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) October 16, 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.)
644419.1
<PAGE>
ITEM 5. Other Events.
On October 8, 1997, the Registrant issued a press release, a
copy of which is attached hereto as Exhibit 99.1, announcing that it had issued
a plan to combine with Marvel Entertainment Group, Inc. ("Marvel"). Registrant's
proposal required that senior secured lenders holding greater than one-third of
Marvel's senior secured debt accept its proposal by the close of business on
October 13, 1997 in order to commit the Registrant to proceed with its proposal.
A copy of the proposal documents which include a Master Agreement with attached
exhibits, a Proxy and Stock Option Agreement, dated as of October 7, 1997, by
and among Isaac Perlmutter, Isaac Perlmutter T.A. and Zib Inc., secured
creditors of Marvel and certain of its direct and indirect subsidiaries and a
Proxy and Stock Option Agreement, dated as of October 7, 1997, by and between
Avi Arad, secured creditors of Marvel and certain of its direct and indirect
subsidiaries is attached hereto as Exhibit 2.1, Exhibit 10.1 and Exhibit 10.2,
respectively. On October 16, 1997, the Registrant issued a press release, a copy
of which is attached hereto as Exhibit 99.2, announcing that senior secured
lenders of Marvel representing more than one-third of the outstanding amount of
Marvel's senior secured debt have agreed to support Toy Biz's previously
announced plan to combine with Marvel.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
2.1. Master Agreement among, dated as of October 7, 1997, by and among
Registrant, the secured creditors of Marvel and certain of its direct
and indirect subsidiaries.
10.1. Proxy and Stock Option Agreement, dated as of October 7, 1997, by and
among Isaac Perlmutter, Isaac Perlmutter T.A. and Zib Inc., secured
creditors of Marvel and certain of its direct and indirect
subsidiaries.
10.2. Proxy and Stock Option Agreement, dated as of October 7, 1997, by and
between Avi Arad, secured creditors of Marvel and certain of its direct
and indirect subsidiaries.
99.1. Press release of the Registrant, dated October 8, 1997.
99.2. Press release of the Registrant, dated October 16, 1997.
644419.1
<PAGE>
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: October 16, 1997
By /s/ Joseph M. Ahearn
------------------------------------
Name: Joseph M. Ahearn
Title: President and Chief Executive
Officer
644419.1
MASTER AGREEMENT
MASTER AGREEMENT (this "Agreement") dated as of October 7,
1997, by and among Toy Biz, Inc., a Delaware corporation ("Toy Biz") and 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").
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, N.A. ("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 submit a Joint
Plan of Reorganization (substantially in the form attached hereto as Exhibit 2
with such further modifications as a Majority of the Consenting Lenders and Toy
Biz may agree) (the "Plan of Reorganization"), as creditors and parties in
interest in the Reorganization Cases pending in the Bankruptcy Court. The Plan
of Reorganization will provide, among other things, that pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), Toy Biz will be merged
with and into a newly organized, wholly-owned subsidiary of Entertainment
("Newco") with Toy Biz as the surviving corporation (the "Merger"), and each
holder of Class A Shares (as hereinafter defined) will receive a certain amount
of shares of Newco Common Stock (as
639892.7
<PAGE>
hereinafter defined), and (ii) Entertainment's certificate of incorporation and
by-laws will be amended and restated as provided in the Merger Agreement. The
structure of the Merger may change so that Toy Biz, rather than Marvel, is the
issuer of the public common stock and is the issuer and resulting publicly held
corporation if appropriate to facilitate filing of the Form S-4 referred to
below.
E. At the same time as the execution and delivery of this
Agreement by Toy Biz, Isaac Perlmutter, Isaac Perlmutter T.A., and Zib Inc. (the
"Perlmutter Stockholders") and Avi Arad have 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 have 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 Proxy and Stock Option Agreements (the "Proxy and Stock Option
Agreements") by and between the Perlmutter Stockholders and Avi Arad,
respectively, and the Consenting Lender (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 Lenders 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 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:
ARTICLE 1
DEFINITIONS
639892.7
<PAGE>
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.
"Agreement" shall have the meaning set forth in the
Preliminary Statement.
"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.
"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.
"Consenting Lender Threshold Date" means the date this
Agreement has been executed and delivered by holders of Senior Secured Claims
who constitute the Consenting Lenders Threshold.
"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
preamble.
"Disclosure Schedule" means the disclosure schedule separately
delivered by Toy Biz to the Consenting Lenders with this Agreement.
639892.7
3
<PAGE>
"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, Westgate International, L.P. or any
affiliates of any of the foregoing or in which any of the
foregoing have any 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.
"Majority of the Consenting Lenders" means Consenting Lenders
holding a majority 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.
"Merger" 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.
639892.7
4
<PAGE>
"New Investment" shall mean the $90 million investment in
Newco to be made by the New Investors.
"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.
"Proxy and Stock Option Agreements" shall have the meaning set
forth in the Preliminary Statement.
"Reorganization Cases" shall have the meaning set forth
in the Preliminary Statement.
"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 Majority of the 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
639892.7
5
<PAGE>
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 common 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' 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' 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, each of the parties hereto agrees to use its 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 administrative, challenging this Agreement or
the consummation of the transactions contemplated by this Agreement including
seeking to have
639892.7
6
<PAGE>
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.1
(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
November 18, 1997, 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
- --------
1 References to Marvel as the registrant under the Form S-4 will be deemed to
refer to Toy Biz if the Merger is structured so that Toy Biz is the issuer
and resulting publicly held corporation.
639892.7
7
<PAGE>
Rule 14c-2 under the Securities Exchange Act of 1934, as amended, at least 20
calendar days in advance of the Effective Time.
(c) Toy Biz shall notify the Consenting 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 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 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. Toy Biz shall give prompt
notice to the Consenting Lenders and the Consenting 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
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 or
the Consenting Lenders, as the case may be, 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
639892.7
8
<PAGE>
the FTC or the Antitrust Division, including any request for
additional information or documentary material.
2.8 Required Actions. Each of the parties hereto and each of
the New Investors hereby agrees to use its 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;
(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 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.
In addition, the Consenting Lenders shall consult with Toy Biz, and Toy
Biz shall consult with the Consenting Lenders, 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 other than
the Panini Stock, without the consent of
Toy Biz which consent will not be
unreasonably withheld, unless a Majority of
the Consenting Lenders shall have first
confirmed in writing to Toy Biz that they
will thereafter 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
639892.7
9
<PAGE>
Consenting Lenders foreclose against the
Common Stock of Fleer;
(e) to 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
Majority of the Consenting Lenders shall
have first confirmed in writing to Toy Biz
that they will thereafter effect
transactions substantially similar in those
contemplated by this Agreement;
(f) 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; or
(g) 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 Consummation Date,
Toy Biz shall obtain the Term Loan Facility, the Working Capital
Facility and the New Investment.
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
639892.7
10
<PAGE>
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.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF TOY BIZ
Toy Biz hereby represents and warrants to each Consenting
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) 59,091 shares of Preferred Stock are issued
and outstanding and 59,091 Class A Shares are reserved for issuance upon
conversion of such shares, and (iv) 1,321,471 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, warrants, calls, preemptive rights, subscriptions
or other rights, agreements, arrangements or
639892.7
11
<PAGE>
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 creditor's 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 acknowledge that Toy Biz is engaged in litigation with
Entertainment concerning the status of Toy Biz' class B common stock and its
stockholders' agreement (the "Stockholder Agreement Litigation"). The
representations in this Article 3 are qualified by the Stockholder Agreement
Litigation.
639892.7
12
<PAGE>
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 (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
Each of the Consenting 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).
