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As filed with the Securities and Exchange Commission on September 30, 1999
Registration Statement No. _________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------------------
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)
387 Park Avenue South
New York, New York 10016
(212) 696-0808
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
F. Peter Cuneo
President and Chief Executive Officer
387 Park Avenue South
New York, New York 10016
(212) 696-0808
(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: As
promptly as reasonably practical, after the effective date of this registration
statement, to permit an orderly sale.
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. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of each class Amount Proposed Maximum Proposed Maximum
of securities to be to be Offering Price per Aggregate Offering Amount of
Registered Registered Share Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Warrants 936,563 $11.88 (1) $11,126,368 $3,093
- ---------------------------------------------------------------------------------------------------------------------
8% Cumulative Convertible Exchangeable
Preferred Stock 936,563 $11.88 $11,126,368 (2)
- ---------------------------------------------------------------------------------------------------------------------
Common Stock 973,089 N/A N/A (3)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $11.88 (1) $11,126,368 $3,093
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the Registration Fee.
Based, in accordance with Rule 457(g) under the Securities Act of 1933,
upon the price at which the Class B Warrants may be exercised.
(2) No fee required, in accordance with Rule 457(g) under the Securities
Act of 1933.
(3) No fee required, in accordance with Rule 457(i) under the Securities
Act of 1933.
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.
872161.5
<PAGE>
================================================================================
Prospectus
MARVEL ENTERPRISES, INC.
936,563 Class B Warrants
936,563 Shares of 8% Cumulative Convertible Exchangeable Preferred Stock
973,089 Shares of Common Stock
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This prospectus relates to the public offer and sale of warrants and
the shares of stock that underlie them. We are issuing the warrants to American
Stock Transfer & Trust Company as warrant liquidation agent for certain
unsecured creditors in the chapter 11 cases of Marvel Entertainment Group, Inc.
and certain of its subsidiaries. The warrant liquidation agent will sell the
warrants to the public. The sales prices, and the methods of determining those
prices, have yet to be determined. All net proceeds of the sale of the warrants
by the warrant liquidation agent will be held in trust for the unsecured
creditors. We will not receive any proceeds from the sale of the warrants, but
we will receive the cash payable upon any exercise of the warrants.
Each warrant covered by this prospectus entitles its holder to purchase
one newly issued share of preferred stock for $11.88 on or before April 1, 2000.
This prospectus covers offers and sales related to three transactions:
o the sale of the warrants by the warrant liquidation agent to the
public;
o our issuance of shares of preferred stock to warrant-holders who
exercise their warrants; and
o our issuance of shares of common stock to preferred stockholders
who convert their preferred stock.
The warrants are not listed for trading on any national securities
exchange or on the Nasdaq Stock Market, and neither is the preferred stock. We
have no plans to seek the listing of the warrants or the preferred stock on any
national securities exchange or on the Nasdaq Stock Market. The common stock is
listed for trading on the New York Stock Exchange.
See "Risk Factors" beginning on page 5 for certain factors relevant to
an investment in the warrants, the preferred stock and the common 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.
, 1999
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872161.5
<PAGE>
TABLE OF CONTENTS
Page
Prospectus Summary.........................................................3
Risk Factors...............................................................5
Ratio of Combined Fixed Charges and
Preference Dividends to Earnings.......................................11
Forward-Looking Statements................................................11
Federal Income Tax Considerations.........................................12
Use of Proceeds...........................................................16
Description of the Warrants...............................................16
Plan of Distribution......................................................18
Where You Can Find More Information.......................................19
Experts...................................................................20
Legal Matters.............................................................20
872161.5
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<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.
About Marvel Enterprises, Inc.
We are an entertainment company. We operate in the licensing, comic
book publishing and toy businesses. We own the copyrights to over 3,500
fictional characters, including Spider-Man, X-Men, Captain America, Fantastic
Four and The Incredible Hulk.
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. Our acquisition of Marvel Entertainment was part of
a plan of reorganization for Marvel Entertainment that was proposed, and
ultimately confirmed by the court, in Marvel Entertainment's bankruptcy case.
We operate through the following three business divisions:
1. Marvel Licensing. Marvel Licensing licenses our characters for use
in television programs, motion pictures, destination-based entertainment (such
as theme parks), on-line media, and other consumer products.
2. Marvel Publishing. Marvel Publishing is one of the world's leading
publishers of comic books. We believe that our characters are among the oldest
and most recognizable in the entertainment industry. Marvel Publishing has
published comic books based upon our characters for over 60 years, including
some of the world's most popular comic book titles.
3. Toy Biz. Toy Biz designs, develops, markets and distributes both
innovative and traditional toys in the United States and internationally. Our
toy products fall into three categories: toys based on our characters,
proprietary toys designed and developed by us, and toys based on properties
licensed to us by third parties.
We sold our Fleer/SkyBox sports and entertainment trading card business
in February 1999. We intend to dispose of our Panini activity stickers and
adhesive paper business in 1999.
Our executive offices are located at 387 Park Avenue South, New York,
New York 10016 and our telephone number is (212) 696-0808.
872161.5
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<PAGE>
Securities to be Offered
This prospectus relates to the offer and sale of three types of
securities:
o Class B Warrants. Each Class B Warrant allows its holder to
purchase one newly issued share of preferred stock of Marvel
Enterprises for $11.88 at any time on or before April 1, 2000;
o shares of preferred stock that are issuable by us upon exercise
of the Class B Warrants; and
o shares of common stock that are issuable by us upon conversion
of those shares of preferred stock.
The formal name of the preferred stock covered by this prospectus is 8%
cumulative convertible exchangeable preferred stock, but we refer to it in this
prospectus simply as preferred stock. Each share of preferred stock:
o is entitled to receive dividends, at the rate of 8% per year, in
cash or in additional shares of 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;
o can be converted into common stock by Marvel Enterprises
beginning on October 1, 2001 if the trading price of the common
stock is above a certain dollar amount; and
o can be repurchased by Marvel Enterprises for $10 beginning on
October 1, 2001.
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
securities offered by this prospectus.
872161.5
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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 our Class B Warrants, to exercise
warrants for preferred stock or to convert those shares of preferred stock into
common stock. This section includes or refers to certain forward-looking
statements. You should refer to the explanation of the qualifications and
limitations on those forward-looking statements discussed on pages 11 and 12 of
this prospectus.
Our indebtedness is substantial and it could hurt our financial health.
