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As filed with the Securities and Exchange Commission on December 23, 1998
Registration Statement No. 333-68019
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MARVEL ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3711775
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
685 Third Avenue
New York, New York 10017
(212) 588-5100
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Morton E. Handel
Chairman of the Board
685 Third Avenue
New York, New York 10017
(212) 588-5100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------
copy to:
John N. Turitzin, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
(212) 856-7000
Approximate date of commencement of proposed sale to public: From
time to time or at one time after the effective date of this registration
statement as determined by market conditions.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
782128.2
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Prospectus
MARVEL ENTERPRISES, INC.
36,642,683 Shares of Common Stock
15,620,234 Shares of 8% Cumulative Convertible
Exchangeable Preferred Stock
All of the shares offered under this
Prospectus are offered by selling stockholders
and not by Marvel Enterprises, Inc.
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We are a leading entertainment-based marketing and licensing company
operating in the licensing, comic book publishing, toy, trading card and
children's activity sticker businesses on a worldwide basis.
This prospectus relates to the offer and sale from time to time by
the persons listed under "Selling Stockholders" of up to 36,642,683 shares of
our common stock and 15,620,234 shares of our 8% Cumulative Convertible
Exchangeable Preferred Stock. In this prospectus, our 8% Cumulative Convertible
Exchangeable Preferred Stock is often referred to as "8% preferred stock." The
common stock offered through this prospectus includes shares that may be issued
upon conversion of 8% preferred stock. The common stock is listed for trading on
the New York Stock Exchange under the symbol "MVL". The 8% preferred stock is
not listed for trading on any national securities exchange or on the Nasdaq
Stock Market.
The selling stockholders may offer the shares of common stock and/or
8% preferred stock covered by this prospectus from time to time. The selling
stockholders have not yet chosen the methods by which they will determine the
offering prices of any of those shares that they choose to sell. The selling
stockholders will pay any brokerage fees or commissions relating to the sales by
them. See "Plan of Distribution." The selling stockholders may choose to sell
all of their shares, to sell only a portion of their shares, or to sell none of
their shares.
We will not receive any of the proceeds of sales by the selling
stockholders. We are paying the costs of preparing and filing the Registration
Statement that includes this prospectus.
See "Risk Factors" beginning on page 5 for certain factors relevant
to an investment in our common stock and/or 8% Preferred Stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
December 23, 1998
782128.2
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TABLE OF CONTENTS
Page
Prospectus Summary............................................................3
Risk Factors..................................................................5
Ratio of Combined Fixed Charges and
Preference Dividends to Earnings..........................................11
Forward-Looking Statements...................................................12
Federal Income Tax Considerations............................................13
Use of Proceeds..............................................................16
Selling Stockholders.........................................................17
Plan of Distribution.........................................................22
Where You Can Find More Information..........................................23
Experts......................................................................24
Legal Matters................................................................24
782128.2
3
<PAGE>
PROSPECTUS SUMMARY
Because this is a summary, it does not contain all the details that
may be important to you. You should read this entire prospectus carefully before
you invest.
Marvel Enterprises, Inc.
We are a leading entertainment-based marketing and licensing company
operating in the licensing, comic book publishing, toy and trading card
businesses. In addition, we currently operate a children's activity sticker
businesses which we do not intend to continue. Our proprietary library of
intellectual property is comprised of over 3,500 characters (the "Marvel
Characters"). We believe that this library, which includes characters such as
Spider- Man, X-Men, Hulk, Fantastic Four, Captain America and Iron Man, is one
of the most recognizable libraries in the entertainment industry.
Our company was called "Toy Biz, Inc." until October 1, 1998. On that
day, we acquired Marvel Entertainment Group, Inc., which had been in bankruptcy
since December 1996, and changed our name to Marvel Enterprises, Inc. When we
use the term "Marvel Entertainment" in this prospectus, we are referring to
Marvel Entertainment Group. The term "Marvel" refers to our company, Marvel
Enterprises, Inc. We acquired Marvel Entertainment by means of a merger (between
Marvel Entertainment and a wholly owned subsidiary of ours), and that is the
merger that is referred to whenever this prospectus uses the term, "the merger."
The merger was part of a plan of reorganization for Marvel Entertainment
(referred to in this prospectus as "the Marvel Entertainment plan of
reorganization") that was proposed, and ultimately confirmed by the court, in
Marvel Entertainment's bankruptcy case.
We operate through the following five business divisions:
1. Marvel Comics. We believe that Marvel Comics is one of the leading
publishers of comic books and one of the largest licensors of proprietary
characters in the world. Marvel Comics has been publishing comic books based
upon the Marvel Characters since 1939, and has consistently published some of
the world's most popular comic book titles.
2. Toy Biz. Toy Biz designs, develops, markets and distributes, on a
worldwide basis, both innovative and traditional toys in the boys', girls',
preschool, activity and electronic toy categories. Toy Biz's products are based
on popular entertainment properties, including the Marvel Characters, Sony's
Godzilla and World Championship Wrestling (WCW/NwO), and consumer brand names
like Gerber.
3. Marvel Media. We pursue our strategy of maximizing media exposure
for the Marvel Characters primarily through Marvel Media. Marvel Media seeks to
establish a broad array of licensing relationships, including licenses with
studio and network partners for television, motion picture and home video
projects.
4. Fleer/SkyBox. We believe that Fleer/SkyBox is the leading marketer
of sports and entertainment trading cards in the world.
5. Panini. We believe that Panini is the world leader in the
children's activity sticker market. Panini's sticker products focus on European,
World Cup and other soccer leagues and events as well as entertainment
properties. Panini also operates a Europe-based regional adhesive paper
business. We do not intend to continue the Panini business lines in light of
Panini's deficit in net tangible assets.
Our executive offices are located at 685 Third Avenue, New York, New
York 10017 and our telephone number is (212) 558-5100.
782128.2
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<PAGE>
Securities to be Offered
This prospectus relates to the offer and sale of two types of stock
in Marvel Enterprises: our common stock and our 8% preferred stock. Each share
of 8% preferred stock:
o can be converted by its owner into 1.039 shares of common stock;
o votes generally with the common stock as one class;
o has the same voting power as 1.039 common shares when it votes
with the common stock; and
o can be forced to convert into common stock beginning on October
1, 2001 if the trading price of the common stock is above a
certain dollar amount.
The shares of stock covered by this prospectus are not owned by
Marvel. Those shares are owned by stockholders listed in the section of the
prospectus called "Selling Stockholders." Those selling stockholders, not
Marvel, will be the sellers if and when any shares of stock are offered or sold
under this prospectus. The selling stockholders may sell their shares from time
to time, rather than all at once. The selling stockholders may choose to sell
all of their shares, to sell only a portion of their shares, or to sell none of
their shares. The sales prices are yet to be determined. The selling
stockholders will pay any brokerage fees or commissions relating to their sales.
See the section of the prospectus called "Plan of Distribution."
We will not receive any of the proceeds of sales by the selling
stockholders. We are paying the costs of preparing and filing the Registration
Statement that includes this prospectus.
A total of 36,642,683 shares of common stock and 15,620,234 shares of
8% preferred stock are covered by this prospectus.
Federal Income Tax Considerations
See "Federal Income Tax Considerations," which discusses certain U.S.
federal income tax consequences that may result from the purchase of the common
stock or the 8% preferred stock offered by this prospectus.
782128.2
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<PAGE>
RISK FACTORS
You should consider carefully the following risk factors together with all of
the other information included or incorporated by reference in this prospectus
before you decide to purchase shares of our common stock or 8% preferred stock.
This section includes or refers to certain forward-looking statements. You
should refer to the explanation of the qualifications and limitations on such
forward-looking statements discussed on page 3 of the prospectus.
Risks to Holders of Common Stock and 8% Preferred Stock Are Increased Because We
Have More than $200 Million of Indebtedness
Our indebtedness poses risks to holders of common stock and 8%
preferred stock. We have a lot of indebtedness. We have outstanding indebtedness
of approximately $200 million and have guaranteed $27 million of the
indebtedness of Panini, as discussed below. Our indebtedness consists of $200
million owed to UBS AG, Stamford Branch (the "Bridge Loan Facility") that was
used to fund the acquisition of Marvel Entertainment. In addition, we expect to
borrow under a new $50 million credit facility (the "New Credit Facility").