4.3 Ownership of Claims. Such party owns or beneficially owns
the outstanding principal amount of Senior Secured Claims set forth on its
Consenting Lender Execution Page and, with respect to each such claim, such
party has the legal right to exercise all voting rights relating thereto
639892.7
13
<PAGE>
(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. Such party 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. Such
party 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 the
satisfaction of the following condition during the term hereof, which may be
waived in whole or in part by Toy Biz or a Majority of the Consenting Lenders,
as the case may be, to the extent permitted by applicable law:
Injunctions. There shall be 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;
5.2 Conditions to Consenting Lenders' Obligations to Perform
their Respective Obligations in Accordance with Article 2. The obligations of
the Consenting 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 during the term hereof, any and all of which may be
waived in whole or part by a Majority 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
639892.7
14
<PAGE>
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);
and
(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.,
Eastern Daylight Time, on October 14, 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;
(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;
639892.7
15
<PAGE>
(d) 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 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(e) or the Merger
Agreement is terminated in accordance with Section 6.1(d), a Majority of the
Consenting Lenders shall have the right to direct Toy Biz 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
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:
(a) by mutual written agreement of each of the
Consenting Lenders and Toy Biz;
(b) by a Majority of the Consenting Lenders if the
Consummation Date has not occurred on or before March 2, 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
639892.7
16
<PAGE>
or agreement or satisfy any condition under this Agreement or the Merger
Agreement by any of the Consenting Lenders;
(c) by Toy Biz if the Consummation Date has not
occurred on or before July 6, 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) and (e) 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 July 6, 1998.
(d) by a Majority of the 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;
(e) by a Majority 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 Majority of the Consenting Lenders of such breach;
(f) by Toy Biz if, by 5:00 p.m., Eastern Daylight
Time, on October 14, 1997, this Agreement has not been executed and delivered by
holders of Senior Secured Claims holding at least 33-1/3% in principal amount of
the Senior Secured Claims, excluding Excluded Claims;
(g) by Toy Biz or any Consenting Lender if the
Consenting Lender Threshold Date has not occurred by 5:00 p.m., Eastern Standard
Time on November 14, 1997; or
(h) 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 or number of non-breaching Consenting
Lenders falls below the Consenting Lender Threshold.
639892.7
17
<PAGE>
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 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.
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):
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
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
639892.7
18
<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.
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.
8.10 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
639892.7
19
<PAGE>
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.
639892.7
20
<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:
------------------------
Name:
Title:
<PAGE>
EXHIBIT 1
CONSENTING LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the (i) Master Agreement, dated as of October 7, 1997, by and among Toy Biz,
Inc. and certain secured creditors of Marvel Entertainment Group, Inc. and
certain of its direct and indirect subsidiaries (the "Marvel Debtors"), (ii)
Proxy and Stock Option Agreement, dated as of October 7, 1997, by and among
Isaac Perlmutter. Isaac Perlmutter, T.A. and Zib, Inc. and certain secured
creditors of the Marvel Debtors, and (iii) Proxy and Stock Option Agreement,
dated as of October 7, 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."
Date:
--------------
Name of Consenting Lender:
-----------------------------
By:
--------------------------
Name:
Title:
Address for Notices:
-----------------------------
-----------------------------
-----------------------------
Telecopy No.:
----------------
Telecopy No.:
----------------
Principal amount of Senior
Secured Claims owned or
beneficially owned: $
--------.
<PAGE>
Exhibit 2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- -----------------------------------x
:
In re :
: Chapter 11 Case Nos.
Marvel Entertainment Group, Inc. : 96-2069 (HSB) through
et al., : 96-2077 (HSB)
:
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
October __, 1997
639280.9
<PAGE>
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 October __, 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.
"Allowed" means, with reference to any Claim or Equity
Interest, (a) 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, (b) any Claim or Equity Interest allowed by Final Order,
(c) 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
jurisdiction other than the Bankruptcy Court or (d) any Claim allowed expressly
hereunder.
"Assigned Panini Intercompany Claims" means (i) any and
all indebtedness, claims, liabilities or other amounts owing by
639280.9
<PAGE>
any of the Panini Entities to any of the Debtors as of the
Consummation Date.
"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.
"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 __ 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, suits, debts, sums
of money, damages, judgments, claims and demands whatsoever, whether known or
unknown, in law, equity or otherwise.
2
639280.9
<PAGE>
"Characters" means Marvel Characters, Inc., one of the
Debtors herein.
"Charter" means the Certificate of Incorporation for
Newco in the form of Exhibit __ 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.
"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.
"Confirmation Order" means the order of the Bankruptcy Court
confirming this Plan of Reorganization in substantially the form of the order
annexed as Exhibit __ hereto.
"Consummation Date" means the latest to occur of (a) the
eleventh 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
3
639280.9
<PAGE>
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 subsidiaries governed by or arising out of the
guarantee 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 be
convertible into seventeen million, five hundred fifty eight thousand, four
hundred forty two (17,558,442) shares of Newco Common Stock and which shall be
in the form of Exhibit ___ hereto.
"Convertible Preferred Stock Purchase Agreement" means
a Convertible Preferred Stock Purchase Agreement substantially in
the form annexed hereto as Exhibit "__."
"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.
"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 __ hereto.
***["Designated Officer" means Mr. Peter Cheston, or
such other person appointed by the Bankruptcy Court at the
request of the Secured Lenders.]***
"DIP Claim" shall mean any claim arising under the DIP Credit
Agreement.
4
639280.9
<PAGE>
"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.
"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.
"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, including, without limitation (i) the
48,000,000 shares of Entertainment common stock pledged to the holders of
secured note claims against Marvel Holdings, Inc., a Delaware corporation and
the debtor in Chapter 11 Case No. 96-2066 (HSB), pursuant to the trust indenture
dated as of April 15, 1993 between Marvel Holdings Inc., as issuer, and Nations
Bank of Georgia, N.A., as indenture trustee, under which Marvel Holdings Inc.
issued $517,447,000 in Series B Senior Secured Discount Notes due 1998, (ii) the
20,000,000 shares of Entertainment common stock pledged to the holders of
secured note claims against Marvel (Parent) Holdings, Inc., a Delaware
corporation and the debtor in Chapter 11 Case No. 96-2068 (HSB), under the trust
indenture dated as of October 1, 1993, between Marvel (Parent) Holdings, Inc.,
as issuer and Nations Bank of Georgia, N.A., as indenture trustee, pursuant to
which Marvel (Parent) Holdings, Inc. issued $251,678,000 in Senior Secured
Discount Notes due 1998, and (iii) the 9,302,326 of Marvel III Holdings Inc., a
Delaware corporation and the debtor in Chapter 11 Case No. 96-2067 (HSB), under
the trust indenture dated as of February 15, 1994, between Marvel III Holdings
Inc., as issuer, and Nations Bank of Georgia, N.A., as indenture trustee,
pursuant to which Marvel III Holdings Inc. issued $125,000,000 in 9-1/8% Series
B Senior Secured Discount Notes due 1998. For purposes of Subclass 6A
(Entertainment) of
5
639280.9
<PAGE>
Class 6 (Equity Interests), the Existing Warrants shall not be included in such
subclass.
"Excess Administration Claims Amount" means the amount by
which the sum of (a) all Allowed Administration Expense Claims, (exclusive of
all DIP claims), (b) the aggregate amount of all professional fees, costs and
expenses of Chase and 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, and (c) Class Securities Litigation
Claims, exceeds thirty-five million dollars ($35,000,000).
"Excess Administration Claims Note" means an unsecured note
subordinate to the Term Loan Facility and the Working Capital Facility in
substantially the form of Exhibit "__" 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, shall have a maturity date of the fifth
anniversary of the Consummation Date and shall not be subject to prepayment.
"Exculpated Persons" means the Debtors, the Reorganized
Debtors, Newco, the holders of DIP claims, the holders of Senior Secured Claims,
Chase, Toy Biz, the New Investors, the members of any statutory committee for
the Debtors, 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.
"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 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
6
639280.9
<PAGE>
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 (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 Insituto
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); (d) 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; 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,
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.
7
639280.9
<PAGE>
"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 account of Entertainment or any of its subsidiaries or 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
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.
"Insider Claim" means any Unsecured Claim of an "insider" or
"affiliate" of any Debtor as the terms "insider" and "affiliate" are defined in
section 101 of the Bankruptcy Code.
***["Intercompany Agreement" means those agreements set
forth on Exhibit "__" 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.
8
639280.9
<PAGE>
"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 __, 1997.
"Merger Agreement" means that certain Agreement and Plan of
Merger dated as of the Consummation Date in the form annexed as Exhibit __
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.
"New Investors" means the individuals set forth on
Exhibit ___ hereto.
"Newco" means, as applicable, (a) the entity resulting from
the combination of Marvel and Toy Biz 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.
"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 Indemnity" means an indemnity substantially in the
form of Exhibit "__" hereto pursuant to which Newco will indemnify and hold
harmless Panini from 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
9
639280.9
<PAGE>
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 Disposition Proceeds" means any and all proceeds
arising from any Panini Disposition Transaction, after satisfying any
indebtedness, liens, claims or encumbrances of any kind or nature whatsoever of
the Panini Entities which are required to be satisfied in order to effectuate
any such sale or disposition.