We have a lot of indebtedness, which presents a risk to our
stockholders that our financial health will suffer. Our indebtedness consists of
$250 million of senior notes due 2009 and a guarantee of $27 million of the
indebtedness of Panini, S.p.A. In addition, our secured working capital facility
can allow us to borrow up to $60 million.
The amount of our indebtedness could have important consequences to
holders of our warrants and our common stock and 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, which will reduce the funds available to operate
our business;
o we have made promises in our loan agreements and in the
indenture governing the senior notes 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 preferred stock, to pay interest on
the senior notes, to repay our lenders and to operate and grow 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 and in the
indenture governing the senior notes, our lenders or the noteholders could
demand that we pay back all the money we owe them under those agreements
immediately. It is possible that the cash we generate by operating our business,
together with borrowings expected to be available under our working capital
facility, will be too little to make required payments under our loan agreements
and the indenture and to cover our other cash requirements. In that case, we
would need to renegotiate those agreements, to refinance our indebtedness or to
obtain additional financing; but we might be unable to do so.
We may need additional financing but be unable to obtain it.
The terms of our working capital facility require us to comply with
various financial and other covenants in order to borrow money. We failed to
comply with similar covenants under the revolving credit facility that we
obtained on October 1, 1998 (which we terminated in February 1999) and under the
bridge loan that we obtained on October 1, 1998 (which we paid back in full in
February 1999). If we are limited in our ability to borrow money under our
working capital facility or if we are otherwise unable to obtain the funds we
need, it could significantly harm us.
872161.5
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<PAGE>
Our financing agreements limit our operating flexibility.
Both the indenture that governs the senior notes and our working
capital facility constrict us in ways that may limit our financial success. For
instance, they limit our ability to:
o incur additional indebtedness;
o incur liens;
o pay dividends, make investments or make some types of payments;
o consummate some types of asset sales;
o enter into some types of transactions with affiliates;
o merge or consolidate with any other person; or
o sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of our assets.
Our working capital facility requires us to satisfy various financial
tests. Events beyond our control might cause us to fail those tests. If we fail
any of the tests, our working capital facility lenders will have the right to
demand that we pay back all the money we owe them at once. If we are unable to
repay the money, those lenders might be entitled to sell substantially all our
assets, which we expect will be pledged to the lenders to secure our debt.
Because a significant portion of our assets are intangible, we might not have
any assets left for stockholders after a foreclosure by creditors.
Because a significant portion of our assets are intangible, holders of
our common and even our preferred stock might be entitled to nothing after a
foreclosure by our secured creditors. Our intangible assets consist of
copyrights, trademarks, licenses, goodwill and other intangibles. These assets
comprised $487.7 million of our $689.9 million of total assets at December 31,
1998, resulting in negative tangible net worth of $304.1 million. The value of
these assets could be reduced materially in the future by changing consumer
preferences, our failure to implement our business strategy, competition and
other future trends. As a result, our assets may not be sufficient to repay all
of our indebtedness if secured creditors foreclose on the assets pledged to them
or if we are forced to dispose of our assets to meet our obligations.
We might not be able to integrate the businesses of Marvel Entertainment and Toy
Biz.
Our future success will depend in part on our ability to integrate
effectively the businesses of Toy Biz and Marvel Entertainment. This process may
require a disproportionate amount of time and attention of our management,
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 combination 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 Toy Biz's and 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, among others, general and regional
economic conditions, interest rates, competition, and the ability to attract and
maintain skilled
872161.5
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<PAGE>
employees. As a result, the combination might not be successful, our business
strategies might not be effective and we might not be able to achieve our goals.
There have been declines in many of our lines of business in recent periods.
In recent years there has been a decline in many of our businesses, and
that decline may continue. In 1995 and 1996, there was an overall decline in
Marvel Entertainment's core publishing business, its licensing business and its
sports and entertainment trading card business which had a material adverse
effect on Marvel Entertainment. This decline, along with the substantial
indebtedness incurred by Marvel Entertainment in connection with its acquisition
program, ultimately led Marvel Entertainment to file for bankruptcy protection
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 1997
and 1998, Marvel Entertainment's publishing revenues continued to decline due to
these reasons and Marvel Entertainment's decision to eliminate unprofitable
comic book titles. We do not expect publishing revenues to return to
pre-bankruptcy levels.
Marvel Entertainment's licensing revenues declined significantly from
pre-bankruptcy levels. These revenues decreased from $54.7 million in 1995 to
$15.1 million in 1998. Our licensing revenues might never reach Marvel
Entertainment's pre-bankruptcy levels.
The bankruptcy of Marvel Entertainment also caused a decline in our toy
business because a substantial portion of our toy products were based on
characters licensed to us by Marvel Entertainment. Our toy business might not
return to its pre-bankruptcy levels. In addition, during the fourth quarter of
1998, our operations were hurt by the decision of Toys 'R' Us, one of our major
customers, to significantly reduce its toy inventory levels.
Our net toy sales were $221.6 million, $150.8 million and $212.4
million in 1996, 1997 and 1998, respectively, while our toy operating income
(loss) was $27.2 million, $(49.3) million and $(18.7) million, respectively, for
those periods. Marvel Entertainment's revenues (including the Fleer/SkyBox
sports and entertainment trading card and Panini activity sticker and adhesive
paper businesses) were $745.5 million, $471.7 million and $273.5 million in
1996, 1997 and the nine months ended September 30, 1998, respectively, while its
operating loss was $(386.3) million, $(191.4) million and $(2.3) million,
respectively, for those periods.
We believe that the sales and the profitability of each of our
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 Marvel Entertainment's plan of
reorganization has alleviated these concerns, our sales and profitability might
continue to be adversely affected.
Our customer base for toys is concentrated.
Like other toy makers, we are dependent upon toy retailers and mass
merchandisers to distribute our products. The retail toy business is highly
concentrated. The five largest customers for our toy products accounted in the
aggregate for approximately 66% of our total toy sales in 1998. An adverse
change in, or termination of, our relationship with one or more of our major
customers could have a material adverse effect on us. In recent years, the
retail chain store industry, and the toy retail industry in particular, have
undergone significant consolidation. To the extent that this consolidation
continues, our distribution base could shrink, thereby concentrating an even
greater percentage of our sales in a smaller number of retailers and increasing
the remaining toy retailers' ability to negotiate more favorable terms and
prices from us.