The amount of our indebtedness could have important consequences to
holders of our common stock and 8% preferred stock, including, but not limited
to, the following:
o our ability to borrow money or sell stock when we want to
for working capital, capital expenditures, acquisitions,
general corporate or other purposes may be limited;
o a substantial portion of whatever cash we make from our
business will be needed to pay the principal of, and
interest on, our indebtedness;
o we have made promises in our loan agreements that could
limit our ability to develop our business and expand; and
o our indebtedness may make us more vulnerable to economic
downturns, limit our ability to withstand competitive
pressures and reduce our flexibility in responding to
changing business and economic conditions.
Our ability to pay dividends on the 8% preferred stock, to pay
interest on our indebtedness, to repay our lenders and to operate and build our
business will depend on our operating success, which could be affected by many
factors, including general economic conditions and other factors beyond our
control. If we do not fulfill the promises that we made in our loan agreements,
we might be forced to pay back all of the indebtedness under those loan
agreements immediately. We believe that the cash we generate by operating our
business, together with borrowings under our New Credit Facility, will be
sufficient to make required payments under our loan agreements and to cover our
other cash requirements, but if that is not the case, we might be required to
try to renegotiate our loan agreements or try to refinance all or a portion of
our indebtedness or to obtain additional financing. It is possible that we will
be unable to renegotiate our loan agreements, refinance that indebtedness or
obtain additional financing.
We Might Not Be Able to Refinance Our Bridge Loan Facility
We are obligated to repay the Bridge Loan Facility by September 27,
1999. This obligation is secured by a lien on virtually all of our assets,
including the assets of all of our subsidiaries except Panini. It is possible
that we may not be able to obtain alternate financing in order to repay the
Bridge Loan Facility.
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<PAGE>
Competition
We operate in highly competitive industries. We compete in the toy,
comic book publishing, trading card, licensing and media businesses with many
larger, integrated companies that have greater financial and other resources and
more established distribution organizations. Competition may adversely affect
our results of operations or financial condition.
We Might Not Be Able to Integrate Marvel Entertainment or Achieve Anticipated
Cost Savings
The success of the merger will depend in part on our ability to
effectively integrate the businesses of Toy Biz and Marvel Entertainment. The
process of integrating the businesses of Toy Biz and Marvel Entertainment may
involve unforeseen difficulties and may require a disproportionate amount of
time and attention of our management and financial and other resources. Although
we believe that we have the opportunity for synergies and cost savings, the
timing or amount of synergies or cost savings that may ultimately be attained is
uncertain. Some of the anticipated benefits of the merger may not be achieved if
our operations are not successfully integrated in a timely manner. The
difficulties of that integration may initially be increased by the necessity of
coordinating and integrating personnel with different business backgrounds and
corporate cultures. We might not be able to integrate effectively Marvel
Entertainment's operations. If we are not successful in this combination, if the
combination takes longer than anticipated, or if the integrated operations fail
to achieve market acceptance, our business could be adversely affected. In
addition, implementation of our business strategy will be subject to numerous
other contingencies beyond our control, including general and regional economic
conditions, interest rates, competition, and the ability to attract and maintain
skilled employees. As a result, the merger might not be successful, our business
strategies might not be effective and we might not be able to achieve our goals.
There Has Been a Decline in the Business of Marvel Entertainment and Toy Biz
In 1995 and 1996 there was an overall decline in Marvel
Entertainment's core publishing and trading card businesses which had a material
adverse effect on Marvel Entertainment. This decline, when taken in connection
with indebtedness incurred by Marvel Entertainment in connection with its
acquisition program, ultimately caused Marvel Entertainment's filing for
reorganization under chapter 11 of the Bankruptcy Code in 1996. Marvel
Entertainment's publishing revenues, along with those of the overall comic book
industry, declined primarily as a result of reduced readership, lower
speculative purchases and lower selling prices, which in turn caused a
contraction in the number of comic book specialty stores. These store closings
further hurt Marvel Entertainment's net publishing revenues. In addition,
Fleer/SkyBox's trading card markets contracted during 1995 through 1997,
although this contraction appears to be slowing. The decline in the comic book
and trading card business could continue or get worse. Moreover, a labor dispute
in any of the professional team sports could have a material adverse effect on
the trading card industry. As of the date of this prospectus there is such a
dispute with the National Basketball Association, with which we have licensing
arrangements. We believe that the renegotiated terms of certain of these
professional team sports licenses, including the terms of the National
Basketball Association license, will minimize the effect of any labor disputes
on Fleer/SkyBox.
The bankruptcy of Marvel Entertainment also caused a decline in our
toy business because a substantial portion of our toy products were based on the
Marvel Characters. Our Marvel Characters toy business might not return to its
pre-bankruptcy levels. In addition, during the third quarter of 1998, Marvel's
operations began to hurt by the decision of certain major retailers to
significantly reduce their toy inventory levels.
We believe the sales and the profitability of each of Marvel's
businesses have been hurt by concerns about the effect of Marvel Entertainment's
bankruptcy proceedings among customers and others with whom we do business.
While we believe that the consummation of the
<PAGE>
Marvel Entertainment plan of reorganization has alleviated these concerns, our
sales and profitability might continue to be adversely affected.
782128.2
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<PAGE>
We Might Not be Able to Implement Our Strategy
The success of our strategy depends in large part upon consumer
acceptance of the Marvel Characters and products and licensing and promotional
television and other programs related to them. Consumer acceptance of many of
these products is dependent on our being able to successfully secure a stable
flow of media relating to the Marvel Characters, the popularity of these
television programs and other media events, and consumer interest in our core
product categories. Scheduled or anticipated television programs or other media
events might not occur at all or, if they occur, they might not continue to be
broadcast or otherwise result in substantial marketing value to, or sales of,
our products. Further, the goodwill associated with the Marvel Characters or any
of the other intellectual property upon which any of our products are based
might not add marketing value to our products or our core products might not
maintain the buying interest of consumers. Our new and existing products are
also subject to changing consumer preferences. Some products are successfully
marketed for a limited period, sometimes only one or two years. Existing product
lines might not retain their current popularity or new products developed by us
might not meet with the same success as our current products. While it is
impossible to predict future trends in the toy, comic book and trading card
industries, we believe our product line is sufficiently diverse to benefit from
such trends. However, we might not accurately anticipate future trends or be
able to successfully develop, produce and market products to take advantage of
market opportunities presented by those trends.
Marvel Entertainment's Bankruptcy Proceedings Might Cause Us to Lose Licensing
Arrangements
Marvel Entertainment is a party to various licensing arrangements
that were rejected pursuant to Marvel Entertainment's plan of reorganization,
the loss of which, if not renegotiated, could have a material adverse effect on
Marvel. Although there can be no assurances, we believe that these licensing
arrangements can be renegotiated on terms acceptable to us.
We have Guaranteed Panini's Indebtedness
Panini has outstanding borrowings of Italian Lire 280.6 billion
(approximately $168.4 million based on exchange rates in effect on November 20,
1998) under renegotiated credit facilities entered into pursuant to Marvel
Entertainment's plan of reorganization. Under Marvel Entertainment's plan of
reorganization, we have guarantied $27 million of that indebtedness.
We Depend on Raw Materials and Foreign Manufacturers
The principal raw materials used in the production and sale of our
toy products are plastics and paper products. Raw materials are generally
purchased by the manufacturers who deliver completed products to us. We believe
that an adequate supply of raw materials used in the manufacture of our toy
products is readily available from existing and alternative sources at
reasonable prices, but a disruption in raw material supplies, could harm our
business, especially if we could not obtain alternative sources of supply in a
timely manner.
A large number of our toy products are manufactured in China. While
we are not dependent on any single manufacturer in China to supply us with toy
products, we are subject to the risks of foreign manufacturing, including
currency exchange fluctuations, transportation delays and interruptions, and
political or economic disruptions affecting international businesses generally.
Our ability to obtain products from our Chinese manufacturers is dependent upon
the United States' trade relationship with China. The "Most Favored Nation"
status of China, which is reviewed annually by the United States government, is
a regular topic of political controversy. The loss of China's "Most Favored
Nation" status would increase the cost of importing products from China
significantly, which could
782128.2
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have a material adverse effect on us. The imposition of further trade sanctions
on China could result in significant supply disruptions or higher merchandise
costs to us. We might not be able to find alternate sources of manufacturing
outside China on acceptable terms even if we want or need to.
