
of November 19, 1997, by and between Avi Arad and the Consenting
Lenders.
10.3 Commitment Letter, dated as of November 19, 1997, by and between the
Registrant, Dickstein Partners Inc., and Zib Inc.
10.4 Agreement, dated as of November 19, 1997, by and among Dickstein
Partners, Inc., Isaac Perlmutter, Avi Arad and Joseph M. Ahearn.
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99.1. Press release of the Registrant, dated November 21, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TOY BIZ, INC.
(Registrant)
Date: November 24, 1997
By /s/ Joseph M. Ahearn
---------------------------------------
Name: Joseph M. Ahearn
Title: President and Chief Executive Officer
MASTER AGREEMENT
This Amended and Restated Master Agreement, dated as of
November 19, 1997 (this "Agreement"), amends and restates the Master Agreement
dated as of October 7, 1997 (the "Original Agreement"), by and among (i) Toy
Biz, Inc., a Delaware corporation ("Toy Biz"), (ii) the secured creditors of
Marvel Entertainment Group, Inc., a Delaware corporation ("Entertainment"), and
certain of its direct and indirect subsidiaries who become parties to this
Agreement by executing and delivering a separate Consenting Lender Execution
Page in the form attached as Exhibit 1 to this Agreement (the "Consenting
Lenders") and (iii) the Panini Lenders (as defined in the Plan of
Reorganization) who become parties to this Agreement by executing and delivering
a separate Consenting Panini Lender Execution Page in the form attached as
Exhibit 2 to this Agreement (the "Consenting Panini Lenders").
PRELIMINARY STATEMENT
A. Entertainment, together with eight of its wholly owned
subsidiaries (collectively with Entertainment, the "Debtors"), are chapter 11
debtors and debtors in possession in cases pending under chapter 11 of title 11
of the United States Code (11 U.S.C. ss.ss. 101 et seq.) (the "Bankruptcy
Code"), having commenced voluntary cases (Nos. 96-2066 through 96-2077 (HSB))
(the "Reorganization Cases") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court").
B. Entertainment, certain affiliates of Entertainment, and The
Chase Manhattan Bank ("Chase") as administrative agent for the holders of Senior
Secured Claims (as defined in the Plan of Reorganization referred to below) are
parties to the Existing Credit Agreements (as such term is defined in the Plan
of Reorganization) pursuant to which the Debtors are indebted to the holders of
Senior Secured Claims.
C. Entertainment (i) owns approximately 26.7% of the Class A
Common Stock of Toy Biz, (ii) licenses certain intellectual property to Toy Biz,
and (iii) has entered into certain agreements with Toy Biz.
D. The Consenting Lenders and Toy Biz intend to jointly
propose a chapter 11 plan of reorganization (substantially in the form attached
hereto as Exhibit 3 (the "Plan of Reorganization"), as creditors and parties in
interest in the Reorganization Cases pending in the Bankruptcy Court. The
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Plan of Reorganization will provide, among other things, that pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), Toy Biz and Entertainment
will combine (the "Merger") to form Newco ("Newco"), and each holder of Class A
Shares (as hereinafter defined) will receive a certain amount of shares of Newco
Common Stock (as hereinafter defined), other than Marvel, and (ii) Newco's
certificate of incorporation and by-laws will be amended and restated as
provided in the Plan of Reorganization.
E. At the same time as the execution and delivery of the
Original Agreement by Toy Biz, Isaac Perlmutter, Isaac Perlmutter T.A., and Zib
Inc. (the "Perlmutter Stockholders") and Avi Arad executed and delivered into
escrow a stockholders agreement (the "New Stockholders Agreement") having
substantially the same terms as the Stockholders' Agreement, dated as of March
2, 1995, by and among Toy Biz, the Perlmutter Stockholders, Avi Arad and
Entertainment, and each of Isaac Perlmutter and Avi Arad executed and delivered
into escrow voting trust agreements having substantially the same terms as the
Voting Trust Agreements, dated as of March 2, 1995, by and among Entertainment
and each of Isaac Perlmutter and Avi Arad (the "New Voting Trust Agreements").
F. At the same time as the execution and delivery of this
Agreement by Toy Biz, the Perlmutter Stockholders and Avi Arad have executed and
delivered Amended and Restated Proxy and Stock Option Agreements (the "Proxy and
Stock Option Agreements") which amend and restate the Proxy and Stock Option
Agreements dated as of October 7, 1997, by and between the Perlmutter
Stockholders and Avi Arad, respectively, and the Consenting Lenders (as defined
in the Proxy and Stock Option Agreements), pursuant to which the Perlmutter
Stockholders and Avi Arad have, among other things, granted to the Designated
Consenting Lender a proxy to vote their Class A Shares in favor of the
transactions contemplated by this Agreement.
G. The parties hereto desire that the parties take the actions
set forth in this Agreement, subject to the terms and conditions contained
herein, so that (i) the Plan of Reorganization is confirmed by the Bankruptcy
Court (or such other court as may from time to time exercise jurisdiction over
the Debtors' Bankruptcy cases) in accordance with the Bankruptcy Code, (ii) the
Merger is consummated as provided in the Plan of Reorganization and the Merger
Agreement, and (iii) certain other related transactions are consummated as set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises and covenants set forth herein, and on the terms and subject to
the conditions set forth herein, the parties hereto agree as follows:
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ARTICLE 1
DEFINITIONS
For the purpose of this Agreement, capitalized terms which are
used herein and not otherwise defined shall have the meanings given such terms
in the Plan of Reorganization and the following terms shall have the meanings
specified in this Article 1.
"Adverse Order" shall mean an order of any court preventing
Toy Biz from complying with this Agreement or consummating the Plan of
Reorganization based wholly or in part on any contention that the board of
directors of Toy Biz which approved this Agreement was not the duly authorized
board of directors of Toy Biz at such time.
"Agreement" shall have the meaning set forth in the
preamble.
"Antitrust Division" shall have the meaning set forth
in Section 2.7.
"Bankruptcy Code" shall have the meaning set forth in
the Preliminary Statement.
"Bankruptcy Court" shall have the meaning set forth in
the Preliminary Statement.
"Change in Control" shall mean a determination of any court
that the board of directors of Toy Biz which approved the Master Agreement was
not at such time the duly authorized board of directors of Toy Biz.
"Chase" shall have the meaning set forth in the
Preliminary Statement.
"Class A Shares" means shares of Class A common stock, par
value $.01 per share, of Toy Biz.
"Class B Shares" means shares of Class B common stock, par
value $.01 per share, of Toy Biz.
"Consenting Lenders" shall have the meaning set forth
in the preamble.
"Consenting Lenders Threshold" means holders of Senior Secured
Claims holding at least two-thirds in principal amount and a majority in number
of the Senior Secured Claims, excluding Excluded Claims. For purposes hereof, if
a secured creditor is a Consenting Lender, all of the Senior Secured Claims in
which it has a beneficial interest, to the extent of its beneficial
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interest therein, shall be included for purposes of the computations in this
definition.
"Consenting Lenders Threshold Date" means the date this
Agreement has been executed and delivered by holders of Senior Secured Claims
who constitute the Consenting Lenders Threshold.
"Consenting Panini Lenders" shall have the meaning set
forth in the preamble.
"Contingent Senior Secured Claims" shall have the meaning set
forth in the Plan of Reorganization.
"Converted Class B Shares" means the Class A Shares issued
upon conversion of the Class B Shares as a result of a change in control of
Entertainment pursuant to the Toy Biz Stockholders Agreement, dated as of March
2, 1995.
"Debtors" shall have the meaning set forth in the
Preliminary Statement.
"Designated Consenting Lender" shall have the meaning set
forth in the Proxy and Stock Option Agreements.
"DIP Claim" shall have the meaning set forth in the
Plan of Reorganization.
"DIP Credit Agreement" shall have the meaning set forth
in the Plan of Reorganization.
"Disclosure Schedule" means the disclosure schedule separately
delivered by Toy Biz to the Consenting Lenders with the Original Agreement.
"Disclosure Statement" shall have the meaning set forth
in Section 2.2.
"DGCL" means the General Corporation Law of the State
of Delaware.
"Effective Time" shall have the meaning set forth in
the Merger Agreement.
"Employee Option" have the meaning set forth in Section
2.12.
"Entertainment" shall have the meaning set forth in the
preamble.
"Excluded Claims" means Senior Secured Claims which are
held or controlled, directly or indirectly, by Carl Icahn, High
River Limited Partnership, Elliott Associates, L.P., Westgate
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International, L.P. or any affiliates of any of the foregoing or in which any of
the foregoing have any interest, including any participation interest, solely to
the extent of such interest.
"Form S-4" shall have the meaning set forth in Section
2.3.
"FTC" shall have the meaning set forth in Section 2.7.
"Governmental Entity" means any court, arbitral tribunal,
administrative agency or commission, or other governmental or regulatory
authority or agency.
"HSR Act" shall have the meaning set forth in Section
2.7.
"Information Statement/Prospectus" shall have the
meaning set forth in Section 2.3.
"Merger" shall have the meaning set forth in the
Preliminary Statement.
"Merger Agreement" shall have the meaning set forth in
the Preliminary Statement.
"Newco" shall have the meaning set forth in the
Preliminary Statement.
"Newco Common Stock" shall mean Common Stock as defined in the
Plan of Reorganization.
"New Investment" shall mean the $90 million investment in
Newco to be made in exchange for the issuance by Newco of Convertible Preferred
Stock or New Convertible Notes (as defined in the Plan of Reorganization).
"New Stockholders Agreements" shall have the meaning
set forth in the Preliminary Statement.
"New Voting Trust Agreements" shall have the meaning set forth
in the Preliminary Statement.
"Perlmutter Stockholders" shall have the meaning set
forth in the Preliminary Statement.
"Plan of Reorganization" shall have the meaning set
forth in the Preliminary Statement.
"Preferred Shares" means Preferred Stock, par value $.01 per
share of Toy Biz.
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"Proxy and Stock Option Agreements" shall have the meaning set
forth in the Preliminary Statement.
"Qualifying Transaction" shall have the meaning set
forth in the Plan of Reorganization.
"Reorganization Cases" shall have the meaning set forth
in the Preliminary Statement.
"Requisite Amount of the Consenting Lenders" means Consenting
Lenders holding at least two-thirds in principal amount of the Fixed Senior
Secured Claims held by all of the Consenting Lenders, as shown on the Consenting
Lender Execution Pages signed by the Consenting Lenders.
"Requisite Amount of the Consenting Panini Lenders" means
Panini Lenders holding at least two-thirds in principal amount of the Contingent
Senior Secured Claims held by all of the Panini Lenders, as shown on the Panini
Lenders Execution Pages signed by the Consenting Panini Lenders.
"SEC" means the Securities and Exchange Commission.
"Senior Secured Claims" shall have the meaning set
forth in the Plan of Reorganization.
"Stock Option Plan" shall have the meaning set forth in
Section 2.12.
"Subsidiary" means all of the corporations or other entities
of which Toy Biz owns a majority of the issued and outstanding capital stock or
similar interests.
"Toy Biz" shall have the meaning set forth in the
preamble.
"Toy Biz Shares" shall mean the Class A Shares and
Preferred Shares.
"Voting Debt" shall have the meaning set forth in
Section 3.2.
ARTICLE 2
COVENANTS
2.1 Interim Operations of Toy Biz. Toy Biz covenants and
agrees that, except (x) as expressly contemplated by this Agreement, the Plan of
Reorganization or the Merger Agreement or as disclosed on Schedule 2.1 in the
Disclosure Schedule or (y) as agreed in writing by a Requisite Amount of the
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Consenting Lenders after the date hereof and prior to the Effective Time, the
business of Toy Biz and its Subsidiary shall be conducted only in the ordinary
and usual course, in substantially the same manner as heretofore conducted, and,
in particular, Toy Biz will not, directly or indirectly, (i) issue, sell,
transfer, pledge or otherwise encumber, or agree (including pursuant to options
or warrants) to issue, sell, transfer, pledge or otherwise encumber, any of the
Toy Biz Shares (other than Class A Shares reserved for issuance on the date
hereof pursuant to the exercise of Employee Options outstanding on the date
hereof and upon the conversion of shares of Toy Biz' outstanding Series A
Preferred Stock) or capital stock of its Subsidiary beneficially owned by it;
(ii) amend its certificate of incorporation, by-laws or other comparable
organizational documents; (iii) split, combine or reclassify the outstanding Toy
Biz Shares; (iv) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock; (v)
redeem, purchase or otherwise acquire directly or indirectly any shares of
capital stock of Toy Biz or its Subsidiary; (vi) acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, any business or any corporation, partnership, joint venture or other
business organization; (vii) subject to any lien, mortgage, security interest,
pledge or other encumbrance or sell, lease or otherwise dispose of a material
portion of its assets other than in the ordinary course of business and any such
actions in connection with the refinancing of Toy Biz's current revolving credit
agreement; (viii) incur any indebtedness for borrowed money or guarantee any
such indebtedness, other than borrowings and guarantees incurred in the ordinary
course of business and except for refinancings of Toy Biz's current revolving
credit agreement; or (ix) enter into any transactions or agreements with any
directors or officers of Toy Biz or Isaac Perlmutter or Avi Arad or any
affiliates of any of the foregoing, other than consistent with past practice.
2.2 Consents and Approvals. Upon the terms and subject to the
conditions of this Agreement, Toy Biz and the Consenting Lenders, acting
collectively, agree to use their reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Plan of
Reorganization as promptly as practicable including, but not limited to: (i) the
preparation and filing of all forms, registrations, notices and pleadings
required to be filed to consummate the transactions contemplated by this
Agreement and the taking of such actions as are necessary to obtain any
requisite approvals, consents, order, exemptions or waivers by any third party
or Governmental Entity, including, but not limited to the Bankruptcy Court; (ii)
the defending of any lawsuits or other legal proceedings, whether judicial or
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administrative, challenging this Agreement or the consummation of the
transactions contemplated by this Agreement including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed; (iii) the filing of the Plan of Reorganization, together
with a disclosure statement (the "Disclosure Statement") with respect thereto,
as required by section 1125 of the Bankruptcy Code, no later than ten business
days after the Consenting Lender Threshold Date; and (iv) causing the
satisfaction of all conditions to the Merger as provided in the Merger
Agreement. In connection with and without limiting the foregoing, Toy Biz and
its board of directors shall (i) take all action it has the power to take
necessary so that no state takeover statute or similar statute or regulation is
or becomes applicable to the Merger, the Merger Agreement, this Agreement or any
other transaction contemplated by this Agreement and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Merger, the
Merger Agreement, this Agreement or any other transaction contemplated by this
Agreement, take all action it has the power to take necessary so that the Merger
and the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Merger and
the other transactions contemplated by this Agreement.
2.3 Information Statement/Prospectus, Form S-4, etc.
(a) To the extent required by applicable law,
Toy Biz shall use its best efforts to prepare and file with the SEC no later
than thirty (30) days after the Consenting Lender Threshold Date, a combined
information statement and prospectus on Form S-4 (the "Form S-4") with respect
to the Toy Biz stockholder action to approve the Merger and the registration of
the shares of Newco Common Stock to be issued in the Merger and shall use its
best efforts to have the Form S-4 declared effective by the SEC as promptly as
practicable. Toy Biz shall also take any action reasonably required to be taken
under state blue sky or other securities laws in connection with the issuance of
shares of Newco Common Stock in the Merger.
(b) Toy Biz shall promptly prepare and
thereafter promptly distribute to its stockholders, the combined information
statement and prospectus which is included in the Form S-4 to be filed pursuant
to Section 2.3(a) hereof (the "Information Statement/Prospectus"), which
Information Statement/Prospectus shall comply in all material respects with the
rules and regulations of the SEC. The Information Statement/Prospectus shall be
mailed to stockholders of Toy Biz in accordance with Rule 14c-2 under the
Securities Exchange Act of 1934, as amended, at least 20 calendar days in
advance of the Effective Time.
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(c) Toy Biz shall notify the Consenting Lenders
and the Consenting Panini Lenders of the receipt of any comments from the SEC
and of any requests by the SEC for amendments or supplements to the Form S-4 or
the Information Statement/Prospectus or for additional information, and shall
promptly supply Chase with copies of all correspondence between Toy Biz (or
their representatives) and the SEC (or its staff) with respect thereto.
2.4 Stock Exchange Listing. Toy Biz shall use its best efforts
to cause the shares of Newco Common Stock to be issued in the Merger and the
Plan of Reorganization and the Convertible Preferred Stock to be issued pursuant
to the Plan of Reorganization to be approved for listing on the New York Stock
Exchange, subject to official notice of issuance, prior to the Effective Time.
2.5 Publicity. After the initial press release with respect to
the execution of this Agreement, so long as this Agreement is in effect, neither
Toy Biz, the Consenting Lenders, the Consenting Panini Lenders, nor any of their
respective affiliates shall issue or cause the publication of any press release
or other announcement with respect to the Merger, this Agreement, the Plan of
Reorganization or the other transactions contemplated hereby without the
exercise of reasonable efforts to consult with the Consenting Lenders, the
Consenting Panini Lenders and Toy Biz, except as may be required by law or by
any listing agreement with a national securities exchange or trading market.
2.6 Notification of Certain Matters.
(a) Toy Biz shall give prompt notice to the
Consenting Lenders and the Consenting Panini Lenders of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would
cause any representation or warranty of Toy Biz contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time and (ii) any material failure of Toy Biz to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by such party
hereunder; provided, however, that the failure to deliver any notice pursuant to
this Section 2.6 shall not limit or otherwise affect the remedies available
hereunder to the non-defaulting or non-breaching party.
(b) Each of the Consenting Lenders and each of
the Consenting Panini Lenders shall give prompt notice to Toy Biz of (i) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would cause any representation or warranty of such Consenting Lender or
such Consenting Panini Lender contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the
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Effective Time and (ii) any material failure of such Consenting Lender or such
Consenting Panini Lender, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by such party hereunder; provided
however, that the failure to deliver any notice pursuant to this Section 2.6
shall not limit or otherwise affect the remedies available hereunder to the
non-defaulting or non-breaching party.
2.7 HSR Act. Toy Biz shall, as soon as practicable, file a
Notification and Report Forms under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended ("HSR Act") with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") with respect to the Merger and shall use its best efforts to respond
as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division, including any request for additional information or
documentary material.
2.8 Required Actions. Each of the parties hereto hereby agrees
to use its reasonable best efforts to take, or cause to be done, all things
necessary, proper or advisable under applicable laws or regulations to:
(a) obtain approval of the Disclosure Statement
in accordance with section 1125 of the
Bankruptcy Code as soon as reasonably
practicable, including, without limitation,
requesting that on or before January 5,
1998, the Bankruptcy Court or such other
court as may from time to time exercise
jurisdiction over the Debtors' Bankruptcy
Cases schedule a hearing on or before
February 15, 1998 to consider the adequacy
of the Disclosure Statement;
(b) obtain entry of the Confirmation Order as
soon as reasonably practicable;
(c) cause the Consummation Date of the Plan of
Reorganization to occur as soon as soon as
reasonably practicable; and
(d) obtain from the Bankruptcy Court or such
other court as may from time to time
exercise jurisdiction over the Debtors'
Bankruptcy Cases such other relief as may be
necessary or appropriate in connection with
this Agreement, the Plan of Reorganization
and the consummation of the transactions
contemplated hereby and thereby.
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In addition, the parties to this Agreement shall consult with one
another concerning additional motions and/or pleadings that may be made in
connection with any of the foregoing or otherwise in connection with the Plan of
Reorganization.
2.9 Prohibited Actions. Each of the parties hereto
hereby agrees not to:
(a) object to the Disclosure Statement;
(b) object to entry of the Confirmation Order;
(c) take any action to hinder, delay, preclude
or interfere with the entry of an order
approving the Disclosure Statement, the
entry of the Confirmation Order or the
occurrence of the Consummation Date;
(d) with respect to the Consenting Lenders,
foreclose against any collateral without the
consent of Toy Biz which consent will not be
unreasonably withheld, unless a Requisite
Amount of the Consenting Lenders shall have
first confirmed in writing to Toy Biz that
they will thereafter use reasonable best
efforts to effect transactions substantially
similar to those contemplated by this
Agreement or, in the case of an asset of
immaterial value, provide an appropriate
cash credit, provided, however, that under
no circumstance may the Consenting Lenders
foreclose against the Common Stock of Fleer
Corp.;
(e) with respect to the Consenting Panini
Lenders, each Consenting Panini Lender
agrees that it shall not exercise any of its
remedies under the Existing Panini Credit
Agreements, to collect any of the Panini
Obligations or to realize on any of the
collateral security or guarantee obligations
held with respect to any of the Panini
Obligations against any subsidiary of any of
the Debtors that is not the subject of a
case under Title 11 of the United States
Code, except to the extent reasonably
necessary to protect their rights under the
Existing Panini Credit Agreements if (x)
Panini becomes the subject of a bankruptcy,
insolvency, liquidation or similar
proceeding and/or (y) creditors of Panini,
other than Panini Lenders, holding claims
against Panini
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aggregating greater than $1,000,000 exercise
their rights and remedies against Panini
under their applicable credit documents or
under applicable law; provided, however,
notwithstanding the foregoing, the
Consenting Panini Lenders shall be entitled
to seek adequate protection and object to
continued use of cash collateral.
(f) with respect to the Consenting Lenders and
the Consenting Panini Lenders, file a motion
to dismiss or convert one or more of the
Reorganization Cases without the consent of
Toy Biz which consent will not be
unreasonably withheld, unless a Requisite
Amount of the Consenting Lenders and a
Requisite Amount of the Consenting Panini
Lenders shall have first confirmed in
writing to Toy Biz that they will thereafter
effect transactions substantially similar to
those contemplated by this Agreement;
(g) with respect to Toy Biz, file a motion to
dismiss or convert one or more of the
Reorganization Cases without the consent of
the Requisite Amount of the Consenting
Lenders which consent will not be
unreasonably withheld, unless Toy Biz shall
have first confirmed in writing to the
Consenting Lenders and the Panini Lenders
that it will thereafter effect transactions
substantially similar to those contemplated
by this Agreement;
(h) with respect to the Consenting Lenders,
transfer, sell or assign, or agree to
transfer, sell or assign their respective
Senior Secured Claims unless the transferee
of such Senior Secured Claims agrees in a
writing reasonably acceptable to Toy Biz to
be bound by the terms and conditions of this
Agreement;
(i) with respect to the Consenting Panini
Lenders, transfer, sell or assign, or agree
to transfer, sell or assign their respective
Senior Secured Claims unless the transferee
of such Senior Secured Claims agrees in
writing reasonably acceptable to Toy Biz to
be bound by the terms and conditions of this
Agreement; or
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(j) support any other plan of reorganization,
arrangement or other settlement in any way
inconsistent with the Plan of
Reorganization.
2.10 Merger. Upon satisfaction of the conditions set forth in
Section 5.3, Toy Biz shall, in accordance with the Plan of Reorganization, (i)
execute and deliver the Merger Agreement and any other documents or instruments
required to be executed and delivered by it pursuant to the Merger Agreement,
and (ii) take any and all other action required under the Plan of Reorganization
and the Merger Agreement to effect the Merger.
2.11 Financing. On or before the Confirmation Date, Toy Biz
shall provide the Consenting Lenders and the Consenting Panini Lenders with
written evidence of firm commitments, subject to customary exceptions, for the
Term Loan Facility, the Working Capital Facility and the New Investment. On or
before the Consummation Date, Toy Biz shall obtain the Term Loan Facility, the
Working Capital Facility and the New Investment; it being understood and agreed
that such financing obligation of Toy Biz is absolute and unconditional.
2.12 Company Stock Options.
(a) Toy Biz's board of directors, or, if
appropriate, any committee administering Toy Biz's 1995 Stock Option Plan (the
"Stock Option Plan") shall, prior to the Effective Time, terminate, or adopt
such resolutions or take such actions as may be required to adjust, the terms of
all then outstanding employee stock options to purchase Toy Biz Shares granted
under the Stock Option Plan (each, an "Employee Option") and the terms of the
Stock Option Plan to provide that at the Effective Time, each Employee Option
outstanding immediately prior to the Effective Time will be deemed to constitute
an option to acquire, on the same terms and conditions as under such Employee
Option, the number of shares of Newco Common Stock as the holder of such
Employee Option would have been entitled to receive pursuant to the Merger
Agreement had such holder exercised such Employee Option in full immediately
prior to the Effective Time, at the price provided for in the Merger Agreement
and any such shares issuable under such Employee Options shall dilute only the
shares to be issued to holders of Toy Biz Shares in the Merger. Any such
Employee Options which are not terminated will dilute only the Newco Common
Stock to be issued to holders of Class A Shares in the Merger.
(b) Toy Biz shall not grant any stock options or
stock appreciation rights under the Stock Option Plan and will not accelerate
the exercisability of Employee Options and/or permit cash payments to holders of
Employee Options with respect to such options.
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<PAGE>
2.13 Qualifying Transactions. Toy Biz shall use its reasonable
best efforts, without being required to incur any material expense, to cooperate
with efforts by the Secured Lenders or the Debtors to consummate a Qualifying
Transaction and, in connection therewith, shall cooperate with financial
advisors, accountants and other advisors to the Consenting Lenders and provide
financial information and projections and other information, subject to
customary confidentiality agreements, to such advisors and potential parties to
a Qualifying Transaction.
2.14 Restructuring of Panini Loan Documents. The
Consenting Panini Lenders shall restructure the Panini Obligations (as such term
is defined in the Plan of Reorganization) in accordance with the Plan of
Reorganization.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF TOY BIZ
Toy Biz hereby represents and warrants to each Consenting
Lender and each Consenting Panini Lender as follows:
3.1 Organization. Each of Toy Biz and its Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation.
3.2 Capitalization.
(a) The authorized capital stock of Toy Biz
consists of 100,000,000 Class A Shares, 20,000,000 Class B Shares and 25,000,000
shares of Preferred Stock. As of the date of this Agreement, (i) 27,746,127
Class A Shares are issued and outstanding and no Class A Shares are held in the
treasury of Toy Biz, (ii) no Class B Shares are issued and outstanding or held
in the treasury of Toy Biz, (iii) no shares of Preferred Stock are issued and
outstanding, and (iv) 704,386 Class A Shares are reserved for issuance upon
exercise of outstanding Employee Options. All the outstanding shares of Toy
Biz's capital stock are, and all Class A Shares which may be issued pursuant to
the exercise of outstanding Employee Options will be, when issued in accordance
with the respective terms thereof, duly authorized, validly issued, fully paid
and non-assessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of Toy Biz or its Subsidiary issued and outstanding. Except as
set forth above, as of the date hereof, (i) there are no shares of capital stock
of Toy Biz authorized, issued or outstanding, and (ii) there are no existing
options,
639892.14
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warrants, calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of Toy Biz or its Subsidiary, obligating Toy Biz or its Subsidiary
to issue, transfer or sell or cause to be issued, transferred or sold any shares
of capital stock or Voting Debt of Toy Biz or its Subsidiary or securities
convertible into or exchangeable for such shares or equity interests, or
obligating Toy Biz or its Subsidiary to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement, arrangement or
commitment.
(b) Except as disclosed in Schedule 3.2(b) of
the Disclosure Schedule, all of the outstanding shares of capital stock of Toy
Biz's Subsidiary are owned of record and beneficially by Toy Biz, directly or
indirectly. All such shares have been validly issued and are fully paid and
non-assessable and are owned by Toy Biz free and clear of all liens, charges,
claims or encumbrances.
(c) Neither Toy Biz nor its Subsidiary is
required to redeem, repurchase or otherwise acquire shares of capital stock of
Toy Biz, or its Subsidiary, respectively, as a result of the transactions
contemplated by this Agreement.
3.3 Authorization; Validity of Agreement; Corporate Action.
Toy Biz has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by Toy Biz of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by the board of directors of Toy Biz and no other corporate action on
the part of Toy Biz is necessary to authorize the execution and delivery by Toy
Biz of this Agreement and, except for the approval of the stockholders of Toy
Biz, the consummation by it of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Toy Biz and constitutes a
valid and binding obligation of Toy Biz enforceable against Toy Biz in
accordance with its terms except that the enforcement thereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). Except as disclosed in Schedule 3.3 of the
Disclosure Schedule, the execution delivery and performance of this Agreement by
Toy Biz do not breach, violate, conflict with or constitute a default under any
material agreement to which Toy Biz is a party.
The Consenting Lenders and the Consenting Panini Lenders
acknowledge that Toy Biz is engaged in litigation with Entertainment concerning
the status of Toy Biz's class B common
639892.14
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<PAGE>
stock and its stockholders' agreement (the "Stockholder Agreement Litigation").
The representations in this Article 3 are qualified by the Stockholder Agreement
Litigation.
3.4 Information. Toy Biz has adequate information concerning
the business and financial condition of the Debtors, the Reorganization Cases
and the transactions contemplated by this Agreement and the Plan of
Reorganization to make an informed decision with respect to this transactions
contemplated by this Agreement and the Plan of Reorganization. Toy Biz has
independently and without reliance upon any of the Consenting Lenders or any of
the Consenting Panini Lenders (except for the representations, warranties, and
covenants and agreements contained herein) and based on such information as Toy
Biz has deemed appropriate in its independent judgment, made its own analysis
and decision to enter into this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE
CONSENTING LENDERS AND THE CONSENTING PANINI LENDERS
Each of the Consenting Lenders and each of the Consenting
Panini Lenders hereby represents and warrants with respect to itself to Toy Biz
as follows:
4.1 Organization. It is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation.
4.2 Authorization; Validity of Agreement; Corporate Action. It
has all requisite corporate or similar power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
the execution, delivery and performance by such party of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary action by such party and no further action on the
part of such part is necessary to authorize the execution and delivery by such
party of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by such
party, and assuming due and valid authorization, execution and delivery hereof
of the other parties hereto, is a valid and binding obligation of such party
enforceable against such party in accordance with its terms except that the
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditor's rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).
639892.14
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4.3 Ownership of Claims. Each Consenting Lender and each
Consenting Panini Lender owns or beneficially owns, respectively, the
outstanding principal amount of Senior Secured Claims set forth on its
Consenting Lender Execution Page or Consenting Panini Lender Execution Page and,
with respect to each such claim, such party has the legal right to exercise all
voting rights relating thereto (collectively, "Controlled Claims"); and such
party represents that to the extent that it has previously pledged,
hypothecated, transferred, participated or otherwise encumbered any interests in
such Senior Secured Claim, the other party to any such conveyance has agreed to
be bound hereby.
4.4 Information. Each Consenting Lender and each Consenting
Panini Lender has adequate information concerning the business and financial
condition of Toy Biz, the Debtors, the Reorganization Cases and the transactions
contemplated by this Agreement and the Plan of Reorganization to make an
informed decision with respect to the transactions contemplated by this
Agreement and the Plan of Reorganization. Each Consenting Lender and each
Consenting Panini Lender has independently and without reliance upon Toy Biz,
and its officers, directors and representatives whatsoever (except for the
representations, warranties, and covenants and agreements contained herein) and
based on such information as such party has deemed appropriate in its
independent judgment, made its own analysis and decision to enter into this
Agreement.
ARTICLE 5
CONDITIONS
5.1 Conditions to Each Party's Obligations to Continue to
Perform Its Respective Obligations in Accordance with Article 2. The obligations
of each party to perform its respective obligations under Article 2 (other than
Section 2.10) during the term of this Agreement shall be subject to there being
no order or injunction of a Governmental Entity of competent jurisdiction in
effect precluding, restraining, enjoining or prohibiting the transactions
contemplated in this Agreement and in the Plan of Reorganization during the term
hereof, which condition may be waived in whole or in part by Toy Biz or a
Requisite Amount of the Consenting Lenders as the case may be, to the extent
permitted by applicable law.
5.2 Conditions to Consenting Lenders' Obligations to Perform
Their Respective Obligations in Accordance with Article 2. The obligations of
the Consenting Lenders and the Consenting Panini Lenders to perform their
respective obligations under Article 2 during the term of this Agreement shall
be subject to the satisfaction of each of the following conditions
639892.14
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during the term hereof, any and all of which may be waived in whole or part by a
Requisite Amount of the Consenting Lenders to the extent permitted by applicable
law.
(a) Representations and Warranties of Toy Biz.
The representations and warranties of Toy Biz shall be true and correct in all
material respects during the term hereof (except for those representations and
warranties that address matters only as of a particular date which need only be
true and correct in all material respects as of such date).
(b) Covenants of Toy Biz. Toy Biz shall have
performed in all material respects its obligations required to be performed
during the term of this Agreement.
(c) No Stockholder Breach Event. No Stockholder
Breach Event, as defined in the Proxy and Stock Option Agreements, shall have
occurred and be continuing.
(d) Opinion of Counsel. No later than 5:00 p.m.,
New York Time, on November 24, 1997, Battle Fowler LLP, counsel to Toy Biz shall
have delivered to Wachtell, Lipton, Rosen & Katz, its opinion in the form
attached hereto as Exhibit 5.2(d).
(e) Stockholders Agreement. Toy Biz, Avi Arad
and the Perlmutter Stockholders shall have entered into a stockholders agreement
pursuant to which Avi Arad and the Perlmutter Stockholders agree to vote their
shares of Newco Common Stock in favor of the election to the Newco board of
directors of five nominees designated by the Consenting Lenders and certain of
their transferees for as long as the Consenting Lenders and those transferees
hold more than a specified percentage of the outstanding Newco Common Stock.
5.3 Conditions to Toy Biz's Obligation to Execute and Deliver
the Merger Agreement. The obligation of Toy Biz to execute and deliver the
Merger Agreement and to perform its obligation under Section 2.10 shall be
subject to the satisfaction on or prior to the date upon which Toy Biz executes
the Merger Agreement of each of the following conditions, any and all of which
may be waived in whole or in part by Toy Biz, to the extent permitted by
applicable law:
(a) Effectiveness of Form S-4. If required by
applicable law, the Form S-4 shall have become effective and no stop order
suspending the effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(b) HSR Act. Any waiting period (including any
extension thereof) under the HSR Act applicable to the Merger shall have expired
or been terminated.
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(c) Injunctions. There shall be no order or
injunction of a Governmental Entity of competent jurisdiction in effect
precluding, restraining, enjoining or prohibiting consummation of the Merger.
(d) Confirmation Order. The Bankruptcy Court (or
such other court as may from time to time exercise jurisdiction over the
Debtors' Bankruptcy Cases) shall have entered the Confirmation Order and its
effectiveness and enforceability shall not be subject to any stay or injunction
and all conditions to the consummation of the Plan of Reorganization shall have
been satisfied or duly waived in accordance with the Plan of Reorganization.
ARTICLE 6
CONVERSION OF MARVEL-OWNED SHARES
6.1 Conversion of Marvel-Owned Shares. If this Agreement is
terminated by the Consenting Lenders under Section 7.1(d) or the Merger
Agreement is terminated in accordance with Section 6.1(d) thereof, a Requisite
Amount of the Consenting Lenders shall have the right to direct Toy Biz to, and
Toy Biz shall thereupon be obligated to, convert the Converted Class B Shares
into an equal number of duly authorized, fully paid and nonassessable Class B
Shares. Following that conversion, the holders of the Converted Class B Shares
shall thereafter be deemed to be the holders of such new Class B Shares and the
certificates evidencing those Converted Class B Shares shall be deemed to
evidence those new Class B Shares. As a condition precedent to that conversion,
the New Stockholders Agreement and New Voting Trust Agreements will be released
from escrow and the holders of such new Class B Shares will be required to
complete, execute and deliver to each of the parties thereto the New
Stockholders Agreement and the New Voting Trust Agreements and Toy Biz will
deposit one of the Class B Shares into each of the voting trusts established
under the New Voting Trust Agreements as contemplated by the New Voting Trust
Agreements.
ARTICLE 7
TERMINATION AND WITHDRAWAL
7.1 Termination. This Agreement shall terminate upon the
consummation of the Merger at the Effective Time unless terminated sooner in
accordance with this Section 7.1. This Agreement may be terminated and the
Merger contemplated herein may be abandoned at any time prior to the Effective
Time:
639892.14
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(a) by mutual written agreement of each of the
Consenting Lenders and Toy Biz;
(b) by Toy Biz if the Consummation Date has not
occurred on or before September 21, 1998, provided that the failure of the
Consummation Date to occur on or before such date is not the result of the
breach of any representation or warranty or the failure to perform any covenant
or agreement or satisfy any condition under this Agreement or the Merger
Agreement by Toy Biz, it being understood and agreed that the Consummation Date
will be deemed to have occurred if the parties effect a substantially similar
transaction as contemplated by Sections 2.9 (d) hereof on terms no less
favorable to Toy Biz's shareholders (other than the Debtors) than those
contemplated by this Master Agreement on or before September 21, 1998;
(c) by any Consenting Lenders or Toy Biz upon
written notice given to the other if there shall be any law or regulation of any
competent authority that makes consummation of the Merger illegal or otherwise
prohibited, or if any Governmental Entity of competent jurisdiction shall have
issued a final non-appealable order, judgment, injunction or order enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, other
than an Adverse Order or a Change in Control;
(d) by a Requisite Amount of the Consenting
Lenders if Toy Biz breaches or fails in any material respect to perform or
comply with any of its covenants and agreements contained herein or breaches its
representations and warranties in any material respect and such breach has not
been cured to the reasonable satisfaction of the Consenting Lenders within 10
days of the notice by a Requisite Amount of the Consenting Lenders of such
breach;
(e) by a Requisite Amount of the Consenting
Lenders if there is a Stockholder Breach Event (as defined in the
Proxy and Stock Option Agreements);
(f) by Toy Biz or any Consenting Lender if the
Consenting Lender Threshold Date has not occurred by 5:00 p.m., New York Time on
November 21, 1997;
(g) by Toy Biz after the Consenting Lender
Threshold Date if one or more Consenting Lenders breach their respective
representations, warranties or covenants contained herein in any material
respect, such breaches have not been cured to Toy Biz's reasonable satisfaction
within 10 days' receipt by such Consenting Lender of notice by Toy Biz and, as a
result of such breach, the amount of Senior Secured Claims held by, or number
of, non-breaching Consenting Lenders falls below the Consenting Lender
Threshold; and/or
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(h) by Toy Biz or any Consenting Lender after the
Consenting Lender Threshold Date, if as a result of breaches by one or more
Consenting Lenders contemplated by Section 7.1(f) and/or withdrawals by
Consenting Lenders pursuant to Section 7.2 and 8.2, the amount of Senior Secured
Claims held by, or number of, non-breaching Consenting Lenders and
non-withdrawing Consenting Lenders falls below the Consenting Lenders Threshold.
