SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event) October 16, 1998
Marvel Enterprises, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-13638 13-3711775
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
685 Third Avenue, New York, New York 10017
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(Address of Principal Executive Offices) (Zip Code)
(212) 588-5100
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, If Changed Since Last Report.)
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ITEM 7. Financial Statements and Exhibits.
This Current Report on Form 8-K/A is being filed to amend the Current
Report on Form 8-K, dated October 13, 1998 to include exhibits 99.3, 99.4 and
99.5.
(a) Financial Statements of Business Acquired.
The financial statements required by this Item 7(a) will be filed not
later than 60 days from the date hereof.
(b) Pro Forma Financial Information.
The pro forma financial information required by this Item 7(b) will be
filed not later than 60 days from the date hereof.
(c) Exhibits.
2.1 Fourth Amended Plan of Reorganization filed with the United States
District Court for the District of Delaware on July 31, 1998 by the
Fixed Senior Secured Lenders and the Registrant, with attached exhibits
(previously filed on the Current Report on Form 8-K, dated as of
October 13, 1998, and filed on October 14, 1998).
2.2 Agreement and Plan of Merger, dated as of August 12, 1998, by and among
the Registrant, Marvel Entertainment Group, Inc., and MEG Acquisition
Corp (previously filed on the Current Report on Form 8-K, dated as of
October 13, 1998, and filed on October 14, 1998).
4.1 Restated Certificate of Incorporation of the Registrant (previously
filed on the Current Report on Form 8-K, dated as of October 13, 1998,
and filed on October 14, 1998).
4.2 Plan Warrant Agreement, dated as of October 1, 1998, between the
Registrant and American Stock Transfer and Trust Company, as warrant
agent (previously filed on the Current Report on Form 8-K, dated as of
October 13, 1998, and filed on October 14, 1998).
4.3 Class A Warrant Agreement, dated as of October 1,1998, between the
Registrant and American Stock Transfer and Trust Company, as warrant
agent (previously filed on the Current Report on Form 8-K, dated as of
October 13, 1998, and filed on October 14, 1998).
4.4 Class B Warrant Agreement, dated as of October 1,1998, between the
Registrant and American Stock Transfer and Trust Company, as warrant
agent (previously filed on the
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Current Report on Form 8-K, dated as of October 13, 1998, and filed on
October 14, 1998).
4.5 Class C Warrant Agreement, dated as of October 1,1998, between the
Registrant and American Stock Transfer and Trust Company, as warrant
agent (previously filed on the Current Report on Form 8-K, dated as of
October 13, 1998, and filed on October 14, 1998).
99.1 Credit Agreement, dated September 28, 1998, among the Registrant (by
change of name Marvel Enterprises, Inc.) and UBS AG Stamford Branch, as
Agent and Collateral Agent, et al (previously filed on the Current
Report on Form 8-K, dated as of October 13, 1998, and filed on October
14, 1998).
99.2 Security Agreement, dated September 28, 1998, among the Registrant (by
change of name Marvel Enterprises, Inc.) and UBS AG Stamford Branch AG,
as Collateral Agent, et al (previously filed on Current Report on Form
8-K, dated as of October 13, 1998, and filed on October 14, 1998).
99.3 Stock Purchase Agreement, dated as of October 1, 1998, among the
Registrant and Dickstein & Co., L.P., Dickstein Focus Fund L.P.,
Dickstein International Limited, Elyssa Dickstein, Jeffrey Schwarz and
Alan Cooper as Trustees U/T/A/D 12/27/88, Mark Dickstein, Grantor, Mark
Dickstein and Elyssa Dickstein, as Trustees of the Mark and Elyssa
Dickstein Foundation, Elyssa Dickstein, Object Trading Corp., and
Whippoorwill Associates, Incorporated.
99.4 Stockholders' Agreement, dated as of October 1, 1998, by and among Avi
Arad, Dickstein & Co., L.P., Dickstein Focus Fund L.P., Dickstein
International Limited, Elyssa Dickstein, Jeffrey Schwarz and Alan
Cooper as Trustees U/T/A/D 12/27/88, Mark Dickstein, Grantor, Mark
Dickstein and Elyssa Dickstein, as Trustees of the Mark and Elyssa
Dickstein Foundation, Elyssa Dickstein, Isaac Perlmutter, Isaac
Perlmutter T.A., The Laura & Isaac Perlmutter Foundation Inc., Object
Trading Corp., Zib Inc., Whippoorwill Associates, Incorporated, and the
Registrant.
99.5 Registration Rights Agreement, dated as of October 1, 1998, by and
among the Registrant, Dickstein & Co., L.P., Dickstein Focus Fund L.P.,
Dickstein International Limited, Elyssa Dickstein, Jeffrey Schwarz and
Alan Cooper as Trustees U/T/A/D 12/27/88, Mark Dickstein, Grantor, Mark
Dickstein and Elyssa Dickstein, as Trustees of the Mark and Elyssa
Dickstein Foundation, Elyssa Dickstein, Object Trading Corp.,
Whippoorwill/Marvel Obligations Trust - 1997, and Whippoorwill
Associates, Incorporated.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MARVEL ENTERPRISES, INC.
(Registrant)
Date: October 16, 1998
By: /s/ Morton E. Handel
------------------------------------
Name: Morton E. Handel
Title: Chairman of the Board
4
EXHIBIT 99.3
STOCK PURCHASE AGREEMENT
dated as of October 1, 1998
among
TOY BIZ, INC.
and
BUYERS
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TABLE OF CONTENTS
<TABLE>
Page
ARTICLE I
<S> <C> <C>
AUTHORIZATION AND SALE OF STOCK..........................................................................2
1.1. Authorization of Preferred Stock..............................................................2
1.2. The Sale......................................................................................2
1.3. Use of Proceeds...............................................................................2
1.4. Purchase Price................................................................................2
1.5. Closing.......................................................................................3
1.6. Deliveries by Toy Biz.........................................................................3
1.7. Deliveries by the Dickstein Parties...........................................................4
1.8. Deliveries by Object Trading..................................................................4
1.9. Deliveries by Whippoorwill....................................................................5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TOY BIZ................................................................5
2.1. Corporate Organization; Etc...................................................................5
2.2. Corporate Authority...........................................................................5
2.3. Consents and Approvals; No Violations.........................................................6
2.4. The Shares....................................................................................7
2.5. Brokers and Finders...........................................................................7
2.6. SEC Documents.................................................................................7
2.7. Disclosure Statement..........................................................................7
2.8. No Litigation.................................................................................7
2.9. Capitalization................................................................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DICKSTEIN
PARTIES..................................................................................................8
3.1. Organization; Etc.............................................................................8
3.2. Authority.....................................................................................8
3.3. Consents and Approvals; No Violations.........................................................8
3.4. Investor Representations......................................................................9
3.5. Brokers and Finders...........................................................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OBJECT TRADING........................................................10
4.1. Corporate Organization; Etc..................................................................10
4.2. Corporate Authority..........................................................................10
</TABLE>
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<TABLE>
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4.3. Consents and Approvals; No Violations........................................................10
4.4. Investor Representations.....................................................................11
4.5. Brokers and Finders..........................................................................11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WHIPPOORWILL..........................................................11
5.1. Corporate Organization; Etc..................................................................11
5.2. Authority....................................................................................11
5.3. Consents and Approvals; No Violations........................................................12
5.4. Investor Representations.....................................................................12
5.5. Brokers and Finders..........................................................................12
ARTICLE VI
COVENANTS OF THE PARTIES................................................................................13
6.1. Conduct of Business of Toy Biz...............................................................13
6.2. Inspection Rights............................................................................13
6.3. Restricted Stock.............................................................................13
6.4. Consents and Approvals.......................................................................14
6.5. Public Announcements.........................................................................14
6.6. Consummation of the Plan of Reorganization...................................................14
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE AGREEMENT.............................................................14
7.1. Conditions to Each Party's Obligations to Consummate the
Agreement....................................................................................14
7.2. Further Conditions to Toy Biz's Obligations to Sell the Dickstein
Shares.......................................................................................15
7.3. Further Conditions to Toy Biz's Obligations to Sell the Object
Trading Shares...............................................................................16
7.4. Further Conditions to Toy Biz's Obligations to Sell the Whippoorwill
Shares.......................................................................................16
7.5. Further Conditions to the Dickstein Parties' Obligations.....................................17
7.6. Further Conditions to Object Trading's Obligations...........................................18
7.7. Further Conditions to Whippoorwill's Obligations.............................................18
ARTICLE VIII
TERMINATION AND ABANDONMENT.............................................................................19
8.1. Termination..................................................................................19
</TABLE>
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ARTICLE IX
<TABLE>
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SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.........................................................................................20
9.1. Survival.....................................................................................20
9.2. Indemnification..............................................................................20
9.3. Procedure for Indemnification................................................................20
ARTICLE X
MISCELLANEOUS PROVISIONS................................................................................21
10.1. Amendment and Modification...................................................................21
10.2. Extension; Waiver............................................................................21
10.3. Entire Agreement; Enforceability.............................................................22
10.4. Assignment...................................................................................22
10.5. Validity.....................................................................................22
10.6. Further Assurances...........................................................................22
10.7. Certain Payment to Dickstein.................................................................23
10.8. Notices......................................................................................23
10.9. Governing Law................................................................................23
10.10. Descriptive Headings.........................................................................23
10.11. Counterparts.................................................................................24
10.12. Expenses.....................................................................................24
10.13. Parties in Interest..........................................................................24
10.14. No Waivers...................................................................................24
10.15. Specific Performance.........................................................................24
10.16. Transfer Taxes...............................................................................24
10.17. Whippoorwill Obligations Several and Not Joint...................................................24
</TABLE>
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EXHIBITS
Exhibit A Restated Certificate of Incorporation
Exhibit B Registration Rights Agreement
Exhibit C Stockholders' Agreement
SCHEDULES
Schedule 1 Buyers and Number of Shares Purchased
Schedule 2.8 Pending Litigation Against Toy Biz relating to the Plan of
Reorganization
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 1, 1998, (this
"Agreement"), by and among TOY BIZ, INC., a Delaware corporation ("Toy Biz"),
and the parties set forth on Schedule 1 hereto (collectively, the "Buyers").
RECITALS:
WHEREAS, certain bankruptcy cases of Marvel Entertainment
Group, Inc., a Delaware corporation ("Marvel"), and various subsidiaries of
Marvel are presently pending in the United States District Court for the
District of Delaware (the "District Court");
WHEREAS, the District Court entered an order confirming the
Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the United
States Bankruptcy Code, on July 31, 1998 (as such plan may hereafter be amended,
restated or otherwise modified, the "Plan of Reorganization"), filed by certain
of the secured lenders of Marvel and its subsidiaries and by Toy Biz;
WHEREAS, pursuant to the Plan of Reorganization, (i) Dickstein
Partners, Inc., a Delaware corporation ("Dickstein"), has agreed to purchase, or
cause its affiliates to purchase (such affiliates, identified on Schedule 1
hereto as the Dickstein Parties, hereinafter referred to as the "Dickstein
Parties"), from Toy Biz 3,000,000 shares of Preferred Stock, the "Dickstein
Shares"), at a price of $10.00 per share of 8% Cumulative Convertible
Exchangeable Preferred Stock (the "Preferred Stock"), and (ii) Object Trading
Corp., a Delaware corporation ("Object Trading"), has agreed to purchase from
Toy Biz 6,000,000 shares of Preferred Stock at a price of $10.00 per share of
Preferred Stock (as reduced by the number of shares of Preferred Stock to be
purchased by Whippoorwill/Marvel Obligations Trust - 1997 (as described below)
and as reduced by the number of shares (not to exceed 4,000,000) of Preferred
Stock actually pur chased by the Senior Marvel Lenders, the "Object Trading
Shares");
WHEREAS, pursuant to Section 4.2(b)(i)(A)(6) of the Plan of
Reorganization, Toy Biz will offer up to 4,000,000 shares of Preferred Stock to
the holders of Allowed Fixed Senior Secured Claims (the "Senior Marvel Lenders")
prior to the consummation of the Plan of Reorganization;
WHEREAS, Object Trading has agreed to assign the right to
purchase 500,000 shares of Preferred Stock to Whippoorwill/Marvel Obligations
Trust - 1997 and such right has been exercised by certain beneficiaries of such
Trust listed on Schedule 1 (each, a "Whippoorwill Account" and collectively,
"Whippoorwill") and Whippoorwill has agreed to purchase 500,000 shares of
Preferred Stock at a price of $10.00 per share of Preferred Stock (the
"Whippoorwill Shares" and together with the Dickstein Shares and the Object
Trading Shares, the "Shares");
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WHEREAS, pursuant to the Plan of Reorganization, Toy Biz and
Marvel have entered into an Agreement and Plan of Merger, dated as of August 12,
1998, which provides for the merger (the "Merger") of MEG Acquisition Corp., a
Delaware corporation ("Acquisi tion"), a newly formed, wholly-owned subsidiary
of Toy Biz, with and into Marvel, with Marvel continuing as the surviving
corporation and as a wholly-owned subsidiary of Toy Biz (by change of name
Marvel Enterprises, Inc.); and
WHEREAS, the Buyers desire to purchase, and Toy Biz desires to
sell, the Shares, upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the respective covenants,
representations and warranties herein contained, and intending to be legally
bound by the covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE I
AUTHORIZATION AND SALE OF STOCK
1.1. Authorization of Preferred Stock. Toy Biz has, or before
the Closing Date (as defined in Section 1.5) will have, duly authorized the
issuance and sale of 16,900,000 shares of Preferred Stock, having the rights,
restrictions, privileges and preferences set forth in the restated certificate
of incorporation of Toy Biz (the "Restatement") in the form attached hereto as
Exhibit A and will have authorized the issuance and delivery of the shares of
Common Stock, par value $0.01 per share, of Toy Biz (the "Common Stock")
issuable upon conversion of the Preferred Stock. Toy Biz has, or on or before
the Closing Date will have, filed the Restatement with the Secretary of State of
the State of Delaware. The shares of Common Stock issuable upon the conversion
of the Preferred Stock have been or will be reserved prior to the Closing Date
for issuance.
1.2. The Sale. Upon the terms and subject to the conditions of
this Agreement, at the closing (the "Closing"), Toy Biz will sell, convey,
assign, transfer and deliver to Object Trading, the Dickstein Parties and
Whippoorwill, and Object Trading, the Dickstein Parties and Whippoorwill will
each purchase, acquire and accept from Toy Biz, the Object Trading Shares, the
Dickstein Shares and the Whippoorwill Shares, respectively.
1.3. Use of Proceeds. Toy Biz shall use the net proceeds from
the sale of the Preferred Stock for the purposes set forth in the Plan of
Reorganization.
1.4. Purchase Price. In consideration of the sale, conveyance,
assignment, transfer and delivery of the Shares to Object Trading, the Dickstein
Parties and Whippoorwill on the Closing Date pursuant to Section 1.2 hereof, (i)
the Dickstein Parties shall, on the Closing Date, in full payment for the
Dickstein Shares pay to Toy Biz, by wire transfer in
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immediately available funds, an amount equal to the product of (w) $10.00 and
(x) the number of Dickstein Shares, (ii) Object Trading shall, on the Closing
Date, in full payment for the Object Trading Shares, pay to Toy Biz, by wire
transfer in immediately available funds, an amount equal to the product of (y)
$10.00 and (z) the number of Object Trading Shares and (iii) Whippoorwill shall,
on the Closing Date, in full payment of the Whippoorwill Shares, pay to Toy Biz,
by wire transfer in immediately available funds, an amount equal to the product
of (y) $10.00 and (z) the number of Whippoorwill Shares. (the "Purchase Price").
1.5. Closing. Upon the terms and subject to the conditions
contained in this Agreement, the Closing will take place at 10:00 a.m. at the
offices of Battle Fowler LLP, 75 East 55th Street, New York, New York 10022, on
the date of the consummation of the Plan of Reorganization (the "Closing Date").
1.6. Deliveries by Toy Biz. At the Closing, Toy Biz will
deliver the following to the Buyers:
(a) Certificates representing the Shares registered in the
names of the Buyers representing the Shares subscribed to by each Buyer, free
and clear of any claim, security interest, lien or encumbrance whatsoever with
respect thereto and without any restrictive legend other than with respect to
applicable securities laws and as otherwise provided in this Agreement or the
Stockholders' Agreement;
(b) The duly executed officer's certificate provided for in
Sections 7.5(c), 7.6(c) and 7.7(c);
(c) Certified copies of the resolutions, duly adopted by the
Board of Directors of Toy Biz, that will be in full force and effect at the time
of delivery, authorizing the execution, delivery and performance of this
Agreement, that certain registration rights agreement relating to the Shares
(the "Registration Rights Agreement") in the form attached hereto as Exhibit B
and that certain stockholders' agreement among Toy Biz, Avi Arad, the Dickstein
Parties, Isaac Perlmutter, Isaac Perlmutter T.A., Object Trading, Zib, Inc. and
the holders of senior secured indebtedness of Marvel (the "Stockholders'
Agreement") in the form attached hereto as Exhibit C;
(d) The Registration Rights Agreement, executed on behalf of
Toy Biz;
(e) The Stockholders' Agreement, executed on behalf of Toy
Biz; and
(f) All other documents, instruments and writings required to
be delivered by Toy Biz at or prior to the Closing Date pursuant to this
Agreement, the Stockholders' Agreement and the Registration Rights Agreement.