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<PAGE>
Toy retailers' inventory management systems could cause us to produce the wrong
amount of toy products.
Each of our five top toy customers uses, to some extent, inventory
management systems which track sales of particular products and rely on reorders
being rapidly filled by suppliers like us, rather than on large inventories
being maintained by the retailers themselves. These systems increase pressure on
us to fill orders promptly. The systems also shift a portion of retailers'
inventory risk onto us. Our production of excess products to meet anticipated
retailer demand could result in markdowns and increased inventory carrying costs
for us on even our most popular items. For instance, we believe that our
operations were negatively impacted in the fourth quarter of 1998 by the
decision of Toys 'R' Us, one of our major customers, to significantly reduce its
toy inventory levels. If we fail to anticipate a high demand for our products,
however, we face the risk that we may be unable to provide adequate supplies of
popular toys to retailers in a timely fashion, particularly during the Christmas
season, and may consequently lose sales.
We are vulnerable to changing consumer preferences.
Our new and existing toy products are subject to changing consumer
preferences. Most of our toy products can be successfully marketed for only a
limited period. In particular, toys based on feature films are in general
successfully marketed for only a year or two following the film's release.
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. 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. Part of our strategy is to make toys based on the
anticipated success of feature film releases and TV show broadcasts. If these
releases and broadcasts are not successful, we may not be able to sell these
toys profitably, if at all. In addition, we derive a substantial portion of our
revenues from a limited number of popular toys. In particular, we expect
products based on our World Championship Wrestling license to generate a
significant portion of our operating income during the next several years. If
these products are not successful, it could have a material adverse effect on
us.
We depend on toy manufacturers in China.
A large number of our toy products are manufactured in China, which
subjects us to risks of currency exchange fluctuations, transportation delays
and interruptions, and political and economic disruptions. Our ability to obtain
products from our Chinese manufacturers is dependent upon the United States'
trade relationship with China. The maintenance by the United States of "normal
trade relations" with China (the equivalent of what was formerly referred to as
the United States giving China "most favored nation" status), which is reviewed
annually by the United States government, is a regular topic of political
controversy. The loss of "normal trade relations" with China would increase the
cost of importing products from China significantly, which could 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. Our inability to find those
alternate sources could have a material adverse effect on us.
We purchase goods from manufacturers in China mostly in Hong Kong
dollars and, accordingly, fluctuations in Hong Kong monetary rates may have an
impact on 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.
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<PAGE>
Our toy business is seasonal.
Our annual operating performance depends, in large part, on our sales
of toys during the relatively brief Christmas selling season. Unlike many
industries, the toy industry tends to be seasonal. During 1996, 1997 and 1998,
64%, 67% and 60%, respectively, of our domestic net toy sales were realized
during the second half of the year. We expect that our toy business will
continue to experience a significant seasonal pattern for the foreseeable
future. This seasonal pattern requires significant use of working capital mainly
to build inventory during the year, prior to the Christmas selling season, and
requires accurate forecasting of demand for our products during the Christmas
selling season.
We must often make advance payments and guarantee royalties under licenses that
we acquire.
When we obtain licenses from others to manufacture products based on
their characters, we are often required to pay significant non-refundable
advances or to guarantee significant minimum royalty payments without knowing
whether the characters will be popular. If a character does not turn out to be
popular, the non-refundable advances and guaranteed minimum royalties might
cause us to lose a significant amount of money on the license.
We depend on a single direct market comic book distributor.
We distribute our comic book publications to the direct market through
the only major comic book distributor. The direct market accounted for
approximately 81% of Marvel Publishing's net publishing revenues in 1998. As a
result, a termination of our agreement with that distributor could significantly
disrupt our publishing operations. Our agreement with the distributor 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 also has the right to
terminate upon the happening of certain events. We believe that the termination
of the current distribution agreement would not have a long-term material
adverse effect on us.
The outcome of stockholder votes is controlled by a small number of
stockholders.
A majority of the voting power of our stock is held by a small number
of stockholders, who can determine the outcome of most stockholder votes. In
addition, holders of over 60% in voting power of our stock have entered into a
stockholders' agreement with us. 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. Other stockholders, therefore,
have little or no ability to select our directors while the stockholders'
agreement is in effect.
Holdings of preferred stock are highly concentrated in a small number of
holders.
A significant portion of the outstanding shares of preferred stock are
held by a relatively small number of stockholders. Sales of a large number of
the outstanding shares of 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 preferred stock.
There is no active trading market for the preferred stock or the warrants.
There is currently no active trading market for the Class B Warrants or
the preferred stock. The warrants are not listed for trading on any national
securities exchange or on the Nasdaq Stock Market, and neither is the preferred
stock. We have no plans to seek the listing of the warrants or the preferred
stock on any national securities exchange or on the Nasdaq Stock Market. It is
possible that no active trading market in the warrants or the preferred stock
will develop and that purchases of the warrants offered by this prospectus, and
the shares of preferred stock for which those warrants may be exercised, will be
an illiquid investment.
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<PAGE>
Dividends paid in kind on the preferred stock may cause preferred stockholders
to suffer tax liability without the receipt of any cash.
Holders of preferred stock may incur income tax liability without the
receipt of any cash to pay that liability. Dividends on the preferred stock may
be paid, at our option, either in cash or in additional shares of preferred
stock. Dividends paid in additional shares of 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 preferred stock even though those dividends provide
no cash to those holders with which to pay the resulting income tax liability.
We can repurchase the preferred stock.
We have the option, on thirty days' notice, to repurchase all of the
shares of preferred stock at any time after October 1, 2001 for $10 per share,
plus all accrued but unpaid dividends, whether or not the holders of preferred
stock wish us to do so.
We can require conversion of 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 preferred stock at
a time into shares of common stock. Purchasers of the shares of preferred stock
offered by this prospectus therefore risk having their shares converted, against
their will, into shares of common stock.
Corporate holders of preferred stock risk loss of a tax deduction if we exchange
the preferred stock.
If we exchange the preferred stock for subordinated notes, corporate
holders of preferred stock may suffer adverse tax consequences. If a majority of
the holders of preferred stock approve, we may exchange all of the shares of
preferred stock for subordinated notes at any time after April 1, 2000. Those
notes will have substantially the same economic terms, voting rights and
conversion features as the preferred stock, but instead of receiving dividend
payments, holders of subordinated notes would receive interest payments.
Corporate holders of preferred stock therefore risk the loss of the "dividends
received" deduction in the event of our exchange of the shares of preferred
stock for subordinated notes.