7.2 Withdrawal. A Consenting Lender shall have the right to
withdraw from this Agreement during the following periods. Upon withdrawal from
this Agreement by a Consenting Lender the withdrawing Consenting Lender shall
thereupon cease to have any rights or obligations under this Agreement, and
shall no longer be deemed to be a Consenting Lender. A Consenting Lender may
withdraw:
(a) at any time prior to 5:00 p.m., New York
Time, January 15, 1998, if a court of competent jurisdiction has not by January
5, 1998 established a date on or prior to February 15, 1998 to consider the
adequacy of the Disclosure Statement provided that failure to establish such a
date is not the result of the breach of any representation or warranty or the
failure to perform any covenant or agreement or satisfy any condition under this
Agreement or the Merger Agreement by any of the Consenting Lenders or any of the
Consenting Panini Lenders;
(b) at any time prior to 5:00 p.m., New York
Time, February 25, 1998, if the Disclosure Statement relating to the Plan of
Reorganization has not been approved by the Bankruptcy Court (or such other
court as may from time to time exercise jurisdiction over the Debtors'
Bankruptcy Cases) by February 15, 1998 provided that failure to approve the
Disclosure Statement by such date is not the result of the breach of any
representation or warranty or the failure to perform any covenant or agreement
or satisfy any condition under this Agreement or the Merger Agreement by any of
the Consenting Lenders or any of the Consenting Panini Lenders;
(c) at any time prior to 5:00 p.m., New York
Time, April 10, 1998, if the Confirmation Date has not occurred on or before
April 1, 1998, provided that failure of the Confirmation Date to occur on or
before such date is not the result of the breach of any representation or
warranty or the failure to perform any covenant or agreement or satisfy any
condition under this Agreement or the Merger Agreement by any of the Consenting
Lenders or any of the Consenting Panini Lenders;
(d) at any time prior to 5:00 p.m., New York
Time, May 25, 1998, if the Consummation Date has not occurred on or before May
15, 1998, provided that the failure of the Consummation Date to occur on or
before such date is not the result of the breach of any representation or
warranty or the
639892.14
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failure to perform any covenant or agreement or satisfy any condition under this
Agreement or the Merger Agreement by any of the Consenting Lenders or any of the
Consenting Panini Lenders;
(e) at any time during the sixty (60) day period
following the entry of an Adverse Order.
(f) at any time during the thirty (30) day period
following a Change in Control.
ARTICLE 8
MISCELLANEOUS
8.1 Fees and Expenses. Except as contemplated by this
Agreement and the Plan of Reorganization, all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
8.2 Amendment, Modification, Waiver and Other Action.
Subject to applicable law, this Agreement may be amended,
modified and supplemented in any and all respects, and any provision hereof may
be waived, by written agreement of Toy Biz and a Requisite Amount of the
Consenting Lenders, provided that any Consenting Lender who does not agree to
any such amendment, modification, supplement or waiver shall have the right to
withdraw from this Agreement within ten days after such amendment, modification,
supplement or waiver becomes effective, and in addition, provided that no such
amendment, modification supplement or waiver shall affect the amount of the
Newco Guaranty, the collateral securing the Newco Guaranty or any of the terms
of the Restructured Panini Obligations without the written agreement of a
Requisite Amount of the Consenting Panini Lenders.
8.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be sufficient if in writing and delivered
personally, telecopied (which is confirmed) or sent by an overnight courier
service, such as Federal Express, and shall be deemed given when so delivered
personally, telecopied or if mailed or sent by overnight courier service, on the
scheduled delivery date, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
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if to the Consenting Lenders, to:
To the address of that Consenting Lender set
forth adjacent to the signature of that
Consenting Lender on the signature pages to
this Agreement
with a copy to:
Chaim J. Fortgang
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telephone No.: (212) 403-1000
Telecopy No.: (212) 403-2000
and
if to the Consenting Panini Lenders, to:
To the address of that Consenting Panini
Lender set forth adjacent to the signature
of that Consenting Panini Lender on the
signature pages to this Agreement
with a copy to:
Chaim J. Fortgang
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telephone No.: (212) 403-1000
Telecopy No.: (212) 403-2000
and
if to Toy Biz, to:
Toy Biz, Inc.
333 East 38th Street
New York, New York 10016
Attention: General Counsel
Telephone No.: (212) 682-4700
Telecopy No.: (212) 682-3516
639892.14
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<PAGE>
with a copy to:
Lawrence Mittman
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Telephone No.: (212) 856-7177
Telecopy No.: (212) 856-7807
8.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act.
8.6 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties. Delivery of an executed
signature page of this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
8.7 Entire Agreement, No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
8.8 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a Governmental Entity of competent
jurisdiction to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the general corporation law of the State of
Delaware with respect to matters covered therein and otherwise in accordance
with the laws of the State of New York, in each case without giving effect to
the principles of conflicts of law thereof.
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8.10 Enforcement; Damages. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at law or in equity; provided,
however, in no event shall Toy Biz be liable for any damages as a result of a
breach or failure by Toy Biz to perform or comply with any of its covenants or
agreements contained in this Agreement which (i)(x) occurs after there has been
a Change in Control and (y) is caused by the action or inaction of the new board
of directors or new management of Toy Biz or (ii) occurs as a result of an
Adverse Order.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
TOY BIZ, INC.
By:/s/Joseph M. Ahearn
Name: Joseph M. Ahearn
Title: President
26
<PAGE>
EXHIBIT 1
CONSENTING LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the (a) Amended and Restated Master Agreement (the "Master Agreement"), dated
as of November 19, 1997, by and among (i) Toy Biz, Inc., (ii) certain secured
creditors of Marvel Entertainment Group, Inc. and certain of its direct and
indirect subsidiaries (the "Marvel Debtors"), and (iii) the Panini Lenders (as
defined in the Plan of Reorganization referred to in the Master Agreement), (b)
Amended and Restated Proxy and Stock Option Agreement, dated as of November 19,
1997, by and among Isaac Perlmutter, Isaac Perlmutter, T.A. and Zib, Inc. and
certain secured creditors of the Marvel Debtors, and (c) Amended and Restated
Proxy and Stock Option Agreement, dated as of November 19, 1997, by and among
Avi Arad and certain secured creditors of the Marvel Debtors. This Consenting
Lender Execution Page shall be deemed to be a signature page to each of the
agreements listed above and the undersigned shall be deemed to have signed each
as a "Consenting Lender."
Name of Consenting Lender:
-----------------------------
By:__________________________
Name:
Title:
Address for Notices:
-----------------------------
-----------------------------
-----------------------------
Telephone No.:_______________
Telecopy No.:________________
Principal amount of Fixed
Senior Secured Claims owned
or beneficially owned and
which is consenting as set
forth above:$_________.
<PAGE>
EXHIBIT 2
CONSENTING PANINI LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the Amended and Restated Master Agreement (the "Master Agreement"), dated as
of November 19, 1997, by and among (i) Toy Biz, Inc., (ii) certain secured
creditors of Marvel Entertainment Group, Inc. and certain of its direct and
indirect subsidiaries, and (iii) the Panini Lenders (as defined in the Plan of
Reorganization referred to in the Master Agreement).
Name of Consenting Panini Lender:
-----------------------------
By:__________________________
Name:
Title:
Address for Notices:
-----------------------------
-----------------------------
Telephone No.:_______________
Telecopy No.:________________
Principal amount of claims under
the Existing Panini Junior Credit
Agreements owned or beneficially
owned and which is consenting as
set forth above: It. Lire_____________.
Principal amount of claims under
the Existing Panini Senior Credit
Agreements owned or beneficially
owned and which is consenting as
set forth above: It. Lire_____________.
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- -----------------------------------x
:
In re :
: Chapter 11 Case Nos.
Marvel Entertainment Group, Inc. : 96-2069-RRM through
et al., : 96-2077-RRM
:
Debtors.: (Jointly Administered)
:
- -----------------------------------x
JOINT PLAN OF REORGANIZATION PROPOSED BY
THE SECURED LENDERS AND TOY BIZ, INC.
WACHTELL, LIPTON, ROSEN & KATZ BATTLE FOWLER LLP
Attorneys for The Secured Attorneys for Toy Biz, Inc.
Lenders 75 East 55th Street
51 West 52nd Street New York, New York 10022
New York, New York 10019 (212) 856-7000
(212) 403-1000
-and- -and-
RICHARDS, LAYTON & FINGER, P.A. PEPPER, HAMILTON & SCHEETZ
Attorneys for The Secured Attorneys for Toy Biz, Inc.
Lenders 1202 Market Street
One Rodney Square P.O. Box 1709
Wilmington, Delaware 19899 Wilmington, Delaware 19899
(302) 658-6541 (302) 777-6500
Dated: Wilmington, Delaware
November 19, 1997
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND INTERPRETATION..............................................................1
A. Definitions.................................................................................1
B. Interpretation; Application of Definitions and
Rules of Construction......................................................................14
C. Exhibits and Schedules.....................................................................15
SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION EXPENSE
CLAIMS AND PRIORITY TAX CLAIMS ...........................................................15
2.1 Administration Expense Claims..............................................................15
2.2 Compensation and Reimbursement Claims......................................................16
2.3 Priority Tax Claims........................................................................16
SECTION 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS..............................................16
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY
INTERESTS UNDER THE PLAN...................................................................17
4.1 Priority Non-Tax Claims (Class 1)..........................................................17
4.2 Senior Secured Claims......................................................................17
(a) Allowance of Senior Secured Claims................................................17
(b) Treatment of Allowed Fixed Senior Secured
Claims............................................................................18
(i) No Qualifying................................................................18
(A) Distributions...................................................18
(B) Panini Obligations..............................................19
(ii) Qualifying..................................................................19
(c) Treatment of Allowed Contingent Secured Claims
.................................................................................19
4.3 Other Secured Claims (Class 3).............................................................19
4.4 General Unsecured Claims (Class 4).........................................................19
(a) Distributions.....................................................................19
(b) Intercompany Claims...............................................................20
(c) Insider Claims....................................................................20
4.5 Class Securities Litigation Claims (Class 5)...............................................20
(a) Distributions.....................................................................20
(b) Calculation of Distribution.......................................................20
(c) Parity of and Limitation on Distributions.........................................21
4.6 Equity Interests (Class 6).................................................................21
(a) Entertainment (Subclass 6A).......................................................21
(i) Distributions................................................................21
(ii) Parity of and Limitation on Distributions
21
(b) Subsidiary Equity Interest (Subclass 6B)..........................................21
4.7 Existing Warrants (Class 7)................................................................22
SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS
IMPAIRED AND NOT IMPAIRED UNDER THE PLAN;
ACCEPTANCE OR REJECTION OF THE PLAN........................................................22
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5.1 Holders of Claims and Equity Interests Entitled to
Vote.......................................................................................22
5.2 Subtraction and Addition of Classes and
Subclasses.................................................................................23
(a) Subtraction of Classes and Subclasses.............................................23
(b) Addition of Classes and Subclasses................................................23
5.3 Nonconsensual Confirmation.................................................................23
5.4 Severability of Plan of Reorganization.....................................................23
SECTION 6. MEANS OF IMPLEMENTATION....................................................................24
6.1 Closing of Transaction.....................................................................24
6.2 Derivative Securities Litigation Claims....................................................24
6.3 Board of Directors of the Reorganized Debtors..............................................24
6.4 Officers of the Reorganized Debtors........................................................24
6.5 Distribution to New Investors..............................................................25
6.6 Toy Biz Distribution.......................................................................25
(a) No Qualifying Transaction.........................................................25
(b) Qualifying Transaction............................................................25
6.7 Breakup Fee................................................................................25
6.8 Dissolution of Committees..................................................................25
6.9 Transfer of Panini.........................................................................25
6.10 Newco Financing............................................................................25
6.11 Vote of Characters' Toy Biz Stock..........................................................26
6.12 Forgiveness of Panini Obligations..........................................................26
6.13 Panini Indemnity...........................................................................26
6.14 Outstanding Toy Biz Stock Interests........................................................26
SECTION 7. PROVISIONS GOVERNING DISTRIBUTIONS.........................................................26
7.1 Date of Distributions......................................................................26
7.2 Entities to Exercise Function of Disbursing Agent
..........................................................................................27
7.3 Surrender and Cancellation of Instruments..................................................27
7.4 Delivery of Distributions..................................................................27
7.5 Manner of Payment Under Plan of Reorganization.............................................28
7.6 Reserves and Distributions.................................................................28
7.7 Distributions After Consummation Date......................................................28
7.8 Rights And Powers Of Disbursing Agent......................................................28
(a) Powers of the Disbursing Agent....................................................28
(b) Expenses Incurred on or after the
Consummation Date.................................................................29
(c) Exculpation.......................................................................29
SECTION 8. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER THE
PLAN OF REORGANIZATION.....................................................................29
8.1 Objections to Claims.......................................................................29
8.2 No Distributions Pending Allowance.........................................................29
8.3 Distributions After Allowance..............................................................30
SECTION 9. PROVISION GOVERNING EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN............................................................30
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9.1 General Treatment..........................................................................30
9.2 Amendments to Schedule; Effect of Amendments...............................................31
9.3 Bar to Rejection Damage Claims.............................................................31
9.4 Certain Panini Agreements..................................................................31
(a) Panini Sticker Agreement..........................................................31
(b) Panini Comic Distribution Agreement...............................................32
SECTION 10. CONDITIONS PRECEDENT TO CONFIRMATION DATE AND
CONSUMMATION DATE..........................................................................32
10.1 Conditions Precedent to Confirmation of Plan of
Reorganization.............................................................................32
(a) Confirmation Order................................................................32
10.2 Conditions Precedent to Consummation Date of Plan of
Reorganization.............................................................................32
(a) SEC Information Statement.........................................................32
(b) HSR ..................................................................................33
(c) Secured Lender Consummation Date.......................................................33
(d) Toy Biz Consummation Date..............................................................33
10.3 Waiver of Conditions Precedent.............................................................33
SECTION 11. EFFECT OF CONFIRMATION.....................................................................33
11.1 General Authority..........................................................................33
11.2 Discharge of Debtors.......................................................................33
(a) General Discharge.................................................................33
(b) Exculpations......................................................................34
(c) Treatment of Indemnification Claims...............................................34
11.3 Term of Injunctions or Stays...............................................................35
SECTION 12. WAIVER OF CLAIMS...........................................................................35
12.1 Avoidance Actions..........................................................................35
SECTION 13. RETENTION OF JURISDICTION..................................................................35
13.1 Retention of Jurisdiction..................................................................35
13.2 Amendment of Plan of Reorganization........................................................37
SECTION 14. MISCELLANEOUS PROVISIONS...................................................................37
14.1 Payment of Statutory Fees..................................................................37
14.2 Retiree Benefits...........................................................................37
14.3 Compliance with Tax Requirements...........................................................38
14.4 Recognition of Guaranty Rights.............................................................38
14.5 Severability of Plan Provisions............................................................38
14.6 Governing Law..............................................................................38
14.7 Further Assurances.........................................................................39
14.8 Time of the Essence........................................................................39
14.9 Standard of Discretion.....................................................................39
14.10 Counterparts...............................................................................39
14.11 Notices....................................................................................39
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EXHIBITS
1. Bylaws for Newco
2. Charter for Newco
3. Confirmation Order
4. Convertible Preferred Stock
5. Convertible Preferred Stock Purchase Agreement
6. Designated Competitors
7. Excess Administration Claims Note
8. Intercompany Agreement
9. Merger Agreement
10. New Investors
11. Newco Guaranty
12. Panini Indemnity
13. Plan Warrant Agreement
14. Secured Lenders
15. Subscription Agreement
SCHEDULES
6.1. Letter of Credit and related obligations
9.1. Rejection Schedule
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JOINT PLAN OF REORGANIZATION
The Secured Lenders and Toy Biz, Inc., creditors and parties
in interest in these chapter 11 cases, hereby propose this Plan of
Reorganization dated November 19, 1997 for Marvel Entertainment Group, Inc., The
Asher Candy Company, Fleer Corp., Frank H. Fleer Corp., Heroes World
Distribution, Inc., Malibu Comics Entertainment, Inc., Marvel Characters, Inc.,
Marvel Direct Marketing Inc. and SkyBox International Inc.
SECTION 1. DEFINITIONS AND INTERPRETATION
A. Definitions.
The following terms used herein shall have the respective
meanings defined below:
"Administration Expense Claim" means any right to payment
constituting a cost or expense of administration of any of the Reorganization
Cases allowed under Sections 503(b) and 507(a)(1) of the Bankruptcy Code,
including, without limitation, (a) any actual and necessary costs and expenses
of preserving the estates of the Debtors, (b) any actual and necessary costs and
expenses of operating the business of the Debtors, (c) any allowances of
compensation and reimbursement of expenses to the extent allowed by Final Order
under Section 330 or 503 of the Bankruptcy Code, and (d) any fees or charges
assessed against the estates of the Debtors under Section 1930, title 28, United
States Code.
"Administrative Agent" means The Chase Manhattan Bank as
administrative agent under each of the applicable Existing Credit Agreements or
any successor administrative agent appointed in accordance with any of the
applicable Existing Credit Agreements.
"Affiliate" means, with reference to any person or entity, any
other person or entity that, within the meaning of Rule 12b-2 promulgated under
the Securities Exchange Act of 1934, as amended, "controls," is "controlled by"
or is under "common control with" such entity or person
"Allowed" means, with reference to any Claim or Equity
Interest, (a) any and all DIP Claims, (b) any Claim or Equity Interest against
any Debtor which has been listed by such Debtor in its Schedules, as such
Schedules may be amended by the Debtors from time to time in accordance with
Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent and
for which no contrary proof of claim has been filed, (c) any Claim or Equity
Interest allowed by Final Order, (d) any Claim or Equity Interest as to which
the liability of the Debtors and the amount thereof are determined by final
order of a court of competent
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jurisdiction other than the Bankruptcy Court or (e) any Claim allowed expressly
hereunder.
"Ballot" means any form or forms distributed to each holder of
a Claim or Equity Interest entitled to vote on this Plan of Reorganization on
which is to be indicated the acceptance or rejection by such holder of this Plan
of Reorganization.
"Ballot Date" means the date fixed by the Bankruptcy Court as
the date by which all Ballots must be received by the Balloting Agent (as such
term is defined in the Disclosure Statement) from holders of impaired Claims and
Equity Interests other than holders of Equity Interests in Subclass 6B (Fleer
Corp.) of Class 6 Equity Interests in Class 7 (Existing Warrants) to be counted
as acceptances or rejections of this Plan of Reorganization.
"Bankruptcy Code" means title 11, United States Code, as
applicable to the Reorganization Cases as in effect on the Confirmation Date.
"Bankruptcy Court" means the United States District Court for
the District of Delaware having jurisdiction over the Reorganization Cases and,
to the extent of any reference under section 157, title 28, United States Code,
the unit of such District Court under section 151, title 28, United States Code.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure as promulgated by the United States Supreme Court under section 2075,
title 28, United States Code, and any Local Rules of the Bankruptcy Court.
"Breakup Fee" means Cash in the amount of the breakup fee
payable pursuant to the Convertible Preferred Stock Purchase Agreement but in no
event more than eight million dollars ($8,000,000).
"Business Day" means any day other than a Saturday, a Sunday
or any other day on which banking institutions in New York, New York are
required or authorized to close by law or executive order.
"Bylaws" means the bylaws for Newco in substantially
the form of Exhibit 1 hereto.
"Cash" means legal tender of the United States of America and,
with respect to payments under this Plan of Reorganization, cash (U.S. dollars),
certified check, bank check or wire transfer from a domestic bank.
"Causes of Action" means, without limitation, any and all
actions, causes of action, liabilities, obligations, rights,
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suits, debts, sums of money, damages, judgments, claims and demands whatsoever,
whether known or unknown, in law, equity or otherwise.
"Characters" means Marvel Characters, Inc., one of the
Debtors herein.
"Charter" means the Certificate of Incorporation for in
substantially the form of Exhibit 2 hereto.
"Chase" means The Chase Manhattan Bank in its capacity as
agent under the Existing Credit Agreements.
"Claim" means (a) any right to payment from any of the
Debtors, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, or (b) any right to an equitable remedy
for breach of performance if such breach gives rise to a right of payment from
any of the Debtors, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured.
"Class Securities Litigation Claim" means any Claim whether or
not the subject of an existing lawsuit arising from rescission of a purchase or
sale of shares of common stock of Entertainment, for damages arising from the
purchase or sale of any such security, or for reimbursement or contribution
allowed under section 502 of the Bankruptcy Code on account of any such Claim
which Claims shall be subordinated in accordance with section 510(b) of the
Bankruptcy Code.
"Collateral" means any property or interest in property of the
estate of any Debtor subject to a Lien to secure the payment or performance of a
Claim, which Lien is not subject to avoidance under the Bankruptcy Code.
"Confection Business" means any and all of the assets and
properties relating to the confection business operated and owned by Fleer
including, without limitation, all of its rights relating to Dubble Bubble,
Razzles and any other food and candy products produced thereby.
"Confirmation Date" means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on its docket.
"Confirmation Hearing" means the hearing held by the
Bankruptcy Court on confirmation of this Plan of Reorganization, as such hearing
may be adjourned or continued from time to time.
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"Confirmation Order" means the order of the Bankruptcy Court
confirming this Plan of Reorganization in substantially the form of the order
annexed as Exhibit 3 hereto.
"Consummation Date" means the latest to occur of (a) the
thirtieth (30th) day (calculated under Bankruptcy Rule 9006) after the
Confirmation Date if no stay of the Confirmation Order is then in effect, (b)
the first Business Day after any stay of the Confirmation Order expires or
otherwise terminates, and (c) such other date as may be fixed from time to time
after the Confirmation Date by filing a notice thereof by the Proponents with
the Bankruptcy Court; provided, however, that in no event shall the Consummation
Date occur earlier than the date of the satisfaction of each of the conditions
precedent to the occurrence of the Consummation Date of this Plan of
Reorganization in Section 10.2 hereof unless waived as provided in Section 10.3
hereof.
"Contingent Senior Secured Claim" means any Claim against
Entertainment or any of its Debtor subsidiaries governed by or arising out of
the guaranty provisions contained in the Existing Panini Credit Agreements or
evidenced by any of the promissory notes issued thereunder or any letter of
credit issued by a bank or other financial institution which is a party to the
Existing Panini Credit Agreements for the account of Panini or any of its
subsidiaries.
"Convertible Preferred Stock" means the one million, six
hundred ninety thousand (1,690,000) shares of convertible preferred stock in
Newco to be issued pursuant to this Plan of Reorganization which shall (a) be
convertible into seventeen million, five hundred fifty eight thousand, four
hundred forty two (17,558,442) shares of Newco Common Stock, (b) have the terms
set forth in the Charter, and (c) be in substantially the form of Exhibit 4
hereto.
"Convertible Preferred Stock Purchase Agreement" means a
Convertible Preferred Stock Purchase Agreement to be executed on the
Confirmation Date substantially in substantially the form annexed hereto as
Exhibit 5.
"Debtor" means each of Entertainment, The Asher Candy
Company, Fleer Corp., Frank H. Fleer Corp., Heroes World
Distribution, Inc., Malibu Comics Entertainment, Inc., Marvel
Characters, Inc., Marvel Direct Marketing, Inc., and SkyBox
International Inc., each (other than Malibu Comics Entertainment,
Inc.) being a Delaware corporation and Malibu Comics
Entertainment, Inc. being a California corporation, the debtors
in Chapter 11 Case Nos. 96-2069 (HSB) through 96-2077 (HSB),
respectively.
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"Debtor in Possession" means each Debtor in its capacity as a
debtor in possession under sections 1107(a) and 1108 of the Bankruptcy Code.
"Designated Competitor" means those entities listed on
Exhibit 6 hereto.
"Designated Contingent Senior Secured Claims" means on any
date all Contingent Senior Secured Claims other than those beneficially owned or
controlled (directly, indirectly or by participation) by (a) any entity that
serves or has served as a member of Entertainment's board of directors, or (b)
any entity purchasing Convertible Preferred Stock pursuant to the Convertible
Preferred Stock Purchase Agreement, or if applicable, New Convertible Notes,
other than solely by virtue of the exercise of such entity's rights pursuant to
Section 4.2(b)(i)(A)(7) hereof.
"Designated Fixed Senior Secured Claims" means on any date all
Fixed Senior Secured Claims other than those beneficially owned or controlled
(directly, indirectly or by participation) by (a) any entity that serves or has
served as a member of Entertainment's board of directors, or (b) any entity
purchasing Convertible Preferred Stock pursuant to the Convertible Preferred
Stock Purchase Agreement, or if applicable, New Convertible Notes, other than
solely by virtue of the exercise of such entity's rights pursuant to Section
4.2(b)(i)(A)(7) hereof.
"DIP Claim" shall mean any claim arising under the DIP Credit
Agreement.
"DIP Credit Agreement" means that certain Revolving Credit and
Guaranty Agreement dated as of December 27, 1996 among Marvel Entertainment
Group, Inc., the guarantors named therein, the banks party thereto and The Chase
Manhattan Bank as agent as the same may be amended from time to time in
accordance with the terms thereof or the agreements or other documents
evidencing any successor or replacement post-petition financing facility.
"Disbursing Agent" means any entity in its capacity as a
disbursing agent under Section 7.2 hereof.
"Disclosure Statement" means that certain Disclosure
Statement, including, without limitation, all exhibits and schedules thereto, in
the form approved by the Bankruptcy Court relating to this Plan of
Reorganization as the same may be amended from time to time.
"Disputed Claim" means a Claim against a Debtor that is
not an Allowed Claim.
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"Effective Time" shall have the meaning given to such term in
the Merger Agreement.
"Entertainment" means Marvel Entertainment Group, Inc.
"Equity Interest" means any share of common stock or other
instrument evidencing a present ownership interest in any of the Debtors,
whether or not transferable, or any option, warrant or right, contractual or
otherwise, to acquire any such interest. For purposes of Subclass 6A
(Entertainment) of Class 6 (Equity Interests), the Existing Warrants shall not
be included in such subclass.
"Excess Administration Claims Amount" means the amount, if
any, by which the sum of (a) all Allowed Administration Expense Claims,
(exclusive of all DIP Claims through October 7, 1997), and (b) the aggregate
amount of all professional fees, costs and expenses of professionals engaged by
Chase in its capacity as agent or acting on behalf of all of the holders of
Senior Secured Claims including, without limitation, all fees and expenses of
counsel and financial advisors incurred in connection with the Reorganization
Cases, exceeds thirty-five million dollars ($35,000,000).
"Excess Administration Claims Note" means an unsecured note of
Newco and its subsidiaries in substantially the form of Exhibit 7 hereto in an
original principal amount equal to the Excess Administration Claims Amount
bearing interest at the rate of ten percent (10%) per annum which shall, at the
election of Newco, be paid semi-annually or accrue and compound, and shall have
a maturity date of the fifth anniversary of the Consummation Date.
"Exculpated Persons" means (a) the Reorganized Debtors, Newco,
the holders of DIP Claims, the holders of Senior Secured Claims (other than
those beneficially owned or controlled directly, indirectly or by participation
by entities or Affiliates of entities that serve or have served on
Entertainment's board of directors), Chase, Toy Biz, the New Investors,
Affiliates of any of the foregoing, and all officers, directors, employees,
shareholders, limited liability entity members, partners, consultants, advisors,
investment bankers, attorneys, accountants or other representatives or agents of
any of the foregoing acting as such, and (b) the Debtors.
"Existing Credit Agreements" means, collectively, the
Existing Fleer Credit Agreements and the Existing Panini Credit
Agreements.
"Existing Fleer Credit Agreements" means, collectively, (a)
that certain Amended and Restated Credit and Guarantee Agreement dated as of
August 30, 1994, as amended, among
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Entertainment, Fleer Corp., the financial institutions parties thereto, the
co-agents named therein and The Chase Manhattan Bank (formerly named Chemical
Bank) as administrative agent, (b) that certain Credit and Guarantee Agreement
dated as of April 24, 1995, as amended, by and among Entertainment, Fleer Corp.,
the financial institutions party thereto, the co-agents named therein and The
Chase Manhattan Bank (formerly named Chemical Bank) as administrative agent, (c)
that certain Line of Credit, dated as of March 27, 1996, as amended, among Fleer
Corp., the banks and other financial institutions parties thereto and The Chase
Manhattan Bank as Administrative Agent,(d)(i)(A) any letter of credit issued for
the account of Entertainment or any of its subsidiaries by a bank or other
financial institution which is a party to any of the Existing Credit Agreements
referred to in clauses (a) or (b) of this definition of "Existing Fleer Credit
Agreements" and (B) any related letter of credit applications and any agreements
governing or evidencing reimbursement obligations relating to any letters of
credit referred to in clause (d)(i)(A) of this definition of "Existing Fleer
Credit Agreements" or (ii) any interest rate agreement between Entertainment or
any of its subsidiaries and a bank or other financial institution which is a
party to any of the Existing Credit Agreements referred to in clauses (a)
through (c), inclusive, of this of this definition of "Existing Fleer Credit
Agreements", and (e) any guarantees and security documents, including, without
limitation, mortgages, pledge agreements, security agreements and trademark
security agreements, executed and delivered in connection with any of the
foregoing agreements.
"Existing Panini Credit Agreements" means the Existing
Panini Junior Credit Agreements and the Existing Panini Senior
Credit Agreements.
"Existing Panini Junior Credit Agreements" means (a) that
certain Term Loan and Guarantee Agreement dated as of August 30, 1994, as
amended, supplemented or otherwise modified from time to time, among
Entertainment, Panini, S.p.A. (formerly named Marvel Comics Italia S.r.l.), and
Isituto Bancario San Paolo di Torino, S.p.A.; (b) the Panini Participation
Agreements; (c)(i)(A) any letter of credit issued for the account of any of the
Panini Entities by a bank or other financial institution pursuant to any of the
Panini Credit Agreements referred to in clauses (a) or (b) and (B) any related
letter of credit applications and any agreements governing or evidencing
reimbursement obligations relating to any letters of credit referred to in
clause (c)(i)(A) or (ii) any interest rate agreement between any of the Panini
Entities and a bank or other financial institution pursuant to any of the Panini
Credit Agreements referred to in clauses (a) and (b); and (d) any guarantees and
security documents, including, without limitation, mortgages, pledge agreements,
security agreements and trademark security agreements, executed and delivered in
connection with
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any of the foregoing agreements, together in each case with all related
documents, instruments, consents, amendments, modifications and waivers.
"Existing Panini Senior Credit Agreements" means that certain
Italian Lire 27,000,000,000 Term Loan and Guaranty Agreement dated as of August
5, 1997 as amended, supplemented or otherwise modified from time to time, among
Entertainment, Panini, the lenders listed on Schedule 1 thereto as lenders, and
The Chase Manhattan Bank as agent, and the related Panini financing order
entered by the Bankruptcy Court and any guarantees and security documents,
including, without limitation, mortgages, pledge agreements, security agreements
and trademark security agreements, executed and delivered in connection with any
of the foregoing agreements, together in each case with all related documents,
instruments, consents, amendments, modifications and waivers.
"Existing Warrants" means, collectively, all incentive stock
options, non-qualified stock options and stock appreciation rights granted under
that certain Entertainment Amended and Restated Stock Option Plan and any other
options, warrants or rights, contractual or otherwise, if any, to acquire an
Equity Interest.
"Final Order" means an order or judgment of the Bankruptcy
Court entered by the Clerk of the Bankruptcy Court on the docket in the
Reorganization Cases, which has not been reversed, vacated or stayed and as to
which (a) the time to appeal, petition for certiorari or move for a new trial,
reargument or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for a new trial, reargument or rehearing shall
then be pending or (b) if an appeal, writ of certiorari, new trial, reargument
or rehearing thereof has been sought, such order or judgment of the Bankruptcy
Court shall have been affirmed by the highest court to which such order was
appealed, or certiorari shall have been denied or a new trial, reargument or
rehearing shall have been denied or resulted in no modification of such order,
and the time to take any further appeal, petition for certiorari or move for a
new trial, reargument or rehearing shall have expired; provided, that the
possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure,
or any analogous rule under the Bankruptcy Rules, may be filed relating to such
order, shall not cause such order not to be a Final Order.
"Fixed Senior Secured Claim" means any Claim governed by any
of the Existing Fleer Credit Agreements or evidenced by any of the promissory
notes issued thereunder or any letter of credit issued by a bank or other
financial institution which is a party to any of the Existing Fleer Credit
Agreements for the
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account of Entertainment or any of its subsidiaries (other than the Panini
Entities) or any interest rate agreement between Entertainment or any of its
subsidiaries (other than the Panini Entities) and a bank or other financial
institution which is a party to any of the Existing Fleer Credit Agreements.
"Fleer" means Fleer Corp., one of the Debtors.
"General Unsecured Claim" means any Unsecured Claim
other than a Class Securities Litigation Claim.
"Immaterial Debtors" means The Asher Candy Company,
Frank H. Fleer Corp., Heroes World Distribution, Inc. and any
other Debtor which the Proponents, acting reasonably, jointly
determine to have de minimis value.
"Insider Claim" means any Unsecured Claim (other than a Senior
Secured Claim) of an insider (as defined in section 101 of the Bankruptcy Code)
or Affiliate of any Debtor.
"Intercompany Agreement" means those agreements set
forth on Exhibit 8 hereto.
"Intercompany Claim" means any Claim held by any Debtor
against any other Debtor, including, without limitation, all derivative Claims
asserted by or on behalf of any one Debtor against any other Debtor.
"Lien" means any charge against or interest in property or an
interest in property to secure payment of a debt or performance of an
obligation.
"Marvel" means, collectively, Entertainment and each of its
subsidiaries other than the Panini Entities.
"Master Agreement" means that certain Master Agreement by and
among the Proponents dated as of October 7, 1997 as the same may be amended from
time to time.
"Merger Agreement" means that certain Agreement and Plan of
Merger dated as of the Consummation Date in substantially the form annexed as
Exhibit 9 hereto.
"NBA License Agreement" means that certain Retail Product
License Agreement dated July 21, 1995 between Entertainment and NBA Properties,
Inc., as amended, supplemented or otherwise modified from time to time.
"Net Cash Proceeds" means the gross proceeds in Cash realized
from the sale of capital stock of Newco net of Cash payments, if necessary to
cause the occurrence of the
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Consummation Date, in an amount equal to the aggregate of (i) Administration
Expense Claims, including, without limitation, all DIP Claims, (ii) Priority
Non-Tax Claims, (iii) Priority Tax Claims, and (iv) any other Cash payments
necessary to cause the occurrence of the Consummation Date other than the Toy
Biz Cash Distribution and the Required Secured Lender Consideration.
"New Convertible Notes" means unsecured notes to be issued by
Newco in lieu of all of the Convertible Preferred Stock at the request of Toy
Biz, which request shall be made not later than the commencement of the hearing
to consider the adequacy of the Disclosure Statement, having priority and other
rights identical to those attendant to the Convertible Preferred Stock and
otherwise reasonably satisfactory to the Proponents.
"New Investors" means the individuals set forth on Exhibit 10
hereto and the holders of Fixed Senior Secured Claims exercising the right to
purchase Convertible Preferred Stock or, if applicable, New Convertible Notes in
accordance with Section 4.2(b)(i)(A)(7) hereof.
"New Panini Securities" means securities of Newco having a
present value as of the Consummation Date of forty million dollars ($40,000,000)
as confirmed by a fairness opinion (taking into account, inter alia, the
liquidity of the securities) of a nationally recognized investment banking firm
reasonably acceptable to Toy Biz and the Panini Lenders.
"Newco" means, as applicable, (a) the parent entity resulting
from the combination of Marvel and Toy Biz contemplated by the Merger Agreement,
or (b)(i) in the event that such combination is effected through a merger or
other combination of a subsidiary of Entertainment and Toy Biz, Entertainment
after the Effective Time of such merger and (ii) in the event that such
combination is effected through a merger or other combination of a subsidiary of
Toy Biz and Entertainment, Toy Biz after the Effective Time of such merger.
"Newco Common Stock" means the issued and outstanding shares
of common stock of Newco as of the Consummation Date.
"Newco Guaranty" means an absolute and unconditional guaranty
of Newco and its subsidiaries secured by a valid, binding, enforceable and
perfected first priority lien against the Confection Business and the Panini
Stock to be executed and delivered by Newco in substantially the form annexed
hereto as Exhibit 11 pursuant to which Newco and its subsidiaries shall guaranty
the Restructured Panini Obligations; provided, however, that such guaranty
obligation shall be limited to forty million dollars ($40,000,000), eight
million dollars ($8,000,000) of which shall be payable in Cash and thirty two
million dollars ($32,000,000) of which shall be payable, at the election of
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Newco, in the form of either Cash or securities of Newco having a then present
value of thirty two million dollars ($32,000,000) as the latter value may be
confirmed by a fairness opinion (taking into account, inter alia, the liquidity
of the securities) of a nationally recognized investment banking firm reasonably
acceptable to Newco and the Panini Lenders.
"Other Secured Claims" means any Secured Claim not
constituting a Senior Secured Claim.
"Panini" means Panini S.p.A.
"Panini Comic Distribution Agreement" means that certain
agreement to manufacture, reprint, publish and sell Marvel Comics dated December
1995 between Panini and
Entertainment.
"Panini Entities" means Panini and its subsidiaries.
"Panini Indemnified Liabilities" means any and all claims,
liabilities, obligations, losses, damages, distributions, recoveries, penalties,
actions, judgments, suits, costs, expenses (including reasonable fees and
expenses of counsel and other professionals) and disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted against
any Panini Entity in any way relating to, or arising out of, directly or
indirectly, any contracts or other agreements to which any of the Debtors are
party, including, without limitation, the NBA License Agreement, provided,
however that (i) obligations to repay the Panini Lenders pursuant to the Panini
Credit Agreements shall not constitute Panini Indemnified Liabilities and (ii)
the Debtors shall not be responsible for making any royalty payments owed to or
for the benefit of the National Basketball Association under the NBA License
Agreement solely in respect of sticker sales or card sales made by the Panini
Entities from and after the Consummation Date; provided that Newco shall control
the prosecution, settlement or resolution of such Panini Indemnified Liabilities
and provided further that the Panini Entities shall not assert any claims
against Newco in respect of Panini Indemnified Liabilities that are asserted
outside of any applicable statute of limitations period.
"Panini Indemnity" means an indemnity substantially in the
form of Exhibit 12 hereto pursuant to which Newco will indemnify and hold
harmless Panini from and against any and all claims, liabilities, obligations,
losses, damages, distributions, recoveries, penalties, actions, judgments,
suits, costs, expenses (including reasonable fees and expenses of counsel and
other professionals) and disbursements of any kind whatsoever which may at any
time be imposed on, incurred by or asserted against any Panini Entity in any way
relating to, or arising out of directly or indirectly, any contracts or other
agreements to which any of
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the Debtors are party, including, without limitation, the NBA License Agreement,
provided, however that (i) obligations to repay the Panini Lenders pursuant to
the Existing Credit Agreements shall not constitute Panini Indemnified
Liabilities and (ii)Newco shall not be responsible for making any royalty
payments owed to or for benefit of the National Basketball Association under the
NBA License Agreement solely in respect of sticker sales or card sales made by
Panini from and after the Consummation Date.