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1.7. Deliveries by the Dickstein Parties. At the Closing, the
Dickstein Parties will deliver the following:
(a) By wire transfer, in immediately available funds, the
portion of the Purchase Price attributable to the Dickstein Shares by the
Dickstein Parties;
(b) The duly executed officer's certificate provided for in
Section 7.2(c);
(c) Certified copies of duly adopted resolutions or other
similar evidence of partnership, limited liability or trust authority and
authorization for each of the Dickstein Parties which is an entity, that will be
in full force and effect at the time of delivery, authorizing the execution,
delivery and performance of this Agreement, the Stockholders' Agreement and the
Registration Rights Agreement;
(d) The Registration Rights Agreement executed on behalf of
each of the Dickstein Parties;
(e) The Stockholders' Agreement executed on behalf of each of
the Dickstein Parties; and
(f) All other documents, instruments and writings required to
be delivered by the Dickstein Parties at or prior to the Closing Date pursuant
to this Agreement and the Registration Rights Agreement.
1.8. Deliveries by Object Trading. At the Closing, Object
Trading will deliver the following:
(a) By wire transfer, in immediately available funds, the
portion of the Purchase Price attributable to the Object Trading Shares;
(b) The duly executed officer's certificate provided for in
Section 7.3(c);
(c) Certified copies of the resolutions, duly adopted by the
Board of Directors of Object Trading, that will be in full force and effect at
the time of delivery, authorizing the execution, delivery and performance of
this Agreement, the Stockholders' Agreement and the Registration Rights
Agreement;
(d) The Registration Rights Agreement executed on behalf of
Object Trading;
(e) The Stockholders' Agreement executed on behalf of Object
Trading; and
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(f) All other documents, instruments and writings required to
be delivered by Object Trading at or prior to the Closing Date pursuant to this
Agreement and the Registration Rights Agreement.
1.9. Deliveries by Whippoorwill. At the Closing, Whippoorwill
will deliver the following:
(a) By wire transfer, in immediately available funds, the
portion of the Purchase Price attributable to the Whippoorwill Shares;
(b) The duly executed officer's certificate provided for in
Section 7.4(c);
(c) Certified copies of duly adopted resolutions or other
similar evidence of authority for Whippoorwill, that will be in full force and
effect at the time of delivery authorizing the execution, delivery and
performance of this Agreement and the Registration Rights Agreement;
(d) The Registration Rights Agreement executed on behalf of
Whippoorwill; and
(e) All other documents, instruments and writings required to
be delivered by Whippoorwill at or prior to the Closing Date pursuant to this
Agreement and the Registration Rights Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TOY BIZ
Toy Biz hereby represents and warrants to the Buyers as follows:
2.1. Corporate Organization; Etc. Toy Biz is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted, except where the failure to have such power and authority would not
have a material adverse effect on Toy Biz.
2.2. Corporate Authority. Toy Biz has all requisite corporate
authority and power to execute and deliver this Agreement, the Stockholders'
Agreement and the Registration Rights Agreement and to consummate the
transactions contemplated hereby, including, without limitation, the issuance of
the Preferred Stock and, upon the conversion thereof, the Common Stock issuable
upon such conversion. As of the Closing, the execution and delivery of this
Agreement, the Stockholders' Agreement and the Registration Rights Agreement and
the consummation of the transactions contemplated hereby by Toy Biz, including,
without
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limitation, the issuance of the Preferred Stock and, upon the conversion
thereof, the Common Stock issuable upon such conversion, will have been duly and
validly authorized by all required corporate action on the part of Toy Biz, and
no other corporate proceedings on the part of Toy Biz are necessary to authorize
this Agreement, the Stockholders' Agreement and the Registration Rights
Agreement or to consummate the transactions contemplated hereby including,
without limitation, the issuance of the Preferred Stock and, upon the conversion
thereof, the Common Stock issuable upon such conversion. This Agreement has
been, and at the time of Closing, the Stockholders' Agreement and the
Registration Rights Agreement will have been, duly and validly executed and
delivered by Toy Biz and, assuming this Agreement has been, and at the Closing
the Stockholders' Agreement and the Registration Rights Agreement will have
been, duly authorized, executed and delivered by each of the Buyers, such
agreements constitute the valid and binding agreements of Toy Biz, enforceable
against Toy Biz in accordance with their terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, moratorium, reorganization and
other similar laws affecting creditors' rights generally and (ii) the general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law; provided, however, that each of the parties hereto acknowledges that
Toy Biz is involved in litigation with Marvel concerning the status of Toy Biz's
class B common stock and its stockholders' agreement and this representation is
qualified by such litigation.
2.3. Consents and Approvals; No Violations. No filing with,
and no permit, authorization, consent or approval of any public body or
governmental authority, domestic or foreign, is necessary for the consummation
by Toy Biz of the transactions contemplated by this Agreement, the Stockholders'
Agreement or the Registration Rights Agreement, including, without limitation,
the issuance of the Preferred Stock and, upon the conversion thereof, the Common
Stock issuable upon such conversion, other than those which have been made, will
have been made prior to Closing, or have been obtained. Neither the execution
and delivery of this Agreement, the Stockholders' Agreement or the Registration
Rights Agreement by Toy Biz nor the consummation by Toy Biz of the transactions
contemplated hereby including, without limitation, the issuance of the Preferred
Stock and, upon the conversion thereof, the Common Stock issuable upon such
conversion, nor compliance by Toy Biz with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the Restatement or
ByLaws of Toy Biz, (ii) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body applicable to Toy Biz
which could have any material adverse effect on the business of Toy Biz, or
(iii) conflict with or result in a breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time or both) a
default under any note, indenture, mortgage, lease, purchase or sales order or
other material contract, agreement or instrument to which Toy Biz is a party or
by which it or any of its property is bound which could have any material
adverse effect on the business of Toy Biz.
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2.4. The Shares. The Shares will, when issued and delivered to
the Buyers in accordance with this Agreement, be duly authorized, validly
issued, fully paid and nonassessable and the shares of Common Stock issuable
upon conversion of the Preferred Stock, when issued upon such conversion, will
be duly authorized, validly issued, fully paid and nonassessable. None of the
Shares, when issued in accordance with this Agreement, nor the shares of Common
Stock issuable upon the conversion of the Shares, will be subject to preemptive
rights.
2.5. Brokers and Finders. Except for SBC Warburg Dillon Read
Inc., Toy Biz has not employed any broker or finder nor incurred any liability
for any investment banking fees, brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
2.6. SEC Documents. Toy Biz has timely made all filings with
the Securities and Exchange Commission (the "Commission") it has been required
to make under the Securities Act of 1933, as amended (the "Securities Act"), and
the Exchange Act of 1934, as amended (the "Exchange Act") (such filings, the
"SEC Documents"). Each of the SEC Documents filed with the Commission complied
with the applicable disclosure requirements of the Securities Act and the
Exchange Act in all material respects on the date of filing. None of the SEC
Documents, as of their respective dates, contained any untrue statement of
material fact or omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances in which they were made,
not misleading.
2.7. Disclosure Statement. The Third Amended Disclosure
Statement of Toy Biz relating to the Plan of Reorganization (the "Disclosure
Statement") filed with the United States District Court for the District of
Delaware on March 12, 1998 complied with the applicable disclosure requirements
of title 11, United States Code, in all material respects on the date of filing.
The Disclosure Statement did not, as of the date thereof, and does not, as of
the date hereof, contain any untrue statement of material fact or omit to state
a material fact necessary in order to make the statements made therein, in light
of the circumstances in which they were made, not misleading.
2.8. No Litigation. Except as set forth on Schedule 2.8
hereto, there is no action, suit or proceeding pending (or, to the knowledge of
Toy Biz, currently threatened) against Toy Biz, or its existing or proposed
business or activities, properties or assets relating to the Plan of
Reorganization or the transactions contemplated thereby.
2.9. Capitalization. Immediately after giving effect to the
transactions contemplated by the Plan of Reorganization and this Agreement, the
authorized capital stock of Toy Biz will consist of (i) 250,000,000 shares of
Common Stock, of which 40,846,127 shares will be issued and outstanding, fully
paid and nonassessable, 117,500,000 shares will be reserved for issuance upon
the exercise of the Class A Warrants, the Class C Warrants and the Plan
Warrants, and for issuance upon the conversion of the Preferred Stock and for
Common
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Stock to be issued under any employee benefit plan, and (ii) 75,000,000 shares
of Preferred Stock, of which 16,900,000 shares will be issued and outstanding,
fully paid and nonassessable, and 58,100,000 shares will be reserved for
issuance upon the exercise of the Class B Warrants and to pay dividends in kind
on the Preferred Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DICKSTEIN PARTIES
Each of Dickstein, as to itself and the Dickstein Parties, and each of
the Dickstein Parties severally as to itself only, hereby represents and
warrants to Toy Biz as follows:
3.1. Organization; Etc. Dickstein and each of the Dickstein
Parties which is an entity is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to have
such power and authority would not have a material adverse effect on such
Dickstein Party.
3.2. Authority. Dickstein and each Dickstein Party has all
requisite authority and power to execute and deliver this Agreement, the
Stockholders' Agreement and the Registration Rights Agreement and to consummate
the transactions contemplated hereby. As of the Closing, the execution and
delivery of this Agreement, the Stockholders' Agreement and the Registration
Rights Agreement and the consummation of the transactions contemplated hereby by
the Dickstein Parties will have been duly and validly authorized by all required
action on the part of the Dickstein Parties, and no other corporate,
partnership, trust or other proceedings on the part of the Dickstein Parties or
Dickstein are necessary to authorize this Agreement, the Stockholders' Agreement
and the Registration Rights Agreement or to consummate the transactions
contemplated hereby. This Agreement, the Stockholders' Agreement and the
Registration Rights Agreement have been duly and validly executed and delivered
by Dickstein and each of the Dickstein Parties and, assuming this Agreement, the
Stockholders' Agreement and the Registration Rights Agreement have been duly
authorized, executed and delivered by Toy Biz, constitute valid and binding
agreements of Dickstein and the Dickstein Parties, enforceable against Dickstein
and the Dickstein Parties in accordance with their terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights generally and
(ii) the general principles of equity, regardless of whether asserted in a
proceeding in equity or at law.
3.3. Consents and Approvals; No Violations. No filing with,
and no permit, authorization, consent or approval of any public body or
governmental authority, domestic or foreign, is necessary for the consummation
by Dickstein and the Dickstein Parties of the
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transactions contemplated by this Agreement, the Stockholders' Agreement or the
Registration Rights Agreement other than those which have been made, will have
been made prior to Closing, or have been obtained. Neither the execution and
delivery of this Agreement, Stockholders' Agreement or the Registration Rights
Agreement by Dickstein and the Dickstein Parties nor the consummation by
Dickstein and the Dickstein Parties of the transactions contemplated hereby nor
compliance by Dickstein and the Dickstein Parties with any of the provisions
hereof will conflict with or result in any breach of any provision of such
entity's charter or other formative documents.
3.4. Investor Representations. (a) Each of the Dickstein
Parties represents and warrants to Toy Biz that it is either (i) (A) an
"accredited investor" as such term is defined in the rules promulgated under the
Securities Act; and (B) has such knowledge and experience in business and
financial matters as to be capable of evaluating the merits and risks of an
investment in the Shares and has the capacity to protect its interest in
connection with the acquisition of the Dickstein Shares, or (ii) a trust or
charitable foundation that (A) together with its trustees has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of its investment in the Shares and (B) has received the
Company's 1997 Annual Report to Stockholders and Forms 10Q for the quarters
ended June 30, 1998 and March 31, 1998, the Current Report on Form 8-K, dated
July 31, 1998, and all other information required by Rule 502 under the
Securities Act. Each of the Dickstein Parties acknowledges that the Dickstein
Shares and the Common Stock into which such Shares are convertible will be
subject to transfer restrictions as more fully set forth in Section 6.3 hereof.
(b) Each of the Dickstein Parties represents that it is
purchasing the Dickstein Shares and the Common Stock into which such Shares are
convertible for its own account for investment and not with a view to, or for
sale in connection with, any distribution of the Dickstein Shares or shares of
Common Stock into which such Shares are convertible. Each of the Dickstein
Parties acknowledges that the Dickstein Shares and the Common Stock into which
such Shares are convertible have not been registered under the Securities Act,
or applicable state securities laws and agrees to comply fully with such laws in
connection with any resale or transfer thereof.
3.5. Brokers and Finders. Neither the Dickstein Parties nor
Dickstein has employed any broker or finder nor incurred any liability for any
investment banking fees, brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OBJECT TRADING
Object Trading hereby represents and warrants to Toy Biz as follows:
4.1. Corporate Organization; Etc. Object Trading is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such power and
authority would not have a material adverse effect on Object Trading.
4.2. Corporate Authority. Object Trading has all requisite
corporate authority and power to execute and deliver this Agreement, the
Stockholders' Agreement and the Registration Rights Agreement and to consummate
the transactions contemplated hereby. As of the Closing, the execution and
delivery of this Agreement, the Stockholders' Agreement and the Registration
Rights Agreement and the consummation of the transactions contemplated hereby by
Object Trading will have been duly and validly authorized by all required
corporate action on the part of Object Trading and no other corporate
proceedings on the part of Object Trading are necessary to authorize this
Agreement, the Stockholders' Agreement and the Registration Rights Agreement or
to consummate the transactions contemplated hereby. This Agreement has been, and
at the time of Closing the Stockholders' Agreement and the Registration Rights
Agreement will have been, duly and validly executed and delivered by Object
Trading and, assuming this Agreement has been, and at the Closing the
Stockholders' Agreement and the Registration Rights Agreement will have been,
duly authorized, executed and delivered by Toy Biz, constitute valid and binding
agreements of Object Trading, enforceable against Object Trading in accordance
with their terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally and (ii) the general principles of equity,
regardless of whether asserted in a proceeding in equity or at law.
4.3. Consents and Approvals; No Violations. No filing with,
and no permit, authorization, consent or approval of any public body or
governmental authority, domestic or foreign, is necessary for the consummation
by Object Trading of the transactions contemplated by this Agreement, the
Stockholders' Agreement or the Registration Rights Agreement other than those
which have been made, will have been made prior to Closing, or have been
obtained. Neither the execution and delivery of this Agreement, the
Stockholders' Agreement or the Registration Rights Agreement by Object Trading
nor the consummation by Object Trading of the transactions contemplated hereby
nor compliance by Object Trading with any of the provisions hereof will conflict
with or result in any breach of any provision of the Certificate of
Incorporation or By-Laws of Object Trading.
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4.4. Investor Representations. (a) Object Trading represents
and warrants to Toy Biz that it is (A) an "accredited investor" as such term is
defined in the rules promulgated under the Securities Act; and (B) has such
knowledge and experience in business and financial matters as to be capable of
evaluating the merits and risks of an investment in the Shares and has the
capacity to protect its interest in connection with the acquisition of the
Object Trading Shares. Object Trading acknowledges that the Object Trading
Shares and the Common Stock into which such Shares are convertible will be
subject to transfer restrictions as more fully set forth in Section 6.3 hereof.
(b) Object Trading represents that it is purchasing the Object
Trading Shares and the Common Stock into which such Shares are convertible for
its own account for investment and not with a view to, or for sale in connection
with, any distribution of the Object Trading Shares or shares of Common Stock.
Object Trading acknowledges that the Object Trading Shares and the Common Stock
into which such Shares are convertible have not been registered under the
Securities Act, or applicable state securities laws and agrees to comply fully
with such laws in connection with any resale or transfer thereof.
4.5. Brokers and Finders. Object Trading has not employed any
broker or finder nor incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WHIPPOORWILL
Whippoorwill hereby represents and warrants to Toy Biz as follows:
5.1. Corporate Organization; Etc. Each Whippoorwill Account is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has all requisite power and authority to own
and use its properties and to carry on its business as now being conducted,
except where the failure to have such power and authority would not have a
material adverse effect on such Whippoorwill Account.
5.2. Authority. Whippoorwill Associates, Incorporated has all
requisite authority and power to execute and deliver this Agreement and the
Registration Rights Agreement on behalf of each Whippoorwill Account and to
consummate the transactions contemplated hereby. As of the Closing, the
execution and delivery of this Agreement and the Registration Rights Agreement
and the consummation of the transactions contemplated hereby by Whippoorwill
will have been duly and validly authorized by all required action on the part of
Whippoorwill and no other proceedings on the part of Whippoorwill are necessary
to authorize this Agreement and the Registration Rights Agreement or to
consummate the transactions contemplated hereby. This Agreement has been, and at
the time of Closing the Registration Rights Agreement will have been, duly and
validly executed and delivered by
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Whippoorwill and, assuming this Agreement has been, and at the Closing the
Registration Rights Agreement will have been, duly authorized, executed and
delivered by Toy Biz, constitute valid and binding agreements of each
Whippoorwill Account, enforceable against each Whippoorwill Account in
accordance with their terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally and (ii) the general principles of equity,
regardless of whether asserted in a proceeding in equity or at law.
5.3. Consents and Approvals; No Violations. No filing with,
and no permit, authorization, consent or approval of any public body or
governmental authority, domestic or foreign, is necessary for the consummation
by Whippoorwill of the transactions contemplated by this Agreement or the
Registration Rights Agreement other than those which have been made, will have
been made prior to Closing, or have been obtained. Neither the execution and
delivery of this Agreement or the Registration Rights Agreement by any
Whippoorwill Account nor the consummation by any Whippoorwill Account of the
transactions contemplated hereby nor compliance by any Whippoorwill Account with
any of the provisions hereof will conflict with or result in any breach of any
provision of such Whippoorwill Account's formative documents.
5.4. Investor Representations. (a) Each Whippoorwill Account
represents and warrants to Toy Biz that it is (A) an "accredited investor" as
such term is defined in the rules promulgated under the Securities Act; and (B)
has such knowledge and experience in business and financial matters as to be
capable of evaluating the merits and risks of an investment in the Shares and
has the capacity to protect its interest in connection with the acquisition of
the Whippoorwill Shares. Each Whippoorwill Account acknowledges that the
Whippoorwill Shares and the Common Stock into which such Shares are convertible
will be subject to transfer restrictions as more fully set forth in Section 6.3
hereof.