"Panini Disposition Transaction" means the sale or other
disposition of any Panini Stock or any of the assets of the Panini Entities
(including the capital stock of any subsidiaries of Panini) out of the ordinary
course of business.
"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 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 Participation Agreement" means collectively,
(i) the Participation Agreement dated as of August 30, 1994 among
10
639280.9
<PAGE>
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 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 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 October __, 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.
"Plan Warrant Agreement" means that certain Warrant Agreement
in substantially the form of Exhibit __ 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.
11
639280.9
<PAGE>
"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.
"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.
"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 "__" 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.
"Subscription Agreement" means a subscription agreement in
substantially the form of Exhibit __ 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.
12
639280.9
<PAGE>
"Term Loan Facility" means a term loan facility or facilities
for Newco 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.
"Transaction" means the transactions contemplated by
the Merger Agreement.
"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.
"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 in an amount not to exceed 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 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 the Plan of Reorganization. All other Exhibits and
Schedules to this Plan of Reorganization, which shall be in form and substance
reasonably
13
639280.9
<PAGE>
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 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 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.
14
639280.9
<PAGE>
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
Class 5 -- Class Securities Litigation Claims
Class 6 -- Equity Interests
Subclass 6A -- Entertainment
Subclass 6B -- Subsidiary Equity Interests
15
639280.9
<PAGE>
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 Claims held by any holder of
a Senior Secured Claim or any affiliate thereof that serves or has served as an
appointee on any committee organized by the U.S. Trustee in the cases com menced
by Marvel Holdings Inc., Marvel (Parent) Holdings Inc. and Marvel III Holdings
Inc. 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.
(i) Fixed Senior Secured Claims
(Subclass 2A).
(A) Distributions. On the
Consummation Date, each holder of an Allowed Fixed Senior Secured Claim shall be
distributed, in full and complete satisfaction and discharge of its Fixed Senior
Secured Claims, its Ratable Proportion of (1) either one hundred percent (100%)
of the common stock of Panini or, in the event that the Panini Stock has been
sold, the Panini Disposition Proceeds,(2) two hundred and thirty million dollars
($230,000,000) in Cash less the sum of (a) all amounts paid to satisfy DIP
Claims in full(exclusive any increase in the amount of the DIP Claim from and
after October 7, 1997 including, without limitation, any interest or charges
which any 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, (5) the Excess
Administration Claims Note and (6) one thousand (1,000) shares of new common of
each of the Debtors other than Entertainment and Panini representing one
16
639280.9
<PAGE>
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. Subject to the preceding sentence and without duplication, Chase and the
holders of Senior Secured Claims shall be reimbursed for all of their
professional fees, costs and expenses 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, a 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 (b) the Proponents agree in
writing otherwise.]***
***[(ii) Contingent Senior Secured Claims
(Subclass 2B). Each holder of Allowed Contingent Senior Secured Claims shall
receive, in full and complete satisfaction and discharge of its Fixed Senior
Secured Claims, its Ratable Proportion of one dollar ($1) in Cash in the
aggregate.]***
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
17
639280.9
<PAGE>
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 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 an 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 Class 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
vote to 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
18
639280.9
<PAGE>
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 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 Class 4A, Class 5 and Subclass 6A each 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 vote to 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.
19
639280.9
<PAGE>
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).
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 Clams 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 (Fleer Corp.) 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 (Fleer Corp.) 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.
Subclass 6B (Subsidiary Equity Interests) of Class 6 (Equity
Interests) is not impaired hereunder, and the holders of Claims and Equity
Interests in such classes and, as applicable, each subclass thereof, are
conclusively presumed under section 1126(f) of the Bankruptcy Code to have
accepted this Plan of
20
639280.9
<PAGE>
Reorganization and are not entitled to vote on this Plan of Reorganization.
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.
(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 (Fleer Corp.) 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 the failure to include all Debtors does not have a material impact
upon the business of Newco and there is an appropriate credit against the
21
639280.9
<PAGE>
distributions to be received by the holders of Allowed Fixed Senior Secured
Claims pursuant to Section 4.2(b)(i) hereof.
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 on the terms and subject to the
conditions contained in such Merger Agreement, free and clear of all Liens,
claims, encumbrances and interests (but subject to the Liens of the Panini
Lenders to the extent such Liens attach to the Panini Stock or any of the assets
of the Panini Entities). In connection therewith, all outstanding letters of
credit or other similar obligations as set forth on Exhibit "__" 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
canceled and terminated with Chase receiving releases acceptable to Chase from
the beneficiaries thereof.
6.2 Derivative Securities Litigation Claims.
The 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 shareholders' 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.
22
639280.9
<PAGE>
6.5 Distribution to New Investors.
On the Consummation Date, the New Investors shall receive nine
hundred thousand (900,000) shares of Convertible Preferred Stock.
6.6 Toy Biz Distribution.
On the Consummation Date, holders of Toy Biz common stock
(other than the Debtors ) shall receive twenty million, three hundred fifty-two
thousand, one hundred twenty-seven (20,352,127) shares of Newco Common Stock,
and such shares shall be distributed to Toy Biz on the Consummation Date.
6.7 Dissolution of Equity Committee and Bondholders
Committee.
On the Consummation Date, the committee of equity security
holders of Entertainment appointed by the U.S. Trustee in the Reorganization
Cases shall automatically dissolve and such committee shall cease to exercise
any functions and be divested of all rights, powers and duties.
[6.8 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 the Senior Secured 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.]
6.9 Newco Financing.
Toy Biz shall arrange for Newco to obtain the Term Loan
Facility and the Working Capital Facility.
6.10 Panini Disposition Transaction.
On the Consummation Date, there shall be delivered to the
Designated Officer any Panini Stock not in Chase's possession and the Designated
Officer shall be granted all authority necessary for the purpose of effecting
(subject to the Liens of the holders of Senior Secured Claims)as soon as
practicable thereafter one or more Panini Disposition Transactions. In that
regard, Newco and the Debtors shall(i) cooperate fully with the sale process
contemplated in connection herewith and the anticipated separation of Panini
from the Debtors for the benefit of the holders of Fixed Senior Secured Claims
and the Panini Lenders, including to provide or cause to be provided as soon as
23
639280.9
<PAGE>
possible copies (or originals if necessary) of all books and records relating to
the Panini Entities as may be in the possession or control of Newco or its
professional and other agents, (ii) not take any action with respect to such
sale process without the prior consent of the Designated Officer, and (iii) take
any action with respect to such process that the Designated Officer may request,
including, without limitation, the sale of the Panini Stock pursuant to section
363 of the Bankruptcy Code with court-approved bidding procedures, a breakup
fee, a required minimum topping bid and expense reimbursement, subject only to
Bankruptcy Court approval and higher and better offers. For the avoidance of
doubt,(x) the terms of any transaction regarding the Panini Entities and the
related marketing efforts (including, without limitation, the amount and type of
consideration, other terms of sale, marketing and bidding procedures, breakup
fees, minimum required overbid provisions, and expenses reimbursement
provisions) shall be in all respects within the control of the Designated
Officer and (y) Newco shall cause its management and any professionals retained
by it to cooperate fully with the Designated Officer, the holders of Fixed
Senior Secured Claims and their respective advisors and representatives. Without
limiting the generality of Newco's general cooperation obligations, Newco shall
(1) fully cooperate with the Panini Entities, the Designated Officer and Chase
with respect to the collection, for the sole benefit of Panini, of insurance
proceeds from Newco's insurance carriers for losses and other amounts owing by
such carrier arising from the casualty at Panini's Adespan (Bomporto) facility
and (2) deliver to Chase a duly executed letter acknowledging that from and
after the Consummation Date Newco shall have no rights or interest of any kind
or nature whatsoever in or with respect to the Assigned Panini Intercompany
Claims. All insurance proceeds (whether received by Panini, the Debtors or Newco
and from any insurance carrier) relating to the casualty at Panini's Adespan
(Bomporto) facility are for the sole and exclusive benefit of Panini and Newco
shall have no right or interest of any kind or nature with respect to any such
insurance proceeds.
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 and
the transactions contemplated hereby.