The warrants have a short life.
The warrants expire on April 1, 2000 and may not be exercised after
that date. If holders of warrants do not exercise their warrants by that date,
the warrants will be worthless.
There may never come a time when the warrants will be worth exercising.
You might be able to buy shares of preferred stock in the open market
for a net cost of less than $11.88 per share, and in that case you would be
wasting your money if you exercised your Class B Warrants. In order to exercise
a Class B Warrant, you have to pay us $11.88 for a share of preferred stock. If
you can buy shares of preferred stock for a net cost of less than $11.88 per
share, your warrants may not be worth exercising. Any value that the warrants
have is based on the possibility that the market price of the preferred stock
will rise to more than $11.88 per share before the warrants expire, but no one
can guarantee you that that will happen. If the price of the preferred stock
does not rise to more than $11.88 per share before the warrnts expire, then the
warrants will have been essentially worthless. It is possible that the warrants
covered by this prospectus will, at the end of their lives, have been
essentially worthless.
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<PAGE>
We have not yet achieved Year 2000 compliance.
Through June 30, 1999, we incurred Year 2000, or Y2K, conversion costs
of approximately $2.0 million, and we expect to incur an additional $500,000 in
1999. We are utilizing both internal and external resources to upgrade or
replace our software for Y2K compliance. We anticipate completing the Y2K
project by October 31, 1999.
During Marvel Entertainment's bankruptcy, the Marvel Licensing and
Marvel Publishing divisions received only nominal Y2K conversion attention. We
have placed all our divisions on an accelerated program and have enlisted full
time external project management resources to supplement our efforts.
The worst-case scenarios would be manual performance of all accounting
functions and the loss of relationships with major customers because of the
inability of our computers to interface with theirs. We have not yet developed a
contingency plan to assess the likelihood of, and to address, the worst-case
scenarios. If the Y2K project is not completed on a timely basis, or if our
customers or suppliers fail to address all the Y2K issues, it could have a
material adverse impact on our operations.
<TABLE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS
<CAPTION>
Pro Six Months
Forma Ended
1994 1995 1996 1997 1998 1998 6/30/99
---- ---- ---- ---- ----- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed 16.16 67.63 57.64 -- -- -- --
Charges and Preference Dividends
===========================================================================
</TABLE>
For the purposes of the ratio of earnings to combined fixed charges and
preference dividends, 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 and preference dividends, the
dollar amount of coverage deficiency was $49.7 million, $31.6 million, $90.1
million and $9.4 million for the twelve months ended December 31, 1997 and 1998,
the pro-forma twelve months ended December 31, 1998 and the six months ended
June 30,1999, respectively.
FORWARD-LOOKING STATEMENTS
This prospectus may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934. Forward- looking statements
are subject to risks and uncertainties. Those risks and uncertainties may cause
our actual results, performance or achievements to be materially different from
what is expressed or implied by the forward-looking statements. Forward-looking
statements are based on assumptions and describe our future plans, strategies
and expectations. Forward-looking statements are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or comparable terminology. In addition to the
risks and uncertainties discussed in "Risk Factors," factors which could have a
material adverse effect on our operations and future prospects include, but are
not limited to,
o our potential inability to successfully implement our business
strategy,
o a decrease in the level of media exposure or popularity of our
characters resulting in declining revenues from products based
on those characters,
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o the lack of commercial success of properties owned by major
entertainment companies that have granted us toy licenses,
o the lack of consumer acceptance of new product introductions,
o production delays or shortfalls,
o continued pressure by certain of our major retail customers to
significantly reduce their toy inventory levels,
o the impact of competition and changes to the competitive
environment on our products and services,
o changes in technology (including uncertainties associated with
Year 2000 compliance),
o changes in governmental regulation, and
o other factors detailed from time to time in our filings with the
Securities and Exchange Commission.
These risks and uncertainties should be considered in evaluating any
forward-looking statements contained or incorporated by reference in this
prospectus.
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 investors 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, preferred stock and/or warrants of Marvel
Enterprises, Inc. ("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 consummation of the plan of
reorganization for Marvel Entertainment that was confirmed on July 31, 1998 by
the United States District Court for the District of Delaware (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
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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 by means of which Marvel acquired Marvel Entertainment
pursuant to the Plan (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 of Marvel nor Marvel will recognize gain or loss.
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 the Plan,
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.
Purchase and Exercise of Warrants
When you purchase the warrants, you will acquire a tax basis in the
warrants equal to the amount that you pay for the warrants. If you exercise the
warrants and acquire preferred stock, you will not recognize gain or loss for
general income tax purposes, and your tax basis in the preferred stock will
equal your tax basis in the warrants plus the amount you pay for the preferred
stock. If you sell the warrants, you will have a capital gain or loss, equal to
the difference between the amount you receive and your tax basis in the
warrants. If the warrants are unexercised and expire, you will have a capital
loss equal to your tax basis in the warrants.
Preferred Stock Dividends
Because Marvel is required to redeem the 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 preferred stock will be deemed to have
received, each year, an amount equal to the dividends accruing on the 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 preferred
stock to reduce their tax basis in the preferred stock and then recognize gain).
In addition, if at any time Marvel makes a distribution to its stockholders and,
pursuant to the antidilution provisions of the preferred stock, the conversion
rate of the preferred stock is increased, such increase may be deemed to be the
payment of a taxable dividend to the holders of the preferred stock.
Because the preferred stock is subject to mandatory redemption and,
subject to certain limitations, is exchangeable for 8% Convertible Subordinated
Debentures at Marvel's option, there is a risk that the preferred stock could be
treated as indebtedness for Federal income tax purposes. Marvel takes the
position (which counsel believes is reasonable) that the preferred stock
constitutes stock for Federal income tax purposes and, therefore, the material
tax consequences to holders of preferred stock should be as described herein.
If,
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however, it is determined that the 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 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 this discussion assumes that
the preferred stock will be classified as stock for Federal income tax purposes.
Taxable dividends on the 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 stockholder incurs interest expense on debt directly
attributable to the preferred stock). A corporate stockholder'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
stockholder to reduce its basis in the 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 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 stockholders, 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
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 preferred stock may
constitute extraordinary dividends for this purpose. An "extraordinary dividend"
on the preferred stock would generally be a dividend (including a deemed
dividend) that either equals or exceeds 5% of the holder's basis in such stock,
treating all dividends having ex-dividend dates within an 85-day period as one
dividend, or exceeds 20% 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.