(b) Each Whippoorwill Account represents that it is purchasing
the Whippoorwill Shares and the Common Stock into which such Shares are
convertible for its own account for investment and not with a view to, or for
sale in connection with, any distribution of the Whippoorwill Shares or shares
of Common Stock. Each Whippoorwill Account acknowledges that the Whippoorwill
Shares and the Common Stock into which such Shares are convertible have not been
registered under the Securities Act, or applicable state securities laws and
agrees to comply fully with such laws in connection with any resale or transfer
thereof.
5.5. Brokers and Finders. Whippoorwill has not employed any
broker or finder nor incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
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ARTICLE VI
COVENANTS OF THE PARTIES
6.1. Conduct of Business of Toy Biz. From the date hereof
through the Closing Date, Toy Biz will not take any actions which can reasonably
be expected to cause the representations and warranties contained in Article II
hereof to be untrue. Consistent with the foregoing, Toy Biz shall use its
reasonable efforts to preserve intact the current business organization of Toy
Biz, keep available the services of the current officers, employees, and agents
of Toy Biz, maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with Toy Biz and otherwise conduct its business in the ordinary
course consistent with past practice, except to the extent otherwise set forth
in the Disclosure Statement.
6.2. Inspection Rights. At any time during normal business
hours and upon reasonable prior notice to Toy Biz, the Buyers or any of them or
their designated representatives' or agents may, at the cost and expense of such
Buyer, (a) visit and inspect the premises and any of the properties of Toy Biz,
including, without limitation, its records and books of account (and make copies
thereof and take extracts therefrom) and (b) discuss the affairs, finances, and
accounts of Toy Biz with its officers, directors, employees and accountants. Toy
Biz will provide Buyers with copies of all SEC Documents filed by it with the
Commission and provided to the holders of its Common Stock from and after the
date hereof.
6.3. Restricted Stock. The Buyers severally acknowledge and
agree that they shall not sell, transfer or otherwise dispose of any or all of
the Shares, the shares of Common Stock issuable upon the conversion of such
Shares, or any interest therein, unless such transaction is registered under the
Securities Act, or an exemption from such registration is available and such
Buyer provides to Toy Biz an opinion of counsel to such effect (which counsel
and opinion shall be reasonably acceptable to Toy Biz). The Buyers severally
acknowledge that there will be placed on the certificates of the Shares issued
to the Buyers a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM UNDER THE ACT
OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER."
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6.4. Consents and Approvals. Each party to this agreement
shall use its reasonable best efforts to make all filings, obtain all permits,
authorizations, consents or approvals from any public body or governmental
authority, domestic or foreign, that is necessary for the consummation of the
transactions contemplated herein, including, without limitation, the filing by
the Company and each other party which is required to do so of a Notification
and Report Form 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 purchase of Preferred Stock and the Common Stock issuable upon
the conversion thereof and shall use their respective best efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division, including any request for additional information or documentary
material.
6.5. Public Announcements. Toy Biz and the Buyers will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement, and,
except as may be required by law or by any listing agreement with a national
securities exchange or trading market, shall not issue any such press release or
make any such public statement without the exercise of reasonable efforts to
consult with Toy Biz or the Buyers, as the case may be. Toy Biz shall not issue
any press release or make any public statement with respect to the transactions
contemplated by this Agreement which refers to any of the Buyers without the
consent of such Buyers. None of the Buyers shall issue any press release or make
any public statement with respect to the transactions contemplated by this
Agreement which refers to Toy Biz or any of the other Buyers without the consent
of Toy Biz or such Buyers, as the case may be.
6.6. Consummation of the Plan of Reorganization. Toy Biz will
use its reasonable best efforts to satisfy all conditions and to take all such
other action, as promptly as practicable, to effect the consummation of the Plan
of Reorganization.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE AGREEMENT
7.1. Conditions to Each Party's Obligations to Consummate the
Agreement. The respective obligations of each party to consummate this Agreement
is subject to the satisfaction or waiver of the following conditions on or
before the Closing Date:
(a) No statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated, enforced or threatened
by any court or governmental entity which prohibits or restricts the
consummation of this Agreement, the Stockholders' Agreement and the Registration
Rights Agreement or the transactions contemplated hereby and thereby;
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(b) The Merger and the other transactions contemplated by the
Master Agreement and the Plan of Reorganization shall have been consummated upon
substantially the terms set forth therein without any waiver or other
modification of any material term thereof;
(c) The execution and delivery of the Stockholders' Agreement
by Toy Biz, Object Trading and the Dickstein Parties and the other parties
thereto and the execution and delivery of the Registration Rights Agreement by
Toy Biz and by each of the Buyers and the other parties thereto;
(d) All applicable waiting periods required by the HSR Act
shall have expired or have been terminated by the FTC and the Antitrust
Division;
(e) The Restatement shall have been approved by the requisite
vote of the stockholders of Toy Biz, and the Restatement shall have been filed
with the Secretary of State of the State of Delaware;
(f) All authorizations, approvals, consents and waivers
required to be obtained from and notices and filings required to be given to or
made with any governmental agency or third party shall have been obtained, given
or made; and
(g) The Buyers and the Senior Marvel Lenders shall have
purchased an aggregate of 9,000,000 Shares as contemplated herein.
7.2. Further Conditions to Toy Biz's Obligations to Sell the
Dickstein Shares. The obligations of Toy Biz to sell, convey, assign, transfer
and deliver the Dickstein Shares at the Closing is further subject to
satisfaction or waiver by Toy Biz of the following conditions on or before the
Closing Date:
(a) The representations and warranties of Dickstein and the
Dickstein Parties contained herein shall be true and correct in all material
respects as of the Closing Date as though such representations and warranties
were made at and as of the date;
(b) Dickstein and the Dickstein Parties shall have performed
and complied in all material respects with all agreements, obligations,
covenants and conditions required by this Agreement, the Stockholders' Agreement
and the Registration Rights Agreement to be performed or complied with by it on
or prior to the Closing;
(c) Toy Biz shall have received a duly executed certificate of
an authorized officer of Dickstein to the effect that the conditions in Sections
7.2(a) and (b) have been satisfied; and
(d) All deliveries to Toy Biz by Dickstein and the Dickstein
Parties required under Section 1.7 hereof shall have been delivered by them.
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7.3. Further Conditions to Toy Biz's Obligations to Sell the
Object Trading Shares. The obligations of Toy Biz to sell, convey, assign,
transfer and deliver the Object Trading Shares at the Closing is further subject
to satisfaction or waiver by Toy Biz of the following conditions on or before
the Closing Date:
(a) The representations and warranties of Object Trading
contained herein shall be true and correct in all material respects as of the
Closing Date as though such repre sentations and warranties were made at and as
of the date;
(b) Object Trading shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement, the Stockholders' Agreement and the Registration
Rights Agreement to be performed or complied with by it on or prior to the
Closing;
(c) Toy Biz shall have received a duly executed certificate of
an authorized officer of Object Trading to the effect that the conditions in
Sections 7.3(a) and (b) have been satisfied;
(d) All deliveries to Toy Biz by Object Trading required under
Section 1.8 hereof shall have been delivered by Object Trading.
7.4. Further Conditions to Toy Biz's Obligations to Sell the
Whippoorwill Shares. The obligations of Toy Biz to sell, convey, assign,
transfer and deliver the Whippoorwill Shares at the Closing is further subject
to satisfaction or waiver by Toy Biz of the following conditions on or before
the Closing Date:
(a) The representations and warranties of Whippoorwill
contained herein shall be true and correct in all material respects as of the
Closing Date as though such repre sentations and warranties were made at and as
of the date;
(b) Whippoorwill shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement and the Registration Rights Agreement to be performed
or complied with by it on or prior to the Closing;
(c) Toy Biz shall have received a duly executed certificate of
an authorized officer of Whippoorwill to the effect that the conditions in
Sections 7.4(a) and (b) have been satisfied;
(d) All deliveries to Toy Biz by Whippoorwill required under
Section 1.9 hereof shall have been delivered by Whippoorwill.
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7.5. Further Conditions to the Dickstein Parties' Obligations.
The obligations of the Dickstein Parties to consummate the transactions
contemplated hereby at the Closing is further subject to the satisfaction or
waiver of the following conditions on or before the Closing Date:
(a) The representations and warranties of Toy Biz contained
herein shall be true and correct in all material respects as of the Closing Date
as though such representations and warranties were made at and as of the date;
(b) Toy Biz shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement, the Stockholders' Agreement and the Registration Rights
Agreement to be performed or complied with by them on or prior to the Closing;
(c) Dickstein shall have received a duly executed certificate
from Toy Biz to the effect that the conditions in Sections 7.5(a) and (b) have
been satisfied;
(d) Toy Biz shall have obtained the Term Loan Facility and the
Working Capital Facility (both as defined in the Plan of Reorganization) on
terms and conditions reasonably acceptable to Dickstein. The Term Loan Facility
and the Working Capital Facility shall not, in the aggregate, have an effective
interest rate of more than thirteen percent (13%) per annum.
(e) The sum of the allowed DIP Claims (as defined in the Plan
of Reorganization) and the allowed Administrative Expense Claims (as defined in
the Plan of Reorganization) shall not exceed, or reasonably be expected to
exceed, $147,000,000, unless one or more other Buyers have transferred to the
Dickstein Parties, in proportion to the number of Dickstein Shares purchased by
each of them, for no additional consideration, an aggregate number of additional
shares of Preferred Stock equal to:
N - N
--------------------------------------------
1 - [(D + A - 127,000,000) x .002/1,000,000]
where:
D = the amount of allowed DIP Claims
A = the amount of allowed Administrative
Expense Claims (including for this purpose
all of the professional fees, costs and
expenses of professionals engaged by The
Chase Manhattan Bank pursuant to Section
4.2(b)(i)(A) of the Plan of Reorganization)
N = the number of Dickstein Shares.
Because the amount of the allowed Administrative Expense Claims is unlikely to
have been determined as of the Closing Date, this condition shall be deemed to
be satisfied if Object
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Trading negotiates in good faith with Dickstein to agree upon an estimate of the
maximum amount of the Administrative Expense Claims reasonably likely to be
allowed, and Object Trading places in escrow the number of shares of Preferred
Stock, if any, that would be required to be transferred to the Dickstein Parties
if that estimate was realized. The escrow arrangements shall provide for the
distribution of the escrowed shares as the aggregate of the allowed DIP Claims
and the allowed Administrative Expense Claims become determined. The amounts set
forth above will be appropriately adjusted if Marvel or any of its affiliated
debtors sells assets outside of the ordinary course of business and uses the
proceeds thereof to repay DIP Claims;
(f) All deliveries by Toy Biz to Dickstein required under
Section 1.6 hereof shall have been delivered to Dickstein.
7.6. Further Conditions to Object Trading's Obligations. The
obligations of Object Trading to consummate the transactions contemplated hereby
at the Closing is further subject to the satisfaction or waiver of the following
conditions on or before the Closing Date:
(a) The representations and warranties of Toy Biz contained
herein shall be true and correct in all material respects as of the Closing Date
as though such representations and warranties were made at and as of the date;
(b) Toy Biz shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement, the Stockholders' Agreement and the Registration Rights
Agreement to be performed or complied with by them on or prior to the Closing;
(c) Object Trading shall have received a duly executed
certificate from Toy Biz to the effect that the conditions in Sections 7.6(a)
and (b) have been satisfied;
(d) Toy Biz shall have obtained the Term Loan Facility and the
Working Capital Facility (both as defined in the Plan of Reorganization) on
terms and conditions reasonably acceptable to Object Trading. The Term Loan
Facility and the Working Capital Facility shall not, in the aggregate, have an
effective interest rate of more than thirteen percent (13%) per annum; and
(e) All deliveries by Toy Biz to Object Trading required under
Section 1.6 hereof shall have been delivered to Object Trading.
7.7. Further Conditions to Whippoorwill's Obligations. The
obligations of Whippoorwill to consummate the transactions contemplated hereby
at the Closing is further subject to the satisfaction or waiver of the following
conditions on or before the Closing Date:
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(a) The representations and warranties of Toy Biz contained
herein shall be true and correct in all material respects as of the Closing Date
as though such representations and warranties were made at and as of the date;
(b) Toy Biz shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement and the Registration Rights Agreement to be performed or complied
with by them on or prior to the Closing;
(c) Whippoorwill shall have received a duly executed
certificate from Toy Biz to the effect that the conditions in Sections 7.7(a)
and (b) have been satisfied;
(d) Toy Biz shall have obtained the Term Loan Facility and the
Working Capital Facility (both as defined in the Plan of Reorganization) on
terms and conditions reasonably acceptable to Whippoorwill. The Term Loan
Facility and the Working Capital Facility shall not, in the aggregate, have an
effective interest rate of more than thirteen percent (13%) per annum; and
(e) All deliveries by Toy Biz to Whippoorwill required under
Section 1.6 hereof shall have been delivered to Whippoorwill.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1. Termination. Upon the earlier of (x) the termination of
the Master Agreement or the Plan of Reorganization, (y) a Final Change in
Control (as defined below) or (z) the delivery by Dickstein or Object Trading of
a written notice terminating this Agreement following such time as persons
designated by Marvel and not approved by Dickstein or Object Trading, as the
case may be, become a majority of the directors of Toy Biz (a "Marvel Board
Change"), this Agreement and the obligations of the parties hereunder shall
terminate. In no event shall Toy Biz have any obligations under this Agreement
(including any obligations under Section 7.2(a) hereof) after the occurrence of
a Final Change in Control, whether that Final Change in Control occurs before or
after the termination of this Agreement. The term "Final Change in Control"
means a Change in Control (as defined in the Amended and Restated Master
Agreement (the "Master Agreement"), dated as of November 19, 1997, as amended,
by and among Toy Biz, the secured creditors of Marvel and various subsidiaries
of Marvel, and the Panini Lenders (as defined in the Plan)) that is final and
not subject to appeal or which results in a change in the identity of a majority
of the directors of Toy Biz.
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ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1. Survival. The representations and warranties of Toy Biz
set forth in Article II hereof and the representations and warranties of
Dickstein and the Dickstein Parties set forth in Article III hereof, the
representations and warranties of Object Trading set forth in Article IV hereof
and the representations and warranties of Whippoorwill set forth in Article V
hereof shall survive the Closing for one (1) year (other than the
representations and warranties of Toy Biz under Section 2.4 which shall survive
indefinitely).
9.2. Indemnification. (a) Toy Biz, for itself, its successors,
legal representatives and assigns, agrees, subject to the terms of this Article
IX, to indemnify and hold harmless the Buyers and their successors and assigns
from any Costs (as defined in clause (c) below) resulting from or by reason of
(i) any inaccuracy of or in any of the representations and warranties made by
Toy Biz in this Agreement and (ii) any failure of Toy Biz to perform any
covenant or agreement set forth in this Agreement which failure is not cured
within fifteen days after notice of such failure.
(b) Each of the Buyers, severally, for itself, its successors,
legal representatives and assigns, agrees, subject to the terms of this Article
IX, to indemnify and hold harmless Toy Biz and the other Buyers and each of
their successors and assigns from any Costs (as defined in clause (c) below)
resulting from or by reason of (i) any inaccuracy of or in any of the
representations and warranties made by such Buyer in this Agreement and (ii) any
failure of such Buyer to perform any covenant or agreement set forth in this
Agreement which failure is not cured within fifteen days after notice of such
failure.
(c) As used in this Article IX, "Costs" means all losses,
liabilities, damages, judgments, assessments, fines, interest, penalties, costs
and expenses (including, without limitation, reasonable settlement costs and
reasonable legal, accounting, experts' and other fees, costs and expenses)
incurred in connection with or resulting from any claims, actions, suits,
proceedings, demands or judgments.
9.3. Procedure for Indemnification. (a) If the person seeking
indemnification under this Article IX (the "Indemnitee") shall claim
indemnification hereunder arising from any claim or demand of a third party, the
Indemnitee shall promptly notify the party from which indemnification is sought
(the "Indemnitor") in writing of the basis for such claim or demand, setting
forth the nature of the claim or demand in reasonable detail, and if such claim
is founded upon a written document, a copy of such writing shall accompany the
notice; provided, however, that failure to give such notice will not prejudice
such Indemnitee's right to indemnification from the Indemnitor, except as to any
losses suffered by such Indemnitee which are attributable to such Indemnitee's
failure to promptly give such notice to the Indemnitor.
671666.15
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<PAGE>
The Indemnitor shall have the right to compromise or, if appropriate, defend at
its own cost and through counsel of its own choosing, any claim or demand of any
third party giving rise to such claim for indemnification. Such notice and said
opportunity to compromise or defend, if applicable, shall be conditions
precedent to any asserted liability under this Article IX. In the event the
Indemnitor undertakes to compromise or defend any such claim or demand, it shall
promptly notify the Indemnitee in writing of its intention to do so. The
Indemnitee shall fully cooperate with the Indemnitor and its counsel in the
defense or compromise of such claim or demand. After the assumption of the
defense by the Indemnitor, the Indemnitor shall not be liable for any legal or
other expenses subsequently incurred by the Indemnitee in connection with such
defense, other than reasonable costs of investigation, but the Indemnitee may
participate in such defense at its own expense. No settlement of a third party
claim or demand or consent to entry of a judgment defended by the Indemnitee
shall be made without the written consent of the Indemnitor, which consent shall
not be unreasonably withheld. The Indemnitor shall not, except with the written
consent of the Indemnitee, consent to the entry of a judgment or settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to the Indemnitee of an unconditional release from all
liability in respect of such third party claim or demand.