***[6.12 Forgiveness of Panini Obligations.
On the Consummation Date, at the election of the Secured
Lenders, each of the Debtors shall either (a) forgive all monetary obligations
of Panini to such Debtor due and payable as of December 31, 1997, or (b) such
obligations shall become part of the Assigned Panini Intercompany Claims and be
assigned to the Panini Lenders.]***
24
639280.9
<PAGE>
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 shares of new common stock of such
other Debtors provided under section 4.2(b)(i)(A)(6) hereof shall be made
directly to Newco
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.
25
639280.9
<PAGE>
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 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
26
639280.9
<PAGE>
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 amounts deemed appropriate
in the judgment of the Disbursing Agent 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 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.
27
639280.9
<PAGE>
(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.
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
28
639280.9
<PAGE>
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 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,
29
639280.9
<PAGE>
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 Toy Biz 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 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 the Consummation Date shall, at the election of the
Secured Lenders, (a) be forgiven or (b) such obligations shall become part of
the Assigned Panini Intercompany Claims and be assigned to the Panini Lenders.
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 the
Consummation Date shall be forgiven. In addition, Newco shall permit the Panini
Entities to
30
639280.9
<PAGE>
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 benefits to be received
hereunder by any of (A) the Debtors' estates, (B) Toy Biz, (C) or (D)
the holders of Senior Secured Claims or the DIP Claim, (ii) determines
that the Plan satisfies each of the 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
proxy statement on Form S-4 shall have been declared effective by the
Securities and Exchange Commission and such combined information and
proxy 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) Secured Lender Consummation Date. The Consummation
Date shall occur not later than March 1, 1998; and
31
639280.9
<PAGE>
(d) Toy Biz Consummation Date. The Consummation Date
shall occur not later than July 1, 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(c) 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 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 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 precluded from asserting
against any Debtor or Reorganized Debtor 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
32
639280.9
<PAGE>
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.
(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 or any subsidiary 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 only 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 Administrative Expense Claims nor shall it limit the
right of Newco to object to any such Claim or request for payment of
Administrative 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 until the Consummation Date.
33
639280.9
<PAGE>
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 avoidance or recovery actions under sections
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 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;
34
639280.9
<PAGE>
(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;
(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 Proponent at any time after confirmation and before
substantial consummation, provided that this Plan of Reorganization, as amended,
satisfies the requirements of ss 1122 and 1123 of the Bankruptcy Code and the
35
639280.9
<PAGE>
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.
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 Guarantee Rights.
The classification of and manner of satisfying all Claims
hereunder take into account (a) the existence of guarantees 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 guarantees 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.
36
639280.9
<PAGE>
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 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 Standard of Discretion.
Except as otherwise expressly provided herein, any agreement,
instrument or other document, including, without limitation, all Exhibits and
Schedules hereto, provided to be acceptable to any entity and any approval,
consent or waiver to be given by or obtained from any entity including, without
limitation, Toy Biz, shall be so acceptable or given or obtained in the
reasonable discretion of such entity.
37
639280.9
<PAGE>
14.10 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.
14.11 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:
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
38
639280.9
<PAGE>
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-
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) [ ]
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-
39
639280.9
<PAGE>
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
40
639280.9
<PAGE>
Dated: Wilmington, Delaware
August __, 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:
----------------------------------
[insert signature blocks for secured lenders]
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:
----------------------------------
41
639280.9
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
SECTION 1. DEFINITIONS AND INTERPRETATION.............................................................1
A. Definitions................................................................................1
B. Interpretation; Application of
Definitions and Rules of Construction.....................................................13
C. Exhibits and Schedules....................................................................14
SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION EXPENSE
CLAIMS AND PRIORITY TAX CLAIMS ..........................................................14
2.1 Administration Expense Claims.................................................................14
2.2 Compensation and Reimbursement Claims.........................................................14
2.3 Priority Tax Claims...........................................................................15
SECTION 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS.............................................15
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN.......................................................16
4.1 Priority Non-Tax Claims (Class 1).............................................................16
4.2 Senior Secured Claims.........................................................................16
(a) Allowance of Senior Secured Claims...............................................16
(b) Treatment of Allowed Fixed Senior Secured
Claims...........................................................................16
(i) Fixed Senior Secured
Claims (Subclass 2A).........................................................16
(A) Distributions..................................................16
(B) Panini Obligations.............................................17
[(ii) Contingent Senior Secured Claims
(Subclass 2B).........................................................17
4.3 Other Secured Claims (Class 3)................................................................17
4.4 General Unsecured Claims (Class 4)............................................................17
(a) Distributions.............................................................................17
(b) Intercompany Claims..............................................................18
(c) Insider Claims...................................................................18
4.5 Class Securities Litigation Claims (Class 5)..................................................18
(a) Distributions....................................................................18
(b) Calculation of Distribution......................................................18
(c) Parity of and Limitation on Distributions........................................19
4.6 Equity Interests (Class 6)....................................................................19
(a) Entertainment (Subclass 6A)......................................................19
(i) Distributions...............................................................19
(ii) Parity of and Limitation on Distributions
19
(b) Subsidiary Equity Interest (Subclass 6B).........................................19
4.7 Existing Warrants (Class 7)...................................................................19
SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS
IMPAIRED AND NOT IMPAIRED UNDER THE PLAN; ACCEPTANCE
OR REJECTION OF THE PLAN..................................................................20
</TABLE>
639280.9
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
5.1 Holders of Clams and Equity Interests
Entitled to Vote...............................................................................20
5.2 Subtraction and Addition of Classes
and Subclasses.................................................................................20
(a) Subtraction of Classes and Subclasses............................................20
(b) Addition of Classes and Subclasses...............................................21
5.3 Nonconsensual Confirmation....................................................................21
5.4 Severability of Plan of Reorganization........................................................21
SECTION 6. MEANS OF IMPLEMENTATION...................................................................21
6.1 Closing of Transaction........................................................................21
6.2 Derivative Securities Litigation Claims.......................................................22
6.3 Board of Directors of the Reorganized Debtors.................................................22
6.4 Officers of the Reorganized Debtors...........................................................22
6.5 Distribution to New Investors.................................................................22
6.6 Toy Biz Distribution..........................................................................22
6.7 Dissolution of Equity Committee and Bondholders
Committee.................................................................................23
6.8 Transfer of Panini............................................................................23
6.9 Newco Financing...............................................................................23
6.10 Panini Disposition Transaction...............................................................23
6.11 Vote of Characters' Toy Biz Stock............................................................24
6.12 Forgiveness of Panini Obligations............................................................24
6.13 Panini Indemnity.............................................................................24
6.14 Outstanding Toy Biz Stock Interests..........................................................24
SECTION 7. PROVISIONS GOVERNING DISTRIBUTIONS........................................................25
7.1 Date of Distributions.........................................................................25
7.2 Entities to Exercise Function of
Disbursing Agent..........................................................................25
7.3 Surrender and Cancellation of Instruments.....................................................25
7.4 Delivery of Distributions.....................................................................26
7.5 Manner of Payment Under Plan of Reorganization................................................26
7.6 Reserves and Distributions....................................................................26
7.7 Distributions After Consummation Date.........................................................27
7.8 Rights And Powers Of Disbursing Agent.........................................................27
(a) Powers of the Disbursing Agent...................................................27
(b) Expenses Incurred on or after the Consummation
Date.............................................................................27
(c) Exculpation......................................................................27
SECTION 8. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER THE
PLAN OF REORGANIZATION....................................................................28
8.1 Objections to Claims..........................................................................28
8.2 No Distributions Pending Allowance............................................................28
8.3 Distributions After Allowance.................................................................28
SECTION 9. PROVISION GOVERNING EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN...........................................................28
9.1 General Treatment.............................................................................28
</TABLE>
639280.9
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
9.2 Amendments to Schedule; Effect of Amendments..................................................29
9.3 Bar to Rejection Damage Claims................................................................29
9.4 Certain Panini Agreements.....................................................................30
(a) Panini Sticker Agreement.........................................................30
(b) Panini Comic Distribution Agreement..............................................30
SECTION 10. CONDITIONS PRECEDENT TO CONFIRMATION DATE AND
CONSUMMATION DATE.........................................................................30
10.1 Conditions Precedent to Confirmation of Plan of
Reorganization...........................................................................30
(a) Confirmation Order...............................................................31
10.2 Conditions Precedent to Consummation Date of Plan
of Reorganization........................................................................31
(a) SEC Information Statement........................................................31
(b) HSR .................................................................................31
(c) Secured Lender Consummation Date......................................................31
(d) Toy Biz Consummation Date.............................................................31
10.3 Waiver of Conditions Precedent...............................................................31
SECTION 11. EFFECT OF CONFIRMATION....................................................................32
11.1 General Authority............................................................................32
11.2 Discharge of Debtors.........................................................................32
(a) General Discharge................................................................32
(b) Exculpations.....................................................................32
(c) Treatment of Indemnification Claims..............................................32
11.3 Term of Injunctions or Stays.................................................................33
SECTION 12. WAIVER OF CLAIMS..........................................................................33
12.1 Avoidance Actions............................................................................33
SECTION 13. RETENTION OF JURISDICTION.................................................................34
13.1 Retention of Jurisdiction....................................................................34
13.2 Amendment of Plan of Reorganization..........................................................35
SECTION 14. MISCELLANEOUS PROVISIONS..................................................................35
14.1 Payment of Statutory Fees....................................................................35
14.2 Retiree Benefits.............................................................................36
14.3 Compliance with Tax Requirements.............................................................36
14.4 Recognition of Guarantee Rights..............................................................36
14.5 Severability of Plan Provisions..............................................................36
14.6 Governing Law................................................................................37
14.7 Further Assurances...........................................................................37
14.8 Time of the Essence..........................................................................37
14.9 Standard of Discretion.......................................................................37
14.10 Counterparts................................................................................37
14.11 Notices.....................................................................................37
</TABLE>
639280.9
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
639280.9
<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 Class A common stock,
par value $.01 per share (the "Class A Shares"), and Class B common stock, par
value $.01 per share, of the Company (the "Class B Shares" and, collectively
with the Class A Shares, 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:
639604.1
<PAGE>
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 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,
639604.1
2
<PAGE>
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.