We purchase goods from manufacturers in China mostly in Hong Kong
dollars and, accordingly, fluctuations in Hong Kong monetary rates may have an
impact our cost of goods. In recent years, the value of the Hong Kong dollar has
been tied to the value of the United States dollar, eliminating fluctuations
between the two currencies. The Hong Kong dollar, however, might not continue to
be tied to the United States dollar. Furthermore, appreciation of Chinese
currency values relative to the Hong Kong dollar could increase our cost of
products manufactured in China and harm our business.
We Depend on a Single Comic Book Distributor
We distribute our comic book publications to specialty market
retailers and direct market comic book shops through an unaffiliated entity. The
distribution agreement with this entity is for a term of three-and-a-half years
and automatically renews for succeeding one-year periods unless terminated by
either party. Either party has the right to terminate upon the happening of
certain events. This distributor is the only major provider for the direct comic
book market, and as a result, a termination of this agreement would
significantly disrupt our publishing operations in the short term. We believe
that the termination of the current distribution agreement would not have a
long-term material adverse effect on us. Such a termination, however, might
materially harm our financial condition or results of operations or both.
We Must Often Make Advance Payments and Guarantee Royalties Under Licenses That
We Acquire
A determination to acquire a character license must frequently be
made before the commercial introduction of the property in which a licensed
character appears, but the license arrangements often require us to pay
non-refundable advances or guaranteed minimum royalties. Accordingly, the
success of character licenses acquired by us is dependent upon our ability to
accurately assess the future success and popularity of the character properties
which are under evaluation, to bid for the properties on a selective basis in
accordance with our evaluation and to capitalize on the properties for which we
have obtained licenses in an expeditious manner. The success of our products
produced under license depends in part on whether the strength of the licensed
property will produce marketing value for the product. Products produced under
the licenses acquired by us might not obtain significant market acceptance.
We Must Constantly Protect Against Loss of Our Intellectual Property
We believe that our roster of Marvel Characters represents one of our
most valuable assets. We currently conduct an active program of maintaining and
protecting our principal trademarks and our copyrights on the Marvel Characters
and publications in the United States and in approximately 55 foreign countries.
Our principal trademarks have been registered in the United States, certain of
the countries in Western Europe and South America, Japan, Israel and South
Africa. The issuance of a patent or copyright does not carry any certainty of
successful application or commercial success. There can be no assurances that
this protection will be adequate to deter misappropriation of the Marvel
Characters, that these proprietary rights will be upheld if we seek to enforce
these rights against an infringer or that we will have sufficient resources to
prosecute our rights. Moreover, although we believe that the Marvel Characters
do not infringe upon the proprietary rights of others, there can be no assurance
that other parties will not assert infringement claims against us in the future
or that such claims will not require us to undergo protracted and costly
litigation regardless of the merits of those claims.
782128.2
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<PAGE>
The Outcome of Stockholder Votes is Controlled by a Small Number of Stockholders
Holders of over 60% in voting power of our stock have entered into a
stockholders' agreement with us. Those holders include Isaac Perlmutter and
certain of his affiliates, Avi Arad, Mark Dickstein and certain of his
affiliates, and certain former creditors of Marvel. Messrs. Perlmutter, Arad and
Dickstein are directors of Marvel. The Stockholders' agreement provides, among
other things, that its parties shall nominate and vote in favor of each other's
designated members of our Board of Directors.
We Depend on Our Key Personnel
Our ability to maintain our competitive position depends to some
degree on our ability to retain and attract highly qualified personnel with
appropriate industry and professional expertise. Competition for such personnel
is intense. We are also dependent on certain members of our management, the loss
of whose services could adversely affect Marvel's business and results of
operations.
Our Business is Highly Seasonal
Our toy business experiences a significant seasonal pattern in sales
and net income due to the heavy demand for toys during the Christmas season.
During 1995, 1996 and 1997, 69%, 64% and 67%, respectively, of our domestic net
toy sales were realized during the months of July through December. This
seasonal pattern requires significant use of working capital mainly to build
inventory during the year, prior to the Christmas selling season. We expect that
our business will continue to experience a significant seasonal pattern for the
foreseeable future.
We sell sports trading cards in baseball, basketball and football
throughout the year. Sales of our sports trading cards peak at or near the
beginning and mid-point of the sports season to which a specific product
relates. Sales of entertainment-related products tend to be less seasonal,
although sales of products related to a motion picture or animated series are
generally planned to begin at the time of first release or subsequent video
release in the case of a major motion picture.
Our licensing revenues may vary from period to period depending on
the volume and extent of licensing agreements entered into during any particular
period of time, as well as the level and commercial success of the media
exposure of the Marvel Characters.
Our Business is Subject to Many Government Regulations
We are subject to the provisions of, among other laws, the Federal
Hazardous Substances Act and the Federal Consumer Product Safety Act. Those laws
empower the Consumer Product Safety Commission (the "CPSC") to protect children
from hazardous toys and other articles. The CPSC has the authority to exclude
from the market articles which are found to be hazardous. Similar laws exist in
some states and cities in the United States, Canada and Europe. We maintain a
quality control program (including the inspection of goods at factories and the
retention of an independent quality-inspection firm) to try to ensure compliance
with applicable laws. Our business exposes us to potential product liability
risks which are inherent in the design, marketing and sale of children's
products. We currently maintain product liability insurance and an umbrella
liability policy. In the event of a successful claim against us, a lack of
sufficient insurance coverage could have a material adverse effect on our
business and operations. Moreover, though we maintain what we consider to be
adequate insurance, any successful claim could materially and adversely affect
our reputation and prospects.
Our Historical Financial Information Is Not Comparable to Our Current Financial
Results
As a result of the consummation of Marvel Entertainment's plan of
reorganization and the merger on October 1, 1998, we are operating the formerly
separate businesses of Toy Biz and Marvel Entertainment on a combined basis
under a new corporate structure and a new capital structure. Accordingly, our
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financial condition and results of operations from and after that date will not
be comparable to the financial condition or results of operations reflected in
the historical financial statements of Toy Biz and Marvel Entertainment
incorporated by reference into this prospectus.
There is No Public Market for the 8% Preferred Stock
There is currently no public market for the 8% preferred stock. It is
possible that an active trading market in the 8% preferred stock will not
develop and that purchases of the shares of 8% preferred stock offered by this
prospectus will be an illiquid investment.
Holdings of 8% Preferred Stock Are Highly Concentrated in a Small Number of
Holders
A significant portion of the outstanding shares of 8% preferred stock
are held by a relatively small number of stockholders. Sales of a large number
of the outstanding shares of 8% preferred stock at once, or within a limited
period of time, might have a significant negative effect on the price an
investor could otherwise expect to receive for shares of 8% preferred stock.
There is a Risk of Tax Liability on Non-Cash Income Resulting from Dividends
Paid in Kind on the 8% Preferred Stock
Dividends on the 8% preferred stock may be paid, at our option,
either in cash or in additional shares of 8% preferred stock. Dividends paid in
additional shares of 8% preferred stock are said to be paid "in kind." We have
promised some of our lenders that we will pay dividends only in kind for as long
as we owe money to them. Dividends paid in kind may be taxable income to holders
of 8% preferred stock even though those dividends provide no cash to those
holders.
We Can Redeem the 8% Preferred Stock
If a company buys shares of its stock from the holders of that stock,
it is said to "redeem" those shares. We have the option, on thirty days' notice,
to redeem all (but not less than all) of the shares of 8% preferred stock at any
time after October 1, 2001 for $10 per share, plus all accrued but unpaid
dividends.
We Can Require Conversion of 8% Preferred Stock into Common Stock
If the common stock has been trading at prices above a certain dollar
amount (determined by a formula set forth in Section 6.8(g) of our certificate
of incorporation), then we will have the right, at any time on or after October
1, 2001, to force a conversion of up to $50 million worth of 8% preferred stock
at a time into shares of common stock. Purchasers of the shares of 8% preferred
stock offered by this prospectus therefore risk having their shares converted,
against their will, into shares of common stock.