(b) If the Indemnitee shall claim indemnification hereunder
for any claim other than a third party claim, the Indemnitee shall promptly
notify the Indemnitor of the nature and amount of the claim; and unless such
claim is disputed, payment therefor shall be made by the Indemnitor forthwith
upon receipt of such notice. If such claim is disputed by the Indemnitor, the
Indemnitor shall notify the Indemnitee of the basis for such dispute with
reasonable particularity within twenty (20) business days after its receipt of
notice of claim for indemnification. If the Indemnitor fails to notify the
Indemnitee of such dispute within such twenty (20) business days, the Indemnitor
shall automatically be deemed to have waived any right to dispute such claim if
no notice for the basis of such dispute is given to the Indemnitee within
fifteen (15) business days after notice from the Indemnitee to the Indemnitor of
the expiration of such twenty (20) business day period. If proper notice of
dispute is given by the Indemnitor and the Indemnitee disagrees therewith, then
the Indemnitee may file a lawsuit to recover the amount claimed with the
District Court.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Amendment and Modification. This Agreement may be
amended or modified at any time by the parties hereto, pursuant to an instrument
in writing signed by each of Toy Biz, the Dickstein Parties, Whippoorwill, and
Object Trading.
10.2. Extension; Waiver. At any time prior to the Closing
Date, the party entitled to the benefit of any respective term or provision
hereof may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document, certificate
or writing delivered pursuant hereto or (c) waive compliance with any
obligation, covenant, agreement or condition contained herein. Any agreement on
the part of a party to
671666.15
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<PAGE>
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party entitled to the benefits of such extended or
waived term or provision. The representations, warranties and agreements of any
of the parties provided for in this Agreement, and the parties, obligations
hereunder, shall continue in effect notwithstanding any investigation made by
the other party hereto.
10.3. Entire Agreement; Enforceability. This Agreement,
together with its Exhibits, constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof. Notwithstanding the foregoing, the
commitment letter to purchase the Preferred Stock, dated November 19, 1997, by
and between Toy Biz, Zib, Inc., a Delaware corporation, and Dickstein (the
"Commitment Letter") shall remain in effect except to the extent expressly
superceded hereby.
10.4. Assignment. This Agreement (and the Buyers' commitments
hereunder) shall not be assignable by Toy Biz nor shall it be assignable, in
whole or in part, by the Dickstein Parties or Object Trading without the consent
of Toy Biz and Buyers having committed to purchase 80% of the shares of
Preferred Stock to be purchased by the Buyers, provided that no such consent
shall be required for (i) assignments by Object Trading of its rights to
purchase any or all of the shares of Preferred Stock it is committed to purchase
under this Agreement, (ii) assignments by any Buyer of its rights under this
Agreement to any entity which is controlling, controlled by or under common
control with such Buyer and (iii) assignments by any Dickstein Party of its
rights under this Agreement to an investment fund controlled or managed by it.
Any assignee shall be required to deliver to Toy Biz and the Buyers its written
agreement to be bound by this Agreement and, upon agreeing to be so bound, shall
thereupon be deemed to have become a Buyer. No assignment, however, shall
relieve the assignor of its obligations under this Agreement. Any such purported
assignment without such consents shall be null and void.
10.5. Validity. The invalidity or unenforceability of any term
or provision of this Agreement in any situation or jurisdiction shall not affect
the validity or enforceability of the other terms or provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. Any such provision shall be deemed to be
modified to the extent necessary to render it legal, valid and enforceable.
10.6. Further Assurances. Each of the Buyers and Toy Biz shall
use all commercially reasonable efforts to take all action and to do all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement. Following the Closing, the parties hereto shall
furnish to each other and their respective representatives such necessary and
available information as may reasonably be requested in connection with tax,
accounting and similar matters relating to the purchase of the Preferred Stock.
671666.15
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<PAGE>
10.7. Certain Payment to Dickstein. (a) If a Qualifying
Transaction (as defined in the Plan of Reorganization) occurs, Dickstein will be
entitled to receive a fee of $8 million, which fee shall constitute the Break-up
Fee referred to in the Plan of Reorganization and which shall be paid to
Dickstein by wire transfer of immediately available funds upon payment of the
Toy Biz distribution pursuant to the Plan of Reorganization.
(b) Toy Biz shall reimburse Dickstein for its reasonable
professional fees, costs and out-of-pocket expenses as provided in the
Commitment Letter (as defined in Section 10.3) and the Plan of Reorganization.
10.8. Notices. Unless otherwise provided herein, all notices
and other communications hereunder shall be in writing and shall be deemed given
upon receipt by the other parties at the following addresses or facsimile
numbers:
(a) if to a Buyer, to its address set forth on Schedule 1
hereto;
(b) if to Toy Biz, to
Toy Biz, Inc.
685 Third Avenue
New York, New York 10017
Attention: Joseph M. Ahearn, President
and Chief Executive Officer
Facsimile No.: 212-682-5272
with a copy to
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Lawrence Mittman, Esq.
Facsimile No.: 212-856-7814
10.9. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable Delaware principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
10.10. Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and shall in no way be construed
to define, limit, describe, explain, modify, amplify, or add to the
interpretation, construction or meaning of any provision of, or scope or intent
of, this Agreement or in any way affect this Agreement.
671666.15
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<PAGE>
10.11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.12. Expenses. Whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth in the Master Agreement or the Commitment Letter, all costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
10.13. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its permitted
assigns and nothing in this Agreement, express or implied, is intended by or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
10.14. No Waivers. Except as otherwise expressly provided
herein, no failure to exercise, delay in exercising or single or martial
exercise of any right, power or remedy by any party, and no course of dealing
between the parties, shall constitute a waiver of any such right, power or
remedy.
10.15. Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of the
terms hereof and immediate injunctive relief, in addition to any other remedy at
law or equity.
10.16. Transfer Taxes. Toy Biz shall be responsible for, and
pay, all sales, use, transfer, filing, conveyance, recording, and other similar
taxes and fees, arising out of or in connection with the sale of Preferred Stock
pursuant to this Agreement.
10.17. Whippoorwill Obligations Several and Not Joint. With
respect to any obligations hereunder assumed by any Whippoorwill Account, such
obligations shall be several and not joint and shall be limited to the
percentage held by such Whippoorwill Account of the total Shares held by all
such Whippoorwill Accounts, and no such Whippoorwill Account shall be liable for
any obligation of any other Whippoorwill Account.
671666.15
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly signed as of the date first above written.
TOY BIZ, INC.
By:
------------------------------------------
Name: Joseph M. Ahearn
Title: President and Chief Executive Officer
DICKSTEIN PARTNERS, INC.
By:
------------------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN & CO., L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners, Inc.
By:
------------------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN FOCUS FUND L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
------------------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN INTERNATIONAL LIMITED
By: Dickstein Partners, Inc.
By:
------------------------------------------
Name: Alan S. Cooper
Title: Vice President
671666.15
<PAGE>
ELYSSA DICKSTEIN, JEFFREY SCHWARZ
AND ALAN COOPER AS TRUSTEES
U/T/A/D 12/27/88, MARK DICKSTEIN,
GRANTOR
By:
------------------------------------------
Alan S. Cooper
Trustee
MARK DICKSTEIN AND ELYSSA
DICKSTEIN, AS TRUSTEES OF THE
MARK AND ELYSSA DICKSTEIN
FOUNDATION
By:
------------------------------------------
Mark Dickstein
Trustee
------------------------------------------
Elyssa Dickstein
OBJECT TRADING CORP.
By:
------------------------------------------
Name: Isaac Perlmutter
Title: President
WHIPPOORWILL ASSOCIATES, INCORPORATED, as agent for and/or general partner of
the accounts listed on Schedule 1 hereto
By:
------------------------------------------
Name: Shelley Greenhaus
Title: Managing Director
671666.15
<PAGE>
Schedule 1
<TABLE>
<CAPTION>
Shares of Total
Name and Address Preferred Stock Purchase Price
Dickstein Parties:
<S> <C> <C>
DICKSTEIN & CO., L.P. 1,900,000 $19,000,000
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
DICKSTEIN FOCUS FUND L.P. 200,000 2,000,000
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
DICKSTEIN INTERNATIONAL 700,000 7,000,000
LIMITED
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
ELYSSA DICKSTEIN, JEFFREY 50,000 500,000
SCHWARZ AND ALAN COOPER AS
TRUSTEES U/T/A/D 12/27,88,
MARK DICKSTEIN, GRANTOR
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
MARK DICKSTEIN AND ELYSSA 10,000 100,000
DICKSTEIN, AS TRUSTEES OF THE
MARK AND ELYSSA DICKSTEIN
FOUNDATION
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
Elyssa Dickstein 140,000 1,400,000
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
OBJECT TRADING CORP. 3,492,852 34,928,520
c/o Toy Biz, Inc.
685 Third Avenue
New York, New York
</TABLE>
671666.15
<PAGE>
<TABLE>
<CAPTION>
Shares of Total
Name and Address Preferred Stock Purchase Price
<S> <C> <C>
WHIPPOORWILL ASSOCIATES, 500,000 5,000,000
INCORPORATED, as agent for or general
partner of the accounts or partnerships listed on
the Addendum to Schedule 1
c/o Whippoorwill Associates, Inc.
11 Martine Avenue
White Plains, New York 10606
Total: 6,992,852 69,928,520
========= ===========
</TABLE>
671666.15
<PAGE>
Addendum to Schedule 1
Fund/Account Preferred Shares
Purchased
President and Fellows of Harvard College 26,000
The Rockefeller Foundation 68,000
Vega Partners II, L.P. 76,000
Vega Partners III, L.P. 177,000
Vega Partners IV, L.P. 112,000
Vega Offshore Fund Trust 40,000
Whippoorwill Profit Sharing Plan 1,000
Total 500,000
671666.15
<PAGE>
Schedule 2.8
NONE
671666.15
EXHIBIT 99.4
STOCKHOLDERS' AGREEMENT
by and among
AVI ARAD,
VARIOUS DICKSTEIN ENTITIES AND INDIVIDUALS,
ISAAC PERLMUTTER,
ISAAC PERLMUTTER T.A.,
THE LAURA & ISAAC PERLMUTTER FOUNDATION INC.,
OBJECT TRADING CORP.,
ZIB INC.,
VARIOUS SECURED LENDERS,
and
TOY BIZ, INC.
Dated as of October 1, 1998
674683.23
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions...................................................................3
ARTICLE II
MANAGEMENT
Section 2.1. Board Representation..........................................................7
Section 2.2. Loss of Board Representation.................................................12
Section 2.3. Committee Representation.....................................................15
Section 2.4. Computation and Notice of Common Equivalent Shares Ownership.................19
Section 2.5. Restriction on Disposition of Stock Held by Subsidiary.......................21
ARTICLE III
REPRESENTATIONS
Section 3.1. Representations of the Dickstein Entities....................................22
Section 3.2. Representations of the Perlmutter/Arad Group.................................22
Section 3.3. Representations of the Lender Group..........................................22
ARTICLE IV
MISCELLANEOUS
Section 4.1. Effective Date...............................................................23
Section 4.2. Termination..................................................................23
Section 4.3. Secretary to Retain Copy.....................................................25
Section 4.4. Further Actions..............................................................25
Section 4.5. Specific Performance.........................................................25
Section 4.6. Entire Agreement.............................................................26
Section 4.7. Notices......................................................................26
Section 4.8. Waivers; Amendment...........................................................29
Section 4.9. Binding Effect; Heirs and Successors.........................................29
Section 4.10. No Third Party Beneficiaries.................................................30
Section 4.11. Separability.................................................................30
Section 4.12. Headings.....................................................................30
Section 4.13. Pronouns.....................................................................30
Section 4.14. Counterparts.................................................................30
Section 4.15. Governing Law................................................................30
Section 4.16. No Restriction on Transferability............................................31
Section 4.17. Whippoorwill Obligations Several and Not Joint...............................31
</TABLE>
674683.23
<PAGE>
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of October 1,
1998 among Avi Arad ("Arad"); the various Dickstein entities and individuals
listed on the signature pages hereto (the "Dickstein Entities"); Isaac
Perlmutter ("Perlmutter"); Isaac Perlmutter T.A., a Florida trust (the "Trust");
the Laura & Isaac Perlmutter Foundation Inc., a Florida corporation (the
"Foundation"); Object Trading Corp., a Delaware corporation ("Object Trading");
Zib Inc., a Delaware corporation ("Zib" and together with Perlmutter, the Trust,
the Foundation, and Object Trading, the "Perlmutter Entities"; the Perlmutter
Entities together with Arad, the "Perlmutter/Arad Group"; the Perlmutter/Arad
Group together with the Dickstein Entities, the "Investor Group"); The Chase
Manhattan Bank ("Chase"); Morgan Stanley & Co. Incorporated ("Morgan Stanley");
Whippoorwill Associates, Incorporated, as agent for or general partner of each
institution (a "Whippoorwill Account") set forth on Schedule 1 (collectively,
"Whippoorwill"); and Toy Biz, Inc., a Delaware corporation (the "Company"). Each
of Chase, Morgan Stanley and each Whippoorwill Account shall be a "Secured
Lender" for so long as each remains bound hereby, and all Secured Lenders bound
hereby shall collectively constitute, the "Lender Group"). The Secured Lenders
are some of the "Secured Lenders" referred to in the Fourth Amended Joint Plan
of Reorganization Proposed by those "Secured Lenders" and the Company in the
bankruptcy matter of In Re: Marvel Entertainment Group, Inc. et al. (case No.
97-638-RRM) in the United States District Court for the District of Delaware
(the "Plan"); and all of the "Secured Lenders" as that term
674683.23
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is defined more broadly in the Plan (other than any Dickstein Entity or any of
its Affiliates) are referred to in this Agreement collectively as the "Plan
Secured Lender Group".
W I T N E S S E T H
WHEREAS, the Perlmutter Entities, Arad and the Dickstein Entities will
own shares of common stock, par value $.01 per share, of the Company (the
"Common Stock"), and the Perlmutter Entities and the Dickstein Entities will own
shares of 8% Cumulative Convertible Exchangeable Preferred Stock of the Company
(the "Preferred Stock"; together with the Common Stock and any other security of
the Company which is then currently convertible or exchangeable for Common Stock
without the payment of additional consideration, the "Capital Stock"),
immediately after the consummation of the Plan;
WHEREAS, immediately after the consummation of the Plan, the Secured
Lenders will own shares of Common Stock and Preferred Stock;
WHEREAS, pursuant to the Plan, the Board of Directors of the Company
(the "Board") shall consist of eleven (11) Directors, six (6) of whom, subject
to Section 2.2 hereof, are to be designated by the Investor Group (the "Investor
Group Designees"), and five (5) of whom, subject to Section 2.2 hereof, are to
be designated by the Lender Group (the "Lender Group Designees"); provided, that
unless and until the occurrence of a Dickstein Forfeiture Event, one (1) of the
Investor Group Designees is to be designated by the Dickstein Entities (the
"Dickstein Designee");
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<PAGE>
WHEREAS, each of the parties hereto desires to enter into this
Agreement in order to set forth certain provisions regarding the management of
the Company.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
"Affiliate" and "Affiliated" shall have the meanings set forth in Rule
12b-2 of the Securities Exchange Act of 1934, as amended, and any successor
regulation thereto.
"Agreement" shall have the meaning set forth in the Preamble hereto.
"Arad" shall have the meaning set forth in the Preamble hereto.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, and any successor regulation
thereto; provided that, a person shall not be deemed to be a Beneficial Owner of
a security merely because that person has the right to acquire Beneficial
Ownership of that security if that right may be exercised only upon the payment
of consideration (other than solely by conversion or exchange of Capital Stock)
nor shall a person be deemed to be a Beneficial Owner of a security merely
because of the provisions of this Agreement. For the purposes of this
definition, "Beneficial Ownership" and "Beneficially Own" shall refer to the
ownership interest of a Beneficial Owner. With respect to Whippoorwill,
"Beneficially Owned" shall mean only such Capital
674683.23
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<PAGE>
Stock Beneficially Owned by Whippoorwill Accounts with respect to which
Whippoorwill Associates, Incorporated has the power to direct the vote.
"Board" shall have the meaning set forth in the Preamble hereto.
"Capital Stock" shall have the meaning set forth in the Recitals hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Equivalent Shares" Beneficially Owned by any person shall mean the
number of shares of Common Stock Beneficially Owned by such person.
"Common Stock" shall have the meaning set forth in the Recitals hereto,
together with any other security of the Company for which the Common Stock shall
have been exchanged in any recapitalization or similar transaction.
"Designee" and "Designees" shall have the meaning set forth in Section
2.1(a) hereof.
"Dickstein Designator" shall mean Mark Dickstein or, upon the death or
otherincapacity of Mark Dickstein, Elyssa Dickstein or, upon the death or other
incapacity of Elyssa Dickstein, such other person identified by Dickstein
Partners Inc. by written notice to the Secretary of the Company.
"Dickstein Designee" shall have the meaning set forth in the Recitals
hereto.
"Dickstein Entities" shall have the meaning set forth in the Preamble
hereto.
"Dickstein Forfeiture Event" shall mean a decrease in the Dickstein
Entities' BeneficialOwnership of Capital Stock to less than 1,500,000 Common
Equivalent Shares, calculated in accordance with Section 2.4 hereof and
appropriately adjusted for any stock splits, reverse stock splits,
recapitalization of the Capital Stock or capital transaction of a similar
nature.
"Director" shall mean a member of the Board of Directors of the Company.
674683.23
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<PAGE>
"Effective Date" shall mean the date on which the Agreement becomes
effective in accordance with Section 4.1 hereof.
"Election Meeting" shall have the meaning set forth in Section 2.1(b)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Independent Director" shall mean either Investor Group Designees or Lender
GroupDesignees who satisfy the requirements of Paragraph 303.00 of the New York
Stock Exchange Listed Company Manual (or any successor provision) and who are
(a) "non-employee directors" or any related successor concepts under Rule 16b-3
(or any successor provision) promulgated pursuant to Section 16 of the Exchange
Act, and (b) "outside directors" or any related successor concepts under Section
162(m) (or any successor provision) of the Code.