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%, 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.
Conversion of Preferred Stock to Common Stock
If the preferred stock is converted to common stock, neither the holder
of the 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 preferred stock will be transferred to the common stock in the hands of a
converting stockholder.
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Redemption of Preferred Stock for Cash
A redemption of the 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 stockholder 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 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
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 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 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 preferred stock, the dividend will be
an extraordinary dividend under Section 1059 of the Code irrespective of such
holder's holding period.
Exchange of Preferred Stock for 8% Convertible Subordinated Debentures
Marvel may, under certain circumstances, exchange all of the preferred
stock for 8% Convertible Subordinated Debentures of Marvel. If this occurs, the
treatment to the holders of the preferred stock will generally be as described
under the caption "Redemption of Preferred Stock for Cash" 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 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.
Backup Withholding
Under Section 3406 of the Code and under applicable Treasury
regulations, a noncorporate holder of preferred stock, 8% Convertible
Subordinated Debentures, or common stock may be subject to backup withholding at
the rate of 31% 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, 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 IRS notifies the payor that
the TIN furnished by the payee is incorrect, (iii) there has been a "notified
payee
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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% from any dividend payment made with respect to 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
Half of the fees and expenses of American Stock Transfer & Trust
Company as warrant liquidation agent (the "Warrant Liquidation Agent") for
selling the Class B Warrants covered by this prospectus will be paid from the
net proceeds of that sale. Marvel Enterprises, Inc. (the "Company") will pay the
remainder of the fees and expenses, which will be more than 50% if the net
proceeds of the warrant sale do not cover half the fees and expenses. Any
remaining net proceeds will be held in trust for the benefit of certain
unsecured creditors (the "Unsecured Creditors") in the chapter 11 cases of
Marvel Entertainment and some of its subsidiaries, in accordance with the plan
of reorganization (the "Plan") that was confirmed by the court overseeing those
chapter 11 cases. See "Plan of Distribution."
DESCRIPTION OF THE WARRANTS
There are currently no Class B Warrants outstanding. Under the Plan,
the Company is to issue a total of 3,000,000 Class B Warrants. The Company has
issued a total of 2,063,437 Class B Warrants to date (in two separate series),
each of which has expired. The 936,563 Class B Warrants covered by this
prospectus (Series 3) are the last of the Class B Warrants provided for in the
Plan.
Each Class B Warrant is exercisable for one share of 8% cumulative
convertible exchangeable preferred stock, par value $0.01 per share ("8%
Preferred Stock"), for a period of six months after the date it is issued. All
Class B Warrants issued by the Company on a particular date constitute the same
series and have the same exercise price. The Class B Warrants issued within one
month of October 1, 1998 (the "Consummation Date") had an exercise price of
$10.65 per share. Under the Plan, the exercise price of Class B Warrants issued
after the Consummation Date increases by approximately $0.11 per share per month
based on the date they are issued and is fixed at the exercise price so
determined on the date of issuance.
Each Class B Warrant covered by this prospectus (Series 3) entitles its
registered holder to purchase one newly issued share of 8% Preferred Stock at an
exercise price of $11.88 at any time after issuance until 5:00 p.m., New York
City Time, on April 1, 2000 (the "Expiration Date").
The Class B Warrants will be issued pursuant to the Class B Warrant
Agreement dated as of October 1, 1998 (the "Warrant Agreement") between the
Company and American Stock Transfer & Trust Company, as warrant agent, and will
be evidenced by warrant certificates in registered form.
A Class B Warrant may be exercised upon surrender of the Class B
Warrant certificate on or prior to the Expiration Date at the offices of the
warrant agent, American Stock Transfer & Trust Company, Brooklyn, New York, with
the "Subscription Form" on the reverse side of the Class B Warrant certificate
completed and executed as indicated, accompanied by payment of the full exercise
price (in cash by wire transfer or, at the option of the holder, by certified or
official bank check payable to the order of the Company in immediately available
funds in lawful money of the United States of America) for the number of shares
of 8% Preferred Stock with respect to which the Class B Warrant is being
exercised. Shares of 8% Preferred Stock issued upon
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exercise of Class B Warrants and payment in accordance with the terms of the
Class B Warrants will be fully paid and non-assessable.
Immediately after the Expiration Date, each Class B Warrant covered by
this prospectus which has not been exercised will become void, and all rights
thereunder and in respect thereof under the Warrant Agreement will cease.
The Class B Warrants do not confer upon the warrant-holder any voting
or other rights of a stockholder of the Company.
The number and kind of securities purchasable upon the exercise of the
Class B Warrants and the exercise price thereof are subject to adjustment upon
the occurrence of certain events as set forth in the Warrant Agreement,
including (i) the issuance of common stock of the Company, par value $0.01 per
share ("Common Stock"), or other shares of capital stock as a dividend or
distribution on the Common Stock, and subdivisions, reorganizations and
combinations of the Common Stock and (ii) the issuance of Common Stock, 8%
Preferred Stock or other shares of capital stock as a dividend or distribution
on the 8% Preferred Stock, and subdivisions, reorganizations and combinations of
the 8% Preferred Stock.
If the Company had issued any shares of 8% Preferred Stock or Common
Stock or rights, options or warrants to acquire shares of 8% Preferred Stock or
Common Stock, other than Exempted Issuances (as defined below), within the first
six months after the Consummation Date at an issue price which was lower than
(A) in the case of issuances of shares of 8% Preferred Stock or rights, options
or warrants to acquire shares of 8% Preferred Stock, the then-current exercise
price, or (B) in the case of issuances of shares of Common Stock or rights,
options or warrants to acquire shares of Common Stock, the quotient of the
current exercise price divided by the number of shares of Common Stock (the
"Conversion Number") then issuable on conversion of a share of 8% Preferred
Stock, then the exercise price of all outstanding Class B Warrants and Class B
Warrants issued thereafter would have been adjusted to a price equal to the
issue price, if the adjustment was triggered by the issuance of shares of 8%
Preferred Stock or of rights, options or warrants to acquire shares of 8%
Preferred Stock, or equal to the product of the issue price multiplied by the
Conversion Number, if the adjustment was triggered by the issuance of shares of
Common Stock or of rights, options or warrants to acquire shares of Common
Stock. "Exempted Issuances" means securities issuances contemplated by the Plan,
issuances of shares of 8% Preferred Stock as dividends on shares of 8% Preferred
Stock and issuances pursuant to employee benefit plans of shares of, and options
to acquire shares of, Common Stock, provided that such issuances pursuant to
employee benefit plans which are vested or scheduled to vest prior to the
expiration date of the Class B Warrants do not exceed, in the aggregate, 5% of
the sum of the shares of Common Stock outstanding as of the Consummation Date
and subject to issuance upon conversion of shares of 8% Preferred Stock
outstanding as of the Consummation Date.