We Can Require Exchange of 8% Preferred Stock
If a majority of the holders of 8% preferred stock approve, we may
exchange all (but not less than all) of the shares of 8% preferred stock for 8%
subordinated notes at any time after April 1, 2000. Those notes will mature on
October 1, 2011 and will have substantially the same economic terms, voting
rights and conversion features as the 8% preferred stock. The 8% payments
received by holders of 8% preferred stock are dividends; the corresponding
payments received by holders of 8% subordinated notes would be interest.
Corporate holders of 8% preferred stock therefore risk certain adverse tax
consequences (i.e., the "dividends received" deduction will not be available) in
the event of an exchange by Marvel of the shares of 8% preferred stock for 8%
subordinated notes.
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We Have Not Yet Assured Year 2000 Compliance
We expect to incur Year 2000 conversion costs of approximately $1.0
million throughout the balance of 1998 and 1999. We are utilizing both internal
and external sources to remediate, or replace, and test our software for Year
2000 modifications. We anticipate completing the Year 2000 project by June 30,
1999.
We are in the process of completing an assessment of Year 2000
compliance for the Marvel Entertainment operations. Marvel Entertainment had not
allocated resources to the Year 2000 project while it was in bankruptcy. We
believe that we can successfully complete Marvel Entertainment's Year 2000
compliance by converting Marvel Entertainment's financial system into our
financial system by August, 1999. Other systems used by Marvel Entertainment
will be made Year 2000 compliant in conformance with our systems. We estimate
that the costs to conform Marvel Entertainment will be under $500,000.
The cost of the project and the date on which we believe we will
complete the Year 2000 modifications are only estimates. We currently believe
that the Year 2000 issue will not pose significant operational problems for our
computer systems. We have begun to communicate with our customers and major
suppliers in order to determine whether the Year 2000 issue will affect the
ability of those companies' computer systems to interface with our systems or
will otherwise affect the ability of those companies to transact business with
us. We are not aware of any such material issues with our customers and
suppliers at this time. We have not developed a detailed contingency plan. We
assess our Year 2000 status regularly and will begin to develop comprehensive
contingency plans if we believe we will not complete the Year 2000 project in a
timely manner. If our Year 2000 project is not completed on a timely basis, or
if our major customers or suppliers fail to address all the Year 2000 issues, we
believe it could have a material adverse impact on our operations.
RATIO OF COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS TO EARNINGS
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
Pro Pro
Forma Forma
1993 1994 1995 1996 1997 1997 9/30/97 9/30/98 9/30/98
---- ---- ---- ---- ---- ----- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Combined Fixed
Charges and Preference
Dividends to Earnings 4.08 16.16 67.63 57.64 -- -- -- -- --
=================================================================================================
</TABLE>
For the purposes of the ratio of combined fixed charges and
preference dividends to earnings, earnings were calculated by adding pretax
income, interest expense and the portion of rents representative of an interest
factor. Combined fixed charges consist of interest expense and the portion of
rents representative of an interest factor. For the periods in which earnings
were insufficient to cover combined fixed charges, the dollar amount of coverage
deficiency was $49,721, $200,356, $26,754, $6,815 and $74,066 for the twelve
months ended December 31, 1997, the pro-forma twelve months ended December 31,
1997, the nine months ended September 30, 1997 and 1998 and the pro-forma nine
months ended September 30, 1998, respectively.
782128.2
12
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain information both included and incorporated by reference in
this prospectus may contain forward- looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, and as such may involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative thereof or other variations
thereon or comparable terminology. Factors which could have a material adverse
effect on our operations and future prospects include, but are not limited to,
changes in general economic conditions, our ability to integrate Marvel
Entertainment's business, our ability to refinance the bridge loan we used to
finance our acquisition of Marvel Entertainment, the level of media exposure or
the popularity of our characters and trademarks, consumer acceptance of our new
product introductions, a decrease in the level of media exposure or popularity
of our characters resulting in declining revenues based on such characters, the
lack of continued commercial success of properties owned by major licensors
which have granted us licenses for our sports and entertainment trading card and
sticker businesses, the timing and effectiveness of our programs designed to
make our operations Year-2000 compliant, our dependence on Chinese
manufacturers, U.S. trade relations with China, and continued pressure by
certain of our major retail customers to significantly reduce their toy
inventory levels. These risks and uncertainties should be considered in
evaluating any forward-looking statements contained or incorporated by reference
herein.
782128.2
13
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of material federal income tax matters
relating to our operations that may be relevant to our prospective stockholders.
It is based upon current law and is not tax advice. This discussion does not
address all aspects of taxation that may be relevant to particular stockholders
in light of their personal investment or tax circumstances, or to certain types
of stockholders (including, without limitation, insurance companies, tax-exempt
organizations, financial institutions, broker-dealers, foreign corporations and
persons who are not citizens or residents of the United States) subject to
special treatment under the federal income tax laws, nor does it give a detailed
discussion of any state, local or foreign tax considerations.
Each of our prospective stockholders is encouraged to consult its own
tax advisor regarding the specific tax consequences to it of the purchase,
ownership and sale of shares of common stock and/or 8% preferred stock of
Marvel, including the federal, state, local, foreign and other tax consequences
of such purchase, ownership and sale and of potential changes in applicable tax
laws.
The following discussion is a summary of certain U.S. federal income
tax consequences expected to result from the implementation of the Plan. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), as in effect on the date hereof and on United States Treasury
Regulations in effect (or in certain cases, proposed) on the date hereof, as
well as judicial and administrative interpretations thereof available on or
before such date. All of the foregoing are subject to change, which change could
apply retroactively and could affect the tax consequences described below. There
can be no assurance that the Internal Revenue Service (the "IRS") will not take
a contrary view with respect to one or more of the issues discussed below, and
no ruling from the IRS has been or will be sought with respect to any issues
which may arise under the Plan. This summary is for general information only and
does not purport to address all of the U.S. federal income tax consequences that
may be applicable to Marvel. This discussion does not address state, local or
foreign tax considerations that may be applicable.
The merger is expected to be characterized as a transfer of the stock
of Marvel Entertainment to Marvel upon which, for Federal income tax purposes,
Marvel is not expected to recognize any gain or loss.
The reclassification on October 1, 1998 of the two then-existing
classes of common stock of Marvel into one class of common stock is expected to
be treated as a nontaxable recapitalization of Marvel in which neither the
stockholders nor Marvel will recognize gain or loss.
a. Utilization of Marvel Entertainment's net operating loss
carryovers and built-in losses.
Section 382 of the Code imposes an annual limitation on the amount of
taxable income of a "loss corporation" that may be offset by net operating loss
carryovers ("NOLs") and certain built-in losses (referred to collectively as
pre- change loss) that are attributable to the period preceding an "ownership
change." The NOLs of Marvel Entertainment and its subsidiaries may be subject to
an existing limitation. Marvel Entertainment and its subsidiaries may also have
had a built-in loss at the time of the merger. Upon consummation of Marvel
Entertainment's plan of reorganization, Marvel Entertainment and its
subsidiaries underwent an ownership change within the meaning of section 382 of
the Code. As a result, the NOLs of Marvel Entertainment and its subsidiaries
will be subject to a section 382 limitation. In addition, Marvel may also
undergo an ownership change within the meaning of section 382 of the Code. Thus,
to the extent that Marvel is a loss corporation, such losses will be limited. No
assurance can be provided that the Marvel Entertainment NOL carryovers and
built-in losses (if any) will be available to offset income.
782128.2
14
<PAGE>
b. Preferred Stock Dividends.
Because Marvel is required to redeem the 8% preferred stock on
October 1, 2011 for an amount equal to its liquidation preference plus all
accrued and unpaid dividends, whether or not declared, to the redemption date,
for federal income tax purposes, holders of the 8% preferred stock will be
deemed to have received, each year, an amount equal to the dividends accruing on
the 8% preferred stock, regardless of whether they receive cash distributions.
If and to the extent Marvel has current or accumulated earnings and profits,
this deemed distribution will be treated as ordinary dividend income. If the
deemed distribution exceeds the current or accumulated earnings and profits of
Marvel, the excess will be a return of capital (requiring the holders of the 8%
preferred stock to reduce their tax basis in the 8% preferred stock and then
recognize gain). In addition, if at any time Marvel makes a distribution to its
shareholders and, pursuant to the antidilution provisions of the 8% preferred
stock, the conversion rate of the 8% preferred stock is increased, such increase
may be deemed to be the payment of a taxable dividend to the holders of the 8%
preferred stock.