"Investor Group" shall have the meaning set forth in the Recitals hereto.
"Investor Group Designator" shall mean Isaac Perlmutter until his death,
disability or resignation. The person serving at any time as Investor Group
Designator shall have the right to appoint (or to change), by written notice to
the Secretary of the Company, a successor Investor Group Designator who shall
become the Investor Group Designator upon the death, disability, or resignation
of the Investor Group Designator.
"Investor Group Designee" shall have the meaning set forth in the Recitals
hereto.
"Lender Group" shall have the meaning set forth in the Preamble hereto.
"Lender Group Designator" shall mean (i) with respect to the initial
configuration of the Board following the Effective Time, a subcommittee of the
Lender Group consisting of Chase, Morgan Stanley and Whippoorwill, and (ii)
thereafter, any one or more Secured Lenders that Beneficially Own a majority of
the Common Equivalent Shares Beneficially
674683.23
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<PAGE>
Owned by the Lender Group; provided however that, whenever the Company is
required to deliver a notice under this Agreement to the Lender Group
Designator, such notice shall be delivered to Morgan Stanley, and Morgan Stanley
shall promptly deliver a copy thereof to each other Secured Lender still bound
hereby.
"Lender Group Designee" shall have the meaning set forth in the Preamble
hereto.
"Notice of Designee" shall have the meaning set forth in Section 2.1(b)
hereof.
"Perlmutter Entities" shall have the meaning set forth in the Preamble
hereto.
"Perlmutter/Arad Group" shall have the meaning set forth in the Preamble
hereto.
"Plan" shall have the meaning set forth in the Recitals hereto.
"Plan Secured Lender Group" shall have the meaning set forth in the
Preamble hereto.
"Preferred Stock" shall have the meaning set forth in the Recitals hereto,
together with any other security of the Company for which the Preferred Stock
shall have been exchanged in any recapitalization or similar transaction.
"Secured Lenders" shall have the meaning set forth in the Preamble hereto.
"Stockholder Group Designators" shall mean the Investor Group Designator,
the Lender Group Designator and the Dickstein Designator.
"Stockholder Groups" shall mean the Investor Group, the Lender Group and
the Dickstein Entities.
"Whippoorwill Account" shall have the meaning set forth in the Preamble.
674683.23
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<PAGE>
ARTICLE II
MANAGEMENT
Section 2.1. Board Representation.
(a) Subject to Section 2.2 hereof, at and following the Effective
Date, each party to this agreement will take such action as may reasonably be in
its power to cause the Board to include (i) six (6) Investor Group Designees,
one (1) of whom, unless and until a Dickstein Forfeiture Event has occurred,
shall be the Dickstein Designee, and (ii) five (5) Lender Group Designees. The
Investor Group Designees (including the Dickstein Designee) and the Lender Group
Designees are sometimes collectively referred to herein as the "Designees" and
individually as a "Designee."
(b)
(i) The Investor Group Designator, the Lender Group Designator
and the Dickstein Designator shall each give the Company timely notice
(the "Notice of Designee") of the name of each person whom the
relevant Stockholder Group wishes to be nominated by the Company for
election or re-election to the Board at the next meeting of
stockholders, or taking of action by written consent of stockholders,
at which Directors are to be elected (an "Election Meeting"). At the
option of any Stockholder Group Designator, the Notice of Designee may
also specify one or more alternates (an "Alternate Designee") to serve
in the event of the incapacity or other inability to serve of a
Designee, as provided herein. The Investor Group Designees and the
Lender Group Designees shall at all times include such number of
Independent Directors as shall be required to comply with the
provisions of Sections 2.3(b) and
674683.23
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<PAGE>
2.3(c) hereof. Each Notice of Designee shall be in writing and shall be
timely if delivered to the Secretary of the Company at the Company's
principal executive offices not later than the close of business on the
60th day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the
Election Meeting is more than 30 days before or after such anniversary
date, the Notice of Designee to be timely must be so delivered not
later than the later of (x) the close of business on the later of the
60th day prior to the Election Meeting and (y) the 20th day following
the day on which public announcement of the date of the Election
Meeting is first made by the Company. In no event shall the public
announcement of an adjournment of an Election Meeting commence a new
time period for the giving of the Notice of Designee as described
above. If the Company has not received a Notice of Designee from any
Stockholder Group Designator at a time when the relevant Stockholder
Group is entitled to name one or more Designee on or before the 10th
day before the latest date for delivery of the Notice of Designee
specified in the proviso to the next preceding sentence, the Company
shall so inform the relevant Stockholder Group Designator by written
notice. If the Company has not received a Notice of Designee from any
Stockholder Group Designator at a time when the relevant Stockholder
Group is entitled to name one or more Designee on or before the latest
date for delivery of such Notice, then such Stockholder Group
Designator shall be deemed to have delivered on such date a Notice of
Designee designating the Designees specified in the most recently
delivered Notice of Designee for any prior Election Meeting, or, if
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any such Designee is unable to serve and an Alternate Designee has been
specified therefor, such Alternate Designee.
(ii) By means of written notice given to a Stockholder Group
Designator within ten days of the Company's receipt of a Notice of
Designee sent by that Stockholder Group Designator, the Board may
reject a Designee if, in the exercise of its fiduciary duties, it
reasonably determines that such Designee fails to meet the moral or
professional standards required of a director of a public corporation
such as the Company. The Company's notice of rejection shall specify
the basis for such rejection in accordance with this subsection in
reasonable detail. If the Board shall reject any Designee as
aforesaid, the relevant Stockholder Group Designator may send a
supplemental Notice of Designee designating a replacement for the
rejected Designee, which notice shall be timely if received by the
Company within fifteen days of that Stockholder Group Designator's
receipt of a notice of rejection under the first sentence of this
paragraph. If the Stockholder Group Designator does not send a
supplemental Notice of Designee within the aforesaid time period and
an Alternate Designee was designated for the rejected Designee in the
original Notice of Designee, the Alternate Designee, unless rejected
in accordance with this subsection, shall be deemed nominated by the
Stockholder Group Designator in replacement of the rejected Designee.
(iii) Each Notice of Designee shall set forth, as to each person
whom the Stockholder Group wishes the Company to nominate for election
or re-election as a Director, all information relating to such person
that is required to be disclosed in
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solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation
14A under the Exchange Act and Rule 14a-11 thereunder (including such
person's written consent to being named in the proxy statement as a
nominee and to serving as a Director if elected); provided, however,
that a Notice of Designee shall not be deemed defective for failure to
supply such information unless, after request therefor by the Company
to the relevant Stockholder Group Designator, such Stockholder Group
Designator fails to supply such information on a timely basis for
inclusion in the proxy materials for the relevant Election Meeting.
(iv) If the parties to this Agreement have received notice from
the Company that there are any directorships to be filled at a
forthcoming Election Meeting as to which no timely Notice of Designee
was received or deemed received, the parties to this Agreement may
vote their shares as to those directorships without constraint by this
Agreement.
(c) The Company shall nominate and recommend those Designees as to
whom it has received or is deemed to have received a timely Notice of Designee
to the stock holders of the Company for election or re-election as Directors and
shall otherwise use its best efforts to cause those Designees to be elected to
the Board. Each party to this Agreement agrees to vote, or cause to be voted,
all of the shares of Capital Stock Beneficially Owned by it at any Election
Meeting and agrees to take all actions otherwise reasonably in its power as a
stockholder of the Company to cause the Investor Group Designees (including, in
the absence of a Dickstein Forfeiture Event, the Dickstein Designee) and the
Lender Group Designees to be elected to the Board as described herein.
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(d)
(i) If, following his election to the Board, a Lender Group
Designee shall vacate his position on the Board for any reason,
including, but not limited to, the death, removal or retirement of
that Designee, but excluding any changes in Board representation
pursuant to Section 2.2 hereof, then the Lender Group Designator shall
have the right to nominate a successor Designee to fill the vacancy.
(ii) If, following his election to the Board, the Dickstein
Designee shall vacate his position on the Board for any reason,
including, but not limited to, the death, removal or retirement of
that Designee, but excluding any changes in Board representation
pursuant to Section 2.2 hereof, then the Dickstein Designator shall
have the right to nominate a successor Designee to fill the vacancy.
(iii) If, following his election to the Board, an Investor Group
Designee shall vacate his position on the Board for any reason,
including, but not limited to, the death, removal or retirement of
that Designee, or the occurrence of a Dickstein Forfeiture Event, but
excluding any other changes in Board representation pursuant to
Section 2.2 hereof, then the Investor Group Designator, except in
cases covered by Section 2.1(d)(ii), shall have the right to nominate
a successor Designee to fill the vacancy.
(iv) The Company shall cause any successor Designee nominated
pursuant to Section 2.1(d)(i)-(iii) (a "Nominated Successor") to be
elected to fill such vacancy as promptly as practicable at a special
meeting of the Board called for that purpose or by action of the Board
by unanimous written consent. If for any reason the
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Nominated Successor is not made a Director as aforesaid, the parties
hereto shall promptly use their respective best efforts (i) to bring
about a special meeting of stockholders for the purpose of (A) removing
from the Board any Director appointed instead of the Nominated
Successor and/or (B) electing the Nominated Successor to the Board or
(ii) to execute a written consent in lieu of a meeting of stockholders
(A) to remove from the Board any Director appointed instead of the
Nominated Successor and/or (B) to elect the Nominated Successor to the
Board.
(e) Each Stockholder Group Designator shall have the right, at any
time, to identify any of that Stockholder Group's Designees whom that
Stockholder Group wishes to have removed from his position on the Board and to
nominate a successor Designee to fill the resulting vacancy. The parties hereto
shall promptly use their respective best efforts (i) to bring about a special
meeting of stockholders, and each shall vote, or cause to be voted, all of the
shares of Capital Stock Beneficially Owned by it at that meeting, for the
purpose of removing from the Board any such Designee(s) so identified and
electing the nominated successor(s) to the Board or (ii) to execute a written
consent in lieu of a meeting of stockholders to remove from the Board any such
Designees so identified and to elect the nominated successor(s) to the Board.
(f) The parties to this Agreement shall not, and shall use their best
efforts to cause their respective Designees not to, take any action to change
from eleven (11) the number of Directors which shall constitute the entire Board
without the unanimous written agreement of the Investor Group Designator, the
Lender Group Designator and, unless and until a Dickstein Forfeiture Event has
occurred, the Dickstein Designator.
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Section 2.2. Loss of Board Representation.
(a) Decreases in Beneficial Ownership of Capital Stock (including
decreases occurring prior to the expiration of twenty-one months after the date
of the consummation of the Plan) shall cause decreases in the Stockholder
Groups' right to designate Directors, and shall cause forfeitures of Board
seats, in accordance with this Section 2.2(a); provided, that such decreases in
Stockholder Groups' right to designate Directors, and such forfeitures of Board
seats, shall take effect on the first day after the expiration of twenty-one
months after the consummation of the Plan and not before. For purposes of this
Section 2.2 and Section 2.3(e) hereof, the parties have agreed that such
decreases in the Beneficial Ownership of Capital Stock of the Plan Secured
Lender Group in the aggregate shall cause such decreases in the Lender Group's
right to designate Directors and such forfeitures of Board seats as provided in
those sections.
(i) If either the Investor Group or the Plan Secured Lender
Group, as the case may be, shall decrease its Beneficial Ownership of
Common Equivalent Shares at least twenty percent (20%), but less than
forty percent (40%), then the Investor Group or the Lender Group, as
the case may be, shall forfeit one (1) Board seat.
(ii) If either the Investor Group or the Plan Secured Lender
Group, as the case may be, shall decrease its Beneficial Ownership of
Common Equivalent Shares at least forty percent (40%), but less than
sixty percent (60%), then the Investor Group or the Lender Group, as
the case may be, shall forfeit two (2) Board seats.
(iii) If either the Investor Group or the Plan Secured Lender
Group, as the case may be, shall decrease its Beneficial Ownership of
Common Equivalent Shares at
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least sixty percent (60%), but less than eighty percent (80%), then the
Investor Group or the Lender Group, as the case may be, shall forfeit
three (3) Board seats.
(iv) If either the Investor Group or the Plan Secured Lender
Group, as the case may be, shall decrease its Beneficial Ownership of
Common Equivalent Shares at least eighty percent (80%), but less than
ninety percent (90%), then the Investor Group or the Lender Group, as
the case may be, shall forfeit four (4) Board seats.
(v) (A) If the Investor Group shall decrease its Beneficial
Ownership of Common Equivalent Shares at least ninety percent (90%),
but less than ninety-five percent (95%), then the Investor Group shall
forfeit five (5) Board seats, and (B) if the Plan Secured Lender Group
shall decrease its Beneficial Ownership of Common Equivalent Shares at
least ninety percent (90%), then the Lender Group shall forfeit all
five (5) of its Board seats.
(vi) Upon the occurrence of a Dickstein Forfeiture Event, the
Dickstein Entities shall forfeit their one (1) Board seat, but that
forfeiture shall not cause a reduction in the number of Directors
which the Investor Group has the right to designate unless the
Investor Group shall have decreased its Beneficial Ownership of Common
Equivalent Shares at least ninety-five percent (95%), in which case
the Investor Group shall forfeit all six (6) of its Board seats. If a
Dickstein Forfeiture Event has not occurred, none of the Board seats
forfeited by the Investor Group under Section 2.2(a)(i)-(v) shall be
the Board seat of the Dickstein Designee.
(b) In the event of a decrease in Beneficial Ownership that decreases
a Stockholder Group's right to name Directors under Section 2.2(a) hereof, that
Stockholder
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Group's Designator shall name the Designee(s) to be removed from the Board in
accordance with that section and the parties to this Agreement shall use their
respective best efforts to cause the resignations from the Board of any
Designee(s) so named. If the number of Designees of a Stockholder Group serving
on the Board is not promptly decreased in accordance with Section 2.2(a) hereof,
the parties hereto shall promptly use their respective best efforts (i) to bring
about a special meeting of stockholders, and each shall vote, or cause to be
voted, all of the shares of Capital Stock Beneficially Owned by it at that
meeting, for the purpose of removing from the Board such number of the Designees
of that Stockholder Group as shall be required in order to comply with Section
2.2(a) or (ii) to execute a written consent in lieu of a meeting of stockholders
to remove from the Board such number of Designees of that Stockholder Group.
Section 2.3. Committee Representation.
(a) Each party to this Agreement shall vote, or cause to be voted, its
Capital Stock Beneficially Owned, and shall use its best efforts to cause its
respective Stockholder Group's Designees on the Board, subject to the exercise
of their fiduciary obligations, to establish the following committees of the
Board and to cause those committees of the Board to be comprised and have the
functions, powers and authorizations, as set forth below.
(b) The Audit Committee shall consist of five (5) Independent
Directors, three (3) of whom will be Lender Group Designees named by a majority
of the Lender Group Designees then serving on the Board and two (2) of whom will
be Investor Group Designees named by a majority of the Investor Group Designees
then serving on the Board. The Audit Committee shall exercise, subject to
applicable provisions of laws, the functions regularly
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administered by committees of such type including, without limitation, (A) to
review the professional services and independence of the Company's independent
auditors and the scope of the annual external audit as recommended by the
independent auditors, (B) to ensure that the scope of the annual external audit
by the independent auditors of the Company is sufficiently comprehensive, (C) to
review, in consultation with the independent auditors and the internal auditors,
the plan and results of the annual external audit, the adequacy of the Company's
internal control systems and the results of the Company's internal audits, (D)
to review with management and the independent auditors, the Company's annual
financial statements, financial reporting practices and the results of each
external audit, and (E) to consider the qualification of the Company's
independent auditors, to make recommendations to the Board as to their selection
and to review the relationship between such independent auditors and management.
(c) The Compensation and Nominating Committee shall consist of five
(5) Directors, two (2) of whom shall be Lender Group Designees named by a
majority of the Lender Group Designees then serving on the Board and three (3)
of whom shall be Investor Group Designees named, subject to the following
sentence, by a majority of the Investor Group Designees then serving on the
Board. Unless a Dickstein Forfeiture Event has occurred, one (1) of the three
Investor Group Designees on the Compensation and Nominating Committee shall be
the Dickstein Designee. At least one of the Lender Group Designees and at least
one of the Investor Group Designees (other than the Dickstein Designee) serving
on the Compensation and Nominating Committee shall be an Independent Director.
The Compensation and Nominating Committee shall exercise, subject to applicable
provisions of
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law, the functions regularly administered by committees of such type including,
without limitation, the power to review and recommend to the Board the
compensation and benefit arrangements for the officers of the Company, the
administering of the stock option plans and executive compensation programs of
the Company, including bonus and incentive plans applicable to officers and key
employees of the Company and to recommend to the Board nominees for election as
Directors.
(d) The Finance Committee shall consist of five (5) Directors, two (2)
of whom will be Lender Group Designees named by a majority of the Lender Group
Designees then serving on the Board and three (3) of whom will be Investor Group
Designees named by a majority of the Investor Group Designees then serving on
the Board. The Finance Committee shall exercise, subject to applicable
provisions of law, the functions regularly administered by committees of such
type including, without limitation, to make recommendations to the Board with
respect to the Company's credit arrangements, the issuance of equity and long
term debt instruments and other financial matters.
(e)
(i) If the Investor Group shall decrease its Beneficial Ownership
of Common Equivalent Shares by more than (331/3%), it will forfeit one
Audit Committee Seat. If the Investor Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than sixty
six and two thirds percent (662/3%), it will forfeit both of its Audit
Committee seats. If the Plan Secured Lender Group shall decrease its
Beneficial Ownership of Common Equivalent Shares by more than twenty
five percent (25%), the Lender Group will forfeit one Audit Committee
seat. If the Plan Secured
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Lender Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than fifty percent (50%), the Lender Group
will forfeit two Audit Committee seats. If the Plan Secured Lender
Group shall decrease its Beneficial Ownership of Common Equivalent
Shares by more than seventy five percent (75%), the Lender Group will
forfeit all three of its Audit Committee seats.