If the Company shall issue any shares of 8% Preferred Stock or Common
Stock or rights, options or warrants to acquire shares of 8% Preferred Stock or
Common Stock, other than Exempted Issuances, more than six months after the
Consummation Date but prior to the expiration date of the Class B Warrants for
an issue price which is lower than (A) in the case of issuances of shares of 8%
Preferred Stock or rights, options or warrants to acquire shares of 8% Preferred
Stock, both the then-current exercise price and the product of the Conversion
Number multiplied by the current market price of the Common Stock on the date of
issuance, or (B) in the case of issuances of shares of Common Stock or rights,
options or warrants to acquire shares of Common Stock, both the quotient of the
current exercise price divided by the Conversion Number and the current market
price of the Common Stock on the date of issuance, then the exercise price of
all outstanding Class B Warrants and Class B Warrants issued thereafter shall be
changed to an amount equal to the issue price, if the adjustment is triggered by
the issuance of shares of 8% Preferred Stock or of rights, options or warrants
to acquire shares of 8% Preferred Stock, or equal to the product of the issue
price multiplied by the Conversion Number, if the adjustment is triggered by the
issuance of shares of Common Stock or of rights, options or warrants to acquire
shares of Common Stock.
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The Company may, at its option, at any time during the term of the
Class B Warrants, reduce the then-current exercise price to any amount deemed
appropriate by the Board. The Company and the registrar and warrant agent for
the Class B Warrants may from time to time supplement or amend the Warrant
Agreement without approval of any holder to cure, among other things, any
ambiguity or to correct or supplement any provision thereof; provided, however,
that any supplement or amendment to the Warrant Agreement that has an adverse
effect on the holders of Class B Warrants will require the written consent of
the holders representing a majority of the then-outstanding Class B Warrants.
The Plan provides that if, on the first anniversary of the Consummation
Date, any Class B Warrants have not been distributed, the Company will issue
those warrants to a warrant liquidation agent which shall sell those warrants
into the market as promptly as reasonably practical to permit an orderly sale.
One-half of the fees and expenses of the warrant liquidation agent shall be paid
from the net proceeds of the sale of those warrants and the balance of those
fees and expenses shall be paid by the Company. Any remaining net proceeds of
the sale of those warrants will be held in trust for distribution to the
claimants who would otherwise have been entitled to receive those Class B
Warrants.
PLAN OF DISTRIBUTION
Pursuant to the Plan, the Class B Warrants covered by this prospectus
are being issued to the Warrant Liquidation Agent. The warrant liquidation agent
will sell the Class B Warrants to the public. The shares of preferred stock
covered by this prospectus are issuable on exercise of the Class B Warrants, and
the shares of common stock covered by this prospectus are issuable on conversion
of those shares of preferred stock.
This prospectus covers offers and sales related to three transactions:
o the sale of the Class B Warrants by the Warrant Liquidation
Agent to the public;
o our issuance of shares of preferred stock to warrant-holders who
exercise their warrants; and
o our issuance of shares of common stock to preferred stockholders
who convert their preferred stock.
In accordance with the Plan, half of the Warrant Liquidation Agent's
fees and expenses in connection with its sale of the Class B Warrants, which are
estimated to be $6,500, will be paid out of the net proceeds of that sale. We
will pay the remainder of the fees and expenses, which will be more than 50% if
the net proceeds of the warrant sale do not cover half the fees and expenses.
Any remaining net proceeds of the sale of the Class B Warrants will be held in
trust for the Unsecured Creditors. We will not receive any proceeds from any
offering or sale by the Warrant Liquidation Agent of the Class B Warrants, but
we will receive the cash payable upon any exercise of the warrants. We will pay
all costs, expenses and fees in connection with the registration of the
securities covered by this prospectus. American Stock Transfer & Trust Company
is not only the Warrant Liquidation Agent but is also our transfer agent and the
warrant agent for the Class B Warrants.
There are currently no Class B Warrants outstanding. The Warrant
Liquidation Agent will sell the Class B Warrants as promptly as reasonably
practical to permit an orderly sale, and may sell the Class B Warrants all at
once or in a series of sales from time to time. The Warrant Liquidation Agent
may sell the Class B Warrants at fixed prices or at prices that may be changed
(e.g., at prices it proposes, on a "best offer" basis, at market prices, if any,
prevailing at the time of sale, at prices related to those market prices or at
negotiated prices), by methods such as the following: (a) on the
over-the-counter bulletin board administered by the National Association of
Securities Dealers; (b) on markets, if any, where the Class B Warrants are
traded; (c) in privately negotiated transactions; (d) through broker-dealers,
which may act as agents or principals; (e) in a block trade in which a
broker-dealer will attempt to sell a block of Class B Warrants as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (f) directly to one or more purchasers; (g) through agents; (h)
through put or call option transactions, forward contracts or equity swaps
relating to the
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Class B Warrants; (i) through short sales of the Class B Warrants by the Warrant
Liquidation Agent or counterparties to those transactions; or (j) in any
combination of the above.
In effecting sales, brokers or dealers engaged by the Warrant
Liquidation Agent may arrange for other brokers or dealers to participate. The
broker-dealer transactions may include (a) purchases of the Class B Warrants by
a broker-dealer as principal and resales of the Class B Warrants 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. The compensation earned by participating broker-dealers may be in
excess of customary commissions. To the extent required, the number of warrants
to be sold, the name of the participating broker-dealer, the sale price, the
compensation earned and other material information will be disclosed in a
supplement to this prospectus.
We will not solicit or encourage warrant-holders to exercise their
warrants.