Because the 8% preferred stock is subject to mandatory redemption
and, subject to certain limitations, is exchangeable for 8% Convertible
Subordinated Debentures at the Marvel's option, there is a risk that the 8%
preferred stock could be treated as indebtedness for federal income tax
purposes. Marvel intends to take the position (which counsel believes is
reasonable) that the 8% preferred stock constitutes stock for federal income tax
purposes and, therefore, the material tax consequences to holders of 8%
preferred stock should be as described herein. If, however, it is determined
that the 8% preferred stock is debt, corporate holders would not be entitled to
the benefit of the dividends received deduction discussed below and the yield to
the holders of the 8% preferred stock would be taxable as original issue
discount (i.e., interest income), whether or not actual cash payments are
received and whether or not Marvel has current or accumulated earnings and
profits. The remainder of the discussion assumes that the 8% preferred stock
will be classified as stock for federal income tax purposes.
Taxable dividends on the 8% preferred stock should qualify for the
dividends received deduction in the hands of qualifying corporate holders,
subject to the minimum holding period requirements and other applicable
requirements (including the disallowance of the dividends received deduction to
the extent a corporate shareholder incurs interest expense on debt directly
attributable to the 8% preferred stock). A corporate shareholder's liability for
alternative minimum tax may be affected by the portion of the dividends received
that are deducted in computing taxable income.
Section 1059 of the Code reduces the benefit of the dividends
received deduction with respect to "extraordinary dividends" by requiring a
corporate shareholder to reduce its basis in the 8% preferred stock (but not
below zero) by the nontaxed portion (as a result of the dividends received
deduction) of any "extraordinary dividend" if the holder has not held the 8%
preferred stock for more than two years before the earliest of the dates on
which the corporation declares, announces, or agrees to, the amount or payment
of such dividend. In addition, an amount treated as a dividend in the case of a
redemption that is either non-pro rata as to all shareholders, in partial
liquidation, or which would not have been treated as a dividend if any options
had not been taken into account under Section 318(a)(4) of the Code or if
Section 304(a) of the Code had not applied, would also constitute an
extraordinary dividend even if the 8% preferred stock were held for more than
two years before the date of announcement or agreement with respect to the
redemption. If the nontaxed portion of all extraordinary dividends exceeds the
corporate holder's basis, the excess is treated as taxable gain. The dividends
on the 8% preferred stock may constitute extraordinary dividends for this
purpose. An "extraordinary dividend" on the 8% preferred stock would generally
be a dividend (including a deemed dividend) that either equals or exceeds 5
percent of the holder's basis in such stock, treating all dividends having
ex-dividend dates within an eighty-five-day period as one dividend, or exceeds
20 percent of the holder's basis in such stock, treating all dividends having
ex-dividend dates within a 365- day period as one dividend. However, if the
market value can be established by the holder to the satisfaction of the
Secretary of the Treasury, it may be substituted for stock basis.
782128.2
15
<PAGE>
If stock pays fixed dividends at least annually, has no dividends in
arrears at the time it is acquired by a corporate holder, and does not have an
actual rate of return exceeding 15 percent, then a fixed dividend paid with
respect to such stock will be a "qualified preferred dividend" that may qualify
for special relief under Section 1059 of the Code. Under this relief provision,
(a) a qualified preferred dividend is not treated as "extraordinary" if the
taxpayer holds such stock for more than five years or (b) if the taxpayer
disposes of such stock before it has been held for more than five years, then
the amount of the basis reduction under Section 1059 of the Code with respect to
such dividends will not be greater than the excess (if any) of (i) the qualified
preferred dividends paid with respect to such stock during the period the
taxpayer held the stock over (ii) the qualified preferred dividends that would
have been paid during such period on the basis of the stated rate of return. For
purposes of determining the actual rate of return or the stated rate of return,
the average amount of actual dividends received (or deemed received under
Section 305 of the Code), or the stated dividends, as the case may be, are
compared with the lesser of the holder's adjusted tax basis in the stock or the
liquidation preference (excluding dividend arrearages) of the stock.
c. Conversion of 8% Preferred Stock to Common Stock.
If the 8% preferred stock is converted to common stock, neither the
holder of the 8% preferred stock nor Marvel should recognize gain or loss for
federal income tax purposes. Income will generally be recognized, however, to
the extent common stock is received in payment of dividends in arrears. The tax
basis for the 8% preferred stock will be transferred to the common stock in the
hands of a converting shareholder.
d. Redemption of 8% Preferred Stock for Cash.
A redemption of the 8% preferred stock will be a taxable event that
will be treated as a sale or exchange (on which capital gain or loss may be
realized) if the redemption (a) results in a "complete termination" of the
stockholder's stock interest in Marvel under Section 302(b)(3) of the Code, (b)
is "substantially disproportionate" with respect to the shareholder under
Section 302(b)(2) of the Code, or (c) is "not essentially equivalent to a
dividend" with respect to the stockholder under Section 302(b)(1) of the Code.
The gain or loss recognized will be an amount equal to the difference between
the stockholder's adjusted tax basis in the 8% preferred stock and the amount of
cash received (less any cash received in payment of accumulated and declared but
unpaid dividends, which will be taxable as ordinary income if not previously
included in a holder's income). In determining whether any of these tests has
been met, shares considered to be owned by the stockholder by reason of certain
constructive ownership rules set forth in Section 318 of the Code, as well as
shares actually owned, must be taken into account. A holder's gain, if any, will
generally be considered a capital gain and will be long-term if the holder has
held the 8% preferred stock for more than one year. Capital gains realized by
corporations are generally taxed at the same rates applicable to ordinary
income, although non-corporate taxpayers who realize long-term capital gains may
be subject to a reduced tax rate of 20% on such gains, rather than the "regular"
maximum tax rate of 39.6%. Tax rates may increase prior to the time when holders
may realize gains.
Because satisfaction of either of these tests will depend on the
particular facts and circumstances of each holder of 8% preferred stock as they
exist at the time of the redemption, each holder is urged to consult its own tax
adviser as to whether it would be entitled to sale or exchange treatment in
connection with such a redemption.
If a redemption of the 8% preferred stock does not meet any of the
tests under Section 302 of the Code, it will be treated as a distribution that
is taxable as a dividend under Section 301 of the Code to the extent of Marvel's
current or accumulated earnings and profits. The dividend amount should be the
amount of cash received by the stockholder. If a corporate stockholder has
dividend treatment on a redemption of the 8% preferred stock, the dividend will
be an extraordinary dividend under Section 1059 of the Code irrespective of such
holder's holding period.
782128.2
16
<PAGE>
e. Conversion of 8% Preferred Stock to 8% Convertible Subordinated
Debentures.
Marvel may, under certain circumstances, exchange all of the 8%
preferred stock for 8% Convertible Subordinated Debentures of Marvel. If this
occurs, the treatment to the holders of the 8% preferred stock will generally be
as described in subparagraph (d), above. If gain or loss is recognized for
federal income tax purposes, an amount equal to the difference between the issue
price of the 8% Convertible Subordinated Debentures (less any amount
attributable to accumulated and declared but unpaid dividends, which will be
taxable as ordinary income if not previously included in a holder's income) and
the holders' adjusted tax basis in the 8% preferred stock will be taken into
account. If issuance of the 8% Convertible Subordinated Debentures is treated as
a dividend, the amount of the distribution should be the issue price of the 8%
Convertible Subordinated Debentures. If the 8% Convertible Subordinated
Debentures have original issue discount upon their issuance, a holder will be
required to include in income an amount equal to the sum of the "daily portions"
of such original issue discount, even if the holder does not receive cash
payments of interest.
f. Backup Withholding.