(ii) If the Plan Secured Lender Group shall decrease its
Beneficial Owner ship of Common Equivalent Shares by more than
(331/3%), the Lender Group will forfeit one Compensation and
Nominating Committee seat. If the Plan Secured Lender Group shall
decrease its Beneficial Ownership of Common Equivalent Shares by more
than sixty six and two thirds percent (662/3%), the Lender Group will
forfeit both of its Compensation and Nominating Committee seats. If
the Investor Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than twenty five percent (25%), it will
forfeit one Compensation and Nominating Committee seat. If the
Investor Group shall decrease its Beneficial Ownership of Common
Equivalent Shares by more than fifty percent (50%), it will forfeit
two Compensation and Nominating Committee seats. If the Investor Group
shall decrease its Beneficial Ownership of Common Equivalent Shares by
more than seventy five percent (75%) and a Dickstein Forfeiture Event
shall have occurred, it will forfeit all three of its Compensation and
Nominating Committee seats. If a Dickstein Forfeiture Event has not
occurred, none of the Compensation and Nominating Committee seats
forfeited by the Investor Group under this Section 2.3(e)(ii) shall be
the Compensation and Nominating Committee seat of the Dickstein
Designee.
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(iii) If the Plan Secured Lender Group shall decrease its
Beneficial Owner ship of Common Equivalent Shares by more than
(331/3%), the Lender Group will forfeit one Finance Committee seat. If
the Plan Secured Lender Group shall decrease its Beneficial Ownership
of Common Equivalent Shares by more than sixty six and two thirds
percent (662/3%), the Lender Group will forfeit both of its Finance
Committee seats. If the Investor Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than twenty five percent
(25%), it will forfeit one Finance Committee seat. If the Investor
Group shall decrease its Beneficial Ownership of Common Equivalent
Shares by more than fifty percent (50%), it will forfeit two Finance
Committee seats. If the Investor Group shall decrease its Beneficial
Ownership of Common Equivalent Shares by more than seventy five
percent (75%), it will forfeit all three of its Finance Committee
seats.
(f) If a Stockholder Group's right to committee representation
decreases under Section 2.3(e) hereof, each party to this Agreement shall use
its respective best efforts to cause the required number of the Designees of
that Stockholder Group to resign their Committee(s) assignments.
(g) The parties to this Agreement shall not, and shall use their best
efforts to cause their respective Designees not to, take any action to create
any committee of the Board other than as provided in this Agreement without the
unanimous written agreement of the Investor Group Designator, the Lender Group
Designator and, unless and until a Dickstein Forfeiture Event has occurred, the
Dickstein Designator.
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Section 2.4. Computation and Notice of Common Equivalent Shares
Ownership.
(a) For the purposes of this Agreement, the Investor Group's
Beneficial Ownership of Common Equivalent Shares shall be determined with
reference only to the Perlmutter/Arad Group's Beneficial Ownership of Common
Equivalent Shares and shall not be determined by reference to, or affected by,
any change in the Dickstein Entities' Beneficial Ownership of Common Equivalent
Shares.
(b) For the purposes of Section 2.2 and Section 2.3 hereof, a group's
reduction in its Beneficial Ownership of Common Equivalent Shares shall be
determined by comparing, at any particular time, that group's Beneficial
Ownership of Common Equivalent Shares (including after-acquired Capital Stock)
to that group's Beneficial Ownership of Common Equivalent Shares immediately
following the consummation of the Plan, as adjusted for any stock splits,
reverse stock splits, recapitalization of the Common Equivalent Shares or
capital transaction of a similar nature. Any of the Investor Group, the
Dickstein Group, the Lender Group and the Plan Secured Lender Group may use the
Common Equivalent Shares held by Affiliates of its members to calculate its
total Common Equivalent Shares ownership if such Affiliates have agreed in
writing, for the benefit of all parties to this Agreement, to be bound by this
Agreement.
(c) Any reduction in Common Equivalent Shares Beneficially Owned by
any Secured Lender shall constitute a reduction in the number of Common
Equivalent Shares Beneficially Owned by the Plan Secured Lender Group for
purposes of Section 2.2, 2.3 and 4.2(e)(iii) hereof, except to the extent that
(i) any or all of the Common Equivalent Shares no
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longer so Beneficially Owned are Beneficially Owned by any member of the Plan
Secured Lender Group (or any Affiliate of such a member) who is, or who agrees
to be, bound hereby or (ii) the Lender Group Designator delivers to the Investor
Group Designator, on or prior to the date on which the Lender Group Designator
delivers a Notice of Designee with respect to an Election Meeting, an
irrevocable proxy from one or more members of the Plan Secured Lender Group
(which are not Secured Lenders), authorizing the Investor Group Designator and
the Dickstein Group Designator, acting jointly, to vote a specified number
Common Equivalent Shares Beneficially Owned by such member in the manner
required by this Agreement with respect to the election of directors at such
Election Meeting; provided that even if such an irrevocable proxy has been
delivered this clause (ii) shall not apply with respect to the Common Equivalent
Shares covered thereby with respect to any period after that meeting if such
Common Equivalent Shares fail to be voted in a manner in which such Common
Equivalent Shares would otherwise be required to be voted under this Agreement
if they were Beneficially Owned by a party to this Agreement. For example, (x)
if a Secured Lender sells two million Common Equivalent Shares to a third party
which is not and does not agree to be bound by this Agreement and does not
deliver an irrevocable proxy as provided in the preceding sentence, the number
of Common Equivalent Shares Beneficially Owned by the Plan Secured Lender Group
shall be deemed to have been reduced by two million Common Equivalent Shares,
whether or not offsetting acquisitions of Common Equivalent Shares have been
made by other members of the Plan Secured Lender Group, (y) if, the facts are
the same as in clause (x) but another member of the Plan Secured Lender Group
delivers a proxy described in the preceding sentence and after the meeting to
which the proxy relates the holder
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of those shares fails to take an action required by Section 2.1, 2.2 or 2.3 of
this Agreement, clause (ii) of Section 2.4(c) shall no longer apply with respect
to those shares.
(d) If at any time a Stockholder Group Designator has actual knowledge
(but without any duty of inquiry) that the Beneficial Ownership of Common
Equivalent Shares of the related Stockholder Group (including, for purposes of
the Lender Group Designator, the Plan Secured Lender Group) has been reduced
such that such Stockholder Group would be required to forfeit one or more or any
additional Board seats pursuant to Section 2.2 or Committee seats pursuant to
Section 2.3, it shall as promptly as practicable thereafter notify the Company
and the other parties to this Agreement.
Section 2.5. Restriction on Disposition of Stock Held by Subsidiary.
The parties to this Agreement shall not, and shall use their best efforts to
cause their respective Designees not to, (i) permit Marvel Characters, Inc. to
transfer or otherwise convey any interest in any of the shares of Common Stock
held by Marvel Characters, Inc. unless such transfer or other conveyance (A) has
been approved in writing by a majority in voting power of each Stockholder
Group, or (B) is to the Company, or (ii) allow such shares of Common Stock to be
entitled to vote with respect to matters to be voted upon or consented to by the
stockholders of the Company unless adequate provision is made to assure that
such shares of Common Stock will thereafter be voted, on all such matters,
proportionately with all other outstanding shares of Common Stock voting on all
such matters.
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ARTICLE III
REPRESENTATIONS
Section 3.1. Representations of the Dickstein Entities. The Dickstein
Entities represent to the other parties to this Agreement that they will
Beneficially Own approximately 6,115,000 Common Equivalent Shares in the
aggregate immediately following the consummation of the Plan.
Section 3.2. Representations of the Perlmutter/Arad Group. The
Perlmutter/Arad Group represents to the other parties to this Agreement that it
will Beneficially Own approximately 17,318,000 Common Equivalent Shares in the
aggregate immediately following the consummation of the Plan.
Section 3.3. Representations of the Lender Group.
(a) The Chase Manhattan Bank represents to the other parties to this
Agreement that it will Beneficially Own approximately 2,096,291 Common
Equivalent Shares immediately following the consummation of the Plan and that it
does not share Beneficial Ownership of any of those shares with any other member
of the Lender Group.
(b) Morgan Stanley & Co. Incorporated represents to the other parties
to this Agreement that it will Beneficially Own approximately 4,020,592 Common
Equivalent Shares immediately following the consummation of the Plan and that it
does not share Beneficial Ownership of any of those shares with any other member
of the Lender Group.
(c) Whippoorwill represents to the other parties to this Agreement
that each Whippoorwill Account will Beneficially Own approximately the number of
shares of Capital Stock set forth on Schedule 1 to this Agreement immediately
following the consummation of
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the Plan and that none of the Whippoorwill Accounts shares Beneficial Ownership
of any of those shares with any other member of the Lender Group.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Effective Date. This Agreement shall become effective
upon the consummation of the Plan.
Section 4.2. Termination. (a) This Agreement shall terminate:
(i) Upon consent of all of the parties hereto who are then
subject to this Agreement;
(ii) As to the Perlmutter/Arad Group, in the event that the
Investor Group, or any of its Affiliates that have agreed to be bound by
this Agreement, shall cease to be entitled to the election of any Designee
(exclusive of the Dickstein Designee) to the Board hereunder;
(iii) As to the Lender Group, in the event that the Lender Group,
or any of their Affiliates that have agreed to be bound by this Agreement,
shall cease to be entitled to the election of any Designee to the Board
hereunder and, with respect to any individual Secured Lender, when the
Common Equivalent Shares Beneficially Owned by such Secured Lender have
been less than 10% of the Common Equivalent Shares Beneficially Owned by
such Secured Lender immediately following the consummation of the Plan for
a period of 184 consecutive calendar days; provided, that this Agreement
shall terminate with respect to Whippoorwill Associates, Incorporated and
each
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Whippoorwill Account when the Common Equivalent Shares Beneficially Owed by
all of them in the aggregate have totaled less than 10% of all Common
Equivalent Shares Beneficially Owed by all of them immediately following
the consummation of the Plan for a period of 184 consecutive calendar days;
and provided further, that the termination of this Agreement with respect
to any Secured Lender shall be deemed to result in a reduction in the total
amount of Common Equivalent Shares Beneficially Owed by the Plan Secured
Lender Group by an amount equal to the amount of Common Equivalent Shares
Beneficially Owned by such Secured Lender at such time;
(iv) As to the Dickstein Entities, in the event that the
Dickstein Entities, or any of their Affiliates that have agreed to be bound
by this Agreement, shall cease to be entitled to the election of their
Designee to the Board hereunder.
(b) In the event that a material violation of any covenant hereunder
by a member of a Stockholder Group that is not cured within thirty days of
written notice thereof by a member of one of the other Stockholder Groups shall
occur and be continuing, the Stockholder Group of the breaching party shall not
be deemed to be the Beneficial Owner of any Capital Stock for purposes of Board
representation under Section 2.2 hereof or committee representation under
Section 2.3 hereof, and shall have no further rights under this Agreement. Such
member and such Stockholder Group shall nonetheless continue to be deemed to
Beneficially Own its Capital Stock for all other purposes and to be bound to
perform its obligations under this Agreement.
Section 4.3. Secretary to Retain Copy. A copy of this Agreement shall
be filed with the Secretary of the Company.
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Section 4.4. Further Actions. At any time and from time to time each
party agrees, at its or his expense, to take such actions and to execute and
deliver such documents as may be necessary to effectuate the purposes of this
Agreement. Each party hereto will not take any action that would (x) result in a
breach of any covenant or any other obligation of such party under this
Agreement or (y) impede, interfere with or discourage the transactions con
templated by this Agreement.
Section 4.5. Specific Performance. The parties hereto acknowledge that
failure on any of their parts to comply with the terms of this Agreement shall
cause the other parties hereto immediate and irreparable harm that cannot be
adequately compensated by the remedies at law, and that in the event of such
breach or violation, or threatened breach or violation, the other parties hereto
shall have such provisions of this Agreement specifically enforced by
preliminary and permanent injunctive relief without having to prove the inade
quacy of the available remedies at law or any actual damages and without posting
bond or other security. Any remedy sought or obtained by a party hereto shall
not be considered either exclusive or a waiver of the rights of a party hereto
or any other person to assert any other remedies they have in law or equity. In
any proceeding upon a motion for any such injunctive relief, a party's ability
to answer in damages shall not be a bar, or be interposed as a defense, to the
granting of such injunctive relief. Any rights under this Section 4.5 may be
enforced in any appropriate court in the State of Delaware.
Section 4.6. Entire Agreement. This Agreement contains the entire
under standing between the parties hereto with respect to the subject matter
hereof, and supersedes all
674683.23
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<PAGE>
prior and contemporaneous agreements and understandings among the parties hereto
except as herein contained, with any of the terms hereof.
Section 4.7. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally against receipt thereof,
or transmitted by telecopier or by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
If to the Company, to
Toy Biz, Inc.
685 Third Avenue
New York, New York 10017
Attention: Secretary
Telecopy: (212) 588-5100
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: John Turitzin, Esq.
Telecopy: (212) 856-7813
if to Perlmutter, the Trust, the Foundation, Object Trading or Zib,
to:
P.O. Box 1028
Lake Worth, Florida 33460-1028
Telecopy:
c/o Daniel Golden (212) 806-6006
and
c/o Lawrence Mittman (212) 856-7807
674683.23
27
<PAGE>
with a copy to:
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10004
Attention: Daniel Golden
Telecopy: (212) 806-6006
and
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Lawrence Mittman, Esq.
Telecopy: (212) 856-7807
if to Arad, to:
c/o Avi Arad & Associates
1698 Post Road East
Westport, Connecticut 06880
Telecopy: (203) 254-2613
with a copy to:
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10004
Attention: Daniel Golden
Telecopy: (212) 806-6006
and
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Lawrence Mittman, Esq.
Telecopy: (212) 856-7807
if to any of the Dickstein Entities, to:
Dickstein Partners, Inc.
600 Madison Avenue, 16th Floor
674683.23
28
<PAGE>
New York, New York 10021
Attention: Alan Cooper
Telecopy: (212) 754-5825
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Abbe Dienstag, Esq.
Telecopy: (212) 715-8000
if to The Chase Manhattan Bank, to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Anthony J. Horan
Telecopy: (212) 270-4240
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Scott K. Charles, Esq.
Telecopy: (212) 403-1000
if to Morgan Stanley & Co. Incorporated, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Michael J. Petrick
Telecopy: (212) 761-0713
with a copy to:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10026
Attention: Laura DeForest, Esq.
Telecopy: (212) 762-8831
674683.23
29
<PAGE>
if to any Whippoorwill Account, to:
Whippoorwill Associates, Incorporated
11 Martine Avenue
White Plains, New York 10606
Attention: Shelley Greenhaus
Telecopy: (914) 683-1242
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Thomas Mayer, Esq.
Telecopy: (212) 715-8000
Any notice shall be deemed to have been given on the date of receipt
if delivered personally or by overnight courier, the date of transmission with
confirmation back if transmitted by telecopier, or the third day following
posting if transmitted by mail.
Section 4.8. Waivers; Amendment. This Agreement may not be modified,
amended or waived other than by a written instrument executed by the parties
hereto. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement.
Section 4.9. Binding Effect; Heirs and Successors. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and shall be assignable only to an Affiliate of a party hereto and, with
respect to assignment by Secured
674683.23
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<PAGE>
Lenders, to any member of the Plan Secured Lender Group and any Affiliate of
such a member, and only if such Affiliate of a party hereto, member of the Plan
Secured Group or Affiliate of a member of the Plan Secured Lender Group agrees
in writing to be bound by this Agreement. The provisions of this Agreement shall
be binding upon and inure to the benefit of the heirs and successors of the
parties hereto.
Section 4.10. No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement (except as provided in Section 4.9).
Section 4.11. Separability. If any provision of this Agreement shall
be adjudicated to be invalid, illegal or unenforceable, such provision shall be
amended to delete therefrom the portion thus adjudicated to be invalid, illegal
or unenforceable, such deletion to apply only with respect to the operation of
such provision in the particular jurisdiction in which such adjudication is
made, and the balance of this Agreement shall remain in effect.
Section 4.12. Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of any provision of this Agreement.
Section 4.13. Pronouns. Any masculine personal pronoun shall be
considered to mean the corresponding feminine or neuter personal pronoun, as the
context requires.
Section 4.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
674683.23
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<PAGE>
Section 4.15. Governing Law. This Agreement shall be governed by and
con strued in accordance with the laws of the State of Delaware, without giving
effect to the princi ples of the conflict of laws thereof.
Section 4.16. No Restriction on Transferability. Nothing in this
Agreement shall restrict the ability of any of the parties to this Agreement to
sell or otherwise transfer any shares of Common Stock, Preferred Stock or other
securities of the Company, nor shall a purchaser or other transferee of any
Capital Stock sold or transferred by a signatory hereto be subject to any of the
obligations created hereby unless such purchaser or transferee has agreed in
writing, for the benefit of all parties to this Agreement, to be so bound.
Section 4.17. Whippoorwill Obligations Several and Not Joint. With
respect to any obligations hereunder assumed by any Whippoorwill Account, such
obligations shall be several and not joint and shall be limited to the
percentage held by such Whippoorwill Account of the total Common Equivalent
Shares held by all such Whippoorwill Accounts, and no such Whippoorwill Account
shall be liable for any obligation of any other Whippoorwill Account.
674683.23
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
- -------------------------------
Avi Arad
- -------------------------------
Mark Dickstein
DICKSTEIN & CO., L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
-------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN FOCUS FUND L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
-------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN INTERNATIONAL LIMITED
By: Dickstein Partners Inc.