"Panini Lenders" means each of the holders of Panini
Obligations arising under the Existing Panini Credit Agreements including, any
holder of a Panini Obligation through the Panini
Participation Agreements.
"Panini Liquidation Event" means the commencement of any
insolvency proceeding under the laws of the Republic of Italy or other
applicable law which mandates the liquidation of Panini.
"Panini Obligations" means all of the obligations of the
Panini Entities arising under the Existing Panini Credit Agreements including,
without limitation, outstanding principal, accrued and unpaid interest, fees ,
costs, expenses, charges and any other amounts owing under the Existing Panini
Credit Agreements.
"Panini Participation Agreement" means collectively, (i) the
Participation Agreement dated as of August 30, 1994 among Istituto Bancario San
Paolo di Torino, S.p.A., New York Limited Branch, as Italian Lender, The Chase
Manhattan Bank, as Administrative Agent, and the financial institutions
signatory thereto, as participants and (ii) the Participation Agreement dated as
of August 5, 1997 among The Chase Manhattan Bank, as Lender, The Chase Manhattan
Bank, as Administrative Agent, and the financial institutions signatory thereto,
as participants.
"Panini Sticker Agreement" means that certain License
Agreement dated as of November 15, 1996 by and between Characters and Panini.
"Panini Stock" means all of the issued and outstanding
capital stock of Panini.
"Petition Date" means December 27, 1996, the date on which
each of the Debtors filed its voluntary petition for relief under the Bankruptcy
Code.
"Plan of Reorganization" means this Plan of Reorganization
dated as of November 19, 1997, including, without limitation, the exhibits and
schedules hereto, as the same may be amended or modified from time to time in
accordance with the terms hereof.
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"Plan Warrant Agreement" means that certain Warrant Agreement
in substantially the form of Exhibit 13 hereto.
"Plan Warrants" means two (2) year warrants entitling the
holders thereof to acquire in the aggregate two million (2,000,000) shares of
Newco Common Stock based upon an exercise price of fifteen dollars ($15.00) per
share and otherwise upon the terms and conditions contained in the Plan Warrant
Agreement.
"Priority Non-Tax Claim" means any Claim of a kind specified
in section 507(a)(2), (3), (4), (5), (6), (7) or (9) of the Bankruptcy Code.
"Priority Tax Claim" means any Claim of a governmental unit of
the kind specified in section 507(a)(8) of the Bankruptcy Code.
"Proponents" means Toy Biz and the Secured Lenders.
"Qualifying Transaction" means a transaction to be closed on
the Consummation Date to acquire all or a portion of the capital stock of Newco
which transaction generates Net Cash Proceeds equal to or greater than the Toy
Biz Cash Distribution, plus the Required Secured Lender Consideration, is
otherwise consistent with the terms of this Plan of Reorganization and has been
approved as to the Newco Guaranty by Requisite Panini Lender Consent not to be
unreasonably withheld.
"Ratable Proportion" means, with reference to any distribution
on account of any Allowed Claim or Allowed Equity Interest in any class or
subclass, as applicable, a distribution equal in amount to the ratio (expressed
as a percentage) that the amount of such Allowed Claim or Allowed Equity
Interest, as applicable, bears to the aggregate amount of Allowed Claims or
Allowed Equity Interests of the same class or subclass, as applicable.
"Reorganization Cases" means the cases commenced under chapter
11 of the Bankruptcy Code by the Debtors on the Petition Date.
"Reorganized" means, with reference to any Debtor, such Debtor
(unless such Debtor is a Debtor for which this Plan of Reorganization is not
confirmed in accordance with Section 5.4 hereof) or any successor in interest
thereto from and after the Consummation Date, including, without limitation,
Newco.
"Requisite Panini Lender Consent" means the written consent of
holders of Designated Contingent Senior Secured Claims holding a majority in
amount of Designated Contingent Senior Secured Claims.
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"Required Secured Lender Consideration" means four hundred and
thirty five million dollars ($435,000,000) in Cash or such other amount which
has been approved by Requisite Secured Lender Consent.
"Requisite Secured Lender Consent" means the written consent
of holders of Designated Fixed Senior Secured Claims holding at least eighty
five percent (85%) in amount of such Designated Fixed Senior Secured Claims.
"Restructured Panini Obligations" means all of the obligations
under the Restructured Panini Loan Documents.
"Restructured Panini Loan Documents" means loan documents (i)
extending the maturity of the Panini Obligations until thirty-six (36) months
after the earlier of (a) the Consummation Date or (b) March 31, 1998; (ii)
providing that interest in respect of the obligations evidenced by the Existing
Panini Senior Credit Agreements shall be paid monthly at the non-default rate
thereof; (iii) providing that interest in respect of the obligations evidenced
by the Existing Panini Junior Credit Agreements may, at the election of Newco,
be paid in Cash or in kind by the issuance of additional notes on a quarterly
basis on the last day of March, June, September and December until December 31,
1998, in either case at the non-default rate thereof; (iv) containing customary
and reasonable defaults for a transaction of this nature, it being understood
and agreed that all defaults which predate the Consummation Date shall be waived
and that there shall be no events of default which are inconsistent with the
transactions contemplated hereby; (v) requiring Panini to commence paying
interest in respect of the obligations evidenced by the Existing Panini Junior
Credit Agreements, at the non-default rate thereof, in Cash by making one
quarterly Cash interest payment as of January 1, 1999 (on the principal amount
thereof including any capitalized amounts) in advance, and thereafter making
quarterly Cash interest payments (on the principal amount thereof including any
capitalized amounts) in arrears on the last day of March, June, September and
December until maturity, it being understood that the first quarterly interest
payment in arrears will be due on June 30, 1999 and that no payment will be due
on March 31, 1999; (vi) fixing the non-default rate of interest in respect of
the Panini Obligations at the same rate as in the Existing Panini Credit
Agreements; (vii) fixing the default rate of interest in respect of the Panini
Obligations at two hundred (200) basis points above the non-default rate of
interest in the Existing Panini Credit Agreements; (viii) containing cure
periods consistent with those contained in the Existing Panini Credit Agreements
but in no event less than five (5) Business Days; and (ix) which are otherwise
in form and substance reasonably acceptable to Toy Biz and the Panini Lenders.
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"Schedules" means the schedules of assets and liabilities and
the statements of financial affairs filed by the Debtors under section 521 of
the Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules as
such schedules and statements have been or may be supplemented or amended.
"Secured Claim" means a Claim secured by a Lien on Collateral
to the extent of the value of such Collateral, as determined in accordance with
section 506(a) of the Bankruptcy Code or, in the event that such Claim is
subject to setoff under section 553 of the Bankruptcy Code, to the extent of
such setoff.
"Secured Lenders" means those holders of Senior Secured Claims
set forth on Exhibit 14 hereof.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Secured Claim" means any Contingent Senior
Secured Claim and any Fixed Senior Secured Claim.
"Shareholder Agreement" means a shareholders' agreement by and
between Isaac Perlmutter, Isaac Perlmutter, T.A., Zib Inc., Avi Arad, the New
Investors and the Secured Lenders in form and substance reasonably acceptable to
each of the foregoing and Toy Biz.
"Subscription Agreement" means a subscription agreement
relating to the exercise of Subscription Rights in substantially the form of
Exhibit 15 hereto.
"Subscription Right" means an uncertificated right that
entitles the holder thereof to purchase one share of Newco Common Stock for nine
dollars and sixty-two and one half cents ($9.625) on the Consummation Date.
"Subsidiary Equity Interests" means the Equity Interests in
any of the Debtors held by any of the other Debtors.
"Term Loan Facility" means a term loan facility or facilities
for Newco and its subsidiaries in the amount of one hundred and forty million
dollars ($140,000,000) secured by all of the assets of Newco upon market rate
terms and conditions and otherwise in form and substance reasonably acceptable
to each of the Proponents.
"Toy Biz" means Toy Biz, Inc., a Delaware corporation.
"Toy Biz Cash Distribution" means an amount of Cash equal to
the aggregate of (a) two hundred and eighty million dollars ($280,000,000), (b)
any commitment or facility fees actually paid in connection with obtaining
financing commitments
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required by this Plan of Reorganization, (c) the fees, expenses and costs of Toy
Biz's attorneys, investment bankers, and other professionals incurred in
connection with the Reorganization Cases and the transactions contemplated
hereby, including, without limitation, in connection with or related to the
preparation of any proxy statement, the making of any securities registration
and the solicitation of any proxies for Toy Biz in an amount not to exceed in
the aggregate (i) three million five hundred thousand dollars ($3,500,000) for
the period through and including November 30, 1997, (ii) one million dollars
($1,000,000) for a fairness opinion, (iii) one million, five hundred thousand
dollars ($1,500,000) as a success fee, and (iv) an average of six hundred and
twenty-five thousand dollars ($625,000) per month thereafter through and
including the Consummation Date, and (c) the Breakup Fee.
"Transaction" means the transactions contemplated by the
Merger Agreement, and/or, to the extent applicable, the documents governing any
Qualifying Transaction.
"Unsecured Claim" means any Claim against a Debtor that is not
an Administration Expense Claim, a Priority Non-Tax Claim, a Priority Tax Claim
or a Secured Claim or a Class Securities Litigation Claim.
"U.S. Trustee" means the United States Trustee
appointed under section 581, title 28, United States Code to
serve in the District of Delaware.
"Working Capital Facility" means a revolving credit loan
facility for Newco and its subsidiaries in the amount of seventy-five million
dollar ($75,000,000) upon market rate terms and conditions and otherwise in form
and substance reasonably acceptable to each of the Proponents.
B. Interpretation; Application of
Definitions and Rules of Construction
Unless otherwise specified, all Section, schedule or exhibit
references in this Plan of Reorganization are to the respective Section in,
article of, or schedule or exhibit to, this Plan of Reorganization, as the same
may be amended, waived, or modified from time to time. The words "herein,"
"hereof," "hereto," "hereunder," and other words of similar import refer to this
Plan of Reorganization as a whole and not to any particular Section, subsection
or clause contained in this Plan of Reorganization. Except as otherwise
expressly provided herein, a term used herein that is not defined herein shall
have the meaning assigned to that term in the Bankruptcy Code. The rules of
construction contained in section 102 of the Bankruptcy Code shall apply to the
construction of this Plan of Reorganization. The headings in this Plan of
Reorganization are for convenience
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of reference only and shall not limit or otherwise affect the
provisions hereof.
C. Exhibits and Schedules
The Merger Agreement, Charter and Bylaws are contained in a
separate Exhibit Volume that shall be filed with the Clerk of the Bankruptcy
Court contemporaneously with this Plan of Reorganization. All other Exhibits and
Schedules to this Plan of Reorganization, which shall be in form and substance
reasonably acceptable to the Proponents, shall be contained in a supplemental
Exhibit Volume that shall be filed with the Clerk of the Bankruptcy Court not
later than ten (10) days prior to the commencement of the Confirmation Hearing
or such later date as the Bankruptcy Court may fix.
SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
2.1 Administration Expense Claims.
On the Consummation Date, each holder of an Allowed
Administration Expense Claim (including all DIP Claims) shall be paid by Newco
on account of such Allowed Administration Expense Claim an amount in Cash equal
to the amount of such Allowed Administration Expense Claim, except to the extent
that any entity entitled to payment of any Allowed Administration Expense Claim
agrees to a different treatment of such Administration Expense Claim; provided,
that Allowed Administration Expense Claims representing liabilities incurred in
the ordinary course of business by the Debtors in Possession shall be assumed
and paid by Newco in accordance with the terms and subject to the conditions of
any agreements governing, instruments evidencing or other documents relating to
such transactions.
This Plan of Reorganization constitutes a motion by the
Proponents to fix a bar date for the filing of Administrative Expense Claims
other than the Administration Expense Claims treated under Section 2.2 hereof,
which shall be a date fixed by
order of the Bankruptcy Court.
2.2 Compensation and Reimbursement Claims.
All entities seeking an award by the Bankruptcy Court of
compensation for services rendered or reimbursement of expenses incurred through
and including the Consummation Date under sections 330 or 503(b)(2) of the
Bankruptcy Code (a) shall file their respective final applications for
allowances of compensation for services rendered and reimbursement of expenses
incurred by the date that is forty-five (45) days after the Consummation Date
and, if granted such an award by the Bankruptcy Court, (b) shall be paid in full
by Newco in such amounts as are
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allowed by the Bankruptcy Court (i) upon the later of (A) the Consummation Date,
and (B) the date upon which the order relating to any such Administration
Expense Claim becomes a Final Order or (ii) upon such other terms as may be
mutually agreed upon between such holder of an Administration Expense Claim and
the Proponents or, on and after the Consummation Date, Newco.
2.3 Priority Tax Claims.
On the Consummation Date, each holder of an Allowed Priority
Tax Claim shall be distributed on account of such Allowed Priority Tax Claim a
payment in Cash equal to the amount of such Allowed Priority Tax Claim.
SECTION 3. CLASSIFICATION OF CLAIMS
AND EQUITY INTERESTS
Claims against and Equity Interests in the Debtors are divided
into the following classes:
Class 1 -- Priority Non-Tax Claims
Class 2 -- Senior Secured Claims
Subclass 2A -- Fixed Senior Secured Claims
Subclass 2B -- Contingent Senior Secured Claims
Class 3 -- Other Secured Claims
Subclass 3A -- Entertainment
Subclass 3B -- The Asher Candy Company
Subclass 3C -- Fleer Corp.
Subclass 3D -- Frank H. Fleer Corp.
Subclass 3E -- Heroes World Distribution, Inc.
Subclass 3F -- Malibu Comics Entertainment, Inc.
Subclass 3G -- Marvel Characters, Inc.
Subclass 3H -- Marvel Direct Marketing Inc.
Subclass 3I -- SkyBox International Inc.
Class 4 -- General Unsecured Claims
Subclass 4A -- Entertainment
Subclass 4B -- The Asher Candy Company
Subclass 4C -- Fleer Corp.
Subclass 4D -- Frank H. Fleer Corp.
Subclass 4E -- Heroes World Distribution, Inc.
Subclass 4F -- Malibu Comics Entertainment, Inc.
Subclass 4G -- Marvel Characters, Inc.
Subclass 4H -- Marvel Direct Marketing Inc.
Subclass 4I -- SkyBox International Inc.
Subclass 4J -- Intercompany Claims
Subclass 4K -- Insider Claims
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Class 5 -- Class Securities Litigation Claims
Class 6 -- Equity Interests
Subclass 6A -- Entertainment
Subclass 6B -- Subsidiary Equity Interests
Class 7 -- Existing Warrants
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN
4.1 Priority Non-Tax Claims (Class 1).
On the Consummation Date, each holder of an Allowed Priority
Non-Tax Claim shall be distributed on account of such Allowed Priority Non-Tax
Claim a payment in Cash equal to the amount of its Allowed Priority Non-Tax
Claim.
4.2 Senior Secured Claims (Class 2).
(a) Allowance of Senior Secured Claims. On the
Consummation Date, the Claims of each holder of a Senior Secured Claim under
each of the Existing Credit Agreements (other than and to the extent of Claims
beneficially owned or controlled directly, indirectly or by participation by any
entity or Affiliate of any entity that serves or has served as a member of
Entertainment's board of directors) shall be allowed in the amounts owing to
such holder under the applicable Existing Credit Agreement as of the date
hereof, together with interest, fees, charges and other amounts owing under the
Existing Credit Agreement through the Consummation Date.
(b) Treatment of Allowed Fixed Senior Secured
Claims (Subclass 2A).
(i) No Qualifying Transaction.
(A) Distributions. In the
event that no Qualifying Transaction closes, each holder of an Allowed Fixed
Senior Secured Claim shall be distributed on the Consummation Date, in full and
complete satisfaction and discharge of its Fixed Senior Secured Claims, its
Ratable Proportion of:
(1) one hundred percent (100%) of the common stock of Panini which
stock shall be transferred to Newco in accordance with Section 6.15 hereof;
(2) two hundred and thirty million, two hundred thousand dollars
($230,200,000) in Cash less the sum of (a) all amounts paid to satisfy DIP
Claims in full (exclusive of any increase in the amount of the DIP Claims from
and after October 7, 1997
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including, without limitation, any interest or charges which may accrue and all
amounts advanced under the DIP Credit Agreements), and (b) the Excess
Administration Claims Amount;
(3) eleven million, six hundred thousand (11,600,000) shares
of Newco Common Stock;
(4) seven hundred ninety thousand (790,000) shares of Convertible
Preferred Stock, or, if applicable, an equivalent amount of New Convertible
Notes;
(5) the Excess Administration Claims Note;
(6) one thousand (1,000) shares of new common stock of each of the
Debtors other than Entertainment representing one hundred percent (100%) of the
issued and outstanding stock of such Debtors, which stock shall be transferred
to Newco in accordance with section 6.15 hereof; and
(7) the right to purchase up to thirty million dollars ($30,000,000) of
Convertible Preferred Stock of Newco, or, if applicable, an equivalent amount of
New Convertible Notes as New Investors that would otherwise be issued to the New
Investors set forth on Exhibit 10.
Subject to the preceding sentence and without duplication, Chase and the holders
of Senior Secured Claims shall be reimbursed for all of the professional fees,
costs and expenses of professionals engaged by Chase in its capacity as agent or
to act on behalf of all holders of Senior Secured Claims, including, without
limitation, all fees and expenses of counsel and financial advisors incurred in
connection with the Reorganization Cases, it being understood that, to the
extent that there is an Excess Administration Claims Amount, an amount equal to
all or a portion of such fees may be included in the Excess Administration
Claims Note as set forth above.
(B) Panini Obligations. All Intercompany
Agreements shall remain in full force and effect unless (a) modified or
terminated in the ordinary course of business or pursuant to the Plan of
Reorganization or (b) the Proponents agree in writing otherwise.
(ii) Qualifying Transaction. In the event of a
Qualifying Transaction, each holder of an Allowed Fixed Senior Secured Claim
shall be distributed on the Consummation Date, in full and complete satisfaction
and discharge of its Fixed Senior Secured Claims, its Ratable Proportion of all
consideration received in connection with such transaction other than (i) the
Toy Biz Cash Distribution, and (ii) any property to be distributed pursuant to
Sections 2, 4.1, 4.2(c), 4.3, 4.4, 4.5 and 4.6 hereof.
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(c) Treatment of Allowed Contingent Secured
Claims (Subclass 2B).
(i) No Panini Liquidation Event. If no Panini
Liquidation Event occurs on or prior to Consummation Date, the holders of
Allowed Contingent Senior Secured Claims shall receive, in full and complete
satisfaction and discharge of their Contingent Senior Secured Claims, the Newco
Guaranty of the
Restructured Panini Obligations.
(ii) Panini Liquidation Event. If a Panini
Liquidation Event occurs on or prior to Consummation Date, the holders of
Allowed Contingent Senior Secured Claims shall receive, in full and complete
satisfaction and discharge of their Contingent Senior Secured Claims, their
Ratable Proportion of the
New Panini Securites.
4.3 Other Secured Claims (Class 3).
On the Consummation Date, each holder of an Allowed Other
Secured Claim in each subclass of Class 3 (Other Secured Claims) shall in full
and complete satisfaction and discharge of its Other Secured Claim (a) be
distributed on account of such Allowed Other Secured Claim Cash equal to such
Allowed Other Secured Claim, (b) be distributed on account of such Allowed Other
Secured Claim the Collateral securing such Allowed Other Secured Claim or (c)
have such Allowed Other Secured Claim reinstated as against the applicable
Reorganized Debtor and made unimpaired in accordance with section 1124(2) of the
Bankruptcy Code, notwithstanding any contractual provision or applicable
non-bankruptcy law that entitles the holder of an Allowed Other Secured Claim to
demand and receive payment of such Claim prior to the stated maturity of such
Claim from and after the occurrence of a default. Such treatment shall be
determined by the Proponents.
4.4 General Unsecured Claims (Class 4).
(a) Distributions.
Except as set forth in Sections 4.4(b) and
4.4(c) hereof, in full and complete satisfaction and discharge of its Allowed
General Unsecured Claim, each holder of an Allowed General Unsecured Claim in
each of Subclass 4A (Entertainment), Subclass 4B (The Asher Candy Company),
Subclass 4C (Fleer Corp.), Subclass 4D (Frank H. Fleer Corp.), Subclass 4E
(Heroes World Distribution, Inc.), Subclass 4F (Malibu Comics Entertainment,
Inc.), Subclass 4G (Marvel Characters, Inc.), Subclass 4H (Marvel Direct
Marketing Inc.) and Subclass 4I (Skybox International Inc.)of Class 4 (General
Unsecured Claims) in a Subclass that has voted to accept this Plan of
Reorganization shall, to the extent not paid prior to the Consummation Date, be
distributed its
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Ratable Proportion of the Plan Warrants. Each Subclass that does not vote to
accept this Plan of Reorganization shall not receive any distribution hereunder.
(b) Intercompany Claims. No distribution shall
be made on account of Intercompany Claims, and the holders of Intercompany
Claims shall not receive or retain on account of such Claims any property or
interest in property on account of such Claims. At the election of Newco, any
Intercompany Claims shall be treated as contributions to the capital of the
obligor on such Intercompany Claims.
(c) Insider Claims. Each holder of an Allowed
Insider Claim shall receive, in full and complete satisfaction and discharge of
its Insider Claim, its Ratable Proportion of one dollar ($1).
4.5 Class Securities Litigation Claims (Class 5).
(a) Distributions. In the event that each of
Subclass 4A, Class 5 and Subclass 6A vote to accept this Plan of Reorganization
and subject to allocation between holders of Allowed Class Securities Litigation
Claims and holders of Allowed Equity Interests in Subclass 6A (Entertainment) of
Class 6 (Equity Interests) in accordance with Section 4.5(b) hereof, each holder
of an Allowed Class Securities Litigation Claim shall be distributed, in full
and complete satisfaction and discharge of its Allowed Class Securities
Litigation on account of such Allowed Class Securities Litigation Claim its
Ratable Proportion of four million (4,000,000) Subscription Rights. In the event
that each of Subclass 4A, Class 5 and Subclass 6A do not accept this Plan of
Reorganization, holders of Allowed Class Securities Litigation Claims shall not
receive any distribution hereunder.
(b) Calculation of Distribution. For purposes
of effecting distributions hereunder on account of Allowed Class Securities
Litigation Claims and Allowed Equity Interests in Subclass 6A (Entertainment) of
Class 6 (Equity Interests), any judgment evidencing any Allowed Class Securities
Litigation Claim shall be converted into an implied number of shares of common
stock of Entertainment calculated as the quotient of (i) the aggregate amount of
any such judgment, divided by (ii) the average of intraday high and low average
sales prices of a share of common stock of Entertainment on the New York Stock
Exchange, as reported in The Wall Street Journal (National Edition) for the ten
consecutive trading days ending on the trading day immediately preceding the
date of the commencement of any action underlying any Allowed Class Securities
Litigation Claim.
(c) Parity of and Limitation on Distributions.
The distributions to be made under this Section 4.5 on account of Allowed Class
Securities Litigation Claims shall be made on the
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basis of parity with the Equity Interests in Subclass 6A (Entertainment) of
Class 6 (Equity Interests) and subject to the limitation that holders of Allowed
Class Securities Litigation Claims and Equity Interests in Subclass 6A
(Entertainment) of Class 6 (Equity Interests) shall only be entitled to a single
recovery on account of such Claims and Equity Interests.
4.6 Equity Interests (Class 6).
(a) Entertainment (Subclass 6A).
(i) Distributions. In the event that each
of Subclass 4A, Class 5 and Subclass 6A vote to accept this Plan of
Reorganization and subject to allocation between holders of Allowed Class
Securities Litigation Claims and holders of Allowed Equity Interests in Subclass
6A (Entertainment) of Class 6 (Equity Interests) in accordance with Section
4.5(b) and 4.5(c) hereof, each holder of an Allowed Equity Interest in Subclass
6A (Entertainment) of Class 6 (Equity Interests) shall be distributed, in full
and complete satisfaction and discharge of such Allowed Equity Interest, on
account of such Allowed Equity Interest its Ratable Proportion of four million
(4,000,000) Subscription Rights. In the event that each of Subclass 4A, Class 5
and Subclass 6A do not accept this Plan of Reorganization, holders of Allowed
Equity Interests in Subclass 6A shall not receive any distribution hereunder.
(ii) Parity of and Limitation on
Distributions. The distributions to be made under this Section 4.6 on account of
Equity Interests in Subclass 6A (Entertainment) of Class 6 (Equity Interests)
shall be made on the basis of parity with the Allowed Class Securities
Litigation Claims and subject to the limitation that holders of Allowed Class
Securities Litigation Claims and Equity Interests in Subclass 6A (Entertainment)
of Class 6 (Equity Interests) shall only be entitled to a single recovery on
account of such Claims and Equity Interests.
(b) Subsidiary Equity Interest (Subclass 6B). On
the Consummation Date, all Subsidiary Equity Interests shall be canceled, and
the holders of Subsidiary Equity Interests shall not be entitled to, and shall
not, receive or retain any property or interest in property on account of such
Subsidiary Equity Interest.
4.7 Existing Warrants (Class 7).
On the Consummation Date, the Existing Warrants shall be
canceled, and the holders of Existing Warrants shall not be entitled to, and
shall not, receive or retain any property or interest in property on account of
such Equity Interests in Class 7 (Existing Warrants).
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SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED AND NOT IMPAIRED UNDER THE
PLAN; ACCEPTANCE OR REJECTION OF THE PLAN
5.1 Holders of Claims and Equity Interests Entitled to
--------------------------------------------------
Vote.
- ----
Each of Class 1 (Priority Non-Tax Claims), Class 2 (Senior
Secured Claims), Class 3 (Other Secured Claims), Class 4 (General Unsecured
Claims), Class 5 (Class Securities Litigation Claims), Subclass 6A (Marvel
Entertainment Group) of Class 6 (Equity Interests), Subclass 6B (Subsidiary
Equity Interests) of Class 6 (Equity Interests) and Class 7 (Existing Warrants)
and, as applicable, each subclass thereof, are impaired hereunder, and the
holders of Claims in each of Class 1 (Priority Non-Tax Claims), Class 2 (Senior
Secured Claims), Class 4 (General Unsecured Claims), Class 5 (Class Securities
Litigation Claims) and Subclass 6A (Entertainment) of Class 6 (Equity Interests)
and, as applicable, each subclass thereof, are entitled to vote separately to
accept or reject this Plan of Reorganization as provided in the order of the
Bankruptcy Court fixing the Ballot Date and otherwise governing the balloting
procedures applicable to this Plan of Reorganization. Holders of Claims in
Subclass 4J (Intercompany Claims) of Class 4 (General Unsecured Claims) and
Equity Interests in Subclass 6B (Subsidiary Equity Interests) of Class 6 (Equity
Interests) and Class 7 (Existing Warrants) are not entitled to vote on this Plan
of Reorganization and are presumed to have rejected it in accordance with
section 1126(g) of the Bankruptcy Code.
For purposes of calculating the number of Allowed Claims held
by holders of Allowed Claims that have voted to accept or reject this Plan of
Reorganization under section 1126(c) of the Bankruptcy Code, all Allowed Claims
held by any entity of any Affiliate thereof that acquired record ownership of
such Allowed Claims after the Petition Date shall be aggregated and treated as
one Allowed Claim.
5.2 Subtraction and Addition of Classes and
Subclasses.
(a) Subtraction of Classes and Subclasses. Any
class or subclass of Claims that does not contain as an element thereof an
Allowed Claim or a Claim temporarily allowed under Bankruptcy Rule 3018 as of
the date of the commencement of the Confirmation Hearing shall be deemed
subtracted from this Plan of Reorganization for purposes of voting to accept or
reject this Plan of Reorganization and for purposes of determining acceptance or
rejection of this Plan of Reorganization by such class or subclass under section
1129(a)(8) of the Bankruptcy Code.
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(b) Addition of Classes and Subclasses. In the
event that any subclass of Class 3 (Other Secured Claims) would contain as
elements thereof two or more Secured Claims collateralized by different
properties or interests in property or collateralized by Liens against the same
property or interest in property having different priority, such claims shall be
divided into separate subclasses of such subclass of Class 3 (Other Secured
Claims).
5.3 Nonconsensual Confirmation.
In the event that any impaired class of Claims or Equity
Interests entitled to vote shall not accept this Plan of Reorganization by the
requisite statutory majorities provided in sections 1126(c) or 1126(d) of the
Bankruptcy Code, as applicable, after giving effect to any vote designated under
section 1126(e) of the Bankruptcy Code, the Proponents shall move to have the
Bankruptcy Court confirm this Plan of Reorganization under section 1129(b) of
the Bankruptcy Code notwithstanding such rejection and notwithstanding the
deemed rejection of this Plan of Reorganization by holders of Claims in Subclass
4J (Intercompany Claims) of Class 4 (General Unsecured Claims) and Equity
Interests in Subclass 6B (Subsidiary Equity Interests) of Class 6 (Equity
Interests) and Existing Warrants in Class 7 (Existing Warrants) in accordance
with Section 5.1 hereof.
5.4 Severability of Plan of Reorganization.
This Plan of Reorganization is, severally, a plan of
reorganization for each of the Debtors. In the event that this Plan of
Reorganization is not confirmed for all Debtors, then this Plan of
Reorganization may not be confirmed for any Debtor without the consent of each
of the Proponents, provided, however, that this Plan of Reorganization may be
confirmed if it can be confirmed for all Debtors other than Immaterial Debtors.
SECTION 6. MEANS OF IMPLEMENTATION
6.1 Closing of Transaction.
On the Consummation Date, the closing of the Transaction shall
occur in accordance with the Merger Agreement and, in the event of a Qualifying
Transaction, any other applicable document on the terms and subject to the
conditions contained in such Merger Agreement and/or other applicable document,
free and clear of all Liens, claims, encumbrances and interests. In connection
therewith, all outstanding letters of credit or other similar obligations as set
forth on Schedule 6.1 hereto issued for the account of any of the Debtors or the
Debtors in Possession under the Existing Credit Agreements or the DIP Credit
Agreement, as applicable, shall be (a) canceled and terminated with Chase
receiving releases reasonably acceptable to
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Chase from the beneficiaries thereof, or (b) Newco shall issue a back to back
letter of credit in form and substance reasonably acceptable to Chase.
6.2 Derivative Securities Litigation Claims.
Any derivative securities litigation claims are property of
the estate of Entertainment under section 541 of the Bankruptcy Code and shall
become the property of Newco.
6.3 Board of Directors of the Reorganized Debtors.
The initial Board of Directors of Newco shall consist of six
(6) individuals designated by Toy Biz and the New Investors and five (5)
individuals designated by the Secured Lenders. The initial members of the Board
of Directors of Newco, assuming its formation, are or shall be stated in the
Disclosure Statement under "GENERAL INFORMATION - Board of Directors and
Executive Officers of the Reorganized Debtors" or an amendment or supplement to
the Disclosure Statement or such other filing as may be made with the Bankruptcy
Court. Thereafter, and subject to the Shareholder Agreement, the Board of
Directors of Newco shall be elected in accordance with the Charter and Bylaws.
6.4 Officers of the Reorganized Debtors.
The initial officers of Newco shall be determined by the
Proponents. The initial officers of Newco, assuming its formation, are stated in
the Disclosure Statement under "GENERAL INFORMATION - Board of Directors and
Executive Officers of the Reorganized Debtors." The selection of officers of the
Reorganized Debtors after the Consummation Date shall be as provided in the
Charter and Bylaws.
6.5 Distribution to New Investors.
In the event that no Qualifying Transaction closes, the New
Investors shall receive nine hundred thousand (900,000) shares of Convertible
Preferred Stock, or, if applicable, an equivalent amount of New Convertible
Notes on the Consummation Date.
6.6 Toy Biz Distribution.
(a) No Qualifying Transaction.
In the event that no Qualifying Transaction closes, holders of
Toy Biz common stock (other than the Debtors) shall receive on the Consummation
Date twenty million, three hundred fifty-two thousand, one hundred twenty-seven
(20,352,127) shares
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of Newco Common Stock, and such shares shall be distributed to holders of Toy
Biz common stock on the Consummation Date.
(b) Qualifying Transaction.
In the event that a Qualifying Transaction closes, holders of
Toy Biz common stock (other than the Debtors) shall receive on the Consummation
Date an amount of Cash equal to the Toy Biz Cash Distribution less the Breakup
Fee which net amount shall be payable in immediately available funds in
accordance with instructions to be provided to the Debtors by Toy Biz on or
before the Consummation Date and holders of Allowed Fixed Senior Secured Claims
shall receive their Ratable Proportion of the Required Secured Lender
Consideration.
6.7 Fees to New Investors.
(a) Professional Fees. On the Consummation Date,
the New Investors (other than any New Investors which are New Investors solely
by virtue of having purchased Convertible Preferred Stock pursuant to section
4.2(b)(i)(A)(7) hereof or are Affiliates of Isaac Perlmutter, Isaac Perlmutter
T.A., Zib Inc. or Avi Arad or any assignee of any of the foregoing) shall be
reimbursed by Newco in an amount not to exceed two hundred thousand dollars
($200,000) for all of the professional fees, costs and expenses incurred solely
in connection with the negotiation of the Convertible Preferred Stock
Subscription Agreement and related agreements and documentation, it being
understood that such New Investors shall not be reimbursed for any other
professional fees, costs or expenses relating to these Reorganization Cases
including, without limitation, any litigation relating to the Reorganization
Cases, this Plan of Reorganization, the Convertible Preferred Stock Subscription
Agreement or Toy Biz.
(b) Breakup Fee. In the event that a Qualifying
Transaction closes, the Breakup Fee shall be payable in Cash in immediately
available funds as may be required by the Convertible Preferred Stock Purchase
Agreement.
6.8 Dissolution of Committees.
On the Consummation Date, all statutory committees appointed
by the U.S. Trustee in the Reorganization Cases shall automatically dissolve and
such committees shall cease to exercise any functions and be divested of all
rights, powers and duties.
6.9 Transfer of Panini. All Intercompany Agreements between
the Panini Entities and Marvel or any of its Affiliates, including, without
limitation, any material licensing agreement designated by the holders of a
majority of the Senior Secured
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Claims shall remain in full force and effect unless modified or terminated in
the ordinary course of business or the holders of the Senior Secured Claims and
Toy Biz otherwise agree in writing.
6.10 Newco Financing.
In the event that no Qualifying Transaction closes, Toy Biz
shall arrange for Newco to obtain the Term Loan Facility, the Working Capital
Facility and investors to purchase ninety million dollars ($90,000,000) of
Convertible Preferred Stock, or, if applicable, an equivalent amount of the New
Convertible Notes.
6.11 Vote of Characters' Toy Biz Stock.
As of the Consummation Date, Characters shall be deemed to
have voted all of its Toy Biz common stock in favor of the Merger Agreement, any
Qualifying Transaction and the transactions contemplated hereby.
6.12 Forgiveness of Panini Obligations.
On the Consummation Date, each of the Debtors shall forgive
all monetary obligations of Panini to such Debtor due and payable as of December
31, 1997.
6.13 Panini Indemnity.
On the Consummation Date, Newco shall execute and deliver the
Panini Indemnity.
6.14 Outstanding Toy Biz Stock Interests. Any outstanding Toy
Biz preferred stock or stock options shall be eliminated prior to the
Consummation Date or will only dilute the Newco Common Stock to be distributed
pursuant to Section 6.6 hereof.
6.15 Distribution of Subsidiary Equity Interests.
In connection with and in consideration for the
distributions to be made under section 4.2(b)(i) hereof by Entertainment on
account of the Allowed Fixed Senior Secured Claims, each holder of a Fixed
Senior Secured Claim shall transfer to Entertainment, and Entertainment shall
acquire by subrogation, all Fixed Senior Secured Claims against any Debtor other
than Entertainment. The distributions of common stock of Panini and shares of
new common stock of Debtors other than Entertainment provided for under section
4.2(b)(i)(A) (1) and (6) hereof shall be made directly to Newco.
6.16 Exercise of Subscription Rights. On the
Consummation Date, holders of Allowed Equity Interests that have
executed Subscription Agreements and have performed their
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obligations in strict accordance therewith shall be issued Newco Common Stock
pursuant to such Subscription Agreements.
SECTION 7. PROVISIONS GOVERNING DISTRIBUTIONS
7.1 Date of Distributions.
Any distributions and deliveries to be made hereunder shall be
made on the Consummation Date or as soon as practicable thereafter and deemed
made on the Consummation Date. In the event that any payment or act under this
Plan of Reorganization is required to be made or performed on a date that is not
a Business Day, then the making of such payment or the performance of such act
may be completed on the next succeeding Business Day, but shall be deemed to
have been completed as of the required date.
7.2 Entities to Exercise Function of Disbursing Agent.
All distributions under this Plan of Reorganization shall, at
the election of the Proponents, be made by the applicable Reorganized Debtor as
Disbursing Agent or such other entity designated by the Proponents prior to the
conclusion of the Confirmation Hearing as a Disbursing Agent. A Disbursing Agent
shall not be required to give any bond or surety or other security for the
performance of its duties unless otherwise ordered by the Bankruptcy Court; and,
in the event that a Disbursing Agent is so otherwise ordered, all costs and
expenses of procuring any such bond or surety shall be borne by the applicable
Reorganized Debtor.
7.3 Surrender and Cancellation of Instruments.
Each holder of a promissory note, Existing Warrant or other
instrument evidencing a Claim or Equity Interest (other than a holder of a
promissory note issued under any of the Existing Credit Agreements) shall
surrender such promissory note, Existing Warrant or instrument to the Disbursing
Agent, and the Disbursing Agent shall distribute or shall cause to be
distributed to the holder thereof the appropriate distribution, if any,
hereunder. No distribution hereunder shall be made to or on behalf of any holder
of such a Claim unless and until such promissory note or instrument is received
or the unavailability of such note or instrument is reasonably established to
the satisfaction of the Disbursing Agent. In accordance with section 1143 of the
Bankruptcy Code, any such holder of such a Claim or Equity Interest that fails
to (a) surrender or cause to be surrendered such promissory note or instrument
or to execute and deliver an affidavit of loss and indemnity reasonably
satisfactory to the Disbursing Agent and (b) in the event that
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the Disbursing Agent requests, furnish a bond in form and substance (including,
without limitation, amount) reasonably satisfactory to the Disbursing Agent,
within one (1) year from and after the Consummation Date shall be deemed to have
forfeited to Newco all rights, claims and interests and shall not participate in
any distribution hereunder.