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
639604.1
3
<PAGE>
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] and any dividends
to the extent provided in Section 2.2(c) 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
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
639604.1
4
<PAGE>
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 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,
639604.1
5
<PAGE>
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 (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
639604.1
6
<PAGE>
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.
(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
639604.1
7
<PAGE>
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 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
639604.1
8
<PAGE>
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 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
639604.1
9
<PAGE>
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 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;
639604.1
10
<PAGE>
(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.
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
639604.1
11
<PAGE>
(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.
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:
Marvel Entertainment Group, Inc.
387 Park Avenue South
New York, New York 10016
Attention: _____________
Telephone No.: (212) _____________
Telecopy No.: (212) _____________
639604.1
12
<PAGE>
with a copy to:
and
if to the Company, to:
Toy Biz, Inc.
333 East 38th Street
New York, New York 10016
Attention: General Counsel
Telephone No.: (212) 588-5100
Telecopy No.: (212) 682-3516
with a copy to:
John Turitzin
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Telephone No.: (212) 856-7000
Telecopy No.: (212) 856-6813
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.
639604.1
13
<PAGE>
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.
639604.1
14
<PAGE>
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:
639604.1
15
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <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>
639604.1
i
<PAGE>
<TABLE>
<S> <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>
639604.1
ii
<PAGE>
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and Among
MARVEL ENTERTAINMENT GROUP, INC.,
[TB ACQUISITION CORP.]
and
TOY BIZ, INC.
dated as of
October __, 1997
- --------------------------------------------------------------------------------
639604.1
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
MARVEL ENTERTAINMENT GROUP, INC.
Marvel Entertainment Group, Inc., 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 Marvel Entertainment
Group, Inc. The original certificate of incorporation was filed with the office
of the Secretary of State of the State of Delaware on December 2, 1986.
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 MARVEL ENTERTAINMENT
GROUP, INC. (the "Corporation").
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the
State of Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover,
County of Kent, 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").
639422.5
<PAGE>
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 7% 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
639422.5
-2-
<PAGE>
this Paragraph 5.3 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 5.4 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
639422.5
-3-
<PAGE>
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 7% Cumulative Convertible Preferred Stock. The initial
series of Preferred Stock shall be comprised of ______ shares and shall be
designated 7% Cumulative Convertible Preferred Stock (the "7% Preferred Stock").
The rights, preferences, privileges and restrictions granted
to or imposed upon the 7% Cumulative Convertible Preferred Stock, are as
follows.
6.2 Dividends and Distributions. The holders of 7% Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, dividends at a rate
per annum equal to 7% of the Liquidation Preference (as defined in Section 6.8)
per share of the 7% 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 7% Cumulative Convertible
Preferred Stock having an aggregate Liquidation Preference equal to the dividend
payment, or (2) in any combination of cash and additional shares of 7%
Cumulative Convertible Preferred Stock valued on such basis. No dividend or
distribution may be declared or paid to holders of Common Stock or on any series
of capital stock ranking junior as to dividends to the 7% Preferred
639422.5
-4-
<PAGE>
Stock, other than a dividend or distribution payable solely in shares of Common
Stock or of any such series of capital stock or in rights or warrants to
subscribe for or purchase shares of Common Stock or of any such series, if there
shall be any unpaid dividends on the 7% Preferred Stock.
In the case of the original issuance of shares of 7% Preferred
Stock, dividends shall begin to accrue and be cumulative from the date of issue.
In the case of shares of 7% Preferred Stock issued in exchange for issued share
thereof, 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 or is a date after the record date for the determination of holders of
shares of 7% 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. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of 7% 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 7% 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.
The Corporation shall not declare or pay any dividend or other
distribution on shares of its Common Stock out of the proceeds of a Capital
Transaction unless a dividend or other distribution shall also be declared or
paid on each share of 7% Preferred Stock out of proceeds of that Capital
Transaction which is equivalent to such dividend or other distribution declared
or paid on each share of Common Stock multiplied by the number of shares of
Common Stock into which a share of 7% Preferred Stock is convertible on the
record date for such action. A "Capital transaction " shall mean any sale, other
disposition for value or any refinancing of more than ten percent (10%)
(measured by fair market value as determine in good faith by the Board of
Directors) of the assets of the Corporation or any subsidiary in any one or
series of related transactions which is outside the ordinary course of business.
In case the Corporation at any time or from time to time shall
(A) 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 (or securities
convertible into its Common Stock) at a price per share (or having a
639422.5
-5-
<PAGE>
conversion price per share) less than the Current Market Price (as defined in
Section 6.9(c)) per share of Common Stock on the record date fixed for the
determination of shareholders entitled to receive such right or warrant, or (B)
declare, order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or rights or warrants to subscribe for securities of the Corporation or
any of its subsidiaries by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on its Common Stock, other
than a dividend payable in cash or shares of the Corporation's Common Stock or
rights or warrants to subscribe for share of the Corporation's Common Stock,
then the Board of Directors may, at the same time or times, declare, order, pay
and make a dividend or other distribution on each share of 7% Preferred Stock
which is equivalent to such dividend or other distribution declared, ordered,
paid or made on each share of Common Stock multiplied by the number of shares of
Common Stock into which a share of 7% Preferred Stock is convertible on the
record date for such action.
6.3 Voting Rights. The holders of 7% Preferred Stock
shall have the following voting rights:
(a) Except as otherwise provided herein, each holder of shares
of 7% Preferred Stock shall be entitled to such number of votes for the 7%
Cumulative Convertible Preferred Stock held by him on all matters submitted to a
vote of the Corporation's stockholders as shall be equal to the largest number
of whole shares of Common Stock into which all of his shares of 7% Cumulative
Convertible Preferred Stock are then convertible;
(b) Except as otherwise provided herein or by law, the holders
of 7% 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.
6.4 Certain Restrictions. Whenever quarterly dividends payable
on the 7% Preferred Stock as provided in Section 6.3 are in arrears, thereafter
and until dividends, including all accrued dividends, on shares of the 7%
Preferred Stock outstanding shall have been paid in full or declared and set
apart for payment, the Corporation shall not (A) pay dividends on, make any
other distributions on, or redeem or purchase or otherwise acquire for
consideration any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the 7% Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for, or out of the net cash proceeds from the
sale of, other shares of any such junior stock, (B) pay dividends on or make any
other distributions on any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the 7% Preferred Stock, except
dividends paid ratably on the 7%
639422.5
-6-
<PAGE>
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled, (C) redeem or purchase or otherwise acquire for
consideration any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the 7% Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire share
of any such parity stock in exchange for share of any stock of the Corporation
ranking junior to the 7% Preferred Stock. The Corporation shall not 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. The Corporation shall not 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 7%
Cumulative Convertible Preferred Stock without the affirmative vote or consent
of holders of a majority of outstanding shares of 7% Cumulative Convertible
Preferred Stock voting or consenting separately as one class.