By:
-------------------------------
Name: Alan S. Cooper
Title: Vice President
674683.23
<PAGE>
ELYSSA DICKSTEIN, JEFFREY SCHWARZ
AND ALAN COOPER AS TRUSTEES
U/T/A/D 12/27/88, MARK DICKSTEIN,
GRANTOR
By:
-------------------------------
Alan S. Cooper
Trustee
MARK DICKSTEIN AND ELYSSA
DICKSTEIN, AS TRUSTEES OF THE
MARK AND ELYSSA DICKSTEIN
FOUNDATION
By:
-------------------------------
Mark Dickstein
Trustee
- -------------------------------
Elyssa Dickstein
- -------------------------------
Isaac Perlmutter
ISAAC PERLMUTTER T.A.
By:
-------------------------------
Isaac Perlmutter
Trustee
THE LAURA & ISAAC PERLMUTTER FOUNDATION, INC.
By:
-------------------------------
Name: Isaac Perlmutter
Title: President
674683.23
<PAGE>
OBJECT TRADING CORP.
By:
-------------------------------
Name: Isaac Perlmutter
Title: President
ZIB INC.
By:
-------------------------------
Name: Isaac Perlmutter
Title: President and Chief
Executive Officer
THE CHASE MANHATTAN BANK
By:
-------------------------------
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By:
-------------------------------
Name: Michael J. Petrick
Title: Managing Director
674683.23
<PAGE>
WHIPPOORWILL ASSOCIATES, INCORPORATED, as
agent of and/or general partner for
the accounts listed on Schedule 1 hereto
By:
-------------------------------
Name: Shelley Greenhaus
Title: Managing Director
TOY BIZ, INC.
By:
-------------------------------
Name: Joseph M. Ahearn
Title: President and Chief Executive
Officer
674683.23
<PAGE>
Schedule 1
<TABLE>
<CAPTION>
Common Common Share
Fund/Account Shares Preferred Shares Equivalents
<S> <C> <C> <C>
The President and Fellows of
Harvard College 484,997 551,300 1,057,776
The Rockefeller Foundation 121,546 208,495 338,164
Vega Partners II, L.P. 137,455 234,589 381,183
Vega Partners III, L.P. 317,587 543,269 882,022
Vega Partners IV, L.P. 200,821 342,659 556,830
Vega Offshore Fund Trust 86,108 138,552 230,058
Whippoorwill Profit Sharing Plan 1,890 2,717 4,712
Total 1,350,404 2,021,581 3,450,745
</TABLE>
674683.23
EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
October 1, 1998, is entered into by and among TOY BIZ, INC., a Delaware
corporation (the "Company"), and the undersigned stockholders (each, a "Buyer,"
and collectively, the "Buyers").
RECITALS:
WHEREAS, the Buyers have entered into either (i) a Stock
Purchase Agreement, dated as of October 1, 1998 (the "Stock Purchase Agreement")
with the Company or (ii) have executed a Subscription Election Form (the
"Subscription Election Forms") with the Company, pursuant to which the Company
is selling to Buyers, and Buyers are purchasing from the Company, 9,000,000
shares (the "Shares") of the Company's 8% cumulative convertible exchangeable
preferred stock, par value $0.01 per share (the "Preferred Stock");
WHEREAS, the Buyers are requiring the Company to enter into
this Agreement in connection with the Stock Purchase Agreement and the
Subscription Election Forms and as a condition to the purchase of the Shares by
the Buyers;
WHEREAS, pursuant to the Fourth Amended and Restated Joint
Plan of Reorganization Plan Proposed by the Secured Lenders and the Company. In
Re: Marvel Entertainment Group, Inc. et al (case No. 97-638-RRM) in the United
States District Court for the District of Delaware (the "Plan"), those Buyers
who are Secured Lenders (as defined in the Plan) will receive shares of
Preferred Stock (the "Plan Preferred Shares") and shares of Common Stock (as
herein defined) (the "Plan Common Shares") in respect of their Allowed Fixed
Senior Secured Claims (as defined in the Plan);
WHEREAS, the Board of Directors of the Company has authorized
the officers of the Company to execute and deliver this Agreement in the name
and on behalf of the Company;
NOW, THEREFORE, in consideration of these premises and the
mutual promises herein contained, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions.
Business Day: Any Monday, Tuesday, Wednesday, Thursday or Friday that
is not a day on which banking institutions in the City of New York are
authorized by law, regulation or executive order to close.
703450.15
<PAGE>
Common Stock: The common stock, par value $0.01 per share, of the
Company or any securities issued in exchange therefor in any recapitalization,
reclassification, merger, consolidation or similar transaction.
Debentures: The 8% Convertible Subordinated Voting Debentures of the
Company.
Effective Date: The Consummation Date (as defined in the Plan of
Reorganization).
Exchange Act: The Securities Exchange Act of 1934, as amended from time
to time, or any successor statute, and the rules and regulations of the SEC
thereunder, all as in effect at the time.
Holder: Each of the Buyers and any other Person that becomes an owner
of Registrable Securities; provided, however, that no Person shall become a
Holder unless such Person has executed and delivered to the Company, an
agreement, in the form of Annex A hereto, to be bound by the provisions of this
Agreement.
Person: An individual, partnership, corporation, limited liability
company, joint venture trust or unincorporated organization, a government or
agency or political subdivision thereof or any other entity.
Plan of Reorganization: The Fourth Amended Joint Plan of Reorganization
filed by the Secured Lenders and by the Company, as the same may be amended or
modified.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by a prospectus supplement with respect to the terms of
the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications or registrations (or the
obtaining of exemptions therefrom) of the Registrable Securities), printing
expenses (including expenses of printing Prospectuses), messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
fees and disbursements of its counsel and its independent certified public
accountants (including the expenses of any special audit or "comfort" letters
required by or incident to such performance or compliance), securities acts
liability insurance (if the Company elects to obtain such insurance), fees and
expenses of any special experts retained by the Company in connection with any
registration hereunder, and fees and expenses of other Persons retained by the
Company; provided, however, that
703450.15
2
<PAGE>
Registration Expenses shall not include any underwriting discounts, commissions
or fees attributable to the sale of the Registrable Securities.
Registrable Securities: (i) The Shares, (ii) Plan Preferred Shares,
(iii) any shares of Common Stock into which the Shares or the Plan Preferred
Shares may be converted from time to time, (iv) any Debentures issued in
exchange for the Shares, or the Plan Preferred Shares, (v) if the Debentures are
issued, any shares of Common Stock issued or issuable upon conversion of the
Debentures, (vi) the Plan Common Shares, (vii) all other shares of Common Stock
held by any of the Buyers as of the date hereof and (viii) any other securities
issued or issuable as a result of or in connection with any stock dividend,
stock split or reverse stock split, combination, recapitalization,
reclassification, merger or consolidation, exchange or distribution in respect
of the securities referred to in clauses (i) through (v) above; provided,
however, that any Registrable Security shall cease to be such if (A) such
Registrable Security shall have been transferred pursuant to an effective
Registration Statement or in compliance with Rule 144 or (B) such Registrable
Securities may be sold pursuant to section (k) of Rule 144.
Registration Statement: Any registration statement of the Company,
including, without limitation, the Shelf Registration Statement, filed with the
SEC which provides for the registration for sale or other transfer of the
Registrable Securities, including the Prospectus included therein, all
amendments and any supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar successor rule thereto that may
be promulgated by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar successor rule thereto that may
be promulgated by the SEC.
SEC: The United States Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulation of the SEC
thereunder, all as in effect from time to time.
Underwritten Offering: A registered offering in which securities are
sold to one or more underwriters on a firm commitment basis for reoffering to
the public.
703450.15
3
<PAGE>
Whippoorwill Account: Each partnership or account which enters into
this Agreement as a Buyer through execution and delivery hereof by Whippoorwill
Associates, Incorporated as its agent or General Partner.
2. Registration under the Securities Act
(a) Filing and Effectiveness. As soon as reasonably
practicable following the date hereof (and in no event later than fifty (50)
days after the Effective Date), the Company shall file with the SEC a shelf
registration statement under the Securities Act registering the resale of the
Registrable Securities by the Holders (the "Shelf Registration Statement"). The
Company shall use its reasonable best efforts to cause the Shelf Registration
Statement to be declared effective as soon as practicable after the filing
thereof, and thereafter to keep it continually effective until such time as
there shall cease to be outstanding any Registrable Securities.
(b) Subsequent Holders. If any Person becomes a Holder of
Registrable Securities that were included in the Shelf Registration Statement
subsequent to the time that the Shelf Registration Statement became effective,
the Company shall add such Holder to the Shelf Registration Statement, on a
timely basis, through a post-effective amendment or a supplement to the
Prospectus, as shall be necessary in accordance with the rules of the SEC under
the Securities Act to include such Holder as a selling securityholder in a
distribution under the Shelf Registration Statement.
(c) Methods of Distribution. The Registrable Securities may be
sold or distributed under the Shelf Registration Statement directly by the
Holders as principal or through one or more brokers, dealers or agents from time
to time in one or more transactions, including, without limitation, (i) on any
securities exchange (or quotation system operated by a national securities
association) on which the Registrable Securities are then listed, (ii) in
private transactions, (iii) in block trades, or (iv) though the writing of
options (whether such options are listed on an exchange or otherwise) on, or
settlement of short sales of, the Registrable Securities in compliance with
applicable law. The Holders may not sell or distribute the Registrable
Securities under the Shelf Registration Statement in an Underwritten Offering
except as provided in Section 3 hereof.
Nothing in this Agreement shall in any way restrict any Holder
from selling or otherwise transferring the risk or benefit of ownership of
securities of the Company in any manner not provided in this Agreement in
accordance with the Securities Act and other applicable law.
3. Piggyback Registration.
(a) Piggyback Registration. If the Company at any time
proposes to effect an Underwritten Offering of any class of its equity
securities for its own account or for the
703450.15
4
<PAGE>
account of a holder of securities of the Company pursuant to registration rights
granted by the Company (a "Requesting Shareholder"), whether under a previously
effective shelf registration statement or a registration statement filed for the
purpose of such Underwritten Offering (a "Piggyback Registration"), then the
Company shall in each case give written notice of such proposed offering to the
Holders at least ten (10) Business Days before the proposed date of filing of
such registration statement (or, in the case of a previously effective shelf
registration statement, the filing of any amendment or supplement to such shelf
registration statement to permit such Underwritten Offering), and such notice
shall offer to all Holders the opportunity to have any or all of the Registrable
Securities then held by the Holders included in such Underwritten Offering. Each
Holder desiring to have its Registrable Securities offered under this Section
shall so advise the Company in writing within five (5) Business Days after the
date of receipt of the Company's aforesaid notice (which request shall set forth
the amount of Registrable Securities proposed to be offered), and the Company
shall cause to be included in such Underwritten Offering all such Registrable
Securities so requested to be included therein, provided that the Holders
thereof execute and deliver the underwriting agreement and other customary
documents related to such offering including, if requested by the managing
underwriter or underwriters, selling stockholder questionnaires, powers of
attorney and custody agreements.
(b) Cutback. (i) Priority on Primary Registrations. If a
Piggyback Registration is an Underwritten Offering by the Company on a primary
basis (a "Primary Registration"), and the managing underwriters advise the
Company in writing that in their good faith opinion the amount of securities
requested to be included in such registration is sufficiently large as to be
likely to materially adversely affect the success of such offering, the Company
will include in such registration, to the extent such managing underwriters
advise the Company that such securities can be included in the Offering without
being likely to materially adversely affect the success of the Offering (i)
first, the securities the Company proposes to sell, and (ii) second, the
securities requested to be sold by any of the Holders and other holders of
securities of the Company exercising similar piggy-back registration rights with
respect to that Offering, pro rata, based on the number of securities requested
to be sold by the Holders and the holders.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration is an Underwritten Offering other than a Primary Registration, and
the managing underwriters advise the Company in writing that in their good faith
opinion the amount of securities requested to be included in such registration
is sufficiently large as to be likely to materially adversely affect the success
of such registration, the Company will include in such registration, to the
extent such managing underwriters advise the Company that such securities can be
included in the Offering without being likely to materially adversely affect the
success of the Offering (i) first, the securities requested to be included
therein by a Requesting Shareholder exercising demand registration rights, (ii)
second, the securities requested to be included therein by the Company and (iii)
third, as requested by any other Holders and other holders of securities of the
Company exercising similar piggy-back registration rights with respect to that
703450.15
5
<PAGE>
Offering, pro rata, based on the number of securities requested to be sold by
those Holders or holders.
4. Registration Procedures.
(a) General. In connection with the Company's registration
obligations pursuant to this Agreement, the Company shall:
(i) prepare and file with the SEC the Shelf
Registration Statement and such amendments and post-effective
amendments thereto as may be necessary to keep the Shelf Registration
Statement continuously effective for the time period set forth in
Section 2, including as required in accordance with Item 512(a) of
Regulation S-K under the Securities Act; provided that as soon as
practicable, but in no event later than three (3) Business Days before
the filing of any Registration Statement and any amendment thereto, any
related Prospectus or any amendment or supplement thereto (other than
any amendment or supplement made solely as result of incorporation by
reference of documents filed with the SEC subsequent to the filing of
such Registration Statement), the Company shall furnish to the Holders
of the Registrable Securities covered by such Registration Statement,
copies of all such documents proposed to be filed, which documents
shall be subject to the review of such Holders; not file any
Registration Statement or any amendment thereto or any Prospectus or
any supplement thereto (other than any amendment or supplement made
solely as a result of incorporation by reference of documents filed
with the SEC subsequent to the filing of such Registration Statement)
to which the Holders of a majority of the Registrable Securities shall
have reasonably objected in writing within (2) Business Days after
receipt of such documents to the effect that such Registration
Statement or amendment thereto or Prospectus or supplement thereto does
not comply in all material respects with the requirements of the
Securities Act; and comply with the provisions of the Securities Act
applicable to the Company with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus in accordance with this
Agreement;
(ii) notify the selling Holders of Registrable
Securities promptly (1) when a Registration Statement, Prospectus or
any Prospectus supplement or post-effective amendment has been filed,
and, with respect to any Registration Statement or post-effective
amendment, when it has become effective, (2) of any request by the SEC
for amendments or supplements to any Registration Statement or
Prospectus or for additional information, (3) of the issuance by the
SEC of any comments with respect to any filing, (4) of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (5) of any suspension
of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation
703450.15
6
<PAGE>
or threatening of any proceeding for such purpose and (6) of the
happening of any event which makes any statement of a material fact
made in any Registration Statement, Prospectus or any document
incorporated therein by reference untrue or which requires the making
of any changes in any Registration Statement, Prospectus or any
document incorporated therein by reference in order to make the
statements therein (in the case of any Prospectus, in the light of the
circumstances under which they were made) not misleading; and use
reasonable best efforts to obtain as promptly as practicable the
withdrawal of any order or other action suspending the effectiveness of
any Registration Statement or suspending the qualification or
registration (or exemption therefrom) of the Registrable Securities for
sale in any jurisdiction;
(iii) promptly after the filing of any document which
is to be incorporated by reference into a Registration Statement or
Prospectus, provide without charge copies of such document to the
Holders of the Registrable Securities covered thereby;
(iv) furnish to the selling Holders of Registrable
Securities, without charge, at least one manually signed or "edgarized"
copy, and as many conformed copies as may reasonably be requested, of
the then effective Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(v) deliver to the selling Holders, without charge,
as many copies of the then effective Prospectus (including each
prospectus subject to completion) and any amendments or supplements
thereto as such Persons may reasonably request;
(vi) use reasonable best efforts to register or
qualify or cooperate with the selling Holders and their respective
counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any selling Holder reasonably
requests in writing and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the then effective
Registration Statement; provided, however, that the Company will not be
required to (1) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (vi)
or (2) subject itself to general taxation in any such jurisdiction;
(vii) cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the Holders may
request at least
703450.15
7
<PAGE>
two (2) Business Days prior to any sale of Registrable Securities to
the underwriters, if any;
(viii) upon the occurrence of any event contemplated
by clause (6) of paragraph (ii) above, promptly prepare a supplement or
post-effective amendment to the Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading;
(ix) cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange (or
quotation system operated by a national securities association) on
which identical securities issued by the Company are then listed, and
enter into customary agreements to effect that listing, including, if
necessary, a listing application in customary form, and provide a
transfer agent for such Registrable Securities;
(x) if the Registrable Securities are to be sold in
an Underwritten Offering pursuant to Section 3 or in a block trade or
other private placement: (1) obtain an opinion of counsel covering
matters that are no more extensive in scope than would be customarily
covered in opinions obtained in such types of transactions by issuers
with similar market capitalization and reporting and financial
histories; (2) obtain a "cold comfort" letter from the independent
public accountants of the Company and covering matters that are no more
extensive in scope than would be customarily covered in "cold comfort"
letters and updates obtained in secondary Underwritten Offerings by
issuers with similar market capitalization and reporting and financial
histories, provided, however, that the letter described in this clause
(2) shall only be required in connection with a block trade or other
private placement to the extent such letters are being issued in
respect of such types of transactions under then prevailing accounting
practices and to the extent the Company's independent public
accountants do not have a policy against issuing such letters in
connection with such offerings; and (3) deliver a certificate of a
senior executive officer of the Company to cover matters no more
extensive in scope than those matters customarily covered in officer's
certificates delivered in connection with Underwritten Offerings by
issuers with similar market capitalization and reporting and financial
histories;
(xi) provide a CUSIP number for the Registrable
Securities no later than the effective date of a Registration Statement
applicable thereto;
(xii) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC relating to
such registration and the
703450.15
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<PAGE>
distribution of the securities being offered and make generally
available to its securities holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than 60
days after the end of any 12-month period (or 90 days, if such period
is a fiscal year) commencing at the end of any fiscal quarter in which
the Registrable Securities are sold in an Underwritten Offering, block
trade or other private placement, which earnings statements shall cover
such 12-month periods;
(xiii) cooperate and assist in any filings required
to be made with the National Association of Securities Dealers, Inc.;
and
(xiv) make available for inspection by
representatives of the Holders of the Registrable Securities, and any
attorneys or accountants retained by the Holders, all financial and
other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors and employees to
supply all information reasonably requested by, and to reasonably
cooperate with, any such representative, attorney or accountant in
connection with such registration, and otherwise to cooperate fully in
connection with any due diligence investigation, including making
reasonably available its officers during ordinary business hours, and
permitting discussions with the independent public accountants who have
certified the Company's most recent annual financial statements, in
each case to the extent necessary to enable any Holder to conduct a
"reasonable investigation" for purposes of Section 11(a) of the
Securities Act; provided, however, that such representatives, attorneys
or accountants enter into a confidentiality agreement, in customary
form and substance reasonably satisfactory to the Company, prior to the
release or disclosure to them of any such information, records or
documents.