7.4 Delivery of Distributions.
Subject to Bankruptcy Rule 9010, all distributions to any
holder of an Allowed Claim or an Allowed Equity Interest shall be made at the
address of such holder as scheduled on the Schedules filed with the Bankruptcy
Court unless the Debtors or Reorganized Debtors, as applicable, have been
notified in writing of a change of address, including, without limitation, by
the filing of a proof of claim or interest by such holder that relates an
address for such holder different from the address reflected on such Schedules
for such holder. In the event that any distribution to any holder is returned as
undeliverable, the Disbursing Agent shall use reasonable efforts to determine
the current address of such holder, but no distribution to such holder shall be
made unless and until the Disbursing Agent has determined the then current
address of such holder, at which time such distribution shall be made to such
holder without interest; provided that such distributions shall be deemed
unclaimed property under section 347(b) of the Bankruptcy Code at the expiration
of one year from the Consummation Date. After such date, all unclaimed property
or interest in property shall be the sole and exclusive property of Newco and
the claim of any other holder to such property or interest in property shall be
discharged and forever barred. The distributions to be made on the Consummation
Date to each holder of an Allowed Senior Secured Claim shall be made to the
Administrative Agent for distribution to holders of Allowed Senior Secured
Claims in accordance with the provisions of the Existing Credit Agreements.
7.5 Manner of Payment Under Plan of Reorganization.
At the option of the Disbursing Agent, any Cash payment to be
made hereunder may be made by a check or wire transfer or as otherwise required
or provided in applicable agreements.
7.6 Reserves and Distributions.
The Disbursing Agent shall reserve cash, securities or other
property in an amount determined by the Bankruptcy Court on account of Disputed
Claims in Class 4 (General Unsecured Claims) and Class 5 (Class Securities
Litigation Claims) and, as applicable, each subclass thereof. Upon the
resolution from time to time of Disputed Claims in Class 4 (General Unsecured
Claims) and Class 5 (Class Securities Litigation Claims) and, as applicable,
each subclass thereof, the Disbursing Agent may make
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distributions on account of such claims in such manner deemed appropriate in the
judgment of the Disbursing Agent.
7.7 Distributions After Consummation Date.
Distributions made after the Consummation Date to holders of
Disputed Claims that are not Allowed Claims as of the Consummation Date but
which later become Allowed Claims shall be deemed to have been made on the
Consummation Date.
7.8 Rights And Powers Of Disbursing Agent.
(a) Powers of the Disbursing Agent. The
Disbursing Agent shall be empowered to (a) effect all actions and execute all
agreements, instruments and other documents necessary to perform its duties this
Plan of Reorganization, (b) make all distributions contemplated hereby, (c)
employ professionals to represent it with respect to its responsibilities, and
(d) exercise such other powers as may be vested in the Disbursing Agent by order
of the Bankruptcy Court, pursuant to this Plan of Reorganization, or as deemed
by the Disbursing Agent to be necessary and proper to implement the provisions
hereof.
(b) Expenses Incurred on or after the
Consummation Date. Except as otherwise ordered by the Bankruptcy Court, the
amount of any reasonable fees and expenses incurred by the Disbursing Agent on
or after the Consummation Date (including, without limitation, taxes) and any
reasonable compensation and expense reimbursement claims (including, without
limitation, reasonable fees and expenses of counsel) made by the Disbursing
Agent, shall be paid in Cash by the Reorganized Debtors.
(c) Exculpation. Each Disbursing Agent, from
and after the Consummation Date, is hereby exculpated by all entities,
including, without limitation, holders of Claims and Equity Interests and other
parties in interest from any and all claims, causes of action and other
assertions of liability (including, without limitation, breach of fiduciary
duty) arising out of the discharge by such Disbursing Agent of the powers and
duties conferred upon it hereby or any order of the Bankruptcy Court entered
pursuant to or in furtherance hereof, or applicable law, except solely for
actions or omissions arising out of the gross negligence or willful misconduct
of such Disbursing Agent. No holder of a Claim or an Equity Interest or other
party in interest shall have or pursue any claim or cause of action against the
Disbursing Agent for making payments in accordance herewith or for implementing
the terms hereof.
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SECTION 8. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER
THE PLAN OF REORGANIZATION
8.1 Objections to Claims.
Newco shall be the sole entity to object to Claims. Any
objections to Claims shall be filed by the latest of (a) ninety (90) days after
the Consummation Date, (b) thirty (30) days after a proof of claim is filed and
(c) such later date as may be fixed by the Bankruptcy Court.
8.2 No Distributions Pending Allowance.
Notwithstanding any other provision hereof, if any portion of
a Claim is a Disputed Claim, no payment or distribution provided hereunder shall
be made on account of such Claim unless and until such Disputed Claim becomes an
Allowed Claim.
8.3 Distributions After Allowance.
Payments and distributions to each holder of a Disputed Claim
or Equity Interest or any other Claim or Equity Interest that is not an Allowed
Claim or Equity Interest, to the extent that such Claim or Equity Interest
ultimately becomes an Allowed Claim or Equity Interest, shall be made in
accordance with the provisions hereof governing the class or subclass of Claims
or Equity Interests in which such Claim or Equity Interest is classified. As
soon as practicable after the date that the order or judgment of the Bankruptcy
Court allowing any Disputed Claim or Equity Interest or any other Claim or
Equity Interest that is not an Allowed Claim or Equity Interest becomes a Final
Order, the Disbursing Agent shall distribute to the holders of such Claim or
Equity Interest any payment or property that would have been distributed to such
holder if the Claim or Equity Interest had been allowed on the Consummation
Date, without any interest thereon.
SECTION 9. PROVISION GOVERNING EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN
9.1 General Treatment.
Except as set forth in Section 9.4 below, this Plan of
Reorganization constitutes a motion by the Debtors governed by this Plan of
Reorganization to assume, as of the Consummation Date, all executory contracts
and unexpired leases to which any of the Debtors are parties, except for an
executory contract or unexpired lease that (a) has been assumed or rejected
pursuant to Final Order of the Bankruptcy Court, or (b) is specifically rejected
on Schedule 9.1 hereto filed by the Proponents on or before the commencement of
the Confirmation Hearing or such later
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date as may be fixed by the Bankruptcy Court, or (c) is otherwise assumed
hereunder. Any executory contract or unexpired lease assumed hereunder may be
freely assigned by any Debtor to any other Debtor or Reorganized Debtor or Newco
and any such assignment shall constitute a novation of the obligations of the
assigning Debtor under any such executory contract or unexpired lease. Any such
assignment shall be effected by filing a notice thereof with the Bankruptcy
Court on or before the commencement of the Confirmation Hearing. For purposes
hereof, each executory contract and unexpired lease listed on Schedule 9.1
hereto that relates to the use of occupancy of real property shall include (a)
modifications, amendments, supplements, restatements, or other agreements made
directly or indirectly by any agreement, instrument, or other document that in
any manner affects such executory contract or unexpired lease, without regard to
whether such agreement, instrument or other document is listed on Schedule 9.1
hereto and (b) executory contracts or unexpired leases appurtenant to the
premises listed on Schedule 9.1 hereto, including all easements, licenses,
permits, rights, privileges, immunities, options, rights of first refusal,
powers, uses, usufructs, reciprocal easement agreements, vault, tunnel or bridge
agreements or franchises, and any other interests in real estate or rights in
rem relating to such premises to the extent any of the foregoing are executory
contracts or unexpired leases, unless any of the foregoing agreements are
assumed.
9.2 Amendments to Schedule; Effect of Amendments.
The Debtors shall assume each of the executory contracts and
unexpired leases not listed in Schedule 9.1 hereto; provided, that the
Proponents may on or before the first Business Day before the Consummation Date,
amend Schedule 9.1 hereto to delete or add any executory contract or unexpired
lease thereto, in which event such executory contract or unexpired lease shall
be deemed to be, respectively, assumed and, if applicable, assigned as provided
therein, or rejected. The Proponents shall provide notice of any amendments to
Schedule 9.1 hereto to the parties to the executory contracts or unexpired
leases affected thereby. The fact that any contract or lease is scheduled on
Schedule 9.1 hereto shall not constitute or be construed to constitute an
admission by any Proponent or any Debtor that any Debtor has any liability
thereunder.
9.3 Bar to Rejection Damage Claims.
In the event that the rejection of an executory contract or
unexpired lease by any of the Debtors results in damages to the other party or
parties to such contract or lease, a Claim for such damages, if not heretofore
evidenced by a filed proof of claim, shall be forever barred and shall not be
enforceable against the Debtors, or their properties or interests in property as
agents, successors, or assigns, unless a proof of
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claim is filed with the Bankruptcy Court and served upon counsel for each of the
Proponents on or before thirty (30) days after the earlier to occur of (a) the
giving of notice to such party under Section 9.1 or 9.2 hereof and (b) the entry
of an order by the Bankruptcy Court authorizing rejection of a particular
executory contract or lease.
9.4 Certain Panini Agreements.
(a) Panini Sticker Agreement. Notwithstanding
anything else contained herein to the contrary, the Panini Sticker Agreement
shall be assumed and all amounts owing by any of the Panini Entities to any of
the Debtors on or prior to December 31, 1997 shall be forgiven. In addition,
Newco shall permit the Panini Entities to assign the Panini Sticker Agreement to
any other entity in connection with any subsequent sale of Panini except to a
Designated Competitor.
(b) Panini Comic Distribution Agreement.
Notwithstanding anything else contained herein to the contrary, the Panini Comic
Distribution Agreement shall be assumed and modified as follows: (i) the term
shall be through December 31, 1998, (ii) the royalty rate through December 31,
1998 shall be six percent (6%), (iii) the minimum guaranteed royalty (A) shall
be eliminated for the period from January 1, 1997 through December 31, 1997 and
(B) shall be two million dollars ($2,000,000) for the period from January 1,
1998 through December 31 1998, (iv) the license shall entitle the Panini
Entities to the use of a minimum of fifty (50) titles at all times during 1998,
and (v) any and all amounts owing thereunder to the Debtors on or prior to
December 31, 1997 shall be forgiven. In addition, Newco shall permit the Panini
Entities to assign the Panini Comic Distribution Agreement, as modified, to any
other entity in connection with a sale of the Panini Entities except to a
Designated Competitor. From and after the Consummation Date, any and all
royalties owed to the National Basketball Association in respect of sticker
sales and card sales made by Panini pursuant to the NBA License Agreement shall
be the sole responsibility of Panini.
SECTION 10. CONDITIONS PRECEDENT TO CONFIRMATION DATE
AND CONSUMMATION DATE
10.1 Conditions Precedent to Confirmation of Plan of
Reorganization.
The confirmation of this Plan of Reorganization is subject to
satisfaction of the following conditions precedent:
(a) Confirmation Order. The Confirmation Order to be
entered by the Clerk of the Bankruptcy Court shall be in a
form that (i) does not materially and adversely affect the
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benefits to be received hereunder by any of (A) the Debtors' estates,
(B) Toy Biz, (C) the holders of Senior Secured Claims or (D) the
holders of DIP Claims, (ii) determines that the Plan satisfies each of
the applicable requirements of section 1129 of the Bankruptcy Code, and
(iii) is otherwise in form and substance reasonably acceptable to the
Proponents.
10.2 Conditions Precedent to Consummation Date of Plan
of Reorganization.
The occurrence of the Consummation Date of this Plan of
Reorganization is subject to satisfaction of the following conditions precedent:
(a) SEC Information Statement. A combined information and
registration statement on Form S-4 shall have been declared effective
by the Securities and Exchange Commission and such combined information
and registration statement shall have been delivered to all holders of
Toy Biz common stock in accordance with the rules of the Securities and
Exchange Commission and twenty (20) business days (computed in
accordance with Rule 14C of the Securities and Exchange Commission)
shall have elapsed since such delivery;
(b) HSR. All necessary consents under the Hart-Scott- Rodino
Antitrust Improvements Act of 1976, as amended, shall have been made
and any specified waiting periods thereunder shall have expired without
challenge;
(c) Restructured Panini Loan Documents. The
Restructured Panini Loan Documents shall be in full force
and effect.
(d) Secured Lender Consummation Date. The Consummation
Date shall occur not later than May 15, 1998; and
(e) Toy Biz Consummation Date. The Consummation Date shall
occur not later than September 21, 1998.
10.3 Waiver of Conditions Precedent.
Each of the conditions precedent in Sections 10.1 and 10.2
hereof may only effectively be waived, in whole or in part, if waived, by the
Proponents acting jointly except that the consent of Toy Biz is not required to
waive the condition precedent contained in Section 10.2(d) hereof. Any such
waiver of a condition precedent in Section 10.1 or 10.2 hereof may be effected
at any time, without notice, without leave or order of the Bankruptcy Court and
without any formal action other than
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filing a notice of waiver with the Bankruptcy Court and otherwise proceeding to
consummate this Plan of Reorganization.
SECTION 11. EFFECT OF CONFIRMATION
11.1 General Authority.
Until the completion of all transactions contemplated to occur
on the Consummation Date, the Bankruptcy Court shall retain custody and
jurisdiction of each of the Debtors, its properties and interests in property
and its operations. On the Consummation Date, each of the Debtors, its
properties and interests in property and its operations shall be released from
the custody and jurisdiction of the Bankruptcy Court, except as provided in
Section 14.1 hereof.
11.2 Discharge of Debtors.
(a) General Discharge. The treatment of all
Claims against or Equity Interests in each of the Debtors hereunder shall be in
exchange for and in complete satisfaction, discharge and release of all Claims
against any Equity Interests in such Debtor of any nature whatsoever, known or
unknown, including, without limitation, any interest accrued or expenses
incurred thereon from and after the Petition Date, or against its estate or
properties or interests in property. Except as otherwise provided herein, upon
the Consummation Date, all Claims against and Equity Interests in each of the
Debtors will be satisfied, discharged and released in full exchange for the
consideration provided hereunder. All entities shall be enjoined and precluded
from asserting against any Debtor, Reorganized Debtor or Newco or their
respective properties or interests in property, any other Claims based upon any
act or omission, transaction or other activity of any kind or nature that
occurred prior to the Consummation Date.
(b) Exculpations. From and after the
Consummation Date, no Exculpated Person shall have or incur any liability to any
other Exculpated Person or any entity receiving any distribution under this Plan
of Reorganization (i) for any act taken or omission made in connection with or
in any manner related to negotiating, formulating, implementing, confirming or
consummating this Plan of Reorganization or the transactions contemplated
hereby, or any agreement, instrument or other documents created in connection
with this Plan of Reorganization, (ii) for the actions or other participation of
such Exculpated Person in respect of any of the Reorganization Cases (including
the negotiation of any other Plan of Reorganization, settlement or arrangement)
and (iii) that relate, directly or indirectly, by implication or otherwise, to
the Existing Credit Documents, the DIP Claims, or the Senior Secured Claims. All
Exculpated Persons as well as all entities receiving any distribution under this
36
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Plan of Reorganization shall be enjoined and precluded from asserting against
the Exculpated Persons or their respective properties or interests in property,
any other Claims based upon liability exculpated pursuant to the preceding
sentence.
(c) Treatment of Indemnification Claims.
Notwithstanding Del. Code Ann. (General Corporation) ss. 145 (1997) or any other
state or local statute or rule, all existing indemnification and other similar
obligations as of the Confirmation Date of any Debtor are released or discharged
except as provided in this Section 11.2(c), and the Confirmation Order shall
contain injunctions enforcing such releases and discharge; provided, that: (i)
existing indemnity obligations may survive to the extent of insurance coverage,
but shall in no event entitle such directors or officers to assert any Claim
(including, without limitation, with respect to any deductible) against Newco,
Toy Biz, Marvel or any of their Affiliates, and (ii) any such directors or
officers shall be entitled to make Claims only against the insurance and the
proceeds thereof. This Section 11.2(c) shall not limit any right of directors or
officers or former directors and officers from asserting Claims against any
Debtor based upon timely filed proofs of claim or requests for payment of
Administration Expense Claims nor shall it limit the right of Newco to object to
any such Claim or request for payment of Administration Expense Claims. To the
extent such Claims are Allowed Claims, such Claims shall be treated under this
Plan of Reorganization with Claims in any class or subclass, as applicable,
having the same legal rights and priority as such Claims; provided, that the
Confirmation Order shall establish a bar date for Administration Expense Claims.
11.3 Term of Injunctions or Stays.
Unless otherwise provided, all injunctions or stays provided
for in the Reorganization Cases under sections 105 or 362 of the Bankruptcy
Code, or otherwise, and in existence on the Confirmation Date, shall remain in
full force and effect through and including the Consummation Date.
SECTION 12. WAIVER OF CLAIMS
12.1 Avoidance Actions.
Effective as of the Consummation Date, Newco shall have the
right to prosecute and release any actions under sections 510, 544, 545, 547,
548, 549, 550, 551 and 553 of the Bankruptcy Code, that belong to the Debtors or
Debtors in Possession; provided, however, that notwithstanding the foregoing,
the Debtors and Newco will be deemed to have waived the right to assert or
pursue any claims, rights, and causes of action to recover preferences or
fraudulent conveyances, or to
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<PAGE>
pursue similar avoidance actions against any current customers or suppliers of
the Panini Entities (solely in such capacities) and, or otherwise relating,
directly or indirectly, to any of the Panini Entities.
SECTION 13. RETENTION OF JURISDICTION
13.1 Retention of Jurisdiction.
The Bankruptcy Court may retain jurisdiction of and, if the
Bankruptcy Court exercises its retained jurisdiction, shall have exclusive
jurisdiction of all matters arising out of, and related to, the Reorganization
Cases and this Plan of Reorganization pursuant to, and for the purposes of,
sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the
following purposes:
(a) To hear and determine pending applications for the
assumption or rejection of executory contracts or unexpired leases, if
any are pending, and the allowance of Claims resulting therefrom;
(b) To determine any and all adversary proceedings,
applications and contested matters;
(c) To ensure that distributions to holders of Allowed Claims
and Allowed Equity Interests are accomplished as provided herein;
(d) To hear and determine any timely objections to
Administration Expense Claims or to proofs of claim and equity
interests filed, both before and after the Confirmation Date,
including, without limitation, any objections to the classification of
any Claim or Equity Interest, and to allow or disallow any Disputed
Claim or Equity Interest, in whole or in part;
(e) To enter and implement such orders as may be appropriate
in the event the Confirmation Order is for any reason stayed, revoked,
modified, or vacated;
(f) To issue such orders in aide of execution of this Plan of
Reorganization, to the extent authorized by section 1142 of the
Bankruptcy Code;
(g) To consider any amendments to or modifications of this
Plan of Reorganization, to cure any defect or omission, or reconcile
any inconsistency in any order of the Bankruptcy Court, including,
without limitation, the Confirmation Order;
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639280.23
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(h) To hear and determine all applications for awards of
compensation for services rendered and reimbursement of expenses
incurred prior to the Consummation Date;
(i) To hear and determine disputes arising in connection with
the interpretation, implementation, or enforcement of this Plan of
Reorganization, the Confirmation Order, any transactions or payments
contemplated hereby or any agreement, instrument or other document
governing or relating to any of the foregoing;
(j) To hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code;
(k) To hear any other matter not inconsistent with the
Bankruptcy Code;
(l) To hear and determine all disputes involving the
existence, scope and nature of the discharges granted under Section
11.2 hereof;
(m) To issue injunctions and effect any other actions that may
be necessary or desirable to restrain interference by any entity with
the consummation or implementation of this Plan of Reorganization; and
(n) To enter a final decree closing the Reorganization
Cases.
13.2 Amendment of Plan of Reorganization.
Amendments of this Plan of Reorganization may be proposed in
writing only jointly by the Proponents at any time before confirmation, provided
that this Plan of Reorganization, as amended, satisfies the conditions of
sections 1122 and 1123 of the Bankruptcy Code, and the Debtors shall have
complied with section 1125 of the Bankruptcy Code. This Plan of Reorganization
may be amended only by the Proponents acting jointly at any time after
confirmation and before substantial consummation, provided that this Plan of
Reorganization, as amended, satisfies the requirements of sections 1122 and 1123
of the Bankruptcy Code and the Bankruptcy Court, after notice and a hearing,
confirms this Plan of Reorganization as amended under section 1129 of the
Bankruptcy Code and the circumstances warrant such amendments. A holder of a
Claim or Equity Interest that has accepted this Plan of Reorganization shall be
deemed to have accepted this Plan of Reorganization as amended if the proposed
amendment does not materially and adversely change the treatment of the Claim or
Equity Interest of such holder.
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<PAGE>
SECTION 14. MISCELLANEOUS PROVISIONS
14.1 Payment of Statutory Fees.
All fees payable under section 1930, chapter 123, title 28,
United States Code, as determined by the Bankruptcy Court at the Confirmation
Hearing, shall be paid on the Consummation Date. Any such fees accrued after the
Consummation Date will constitute an Allowed Administration Expenses Claim and
be treated in accordance with Section 2.2 hereof.
14.2 Retiree Benefits.
On and after the Consummation Date, pursuant to section
1129(a)(13) of the Bankruptcy Code, the Reorganized Debtors shall continue to
pay all retiree benefits (within the meaning of section 1114 of the Bankruptcy
Code), at the level established in accordance with subsection (e)(1)(B) or (g)
of section 1114 of the Bankruptcy Code, at any time prior to the Confirmation
Date, for the duration of the period each Debtor has obligated itself to provide
such benefits.
14.3 Compliance with Tax Requirements.
In connection with the consummation of this Plan of
Reorganization, the Debtors shall comply with all withholding and reporting
requirements imposed by any taxing authority, and all distributions hereunder
shall be subject to such withholding and reporting requirements.
14.4 Recognition of Guaranty Rights.
The classification of and manner of satisfying all Claims
hereunder take into account (a) the existence of guaranties by certain Debtors
of obligations of other Debtors and (b) the fact that the Debtors may be joint
obligors with each other or other entities with respect to an obligation. All
Claims against the Debtors based upon any such guaranties or joint obligations
shall be discharged in the manner provided in this Plan of Reorganization;
provided, that no creditor shall be entitled to receive more than a single
satisfaction of its Allowed Claims.
14.5 Severability of Plan Provisions.
In the event that, prior to the Confirmation Date, any term or
provision of this Plan of Reorganization is held by the Bankruptcy Court to be
invalid, void or unenforceable, the Bankruptcy Court shall, with the consent of
the Proponents, have the power to alter and interpret such term or provision to
make it valid or enforceable to the maximum extent practicable, consistent with
the original purpose of the term or provision
40
639280.23
<PAGE>
held to be invalid, void or unenforceable, and such term or provision shall then
be applicable as altered or interpreted. Notwithstanding any such holding,
alteration or interpretation, the remainder of the terms and provisions hereof
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated by such holding, alteration or interpretation. The Confirmation
Order shall constitute a judicial determination and shall provide that each term
and provision hereof, as it may have been altered or interpreted in accordance
with the foregoing, is valid and enforceable in accordance with its terms.
14.6 Governing Law.
Except to the extent that the Bankruptcy Code or other federal
law is applicable, or to the extent an Exhibit hereto provides otherwise, the
rights, duties and obligations arising under this Plan of Reorganization shall
be governed by, and construed and enforced in accordance with, the laws of the
State of New York without regard to the principles of the conflicts of law.
14.7 Further Assurances. All parties in interest shall execute
and deliver such documents, instruments, certificates, assignments, and other
writings, and do such other acts as may be necessary or desirable to carry out
the intents and purposes of this Plan of Reorganization, including, without
limitation, effecting the Merger Agreement.
14.8 Time of the Essence.
Time shall be of the essence relative to any and all dates
contained in this Plan of Reorganization on the Confirmation Date.
14.9 Counterparts.
This Plan of Reorganization may be executed in any number of
counterparts and by different 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.
14.10 Notices.
All notices, requests, and demands to or upon the Debtors to
be effective shall be in writing (including by facsimile transmission) and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when actually delivered or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, addressed as follows:
41
639280.23
<PAGE>
If to the Debtors:
MARVEL ENTERTAINMENT GROUP, INC.
387 Park Avenue South
12th Floor
New York, New York 10016
Attn:
Telephone: (212) 696-0808
Telecopier: (212) 576-9260
-and-
WHITE & CASE
1155 Avenue of the Americas
New York, New York 10036
Attn: Thomas Lauria
Telephone: (212) 819-8200
Telecopier: (212) 354-8113
-and-
YOUNG, CONAWAY, STARGATT & TAYLOR
Rodney Square North
Wilmington, Delaware 19899
Attn: James L. Patton, Jr., Esq.
Laura Davis Jones, Esq.
Telephone: (302) 571-6600
Telecopier: (302) 571-1253
If to Toy Biz:
TOY BIZ, INC.
333 East 38th Street
New York, New York 10016
Attn: Mr. Joseph M. Ahearn
Telephone: (212) 682-4700
Telecopier: (212) 682-5272
-and-
BATTLE FOWLER LLP
75 East 55th Street
New York, New York 10022
Attn: Lawrence Mittman, Esq.
Douglas L. Furth, Esq.
Madlyn Gleich Primoff, Esq.
Telephone: (212) 856-7000
Telecopier: (212) 856-7807
-and-
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<PAGE>
PEPPER, HAMILTON & SCHEETZ
1201 Market Street, Suite 1601
P.O. Box 1709
Wilmington, Delaware 19899
Attn: David B. Stratton
Telephone: (302) 777-6500
Telecopier: (302) 777-656-8865
If to The Secured Lenders:
THE CHASE MANHATTAN BANK
270 Park Avenue
New York, New York 10017-2070
Attn: Susan E. Atkins
Telephone: (212) 270-7142
Telecopier: (212) 270-5748
-and-
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
Attn: Chaim J. Fortgang, Esq.
Telephone: (212) 403-1000
Telecopier: (212) 403-2000
-and-
ZALKIN, RODIN & GOODMAN LLP
750 Third Avenue
New York, New York 10017-2771
Attn: Richard S. Toder, Esq.
Telephone: (212) 455-0600
Telecopier: (212) 682-6331
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639280.23
<PAGE>
Dated: Wilmington, Delaware
November 19, 1997
Respectfully submitted,
TOY BIZ, INC.
By:
Name: Joseph M. Ahearn
Title: President
BATTLE FOWLER LLP
Attorneys for Toy Biz, Inc.
75 East 55th Street
New York, New York 10022
(212) 856-7000
-and-
PEPPER, HAMILTON & SCHEETZ
1201 Market Street
Wilmington, Delaware 19899
(302) 777-6500
By:
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639280.23
<PAGE>
SECURED LENDER EXECUTION PAGE
Name of Secured Lender:
By:_____________________
Name:
Title:
45
639280.23
<PAGE>
WACHTELL, LIPTON, ROSEN, KATZ
Attorneys for The Secured
Lenders
51 West 52nd Street
New York, New York 10019
(212) 403-1000
-and-
RICHARDS, LAYTON & FINGER, P.A.
Attorneys for The
Lenders
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
By:________________________________
46
639280.23
<PAGE>
Exhibit 14 is filed herewith, and Bylaws of Newco, Charter for Newco and Merger
Agreement have been filed in a separate exhibit volume.
Pursuant to section 1(C) of the Plan of Reorganization, all other exhibits and
schedules to the Plan will be filed at least ten days prior to the hearing to
consider confirmation of the Plan.
47
639280.23
<PAGE>
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and Among
[MARVEL ENTERTAINMENT GROUP, INC.],
[TB ACQUISITION CORP.]
and
[TOY BIZ, INC.]
dated as of
_________, 1998
- -------------------------------------------------------------------------------
639604.4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I THE MERGER......................................................................................2
Section 1.1 The Merger.............................................................................2
Section 1.2 Closing................................................................................2
Section 1.3 Effective Time.........................................................................2
Section 1.4 Certificate of Incorporation and By-Laws...............................................2
Section 1.5 Directors and Officers of the Surviving Corporation....................................3
Section 1.6 Company Actions........................................................................3
ARTICLE II CONVERSION OF SECURITIES........................................................................3
Section 2.1 Conversion of Common Stock.............................................................3
Section 2.2 Conversion of Preferred Stock..........................................................4
Section 2.3 Exchange of Certificates...............................................................4
Section 2.4 Surrender of Company Preferred Stock and Payment of Company
Preferred Merger Consideration......................................................7
Section 2.5 Company Stock Options..................................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................8
Section 3.1 Authorization; Validity of Agreement; Company Action...................................8
Section 3.2 Consents and Approvals; No Violations..................................................9
ARTICLE IV COVENANTS ......................................................................................9
Section 4.1 Indemnification........................................................................9
Section 4.2 Affiliates............................................................................10
ARTICLE V CONDITIONS.....................................................................................10
Section 5.1 Conditions to Each Party's Obligation to Effect the Merger............................10
Section 5.2 Conditions to Parent's and the Purchaser's Obligations to Effect
the Merger.........................................................................11
ARTICLE VI TERMINATION ...................................................................................11
Section 6.1 Termination...........................................................................11
Section 6.2 Effect of Termination.................................................................12
ARTICLE VII MISCELLANEOUS................................................................................12
Section 7.1 Fees and Expenses..........................................................................12
Section 7.2 Amendment, Modification and Other Action...................................................12
Section 7.3 Nonsurvival of Representations and Warranties..............................................12
Section 7.4 Notices....................................................................................12
Section 7.5 Interpretation.............................................................................13
</TABLE>
639604.4
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<PAGE>
<TABLE>
<S> <C> <C>
Section 7.6 Counterparts...............................................................................13
Section 7.7 Entire Agreement, No Third Party Beneficiaries; Rights of
Ownership..........................................................................13
Section 7.8 Severability...............................................................................14
Section 7.9 Governing Law..............................................................................14
Section 7.10 Assignment.................................................................................14
Section 7.11 Enforcement................................................................................14
</TABLE>
639604.4
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of ___, 199_,
by and among [Marvel Entertainment Group, Inc., a Delaware corporation]
("Parent"), [TB Acquisition Corp.], a Delaware corporation and a direct wholly
owned subsidiary of Parent (the "Purchaser"), and Toy Biz, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have unanimously approved, and deem it advisable and in the best
interests of their respective stockholders (and, in the case of the Board of
Directors of Parent, the Parent's creditors and other parties in interest) to
consummate, the merger of the Purchaser with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value
$.01 per share, of the Company (the "Shares"), not owned directly or indirectly
by Parent or the Company, will be converted into the right to receive one (the
"Conversion Number") fully paid and non assessable share of common stock, par
value $0.01 per share, of Parent (the "Parent Common Stock");
WHEREAS, for Federal income tax purposes it is intended that the Merger
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (including the rules and regulations
promulgated thereunder, the "Code");
WHEREAS, Parent, together with eight of its wholly owned Subsidiaries
(as defined below) (collectively with Parent, the "Parent Debtors"), are chapter
11 debtors and debtors in possession in cases pending under chapter 11 of title
11 of The United States Code (11 U.S.C. ss.ss. 101 et seq.) (the "Bankruptcy
Code"), having commenced voluntary cases (Nos. 96-2066 through 96-2077 (HSB))
(the "Reorganization Cases") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court");
WHEREAS, it is the intention of the parties that the transactions
contemplated hereby be implemented in connection with the consummation of a
chapter 11 plan of reorganization substantially in the form attached hereto as
Exhibit C (the "Parent Plan") for the [Marvel Debtors]; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL") and the Parent Plan, and upon the
authority granted by the order entered by the Bankruptcy Court confirming the
Parent Plan (the "Confirmation Order"), at the Effective Time (as defined in
Section 1.3), the Company and the Purchaser shall consummate the Merger pursuant
to which (a) the
639604.4
<PAGE>
Purchaser shall be merged with and into the Company, in a transaction intended
to qualify as a tax-free reorganization under Sections 368(a)(1)(K) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code") and
the separate corporate existence of the Purchaser shall thereupon cease, (b) the
Company shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to be
covered by the laws of the State of Delaware, and (c) all of the rights,
privileges, immunities, powers and franchises of the Company and the Purchaser
shall vest in the Surviving Corporation and all obligations, duties, debts and
liabilities of the Company and the Purchaser shall become the obligations,
duties, debts and liabilities of the Surviving Corporation.
Section 1.2 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VI hereof (the "Closing Date"), at
the offices of Battle Fowler, 75 East 55th Street, New York, New York 10022,
unless another date or place is agreed to in writing, by the parties hereto.
Section 1.3 Effective Time. Parent, the Purchaser and the
Company will cause a Certificate of Merger to be executed and filed on the
Closing Date (or on such other date as Parent and the Company may agree) with
the Secretary of State of Delaware (the "Secretary of State") as provided in the
DGCL. The Merger shall become effective on the date on which the Certificate of
Merger has been duly filed with the Secretary of State or such time after that
date as is agreed upon by the parties and specified in such Certificate of
Merger, and such time is hereinafter referred to as the "Effective Time."
Section 1.4 Certificate of Incorporation and By-Laws. At the
Effective Time, the amended and restated certificate of incorporation of the
Company, as amended, as in effect immediately prior to the Effective Time, shall
be amended as set forth in Exhibit E hereto, and promptly filed with the
Secretary of State of the State of Delaware. The Amended and Restated
Certificate of Incorporation of the Company, as so amended at the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended in accordance with applicable law. The By-Laws of the
Company, as in effect immediately prior to the Effective Time, shall be amended
as set forth in Exhibit F hereto. The By-Laws of the Company, as so amended at
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with applicable law. The Merger shall have the
effects specified in the DGCL.
Section 1.5 Directors and Officers of the Surviving
Corporation. The individuals listed on Schedule 1.5 attached hereto shall be the
initial directors and officers, respectively, of the Surviving Corporation until
their successors shall have been duly elected or appointed or qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
639604.4
2
<PAGE>
Section 1.6 Company Actions. The Company hereby approves of
and consents to the Merger and represents that: (i) its Board of Directors, at a
meeting duly called and held, has (x) determined that each of this Agreement and
the Merger are fair and in the best interests of the holders of the Shares, and
(y) approved this Agreement and the transactions contemplated hereby, including
the Merger, and such approval constitutes approval of this Agreement and the
transactions contemplated hereby, including the Merger and recommended that the
stockholders of the Company approve the Merger and (ii) that this Agreement has
been approved and adopted by the requisite vote of the holders of the Shares.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Common Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of Parent, the
Purchaser, the Company or the holders of Shares, or holders of common stock, par
value $0.01 per share, of the Purchaser (the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share
of the Purchaser Common Stock shall be converted into and become one
fully paid and non-assessable share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
Shares that are owned by the Company as treasury stock and any Shares
or other capital stock owned by Parent, the Purchaser or any other
wholly owned Subsidiary of Parent shall be canceled and retired and
shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. As of the Effective Time, each
issued and outstanding Share (other than Shares to be canceled in
accordance with Section 2.l(b)) shall be converted into the right to
receive the Conversion Number of fully paid and non-assessable shares
of Parent Common Stock (the "Merger Consideration"). As of the
Effective Time, all such Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such Shares shall
cease to have any rights with respect thereto, except the right to
receive upon the surrender of such Share certificates, certificates
representing the shares of Parent Common Stock, [any cash in lieu of
fractional shares of Parent Common Stock] to be issued or paid in
consideration therefor upon surrender of such certificate in accordance
with Section 2.2, without interest.
Section 2.2 Conversion of Preferred Stock. (a) At the
Effective Time, each share of Company Preferred Stock (other than shares held by
dissenting stockholders) ("Preferred Shares") shall be converted into and become
the right to receive an amount in cash equal to $___ (the "Preferred Merger
Consideration"). All such shares shall no longer be outstanding and shall
639604.4
3
<PAGE>
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the Preferred Merger
Consideration to be distributed in consideration therefor upon the surrender of
such certificate in accordance with this Section without interest thereon.
(b) After the Effective Time, there shall be no further
registration of transfers of shares of Company Preferred Stock. If, after the
Effective Time, certificates representing shares of Company Preferred Stock are
presented to the Surviving Corporation, they shall be canceled and exchanged for
the consideration provided for, and in accordance with the procedures set forth,
in this Article 2.
(c) Dissenting Company Preferred Shares. Notwithstanding any
provision of this Agreement to the contrary, if required by the DGCL but only to
the extent required thereby, shares of Company Preferred Stock which are issued
and outstanding immediately prior to the Effective Time and which are held by
holders of such shares of Company Preferred Stock who have properly exercised
appraisal rights with respect thereto in accordance with Section 262 of the DGCL
(the "Dissenting Company Preferred Shares") will not be exchangeable for the
right to receive the Preferred Merger Consideration, and holders of such shares
of Company Preferred Stock will be entitled to receive payment of the appraised
value of such shares of Company Preferred Stock in accordance with the
provisions of such Section 262 unless and until such holders fail to perfect or
effectively withdraw or lose their rights to appraisal and payment under the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses such right, such shares of Company Preferred
Stock will thereupon be treated as if they had been converted into and to have
become exchangeable for, at the Effective Time, the right to receive the
Preferred Merger Consideration, without any interest thereon. The Company will
give Parent prompt notice of any demands received by the Company for appraisals
of shares of Company Preferred Stock. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
Section 2.3 Exchange of Certificates. (a) Exchange Agent.
Immediately following the Effective Time of the Merger, Parent shall deposit
with a bank or trust company to be designated by Parent and the Company prior to
the Effective Time (the "Exchange Agent"), for the benefit of the holders of
Shares, for exchange in accordance with this Article II, through the Exchange
Agent, certificates representing the shares of Parent Common Stock (such shares
of Parent Common Stock, together with any dividends or distributions with
respect thereto with a record date after the Effective Time of the Merger, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section 2.1
in exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time of the Merger, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time of the Merger represented outstanding Shares (the
"Certificates"), other than shares to be canceled or retired in accordance with
Section 2.l (b), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and
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title to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificate in exchange for certificates representing shares of
Parent Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed and such other documents
as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the provisions of this Article II,
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Shares which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock may be issued to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other non-income taxes
required by reason of the issuance of shares of Parent Common Stock to a person
other than the registered holder of such Certificate or establish to the
satisfaction of Parent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed, at any time after the Effective Time of the Merger, to represent only
the right to receive upon such surrender the certificate representing the
appropriate number of whole shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock and any dividends to the extent
provided in Section 2.2(c) as contemplated by this Section 2.2. No interest will
be paid or will accrue on any cash payable in lieu of any fractional shares of
Parent Common Stock.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time of the Merger shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Parent Common
Stock represented thereby[, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(e)] until the surrender
of such Certificate in accordance with this Article II. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to Section 2.2(e)
and the amount of dividends or other distributions with a record date after the
Effective Time of the Merger theretofore paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time of
the Merger but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights. All shares of Parent Common
Stock issued upon the surrender for exchange of Certificates in accordance with
the terms of this Article II (including any cash paid pursuant to Section 2.2(c)
or 2.2(e)) shall be deemed to have been issued
639604.4
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(and paid) in full satisfaction of all rights pertaining to the Shares
theretofore represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time of the Merger which may have been
declared or made by the Company on such Shares in accordance with the terms of
this Agreement or prior to the date of this Agreement and which remain unpaid at
the Effective Time of the Merger, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time of the Merger.