6.5 Mandatory Redemption. The Corporation shall redeem all
outstanding shares of 7% Preferred Stock on [THE THIRTEENTH ANNIVERSARY OF THE
CLOSING DATE] at a price per share equal to the Liquidation Preference plus an
amount equal to all unpaid dividends thereon, including accrued dividends,
whether or not declared, to the redemption date pursuant to the following
provisions:
(a) On the redemption date, the Corporation shall deposit for
the pro-rata benefit of the holders of the shares of the outstanding 7%
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 at least $50,000,000. Holders of shares of 7% 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 7% 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 paragraph (a) 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
639422.5
-7-
<PAGE>
(a) shall be paid from time to time to the Corporation for its
own account; and
(b) Upon the deposit for funds pursuant to paragraph (a) in
respect of outstanding shares of the 7% 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 7% Preferred Stock shall cease and terminate, excepting only the right to
receive the redemption price therefor.
6.6 Reacquired Shares. Any shares of the 7% 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 (either as to dividends or
upon liquidation, dissolution or winding up) to the 7% Preferred Stock unless,
prior thereto, the holders of 7% Preferred Stock shall have received $9.625 per
share (the "Liquidation Preference"), plus an amount equal to unpaid dividends
thereon, including accrued dividends, whether or not declared, to the date of
such payment or (B) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the 7% Preferred
Stock, except distributions made ratably on the 7% 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 7% 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 6.9. All shares of 7% Cumulative
Convertible Preferred Stock shall automatically be converted (a "Forced
Conversion") into shares of Common Stock upon ten (10) days' prior written
notice to all holders of 7% Cumulative Convertible Preferred Stock after [THE
THIRD ANNIVERSARY OF THE CLOSING] if the resale of such Shares of Common Stock
is covered by an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act") or is otherwise exempt from registration
under the Securities Act, such shares are traded on a national securities
exchange or on the National Association of
639422.5
-8-
<PAGE>
Securities Dealers Automated Quotation System and the Current Market Price, as
defined in this Section 6.9), during any thirty consecutive Trading Day (as
defined in this Section 6.9) period commencing on the Third Anniversary of the
closing is more than $-----------.
(a) Subject to the provisions for adjustment hereinafter set
forth, each share of the 7% Preferred Stock shall be convertible in the manner
hereinafter set forth, into one (1) fully paid and nonassessable share of Common
Stock of the Corporation;
(b) The number of shares of Common Stock into which each share
of the 7% 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 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), then, and in each
such case, the number of shares of Common Stock into which each such share of
the 7% 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 occurrence of such event by (b) a fraction, the numerator of which is the
sum of (I) the number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event plus (II) the
number of shares of Common Stock which such holder would have been entitled to
receive in connection with the occurrence of such event had such share been
converted immediately prior thereto, and the denominator of which is the number
of shares of Common Stock determined in accordance with clause (I) above. An
adjustment made pursuant to this subparagraph (b)(i) shall become effective (a)
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, or (b) in the case of any such subdivision, 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 combine or consolidate the outstanding shares of its Common
Stock into a lesser number of shares of Common Stock, by reclassification or
otherwise, then, and in each such case, the number of shares of Common Stock
into which each share of the 7% 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 determined by
multiplying (a) the number of shares
639422.5
-9-
<PAGE>
of Common Stock into which such share was convertible immediately prior to the
occurrence of such event by (b) a fraction, the numerator of which is the number
of shares 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
and the denominator of which is the number of Common Shares into which such
shares was convertible immediately prior to the occurrence of such event. An
adjustment made pursuant to this subparagraph (b)(ii) shall become effective at
the close of business on the day immediately prior to the day upon which such
corporate action becomes effective;
(iii) 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
(or securities convertible into 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 7%
Preferred Stock shall be permitted to subscribe for or purchase shares of Common
Stock on the same basis as though such shares of the 7% 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 7% 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 of this
subparagraph (b)(iii), 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)(iii) 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
639422.5
-10-
<PAGE>
to receive such rights or warrants. For purposes of this subparagraph (b)(iii)
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
(iv) In case the Corporation at any time or from
time to time shall declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of other or additional stock or
other securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its subsidiaries by way of dividend or spin-off,
reclassification, recapitalization or similar corporate rearrangement) on its
Common Stock, other than a dividend payable in cash or shares of the
Corporation's Common Stock or rights or warrants to subscribe for shares of the
Corporation's Common Stock covered under (iii) herein, then, and in each such
case (unless the holders of shares of the 7% Preferred Stock shall receive any
such dividend or other distribution on the same basis as though such shares of
the 7% 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 7% 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 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 7% Preferred Stock) payable in respect of one share of Common
Stock. An adjustment made pursuant to this subparagraph (b)(iv) 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
639422.5
-11-
<PAGE>
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 National
Association of Securities Dealers Inc.'s Automated Quotation System. The term
"Trading Day" shall mean a day on which 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 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 7% Preferred Stock may be converted required
pursuant to this Section 6.9(d) would result in an increase or decrease of less
than 1% in the number of shares of Common Stock into which each share of the 7%
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 7% Preferred
Stock is then convertible. All
639422.5
-12-
<PAGE>
calculations under this paragraph (d) 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 7%
Preferred Stock may be converted, in addition to the adjustments required by
this Section 6.9(e), 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 7% 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 7% 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 7% 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 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 7% Preferred Stock so converted shall be entitled and
(ii) if less than the full number of shares of the 7% 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 been made at the close of
business ion the date of giving of such notice and of such surrender of the
certificate or certificates representing the shares of the 7% 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) Following a Forced Conversion, the holders of
shares of 7% Preferred Stock shall have the right to receive
639422.5
-13-
<PAGE>
certificates representing the shares of Common Stock into which such shares of
7% 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
shares of 7% 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 validly issued, fully paid and nonassessable shares Common Stock of
the Corporation to which the holder of the 7% Preferred Stock so converted shall
be entitled. Upon a Forced Conversion, the rights of the holders of 7% 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;
(h) Upon the Forced Conversion of the 7% Preferred Stock, the
holders thereof shall be entitled to receive payment in cash of all accumulated,
accrued and unpaid dividends in respect of the shares so converted;
(i) In connection with the conversion of any shares of the 7%
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 (as defined in paragraph (c)) of such shares on the last
business day on which such shares were traded immediately preceding the date
upon which such shares of 7% Preferred Stock are deemed to have been converted;
and
(j) 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 7% Preferred Stock.
6.9 Adjustments For Consolidation, Merger, etc. In case the
Corporation, (A) shall consolidate with or merge into any other person and shall
not be the continuing or surviving corporation of such consolidation or merger,
(B) shall permit any other person to 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 of any other person or
cash or any other property, (C) shall transfer all or substantially all of its
properties or its assets to any other person, or (D) shall effect a capital
reorganization or reclassification of the Common Stock (other than a capital
reorganization or reclassification resulting in the issue of additional shares
of Common Stock for which adjustment is provided in Section 6.9), then, and in
each such
639422.5
-14-
<PAGE>
case, proper provision shall be made so that each share of 7% Preferred Stock
then outstanding shall be converted into, or exchanged for, one share of
Preferred Stock (the "Substitute Preferred Stock") of the "Acquiring
Corporation" (as hereinafter defined) entitling the holder thereof to all of the
rights, powers, privileges and preferences with respect to the Acquiring
Corporation to which the holder of a share of 7% Preferred Stock is entitled
with respect to the Corporation, and being subject with respect to the Acquiring
Corporation to the qualifications, limitations and restrictions to which a share
of 7% Preferred Stock is subject with respect to the Corporation, except that in
lieu of and notwithstanding the provisions for conversion at the option of the
holders of 7% Preferred Stock set forth in Section 6.9, each shares of
Substitute Preferred Stock shall be convertible at any time, at the option of
the holder thereof, into the number of shares of "Voting Common Stock" (as
hereinafter defined) of the Acquiring Corporation or, if the Acquiring
Corporation shall not meet the requirements of the proviso hereto, its "Parent"
(as hereinafter defined), subject to adjustments (subsequent to consummation of
such transaction) as nearly equivalent as possible to the adjustments provided
for in Section 6.9 and this Section 6.10, determined by multiplying the number
of shares of Common Stock into which each share of the 7% Preferred Stock was
convertible immediately prior to consummation of such transaction by a fraction,
the numerator of which is the "Acquisition Price" (as hereinafter defined) and
the denominator of which is the lesser of (a) the Current Market Price (as
defined in paragraph (c) of Section 6.9) per share of the Voting Common Stock of
the Acquiring Corporation or its Parent, as the case may be, on the date of such
consummation and (b) the Current Market Price (as defined in paragraph (c) of
Section 6.9) per share of the Voting Common Stock of the Acquiring Corporation
or its parent, as the case may be, on the date of such conversion.