(b) Holder Information. The Company may require each selling
Holder to furnish to the Company such information regarding such Holder and the
distribution of Registrable Securities to be sold by such Holder as the Company
may from time to time reasonably request in writing.
(c) Occurrence of Certain Events. Each Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Subsection (a)(ii)(4), (5) or
(6) above, such Holder will forthwith refrain from disposing or discontinue
disposition of Registrable Securities pursuant to the then current Prospectus
(but, in the case of an event described in Subsection (a)(ii)(5), only in the
affected jurisdiction(s)) until such Holder is advised in writing by the Company
that the use of the Prospectus may be resumed. The Company shall use its best
efforts to limit the duration of any discontinuance with respect to the
disposition of Registrable Securities pursuant to this paragraph.
(d) Additional Procedures. If the Holders become
entitled, pursuant to an event described in clause (viii) of the definition of
Registrable Securities, to receive any
703450.15
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securities in respect of Registrable Securities that were already included in
the Shelf Registration Statement subsequent to the date the Shelf Registration
Statement is declared effective, and the Company is unable under the securities
laws to add such securities to the Shelf Registration Statement, the Company, as
promptly as reasonably practicable, shall file, in accordance with the
procedures more particularly set forth in this Section, an additional Shelf
Registration Statement with respect to any such Registrable Securities. The
Company shall use its reasonable best efforts to have any such additional
Registration Statement declared effective as promptly as reasonably practicable
after such filing and to keep such additional Shelf Registration Statement
continuously effective during the period specified in Section 2.
5. Holdback Agreements.
(a) Hold-Back Election. Subject to subsection (c) and the
final sentence of this Subsection (a), in the case of any Underwritten Offering
by the Company, whether for its own account or for the account of a holder of
securities of the Company pursuant to registration rights granted by the
Company, each Holder agrees, if and to the extent requested in writing by the
managing underwriter or underwriters administering such offering as promptly as
reasonably practicable prior to the commencement of the 10-day period referred
to below (a "Hold-Back Election"), not to effect any public sale or distribution
of securities of the Company except as part of such Underwritten Offering,
during the period beginning ten (10) days prior to the closing date of such
underwritten offering and during the period ending on the earlier of (i) sixty
(60) days after such closing date and (ii) the date such sale or distribution is
permitted by such managing underwriter or underwriters, provided that, if and to
the extent it is reasonable to do so, the Company will request of the managing
underwriter or underwriters to permit such sale or distribution prior to the
date permitted under clause (i) above.
(b) Material Development Election. Subject to Subsection (c),
the Company shall be entitled, for a period of time not to exceed forty-five
(45) consecutive days, to require that the Holders refrain from effecting any
distribution of their Registrable Securities pursuant to the Shelf Registration
Statement if the chief executive officer of the Company determines in his
reasonable good faith judgment that, in accordance with his understanding of the
disclosure requirements of applicable securities law, such distribution would
require disclosure of any financing (other than an underwritten secondary
offering of any securities of the Company), acquisition, disposition, corporate
reorganization or other transaction or development involving the Company or any
subsidiary of the Company that is or would be material to the Company and that,
in the reasonable good faith business judgment of such chief executive officer,
such disclosure would not at that time be in the best interests of the Company
(a "Material Development Election"). The Company shall, as promptly as
practicable, give the Holders written notice of any such Material Development
Election. If the Holders have been required to refrain from disposing of their
Registrable Securities as a result of a Material Development Election, the
Company shall, as promptly as practicable following the determination that the
Holders may recommence such sales, notify such Holders in writing of such
determination (but in any event no later than the end of such 45-day period).
703450.15
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(c) Limitation. In no event shall the restrictions under
Subsection (a) or Subsection (b), pursuant to one or more Hold-Back Elections or
Material Development Elections, remain in effect for more than ninety (90) days
in the aggregate in any calendar year.
6. Registration Expenses
The Company shall pay all Registration Expenses in connection with the
registration, offering and sale of the Registrable Securities pursuant to this
Agreement. The Holders shall pay any underwriting discounts, commissions or
fees, fees and expenses of their counsel and all other expenses incurred by them
which are attributable to the offering and sale of any Registrable Securities in
accordance with this Agreement.
7. Rule 144
The Company shall use its reasonable best efforts to make publicly
available, pursuant to Rule 144, such information as is necessary to enable the
Holders to make sales of Registrable Securities pursuant to that Rule. The
Company shall use its reasonable best efforts to file timely with the SEC all
documents and reports required of the Company under the Exchange Act. The
Company shall furnish to any Holder, upon request, a written statement executed
on behalf of the Company as to compliance with the current public information
requirements of Rule 144.
8. Indemnification.
(a) Indemnification by The Company. The Company agrees to indemnify, to
the extent permitted by law (or if indemnification is held by a court of
competent jurisdiction to be unavailable, to contribute to the amount paid or
payable by), each Holder and (as applicable) its officers and directors and each
person or entity who controls such Holder (within the meaning of the Securities
Act) and each person or entity which participates as or may be deemed to be an
underwriter in the offering or sale of such securities against all losses,
claims, damages, liabilities and expenses to which the Holders may be subject
under the Securities Act or any other statute or common law, insofar as such
losses, claims, damages, liabilities and expenses arise out of or are based upon
(i) any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (in the case of a prospectus, always in light of the
circumstances under which the statements are made) or (iii) any violation by the
Company of the Securities Act or any state securities law, "blue sky" law, or
any other law, applicable to the Company in connection with such registration,
qualification, or compliance; provided, however, that the Company will not be
liable to any holder in such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (a) any untrue
statement or omission made in such
703450.15
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Registration Statement or amendment or supplement thereto in reliance upon and
in conformity with the written information furnished to the Company by such
Holder expressly for use in the registration statement or (b) any untrue
statement or alleged untrue statement of a material fact contained in, or any
omission or alleged omission of a material fact from, a Registration Statement
if (x) such Registration Statement had been later amended or supplemented in a
manner that would correct the untrue statement or alleged untrue statement,
omission or alleged omission, which is the basis of the loss, liability, claim,
damage or expense for which indemnification is sought, (y) a copy of such
amendment or supplement had been timely provided to the Holder and had not been
sent to or given to a purchaser at or prior to confirmation of sale to such
purchaser and the Holder shall have been under an obligation to deliver such
amendment or supplement, and (z) there would have been no such liability but for
such failure to deliver such prospectus by the Holder. The Company will also
indemnify underwriters participating in the distribution, their officers,
directors, employees, partners and agents, and each Person who controls such
underwriters (within the meaning of the Securities Act), to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities, if so requested.
(b) Indemnification by the Holders. Each Holder agrees to indemnify, to
the extent permitted by law (or if indemnification is held by a court of
competent jurisdiction to be unavailable, to contribute to the amount paid or
payable by), the Company, its directors and officers and each person or entity
who controls the Company (within the meaning of the Securities Act) and each
person or entity which participates as or may be deemed to be an underwriter in
the offering or sale of such securities against any losses, claims, damages,
liabilities and expenses resulting from (i) any untrue or alleged untrue
statement of material fact contained in the Registration Statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or (ii)
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, (in the case
of a prospectus, always in light of the circumstances under which the statements
are made) or (iii) any violation by the Company of the Securities Act or any
state securities law, "blue sky" law, or any other law, applicable to the
Company in connection with such registration, qualification, or compliance, but
only to the extent that such loss, claim, damage, liability or expense arises
out of or is based upon any untrue statement or omission made in such
registration statement or amendment or supplement thereto or any document in
reliance upon and in conformity with the written information furnished to the
Company by such Holder expressly for use in the registration statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification;
provided, however, that failure to give such notice will not prejudice such
person's or entity's right to indemnification from the indemnifying party,
except as to any losses suffered by such Person which are attributable to such
Person's failure to promptly give such notice to such indemnifying party and
(ii) (A) have the right to assume the defense of any claim with respect to which
it seeks indemnification and
703450.15
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<PAGE>
with respect to which it has given the notice required by clause (i) of this
Subsection if (x) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to the indemnified
party in a timely manner or (y) in the reasonable judgment of such Person, based
upon advise of its counsel, a conflict of interest may exist between such person
and the indemnifying party with respect to such claims (in which case, if such
Person notifies the indemnifying party in writing that such Person elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such Person) or (B) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. The indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim (as well as one local
counsel in each relevant jurisdiction), unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim. The
indemnifying party will not consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the indemnified party of a release from all
liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in
this Section is unavailable to an indemnified party or insufficient to hold it
harmless as contemplated by this Section, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the indemnified party
in connection with the statements or omissions that resulted in such loss,
claim, damage or liability, as well as any other relevant equitable
considerations, provided, however, that no indemnifying Holder shall be required
to contribute an amount greater than the dollar amount of the net proceeds
received by such indemnifying Holder with respect to the sale of the Registrable
Securities giving rise to such indemnification obligation. The relative fault of
any indemnifying or indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by such indemnifying or indemnified party or its affiliates or
representatives, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Subsection were determined by (i) pro rata allocation (even if
all Holders or any agents for the Holders or any underwriters of the Registrable
Securities, or all of them, were treated as one entity for such purpose), or
(ii) by any other method that does not take into account the equitable
consideration referred to in this Subsection. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to above shall be deemed to
include any legal or other
703450.15
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<PAGE>
fees or expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action, proceeding or claim. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentations.
(e) The indemnification and contribution provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling person or entity of such indemnified party and will survive the
transfer of securities and the termination of this Agreement.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into and
will not on or after the date of this Agreement enter into any agreement which
is inconsistent with the rights granted in this Agreement to the Holders or
which otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, without the consent in writing of the Company and all affected Holders.
(c) Notices. All notices, requests, demands, deliveries and other
communications (collectively, "Notices") that are required or may be given under
this Agreement shall be in writing. All Notices shall be deemed to have been
duly given or made: if by hand, immediately upon delivery; if by telecopier or
similar device, immediately upon sending, provided notice is sent on a business
day during the hours of 9:00 a.m. and 6:00 p.m. at the location of the party
receiving the Notice, but if not, then immediately upon the beginning of the
first business day after being sent; if by Federal Express, United States Postal
Service, Express Mail or any other reputable overnight delivery service, on the
scheduled delivery date thereof; and if mailed by certified mail, return receipt
requested, ten Business Days after mailing. Notwithstanding the foregoing, with
respect to any Notice given or made by telecopier or similar device, such Notice
shall not be effective unless and until (i) the telecopier or similar device
being used prints a written confirmation of the successful completion of such
communication by the party sending the Notice, and (ii) a copy of such Notice is
deposited in first class mail to the appropriate address for the party to whom
the Notice is sent. In addition, notwithstanding the foregoing, a Notice of a
change of address by a party hereto shall not be effective until received by the
party to whom such Notice of a change of address is sent. All notices are to be
given or made to the parties at the following addresses (or to such other
address as either party may designate by Notice in accordance with the
provisions of this Section):
703450.15
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<PAGE>
i. if to any of the Holders, to its address set forth on
Schedule 1 hereto or on the Secured Lender Execution Pages attached:
ii. If to Toy Biz, to
Toy Biz, Inc.
685 Third Avenue
New York, New York 10017
Attention: Secretary
Facsimile No.: 212-682-5272
Confirm: 212-558-5100
with a copy to
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Lawrence Mittman, Esq.
Facsimile No.: 212-856-7807
Confirm: 212-856-7000
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
(g) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(h) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective
703450.15
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successors and assigns of the parties hereto whether so expressed or not. In
addition, whether or not any express assignment has been made, the provisions of
this Agreement which are for the benefit of Holders are also for the benefit of,
and enforceable by, any subsequent holder of Registrable Securities.
(i) Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically or to recover
damages or to exercise any other remedy available to it at law or in equity. The
foregoing rights and remedies shall be cumulative and the exercise of any right
or remedy provided herein shall not preclude any Person from exercising any
other right or remedy provided herein. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(j) Jurisdiction; Forum. Each party hereto consents and submits to the
non-exclusive jurisdiction of any state court sitting in the County of New York
or federal court sitting in the Southern District of the State of New York in
connection with any dispute arising out of or relating to this Agreement. Each
party hereto waives any objection to the laying of venue in such courts and any
claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of or
relating to this Agreement may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified copy of such
judgment being conclusive evidence of the fact and amount of such judgment. Each
party hereto agrees that personal service of process may be effected by any of
the means specified in Subsection (c), addressed to such party. The foregoing
shall not limit the rights of any party to serve process in any other manner
permitted by law.
(k) Whippoorwill Obligations Several and Not Joint. With respect to any
obligations hereunder assumed by any Whippoorwill Account, such obligations
shall be several and not joint and shall be limited to the percentage held by
such Whippoorwill Account of the total Registrable Shares held by all such
Whippoorwill Accounts, and no such Whippoorwill Account shall be liable for any
obligation of any other Whippoorwill Account.
703450.15
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TOY BIZ, INC.
By:
-----------------------------------------
Name: Joseph M. Ahearn
Title:President and Chief Executive Officer
DICKSTEIN & CO., L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
-----------------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN FOCUS FUND L.P.
By: Dickstein Partners, L.P.
By: Dickstein Partners Inc.
By:
-----------------------------------------
Name: Alan S. Cooper
Title: Vice President
DICKSTEIN INTERNATIONAL LIMITED
By: Dickstein Partners Inc.
By:
-----------------------------------------
Name: Alan S. Cooper
Title: Vice President
703450.15
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ELYSSA DICKSTEIN, JEFFREY SCHWARZ
AND ALAN COOPER AS TRUSTEES
U/T/A/D 12/27/88, MARK DICKSTEIN,
GRANTOR
By:
-----------------------------------------
Alan S. Cooper
Trustee
MARK DICKSTEIN AND ELYSSA
DICKSTEIN, AS TRUSTEES OF THE
MARK AND ELYSSA DICKSTEIN
FOUNDATION
By:
-----------------------------------------
Mark Dickstein
Trustee
-----------------------------------------
Elyssa Dickstein
OBJECT TRADING CORP.
By:
-----------------------------------------
Name: Isaac Perlmutter
Title: President
WHIPPOORWILL/MARVEL OBLIGATIONS
TRUST - 1997
By: Whippoorwill Associates, Inc.,
solely in its capacity as investment
advisor for the Whippoorwill/Marvel
Obligations Trust - 1997, and not in
its individual capacity
By:
-----------------------------------------
Name: Shelley Greenhaus
Title: Managing Director
703450.15
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WHIPPOORWILL ASSOCIATES, INCORPORATED, as
agent for and/or general partner for the
accounts listed on Schedule 1 hereto
By:
-----------------------------------------
Name: Shelley Greenhaus
Title: Managing Director
703450.15
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Schedule 1
----------
Name and Address
- ----------------
Dickstein Parties:
DICKSTEIN & CO., L.P.
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
DICKSTEIN FOCUS FUND L.P.
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
DICKSTEIN INTERNATIONAL
LIMITED
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
ELYSSA DICKSTEIN, JEFFREY
SCHWARZ AND ALAN COOPER AS
TRUSTEES U/T/A/D 12/27,88,
MARK DICKSTEIN, GRANTOR
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
MARK DICKSTEIN AND ELYSSA
DICKSTEIN, AS TRUSTEES OF THE
MARK AND ELYSSA DICKSTEIN
FOUNDATION
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
Attention: Alan Cooper
703450.15
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Name and Address
- ----------------
Elyssa Dickstein
c/o Dickstein Partners, Inc.
660 Madison Avenue
New York, New York 10021
OBJECT TRADING CORP.
P. O. Box 1028
Lake Worth, Florida
WHIPPOORWILL/MARVEL
OBLIGATIONS TRUST -- 1997
c/o Whippoorwill Associates, Incorporated
11 Martine Avenue
White Plains, NY 10606
WHIPPOORWILL ASSOCIATES,
INCORPORATED, as agent for or
general partner of each account or
partnership listed on the Addendum
to Schedule 1 11 Martine Avenue
White Plains, NY 10606
703450.15
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Addendum to Schedule 1
----------------------
Fund/Account
- ------------
President and Fellows of Harvard College
The Rockefeller Foundation
Vega Partners II, L.P. Vega Partners III, L.P.
Vega Partners IV, L.P.
Vega Offshore Fund Trust
Whippoorwill Profit Sharing Plan
Saranac Partners, L.P.
25307 Partners
Vega Partners, L.P.
703450.15
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SECURED LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and
agreeing to be bound by the Registration Rights Agreement, dated October 1,
1998, by and among Object Trading Corp., Toy Biz, Inc., certain affiliates of
Dickstein Partners, Inc., Whippoorwill Marvel Obligations Trust - 1997 and
certain purchasers of Preferred Stock who have executed subscription election
forms with the Chase Manhattan Bank.
NAME OF SECURED LENDER
By:
---------------------------------
Name:
Title:
Address for Notices:
-------------------------
-------------------------
-------------------------
Telecopy No.
-------------
703450.15