If, after the Effective Time of the Merger, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II, except as otherwise
provided by law.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
shall not entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
(ii) Notwithstanding any other provisions of this
Agreement, each holder of Shares who would otherwise have been
entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a
share of Parent Common Stock multiplied by the Parent Share
Price.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for six months
after the Effective Time of the Merger shall be delivered to Parent, upon
demand, and any holders of Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent for payment of their claim
for Parent Common Stock, [any cash in lieu of fractional shares of Parent Common
Stock] and any dividends or distributions with respect to Parent Common Stock.
(g) No Liability. None of Parent, the Purchaser, the Company
or the Exchange Agent shall be liable to any person in respect of any shares of
Parent Common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund or the Share Trust delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to five years after the
Effective Time of the Merger (or immediately prior to such earlier date on which
any shares of Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock or any dividends or distributions with respect to Parent
Common Stock in respect of such Certificate would otherwise escheat to or become
the property of any Governmental Entity (as defined in Section 3.4)), any such
shares, cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by applicable law, become the property of the Surviving
Corporation and its successors, if any, free and clear of all claims or interest
of any person previously entitled thereto.
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(h) Investment of Exchange Fund and Common Shares Trust. The
Exchange Agent shall invest any cash included in the Exchange Fund, as directed
by Parent, on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent.
(i) Impact of Stock Splits, etc. In the event of any changes
in Parent Common Stock between the date of this Agreement and the Effective Time
of the Merger by reason of any stock split, stock dividend, subdivision,
reclassification, recapitalization, combination, exchange of shares or the like,
the number and class of shares of Parent Common Stock to be issued and delivered
in the Merger in exchange for each outstanding Share as provided in this
Agreement and the calculation of all share prices provided for in this Agreement
shall be proportionately adjusted.
(j) Lost Certificates. If any certificate that immediately
prior to the Effective Time represented Shares shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond, in such reasonable
amount as the Surviving Corporation may direct, as indemnity against any claim
that may be made against it with respect to such certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed certificate the
applicable Merger Consideration, [any cash in lieu of fractional shares of
Parent Common Stock to which the holder thereof is entitled pursuant to this
Section] and any dividends or other distributions with respect to the Parent
Common Stock to which the holder thereof is entitled pursuant to this Section
2.1.
(k) Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares or options or warrants to purchase Shares
thereafter on the records of the Company.
Section 2.4 Surrender of Company Preferred Stock and Payment
of Company Preferred Merger Consideration. (a) Each holder of shares of Company
Preferred Stock that have been converted into a right to the Company Preferred
Merger Consideration upon surrender to the Surviving Corporation of a
certificate or certificates representing such shares of Company Preferred Stock
will be entitled to receive the Preferred Merger Consideration payable in
respect of such shares of Company Preferred Stock. Until so surrendered, each
such certificate shall, after the Effective Time, represent for all purposes
only the right to receive the Preferred Merger Consideration.
Section 2.5 Company Stock Options. (a) the Board of Directors
of the Company (or, if appropriate, any committee administering the Company's
1995 Stock Option Plan (the "Stock Option Plan")) has adopted or shall adopt
such resolutions or taken such actions as may be required to adjust the terms of
all outstanding employee stock options to purchase Toy Biz Shares granted under
the Stock Option Plan (each, an "Employee Option") and the terms of the Stock
Option Plan to provide that at the Effective Time, each Employee Option
outstanding immediately prior to the Effective Time shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Employee Option, the number of shares of Parent Common
Stock as the holder of such Employee Option would have been entitled to receive
pursuant to the Merger had
639604.4
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such holder exercised such Employee Option in full immediately prior to the
Effective Time, at a price per share equal to (y) the aggregate exercise price
for the Shares otherwise purchasable pursuant to such Employee Option divided by
(z) the number of shares of Parent Common Stock deemed purchasable pursuant to
such Employee Option; provided, however, that in the case of any Employee Option
to which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code ("Qualified Stock Options"), the option price, the
number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to comply
with Section 424(a) of the Code.
(b) As soon as practicable after the Effective Time of the
Merger, Parent shall deliver to the holders of Employee Options appropriate
notices setting forth such holders' rights pursuant to the Stock Option Plan and
the agreements evidencing the grants of such Employee Options shall continue in
effect on the same terms and conditions (subject to the adjustments required by
this Section 2.3 after giving effect to the Merger).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows:
Section 3.1 Authorization; Validity of Agreement; Company
Action. The Company has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by the Company of this
Agreement, the consummation by it of the transactions contemplated hereby, and
the submission of this Agreement to the holders of Shares for their approval by
written consent to action in lieu of a meeting have been duly authorized by the
Board of Directors of the Company. No corporate action on the part of the
Company, other than such approval by the holders of shares, is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery hereof by Parent and the Purchaser, is a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except that the enforcement thereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditor's rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
Section 3.2 Consents and Approvals; No Violations. Except for
the filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, (a) the Securities Act of 1933, as
amended (the "Securities Act"), (b) the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (c) the Bankruptcy Code (or filings with, or
authorizations of, the Bankruptcy Court), and (d) the DGCL, and assuming the
filings required
639604.4
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under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), are made and the waiting period thereunder has been terminated or
has expired, neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or the by-laws of the Company or of its Subsidiary, (ii) require
any filing with, or permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (a "Governmental Entity"), or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, its Subsidiary or any of their properties or assets, excluding from the
foregoing clauses (ii) and (iii) such violations, breaches or defaults which
would not, individually or in the aggregate, have a material adverse effect on
the Company and its Subsidiary, taken as a whole, and which will not materially
impair the ability of the Company to consummate the transactions contemplated
hereby or by the Parent Plan.
ARTICLE IV
COVENANTS
Section 4.1 Indemnification. (a) Parent shall, to the fullest
extent permitted by law, all the Company's obligations to indemnify (including
any obligations to advance funds for expenses) the current or former directors
or officers of the Company for acts or omissions by such directors and officers
occurring prior to the Effective Time of the Merger to the extent that such
obligations of the Company exist on the date of this Agreement, whether pursuant
to the Company's Amended and Restated Certificate of Incorporation, By-laws,
individual indemnity agreements or otherwise, and such obligations shall survive
the Merger and shall continue in full force and effect in accordance with the
terms of such Amended and Restated Certificate of Incorporation, By-Laws and
individual indemnity agreements from the Effective Time of the Merger until the
expiration of the applicable statute of limitations with respect to any claims
against such directors or officers arising out of such acts or omissions.
(b) Parent shall maintain the Company's existing officers' and
directors' liability insurance ("D&O Insurance") for a period of not less than
five years after the Effective Time; provided, that the Parent may substitute
therefor policies of substantially similar coverage and amounts containing terms
no less favorable to such former directors or officers.
Section 4.2 Affiliates. Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who are "affiliates" of
the Company for purposes of Rule 145 under the Securities Act. The Company shall
use its best efforts to cause each such person or entity to deliver to Parent on
or prior to the Closing Date a written agreement substantially in the form
attached hereto as Exhibit G. If any such identified person or entity fails to
provide a letter in form
639604.4
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and substance satisfactory to Parent, Parent shall, in lieu of receipt of such
letter, be entitled to cause to be placed appropriate legends on any
certificates evidencing Parent Common Stock to be received by such person or
entity pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for Parent Common Stock, to the
effect that the shares of Parent Common Stock received or to be received by such
person or entity pursuant to the terms of this Agreement may only be sold,
transferred or otherwise conveyed, and the holder thereof may only reduce such
holder's interest in or risks relating to such shares, pursuant to an effective
registration statement under the Securities Act, in accordance with the
provisions of Paragraph (d) of Rule 145, or in a manner not requiring
registration under or pursuant to an exemption provided from registration under
the Securities Act.
ARTICLE V
CONDITIONS
Section 5.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
(a) Effectiveness of Form S-4. The Form S-4 shall have become
effective and no stop order suspending the effectiveness of the Form
S-4 shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC;
(b) HSR Act. Any waiting period (including any extension
thereof) under the HSR Act applicable to the Merger shall have expired
or been terminated;
(c) Statutes; Consents. No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any Governmental
Entity which prohibits the consummation of the Merger and all
governmental consents, orders and approvals required for the
consummation of the Merger and the transactions contemplated hereby
shall have been obtained and shall be in effect at the Effective Time;
(d) Injunctions. There shall be no order or injunction of a
Governmental Entity of competent jurisdiction in effect precluding,
restraining, enjoining or prohibiting consummation of the Merger; and
(e) Confirmation Order. The Bankruptcy Court shall have
entered the Confirmation Order and its effectiveness and enforceability
shall not be subject to any stay or injunction and all conditions to
the consummation of the Parent Plan shall have been satisfied or duly
waived in accordance with the Parent Plan.
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Section 5.2 Conditions to Parent's and the Purchaser's
Obligations to Effect the Merger. The obligations of Parent and the Purchaser to
consummate the Merger are further subject to the fulfillment of the conditions,
which may be waived in whole or in part by Parent and the Purchaser that the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects as of the Effective Time after
giving effect to the Merger as if made at and as of such time;
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated and
the Merger contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) By mutual written agreement of Parent, the Purchaser and
the Company;
(b) By Parent or the Company, if the Closing shall not have
taken place on or before ___________________; provided that the failure
of the Closing, to occur on or before such date is not the result of
the breach of any representation or warranty or the failure to perform
any covenant or agreement or satisfy any condition hereunder by the
party seeking to so terminate;
(c) By Parent or the Company, upon written notice given to the
other if there shall be any law or regulation of any competent
authority that makes consummation of the Merger illegal or otherwise
prohibited, or if any governmental entity of competent jurisdiction
shall have issued a final non-appealable order, judgment, injunction or
order enjoining or otherwise prohibiting the transactions contemplated
by this Agreement; or
(d) By Parent, if the Company breaches its representations and
warranties in any material respect and such breach has not been cured
to the reasonable satisfaction within 10 days of the notice by the
Parent to the Company of such breach.
Section 6.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
any party hereto.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Fees and Expenses. (a) Except as contemplated by
this Agreement, all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such expenses.
Section 7.2 Amendment, Modification and Other Action. Subject
to applicable law, this Agreement may be amended, modified and supplemented in
any and all respects by written agreement of the parties hereto, at any time
prior to the Closing Date with respect to any of the terms contained herein.
Section 7.3 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 7.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Parent or the Purchaser, to:
with a copy to:
and
if to the Company, to:
with a copy to:
639604.4
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Section 7.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". As used in this Agreement, the term
"affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act.
Section 7.6 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 7.7 Entire Agreement, No Third Party Beneficiaries;
Rights of Ownership. This Agreement (including the documents and the instruments
referred to herein): (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) except as provided in Section
5.1, is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
Section 7.8 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a Governmental Entity of competent
jurisdiction to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 7.9 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 conflicts of law thereof.
Section 7.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 7.11 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
[MARVEL ENTERTAINMENT GROUP,
INC.]
By _______________________________
Name:
Title:
[TB ACQUISITION CORP.]
By _______________________________
Name:
Title:
TOY BIZ, INC.
By _______________________________
Name:
Title:
639604.4
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[RESTATED] CERTIFICATE OF INCORPORATION
OF
[NEWCO]
[Newco], a corporation (the "Corporation") organized and
existing under the General Corporation Law of the State of Delaware (the "GCL"),
does hereby certify as follows:
1. The present name of the Corporation is [Newco]. The
original certificate of incorporation was filed with the office of the Secretary
of State of the State of Delaware on ___________, 198 .
[2. This Restated Certificate of Incorporation restates and
integrates and further amends the certificate of incorporation of the
Corporation, as heretofore amended, supplemented, and/or restated] (the
"Certificate of Incorporation").
3. The text of the Certificate of Incorporation is hereby
restated and integrated and further amended to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is [NEWCO] (the "Corporation").
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle, and the name of the registered agent of the Corporation at such address
is The Prentice-Hall Corporation System, Inc.
ARTICLE III
PURPOSES
The nature of the business or purposes of the Corporation is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "GCL").
639422.11
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ARTICLE IV
CAPITAL STRUCTURE
4.1 Authorized Capital Stock. The total number of shares of
capital stock which the Corporation shall have authority to issue is ___________
shares, consisting of two classes of capital stock:
(a) ___________ shares of common stock, par value $.01
per share (the "Common Stock"); and
(b) ___________ shares of preferred stock, par value $.01 per
share (the "Preferred Stock") of which ______ shares shall be designated as
shares of 8% Cumulative Convertible Preferred Stock.
4.2 Designations, Preferences, etc. The designations,
preferences, powers, and relative, participating, optional, and other rights and
the qualifications, limitations, and restrictions thereof, of the capital stock
of the Corporation shall be as set forth in this Certificate of Incorporation.
ARTICLE V
COMMON STOCK
5.1 Dividends. Subject to any preferential or other rights of
the holders of outstanding shares of Preferred Stock, when, as, and if dividends
are declared by the Corporation's Board of Directors in accordance with the
provisions of this Certificate of Incorporation on outstanding shares of Common
Stock, whether payable in cash, in property, or in securities of the
Corporation, the holders of shares of the Common Stock shall be entitled to
share equally in and to receive all such dividends, in accordance with the
number of shares of Common Stock held by each such holder.
5.2 Liquidation Rights. Upon any duly authorized voluntary or
any involuntary liquidation, dissolution, or winding-up of the affairs of the
Corporation, after payment in full or reasonable provision for payment in full
of all claims and obligations of the Corporation, in accordance with Section 281
of the GCL, as the same now exists or may hereafter be amended, or with the
provisions of any successor statute, shall have been made, and subject to any
preferential or other rights of holders of outstanding shares of Preferred
Stock, the holders of shares of Common Stock shall be entitled to share ratably,
in accordance with the number of shares of Common Stock held by each such
holder, in all remaining assets of the Corporation available for distribution
among the holders of Common Stock, whether such assets are capital, surplus, or
earnings. For the purposes of
639422.11
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this Paragraph 5.2 of Article V hereof, neither the consolidation or merger of
the Corporation with or into any other entity or entities, nor the sale, lease,
exchange or transfer by the Corporation of all or any part of its assets, nor
the reduction of the number of authorized shares of the capital stock or any
class or series thereof of the Corporation, shall be deemed to be a voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation as those
terms are used in this Paragraph 5.2 of Article V hereof.
5.3 Voting Rights. At each annual or special meeting of
stockholders, in the case of any written consent of stockholders, and for all
other purposes, each holder of record of shares of Common Stock on the relevant
record date shall be entitled to one (1) vote for each share of Common Stock
standing in such holder's name on the stock transfer records of the Corporation.
The holders of shares of Common Stock shall not have cumulative voting rights.
5.4 No Preemptive or Subscription Rights. No holder
of shares of Common Stock shall be entitled to preemptive or
subscription rights.
ARTICLE VI
PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in
one or more series only as may be determined and authorized in accordance with
the provisions of this Certificate of Incorporation. Subject to the provisions
of this Certificate of Incorporation, the Board of Directors is expressly
authorized, to the fullest extent permitted by law, to fix and alter the powers,
designations, preferences, and relative, optional, participating, and other
rights, and the qualifications, limitations, and restrictions thereof, granted
to or imposed upon any wholly unissued series of Preferred Stock and, unless
otherwise provided in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any such series, to increase
(but not above the total number of authorized shares of Preferred Stock) or
decrease (but not below the number of shares of such series then outstanding)
the number of shares of any such series subsequent to the issue of shares of
that series.
Authorized and unissued shares of any series of Preferred
Stock may be issued with such designations, powers, voting rights, preferences,
and relative, participating, optional and other rights, if any, and such
qualifications, limitations and restrictions thereof, if any, only as may be
authorized in accordance with the provisions of this Certificate of
639422.11
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Incorporation prior to the issuance of any shares of such series of Preferred
Stock, including, but not limited to: (i) the distinctive designation of each
series and the number of shares that will constitute such series; (ii) the
voting rights, if any, of shares of such series and whether the shares of any
such series having voting rights shall have multiple votes per share; (iii) the
dividends payable on the shares of such series, any restriction, limitation, or
condition upon the payment of such dividends, whether dividends shall be
cumulative, and the dates on which dividends are payable; (iv) the prices at
which, and the terms and conditions on which, the shares of such series may be
redeemed, if such shares are redeemable; (v) the purchase or sinking fund
provisions, if any, for the purchase or redemption of shares of such series;
(vi) any preferential amount payable upon shares of such series in the event of
the liquidation, dissolution, or winding-up of the Corporation, or any
distribution of its assets; and (vii) the prices or rates of conversion or
exchange at which, and the terms and conditions on which, the shares of such
series are convertible or exchangeable, if such shares are convertible or
exchangeable.
Any and all shares of Preferred Stock issued and for which
full consideration has been paid or delivered shall be deemed fully paid and
non-assessable shares, and the holder thereof shall not be liable for any
further payment thereon.
6.1 8% Cumulative Convertible Preferred Stock. The initial
series of Preferred Stock shall be comprised of ______ shares and shall be
designated 8% Cumulative Convertible Preferred Stock (the "8% Preferred Stock").
The rights, preferences, privileges and restrictions granted
to or imposed upon the 8% Preferred Stock are as follows.
6.2 Dividends and Distributions. (a) The holders of 8%
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors out of funds legally available for the purpose, dividends at a rate
per annum equal to 8% of the Liquidation Preference (as defined in Section 6.7)
per share of the 8% Preferred Stock payable quarterly on the first business day
of [March, June, September and December] in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing
__________________, 199_. Dividends shall be payable at the option of the Board
of Directors (x) in cash, (y) in additional shares of 8% Preferred Stock having
an aggregate Liquidation Preference no less than the dividend payment, or (z) in
any combination of cash and additional shares of 8% Preferred Stock valued on
such basis. So long as any shares of 8% Preferred Stock are outstanding, the
Corporation shall not pay or declare, or issue by way of any capital
reorganization or reclassification, any dividend or distribution on shares of
Common Stock or on any series of capital stock
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ranking junior to the 8% Preferred Stock (either as to dividends or upon
liquidation, dissolution or winding up), except (i) Approved Spinoff
Distributions (as defined in this paragraph), (ii) dividends or distributions
that are payable solely in shares of Common Stock or any series of capital stock
ranking junior to the 8% Preferred Stock both as to dividends and upon
liquidation, dissolution or winding up, or (iii) any rights or warrants to
subscribe for or purchase shares described in clause (ii). "Approved Spinoff
Distribution" shall mean a dividend or distribution of shares of stock having a
majority of the voting power of a subsidiary of the Corporation but only if (x)
the dividend or distribution of those subsidiary shares is approved by a vote of
at least 75% of the members of the Corporation's board of directors and (y) the
Corporation receives a fairness opinion from a nationally recognized investment
banking firm to the effect that the adjustment of the conversion ratio of the 8%
Preferred Stock as a result of such dividend is fair to the holders of the 8%
Preferred Stock from a financial point of view.
(b) In the case of the original issuance of shares of 8%
Preferred Stock, dividends shall begin to accrue and be cumulative from the date
of issue. In the case of shares of 8% Preferred Stock issued at any other time,
dividends shall begin to accrue and be cumulative from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares to which such
dividends have been paid, unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date (a "Dividend Record Date")for
the determination of holders of shares of 8% Preferred Stock entitled to receive
a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall be cumulative from such Quarterly Dividend
Payment Date; provided, however, that if dividends shall not be paid on such
Quarterly Dividend Payment Date, then dividends shall accrue and be cumulative
from the Quarterly Dividend Payment Date to which such dividends have been paid.
Dividends paid on the shares of 8% Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares
shall be allocated pro-rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of 8% Preferred Stock entitled to receive payment of a
dividend declared thereon, which record date shall be no more than sixty days
prior to the date fixed for the payment thereof.
6.3 Voting Rights. The holders of 8% Preferred Stock
shall have the following voting rights:
(a) Except as otherwise provided herein, each holder of shares
of 8% Preferred Stock shall be entitled to such number of votes for the 8%
Preferred Stock held by him on all matters submitted to a vote of the
Corporation's stockholders as shall be
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equal to the largest number of whole shares of Common Stock into which all of
his shares of 8% Preferred Stock are then convertible;
(b) Except as otherwise provided herein or by law, the holders
of 8% Preferred Stock and the holders of Common Stock shall vote together as one
class on all matters submitted to a vote of the Corporation's stockholders.
(c) The Corporation shall not (A) consolidate with or merge
into any other person in any transaction in which the Corporation is not the
continuing or surviving corporation, (B) permit any other person to consolidate
with or merge into the Corporation in any transaction in which the Corporation
is the continuing or surviving person, but the Common Stock is changed into or
exchanged for stock or other securities of any other person or cash or any other
property, (C) transfer all or substantially all of its properties or its assets
to any other person, or (D) consolidate or merge with any other person, or
permit any subsidiary to consolidate with or merge into any other person, in any
transaction in which the Corporation is the surviving or continuing person and
the number of shares of Common Stock outstanding immediately following such
transaction is greater than 119% of the number of shares of Common Stock
outstanding immediately prior to such transaction, unless such transaction is
approved by at least two-thirds of the shares of outstanding 8% Preferred Stock,
voting together as a separate class, except that, in the case of a merger,
consolidation or transfer to be consummated prior to the [THE DATE WHICH IS THE
THIRD ANNIVERSARY OF THE CLOSING WILL BE INSERTED] such approval shall not be
required if each of the following conditions is satisfied with respect to such
merger, consolidation, sale or transfer: (i) the holders of Common Stock will
receive consideration equal to at least $9.625 per share of Common Stock, and
(ii) the holders of 8% Preferred Stock will receive (x) the same consideration
such holders would have received had such holders converted their 8% Preferred
Stock to Common Stock immediately prior to consummation of the merger, plus
(y)an amount equal to the present value of the amount of dividends such holders
would have been entitled to receive on their shares of 8% Preferred Stock if
such shares remained outstanding until [THE DATE WHICH IS THE THIRD ANNIVERSARY
OF THE CLOSING WILL BE INSERTED], discounted at a discount rate of 10% per
annum, compounded quarterly.
6.4 Certain Restrictions. So long as any shares of 8%
Preferred Stock are outstanding, the Corporation shall not:
(a) redeem or purchase or otherwise acquire for consideration
any stock ranking junior to or on a parity with (either as to dividends or upon
liquidation, dissolution or winding up) the 8% Preferred Stock:
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(b) permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could purchase such shares at such time and in such
manner; or
(c) authorize or issue any class or series of stock ranking
(either as to dividends or upon liquidation, dissolution or winding up) senior
to or on parity with the 8% Preferred Stock without the affirmative vote or
consent of holders of at least two-thirds of the outstanding shares of 8%
Preferred Stock voting or consenting separately as one class.
6.5 Redemption. (a) The Corporation shall redeem all
outstanding shares of 8% Preferred Stock on [THE DATE WHICH IS THE THIRTEENTH
ANNIVERSARY OF THE CLOSING WILL BE INSERTED] at a price per share equal to the
Liquidation Preference plus an amount equal to all accrued but unpaid dividends
thereon, whether or not declared, to the redemption date.
(b) The Corporation may redeem all, but not less than all, of
the outstanding shares of the 8% Preferred Stock at any time after the [THE DATE
WHICH IS THE THIRD ANNIVERSARY OF THE CLOSING WILL BE INSERTED] at a price per
share equal to the Liquidation Preference, plus all accrued but unpaid
dividends, whether or not declared, plus, if the redemption date is not a
Quarterly Dividend Payment Date, an amount equal to the annual dividend per
share multiplied by a fraction, the numerator of which is the number of days
from the Quarterly Dividend Payment Date next preceding the date of redemption
to the redemption date and the denominator of which is 365 , provided that if
the redemption date occurs after a Dividend Record Date and before the Quarterly
Dividend Payment Date to which that Dividend Record Date relates, the dividend
otherwise payable on that Quarterly Dividend Payment Date shall not be paid by
the Corporation. If the Corporation elects to redeem the outstanding shares of
8% Preferred Stock as provided in this paragraph, the Corporation shall send a
notice of redemption to each holder of the 8% Preferred Stock specifying (i) the
redemption date, which date shall be not less than thirty (30) nor more than
sixty (60) days following the date of mailing of the notice of redemption, and
(ii) the redemption price, including a calculation thereof in reasonable detail.
(c) The following provisions shall apply to any redemption
pursuant to this Section 6.5:
(i) On the redemption date, the Corporation shall
deposit for the pro-rata benefit of the holders of the shares of the outstanding
8% Preferred Stock the funds necessary for such redemption with a bank or trust
company in the Borough of Manhattan, The City of New York, having a capital and
surplus of
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at least $50,000,000. Holders of shares of 8% Preferred Stock shall thereafter
have the right to receive payment of the redemption price for such shares by
surrendering to the Corporation, at its principal office or at such other office
or agency maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of 8% Preferred Stock to the Corporation,
at its principal office or at such other office or agency maintained by the
Corporation for that purpose, a certificate or certificates representing such
shares. Any monies so deposited by the Corporation with a bank or trust company
pursuant to this subparagraph (i) and unclaimed at the end of five years from
the redemption date shall revert to the general funds of the Corporation. After
such reversion, any such bank or trust company shall, upon demand, pay over to
the Corporation such unclaimed amounts and thereupon such bank or trust company
shall be relieved of all responsibility in respect thereof to such holder and
such holder shall look only to the Corporation for the payment of the redemption
price. Any interest accrued on funds so deposited pursuant to this paragraph (a)
shall be paid from time to time to the Corporation for its own account; and
(ii) Upon the deposit for funds pursuant to
subparagraph (i) in respect of outstanding shares of the 8% Preferred Stock,
notwithstanding that any certificates for such shares shall not have been
surrendered for cancellation, the shares represented thereby shall no longer be
deemed outstanding, the rights to receive dividends thereon shall cease to
accrue form and after the date of redemption and all rights of the holders of
the shares of the 8% Preferred Stock shall cease and terminate, excepting only
the right to receive the redemption price therefor.
6.6 Reacquired Shares. Any shares of the 8% Preferred Stock
redeemed or purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions or restrictions on issuance set forth
herein.
6.7 Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the corporation, no distribution shall
be made (A) to the holders of stock ranking junior (upon liquidation,
dissolution or winding up) to the 8% Preferred Stock unless, prior thereto, the
holders of 8% Preferred Stock shall have received $100.00 per share (the
"Liquidation Preference"), plus an amount equal to accrued but unpaid dividends
thereon, whether or not declared, to the date of such payment plus, if the date
of such payment is not a Quarterly
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Dividend Payment Date, an amount equal to the annual dividend per share
multiplied by a fraction, the numerator of which is the number of days from the
Quarterly Dividend Payment Date next preceding the date of such payment to the
date of such payment and the denominator of which is 365, provided that if the
date of such payment is after a Dividend Record Date and before the Quarterly
Dividend Payment Date to which that Dividend Record Date relates, the dividend
otherwise payable on that Quarterly Dividend Payment Date shall not be paid by
the Corporation, or (B) to the holders of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the 8%
Preferred Stock, except distributions made ratably on the 8% Preferred Stock and
all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up.
6.8 Conversion. Each share of the 8% Preferred Stock may be
converted (an "Optional Conversion") at any time, at the option of the holder
thereof, into shares of Common Stock of the Corporation, on the terms and
conditions set forth below in this Section 6.8.
(a) Subject to the provisions for adjustment hereinafter set
forth, each share of the 8% Preferred Stock shall be convertible in the manner
hereinafter set forth, into 10.39 fully paid and nonassessable shares of Common
Stock of the Corporation. Upon conversion of any shares of 8% Preferred Stock,
the holder thereof shall be entitled to receive all accrued but unpaid
dividends, whether or not declared, on the shares so converted plus, if the
conversion date is not a Quarterly Dividend Payment Date, an amount equal to the
annual dividend per share multiplied by a fraction, the numerator of which is
the number of days from the Quarterly Dividend Payment Date next preceding the
date of conversion to the conversion date and the denominator of which is 365
(the amount of any such unpaid dividends and other amount being payable in such
number of shares of Common Stock which would be issuable upon conversion of
shares of 8% Preferred Stock having an aggregate Liquidation Preference equal to
such amount), provided that if the conversion date is after a Dividend Record
Date and before the Quarterly Dividend Payment Date to which that Dividend
Record Date relates, the dividend otherwise payable on that Quarterly Dividend
Payment Date in respect of such shares shall not be paid by the Corporation.
(b) The number of shares of Common Stock into which each share
of the 8% Preferred Stock is convertible shall be adjusted from time to time as
follows:
(i) In case the Corporation shall at any time or
from time to time declare or pay any dividend on its Common Stock
payable in its Common Stock or effect a subdivision of the
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outstanding shares of its Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in its
Common Stock), or combine or consolidate the outstanding shares of its Common
Stock into a lesser number of shares of Common Stock, by reclassification or
otherwise, or the Corporation shall otherwise effect a capital reorganization or
reclassification of the Common Stock permitted by this Article VI, then, and in
each such case, the number of shares of Common Stock into which each share of
the 8% Preferred Stock is convertible shall be adjusted so that the holder of
each shares thereof shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock or number and kind of other securities
which the holder would have owned after giving effect to such event had such
shares been converted immediately prior to the occurrence of such event. An
adjustment made pursuant to this subparagraph (b) shall become effective in the
case of any such dividend, immediately after the close of business on the record
date for the determination of holders of Common Stock entitled to receive such
dividend, and otherwise at the close of business on the day immediately prior to
the day upon which such corporate action becomes effective;
(ii) In case the Corporation at any time or from
time to time shall issue rights or warrants to all holders of shares of its
Common Stock entitling them (for a period expiring within 45 calendar days after
the date of issuance) to subscribe for or purchase shares of its Common Stock at
a price per share (or having a conversion price per share) less than the Current
Market Price (as defined in paragraph (c) below) per shares of Common Stock on
the record date fixed for the determination of shareholders entitled to receive
such right or warrant, then, and in each such case (unless the holders of shares
of the 8% Preferred Stock shall be permitted to subscribe for or purchase shares
of Common Stock on the same basis as though such shares of the 8% Preferred
Stock had been converted into shares of Common Stock immediately prior to the
close of business on such record date), the number of shares of Common Stock
into which each share of the 8% Preferred Stock is convertible shall be adjusted
so that the holder of each share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock determined by
multiplying (a) the number of shares of Common Stock into which such share was
convertible immediately prior to such event by (b) a fraction, the numerator of
which shall be the sum of (I) the number of shares of Common Stock outstanding
on such record date plus (II) the number of additional shares of Common Stock
offered for subscription or purchase, and the denominator of which shall be the
sum of (I) the number of shares of Common Stock outstanding on such record date
plus (II) the number of shares of Common Stock which the aggregate consideration
receivable by the Corporation for the total number of shares of Common Stock so
offered would purchase at such Current Market Price on such record date. For
purposes
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of this subparagraph (b)(ii), the aggregate consideration receivable by the
Corporation in connection with the issuance of rights of warrants to subscribe
for or purchase securities convertible into Common Stock shall be deemed to be
equal to the sum of the aggregate offering price of such securities plus the
minimum aggregate amount, if any, payable upon conversion of such securities
into shares of Common Stock. An adjustment made pursuant to this subparagraph
(b)(ii) shall be made upon the issuance of any such rights or warrants and shall
be effective retroactively immediately after the close of business on the record
date fixed for the determination of shareholders entitled to receive such rights
or warrants. For purposes of this subparagraph (b)(ii) the granting of the right
to purchase Common Stock (whether treasury shares or newly issued shares)
pursuant to any plan providing for the reinvestment of dividends or interest
payable on securities of the Corporation, and the investment of additional
optional amounts, in shares of Common Stock, in any such case at a price per
share of not less than 95% of the current market price (determined as provided
in such plans) per share of Common Stock, shall not be deemed to constitute an
issue of rights or warrants by the Corporation within the meaning of this
subparagraph; and
(iii) In case the Corporation at any time or from
time to time shall declare, order, pay or make a dividend or other distribution
of any kind or nature whatsoever which is permitted to be made pursuant to this
Article VI on its Common Stock, other than a dividend payable in shares of the
Corporation's Common Stock or rights or warrants to subscribe for shares of the
Corporation's Common Stock covered under (ii) herein, then, and in each such
case (unless the holders of shares of the 8% Preferred Stock shall receive any
such dividend or other distribution on the same basis as though such shares of
the 8% Preferred Stock had been converted into shares of Common Stock
immediately prior to the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
other distribution), the number of shares of Common Stock into which each share
of the 8% Preferred Stock is convertible shall be adjusted so that the holder of
each share thereof shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock determined by multiplying (a) the number of
shares of Common Stock into which such share was convertible immediately prior
to the close of business on the record date fixed for the determination of
holders of Common Stock entitled to receive such dividend or distribution by (b)
a fraction, the numerator of which shall be the Current Market Price (as defined
in paragraph (c) below) per share of Common Stock on the record date fixed for
the determination of holders of Common Stock entitled to receive such dividend
or distribution, and the denominator of which shall be such Current Market Price
per share of Common Stock less the fair value of such dividend or distribution
(as determined in good
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faith by the Board of Directors of the Corporation, a certified resolution with
respect to which shall be filed with each transfer agent for the 8% Preferred
Stock) payable in respect of one share of Common Stock. An adjustment made
pursuant to this subparagraph (b)(iii) shall be made upon the opening of
business on the next business day following the date on which any such dividend
or distribution is made and shall be effective retroactively immediately after
the close of business on the record date fixed for the determination of holders
of Common Stock entitled to receive such dividend or distribution;
(c) The term "Current Market Price" shall mean, as applied to
any class of stock on any date, the average of the daily "Closing Prices" (as
hereinafter defined) for the 30 consecutive "Trading Days" (as hereinafter
defined) immediately prior to the date in question; provided, however, that in
the event that the Current Market Price per share of Common Stock is determined
during a period following the announcement by the Corporation of a dividend or
distribution on its Common Stock payable in shares of its Common Stock, and
prior to the expiration of thirty Trading Days after the ex-dividend date for
such dividend or distribution, then, and in each such case, the Current Market
Price shall be appropriately adjusted to reflect the Current Market Price pre
Common Stock equivalent. The term "Closing Price" on any day shall mean the last
sales price, regular way, per share of such stock on such day, or, if no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, as reported in the principal consolidation transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if shares of such stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidation
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of such stock are listed or
admitted to trading or, if the shares of such stock are not listed or admitted
to trading on any national securities exchange, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the NASDAQ Stock
Market. The term "Trading Day" shall mean a day on which the NASDAQ Stock Market
or the principal national securities exchange on which shares of such stock are
listed or admitted to trading is open for the transaction of business or, if the
share of such stock are not listed or admitted to trading on the NASDAQ Stock
Market or any national securities exchange, a Monday, Tuesday, Wednesday,
Thursday or Friday on which banking institutions in the Borough of Manhattan,
City and State of New York, are not authorized or obligated by law or executive
order to close;
(d) If any adjustment in the number of shares of Common Stock
into which each share of the 8% Preferred Stock may be converted required
pursuant to this Section 6.8 would result
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in an increase or decrease of less than 1% in the number of shares of Common
Stock into which each share of the 8% Preferred Stock is then convertible, the
amount of any such adjustment shall be carried forward and adjustment with
respect thereto shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate at least 1% of the number of shares of Common
Stock into which each share of the 8% Preferred Stock is then convertible. All
calculations under this Section 6.8 shall be made to the nearest one-hundredth
of a share;
(e) The Board of Directors may, but shall not be required to,
increase the number of shares of Common Stock into which each share of the 8%
Preferred Stock may be converted, in addition to the adjustments required by
Section 6.8(b), as shall be determined by it (as evidenced by a resolution of
the Board of Directors) to be advisable in order to avoid or diminish any income
deemed to be received by any holder of the Common Stock or 8% Preferred Stock
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for federal income tax purposes;
(f) The holder of any shares of the 8% Preferred Stock
electing to make an Optional Conversion shall do so by surrendering for such
purpose to the Corporation, at its principal office or at such other office or
agency maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of 8% Preferred Stock to be converted
accompanied by a written notice stating that such holder elects to convert all
or a specified whole number of such shares in accordance with the provisions of
this Section 6.8(f) and specifying the name or names in which such holder wishes
the certificate or certificates for shares of Common Stock to be issued. In case
such notice shall specify a name or names other than that of such holder, such
notice shall be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. As promptly as
practicable, and in any event within five business days after the surrender of
such certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes, the Corporation shall deliver or
cause to be delivered (i) certificates representing the number of validly
issued, fully paid and nonassessable shares Common Stock of the Corporation to
which the holder of the 8% Preferred Stock so converted shall be entitled and
(ii) if less than the full number of shares of the 8% Preferred Stock evidenced
by the surrendered certificate or certificates are being converted, a new
certificate or certificates, of like tenor, for the number of shares evidenced
by such surrendered certificate or certificates less the number of shares
converted. Such conversions shall be deemed to have
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been made at the close of business on the date of giving of such notice and of
such surrender of the certificate or certificates representing the shares of the
8% Preferred Stock to be converted so that the rights of the holder thereof
shall cease except for the right to receive Common Stock of the Corporation in
accordance herewith, and the converting holder shall be treated for all purposes
as having become the record holder of such Common Stock of the Corporation at
such time;
(g) If at any time on or after [THE DATE WHICH IS THE THIRD
ANNIVERSARY OF THE CLOSING WILL BE INSERTED] the Common Stock is (i) listed on a
national securities exchange or included for quotation on the NASDAQ Stock
Market and (ii) the Closing Price of the Common Stock on the NASDAQ Stock Market
or on such national securities exchange exceeds $11.55 per share (the "Test
Amount") for each Trading Day (as defined in paragraph (c) above) during a
Testing Period (as defined below), the Corporation shall have the right, in its
sole discretion, to convert issued and outstanding shares of 8% Preferred Stock
having an aggregate Liquidation Preference of up to $50 million into shares of
Common Stock, which conversion shall become effective as of a date no earlier
than ten (10) days and no later than forty (40) days following the end of the
relevant Testing Period. Any such conversion compelled by the Corporation shall
be referred to herein as a "Forced Conversion." The Test Amount shall be
appropriately adjusted in connection with any stock split, stock dividend,
reverse stock split, recapitalization or similar corporate transaction.
(h) The shares of each holder of 8% Preferred Stock shall be
converted on a pro rata basis on any Forced Conversion. The transfer agent shall
give holders of the 8% Preferred Stock written notice of the Forced Conversion
at least ten (10) days prior to the effective date, which notice shall specify
(i) the effective date and (ii) the number of shares of Common Stock into which
each share of 8% Preferred Stock shall be converted pursuant to the Forced
Conversion. Any period of ten (10) consecutive Trading Days that does not
precede or include a previously announced effective date of a Forced Conversion
shall be referred to herein as a "Testing Period."