Notwithstanding anything contained herein to the contrary, the Corporation will
not effect any of the transactions described in clauses (a) through (d) above
unless, the prior to the consummation thereof, each corporation, including this
Corporation, which may be required to deliver any stock, securities, cash or
other property to the holders of shares of the 7% Preferred Stock shall assume,
by written instrument delivered to each transfer agent of the 7% Preferred
Stock, the obligation to deliver to such holder such shares of stock,
securities, cash or other property to which, in accordance with the foregoing
provisions, such holder may be entitled and each such corporation shall have
furnished to each such transfer agent an opinion of counsel for such
corporation, stating that such assumption agreement is legal, valid and binding
upon such corporation.
For purposes of this Section 6.10, the term "Voting Common
Stock" with respect to any corporation shall mean the Common Stock of such
corporation ordinarily entitled to elect a majority of the directors
constituting the full board of directors of such corporation; the term
"Acquiring Corporation"
639422.5
-15-
<PAGE>
shall mean the continuing or surviving corporation of a consolidation or merger
with the Corporation (if other than the Corporation), the transferee of all or
substantially all of the properties and assets of this Corporation, the
corporation consolidating with or merging into the Corporation in a
consolidation or merger in which the Corporation is the continuing or surviving
person, but in connection with which the Common Stock of the Corporation is
changed into or exchanged for the stock or other securities of any other person
or cash or any other property, or, in case of a capital reorganization or
reclassification, the Corporation; the term "Parent" shall mean, as to any
Acquiring Corporation, any corporation which (i) controls the Acquiring
Corporation directly or indirectly through one or more intermediaries, (ii) is
required to include the Acquiring Corporation in the consolidated financial
statements of such Parent prepared in accordance with generally accepted
accounting principles and (iii) is not itself included in the consolidated
financial statements of any other person (other than its consolidated
subsidiaries); and the term "Acquisition Price" shall mean, as applied to the
Common Stock, (1) the Current Market Price (as defined in paragraph (c) of
Section 6.9) per share of Common Stock on the date on which any transaction to
which this Section 6.10 applies is consummated.
6.10 Reports as to Adjustments. Whenever the number of shares
of Common Stock into which the shares of the 7% Preferred Stock are convertible
is adjusted as provided in Section 6.9, the Corporation shall (A) promptly
compute such adjustment and furnish to each transfer agent for the 7% Preferred
Stock a certificate, signed by a principal financial officer of the Corporation,
setting forth the number of shares of Common Stock into which each share of the
7% 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 7% Preferred Stock a notice stating
that the number of shares into which the shares of 7% Preferred Stock are
convertible has been adjusted and setting forth the new number of shares into
which each share of the 7% 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 dividend (other than a dividend payable solely in cash
or shares of Common Stock) or other distribution, or any right or warrant to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right;
639422.5
-16-
<PAGE>
(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
(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 7% Preferred Stock and to the holders of
record of the outstanding shares of the 7% 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 transaction will result in any adjustment in the number of shares of Common
Stock into which shares of the 7% Preferred Stock are convertible and, if so,
shall state the new number of shares of Common Stock into which each share of
the 7% 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 6.12, 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.
639422.5
-17-
<PAGE>
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.
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
By-Laws 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
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.
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 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.
639422.5
-18-
<PAGE>
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.
639422.5
-19-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be duly executed and acknowledged, this ____ day
of _______________, 199__.
MARVEL ENTERTAINMENT GROUP, INC.
By:
------------------------------
Name:
Title: President and
Chief Executive Officer
639422.5
-20-
<PAGE>
MARVEL ENTERTAINMENT GROUP, INC.
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
639423.3
<PAGE>
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
639423.3
-2-
<PAGE>
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.
639423.3
-3-
<PAGE>
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
639423.3
-4-
<PAGE>
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
639423.3
-5-
<PAGE>
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
639423.3
-6-
<PAGE>
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.
639423.3
-7-
<PAGE>
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 By-Laws.
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
639423.3
-8-
<PAGE>
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
639423.3
-9-
<PAGE>
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
639423.3
-10-
<PAGE>
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.
639423.3
-11-
<PAGE>
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
639423.3
-12-
<PAGE>
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.
639423.3
-13-
<PAGE>
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
639423.3
-14-
<PAGE>
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
639423.3
-15-
<PAGE>
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.
639423.3
-16-
<PAGE>
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.
639423.3
-17-
<PAGE>
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
639423.3
-18-
<PAGE>
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.
639423.3
-19-
<PAGE>
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
639423.3
-20-
<PAGE>
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.
639423.3
-21-
<PAGE>
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.
639423.3
-22-
<PAGE>
DRAFT: 10/11/97
MARVEL ENTERTAINMENT GROUP, INC.
BY-LAWS
(as restated and amended)
639423.3
-23-
<PAGE>
<TABLE>
TABLE OF CONTENTS
<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...................................................7
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..............................................................8
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..........................................................9
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......................................................11
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....................................................................12
Section 5.6. Chairman of the Board........................................................13
</TABLE>
639423.3
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 5.7. Chief Executive Officer......................................................13
Section 5.8. President....................................................................13
Section 5.9. Chief Financial Officer......................................................13
Section 5.10. Treasurer....................................................................13
Section 5.11. Secretary....................................................................14
Section 5.12. Other Officers...............................................................14
Section 5.13. Salaries.....................................................................14
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..........................................................16
Section 7.1. Execution of Contracts.......................................................16
Section 7.2. Loans........................................................................17
Section 7.3. Checks, Drafts, etc..........................................................17
Section 7.4. Deposits.....................................................................17
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.................................................................18
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.......................................................................19
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>
639423.3
-ii-
PROXY AND STOCK OPTION AGREEMENT
PROXY AND STOCK OPTION AGREEMENT (this "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"), various secured creditors of Marvel and certain of its
direct and indirect subsidiaries propose to enter into an agreement (the "Master
Agreement") providing for the filing of a joint plan of reorganization (the
"Plan of Reorganization") and the merger of a wholly-owned subsidiary of Marvel
("TB Acquisition Corp.") with and into Toy Biz (the "Merger") pursuant to an
Agreement and Plan of Merger (the "Merger Agreement") whereby each share 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 one share of common stock of Marvel; 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;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, it is
agreed as follows:
639613.12
<PAGE>
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 Majority 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 Majority of the
Consenting Lenders who agrees to act as agent for the Consenting Lenders.
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, on the terms and subject to the conditions
set forth herein. The Option shall be exercisable only if the Master Agreement
is terminated pursuant to Section 7.1(e) 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
639613.12
-2-
<PAGE>
or agreements contained in the Master Agreement which (i) occurs after there has
been a change in control of Toy Biz as a result of an adverse ruling in the
Stockholder Agreement Litigation (as defined in Section 3) and (ii) is caused by
the action or inaction of the new board of directors or new management of Toy
Biz (a "New Management Breach")) or 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.
2.2. Exercise of Option. The Option may be exercised only by
action of a Majority 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 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
Majority 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, 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
639613.12
-3-
<PAGE>
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:
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
639613.12
-4-
<PAGE>
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). 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, pursuant to Section 2
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.
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.
639613.12
-5-
<PAGE>
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 (other than the provisions of
Section 7) 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 a temporary restraining order or preliminary
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.
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
639613.12
-6-
<PAGE>
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.
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):
639613.12
-7-
<PAGE>
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
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
639613.12
-8-
<PAGE>
agreements and understandings among the parties with respect to
such subject matter.