Under Section 3406 of the Code and under applicable Treasury
regulations, a noncorporate holder of 8% preferred stock, 8% Convertible
Subordinated Debentures, or common stock may be subject to backup withholding at
the rate of 31 percent with respect to dividends or interest paid on, original
issue discount accrued with respect to, or the proceeds of a sale, exchange, or
redemption of, 8% preferred stock, 8% Convertible Subordinated Debentures, or
common stock, as the case may be. The payor will be required to deduct and
withhold the prescribed amounts if (i) the payee fails to furnish a taxpayer
identification number (TIN) to the payor, (ii) the Internal Revenue Service
notifies the payor that the TIN furnished by the payee is incorrect, (iii) there
has been a "notified payee under-reporting" described in Section 3406(c) of the
Code, or (iv) there has been a failure of the payee to certify under penalty of
perjury that the payee is not subject to withholding under Section 3406(a)(1)(C)
of the Code. If any one of the events listed above occurs, Marvel will be
required to withhold an amount equal to 31 percent from any dividend payment
made with respect to 8% preferred stock or common stock, any payment of interest
or principal pursuant to the terms of the 8% Convertible Subordinated
Debentures, or any payment of proceeds of a redemption of such instruments, to a
noncorporate holder. Amounts paid as backup withholding do not constitute an
additional tax and will be credited against the holder's federal income tax
liabilities.
USE OF PROCEEDS
Any shares offered under this prospectus will be offered by the
selling stockholders. See "Plan of Distribution." We will not receive any
proceeds from the sale of shares offered under this prospectus.
782128.2
17
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to
the amount of common stock and 8% preferred stock held by each selling
stockholder as of the date of this prospectus. The table indicates the nature of
any position, office, or other material relationship which the selling
stockholder has had within the past three years with Marvel or any of its
predecessors or affiliates. Certain of the selling stockholders are parties to
the stockholders' agreement, which is described in "RISK FACTORS--Control by
Certain Stockholders." Those parties are identified in the table. The selling
stockholders may offer all or part of the common stock or 8% preferred stock
covered by this prospectus. No estimate, therefore, can be given as to the
amount of common stock or 8% preferred stock that will be held by the selling
stockholders upon completion of the offering. The common stock and 8% preferred
stock offered by this prospectus may be offered from time to time by the selling
stockholders named below.
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Marvel this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
---------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Dickstein & Co., L.P.(5) 2,419,609 2,513,973 1,458,029 3,972,002 7.8%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Dickstein Focus Fund L.P.(5) 232,577 241,647 195,620 437,267 0.9%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Dickstein International Limited(5) 805,876 837,305 613,967 1,451,272 2.8%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
</TABLE>
782128.2
18
<PAGE>
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Marvel this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
---------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Elyssa Dickstein, Jeffrey 50,000 51,950 0 51,950 0.1%
Schwarz and Alan Cooper as
Trustees U/T/A/D 12/27/88,
Mark Dickstein, Grantor(5)
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Mark Dickstein and Elyssa 10,000 10,390 0 10,390 *
Dickstein, as Trustees of the
Mark and Elyssa Dickstein
Foundation(5)
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Elyssa Dickstein(5) 140,000 145,460 0 145,460 0.3%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Mark Dickstein(5) 0 0 47,500 47,500 *
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Director and Signatory of
Stockholders' Agreement **
Object Trading Corp.(6) 3,492,852 3,629,073 33,500 3,662,573 7.2%
685 Third Avenue
New York, NY 10017
** Signatory of Stockholders'
Agreement **
</TABLE>
782128.2
18
<PAGE>
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Marvel this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
---------------------- ------------------ --------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Zib Inc.(6) 0 0 9,256,000 9,256,000 18.1%
1105 North Market Street
Room 1300
Wilmington, DE 19801
** Signatory of Stockholders'
Agreement **
The Laura & Isaac Perlmutter 0 0 250,000 250,000 0.5%
Foundation Inc.(6)
P.O. Box 1028
Lake Worth, FL 33460
** Signatory of Stockholders'
Agreement **
Avi Arad 0 0 4,150,000 4,150,000 8.1%
1698 Post Road East
Westport, CT 06880
** Director and Signatory of
Stockholders' Agreement **
The President and Fellows of 551,300 572,800 484,997 1,057,797 2.1%
Harvard College (7)
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
The Rockefeller Foundation (7) 208,488 216,619 121,539 338,158 0.7%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Vega Partners II, L.P. (7) 234,592 243,741 137,458 381,199 0.7%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Vega Partners III, L.P. (7) 543,273 564,460 317,594 882,054 1.7%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
</TABLE>
782128.2
19
<PAGE>
<TABLE>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Marvel this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
---------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Vega Partners IV, L.P. (7) 342,656 356,019 200,814 556,833 1.1%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Vega Offshore Fund Trust (7) 138,552 143,955 86,109 230,064 0.5%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Whippoorwill Associates, Inc. 2,703 2,808 1,896 4,704 *
Profit Sharing Plan (7)
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Foothill Capital Corporation 1,611 1,673 0 1,673 *
11111 Santa Monica Blvd., Suite
1500
Los Angeles, CA 90025
Attn: Karen Sandler
Foothill Partners II, L.P. 16,286 16,921 0 16,921 *
11111 Santa Monica Blvd., Suite
1500
Los Angeles, CA 90025
Attn: Karen Sandler
Foothill Partners III, L.P. 39,835 41,388 0 41,388 *
11111 Santa Monica Blvd., Suite
1500
Los Angeles, CA 90025
Attn: Karen Sandler
Elliott Associates, L.P. 142,200 147,745 0 147,745 0.3%
712 Fifth Avenue, 35th Floor
New York, NY 10019
Attn: Michael Stephen
</TABLE>
782128.2
20
<PAGE>
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Marvel this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
---------------------- ------------------ -------------- -------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Morgan Stanley & Co. 2,166,908 2,251,417 1,769,375 4,020,792 7.9%
Incorporated
c/o Morgan Stanley
1585 Broadway
New York, NY 10036
Attn: Edgar Sabounghi
** Signatory of Stockholders'
Agreement **
The Chase Manhattan Bank 777,201 807,511 1,288,777 2,096,288 4.1%
380 Madison Avenue, 9th Floor
New York, NY 10071
Attn: Susan Atkins
** Signatory of Stockholders'
Agreement **
- --------------------------------- ------------------ ----------------- -------------- ---------------- ----------------
TOTAL 12,316,519 12,796,855 20,413,175 33,210,030 65.1%
</TABLE>
* = Less than 0.1%
(1) In the case of each selling stockholder, all the shares of 8% preferred
stock listed in Column B may be offered pursuant to this prospectus. In
addition, shares of 8% preferred stock paid as dividends in kind on the
shares of 8% preferred stock listed in Column B may be offered pursuant
to this prospectus. The total number of shares of 8% preferred stock
covered by this prospectus is 15,620,234, which is equal to 12,316,519
(the total of the numbers in Column B) plus 3,303,715 (the approximate
number of shares of 8% preferred stock that would be necessary to pay
dividends in kind on 12,316,519 shares of 8% preferred stock for three
years). See Note 3 for the total number of shares of common stock
offered pursuant to this prospectus.
(2) Does not include shares of common stock listed in Column C.
(3) The total number of shares of common stock offered pursuant to this
prospectus is 36,642,683, which is equal to 33,210,030 (the total of
the numbers in Column E) plus 3,432,653 (the number of shares of common
stock that underlie the shares of 8% preferred stock that would be
necessary to pay dividends in kind on 12,316,519 shares of 8% preferred
stock for three years; see Note 1). See Note 1 for the total number of
shares of 8% preferred stock offered pursuant to this prospectus.
(4) Refers to the 51,011,227 shares of common stock that would be
outstanding if all outstanding shares of 8% preferred stock were
converted into shares of common stock. Does not include shares that
would be outstanding if warrants or rights were exercised.
(5) (a) Dickstein & Co., L.P. is a Delaware limited partnership.
(b) Dickstein Focus Fund L.P. is a Delaware limited partnership.
782128.2
22
<PAGE>
(c) Dickstein International Limited is a limited-liability, open-end
investment fund incorporated as an international business company
in the Territory of the British Virgin Islands.
(d) Elyssa Dickstein, Jeffrey Schwarz and Alan Cooper as Trustees
U/T/A/D 12/27/88, Mark Dickstein, Grantor is a New York trust
established by Mark Dickstein, as Grantor, for the benefit of his
children. Elyssa Dickstein, Jeffrey Schwarz and Alan Cooper are
the trustees of the trust. Mark Dickstein has no beneficial
interest in the trust.