(i) Following a Forced Conversion, the holders of shares of 8%
Preferred Stock shall have the right to receive certificates representing the
shares of Common Stock into which such shares of 8% Preferred Stock have been
converted by surrendering to the Corporation, at its principal office or at such
other office or agency maintained by the Corporation for that purpose, a
certificate or certificates representing the applicable shares of 8% Preferred
Stock. As promptly as practicable, and in any event within five business days
after the surrender of such certificates, the Corporation shall deliver or cause
to be delivered certificates representing the number of
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validly issued, fully paid and nonassessable shares Common Stock of the
Corporation to which the holder of the 8% Preferred Stock so converted shall be
entitled. Upon a Forced Conversion, the rights of the holders of 8% Preferred
Stock shall cease except for the right to receive Common Stock of the
Corporation in accordance herewith, and the holder shall be treated for all
purposes as having become the record holder of such Common Stock of the
Corporation at such time;
(j) Upon the Forced Conversion of the 8% Preferred Stock, the
holders thereof shall be entitled to receive payment of all accrued but unpaid
dividends, whether or not declared, plus, if the conversion date is not a
Quarterly Dividend Payment Date, an amount equal to the annual dividend per
share multiplied by a fraction, the numerator of which is the number of days
from the Quarterly Dividend Payment Date next preceding the date of conversion
to the conversion date and the denominator of which is 365 (the amount of such
unpaid dividends and other amount being payable in such number of shares of
Common Stock which would be issuable upon conversion of shares of 8% Preferred
Stock having an aggregate Liquidation Preference equal to such amount) in
respect of the shares so converted, provided that if the conversion date is
after a Dividend Record Date and before the Quarterly Dividend Payment Date to
which that Dividend Record Date relates, the dividend otherwise payable on that
Quarterly Dividend Payment Date in respect of the shares so converted shall not
be paid by the Corporation.
(k) In connection with the conversion of any shares of the 8%
Preferred Stock, no fractions of shares of Common Stock shall be issued, but the
Corporation shall pay a cash adjustment in respect of such fractional interest
in an amount equal to the market value of such fractional interest. In such
event, the market value of a share of Common Stock of the Corporation shall be
the Closing Price of such shares on the last business day on which such shares
were traded immediately preceding the date upon which such shares of 8%
Preferred Stock are deemed to have been converted; and
(l) The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares of Common
Stock of the Corporation issuable upon the conversion of all outstanding shares
of the 8% Preferred Stock.
6.9 Adjustments For Consolidation, Merger, etc. In
case (A) the Corporation shall consolidate with or merge into any other person
and shall not be the continuing or surviving corporation of such consolidation
or merger, (B) any other person shall consolidate with or merge into the
Corporation and the Corporation shall be the continuing or surviving person,
but, in connection with such consolidation or merger, the Common Stock shall be
changed into or exchanged for stock or other securities
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of any other person or cash or any other property, or (C) the Corporation shall
transfer all or substantially all of its properties or its assets to any other
person, then, and in each such case, each outstanding share of 8% Preferred
Stock shall, upon the effective date of such event, be converted into the right
to receive the number of shares of stock or other securities or cash or other
property which the holder would have owned after giving effect to such event had
such share been converted pursuant to Section 6.8 immediately prior to the
occurrence of such event, plus any additional shares of stock or other
securities or cash or other property payable by the terms of such event to the
holders of shares 8% Preferred Stock.
6.10 Reports as to Adjustments. Whenever the number of shares
of Common Stock into which the shares of the 8% Preferred Stock are convertible
is adjusted as provided in Section 6.8, the Corporation shall (A) promptly
compute such adjustment and furnish to each transfer agent for the 8% Preferred
Stock a certificate, signed by a principal financial officer of the Corporation,
setting forth the number of shares of Common Stock, or the number and kind of
any other securities, into which each share of the 8% Preferred Stock is
convertible as a result of such adjustment, a brief statement of the facts
requiring such adjustment and the computation thereof and when such adjustment
will become effective and (B) promptly mail to the holders of record of the
outstanding shares of the 8% Preferred Stock a notice stating that the number of
shares into which the shares of 8% Preferred Stock are convertible has been
adjusted and setting forth the new number of shares into which each share of the
8% Preferred Stock is convertible as a result of such adjustment and when such
adjustment will become effective.
6.11 Notices of Corporate Action. In the event of:
(a) any taking by the Corporation of a record of the holders
of its Common Stock for the purpose of determining the holders thereof who are
entitled to receive any distribution or any right or warrant permitted to be
distributed or given to the holder of Common Stock in accordance with this
Article VI (other than a dividend payable solely in shares of Common Stock).
(b) any capital reorganization, reclassification or
recapitalization of the Corporation (other than a subdivision or combination of
the outstanding shares of its Common Stock), any consolidation or merger
involving the Corporation and any other person (other than a consolidation or
merger with a wholly-owned subsidiary of the Corporation, provided that the
Corporation is the surviving or the continuing corporation and no change occurs
in the Common Stock), or any transfer of all or substantially all the assets of
the Corporation to any other person; or
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(c) any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, and in each such case, the Corporation shall cause to be mailed to each
transfer agent for the shares of the 8% Preferred Stock and to the holders of
record of the outstanding shares of the 8% Preferred Stock, at least 20 days (or
10 days in case of any event specified in clause (a) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (i)
the date or expected date on which any such record is to be taken for the
purpose of such dividend, distribution or right and the amount and character of
such dividend, distribution or right or (ii) the date or expected date on which
any such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of record of
Common Stock shall be entitled to exchange their shares of Common Stock for the
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding up. Such notice shall also state whether
such trans action will result in any adjustment in the number of shares of
Common Stock, or kind and number of any other securities, into which shares of
the 8% Preferred Stock are convertible and, if so, shall state the new number of
shares of Common Stock, or kind and number of any other securities, into which
each share of the 8% Preferred Stock shall be convertible upon such adjustment
and when such adjustment will become effective. The failure to give any notice
required by this Section 6.11, or any defect therein, shall not affect the
legality or validity of any such action requiring such notice.
ARTICLE VII
MANAGEMENT OF THE CORPORATION
7.1 Except as otherwise provided herein, the business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors.
7.2 The Board of Directors shall have the power to adopt,
amend, and repeal the By-Laws of the Corporation.
7.3 The stockholders and directors shall have the power, if
the By-Laws so provide, to hold their respective meetings within or without the
State of Delaware and may (except as otherwise required by law) keep the
Corporation's books outside the State of Delaware, at such places as from time
to time may be designated by the By-Laws or the Board of Directors.
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7.4 Election of directors need not be by written ballot unless
the By-laws so provide.
7.5 In addition to the powers and authority hereinbefore
conferred upon them, the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the GCL, this
Certificate of Incorporation, and the By-Laws; provided, however, that no ByLaws
hereafter adopted shall invalidate any prior act of the directors which would
have been valid if such By-Laws had not been adopted.
ARTICLE VIII
AMENDMENTS
8.1 The Corporation reserves the right to amend or repeal any
provisions contained in this Certificate of Incorporation from time to time and
at any time in the manner now or hereafter prescribed in this Certificate of
Incorporation or the By-Laws or required by the laws of the State of Delaware,
and all rights herein conferred upon stockholders are granted subject to such
reservation.
8.2 So long as any shares of 8% Preferred Stock are
outstanding, without the affirmative vote or consent of holders of at least
two-thirds of the outstanding shares of 8% Preferred Stock voting or consenting
separately as one class, no amendment may be made to (i) Article VI of this
Certificate of Incorporation which would increase of decrease the aggregate
number of authorized shares of 8% Preferred Stock, increase or decrease the par
value of the shares of such class or alter or change the powers, preferences, or
special rights of the shares of such class so as to affect them adversely, or
(ii) this Section 8.2.
ARTICLE IX
LIMITATION OF LIABILITY OF DIRECTORS
No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, that the foregoing clause shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which
the director derived an improper personal benefit. For purposes of the prior
sentence, the term "damages" shall, to the extent permitted by
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law, include without limitation, any judgment, fine, amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without limitation,
counsel fees and disbursements). Each person who serves as a director of the
Corporation while this Article IX is in effect shall be deemed to be doing so in
reliance on the provisions of this Article IX. Any repeal or modification of
this Article IX shall not adversely affect any right or protection of a director
existing prior to such repeal or modification. The provisions of this Article IX
are cumulative and shall be in addition to and independent of any and all other
limitations on or eliminations of the liabilities of directors of the
Corporation, as such, whether such limitations or eliminations arise under or
are created by any law, rule, regulation, by-law, agreement, vote of
stockholders or directors, or otherwise.
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IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be duly executed and acknowledged, this ____ day
of _______________, 199__.
[NEWCO]
By:
Name:
Title: President and
Chief Executive Officer
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[NEWCO]
BY-LAWS
[(as restated and amended)]
639423.4
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1.OFFICES.................................................................................................1
Section 1.1. Registered Office.............................................................1
Section 1.2. Other Offices.................................................................1
ARTICLE 2.MEETINGS OF STOCKHOLDERS................................................................................1
Section 2.1. Place of Meetings.............................................................1
Section 2.2. Annual Meetings...............................................................1
Section 2.3. Special Meetings..............................................................2
Section 2.4. Notice of Meetings............................................................2
Section 2.5. Quorum........................................................................2
Section 2.6. Organization..................................................................3
Section 2.7. Voting........................................................................4
Section 2.8. Inspectors....................................................................5
Section 2.9. List of Stockholders..........................................................5
ARTICLE 3.BOARD OF DIRECTORS......................................................................................6
Section 3.1. Number of Directors...........................................................6
Section 3.2. General Powers................................................................6
Section 3.3. Qualifications and Term of Office.............................................7
Section 3.4. Election of Directors.........................................................7
Section 3.5. Quorum and Manner of Acting...................................................8
Section 3.6. Action by Communications Equipment. 8
Section 3.7. Offices, Place of Meeting and Records.........................................8
Section 3.8. Annual Meeting................................................................8
Section 3.9. Regular Meetings..............................................................9
Section 3.10. Special Meetings; Notice......................................................9
Section 3.11. Organization..................................................................9
Section 3.12. Order of Business.............................................................9
Section 3.13. Removal of Directors.........................................................10
Section 3.14. Resignation..................................................................10
Section 3.15. Vacancies....................................................................10
Section 3.16. Compensation.................................................................10
Section 3.17. Interested Directors.........................................................10
Section 3.18. Business Plan................................................................11
ARTICLE 4.ACTION BY CONSENT......................................................................................11
Section 4.1. Consent by Directors.........................................................11
Section 4.2. Consent by Stockholders......................................................12
ARTICLE 5.OFFICERS...............................................................................................12
Section 5.1. Number.......................................................................12
Section 5.2. Election, Qualifications and Term of
Office ......................................................................................12
Section 5.3. Removal......................................................................12
Section 5.4. Resignation..................................................................12
Section 5.5. Vacancies....................................................................13
Section 5.6. Chairman of the Board........................................................13
</TABLE>
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<TABLE>
<S> <C> <C>
Section 5.7. Chief Executive Officer......................................................13
Section 5.8. President....................................................................13
Section 5.9. Chief Financial Officer......................................................13
Section 5.10. Treasurer....................................................................14
Section 5.11. Secretary....................................................................14
Section 5.12. Other Officers...............................................................14
Section 5.13. Salaries.....................................................................15
ARTICLE 6.INDEMNIFICATION, ETC...................................................................................15
Section 6.1. Indemnification and Advances of
Expenses.............................................................15
Section 6.2. Employees and Agents.........................................................16
Section 6.3. Repeal or Modification.......................................................16
Section 6.4. Other Indemnification........................................................16
ARTICLE 7.CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC..........................................................17
Section 7.1. Execution of Contracts.......................................................17
Section 7.2. Loans........................................................................17
Section 7.3. Checks, Drafts, etc..........................................................17
Section 7.4. Deposits.....................................................................18
Section 7.5. Proxies in Respect of Securities of
Other Corporations...................................................18
ARTICLE 8.BOOKS AND RECORDS......................................................................................18
Section 8.1. Place........................................................................18
Section 8.2. Addresses of Stockholders....................................................18
Section 8.3. Record Dates.................................................................19
Section 8.4. Audit of Books and Accounts..................................................19
ARTICLE 9.SHARES AND THEIR TRANSFER..............................................................................19
Section 9.1. Certificates of Stock........................................................19
Section 9.2. Record.......................................................................20
Section 9.3. Transfer of Stock............................................................20
Section 9.4. Transfer Agent and Registrar;
Regulations..........................................................20
Section 9.5. Lost, Destroyed or Mutilated
Certificates.........................................................20
ARTICLE 10.SEAL..................................................................................................21
ARTICLE 11.FISCAL YEAR...........................................................................................21
ARTICLE 12.NOTICE................................................................................................21
Section 12.1. Delivery of Notices..........................................................21
Section 12.2. Waivers of Notice............................................................21
ARTICLE 13.AMENDMENTS............................................................................................22
Section 13.1. By-Laws......................................................................22
ARTICLE 14.DIVIDENDS.............................................................................................22
</TABLE>
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[NEWCO]
By-Laws
[(as restated and amended)]
ARTICLE 1.
OFFICES
Section 1.1. Registered Office. The registered office
and registered agent of the Corporation in the State of Delaware shall be as set
forth in the Corporation's Certificate of Incorporation.
Section 1.2. Other Offices. The Corporation may also have an
office at such other place or places either within or without the State of
Delaware from time to time as the Board of Directors may determine or the
business of the Corporation may require.
ARTICLE 2.
MEETINGS OF STOCKHOLDERS
Section 2.1. Place of Meetings. All meetings of the
stockholders of the Corporation shall be held at such place either within or
without the State of Delaware as may be designated from time to time by the
Board of Directors.
Section 2.2. Annual Meetings.
(a) The annual meeting of the stockholders for the election of
directors and for the transaction of such other business as may properly come
before the meeting shall be held at such date, time and place either within or
without the State of Delaware, as may be designated by the Board of Directors
from time to time.
(b) In respect of the annual meeting for any particular year
the Board of Directors may, by resolution fix a different day, time or place
(either within or without the State of Delaware) for the annual meeting.
(c) If the election of directors shall not be held on the day
fixed by the Board for any annual meeting, or on the day of any adjourned
session thereof, the Board of Directors shall cause the election to be held at a
special meeting as soon thereafter as conveniently may be. At such special
meeting, the stockholders may elect the directors and transact such other
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business properly before the meeting with the same force and effect as at an
annual meeting duly called and held.
Section 2.3. Special Meetings. A special meeting of the
stockholders for any purpose or purposes may be called at any time or from time
to time by the Chief Executive Officer or Chairman of the Board, and shall be
called at any time or from time to time at the request in writing of a majority
of the total number of directors in office. At any special meeting, no business
shall be transacted and no corporate action shall be taken other than as stated
in the notice of the meeting.
Section 2.4. Notice of Meetings.
(a) Except as otherwise required by law or the Certificate of
Incorporation, written notice of each annual or special meeting of the
stockholders shall be given to each stockholder of record entitled to vote at
such meeting not less than ten days nor more than sixty days before the date of
such meeting. Every such notice shall state the date, time and place of the
meeting and, in case of a special meeting, shall state briefly the purposes
thereof.
(b) Attendance of a stockholder at a meeting, in person or by
proxy, shall constitute a waiver of notice of such meeting, except when such
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the grounds that
the meeting is not lawfully called or convened. Notice of any adjourned meeting
of the stockholders shall not be required to be given except by announcement at
the meeting so adjourned or when expressly required by law.
Section 2.5. Quorum.
(a) At each meeting of the stockholders, except where
otherwise provided by law, the Certificate of Incorporation or these By-Laws,
the holders of record of a majority in voting power of the issued and
outstanding shares of stock of the Corporation entitled to vote at such meeting,
present in person or represented by proxy, shall be required to constitute a
quorum for the transaction of business. Where a separate vote by class or
classes or one or more series of a class or classes of stock is required by law
or the Certificate of Incorporation for any matter, the holders of a majority in
voting power of the issued and outstanding shares of each such class or classes
or one or more series of a class or classes entitled to vote, present in person
or represented by proxy, shall be required to constitute a quorum with respect
to a vote on that matter, except that where the unanimous affirmative vote or
written consent of all of the holders of the outstanding shares of a class or
classes of stock is required by the Certificate of Incorporation with respect to
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any matter, all of the holders of the outstanding shares of such class or
classes entitled to vote, present in person or by proxy, shall be required to
constitute a quorum with respect to a vote on that matter. For purposes of these
By-Laws, the term "total voting power" shall mean, (a) in the case of matters
which do not require a separate vote by class or classes or one or more series
of a class or classes of stock, the aggregate number of votes which all of the
shares of stock, excluding the votes of shares of stock having such entitlement
only upon the happening of a contingency, would be entitled to cast in the
election of directors to the Board of Directors, if all such shares of stock
were present at a meeting of the Corporation's stockholders for the purpose of
the election of directors, and (b) in the case of matters which do require a
separate vote by class or classes or one or more series of a class or classes of
stock, the aggregate number of votes which all of the shares of such class or
classes or one or more series of a class or classes of stock, excluding the
votes of shares of stock having such entitlement only upon the happening of a
contingency, would be entitled to cast on any such matter, if all of the shares
of such class or classes or one or more series of a class or classes of stock
were present and voted at a meeting of the Corporation's stockholders for the
purpose of stockholder action on such matter.
(b) In the absence of a quorum at any annual or special
meeting of stockholders, a majority in total voting power of the shares of stock
entitled to vote, or in the case of matters requiring a separate vote by any
class or classes or one or more series of a class or classes of stock, a
majority in total voting power of the shares of each such class or classes or
one or more series of a class or classes entitled to vote, present in person or
represented by proxy or, in the absence of all such stockholders, any person
entitled to preside at or act as secretary of such meeting, shall have the power
to adjourn the meeting from time to time, if the date, time and place thereof
are announced at the meeting at which the adjournment is taken. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally called.
If the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 2.6. Organization. At each meeting of the
stockholders, the Chairman of the Board or in his absence, the Chief Executive
Officer, or in his absence, the President or any other officer designated by the
Board, shall act as chairman of and preside over the meeting, and the Secretary
or an Assistant Secretary of the Corporation, or any other person whom the
chairman of such meeting shall appoint, shall act as secretary of the meeting
and keep the minutes thereof.
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Section 2.7. Voting.
(a) Except as otherwise provided by law or by the Certificate
of Incorporation or these By-Laws, at every meeting of the stockholders, in the
case of any written consent of stockholders, and for all other purposes, each
holder of record of shares of Common Stock on the relevant record date shall be
entitled to one (1) vote for each share of Common Stock standing in such
person's name on the stock transfer records of the Corporation. If no such
record date shall have been fixed by the Board, then the record date shall be as
fixed by applicable law.
(b) Persons holding a share or shares of stock in a fiduciary
capacity shall be entitled to vote the share or shares so held and to consent in
writing with respect to such share or shares. If shares of stock stand of record
in the names of two or more persons, or if two or more persons have the same
fiduciary relationship respecting the same shares of stock, such persons may
designate in writing one or more of their number to represent such stock and
vote the shares so held, unless there is a provision to the contrary in the
instrument or order, if any, defining their powers and duties, appointing them,
or creating their relationship, and a copy of such instrument or order is
furnished to the Secretary of the Corporation along with written notice to the
contrary.
(c) Persons whose stock is pledged shall be entitled to vote
the pledged shares, unless in the transfer by the pledgor on the books of the
Corporation the pledgor has expressly empowered the pledgee to vote thereon, in
which case only the pledgee, or his proxy, may represent such stock and vote
thereon.
(d) Any stockholder entitled to vote may do so in person or by
his proxy appointed by an instrument in writing subscribed by such stockholder
or by his attorney thereunto authorized, delivered to the secretary of the
meeting; provided, however, that no proxy shall be voted after three years from
its date, unless said proxy provides for a longer period. The provisions of this
subsection 2.7(d) are not intended to and do not limit the manner in which a
stockholder may authorize another person or persons to act for him as proxy.
(e) At all meetings of the stockholders at which a quorum is
present, except as otherwise provided by law or by the Certificate of
Incorporation or these By-Laws, all matters shall be decided by the affirmative
vote of the holders of a majority in voting power of the shares entitled to vote
thereon and present in person or represented by proxy at such meeting, voting as
a single class. Except as otherwise provided by the Certificate of
Incorporation, where a separate vote by class or classes or one or more series
of a class or classes of stock is
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required for any matter, such matters shall be decided by the affirmative vote
of the holders of a majority in voting power of the shares of each such class or
classes or one or more series of a class or classes entitled to vote thereon and
present in person or represented by proxy at such meeting, a quorum being
present. Except as otherwise provided by the Certificate of Incorporation or
these By-Laws, directors shall be elected by the affirmative vote of a plurality
in voting power of the shares present in person or represented by proxy and
entitled to vote for the election of directors at a meeting at which a quorum is
present.
(f) If the Certificate of Incorporation provides for more or
less than one vote for any share, on any matter on which the stockholders vote,
every reference in these By-Laws to a majority or other proportion of stock
shall be deemed to refer to a majority or that other proportion of the votes of
such stock.
Section 2.8. Inspectors. The Corporation shall, in advance of
any meeting of the stockholders, appoint one or more inspector to act at the
meeting of the stockholders and make a written report thereof. Such inspectors,
among other things, shall accept and count the votes for and against the matters
presented for a vote, make a written report of the results of such votes, and
subscribe and deliver to the secretary of the meeting a certificate stating the
number of shares of stock issued and outstanding and entitled to vote thereon
and the number of shares voted for and against the questions presented. If no
inspector or alternate is able to act at a meeting of stockholders, the chairman
of the meeting shall appoint one or more inspectors to act at the meeting. The
inspectors need not be stockholders of the Corporation, and any director or
officer of the Corporation may be an inspector on any matter subject to a vote
other than a vote for or against his election to any position or office on or
with the Board or the Corporation or on any other matter subject to a vote in
which he may be directly interested. Before entering upon the discharge of any
of his duties as such, each inspector shall subscribe an oath faithfully to
execute the duties of an inspector with strict impartiality and according to the
best of his ability.
Section 2.9. List of Stockholders.
(a) It shall be the duty of the Secretary or other officer of
the Corporation who shall have charge of its stock ledger to prepare and make,
or cause to be prepared and made, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall
be open during ordinary business hours to the examination of any stockholder for
any purpose germane to the meeting for a period of at least ten days
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prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held.
(b) Such list shall be produced and kept at the time and place
of the meeting during the whole time thereof and may be inspected by any
stockholder who is present.
(c) The stock ledger shall be the conclusive evidence as to
who are the stockholders entitled to examine the stock ledger, and the list of
stockholders required by this Section 2.9, or the books of the Corporation, or
to vote in person or by proxy at any meeting of stockholders.
ARTICLE 3.
BOARD OF DIRECTORS
Section 3.1. Number of Directors. The number of
Directors which shall constitute the entire Board of Directors
shall be eleven (11).
Section 3.2. General Powers.
(a) Except as otherwise provided in the Certificate of
Incorporation, the business, property, policies, and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
(b) The Board of Directors may from time to time, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. Any such committee, to the extent provided in the resolution or
these By-Laws and permitted by law, shall have and may exercise the powers of
the Board in the management of the business and affairs of the Corporation;
provided, however, that no committee of the Board shall have power or authority
in reference to amending the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board as provided
in Section 151(a) of the General Corporation Law of the State of Delaware (the
"GCL"), fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number of shares
of any series of stock or
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authorize the increase or decrease of the number of shares of any series),
adopting an agreement of merger or consolidation under Section 251 or 252 of the
GCL, recommending to the stockholders the sale, lease or exchange of all or
substantially all the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or the revocation of a
dissolution, or amending these By-Laws; provided further, that, unless expressly
so provided in the resolution of the Board designating such committee, no
committee of the Board shall have the power or authority to declare a dividend,
to authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the GCL.
Each committee of the Board shall keep regular minutes of its
proceedings and report the same to the Board when so requested by the Board. Any
such committee shall fix its own rules of procedure, subject to the approval of
the Board and the provisions of the Certificate of Incorporation and of these By
Laws.
The Board may designate one (1) or more directors as alternate
members of one (1) or more committees of the Board, who thereafter may replace
any absent or disqualified member of such committees, upon the affirmative vote
or written consent of a majority of the total number of directors in office. In
the event that a member of a committee of the Board is absent or disqualified
from serving on such committee, the Board may appoint another director to act in
the place of such absent or disqualified member, upon the affirmative vote or
written consent of a majority of the total number of directors in office, and
under no circumstances may the committee members, in their capacities as such,
appoint another director to act in the place of such absent or disqualified
member. In the event that, and for so long as, there are no duly appointed
members, no duly designated alternate members, and no duly appointed replacement
members of one (1) or more committees of the Board, the powers and authority
that otherwise would be delegated to and exercised by such committee shall be
reserved to and exercised by the Board.
Section 3.3. Qualifications and Term of Office. A director
need not be a stockholder. Each director shall hold office until the annual
meeting of the stockholders next following his election and until his successor
shall have been elected and qualified, or until his death, or until he shall
resign, or until he shall have been removed or disqualified.
Section 3.4. Election of Directors. Except as
otherwise provided in the Certificate of Incorporation, the
directors shall be elected by the stockholders at the annual
meeting of stockholders.
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Section 3.5. Quorum and Manner of Acting.
(a) Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, a majority of the whole Board shall be required
to constitute a quorum for the transaction of business at any meeting of the
Board, and the affirmative vote of a majority of the directors present at any
meeting of the Board at which a quorum is present shall be required for the
taking of any action by the Board. Except as otherwise provided by law, the
Certificate of Incorporation, or By-Laws, a majority of the total number of
members of any committee of the Board shall be required to constitute a quorum
for the transaction of business at any meeting of such committee, and the
affirmative vote of a majority of the members of any committee of the Board
present at any meeting of such committee at which a quorum is present shall be
required for the taking of any action by such committee.
(b) In the absence of a quorum at any meeting of the Board of
Directors or of any committee of the Board, such meeting need not be held; or a
majority of the directors or committee members, as the case may be, present
thereat or, if no director or committee member be present, the Secretary, may
adjourn such meeting from time to time until a quorum shall be present. Notice
of any adjourned meeting need not be given except by announcement at the meeting
at which the adjournment is taken.
Section 3.6. Action by Communications Equipment. The directors
may participate in a meeting of the Board or any committee thereof by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
Section 3.7. Offices, Place of Meeting and Records. The Board
and any committee of the Board may hold meetings and have an office or offices
at such place or places within or without the State of Delaware as the Board or
such committee, as the case may be, may from time to time determine. The place
of meeting shall be as from time to time designated by the Board or such
committee, as the case may be, or as specified or fixed in the respective
notices or waivers of notice thereof, except where no notice of such meeting is
required, and except as otherwise provided by law, by the Certificate of
Incorporation or these ByLaws.
Section 3.8. Annual Meeting. The Board shall meet
for the purpose of organization, the election of principal
officers and the transaction of other business, if a quorum be
present, immediately following each annual election of directors
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by the stockholders; or the time and place of such meeting may be fixed by a
majority of the total number of directors in office.
Section 3.9. Regular Meetings. Regular meetings of the Board
and committees of the Board shall be held at such places and at such times as
the Board or such committee, as the case may be, shall from time to time
determine. Notice of regular meetings need not be given.
Section 3.10. Special Meetings; Notice. Special meetings of
the Board of Directors shall be held whenever called by the Chief Executive
Officer or Chairman of the Board or by a majority o the total number of
directors in office. Special meetings of committees of the Board shall be held
whenever called by the Chief Executive Officer or Chairman of the Board, a
majority of the total number of directors in office or a majority of the members
of such committee. Notice of each such meeting shall be mailed to each director
or committee member, as the case may be, addressed to him at his usual place of
business at least ten days before the day on which the meeting is to be held, or
shall be sent to him at such place of business by facsimile transmission or
other available means, or delivered personally or by telephone not later than 24
hours before the day on which the meeting is to be held. Each such notice shall
state the time and place of the meeting and the purpose thereof. Notice of any
such meeting need not be given to any director or committee member, as the case
may be, however, if waived by him in writing, whether before or after such
meeting shall be held, or if he shall be present at such meeting other than for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 3.11. Organization. At each meeting of the Board of
Directors, the Chairman of the Board or, in his absence, a director chosen by a
majority of the directors present shall act as chairman of and preside over the
meeting. At each meeting of any committee of the Board, the Chairman of the
Board, if he be a member of such committee, or in his absence, the member of
such committee designated as chairman of such committee by the Board, or in the
absence of such designation or such designated chairman, a member of such
committee chosen by a majority of the members of such committee present, shall
act as chairman of and preside over the meeting. The Secretary or, in his
absence an Assistant Secretary or, in the absence of the Secretary and all
Assistant Secretaries, a person whom the chairman of such meeting shall appoint,
shall act as secretary of such meeting and keep the minutes thereof.
Section 3.12. Order of Business. At all meetings of
the Board of Directors and committees of the Board, business
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shall be transacted in the order determined by the chairman of
such meeting.
Section 3.13. Removal of Directors. Except as otherwise
provided by law, the Certificate of Incorporation or these By-Laws, any director
or the entire Board may be removed, either with or without cause, at any time
and from time to time, by the affirmative vote or written consent of a majority
in voting power of the shares of the capital stock of the Corporation then
entitled to vote for the election of directors of the Corporation.
Section 3.14. Resignation. Any director of the Corporation may
resign at any time by giving written notice of his resignation to the Board, the
Chief Executive Officer, President or Chairman of the Board, or the Secretary of
the Corporation. Such resignation shall take effect at the date of receipt of
such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3.15. Vacancies. Except as otherwise provided in the
Certificate of Incorporation, vacancies on the Board, caused by death,
resignation, removal, disqualification, or other cause, and newly created
directorships resulting from any increase in the authorized number of directors,
may be filled by a majority action of the remaining directors then in office,
though less than a quorum, or by election upon the vote of the stockholders of
the Corporation at the next annual meeting or any special meeting called for
such purpose or upon action of the stockholders of the Corporation taken by
written consent, and each director so elected to fill any such vacancy or newly
created directorship shall hold office until the next annual election of
directors and until his successor shall be duly elected and qualified or until
his death or until he shall resign or until he shall have been removed or
disqualified.
Section 3.16. Compensation. Each director, in consideration of
his serving as such, shall be entitled to receive from the Corporation such
amount per annum or such fees for attendance at directors' meetings, or both, as
the Board shall from time to time determine, together with reimbursement for the
reasonable expenses incurred by him in connection with the performance of his
duties; provided that nothing herein contained shall be construed to preclude
any director from serving the Corporation or its subsidiaries in any other
capacity and receiving proper compensation therefor.
Section 3.17. Interested Directors. No contract or
transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in
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which one or more of its directors or officers are directors or officers, or
have a financial interest, that is otherwise duly authorized in accordance with
the provisions of the Certificate of Incorporation, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the dis interested
directors be less than a quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board, a committee thereof
or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board or of a committee
which authorizes the contract or transaction.
Section 3.18. Business Plan. The Board shall annually adopt a
business plan for each calendar year (each, a "Business Plan"). The directors
shall use their best efforts in consultation with one another to adopt the
Business Plan for each year not later than November 30 of the prior year with
respect to the Business Plan for each subsequent calendar year. Each Business
Plan shall set forth such matters with regard to the operations of the
Corporation for the year as are customarily contained in annual business plans,
including, but not limited to, with respect to personnel, marketing, production,
and distribution.
ARTICLE 4.
ACTION BY CONSENT
Section 4.1. Consent by Directors. Unless otherwise provided
in the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board or of any committee thereof
may be taken without a meeting, without prior notice and without a vote if a
written consent thereto is signed by all members of the Board or of such
committee, as the case may be, and such written consent or consents is filed
with the minutes of the proceedings of the Board or such committee.
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Section 4.2. Consent by Stockholders. Any action required or
permitted to be taken at any meeting of the stockholders may be taken without a
meeting, without prior notice and without a vote upon the delivery to the
Corporation in accordance with Section 228 of the General Corporation Law of the
State of Delaware, as the same now exists or may hereafter be amended, or the
provisions of a successor statute ("Section 228"), of a written consent or
written consents of the holders of outstanding shares of stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of any corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing, and any certificate required to
be filed with the office of the Secretary of State of the State of Delaware with
respect to such matter shall state that written consent has been given in
accordance with Section 228 and that such written notice has been given.
ARTICLE 5.
OFFICERS
Section 5.1. Number. The principal officers of the Corporation
shall be a Chairman of the Board, Chief Executive officer, a President, a Chief
Financial Officer, a Treasurer and a Secretary. In addition, there may be such
other or subordinate officers, agents and employees as may be appointed in
accordance with the provisions of Section 5.12. Any two or more offices may be
held by the same person, except that the office of Secretary shall be held by a
person other than the person holding the office of President.
Section 5.2. Election, Qualifications and Term of Office. Each
officer of the Corporation, except such officers as may be appointed in
accordance with the provisions of Section 5.12, shall be elected annually by the
Board of Directors and shall hold office until his successor shall have been
duly elected and qualified, or until his death, or until he shall have resigned
or shall have been removed.
Section 5.3. Removal. Any officer may be removed, either
with or without cause, by the action of the Board of Directors.
Section 5.4. Resignation. Any officer may resign at any
time by giving written notice to the Board of Directors, or the Chairman of the
Board, the Chief Executive Officer, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of receipt of
such notice or at any later time specified therein; and, unless
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otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 5.5. Vacancies. A vacancy in any office under this
Article Five because of death, resignation, removal, disqualification or any
other cause shall be filled for the unexpired portion of the term in the manner
prescribed in this Article Five for regular election or appointment to such
office.
Section 5.6. Chairman of the Board. The directors may elect
one of their members to be Chairman of the Board. The Chairman of the Board, as
such, shall be subject to the control of and may be removed by the Board. The
Chairman of the Board shall be a director and shall preside at all meetings of
the Board and stockholders. The Chairman of the Board shall have general
executive powers and such specific powers and duties as from time to time may be
conferred or assigned by the Board.
Section 5.7. Chief Executive Officer. Subject to the direction
of the Board or the Chairman of the Board, the Chief Executive Officer shall be
the chief executive officer of the Corporation, shall have general charge and
supervision of the business of the Corporation and shall exercise chief
executive powers and such specific powers and shall perform such duties as from
time to time may be conferred upon or assigned to him by the Board, the Chairman
of the Board or any committee thereof designated by it to so act. In the absence
of the Chairman of the Board, the Chief Executive Officer shall preside at all
meetings of the Board and the stockholders.
Section 5.8. President. The President shall have general
executive powers and such specific powers and shall perform such duties as from
time to time may be conferred upon or assigned to him by the Board, the Chairman
of the Board, the Chief Executive Officer, or any committee of the Board
designated by it to so act.
Section 5.9. Chief Financial Officer. The Chief Financial
Officer shall maintain or cause to be maintained adequate records of all assets,
liabilities, and transactions of the Corporation and adequate internal
accounting controls; shall prepare or cause to be prepared such financial
statements or reports on the Corporation's results of operations or financial
condition as required by law or directed by the Board; shall insure that
adequate audits thereof are currently and regularly made; and shall, in
consultation with the Chief Executive Officer or the Chairman of the Board,
undertake measures and implement procedures designed to facilitate or further
the foregoing. His duties and powers shall, so far as the Chief Executive
Officer or the Chairman of the Board may deem practicable, extend to all
subsidiary corporations.
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Section 5.10. Treasurer. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation,
and shall deposit all such funds to the credit of the Corporation in such banks,
trust companies or other depositories as shall be selected in accordance with
the provisions of these By-Laws. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, making proper vouchers for such
disbursements, and shall render to the Board or the committee of the Board to
which he reports or the stockholders, whenever the Board may require him so to
do, a statement of all his transactions as Treasurer and of the financial
condition of the Corporation; and, in general, he shall perform all the duties
as from time to time may be assigned to him by the Board, or by the Chief
Executive Officer or Chairman of the Board. When required by the Board, the
Treasurer shall give bonds for the faithful discharge of his duties in such sums
and with such sureties as the Board shall approve.
Section 5.11. Secretary. The Secretary shall record or cause
to be recorded in books provided for the purpose the minutes of the meetings of
the stockholders, the Board, and all committees of which a secretary shall not
have been appointed; shall see that all notices are duly given in accordance
with the provisions of the Certificate of Incorporation and these By-Laws and as
required by law; shall be custodian of all corporate records (other than
financial records) and of the seal of the Corporation and see that the seal is
affixed to all documents the execution of which on behalf of the Corporation
under its seal is duly authorized, in accordance with, and required by, the
provisions of these By-Laws; shall keep, or cause to be kept, the list of
stockholders as required by Section 2.9 of Article Two of these By-Laws, which
shall include the post-office addresses of the stockholders and the number of
shares held by them, respectively, and shall make or cause to be made, all
proper changes therein; shall see that the books, reports, statements,
certificates and all other documents and records required by law are properly
kept and filed; and, in general, shall perform all duties incident to the office
of Secretary and such other duties as may from time to time be assigned to him
by the Board, by any committee of the Board designated by it to so act, or by
the Chief Executive Officer or Chairman of the Board.
Section 5.12. Other Officers. The Corporation may have such
other officers, agents, and employees as the Board may designate, including
without limitation, one or more Senior or Executive Vice Presidents, one or more
Vice Presidents, a Chief Operating Officer, a Senior Legal Officer, a
Controller, one or more Assistant Controllers, one or more Assistant Treasurers,
and one or more Assistant Secretaries, each of whom shall hold such office, for
such period, have such authority, and perform such duties as the Board, any
committee of the Board designated by it to so act, or the Chief Executive
Officer or Chairman of the
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Board may from time to time determine. The Board may delegate to any principal
officer the power to appoint or remove any such subordinate officers, agents or
employees.
Section 5.13. Salaries. The salaries of the principal officers
of the Corporation shall be fixed from time to time by the Board or a duly
designated and constituted committee thereof duly empowered and authorized so to
act, and none of such officers shall be prevented from receiving a salary by
reason of the fact that he is a director of the Corporation.
ARTICLE 6.
INDEMNIFICATION, ETC.