11. Amendment; Waiver; Action of Majority of the Consenting
Lenders. This Agreement may be modified, amended, altered, supplemented or
waived only in a writing signed by the Stockholders and by all Consenting
Lenders. A "Majority of the Consenting Lenders" means Consenting Lenders who
hold a majority 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:
(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 the Consenting Lenders do not receive the shares of Class B
common stock, and
639613.12
-9-
<PAGE>
the super-voting rights associated therewith, as provided in 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 a
change in control of Toy Biz has occurred as a result of an adverse ruling in
the Stockholder Agreement Litigation. 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 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 a Proxy and Stock Option
639613.12
-10-
<PAGE>
Agreement, dated as of October 7, 1997, by and among Isaac Perlmutter,
Isaac Perlmutter T.A., Zib Inc. and the Consenting 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.
639613.12
-11-
<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 the
Stockholders have duly executed this Agreement, as of the date and year first
above written.
STOCKHOLDERS:
ISAAC PERLMUTTER
-------------------------------
ZIB INC.
By:
----------------------------
Isaac Perlmutter,
ISAAC PERLMUTTER T.A.
By:
----------------------------
Isaac Perlmutter,
Trustee
639613.12
<PAGE>
EXHIBIT 1
CONSENTING LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the (i) Master Agreement, dated as of October 7, 1997, by and among Toy Biz,
Inc. and certain secured creditors of Marvel Entertainment Group, Inc. and
certain of its direct and indirect subsidiaries (the "Marvel Debtors"), (ii)
Proxy and Stock Option Agreement, dated as of October 7, 1997, by and among
Isaac Perlmutter. Isaac Perlmutter, T.A. and Zib, Inc. and certain secured
creditors of the Marvel Debtors, and (iii) Proxy and Stock Option Agreement,
dated as of October 7, 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:
--------------------------------
--------------------------------
--------------------------------
Telecopy No.:
-------------------
Telecopy No.:
-------------------
639613.12
-13-
PROXY AND STOCK OPTION AGREEMENT
PROXY AND STOCK OPTION AGREEMENT (this "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"), various secured creditors of Marvel and certain of its
direct and indirect subsidiaries propose to enter into an agreement (the "Master
Agreement") providing for the filing of a joint plan of reorganization (the
"Plan of Reorganization") and the merger of a wholly-owned subsidiary of Marvel
("TB Acquisition Corp.") with and into Toy Biz (the "Merger") pursuant to an
Agreement and Plan of Merger (the "Merger Agreement") whereby each share 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 one share of common stock of Marvel; 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;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, it is
agreed as follows:
639992.7
<PAGE>
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 Majority 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 Majority of the Consenting
Lenders who agrees to act as agent for the Consenting Lenders.
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 and subject to the conditions set
forth herein. The Option shall be exercisable only if the Master Agreement is
terminated pursuant to Section 7.1(e) 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
639992.7
-2-
<PAGE>
agreements contained in the Master Agreement which (i) occurs after there has
been a change in control of Toy Biz as a result of an adverse ruling in the
Stockholder Agreement Litigation (as defined in Section 3) and (ii) is caused by
the action or inaction of the new board of directors or new management of Toy
Biz (a "New Management Breach"))or 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.
2.2. Exercise of Option. The Option may be exercised only by
action of a Majority 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 Majority 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 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
639992.7
-3-
<PAGE>
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 Lenders 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 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
639992.7
-4-
<PAGE>
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). 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.
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
639992.7
-5-
<PAGE>
"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 (other than the provisions of
Section 7) 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 a temporary restraining order or preliminary
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.
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;
639992.7
-6-
<PAGE>
(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.
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:
639992.7
-7-
<PAGE>
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 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 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 Majority 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 "Majority of the Consenting Lenders" means Consenting Lenders who hold a
majority 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.
639992.7
-8-
<PAGE>
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 basis, in the aggregate
amount of $10,000,000 if the Consenting Lenders do not receive the shares of
Class B common stock, and the super-voting rights associated therewith, as
provided in 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 a change in control of Toy Biz has occurred as a result of
an adverse ruling in the Stockholder Agreement Litigation. 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.
639992.7
-9-
<PAGE>
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:
The shares of common stock represented by this certificate are subject
to the terms of a Proxy and Stock Option Agreement, dated as of October
7, 1997, by and between Avi Arad and The Consenting 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.
639992.7
-10-
<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 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
--------------------------
639992.7
<PAGE>
EXHIBIT 1
CONSENTING LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the(i) Master Agreement, dated as of October 7, 1997, by and among Toy Biz,
Inc. and certain secured creditors of Marvel Entertainment Group, Inc. and
certain of its direct and indirect subsidiaries (the "Marvel Debtors"), (ii)
Proxy and Stock Option Agreement, dated as of October 7, 1997, by and among
Isaac Perlmutter. Isaac Perlmutter, T.A. and Zib, Inc. and certain secured
creditors of the Marvel Debtors, and (iii) Proxy and Stock Option Agreement,
dated as of October 7, 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:
-------------------------------
-------------------------------
-------------------------------
Telecopy No.:
------------------
Telecopy No.:
------------------
639992.7
-12-
MARVEL PUTS FORWARD PLAN FOR COMBINATION
WITH MARVEL ENTERTAINMENT
New York, NY -- October 8, 1997...Toy Biz Inc. (NYSE:TBZ) announced today that
it has proposed a plan for the combination of its business with Marvel
Entertainment Group, Inc. (NYSE:MRV). The plan put forward by Toy Biz would
result in the merger of Toy Biz and Marvel (other than Marvel's Panini sticker
business) with the senior secured lenders of Marvel receiving a combination of
cash and common and preferred securities issued by the combined company,
together with the proceeds from the sale of Panini.
Under the proposal, unsecured creditors and equity holders of Marvel would
receive warrants and subscription rights, respectively, in the combined company.
As part of the proposed combination, common stockholders of Toy Biz (excluding
Marvel) would receive one share of common stock in the combined company for each
share of Toy Biz common stock. The cash payments to be made to the Marvel senior
secured lenders are proposed to be funded through the issuance of preferred
stock and senior notes by the combined company. The proposal by Toy Biz is
subject to acceptance by holders of no less than two thirds of the Marvel senior
secured debt and bankruptcy court approval. Toy Biz anticipates receiving
stockholder approval of the proposal and will seek all regulatory approvals
expeditiously.
Joseph Ahearn, Toy Biz CEO, stated, "We believe that this proposal represents an
opportunity for both Toy Biz stockholders as well as Marvel creditors and
stockholders to participate in a meaningful way in a combined Marvel/Toy Biz on
terms that we believe should be acceptable to all parties involved."
Forward Looking Statements: Except for historical information contained herein,
the statements in this news release regarding the Company's 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, the level of media exposure or the popularity of the
Company's characters and trademarks, 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.
TOY BIZ, INC. RECEIVES COMMITMENTS FROM SENIOR SECURED LENDERS
OF MARVEL ENTERTAINMENT GROUP, INC. ON PROPOSAL TO COMBINE
WITH MARVEL
New York, NY -- October 16, 1997...Toy Biz, Inc. (NYSE:TBZ) announced today that
senior secured lenders of Marvel Entertainment Group, Inc. (NYSE:MRV)
representing more than one-third of the outstanding amount of Marvel's senior
secured debt have agreed to support Toy Biz's previously announced plan to
combine with Marvel. The proposal made by Toy Biz required that senior secured
lenders holding greater than one-third of the Marvel debt accept its proposal by
the close of business on October 13th in order to commit Toy Biz to proceed with
its proposal. Toy Biz will continue to seek the consent of the remaining Marvel
lenders in order to reach the two-thirds threshold that the proposal requires by
November 14. If it obtains the requisite consents from Marvel's lenders, Toy Biz
will seek to have the proposal approved by the Bankruptcy court through
confirmation of a plan of reorganization.
Joseph Ahearn, CEO of Toy Biz, noted, "We are pleased to see that a growing
number of the Marvel lenders believe that the proposal we have put forward
represents an acceptable basis for resolving the situation at Marvel and we are
confident that once the remaining lenders have an opportunity to consider the
proposal more fully, we will receive the support of the requisite number of
lenders."
As previously disclosed, the plan put forward by Toy Biz would result in the
merger of Toy Biz and Marvel (other than Marvel's Panini sticker business) with
the senior secured lenders of Marvel receiving a combination of cash and
preferred and common securities in the combined company, along with the proceeds
from the sale of Panini. Toy Biz stockholders (other than Marvel) would receive
one share of common stock in the combined entity for every share of Toy Biz
common stock. Pre-petition unsecured creditors of Marvel and Marvel equity
holders would receive warrants and subscription rights, respectively, issued by
the combined company.
644413.1