(e) The Mark and Elyssa Dickstein Foundation is a New York Trust
organized to be exempt from federal income taxes under Section
501(c)(3) of the Internal Revenue Code.
(f) Mark Dickstein, a director and principal stockholder of Marvel, is
the president, sole stockholder and sole director of Dickstein
Partners Inc., a Delaware corporation that is the advisor to
Dickstein International Limited and is the general partner of
Dickstein Partners, L.P., a Delaware limited partnership which in
turn is the general partner of both Dickstein & Co., L.P. and
Dickstein Focus Fund L.P. Mr. Dickstein is a trustee and the
grantor of the Mark and Elyssa Dickstein Foundation and has the
sole and exclusive authority to invest the principal of that
foundation.
(g) Elyssa Dickstein is the wife of Mark Dickstein and is a trustee of
the Mark and Elyssa Dickstein Foundation and the trust described
in (d), above.
(6) (a) Object Trading Corp., a Delaware corporation, is wholly owned by
Isaac Perlmutter, a director and principal stockholder of Marvel.
(b) Zib Inc., a Delaware corporation, is wholly owned by the Isaac
Perlmutter T.A., a Florida trust established by Mr. Perlmutter
(the "Trust"). Mr. Perlmutter is a trustee and the sole
beneficiary of the Trust, and may revoke the Trust at any time.
(c) Mr. Perlmutter is a director and the president of The Laura &
Isaac Perlmutter Foundation Inc., a Florida not-for-profit
corporation.
(7) Whippoorwill Associates, Incorporated, a Delaware corporation, as
agent of and/or general partner for these accounts, is a signatory
of the Stockholders' Agreement.
PLAN OF DISTRIBUTION
The shares of common stock and 8% preferred stock covered by this
prospectus are now owned by the selling stockholders. As used in the rest of
this section of the prospectus, the term "Selling Stockholders" includes the
named selling stockholders and any of their pledgees, donees, transferees or
other successors in interest selling shares received from a named selling
stockholder after the date of this prospectus. The shares of common stock and 8%
preferred stock covered by this prospectus are referred to in this section as
the "Shares." The selling stockholders may offer and sell, from time to time,
some or all of the Shares. We have registered the Shares for sale by the selling
stockholders so that the Shares will be freely tradeable by them. Registration
of the Shares does not mean, however, that the Shares will necessarily be
offered or sold. We will not receive any proceeds from any offering or sale by
the selling stockholders of the Shares. We will pay all costs, expenses and fees
in connection with the registration of the Shares. The selling stockholders will
pay all brokerage commissions and similar selling expenses, if any, attributable
to the sale of the Shares.
The selling stockholders may sell the Shares from time to time, at
market prices prevailing at the time of sale or at negotiated prices, by methods
such as the following: (a) on markets where our common stock or 8% preferred
stock is traded or in an exchange distribution in accordance with the rules of
the exchange; (b) in privately negotiated transactions; (c) through
broker-dealers, which may act as agents or principals; (d) in a block trade in
which a broker-dealer will attempt to sell a block of Shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (e) through one or more underwriters on a firm commitment or
best-efforts basis; (f) directly to one or more purchasers; (g) through agents;
(h) through put or call
782128.2
23
<PAGE>
option transactions, forward contracts or equity swaps relating to the Shares;
(i) through short sales of the Shares by the selling stockholders or
counterparties to those transactions; or (j) in any combination of the above.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. The
broker-dealer transactions may include (a) purchases of the Shares by a
broker-dealer as principal and resales of the Shares by the broker-dealer for
its account pursuant to this prospectus; (b) ordinary brokerage transactions; or
(c) transactions in which the broker-dealer solicits purchasers.
If a material arrangement with any underwriter, broker, dealer or
other agent is entered into for the sale of any Shares through a secondary
distribution, or a purchase by a broker or dealer, a prospectus supplement will
be filed, if necessary, pursuant to Rule 424(b) under the Securities Act
disclosing the material terms and conditions of such arrangement. If an
underwriter or underwriters are used in the sale of Shares, Marvel and the
selling stockholders will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached.
The underwriter or underwriters with respect to an underwritten offering of
Shares and the other material terms and conditions of the underwriting will be
set forth in a prospectus supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such prospectus supplement. In connection with the
sale of Shares, underwriters will receive compensation in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Shares for whom they may act as agent. Underwriters may sell to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent.
The Shares may be sold either at a fixed price or prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
The selling stockholders and any underwriters, broker-dealers or
agents participating in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the Shares by the selling stockholders and any commissions received by
any such broker-dealers or agents may be deemed to be underwriting commissions
under the Securities Act. We have agreed to indemnify some of the selling
stockholders -- those who signed a Registration Rights Agreement with us, dated
as of October 1, 1998 --, and each person or entity which participates as or may
be deemed to be an underwriter in the offering or sale of those selling
stockholders' shares, against certain liabilities (and to contribute to payments
in respect thereof), including liabilities arising under the Securities Act. The
selling stockholders may agree to indemnify any agent or broker-dealer that
participates in transactions involving sales of the Shares against certain
liabilities, including liabilities arising under the Securities Act.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. Our Securities and Exchange Commission filings are
also available to the public from the Securities and Exchange Commission's
Website at "http://www.sec.gov."
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
782128.2
24
<PAGE>
1. Our Annual Report on Form 10-K for the year ended December 31, 1997;
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
3. Our Current Reports on Form 8-K filed with the Securities and Exchange
Commission on August 3, 1998, October 2, 1998, and October 14, 1998, our Current
Report on Form 8-K/A filed on October 16, 1998, and our Current Report on Form
8-K/A-2 filed on November 25, 1998 (which incorporates by reference the
consolidated financial statements included in Marvel Entertainment Group, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1997 and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998);
4. Our descriptions of our common stock and 8% preferred stock contained in our
Registration Statements on Form 8-A filed on October 2, 1998 (SEC File Nos.
001-13638 and 000-24937); and
5. The section entitled "THE MARVEL PROPOSALS -- Securities to be Issued and
Transferred under the Plan" on pages 82 -87 of our Proxy Statement on Schedule
14A (SEC File No. 001-13638), as filed with the Securities and Exchange
Commission on August 13, 1998, which includes descriptions of our common stock
and 8% preferred stock.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
David J. Fremed, Chief Financial Officer
Marvel Enterprises, Inc.
685 Third Avenue
New York, NY 10017
Telephone requests may be directed to (212) 558-5100.
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information or
representations provided in this prospectus. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus is accurate as of any date other than
the date on the front of the document.
EXPERTS
The consolidated financial statements of Toy Biz, Inc. appearing in
Toy Biz, Inc.'s (now known as Marvel Enterprises, Inc.) Annual Report (Form
10-K) for the year ended December 31, 1997, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Marvel Entertainment Group,
Inc. appearing in Marvel Entertainment Group, Inc.'s Annual Report (Form 10-K/A)
for the year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
782128.2
25
<PAGE>
The validity of the shares of common stock offered hereby will be
passed upon for us by Battle Fowler LLP, New York, New York. Lawrence Mittman, a
director of Marvel, is a partner in Battle Fowler LLP.
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------- --------------------------------------------
- -------------------------------------------------------------------------------- --------------------------------------------
No dealer, salesperson or other individual 36,642,683 Shares of Common Stock
has been authorized to give any information
or make any representations not contained 15,620,234 Shares of 8% Cumulative
in this prospectus in connection with the Convertible Exchangeable
offering covered by this prospectus. If Preferred Stock
given or made, such information or
representation must not be relied upon as
having been authorized by us or the selling
stockholders. This prospectus does not
constitute an offer to sell, or a
solicitation of an offer to buy, common
stock and or the 8% preferred stock in any
jurisdiction where, or to any person to
whom, it is unlawful to make such offer or
solicitation. Neither the delivery of this MARVEL ENTERPRISES, INC.
prospectus nor any sale made hereunder
shall, under any circumstances, create an
implication that there has not been any
change in the facts set forth in this
prospectus or in our affairs of since the
date hereof.