Section 6.1. Indemnification and Advances of Expenses. To the
fullest extent permitted by the General Corporation Law of the State of Delaware
("GCL"), as the same now exists or may hereafter be amended, and, to the extent
required by the GCL, only as authorized in the specific case upon the making of
a determination that indemnification of the person is proper in the
circumstances because he has met the applicable standard of conduct prescribed
in Sections 145(a) and (b) of the GCL, the Corporation shall indemnify and hold
harmless any person who was or is a director, officer or incorporator of the
Corporation from and against any and all expenses (including counsel fees and
disbursements), judgments, fines (including excise taxes assessed on a person
with respect to an employee benefit plan), and amounts paid in settlement that
may be imposed upon or incurred by him in connection with, or as a result of,
any threatened, pending, or completed proceeding, whether civil, criminal,
administrative or investigative (whether or not by or in the right of the
Corporation), in which he is or may become involved, as a party or otherwise, by
reason of the fact that he is or was such a director, officer or incorporator of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, incorporator, employee, partner, trustee or agent of another
corporation, partnership, joint venture, trust or other enterprise (including an
employee benefit plan), whether or not he continues to be such at the time such
expenses and judgments, fines and amounts paid in settlement shall have been
imposed or incurred. The Corporation shall be required to indemnify such a
person who is or was a director, officer, or incorporator in connection with a
proceeding (or part thereof) initiated by such person, however, only if the
initiation of such proceeding (or part thereof) by such person was authorized by
the Board. Such right of indemnification shall inure whether or not such
expenses and judgments, fines and amounts paid in settlement are imposed or
incurred based on matters which antedate the adoption of this Article Six. Such
right of indemnification shall continue as to a person who has
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ceased to be a director, officer or incorporator of the Corporation, and shall
inure to the benefit of the heirs and personal representatives of such a person.
Expenses incurred by a person who is or was a director,
officer, or incorporator of the Corporation in defending or investigating a
threatened or pending action, suit or proceeding in which such person is or may
become involved, as a party or otherwise, by reason of the fact that he is or
was a director, officer, or incorporator of the Corporation or is or was serving
at the request of the Corporation as a director, officer, incorporator,
employee, partner, trustee, or agent of another corporation, partnership, joint
venture, trust or other enterprise (including an employee benefit plan), shall
be paid by the Corporation in advance of final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation under this Article Six or otherwise.
The rights to indemnification and advancement of expenses
provided by this Article Six shall not be deemed exclusive of any other rights
which are or may be provided now or in the future under any provision currently
in effect or hereafter adopted of these By-Laws, by any agreement, by vote of
stockholders, by resolution of directors, by provision of law or otherwise.
Section 6.2. Employees and Agents. The Corporation may, to the
extent authorized from time to time by the Board of Directors, provide to
employees and agents of the Corporation who are not directors, officers or
incorporators rights to indemnification and advancement of expenses similar to
those conferred in this Article Six on directors, officers and incorporators of
the Corporation.
Section 6.3. Repeal or Modification. Any repeal or
modification of this Article Six shall not adversely affect any rights to
indemnification and advancement of expenses of a director, officer or
incorporator of the Corporation existing pursuant to this Article Six with
respect to any acts or omissions occurring prior to such repeal or modification.
Section 6.4. Other Indemnification. The Corporation's
obligation, if any, to indemnify any person who is or was serving at its request
as a director, officer, incorporator, employee, partner, trustee, or agent of
another corporation, partnership, joint venture, trust or other enterprise
(including an employee benefit plan), shall be reduced by any amount such person
actually receives as indemnification from such other corporation, partnership,
joint venture, trust or other enterprise.
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ARTICLE 7.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 7.1. Execution of Contracts. Unless the Board shall
otherwise determine, the Chief Executive Officer, President or Chairman of the
Board, any Vice President, the Treasurer or the Secretary may enter into any
contract or execute any contract or other instrument, the execution of which is
not otherwise specifically provided for, in the name and on behalf of the
Corporation. The Board, or any committee designated by it to so act, except as
otherwise provided in these By-Laws, may authorize any other or additional
officer or officers or agent or agents of the Corporation to so act, and such
authority may be general or confined to specific instances. Unless duly
authorized so to do by the Certificate of Incorporation or by these By-Laws or
by the Board or by any such committee, no officer, agent or employee shall have
any power or authority to bind the Corporation by any contract or engagement or
to pledge its credit or to render it liable pecuniarily for any purpose or to
any amount.
Section 7.2. Loans. No loan shall be contracted on behalf of
the Corporation, and no evidence of indebtedness shall be issued, endorsed or
accepted in its name, unless duly authorized by the Board or any committee
designated by it to so act. Such authority may be general or confined to
specific instances. When so authorized, the officer or officers thereunto
authorized may effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation or
individual, and for such loans and advances may make, execute and deliver
promissory notes or other evidences of indebtedness of the Corporation, and,
when authorized as aforesaid, as security for the payment of any and all loans,
advances, indebtedness and liabilities of the Corporation, may mortgage, pledge,
hypothecate or transfer any real or personal property at any time owned or held
by the Corporation, and to that end execute instruments of mortgage or pledge or
otherwise transfer such property.
Section 7.3. Checks, Drafts, etc. All checks, drafts, bills of
exchange or other orders for the payment of money, obligations, notes, or other
evidence of indebtedness, bills of lading, warehouse receipts and insurance
certificates of the Corporation, shall be signed or endorsed by such officer or
officers, agent or agents, attorney or attorneys, employee or employees, of the
Corporation as shall from time to time be determined by resolution of the Board
or any committee designated by it to so act.
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Section 7.4. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the Board or
any committee designated by it to so act may from time to time designate, or as
may be designated by any officer or officers or agent or agents of the
Corporation to whom such power may be delegated by the Board or any committee
designated by it to so act and, for the purpose of such deposit and for the
purposes of collection for the account of the Corporation may be
endorsed,,assigned and delivered by any officer, agent or employee of the
Corporation or in such other manner as may from time to time be designated or
determined by resolution of the Board or any committee designated to so act.
Section 7.5. Proxies in Respect of Securities of Other
Corporations. Unless otherwise provided by resolution adopted by the Board or
any committee designated by it to so act, the Chairman of the Board, Chief
Executive Officer or President or any Vice President may from time to time
appoint an attorney or attorneys or agent or agents of the Corporation, in the
name and on behalf of the Corporation, to cast the votes which the Corporation
may be entitled to cast as the holder of stock or other securities in any other
corporation, association or trust, any of whose stock or other securities may be
held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporation, association or trust, or to consent in
writing, in the name of the Corporation as such holder, to any action by or
respecting such other corporation, association or trust, and may instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent, and may execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
ARTICLE 8.
BOOKS AND RECORDS
Section 8.1. Place. The books and records of the
Corporation may be kept at such places within or without the
state of Delaware as the Board may from time to time determine.
Section 8.2. Addresses of Stockholders. Each stockholder shall
furnish to the Secretary of the Corporation or to a transfer agent of the
Corporation an address at which notices of meetings and all other corporate
notices and communications may be served upon or mailed to him, and if any
stockholder shall fail to designate such address, corporate notices and
communications may be served upon him by mail, postage prepaid, to him at his
post office address last known to
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the Secretary or to a transfer agent of the Corporation or by transmitting a
notice thereof to him at such address by facsimile transmission or other
available method.
Section 8.3. Record Dates. Except as otherwise provided by law
or these By-Laws, in order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board may fix, in advance, a record date, which
shall not be more than sixty days nor less than ten days before the date of such
meeting, or more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
Section 8.4. Audit of Books and Accounts. The books and
accounts of the Corporation shall be audited at least once in each fiscal year
by certified public accountants of good standing selected by the Board.
ARTICLE 9.
SHARES AND THEIR TRANSFER
Section 9.1. Certificates of Stock. Every holder of record of
shares of stock of the Corporation shall be entitled to have a certificate
certifying the number of shares owned by him and designating the class of stock
to which such shares belong, which shall otherwise be in such form as the Board
may prescribe. Every such certificate shall be signed by the Chairman of the
Board, President or a Vice President, and the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Corporation; any
and all signatures may be in facsimile form. In case any officer or officers who
shall have signed, or whose facsimile signature or signatures shall have been
used on, any such certificate or certificates shall cease to be such officer or
officers of the Corporation, whether because of death, resignation or otherwise,
before such certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the person or persons who signed such
certificate or whose facsimile signature or signatures shall have been used had
not ceased to be such officer or officers of the Corporation.
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Section 9.2. Record. A record shall be kept of the name of the
person, firm or corporation owning the shares of stock represented by each
certificate for shares of stock of the Corporation issued, the number of shares
represented by each such certificate, and the date thereof, and, in case of
cancellation, the date of cancellation. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the Certificate of Incorporation or law. The stock record books and the blank
stock certificate books shall be kept by the Secretary or by any other officer
or agent designated by the Board.
Section 9.3. Transfer of Stock. Except as otherwise provided
by law or the Certificate of Incorporation, transfers of shares of the stock of
the Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his attorney thereunto authorized, and on the
surrender of the certificate or certificates for such shares properly endorsed
or accompanied by proper instruments of transfer; provided, however, that such
transfer is subject to the transfer restrictions contained in the Certificate of
Incorporation.
Section 9.4. Transfer Agent and Registrar; Regulations. The
Corporation shall, if and whenever the Board shall so determine, maintain one or
more transfer offices or agencies, each in charge of a transfer agent designated
by the Board, where the shares of the capital stock of the Corporation shall be
directly transferable, and also if and whenever the Board shall so determine,
maintain one or more registry offices, each in charge of a registrar designated
by the Board, where such shares of stock shall be registered. The Board may make
such rules and regulations as it may deem expedient, not inconsistent with the
Certificate of Incorporation or these By-Laws, concerning the issue, transfer
and registration of certificates for shares of the capital stock of the
Corporation.
Section 9.5. Lost, Destroyed or Mutilated Certificates. The
Board may direct a new certificate representing shares of stock to be issued in
place of any certificate theretofore issued by the Corporation alleged to have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost, stolen or destroyed.
When authorizing such issue of a new certificate, the Board may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
639423.4
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representative, to advertise the same in such manner as the Board of Directors
shall require and/or give the Corporation a bond in such sum as the Board may
direct to indemnify the Corporation against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
ARTICLE 10.
SEAL
The Board shall adopt and approve a corporate seal, which
shall be in the form of a circle and shall bear the full name of the
Corporation, the year of its incorporation and the words and figures "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE 11.
FISCAL YEAR
[The fiscal year of the Corporation shall commence on the
first day of January, except as otherwise provided from time to time by
resolution of the Board of Directors.]
ARTICLE 12.
NOTICE
Section 12.1. Delivery of Notices. Except as otherwise
provided in these By-Laws, whenever written notice is required by law, the
Certificate of Incorporation or these By Laws, to be given to any director,
member of a committee of the Board or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written notice may also be given
personally or by facsimile transmission, telegram, telex or cable or other
permissible means.
Section 12.2. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these By Laws, to be given
to any director, member of a committee of the Board or stockholder, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
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ARTICLE 13.
AMENDMENTS
Section 13.1. By-Laws. The stockholders entitled to vote
thereon may adopt, amend or repeal the By-Laws of the Corporation by the
affirmative vote of a majority in total voting power of such shares voting as a
single class, and except as otherwise provided by law or the Certificate of
Incorporation, and provided that the Certificate of Incorporation confers on the
Board the power to adopt, amend, and repeal the By-Laws, the Board may adopt,
amend or repeal the By-Laws. No such amendment may be made unless the By-Laws,
as amended, are consistent with the provisions of the General Corporation Law of
the State of Delaware and of the Certificate of Incorporation.
ARTICLE 14.
DIVIDENDS
Dividends upon shares of the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board, only in accordance with these By-Laws and the Certificate
of Incorporation, and may be paid in cash, in property, or in shares of the
capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any proper purpose, and the
Board may modify or abolish any such reserve.
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AMENDED AND RESTATED PROXY AND STOCK OPTION AGREEMENT
THIS PROXY AND STOCK OPTION AGREEMENT (this "Agreement"),
dated as of November 19, 1997, amends and restates the Proxy and Stock Option
Agreement, dated as of October 7, 1997, by and among Isaac Perlmutter, Isaac
Perlmutter T.A. and Zib Inc. (the "Stockholders"), and secured creditors of
Marvel Entertainment Group, Inc., a Delaware corporation ("Marvel") and certain
of its direct and indirect subsidiaries who become parties to this Agreement by
executing and delivering a separate Consenting Lender Execution Page in the form
attached as Exhibit 1 to this Agreement (the "Consenting Lenders").
WHEREAS, concurrently herewith, Toy Biz, Inc., a Delaware
corporation ("Toy Biz" or the "Company"), various secured creditors of Marvel
and certain of its direct and indirect subsidiaries and the Panini Lenders (as
defined in the Plan of Reorganization referred to below) that are parties
thereto propose to enter into an amended and restated master agreement (the
"Master Agreement") providing for the filing of a joint plan of reorganization
(the "Plan of Reorganization") and the combination of Marvel and Toy Biz (the
"Merger") pursuant to an Agreement and Plan of Merger (the "Merger Agreement")
whereby shares of Class A Common Stock, par value $.01 per share ("Common
Stock") of Toy Biz issued and outstanding as of the effective date of the Merger
(excluding Common Stock held in treasury by Toy Biz or owned by Marvel or its
affiliates) will be converted into shares of common stock of the combined
corporation ("Newco"); and
WHEREAS, the Stockholders own (beneficially or of record) as
of the date hereof 9,506,000 shares of Common Stock (collectively with any other
shares of Common Stock beneficially owned by the Stockholders, the "Existing
Shares", and together with any shares of Common Stock acquired or beneficially
owned by the Stockholder after the date hereof and prior to the termination
hereof, hereinafter collectively referred to as the "Shares"); and
WHEREAS, a Proxy and Stock Option Agreement, dated as of the
date of this Agreement, is being entered into by Avi Arad ("Arad") and various
secured creditors of Marvel relating to the shares of Common Stock owned by Arad
(the "Arad Agreement"); and
WHEREAS, the Consenting Lenders are expected to or have
entered into the Master Agreement in reliance on the Stockholders' covenants
hereunder;
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, it is
agreed as follows:
1. Proxy. Each of the Stockholders hereby appoints the
Designated Consenting Lender the lawful proxy for the Stockholder to vote all of
the Shares which the Stockholder is entitled to vote, or which the Stockholder
controls, directly or indirectly, in each case, for and in the name, place and
stead of the Stockholder, at any annual, special or other meeting of the
stockholders of Toy Biz and at any adjournment thereof, or pursuant to any
consent in lieu of a meeting, at which meeting or in connection with which
consent action shall be taken, and such proxy shall be for the sole purpose of
acting (a) in favor of the transactions contemplated by the Master Agreement and
the Plan of Reorganization, including the Merger; (b) against any action or
agreement that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation or agreement of Toy Biz under
the Master Agreement or any agreement contemplated thereby, including the Merger
Agreement;(c) against any action or agreement that would, directly or
indirectly, impede, interfere with, delay, postpone or attempt to discourage the
Merger or confirmation of the Plan of Reorganization, including, but not limited
to: (i) any extraordinary corporate transaction (other than the Merger), such as
a merger, other business combination, reorganization or liquidation involving
Toy Biz or its subsidiary; (ii) a sale or transfer of a material amount of
assets of Toy Biz or its subsidiary except as otherwise described on Schedule 1
in the Disclosure Schedule separately delivered by the Stockholders with this
Agreement; (iii) any change in the management or board of directors of Toy Biz,
except as otherwise agreed to in writing by a Requisite Amount of the Consenting
Lenders (as defined in Section 11); (iv) any change in the present
capitalization or dividend policy of Toy Biz; or (v) any other change in Toy
Biz's corporate structure or business; and (d) in favor of any other action,
directly or indirectly, necessary or appropriate to effect the Merger in
accordance with the terms of the Merger Agreement or confirmation of the Plan of
Reorganization. The foregoing proxy, which is coupled with an interest and
therefore not terminable by the Stockholders without the consent of all of the
Consenting Lenders, will remain in effect during the term of this Agreement.
"Designated Consenting Lender" means a Consenting Lender designated in writing
by a Requisite Amount of the Consenting Lenders who agrees to act as agent for
the Consenting Lenders hereunder.
2. Option to Purchase and Sell.
2.1. Grant of Option. Each of the Stockholders hereby
grants to the Consenting Lenders an irrevocable option (the
"Option") to purchase all, but not less than all, of the Shares,
639613.17
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on the terms and subject to the conditions set forth herein. The Option shall be
exercisable only if (a) the Master Agreement is terminated pursuant to Section
7.1(d) of the Master Agreement (a "Toy Biz Breach Event") (other than as a
result of a breach or failure by Toy Biz to perform or comply with any of its
covenants or agreements contained in the Master Agreement which (i) (x) occurs
after there has been a change in control of Toy Biz (as defined below) and (y)
is caused by the action or inaction of the new board of directors or new
management of Toy Biz or (ii) occurs as a result of an order of any court of
competent jurisdiction preventing Toy Biz from complying with the Master
Agreement or consummating the Plan of Reorganization based wholly or in part on
any contention that the board of directors of Toy Biz which approved the Master
Agreement was not the duly authorized board of directors of Toy Biz at such time
(a "New Management Breach")) or (b) if there is a Stockholder Breach Event. The
right of the Consenting Lenders to exercise the Option shall be in addition to,
and shall in no way limit, their rights against Toy Biz for breach by Toy Biz of
the Master Agreement, against the Stockholders for breach by the Stockholders of
this Agreement, or against Arad for breach by Arad of the Arad Agreement, and
shall be in addition to their rights under Section 14 of this Agreement. A
change in control shall mean a determination of any court that the board of
directors of Toy Biz which approved the Master Agreement was not at such time
the duly authorized board of directors of Toy Biz.
2.2. Exercise of Option. The Option may be exercised only by
action of a Requisite Amount of the Consenting Lenders at any time after the
occurrence of (i) a Toy Biz Breach Event which is not a New Management Breach or
(ii) a Stockholder Breach Event and prior to the termination of this Agreement
pursuant to Section 5 hereof. A "Stockholder Breach Event" means (i) a material
breach by any of the Stockholders or a failure of any of the Stockholders in any
material respect to perform or comply with any of their covenants and agreements
contained herein, and/or (ii) a breach by any of the Stockholders of its
representations and warranties contained herein in any material respect if such
breach has not been cured within 10 days of notice by the Consenting Lenders of
such breach. A Requisite Amount of the Consenting Lenders may exercise the
Option by sending a written notice of such exercise to each of the Stockholders
specifying a date (not less than two business days nor more than twenty days
from the date such notice is given) for the closing of such purchase (the
"Closing"). The Closing shall take place at the offices of Wachtell, Lipton,
Rosen & Katz, 51 West 52nd Street, New York, New York at 10:00 a.m. on the day
specified in such notice or at such other place, and at such other time or date
as the parties hereto may agree. At the Closing, the Stockholders shall deliver
to the Designated Consenting Lender, as agent for the Consenting Lenders, all of
the Shares by delivery of certificates evidencing such Shares,
639613.17
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properly endorsed by the Stockholders and accompanied by such stock powers and
other documents as may be necessary to transfer record ownership of the Shares
into the Designated Consenting Lender's name on the stock transfer books of Toy
Biz, together with evidence of payment of all applicable transfer and
documentary stamp taxes and other fees. At the time of the Closing, Isaac
Perlmutter agrees that (i) he shall promptly resign as a director of Toy Biz,
(ii) the Stockholders' Agreement, dated as of March 2, 1995, by and among Arad,
the Stockholders, Marvel and Toy Biz (the "Stockholders Agreement"), if still in
effect, shall be terminated as to the Stockholders, and (iii) the Voting Trust
Agreement, dated as of March 2, 1995, by and among Marvel, Isaac Perlmutter and
Toy Biz (the "Voting Trust Agreement"), if still in effect, shall terminate,
with the result that the shares of class B common stock of Toy Biz ("Class B
Common Stock") held by the voting trust established thereunder shall be deemed
transferred to Marvel.
2.3. Payments.
(a) Purchase Price. The purchase and sale of the Shares
pursuant to the Option shall be at a purchase price of $4.00 per Share (the
"Purchase Price"). At the Closing, the Designated Consenting Lender, as agent
for the Consenting Lenders, shall pay to the Stockholders in cash by wire
transfer or by certified or bank check payable to the order of the Stockholders
an amount equal to the product of the Purchase Price multiplied by the number of
Shares sold pursuant to this Section 2.
(b) Adjustments. If at any time the outstanding shares of
Common Stock are changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment or if a stock dividend thereon is declared
with a record date prior to the termination of this Agreement, then the number
of shares of Common Stock subject to the option and the per share consideration
to be paid by the Designated Consenting Lender, upon exercise of the Option (but
not the total purchase price) shall be appropriately and equitably adjusted so
that the Designated Consenting Lender shall receive upon exercise of the Option
the number and class of shares or other securities or property that the
Designated Consenting Lender would have received in respect of the Shares that
the Designated Consenting Lender is entitled to purchase upon exercise of the
Option if the Option had been exercised immediately prior to such event.
3. Representations and Warranties of the Stockholders. The
Stockholders, jointly and severally, represent and warrant to each of the
Consenting Lenders as follows:
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3.1. Ownership of Shares. On the date hereof the Shares are,
and on the date of the Closing all Shares owned by the Stockholders on such date
will be, owned of record or beneficially by the Stockholders, free and clear of
all liens, charges, encumbrances, voting agreements or commitments of any kind,
and constitute, and will constitute, all of the shares of Common Stock or
preferred stock of Toy Biz owned of record or beneficially by the Stockholders.
The Stockholders do not have any options, warrants or rights to purchase or
acquire, any additional shares of Common Stock or preferred stock of Toy Biz.
3.2. Power; Binding Agreement; Non-Contravention. The
Stockholders have full legal right, power and authority to enter into and
perform all of their obligations under this Agreement. This Agreement has been
duly executed and delivered by the Stockholders and constitutes a legal, valid
and binding agreement of the Stockholders, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and remedies generally or general principles
of equity. Neither the execution of this Agreement nor the consummation by the
Stockholders of the transactions contemplated hereby will (i) if the Stockholder
is an entity, conflict with or result in any breach of any provision of the
certificate of incorporation, by-laws or similar governing documents of such
Stockholder, (ii) require any consent or approval of or filing with any
governmental or other regulatory body except for the filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and filings required pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder or (iii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Stockholders or any of their properties or
assets. The execution delivery and performance of this Agreement by the
Stockholders do not breach, violate, conflict with or constitute a default under
any material agreement to which any of the Stockholders is a party.
3.3. Shares. The Stockholders have, and on the date of the
Closing hereunder the Stockholders will have, good, valid and marketable title
to the Shares free and clear of all liens, encumbrances, restrictions and claims
of every kind (other than the encumbrance created by this Agreement and
restrictions on resale imposed by the Securities Act of 1933, as amended). There
are no outstanding options, warrants or rights to purchase or acquire, or
agreements relating to, the Shares (other than this Agreement or as disclosed
herein).
3.4. Title. The delivery of the Shares to the Designated
Consenting Lender, as agent for the Consenting Lenders hereunder, will transfer
to the Consenting Lenders good, valid
639613.17
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and marketable title to the Shares, free of all liens, encumbrances,
restrictions and claims of every kind, other than restrictions on resale imposed
by the Securities Act of 1933, as amended.
3.5. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from the Stockholders in connection with this
Agreement or the transactions contemplated hereby.
3.6. No Ownership of Marvel Claims. The Stockholders do not
own or have any interest of any kind in respect of (including, without
limitation, any control thereof) directly or indirectly, any Claims against, or
Equity Interests in, any of the Debtors (as those terms are defined in the Plan
of Reorganization) except as disclosed on Schedule 3.6 included in the
Disclosure Schedule.
The Consenting Lenders acknowledge that Toy Biz is engaged in
litigation with Marvel concerning the status of Toy Biz' class B common stock
and its Stockholders Agreement (the "Stockholder Agreement Litigation"). The
representations in this Section 3 are qualified by the Stockholder Agreement
Litigation solely with respect to the Stockholders' ability to vote the Shares.
4. Conditions to Closing. (a) The obligations of the parties
to close hereunder shall be subject to the conditions that there shall be no
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction in effect which prohibits the consummation of the
transactions contemplated herein. Each of the Stockholders and the Consenting
Lenders agree that they will not seek, will oppose, and will seek the immediate
lifting of, any such injunction or order.
(b) The obligation of the Consenting Lenders to close the
exercise of the Option pursuant to Section 2 shall be subject to the additional
condition that all representations and warranties of the Stockholders shall be
true and correct in all material respects as of the date hereof and at and as of
the Closing, with the same force and effect as though made on and as of the
Closing.
5. Termination. This Agreement shall terminate on the earlier
of: (i) the Effective Time (as defined in the Merger Agreement), (ii) the
termination of the Master Agreement for a reason other than (x) a Toy Biz Breach
Event which is not a New Management Breach, or (y) a Stockholder Breach Event,
or (iii) 90 days after the termination of the Master Agreement as a result of
(x) a Toy Biz Breach Event which is not a New Management Breach, or (y) a
Stockholder Breach Event, provided that if there is an order or injunction
issued by a court of competent jurisdiction
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in effect on that 90th day which prohibits the exercise of the Option, that 90
day period shall be extended for an additional 60 days to a total of 150 days
after the termination of the Master Agreement, or (iv) at the discretion of
Stockholder, if the Consummation Date has not occurred by September 21, 1998.
6. Expenses. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of its counsel and other advisers.
7. Certain Covenants of the Stockholders. (i) Except
in accordance with the provisions of this Agreement, the
Stockholders agree, while this Agreement is in effect, that they
shall not:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares except pursuant
to this Agreement;
(b) grant any proxies (other than the proxy granted
hereunder), deposit any Shares into a voting trust or enter into a
voting agreement or otherwise transfer or convey any voting rights with
respect to any Shares;
(c) solicit or initiate, or encourage or support the
submission of, any plan of reorganization with respect to Marvel, other
than the Plan of Reorganization contemplated by the Master Agreement;
(d) take any action, directly or indirectly, in conflict or
inconsistent with the Stockholders' obligations hereunder;
(e) acquire, directly or indirectly, any Claims against, any
interest therein, or Equity Interests in, any of the Debtors; or
(f) take any action, directly or indirectly, that would cause
Toy Biz to breach or fail in any material respect to perform or comply
with any of its covenants and agreements contained in the Master
Agreement or to breach its representations and warranties contained in
the Master Agreement in any material respect.
(ii) Each of the Stockholders agrees, while this Agreement is
in effect, to promptly notify the Designated Consenting Lender of the number of
any new shares of Common Stock acquired by such Stockholder after the date
hereof.
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8. Survival of Representations and Warranties. All
representations, warranties, covenants and agreements made by any of the
Stockholders in this Agreement shall survive the Closing hereunder and any
investigation at any time made by or on behalf of any party.
9. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to any Consenting Lender:
To the address of that Consenting Lender set forth
adjacent to the signature of that Consenting Lender
on the signature pages to this Agreement
with a copy to:
Chaim Fortgang
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York
Telephone No.: (212) 403-1000
Telecopy No.: (212) 403-2000
and
if to the Stockholders, to:
Isaac Perlmutter
P.O. Box 1028
Lake Worth, Florida 33460-1028
Telephone No.:
Telecopy No.:
with copies to:
Daniel Golden
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10004
Telephone No.: (212) 806-5423
Telecopy No.: (212) 806-6006
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and:
Lawrence Mittman
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Telephone No.: (212) 856-7177
Telecopy No.: (212) 856-7807
10. Entire Agreement. This Agreement, together with the
documents expressly referred to herein, constitutes the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersedes all prior agreements and understandings among the parties with
respect to such subject matter.
11. Amendment; Waiver; Action of Requisite Amount of the
Consenting Lenders. This Agreement may be modified, amended, altered,
supplemented or waived only in a writing signed by the Stockholders and by a
Requisite Amount of the Consenting Lenders. A "Majority of the Consenting
Lenders" means Consenting Lenders who hold at least two-thirds in principal
amount of the Fixed Senior Secured Claims (as defined in the Plan of
Reorganization) held by all of the Consenting Lenders as shown on Consenting
Lender Execution Pages signed by the Consenting Lenders.
12. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement and the rights of the Consenting Lenders hereunder may
be assigned by the Consenting Lenders without the prior written consent of any
of the Stockholders.
13. 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 conflicts of law thereof.
14. Remedies.
14.1. Specific Performance and Liquidated Damages. The parties
agree that it would be difficult, if not impossible, to calculate the damages
that would be suffered by the Consenting Lenders as a result of a breach of this
Agreement by the Stockholders or a Toy Biz Breach Event and that the Consenting
Lenders would suffer irreparable damage in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that:
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(a) The Consenting Lenders shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the state of Delaware or New York or in any Delaware state court. The
parties agree that the foregoing remedies of specific performance are not
exclusive and are in addition to the right of the Consenting Lenders to seek any
other remedies to which they are entitled at law or in equity.
(b) Upon the occurrence of a Toy Biz Breach Event, the
Consenting Lenders shall be entitled to the payment of liquidated damages from
the Stockholders and Arad, on a joint and several basis, in the aggregate amount
of $10,000,000 if Toy Biz breaches its obligations under Article 6 of the Master
Agreement, provided that if there has not been a Stockholder Breach Event, the
Stockholders shall have no liability for such liquidated damages if the breach
by Toy Biz is a result of an Adverse Order (as defined in the Master Agreement)
or if a change in control of Toy Biz, as defined in Section 2.1 of this
Agreement, has occurred. The payment of such liquidated damages shall be in lieu
of any other claim for money damages by the Consenting Lenders against any of
the Stockholders and Arad as a result of the Toy Biz Breach Event, but shall be
in addition to the right of the Consenting Lenders to seek any remedies to which
they are entitled against Toy Biz and, in the event of a Stockholder Breach
Event, against the Stockholders.
15. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one and
the same document.
16. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in another jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only so broad as is enforceable.
17. Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable to consummate
the transactions contemplated by this Agreement.
18. Third-Party Beneficiaries; No Impairment of Stockholder
Agreement Litigation. Nothing in this Agreement, expressed or implied, shall be
construed to give any person other
639613.17
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than the parties hereto any legal or equitable right, remedy or claim under or
by reason of this Agreement or any provision contained herein or be construed as
an admission of any fact or conclusion of law by Toy Biz or any of the
Stockholders with respect to any issue in the Stockholder Agreement Litigation,
or in any other legal action which is pending now or at any time in the future.
19. Legend. As soon as practicable after the
execution of this Agreement, the Stockholders shall cause the
following legend to be placed on the certificates representing
the Shares:
The shares of common stock represented by this certificate are subject
to the terms of an Amended and Restated Proxy and Stock Option
Agreement, dated as of November 19, 1997, by and among Isaac
Perlmutter, Isaac Perlmutter T.A. and Zib Inc., the Consenting Lenders
and the Panini Lenders who are parties thereto (the "Agreement"), and
are held and may not be transferred or encumbered, except in accordance
therewith. No registration or transfer will be recorded on the books of
Toy Biz, Inc. unless the transfer is made to a transferee who agrees to
be bound by the Agreement.
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IN WITNESS WHEREOF, the Consenting Lenders have caused this
Proxy and Stock Option Agreement to be executed by their respective duly
authorized officers by their execution and delivery of a Consenting Lender
Execution Page as described in the preamble to this Agreement, and the
Stockholders have duly executed this Agreement, as of the date and year first
above written.
STOCKHOLDERS:
ISAAC PERLMUTTER
/s/ Issac Perlmutter
--------------------------------
ZIB INC.
By: /s/ Issac Perlmutter
--------------------------------
Isaac Perlmutter
ISAAC PERLMUTTER T.A.
By: /s/ Issac Perlmutter
--------------------------------
Isaac Perlmutter,
Trustee
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EXHIBIT 1
CONSENTING LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the (a) Amended and Restated Master Agreement (the "Master Agreement"), dated
as of November 19, 1997, by and among (i) Toy Biz, Inc., (ii) certain secured
creditors of Marvel Entertainment Group, Inc. and certain of its direct and
indirect subsidiaries (the "Marvel Debtors"), and (iii) the Panini Lenders (as
defined in the Plan of Reorganization referred to in the Master Agreement), (b)
Amended and Restated Proxy and Stock Option Agreement, dated as of November 19,
1997, by and among Isaac Perlmutter, Isaac Perlmutter, T.A. and Zib, Inc. and
certain secured creditors of the Marvel Debtors, and (c) Amended and Restated
Proxy and Stock Option Agreement, dated as of November 19, 1997, by and among
Avi Arad and certain secured creditors of the Marvel Debtors. This Consenting
Lender Execution Page shall be deemed to be a signature page to each of the
agreements listed above and the undersigned shall be deemed to have signed each
as a "Consenting Lender."
Name of Consenting Lender:
---------------------------------
By:______________________________
Name:
Title:
Address for Notices:
--------------------------------
--------------------------------
Telephone No.:__________________
Telecopy No.:___________________
Principal amount of Fixed Senior
Secured Claims owned or
beneficially owned and which
is consenting as set forth
above: $ .
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<PAGE>
AMENDED AND RESTATED PROXY AND STOCK OPTION AGREEMENT
THIS PROXY AND STOCK OPTION AGREEMENT (this "Agreement"),
dated as of November 19, 1997, amends and restates the Proxy and Stock Option
Agreement, dated as of October 7, 1997, by and between Avi Arad ("Stockholder"),
and secured creditors of Marvel Entertainment Group, Inc., a Delaware
corporation ("Marvel") and certain of its direct and indirect subsidiaries who
become parties to this Agreement by executing and delivering a separate
Consenting Lender Execution Page in the form attached as Exhibit 1 to this
Agreement (the "Consenting Lenders").
WHEREAS, concurrently herewith, Toy Biz, Inc., a Delaware
corporation ("Toy Biz" or the "Company"), various secured creditors of Marvel
and certain of its direct and indirect subsidiaries and the Panini Lenders (as
defined in the Plan of Reorganization referred to below) that are parties
thereto propose to enter into an amended and restated master agreement (the
"Master Agreement") providing for the filing of a joint plan of reorganization
(the "Plan of Reorganization") and the combination of Marvel and Toy Biz (the
"Merger") pursuant to an Agreement and Plan of Merger (the "Merger Agreement")
whereby shares of Class A Common Stock, par value $.01 per share ("Common
Stock") of Toy Biz issued and outstanding as of the effective date of the Merger
(excluding Common Stock held in treasury by Toy Biz or owned by Marvel or its
affiliates) will be converted into shares of common stock of the combined
corporation ("Newco"); and
WHEREAS, Stockholder owns (beneficially or of record) as of
the date hereof 4,150,000 shares of Common Stock (collectively with any other
shares of Common Stock beneficially owned by Stockholder, the "Existing Shares",
and together with any shares of Common Stock acquired or beneficially owned by
Stockholder after the date hereof and prior to the termination hereof,
hereinafter collectively referred to as the "Shares"); and
WHEREAS, a Proxy and Stock Option Agreement, dated as of the
date of this Agreement, is being entered into by and among Isaac Perlmutter,
Isaac Perlmutter T.A. and Zib Inc. (collectively, "Perlmutter") and various
secured creditors of Marvel relating to the shares of Common Stock owned by
Perlmutter (the "Perlmutter Agreement"); and
WHEREAS, the Consenting Lenders are expected to or have
entered into the Master Agreement in reliance on Stockholder's covenants
hereunder;
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, it is
agreed as follows:
1. Proxy. Stockholder hereby appoints the Designated
Consenting Lender as the lawful proxy for Stockholder to vote all of the Shares
which Stockholder is entitled to vote, or which Stockholder controls, directly
or indirectly, in each case, for and in the name, place and stead of
Stockholder, at any annual, special or other meeting of the stockholders of Toy
Biz and at any adjournment thereof, or pursuant to any consent in lieu of a
meeting, at which meeting or in connection with which consent action shall be
taken, and such proxy shall be for the sole purpose of acting (a) in favor of
the transactions contemplated by the Master Agreement and the Plan of
Reorganization, including the Merger; (b) against any action or agreement that
would result in a breach in any material respect of any covenant, representation
or warranty or any other obligation or agreement of Toy Biz under the Master
Agreement or any agreement contemplated thereby, including the Merger Agreement;
(c) against any action or agreement that would, directly or indirectly, impede,
interfere with, delay, postpone or attempt to discourage the Merger or
confirmation of the Plan of Reorganization, including, but not limited to: (i)
any extraordinary corporate transaction (other than the Merger), such as a
merger, other business combination, reorganization or liquidation involving Toy
Biz or its subsidiary; (ii) a sale or transfer of a material amount of assets of
Toy Biz or its subsidiary except as otherwise described on Schedule 1 in the
Disclosure Schedule separately delivered by the Stockholders with this
Agreement;(iii) any change in the management or board of directors of Toy Biz,
except as otherwise agreed to in writing by a Requisite Amount of the Consenting
Lenders (as defined in Section 11); (iv) any change in the present
capitalization or dividend policy of Toy Biz; or (v) any other change in Toy
Biz's corporate structure or business; and (d) in favor of any other action,
directly or indirectly, necessary or appropriate to effect the Merger in
accordance with the terms of the Merger Agreement or confirmation of the Plan of
Reorganization. The foregoing proxy, which is coupled with an interest and
therefore not terminable by Stockholder without the consent of all of the
Consenting Lenders, will remain in effect during the term of this Agreement.
"Designated Consenting Lender" means a Consenting Lender designated in writing
by a Requisite Amount of the Consenting Lenders who agrees to act as agent for
the Consenting Lenders hereunder.
2. Option to Purchase and Sell.
2.1. Grant of Option. Stockholder hereby grants to the
Consenting Lenders an irrevocable option (the "Option") to
purchase all, but not less than all, of the Shares, on the terms
639992.13
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and subject to the conditions set forth herein. The Option shall be exercisable
only if (a) the Master Agreement is terminated pursuant to Section 7.1(d) of the
Master Agreement (a "Toy Biz Breach Event") (other than as a result of a breach
or failure by Toy Biz to perform or comply with any of its covenants or
agreements contained in the Master Agreement which (i) (x) occurs after there
has been a change in control of Toy Biz (as defined below) and (y) is caused by
the action or inaction of the new board of directors or new management of Toy
Biz or (ii) occurs as a result of an order of any court of competent
jurisdiction preventing Toy Biz from complying with the Master Agreement or
consummating the Plan of Reorganization based wholly or in part on any
contention that the board of directors of Toy Biz which approved the Master
Agreement was not the duly authorized board of directors of Toy Biz at such time
(a "New Management Breach"))or (b) if there is a Stockholder Breach Event. The
right of the Consenting Lenders to exercise the Option shall be in addition to,
and shall in no way limit, their rights against Toy Biz for breach by Toy Biz of
the Master Agreement, against Stockholder for breach by Stockholder of this
Agreement, or against Perlmutter for breach by Perlmutter of the Perlmutter
Agreement, and shall be in addition to their rights under Section 14 of this
Agreement. A change in control shall mean a determination of any court that the
board of directors of Toy Biz which approved the Master Agreement was not at
such time the duly authorized board of directors of Toy Biz.