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 filings we make with
the Securities and Exchange Commission after the date of this prospectus under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Our Annual Report on Form 10-K for the year ended December 31,
1998;
2. Our Quarterly Reports on Form 10-Q for the quarters ended March
31, 1999 and June 30, 1999;
3. Our Current Reports on Form 8-K filed on February 4, 1999,
February 24, 1999, February 25, 1999, March 10, 1999 and July
20, 1999 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/A 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 preferred stock
contained in our Registration Statements on Form 8-A filed on
October 2, 1998 (SEC File Nos. 001-13638 and 000-24937);
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
872161.5
19
<PAGE>
(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 preferred stock;
6. The section entitled "INFORMATION CONCERNING MARVEL" on pages
29-37 of the Proxy Statement described in the preceding
paragraph, which includes information concerning Marvel
Entertainment Group, Inc.; and
7. The consolidated financial statements and schedule contained in
the Annual Report of Marvel Entertainment Group, Inc. on Form
10-K/A for the year ended December 31, 1997.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Marvel Enterprises, Inc., 387 Park
Avenue South, New York, New York 10016, Attention: William H. Hardie, III,
Corporate Secretary. Telephone requests may be directed to (212) 696-0808.
Exhibits to the documents will not be sent, unless those exhibits have
specifically been incorporated by reference in this prospectus.
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information
contained 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 Marvel Enterprises, Inc.
(formerly Toy Biz, Inc.) and its subsidiaries as of December 31, 1997 and 1998
and for each of the three years in the period ended December 31, 1998
incorporated herein by reference to Marvel Enterprises, Inc.'s Current Report on
Form 8-K filed on March 10, 1999 have been audited by Ernst & Young LLP,
independent auditors, as stated in their report 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. and its subsidiaries as of December 31, 1996 and 1997 and for each of the
three years in the period ended December 31, 1997 incorporated herein by
reference to Marvel Entertainment Group, Inc.'s Annual Report on Form 10-K/A for
the year ended December 31, 1997 have been audited by Ernst & Young LLP,
independent auditors, as stated in their report included therein (which contains
an explanatory paragraph describing conditions that raise substantial doubt
about Marvel Entertainment Group, Inc.'s ability to continue as a going concern,
as described in Note 1 to the consolidated financial statements) 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
The validity of the shares of common stock and preferred stock offered
hereby has been passed upon for us by Battle Fowler LLP, New York, New York.
Lawrence Mittman, a director of Marvel, is a partner of Battle Fowler LLP.
872161.5
20
<PAGE>
========================================= =================================
No dealer, salesperson or other
individual has been authorized to give
any information or make any 936,563 Class B Warrants
representations not contained in this
prospectus in connection with the 936,563 Shares of 8% Cumulative
offering covered by this prospectus. If Convertible Exchangeable
given or made, such information or Preferred Stock
representation must not be relied upon
as having been authorized by us or the 973,089 Shares of Common Stock
selling stockholders. This prospectus
does not constitute an offer to sell, or
a solicitation of an offer to buy, Class
B Warrants, preferred stock and/or
common stock in any jurisdiction where, MARVEL ENTERPRISES, INC.
or to any person to whom, it is unlawful
to make such offer or solicitation.
Neither the delivery of this 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 Prospectus
or in our affairs since the date hereof.
--------------------
TABLE OF CONTENTS
Page
Prospectus Summary....................3
Risk Factors..........................5 ,1999
Ratio of Combined Fixed Charges
andPreference Dividends to
Earnings..........................11
Forward-Looking Statements...........11
Federal Income Tax Considerations....12
Use of Proceeds......................16
Description of the Warrants..........16
Plan of Distribution.................18
Where You Can Find More Information..19
Experts..............................20
Legal Matters........................20
======================================== =================================
872161.5
<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 Class B Warrants, the
shares of 8% Preferred Stock and the shares of Common Stock to be registered
under this Registration Statement.
Securities and Exchange Commission, registration fee.....................$ 3,093
Warrant Liquidation Agent's fees and expenses*.............................6,500
Federal taxes..................................................................0
State taxes and fees...........................................................0
Transfer agent's fees..........................................................0
Engineering fees...............................................................0
Printing and engraving costs...............................................5,700
Mailing expenses.......................................................... 1,000
Accounting fees and expenses.............................................. 7,000
Legal fees and expenses...................................................10,000
Miscellaneous expenses.....................................................1,707
------
Total......................................................$35,000
=======
*The net proceeds of the sale of the Class B Warrants by the Warrant Liquidation
Agent will be applied to these fees and expenses until those net proceeds have
paid for half of the fees and expenses.
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 the Company 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 the Company 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 the Company. 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 -- 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).
872161.5
II-1
<PAGE>
4.1 -- The Company'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).
4.2 -- Class B Warrant Agreement dated as of October 1, 1998, between the
Company and American Stock Transfer and Trust Company, as warrant
agent (incorporated by reference to Exhibit 4.4 to the
Registrant's Current Report on Form 8-K, dated as of October 13,
1998, and filed on October 14, 1998).
5 -- Opinion of Battle Fowler LLP.
10 -- Warrant Liquidation Agency Agreement, dated as of October 1, 1998,
between the Company and American Stock Transfer and Trust Company,
as warrant liquidation agent.
12 -- Statements re: Computation of Ratios (incorporated by reference to
Exhibit 12 to the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1999).
23.1 -- Consent of Independent Auditors.
23.2 -- Consent of Independent Auditors.
24 -- Power of Attorney (included on signature page hereto).
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.
872161.5
II-2
<PAGE>
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 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.
872161.5
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 27th day of September,
1999.
MARVEL ENTERPRISES, INC.
a Delaware corporation (Registrant)
By: /s/ F. PETER CUNEO
-----------------------------
F. Peter Cuneo
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints William H. Hardie, III and Robert S. Hull 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>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ MORTON E. HANDEL Chairman of the Board and Director September 27, 1999
- ---------------------------------
Morton E. Handel
/s/ F. PETER CUNEO President and Chief Executive September 27, 1999
- --------------------------------- Officer (principal executive officer)
F. Peter Cuneo
/s/ ROBERT S. HULL Executive Vice President and Chief September 27, 1999
- --------------------------------- Financial Officer (principal
Robert S. Hull financial and accounting officer)
</TABLE>
872161.5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ AVI ARAD Chief Creative Officer and Director September 27, 1999
- ---------------------------------
Avi Arad
/s/ MARK DICKSTEIN Director September 27, 1999
- ---------------------------------
Mark Dickstein
/s/ SHELLEY F. GREENHAUS Director September 27, 1999
- ---------------------------------
Shelley F. Greenhaus
/s/ JAMES F. HALPIN Director September 27, 1999
- ---------------------------------
James F. Halpin
/s/ MICHAEL M. LYNTON Director September 29, 1999
- ---------------------------------
Michael M. Lynton
/s/ LAWRENCE MITTMAN Director September 27, 1999
- ---------------------------------
Lawrence Mittman
/s/ ISAAC PERLMUTTER Director September 27, 1999
- ---------------------------------
Isaac Perlmutter
/s/ ROD PERTH Director September 27, 1999
- ---------------------------------
Rod Perth
/s/ MICHAEL J. PETRICK Director September 29, 1999
- ---------------------------------
Michael J. Petrick
</TABLE>
872161.5
Exhibit 5
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
(212) 339-9150
September 30, 1999
Board of Directors
Marvel Enterprises, Inc.