------------------------------
----------------------------
Prospectus
TABLE OF CONTENTS
---------------------------- ------------------------------
Prospectus
Page
----
Prospectus Summary.............................................................3
Risk Factors...................................................................5
Ratio of Combined Fixed Charges and
Preference Dividends to Earnings...........................................11
Forward-Looking Statements....................................................12
Federal Income Tax Considerations.............................................13 December 23, 1998
Use of Proceeds...............................................................16
Selling Stockholders..........................................................17
Plan of Distribution..........................................................22
Where You Can Find More Information...........................................23
Experts.......................................................................24
Legal Matters.................................................................24
- -------------------------------------------------------------------------------- -------------------------------------------
- -------------------------------------------------------------------------------- -------------------------------------------
</TABLE>
782128.2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below is an estimate of the approximate amount of the fees
and expenses (other than underwriting discounts and commissions) incurred in
connection with the issuance and distribution of the shares of common stock and
8% preferred stock to be registered under this Registration Statement. The
selling stockholders will bear no portion of the fees and expenses estimated
below. Those fees and expenses will be borne entirely by Marvel.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission, registration fee...................................................$ 87,272
Federal taxes....................................................................................................0
State taxes and fees.............................................................................................0
Transfer agent's fees............................................................................................0
Engineering fees.................................................................................................0
Printing and engraving costs................................................................................25,000
Mailing expenses.............................................................................................1,000
Accounting fees and expenses................................................................................35,000
Legal fees and expenses....................................................................................100,000
Miscellaneous expenses......................................................................................20,000
-------
Total......................................................................................$ 268,272
=======
</TABLE>
Item 15. Indemnification of Directors and Officers
In accordance with Section 102(b)(7) of the Delaware General
Corporation Law, Article X of our Certificate of Incorporation eliminates, with
certain exceptions, our directors' personal liability to Marvel or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Article 6 of our By-Laws provides, to the extent permitted by the
Delaware General Corporation Law, for our indemnification of present or former
directors, officers or incorporators of Marvel against various costs they may
incur in connection with certain lawsuits and similar proceedings in which they
become involved by reason of their relationship to Marvel. Only those who have
acted in good faith are entitled to our indemnification. In certain cases, our
indemnification payments may be made, conditionally, before the lawsuit or
similar proceeding is complete.
Item 16. 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 certain creditors of Marvel Entertainment Group, Inc.
and the Registrant, with attached exhibits (incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on
Form 8-K, dated as of October 13, 1998, and filed on October
14, 1998).
4.1 -- The Registrant's Restated Certificate of Incorporation
(incorporated by reference to Exhibit 4.1 to the Registrant's
Current Report on Form 8-K, dated as of October 13, 1998, and
filed on October 14, 1998).
782128.2
II-1
<PAGE>
5.1 -- Opinion of Battle Fowler LLP.
12.1 -- Statements re: Computation of Ratios.*
23.1 -- Consents of Experts and Counsel.
23.2 -- Consents of Experts and Counsel.
24.1 -- Power of Attorney.*
* Previously filed.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered
782128.2
II-2
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referred to in Item 15 of
this Registration Statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.
782128.2
II-3
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, New York, on the 23rd day of December, 1998.
MARVEL ENTERPRISES, INC.
a Delaware corporation (Registrant)
By: /s/ ERIC ELLENBOGEN
-------------------------------
Eric Ellenbogen
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints William H. Hardie, III and David J. Fremed and each or either of them,
his true and lawful attorney-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement (or any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933) and to cause the same to be filed, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby granting to said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing whatsoever requisite or desirable to be done in and about the premises, as
fully to all intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all acts and things that said
attorneys-in-fact and agents, or either of them, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
* Chairman of the Board and Director December __, 1998
- -----------------------------------------
Morton E. Handel
/s/ ERIC ELLENBOGEN Chief Executive Officer (principal December 23, 1998
- ----------------------------------------- executive officer)
Eric Ellenbogen
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ DAVID J. FREMED Chief Financial Officer and December 23, 1998
- ----------------------------------------- Treasurer (principal financial and
David J. Fremed accounting officer)
* Director December __, 1998
- -----------------------------------------
Avi Arad
/s/ MARK DICKSTEIN Director December 23, 1998
- -----------------------------------------
Mark Dickstein
/s/ ERIC ELLENBOGEN Director December 23, 1998
- -----------------------------------------
Eric Ellenbogen
* Director December __, 1998
- -----------------------------------------
Shelley F. Greenhaus
* Director December __, 1998
- -----------------------------------------
James F. Halpin
* Director December __, 1998
- -----------------------------------------
Michael M. Lynton
* Director December __, 1998
- -----------------------------------------
Lawrence Mittman
* Director December __, 1998
- -----------------------------------------
Isaac Perlmutter
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* Director December __, 1998
- -----------------------------------------
Rod Perth
* Director December __, 1998
- -----------------------------------------
Michael J. Petrick
*By: /s/ DAVID J. FREMED December 23, 1998
--------------------------
David J. Fremed
Attorney-in-fact
</TABLE>
Exhibit 5.1
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
December 23, 1998
Board of Directors
Marvel Enterprises, Inc.
685 Third Avenue
New York, NY 10017
Re: Marvel Enterprises, Inc.
Rights Offering
Registration Statement on Form S-3 (No. 333-68019)
Gentlemen:
We have acted as counsel for Marvel Enterprises, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
registration statement on Form S-3 (Registration No. 333-68019), and any
amendments thereto (the "Registration Statement"), as filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), for the registration under the Securities Act of shares of
Common Stock, par value $0.01 per share, of the Company (the "Common Stock"),
and shares of 8% Cumulative Convertible Exchangeable Preferred Stock, par value
$0.01 per share, of the Company (the "Preferred Stock") referred to in the
Registration Statement. Capitalized terms used and not defined in this opinion
have the meanings ascribed to them in the Registration Statement.
In rendering this opinion, we have relied upon, among other
things, our examination of such records of the Company, including without
limitation, the Company's Restated Certificate of Incorporation and the
Company's Amended and Restated Bylaws and certificates of its officers and of
public officials as we have deemed necessary for the purpose of the opinion
expressed below.
792279.1
<PAGE>
2
Board of Directors December 23, 1998
In addition, we have assumed the genuineness of all signatures
and the authenticity of all documents submitted to us as originals, and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies. As to various questions of fact material to this opinion,
we have relied, to the extent we deem reasonably appropriate, upon
representations or certificates of officers or directors of the Company and upon
documents, records and instruments furnished to us by the Company, without
independently checking or verifying the accuracy of such documents, records and
instruments furnished to us by the Company.
We are not admitted to the practice of law in any jurisdiction
but the State of New York, and we do not express any opinion as to the laws of
other states or jurisdictions other than the General Corporation Law of the
State of Delaware and the federal law of the United States. No opinion is
expressed as to the effect that the law of any other jurisdiction may have upon
the subject matter of the opinion expressed herein under conflicts of law
principles, rules and regulations or otherwise.
Based on the foregoing, we are of the opinion that the shares of
Preferred Stock and the shares of Common Stock which are currently issued and
outstanding have been validly issued and are fully paid and nonassessable and
that the shares of Common Stock issuable on conversion of the Preferred Stock,
when so issued, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of our name under the caption "Legal Matters" in the Prospectus included
therein. In giving this consent, we do not admit that we are within the category
of persons whose consent is required by Section 7 of the Securities Act of 1933
or the rules and regulations promulgated thereunder by the Securities and
Exchange Commission.
Very truly yours,
BATTLE FOWLER LLP
792279.1
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-68019) and related
Prospectus of Marvel Enterprises, Inc. (formerly Toy Biz, Inc.) for the
registration of 36,642,683 shares of its common stock and 15,620,234 shares of
its 8% cumulative convertible exchangeable preferred stock and to the
incorporation by reference therein of our report dated March 9, 1998, except as
to Note 7 as to which the date is March 25, 1998, with respect to the
consolidated financial statements and schedule of Toy Biz, Inc. included in its
Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
Ernst & Young LLP
New York, New York
December 23, 1998
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-68019) and related
Prospectus of Marvel Enterprises, Inc. (formerly Toy Biz, Inc.) for the
registration of 36,642,683 shares of its common stock and 15,620,234 shares of
its 8% cumulative convertible exchangeable preferred stock and to the
incorporation by reference therein of our report dated April 14, 1998, with
respect to the consolidated financial statements and schedule of Marvel
Entertainment Group, Inc. included in its Annual Report (Form 10-K/A) for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
Ernst & Young LLP
New York, New York
December 23, 1998