2.2. Exercise of Option. The Option may be exercised only by
action of a Requisite Amount of the Consenting Lenders at any time after the
occurrence of (i) a Toy Biz Breach Event which is not a New Management Breach or
(ii) a Stockholder Breach Event, prior to the termination of this Agreement
pursuant to Section 5 hereof. A "Stockholder Breach Event" means (i) a material
breach by Stockholder or a failure of Stockholder in any material respect to
perform or comply with any of his covenants and agreements contained herein,
and/or(ii) a breach by Stockholder of his representations and warranties
contained herein in any material respect if such breach has not been cured
within 10 days of notice by the Consenting Lenders of such breach. A Requisite
Amount of the Consenting Lenders may exercise the Option by sending a written
notice of such exercise to Stockholder specifying a date (not less than two
business days nor more than twenty days from the date such notice is given) for
the closing of such purchase (the "Closing"). The Closing shall take place at
the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York,
New York, at 10:00 a.m. on the day specified in such notice or at such other
place, and at such other time or date as the parties hereto may agree. At the
Closing, Stockholder shall deliver to the Designated Consenting Lender, as agent
for the Consenting Lenders, all of the Shares by delivery of certificates
evidencing such Shares, properly endorsed by Stockholder and accompanied by such
stock powers and
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other documents as may be necessary to transfer record ownership of the Shares
into the Designated Consenting Lender's name on the stock transfer books of Toy
Biz, together with evidence of payment of all applicable transfer and
documentary stamp taxes and other fees. At the time of the Closing, Stockholder
agrees that (i) he shall promptly resign as a director of Toy Biz, (ii) the
Stockholders' Agreement, dated as of March 2, 1995, by and among Isaac
Perlmutter, Isaac Perlmutter T.A., Zib Inc., Stockholder, Marvel and Toy Biz
(the "Stockholders Agreement"), if still in effect, shall be terminated as to
Stockholder, and (iii) the Voting Trust Agreement, dated as of March 2, 1995, by
and among Marvel, Stockholder and Toy Biz (the "Voting Trust Agreement"), if
still in effect, shall terminate, with the result that the shares of class B
common stock of Toy Biz ("Class B Common Stock") held by the voting trust
established thereunder shall be deemed transferred to Marvel.
2.3. Payments.
(a) Purchase Price. The purchase and sale of the Shares
pursuant to the Option shall be at a purchase price of $4.00 per Share (the
"Purchase Price"). At the Closing, the Designated Consenting Lender, as agent
for the Consenting Lenders, shall pay to Stockholder in cash by wire transfer or
by certified or bank check payable to the order of Stockholder an amount equal
to the product of the Purchase Price multiplied by the number of Shares sold
pursuant to this Section 2.
(b) Adjustments. If at any time the outstanding shares of
Common Stock are changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment or if a stock dividend thereon is declared
with a record date prior to the termination of this Agreement, then the number
of shares of Common Stock subject to the option and the per share consideration
to be paid by the Designated Consenting Lender, upon exercise of the Option (but
not the total purchase price) shall be appropriately and equitably adjusted so
that the Designated Consenting Lender shall receive upon exercise of the Option
the number and class of shares or other securities or property that the
Designated Consenting Lender would have received in respect of the Shares that
the Designated Consenting Lender is entitled to purchase upon exercise of the
Option if the Option had been exercised immediately prior to such event.
3. Representations and Warranties of Stockholder.
Stockholder represents and warrants to each of the Consenting
Lenders as follows:
3.1. Ownership of Shares. On the date hereof the
Shares are, and on the date of the Closing all Shares owned by
Stockholder on such date will be, owned of record or beneficially
639992.13
-4-
<PAGE>
by Stockholder, free and clear of all liens, charges, encumbrances, voting
agreements or commitments of any kind, and constitute, and will constitute, all
of the shares of Common Stock or preferred stock of Toy Biz owned of record or
beneficially by Stockholder. Stockholder does not have any options, warrants or
rights to purchase or acquire, any additional shares of Common Stock or
preferred stock of Toy Biz.
3.2. Power; Binding Agreement; Non-Contravention. Stockholder
has full legal right, power and authority to enter into and perform all of his
obligations under this Agreement. This Agreement has been duly executed and
delivered by Stockholder and constitutes a legal, valid and binding agreement of
Stockholder, enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors' rights and
remedies generally or general principles of equity. Neither the execution of
this Agreement nor the consummation by Stockholder of the transactions
contemplated hereby will (i) if Stockholder is an entity, conflict with or
result in any breach of any provision of the certificate of incorporation,
by-laws or similar governing documents of such Stockholder, (ii) require any
consent or approval of or filing with any governmental or other regulatory body
except for the filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and filings required
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Stockholder or any of his properties or assets. The execution delivery and
performance of this Agreement by the Stockholder do not breach, violate,
conflict with or constitute a default under any material agreement to which the
Stockholder is a party.
3.3. Shares. Stockholder has, and on the date of the Closing
hereunder Stockholder will have, good, valid and marketable title to the Shares
free and clear of all liens, encumbrances, restrictions and claims of every kind
(other than the encumbrance created by this Agreement and restrictions on resale
imposed by the Securities Act of 1933, as amended). There are no outstanding
options, warrants or rights to purchase or acquire, or agreements relating to,
the Shares (other than this Agreement or as disclosed herein).
3.4. Title. The delivery of the Shares to the Designated
Consenting Lender, as agent for the Consenting Lenders, hereunder will transfer
to the Consenting Lenders good, valid and marketable title to the Shares, free
of all liens, encumbrances, restrictions and claims of every kind, other than
restrictions on resale imposed by the Securities Act of 1933, as amended.
639992.13
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<PAGE>
3.5. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby.
3.6 No Ownership of Marvel Claims. The Stockholder does not
own or have any interest of any kind in respect of (including, without
limitation, any control thereof), directly or indirectly, any Claims against, or
Equity Interests in, any of the Debtors (as those terms are defined in the Plan
of Reorganization) except as disclosed on Schedule 3.6 included in the
Disclosure Schedule.
The Consenting Lenders acknowledge that Toy Biz is engaged in
litigation with Marvel concerning the status of Toy Biz' class B common stock
and its Stockholders Agreement (the "Stockholder Agreement Litigation"). The
representations in this Section 3 are qualified by the Stockholder Agreement
Litigation solely with respect to the Stockholder's ability to vote the Shares.
4. Conditions to Closing. (a) The obligations of the parties
to close hereunder shall be subject to the conditions that there shall be no
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction in effect which prohibits the consummation of the
transactions contemplated herein. Stockholder and the Consenting Lenders agree
that they will not seek, will oppose, and will seek the immediate lifting of,
any such injunction or order.
(b) The obligation of the Consenting Lenders to close the
exercise of the Option pursuant to Section 2 shall be subject to the additional
condition that all representations and warranties of Stockholder shall be true
and correct in all material respects as of the date hereof and at and as of the
Closing, with the same force and effect as though made on and as of the Closing.
5. Termination. This Agreement shall terminate on the earlier
of: (i) the Effective Time (as defined in the Merger Agreement),(ii) the
termination of the Master Agreement for a reason other than (x) a Toy Biz Breach
Event which is not a New Management Breach, or (y) a Stockholder Breach Event,
(iii) 90 days after the termination of the Master Agreement as a result of (x) a
Toy Biz Breach Event which is not a New Management Breach, or (y) a Stockholder
Breach Event, provided that if there is an order or injunction issued by a court
of competent jurisdiction in effect on that 90th day which prohibits the
exercise of the Option, that 90 day period shall be extended for an additional
60 days to a total of 150 days after the termination of the Master Agreement, or
(iv) at the discretion of Stockholder, if the Consummation Date has not occurred
by September 21, 1998.
639992.13
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<PAGE>
6. Expenses. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of its counsel and other advisers.
7. Certain Covenants of Stockholder. (i) Except in accordance
with the provisions of this Agreement, Stockholder agrees, while this Agreement
is in effect, that he shall not:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares except pursuant
to this Agreement;
(b) grant any proxies (other than the proxy granted
hereunder), deposit any Shares into a voting trust or enter into a
voting agreement or otherwise transfer or convey any voting rights with
respect to any Shares;
(c) solicit or initiate, or encourage or support the
submission of, any plan of reorganization with respect to Marvel, other
than the Plan of Reorganization contemplated by the Master Agreement;
(d) take any action, directly or indirectly, in conflict or
inconsistent with Stockholder's obligations hereunder;
(e) acquire, directly or indirectly, any Claims against, any
interest therein, or Equity Interests in, any of the Debtors; or
(f) take any action, directly or indirectly, that would cause
Toy Biz to breach or fail in any material respect to perform or comply
with any of its covenants and agreements contained in the Master
Agreement or to breach its representations and warranties contained in
the Master Agreement in any material respect.
(ii) Stockholder agrees, while this Agreement is in effect, to
promptly notify the Designated Consenting Lender of the number of any new shares
of Common Stock acquired by him after the date hereof.
8. Survival of Representations and Warranties. All
representations, warranties, covenants and agreements made by Stockholder in
this Agreement shall survive the Closing hereunder and any investigation at any
time made by or on behalf of any party.
639992.13
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<PAGE>
9. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to any Consenting Lender:
To the address of that Consenting Lender set forth
adjacent to the signature of that Consenting Lender
on the signature pages to this Agreement
with a copy to:
Chaim Fortgang
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York
Telephone No.: (212) 403-1000
Telecopy No.: (212) 403-2000
if to Stockholder, to:
Avi Arad
1698 Post Road East
Westport, CT 06880
Telephone No.:
Telecopy No.:
with copies to:
Daniel Golden
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10004
Telephone No.: (212) 806-5423
Telecopy No.: (212) 806-6006
and:
Lawrence Mittman
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Telephone No.: (212) 856-7177
Telecopy No.: (212) 856-7807
10. Entire Agreement. This Agreement, together with
the documents expressly referred to herein, constitutes the
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<PAGE>
entire agreement among the parties hereto with respect to the subject matter
contained herein and supersedes all prior agreements and understandings among
the parties with respect to such subject matter.
11. Amendment; Waiver; Action of Requisite Amount of the
Consenting Lenders. This Agreement may be modified, amended, altered,
supplemented or waived only in a writing signed by the Stockholders and all
Consenting Lenders. A "Requisite Amount of the Consenting Lenders" means
Consenting Lenders who hold at least two-thirds in principal amount of the Fixed
Senior Secured Claims (as defined in the Plan of Reorganization) held by all of
the Consenting Lenders as shown on the Consenting Lender Execution Pages signed
by the Consenting Lenders.
12. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement and the rights of the Consenting Lenders hereunder may
be assigned by the Consenting Lenders without the prior written consent of
Stockholder.
13. 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 conflicts of law thereof.
14. Remedies.
14.1. Specific Performance and Liquidated Damages. The parties
agree that it would be difficult, if not impossible, to calculate the damages
that would be suffered by the Consenting Lenders as a result of a breach of this
Agreement by Stockholder or a Toy Biz Breach Event and that the Consenting
Lenders would suffer irreparable damage in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that:
(a) The Consenting Lenders shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the state of Delaware or New York or in any Delaware state court. The
parties agree that the foregoing remedies of specific performance are not
exclusive and are in addition to the right of the Consenting Lenders to seek any
other remedies to which they are entitled at law or in equity.
(b) Upon the occurrence of a Toy Biz Breach Event, the
Consenting Lenders shall be entitled to the payment of liquidated damages from
Stockholder and Perlmutter, on a joint and several
639992.13
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<PAGE>
basis, in the aggregate amount of $10,000,000 if Toy Biz breaches its
obligations under Article 6 of the Master Agreement, provided that if there has
not been a Stockholder Breach Event, Stockholder shall have no liability for
such liquidated damages if the breach by Toy Biz is a result of an Adverse Order
(as defined in the Master Agreement) or if a change in control of Toy Biz, as
defined in Section 2.1 of this Agreement, has occurred. The payment of such
liquidated damages shall be in lieu of any other claim for money damages by the
Consenting Lenders against the Stockholder and Perlmutter as a result of the Toy
Biz Breach Event, but shall be in addition to the right of the Consenting
Lenders to seek any remedies to which they are entitled against Toy Biz and, in
the event of a Stockholder Breach Event, against Stockholder.
15. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one and
the same document.
16. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in another jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only so broad as is enforceable.
17. Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable to consummate
the transactions contemplated by this Agreement.
18. Third-Party Beneficiaries; No Impairment of Stockholder
Agreement Litigation. Nothing in this Agreement, expressed or implied, shall be
construed to give any person other than the parties hereto any legal or
equitable right, remedy or claim under or by reason of this Agreement or any
provision contained herein or be construed as an admission of any fact or
conclusion of law by Toy Biz or Stockholder with respect to any issue in the
Stockholder Agreement Litigation, or in any other legal action which is pending
now or at any time in the future.
19. Legend. As soon as practicable after the
execution of this Agreement, Stockholder shall cause the following legend to be
placed on the certificates representing the Shares:
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The shares of common stock represented by this certificate are subject
to the terms of an Amended and Restated Proxy and Stock Option
Agreement, dated as of November 19, 1997, by and between Avi Arad, the
Consenting Lenders and the Panini Lenders who are parties thereto (the
"Agreement"), and are held and may not be transferred or encumbered,
except in accordance therewith. No registration or transfer will be
recorded on the books of Toy Biz, Inc. unless the transfer is made to a
transferee who agrees to be bound by the Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Consenting Lenders have caused this
Proxy and Stock Option Agreement to be executed by their respective duly
authorized officers by their execution and delivery of a Consenting Lender
Execution Page as described in the preamble to this Agreement, and Stockholder
has duly executed this Agreement, as of the date and year first above written.
AVI ARAD
/s/Avi Arad
--------------------------
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<PAGE>
EXHIBIT 1
CONSENTING LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the (a) Amended and Restated Master Agreement (the "Master Agreement"), dated
as of November 19, 1997, by and among (i) Toy Biz, Inc., (ii) certain secured
creditors of Marvel Entertainment Group, Inc. and certain of its direct and
indirect subsidiaries (the "Marvel Debtors"), and (iii) the Panini Lenders (as
defined in the Plan of Reorganization referred to in the Master Agreement), (b)
Amended and Restated Proxy and Stock Option Agreement, dated as of November 19,
1997, by and among Isaac Perlmutter, Isaac Perlmutter, T.A. and Zib, Inc. and
certain secured creditors of the Marvel Debtors, and (c) Amended and Restated
Proxy and Stock Option Agreement, dated as of November 19, 1997, by and among
Avi Arad and certain secured creditors of the Marvel Debtors. This Consenting
Lender Execution Page shall be deemed to be a signature page to each of the
agreements listed above and the undersigned shall be deemed to have signed each
as a "Consenting Lender."
Name of Consenting Lender:
-------------------------------
By:____________________________
Name:
Title:
Address for Notices:
-------------------------------
-------------------------------
Telephone No.:_________________
Telecopy No.:__________________
Principal amount of Fixed
Senior Secured Claims owned
or beneficially owned and
which is consenting as set
forth above: $__________.
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November 19, 1997
Toy Biz, Inc.
685 Third Avenue
New York, New York 10017
Attention: Joseph M. Ahearn
President and Chief Executive Officer
Purchase of 8% Cumulative Convertible Preferred Stock
Gentlemen:
Each of Zib Inc. ("Zib") and Dickstein Partners, Inc.
("Dickstein," and together with Zib, the "New Investors") is pleased to advise
Toy Biz, Inc. ("TB") of its several commitment to purchase the number of shares
of the 8% Cumulative Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of Marvel Entertainment Group, Inc. ("Marvel"; Marvel or
such other entity as is the issuer of the Preferred Stock pursuant to the Plan
of Reorganization (as defined below) being sometimes hereinafter referred to as
the "Company"), as is set forth opposite the signature of such New Investor on
the signature page of this commitment letter (together with the Term Sheet
referred to below, the "Commitment Letter"), subject to the terms and conditions
set forth herein and in the Summary of Principal Terms and Conditions (the "Term
Sheet") annexed hereto as Exhibit A. The terms and provisions with respect to
the preferences, powers and other rights of the Preferred Stock are set forth in
the Company's Restated Certificate of Incorporation (the "Charter") annexed
hereto as Exhibit B. Capitalized terms used but not defined herein or in the
Term Sheet shall have the meanings ascribed to them in the draft Joint Plan of
Reorganization Proposed by the Secured Lenders and TB attached to the Master
Agreement (as defined in the Term Sheet) as Exhibit 2 (the "Plan of
Reorganization").
In consideration of the New Investors having committed to
purchase shares of Preferred Stock pursuant to this Commitment Letter, TB hereby
agrees that:
(1) if at any time prior to September 21, 1999 TB and Marvel
consummate a transaction (other than the Merger as defined in and
contemplated by the Master Agreement, including the investment by the
New Investors contemplated by this Commitment Letter (the "Merger")),
or if at any time after September 21, 1999 TB and
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Joseph M. Ahearn
November 19, 1997
Page 2
Marvel consummate a transaction that was announced prior to September
21, 1999 (other than the Merger), pursuant to which TB and Marvel (or
substantially all of their respective assets) are to be or are,
directly or indirectly, together sold to one or more third parties
(e.g., by merger) or otherwise combined or Marvel is to acquire or
acquires, directly or indirectly, TB (or substantially all of its
respective assets), or TB is to acquire or acquires, directly or
indirectly, Marvel (or substantially all of its respective assets), and
in any such transaction (an "Alternative Transaction"), the holders of
the outstanding common stock, par value $.01 per share, of TB
(collectively, together with any securities of TB issued in exchange
for the aforesaid common stock pursuant to any recapitalization or
similar transaction, the "TB Shares") are to receive or receive
consideration (in cash or fair market value of any non-cash
consideration) per TB Share in excess of $9.625, (such amount to be
appropriately adjusted for any stock dividend, stock split, reverse
stock split or other recapitalization of the TB Shares after the date
hereof (a"TB Recapitalization")) (the "Excess Proceeds"), then
Dickstein shall be entitled to be paid, not later than one (1) business
day following the consummation of the Alternative Transaction, an
alternative transaction fee (the "Alternative Transaction Fee") by TB
(or any successor entity) equal to the product of (a) the lesser of
$3.00 (appropriately adjusted for any TB Recapitalization) and the
Excess Proceeds, (b) 10.39 (appropriately adjusted for any TB
Recapitalization) and (c) the number of shares of Preferred Stock to be
purchased by Dickstein; provided, however, that if TB is the surviving
entity in any combination or other transaction referred to in this
clause (1), the per share consideration deemed to be received by the
holders of the TB Shares shall be the price per share of the TB Shares
immediately following consummation of such combination or other
transaction; provided, further, that any Alternative Transaction Fee
that becomes payable in respect of any Alternative Transaction
announced or consummated prior to the later of September 21, 1998 and
the termination of the Master Agreement will not be in excess of
$8,000,000 and any Alternative Transaction Fee which becomes payable in
respect of an Alternative Transaction which is announced and
consummated after the later of September 21, 1998 and the termination
of the Master Agreement will not be in excess of $4,000,000 (unless the
termination is pursuant to Section 7.1 (d) or (e) of the Master
Agreement, in which case the Alternative Transaction Fee will not be in
excess of $8,000,000); and provided, further, that no Alternative
Transaction Fee shall be payable by Toy Biz in respect of an
Alternative Transaction which occurs after a Final Change in Control;
provided, further that the Alternative Transaction Fee shall not be
payable in the event that the Break-up Fee is paid to Dickstein under
the Plan or the Substitute Fee has been paid to Dickstein. The term
"Final Change in Control" means a Change of Control (as defined in the
Master Agreement) that is final and not subject to appeal or which
results in a change in the identity of a majority of the directors of
TB. The term "Substitute Fee" means the Substitute Fee referred to in
the letter agreement from Isaac Perlmutter,
<PAGE>
Joseph M. Ahearn
November 19, 1997
Page 3
Avi Arad and Joseph Ahearn to Dickstein dated the same date as this
Commitment Letter.
(2) TB will not at any time prior to the termination of the
Master Agreement consent to any material change in the Plan of
Reorganization or withdraw or otherwise terminate the Plan of
Reorganization for the purpose of submitting an alternative plan of
reorganization or consummating an alternative transaction in the
bankruptcy case of Marvel or any of its affiliated debtors; without the
prior written consent of the New Investors having committed to purchase
80% of the shares of Preferred Stock to be purchased by the New
Investors; provided, however, (a) modifications to the Plan of
Reorganization which merely increase the amount of consideration
payable to claimants in the Marvel bankruptcy by an aggregate amount of
$20 million or less and effect no other material changes do not require
the consent of the New Investors, and (b) modifications to the Plan of
Reorganization which merely increase the amount of consideration
payable to claimants in the Marvel bankruptcy by an aggregate amount of
more than $20 million and effect no other material changes do not
require the consent of the New Investors if an appropriate adjustment
is made in the purchase price or terms of the Preferred Stock so that
the value of the Preferred Stock is not reduced by more than the amount
it would have been reduced had the payment to that class been equal to
$20 million;
(3) TB will not at any time prior to the termination of the
Master Agreement implement the transactions contemplated by the Master
Agreement or any similar transactions without permitting the New
Investors to purchase the Preferred Stock on the terms provided in this
Commitment Letter.
Dickstein shall be reimbursed (the "Expense Reimbursement") by
TB or any successor entity in an amount not to exceed $200,000 for all of the
professional fees, costs and expenses incurred by Dickstein solely in connection
with the negotiation of this Commitment Letter and related agreements and
documentation; provided, however, that Dickstein shall not be reimbursed for any
other professional fees, costs or expenses relating to the Reorganization Cases
including, without limitation, any litigation relating to the Reorganization
Cases, the Plan of Reorganization, this Commitment Letter or Toy Biz. Dickstein
shall not be entitled to any Expense Reimbursement if there is a Final Change in
Control.
TB may reduce the aggregate number of shares of Preferred
Stock to be purchased by the New Investors with the consent of New Investors
having committed to purchase 80% of the shares of Preferred Stock to be
purchased by the New Investors, other than Perlmutter, Arad and any of their
affiliates. In the event of such reduction, the shares of Preferred Stock to be
purchased by the New Investors shall be reduced pro rata.
<PAGE>
Joseph M. Ahearn
November 19, 1997
Page 4
This Commitment Letter (and the New Investors' commitments
hereunder) shall not be assignable by you nor shall it be assignable, in whole
or in part, by any New Investor without the consent of you and New Investors
having committed to purchase 80% of the shares of Preferred Stock to be
purchased by the New Investors, provided that no such consent shall be required
for (i) assignments by Zib of its rights under this Commitment Letter, (ii)
assignments by any New Investor of it rights under this Commitment Letter to any
of its affiliates and (iii) assignments by Dickstein of its rights under this
letter to an investment fund controlled or managed by it. Any assignee shall be
required to deliver to TB, Zib and Dickstein its written agreement to be bound
by this Commitment Letter and, upon agreeing to be so bound, shall thereupon be
deemed to have become a New Investor. No assignment, however, shall relieve the
assignor of its obligations under this Commitment Letter. Any such purported
assignment without such consents shall be null and void. This Commitment Letter
is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto. This Commitment Letter may not be amended
or waived except by an instrument in writing signed by you and the New
Investors. This Commitment Letter may be executed in any number of counterparts,
each of which shall be an original, and all of which, when taken together, shall
constitute one agreement. Delivery of an executed signature page of this
Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.
This Commitment Letter constitutes a binding and enforceable
obligation of the New Investors and TB and their respective successors and
permitted assigns; provided, however, that each of the parties hereto
acknowledges that TB is engaged in litigation with Marvel concerning the status
of TB's class B common stock and its stockholders' agreement and this
representation is qualified by such litigation. This Commitment Letter is the
only agreement that has been entered into among us with respect to the matters
contained herein and sets forth the entire understanding of the parties with
respect thereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
If any provision of this Commitment Letter is held to be
illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Commitment Letter.
Such provision shall be deemed to be modified to the extent necessary to render
it legal, valid and enforceable. Without limiting the generality of the
foregoing, if any fee payable by TB pursuant to this Commitment Letter is held
to be in excess of the maximum amount thereof permissible under applicable law,
the amount of such fee, shall be reduced to such maximum amount.
Upon the earlier of (x) the termination of the Master
Agreement, (y) a Final Change in Control and (z) the delivery by Dickstein or
Zib of a written notice terminating this
<PAGE>
Joseph M. Ahearn
November 19, 1997
Page 5
Agreement following such time as persons designated by Marvel and not approved
by Dickstein or Zib, as the case may be, become a majority of the directors of
TB (a "Marvel Board Change"), this Commitment Letter and the obligations of the
parties hereunder shall terminate; provided, however, that if a Final Change in
Control has not occurred and this Commitment Letter is terminated under clause
(x) or (z) above, the obligations of TB under clause (1) of the second paragraph
hereof and its obligations to pay the Expense Reimbursement shall survive
termination of this Commitment Letter. In no event shall TB have any obligations
under this Commitment Letter (including any obligations under clause (1) of the
second paragraph hereof) after the occurrence of a Final Change in Control,
whether that Final Change in Control occurs before or after the termination of
this Commitment Letter.
<PAGE>
Joseph M. Ahearn
November 19, 1997
Page 6
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet by returning
to us executed counterparts hereof.
The New Investors are pleased to have been given the
opportunity to invest in the Company and we look forward to working with you to
complete this transaction.
Very truly yours, Number of Shares of
Preferred Stock subscribed
to:
ZIB, INC.
By: 600,000
---------------- -------
Isaac Perlmutter
President
DICKSTEIN PARTNERS INC.
By: 300,000
-------------- -------
Name:
Title:
ACCEPTED AND AGREED AS OF THE
19TH DAY OF NOVEMBER, 1997:
Toy Biz, Inc.
By:
---------------------
Joseph M. Ahearn
President
GUARANTEE
The undersigned hereby unconditionally guarantees the full compliance and
performance by Zib Inc. with its obligations under this Commitment Letter. This
guarantee is a guarantee of payment and not of collection.
----------------------------
Isaac Perlmutter
<PAGE>
Exhibit A
Summary of Principal Terms and Conditions
Issuer: The Company.
Security: Preferred Stock of the Company. Alternatively, the Company
may issue New Convertible Notes as provided in the Plan of
Reorganization. If New Convertible Notes are issued, all
references to Preferred Stock in this Commitment Letter will be
deemed to be modified, to the extent applicable, to refer to such
New Convertible Notes.
Use of Proceeds: Provide funding for a portion of the distributions and other
payments required to be made on the Consummation Date under
and in connection with the Plan of Reorganization.
Amount of
Investment: The number of shares of Preferred
Stock subscribed to by each New Investor at a price
per share of $100, for a total investment by the New
Investors of $90,000,000, subject to reduction as
provided below.
Inspection
Rights: The New Investors may inspect the Company's properties, books
and other records at reasonable times and upon reasonable notice. The
New Investors will also be provided with the same information
(financial or otherwise) provided to other investors as well as such
other material information relevant to the Company's business and the
New Investors' investment as it may reasonably request from to time,
including access to the Company's management and auditors.
Conditions: The following conditions shall be satisfied
(or waived by New Investors having committed
to purchase 80% of the shares of Preferred
Stock to be purchased by New Investors) on
or prior to the purchase of the Preferred
Stock by the New Investors:
1. Definitive Documentation:
Negotiation of definitive equity
investment documentation including,
without limitation, a Stock Purchase
Agreement containing customary
representations and warranties,
covenants (including payment of the
Alternative Transaction Fee or the
Break-Up Fee and expense
reimbursement) and conditions (other
than a material adverse change
condition) for investments of this
type, a
A-1
<PAGE>
Registration Rights Agreement
between the Company and the New
Investors, and a Stockholders
Agreement between the Company, the
New Investors, Arad and Perlmutter
customary for transactions of this
type, which Stockholders Agreement
shall provide for appropriate Board
representation for the New
Investors.
2. HSR Act: The waiting period required by the HSR Act shall have
expired or been terminated by the FTC and the
Department of Justice Antitrust Division, or, it shall have
been determined that the provisions of the HSR Act are
inapplicable to the purchase by the New Investors of the
Preferred Stock.
3. Confirmation Order: A Confirmation Order
reasonably acceptable to the New Investors
confirming the Plan of Reorganization shall
have been issued by the Bankruptcy Court.
4. Plan of
Reorganization: The Plan of Reorganization confirmed
by the Bankruptcy Court shall contain no material
changes, including, without limitation, changes
relating to equity dilution, from Exhibit 2 to the
Amended and Restated Master Agreement, dated as of
November 19, 1997, by and among TB and the secured
creditors of the Company and certain of the
Company's direct and indirect subsidiaries who
become parties to the Amended and Restated Master
Agreement (the "Master Agreement").
5. Financing: The Company shall have obtained the Term Loan Facility
and the Working Capital Facility on terms and conditions
reasonably acceptable to the New Investors and the New
Investors shall have purchased 900,000 shares of
Preferred Stock as contemplated herein, in each case on or
before the Consummation Date. The Term Loan Facility
and the Working Capital Facility shall not, in the
aggregate, have an effective interest rate of more than
thirteen percent (13%) per annum.
6. Consummation
of Merger,
etc.: The Merger and the other transactions
contemplated by the Master Agreement and the Plan of
Reorganization shall have been consummated upon
substantially the same terms set forth therein.
A-2
<PAGE>
In addition, the following condition shall
be satisfied or waived by Dickstein on or
prior to the purchase of the Preferred Stock
by Dickstein:
DIP and Administrative
Expense Claims: The sum of the allowed DIP Claims and the
allowed Administrative Expense Claims shall not exceed, or
reasonably be expected to exceed, $147,000,000, unless one
or more other New Investors have transferred to Dickstein,
for no additional consideration, an aggregate number of
additional shares of Preferred Stock equal to:
300,000 - 300,000
--------------------------------------------
1 - [(D + A - 127,000,000) x .002/1,000,000]
where:
D = the amount of allowed DIP Claims
A = the amount of allowed
Administrative Expense
Claims (including for this
purpose all of the
professional fees, costs
and expenses of
professionals engaged by
Chase pursuant to Section
4.2(b)(i)(A) of the Plan of
Reorganization)
A-3
<PAGE>
Because the parties recognize that
the amount of the allowed
Administrative Expense Claims is
unlikely to have been determined by
the Consummation Date, the New
Investors proposing to transfer to
Dickstein such additional shares of
Preferred Stock and Dickstein shall
negotiate in good faith to agree
upon an estimate of the maximum
amount of the Administrative Expense
Claims reasonably likely to be
allowed and such New Investors shall
place in escrow on the Consummation
Date the number of shares of
Preferred Stock, if any, that would
be required to be transferred to
Dickstein if that estimate was
realized. The escrow arrangements
shall provide for the distribution
of the escrowed shares as the
aggregate of the allowed DIP Claims
and the allowed Administrative
Expense Claims become determined.
The amounts set forth above will be
appropriately adjusted if Marvel or
any of its affiliated debtors sells
assets outside of the ordinary
course of business and uses the
proceeds thereof to repay DIP
Claims.
A-4
<PAGE>
Exhibit B
Restated Certificate of Incorporation of
Marvel Entertainment Group, Inc.
November 19, 1997
Dickstein Partners, Inc.
600 Madison Avenue, 16th Floor
New York, New York 10021
Attention: Mark Dickstein
Purchase of 8% Cumulative Convertible Preferred Stock
Gentlemen:
The undersigned are the record or beneficial owners of common
stock of Toy Biz, Inc. ("TB") (the "Stockholders") and have requested that you
execute and deliver to TB an agreement pursuant to which you will commit to
purchase shares of the 8% Cumulative Convertible Preferred Stock, par value $.01
per share (the "Preferred Stock"), of Marvel Entertainment Group, Inc. or such
other entity as is the issuer of the Preferred Stock pursuant to the Plan of
Reorganization (the "Commitment Letter"). As a condition to executing and
delivering the Commitment Letter you have requested that the Stockholders
execute and deliver this letter agreement (the "Letter Agreement"). Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Commitment Letter.
In consideration of your execution of the Commitment Letter,
the Stockholders hereby severally agree in their capacities as record and
beneficial owners of common stock of TB that:
1. If (a) a Final Change of Control shall occur and, but for
the Final Change of Control, Dickstein Partners, Inc. ("Dickstein") would be
entitled under the terms of the Commitment Letter to receive an Alternative
Transaction Fee, (b) an Adverse Order shall be entered which has the effect,
legal or otherwise, of preventing the payment of the Alternative Transaction Fee
in accordance with the terms of the Commitment Letter and Dickstein is otherwise
entitled under the terms of the Commitment Letter to receive an Alternative
Transaction Fee or (c) a Marvel Board Change occurs and the Alternative
Transaction Fee is not paid when due, then Perlmutter and Arad shall each be
severally obligated to pay to Dickstein, at the same time that the Alternative
Transaction Fee would have been payable in accordance with the terms of the
Commitment Letter but for the Final Change
656192.3
-1-
<PAGE>
of Control, Adverse Order or Marvel Board Change, a cash fee (the "Substitute
Fee") equal to ten percent (10%) of the product of (a) the number of TB Shares
owned, directly or indirectly, by each of them as of the date hereof and (b) the
amount by which (i) the consideration per TB Share received, to be received or
deemed received by holders of TB Shares in the Alternative Transaction,
determined in the same manner as provided in the Commitment Letter, exceeds (ii)
$9.00 (appropriately adjusted for any TB Recapitalization); provided, however,
that no Substitute Fee shall be payable by Perlmutter or Arad, as the case may
be, in respect of any shares sold upon exercise of the Option granted by him in
the Amended and Restated Proxy and Stock Option Agreement, dated as of November
19, 1997, or any amendment thereto, executed by him in favor of the Consenting
Lenders (as defined therein). Perlmutter and Arad acknowledge the substantial
personal benefit to their investments in TB attributable to the execution of the
Commitment Letter by Dickstein and that, but for the agreements of Perlmutter
and Arad set forth in this paragraph, Dickstein would not have entered into the
Commitment Letter.
2. Each of the undersigned shall use his respective reasonable
best efforts (subject to their fiduciary duties as directors and/or officers of
TB) to cause TB to comply with the terms of the Commitment Letter irrespective
of any Adverse Order, Change in Control or other judicial determination as to
the authorized composition of the Board of Directors of TB.
This Letter Agreement shall not be assignable by you and is
intended to be solely for the benefit of the parties hereto and is not intended
to confer any benefits upon, or create any rights in favor of, any person other
than the parties hereto. This Letter Agreement may not be amended or waived
except by an instrument in writing signed by the parties hereto. This Letter
Agreement may be executed in any number of counterparts, each of which shall be
an original, and all of which, when taken together, shall constitute one
agreement. Delivery of an executed signature page of this Letter Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
This Letter Agreement is the only agreement that has been
entered into among us with respect to the matters contained herein and sets
forth the entire understanding of the parties with respect thereto. This Letter
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York, without giving effect to conflict of law principles
thereof.
656192.3
-2-
<PAGE>
If any provisions of this Letter Agreement is held to be
illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Letter Agreement.
Such provision shall be deemed to be modified to the extent necessary to render
it legal, valid and enforceable.
Very truly yours,
--------------------------------
Isaac Perlmutter
--------------------------------
Avi Arad
--------------------------------
Joseph M. Ahearn
(with respect to paragraph 2 only)
-3-
TOY BIZ AND MARVEL ENTERTAINMENT LENDERS
FILE JOINT PLAN TO COMBINE
TOY BIZ AND MARVEL
November 21, 1997 New York, NY ---- Toy Biz, Inc. (NYSE:TBZ) announced today
that the Company, together with holders of more than two-thirds of the senior
secured debt of Marvel Entertainment Group, Inc. (NYSE:MRV), other than debt
controlled by Marvel insiders, have filed a joint plan of reorganization in
Marvel's bankruptcy case providing for the combination of Toy Biz and Marvel.
Under the terms of the plan, shares of Toy Biz common stock will convert into an
equal number of shares of common stock in the combined company, giving Toy Biz
stockholders (other than Marvel) an ownership interest of approximately 41% in
the combined company. Marvel's senior secured creditors and debtor in possession
lenders will receive approximately $230 million in cash, and Marvel's senior
secured creditors will also receive common and convertible preferred stock,
giving them a 40% ownership interest in the combined company. The plan also
provides for new investors to purchase $90 million in convertible preferred
stock, giving them an ownership interest of approximately 19% in the combined
company. In addition, the combined company will guaranty $40 million of
indebtedness held by lenders to Marvel's Panini sticker manufacturing subsidiary
which is currently guaranteed on a secured basis by Marvel.
Under the plan, prepetition unsecured creditors of Marvel will receive warrants
exercisable for two years to purchase common stock at a price of $15.00 per
share, giving them a potential ownership interest of approximately four percent
in the combined company. Marvel stockholders will receive subscription rights
exercisable prior to the closing of the combination to purchase common stock at
a price of $9 5/8 per share, giving them a potential ownership interest of
approximately eight percent in the combined company. Exercise of the warrants
and subscription rights will dilute the ownership interests of the other
stockholders in the combined company.
Joseph Ahearn, Toy Biz CEO, stated "We are extremely pleased by the support that
our plan has received from Marvel's senior secured creditors. We have worked
diligently to prepare a detailed plan to solve Marvel's nearly year-long
bankruptcy. A successful completion to Marvel's bankruptcy is clearly in the
best interests of Toy Biz's stockholders, as well as the employees of both Toy
Biz and Marvel, who have endured the uncertainty about the fate of these two
companies for far too long."
Toy Biz is required to arrange financing for the cash payments to be made to the
Marvel's senior secured lenders. Toy Biz expects to arrange for the combined
company to obtain the
641120.1
<PAGE>
necessary funds through the incurrence of bank debt and the issuance of $90
million in preferred stock to new investors.
In order to assure that the proposed combination represents the highest and best
value for Marvel's claimants, Marvel's senior secured lenders and Toy Biz have
agreed to solicit buyers for a combined purchase of the two companies prior to
the closing of the combination.
The joint plan is subject to approval of the court in Marvel's bankruptcy and
other conditions. Toy Biz anticipates receiving approval of its stockholders for
the proposal and will seek all regulatory approvals expeditiously.
Toy biz is approximately 27% owned by Marvel and has the right to manufacture
toys based on Marvel characters.
Forward Looking Statements: Except for historical information contained herein,
the statements in this news release regarding the Company's future performance,
products, licensing relationships and growth plans are forward-looking
statements that are dependent upon certain risks and uncertainties, including
those relating to the outcome of the Marvel bankruptcy (including the Company's
proposal with respect thereto), the level of media exposure or the popularity of
the characters and trademarks that are licensed by the Company, consumer
acceptance of the Company's new product introductions, the Company's dependence
on manufacturers in China, U.S. trade relations with China, changing consumer
preferences, production delays or shortfalls and general economic conditions.
Those and other risks and uncertainties are described in the Company's filings
with the Securities and Exchange Commission, including the Company's Annual
Report on Form 10K and Quarterly Reports on form 10Q.
* * *
Contact:
Edelman Financial
Karry O'Brien (media) Joseph Kist (analysts)
212-704-8292 212-704-8239
641120.1