387 Park Avenue South
New York, New York 10016
Re: Marvel Enterprises, Inc.
Offering of Class B Warrants and Underlying Securities
Registration Statement on Form S-3, filed September 30, 1999
------------------------------------------------------------
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, and any amendments thereto (the
"Registration Statement"), as filed on September 30, 1999 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 Class B
Warrants of the Company ("Class B Warrants"), shares of 8% Cumulative
Convertible Exchangeable Preferred Stock, par value $0.01 per share, of the
Company that underlie the Class B Warrants (the "Preferred Stock") and shares of
Common Stock, par value $0.01 per share, of the Company that underlie the
Preferred Stock (the "Common Stock"), all as 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.
878856.1
<PAGE>
2
Board of Directors September 30, 1999
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 (i) the Class B
Warrants, when issued, will be duly authorized and validly issued; (ii) the
shares of Preferred Stock issuable upon exercise of the Class B Warrants, when
so issued, will be validly issued, fully paid and nonassessable; and (iii) 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 or the
rules and regulations promulgated thereunder by the Securities and Exchange
Commission.
Very truly yours,
BATTLE FOWLER LLP
878856.1
Exhibit 10
Warrant Liquidation Agency Agreement
This Warrant Liquidation Agency Agreement between Toy Biz, Inc. (the
"Company") and American Stock Transfer & Trust Company (the "Warrant Liquidation
Agent") is entered into as of the 29th day of September, 1998.
Background
1. The Company is preparing to issue certain securities in accordance
with the Fourth Amended Joint Plan of Reorganization, dated July 31, 1998,
proposed by the Company and certain secured creditors of Marvel Entertainment
Group, Inc. ("Marvel") in the chapter 11 cases of Marvel and certain of its
subsidiaries (the "Plan");
2. Among the securities to be issued by the Company in accordance with
the Plan are six-month warrants ("Stockholder Series B Warrants") to purchase an
aggregate of 3,000,001 shares of 8% cumulative convertible exchangeable
preferred stock of the Company;
3. The Stockholder Series B Warrants may be issued in several tranches;
and
4. The Company plans to change its name to "Marvel Enterprises, Inc."
on or about the date of the consummation of the Plan (the "Consummation Date").
Agreement
The parties to this agreement now agree as follows.
1. If any Stockholder Series B Warrants are issued by the Company to
the Warrant Liquidation Agent after the first (1st) anniversary of the
Consummation Date as provided in Section 8.10 of the Plan, the Warrant
Liquidation Agent shall thereafter sell those Stockholder Series B Warrants (the
"Liquidations Warrants") into the market as promptly as reasonably practical to
permit an orderly sale of the Liquidation Warrants, provided that the Company
has either(i) obtained a no-action letter (a "No-action Letter") from the staff
of the Securities and Exchange Commission to the effect that the staff of the
Securities and Exchange Commission will not recommend any enforcement action if
the sale of the Liquidation Warrants by the Warrant Liquidation Agent is made
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii)filed and caused to become effective a registration
statement (a "Registration Statement") under the Securities Act registering
either (x) both the issuance of the Liquidation Warrants to the Warrant
Liquidation Agent and the sale of the Liquidation Warrants by the Warrant
Liquidation Agent or (y) the sale of the Liquidation Warrants by the Warrant
Liquidation Agent.
<PAGE>
2. The Company will use its reasonable efforts either (i) to obtain a
No-action Letter, or (ii) if it does not obtain such a No-action Letter, to file
and cause to become effective the Registration Statement, as the case may be, in
either case on or before the first (1st) anniversary of the Consummation Date.
3. The Warrant Liquidation Agent shall be entitled to the fee provided
for in Schedule A to this Agreement for the performance of its services under
this agreement, and shall be entitled to the reimbursement of its reasonable
expenses incurred in connection with that performance. One-half of the fees and
expenses of the Warrant Liquidation Agent shall be paid from the net proceeds of
the sale of the Liquidatable Warrants if those net proceeds are sufficient to
pay those fees and expenses. The balance of the fees and expenses of the Warrant
Liquidation Agent shall be paid by the Company. Any remaining net proceeds of
the sale of the Liquidatable Warrants shall be delivered to the Company to be
held in a trust account in accordance with Section 8.10 of the Plan.
4. The United States District Court for the District of Delaware shall
have jurisdiction to determine all controversies and disputes arising under or
in connection with this agreement. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware and the United
States of America.
5. This agreement may be executed in any number of counterparts, each
of which shall be deemed and original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first written above.
AMERICAN STOCK TRANSFER & TRUST COMPANY
/s/ HERBERT J. LEMMER
-----------------------------------
Name: Herbert J. Lemmer
Title: Vice President
TOY BIZ, INC.
/S/ WILLIAM H. HARDIE, III
-----------------------------------
Name: William H. Hardie, III
Title: Executive Vice President,
Business Affairs
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and the related prospectuses of Marvel
Enterprises, Inc. for the registration of Class B Warrants, 8% Cumulative
Convertible Exchangeable Preferred Stock and Common Stock and to the
incorporation by reference of our report dated February 5, 1999, except for Note
3, as to which the date is February 11, 1999 and Notes 1 and 5, as to which the
date is February 25, 1999, with respect to the consolidated financial statements
of Marvel Enterprises, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1998, filed with the Securities and Exchange Commission.
New York, New York /s/ Ernst & Young LLP
September 30, 1999
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and the related prospectuses of Marvel
Enterprises, Inc. for the registration of Class B Warrants, 8% Cumulative
Convertible Exchangeable Preferred Stock and Common Stock and to the
incorporation by reference 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.
New York, New York /s/ Ernst & Young LLP
September 30, 1999
878850.1 9/30/99 1:20p
