-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AolqVVW8BTnuwyQNvK0o9rqyHHph3oLCAAvezYclcrbYLrVdrmStzUhfeYFaj4DP UP7PnBiQ5+c/jvZtwh+9AQ== 0000922423-98-001172.txt : 19981023 0000922423-98-001172.hdr.sgml : 19981023 ACCESSION NUMBER: 0000922423-98-001172 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19981022 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MARVEL ENTERPRISES INC CENTRAL INDEX KEY: 0000933730 STANDARD INDUSTRIAL CLASSIFICATION: DOLLS & STUFFED TOYS [3942] IRS NUMBER: 133711775 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-47191 FILM NUMBER: 98729335 BUSINESS ADDRESS: STREET 1: 685 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126824700 MAIL ADDRESS: STREET 1: 685 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: TOY BIZ INC DATE OF NAME CHANGE: 19941213 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DICKSTEIN PARTNERS INC CENTRAL INDEX KEY: 0000922415 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133537972 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 9 WEST 57TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 MAIL ADDRESS: STREET 1: 9 WEST 57TH STREET CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D/A 1 AMENDMENT TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No.1) Marvel Enterprises,Inc. (formerly Toy Biz, Inc. ----------------------- (Name of Issuer) Common Stock, $.01 par value ---------------------------- (Title of Class of Securities) 57383M 10 8 ----------- (CUSIP Number) Alan S. Cooper Dickstein Partners Inc. 660 Madison Avenue, 16th Floor New York, New York 10021 (212) 754-4000 -------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 1, 1998 --------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13(d)-1(f) or 13d-1(g), check the following box: |_| Page 1 of 67 pages Exhibit Index appears on page 6 This Statement amends the Schedule 13D, dated October 13, 1998 (the "Schedule 13D") filed by Dickstein & Co., L.P., Dickstein Focus Fund L.P., Dickstein International Limited, Dickstein Partners, L.P., Dickstein Partners Inc., Elyssa Dickstein, Jeffrey Schwarz, and Alan Cooper as trustees U/T/A/D 12/27/88, Mark Dickstein, Grantor, Mark and Elyssa Dickstein, as trustees of the Mark and Elyssa Dickstein Foundation, Mark Dickstein and Elyssa Dickstein with respect to the Common Stock, $.01 par value, of Marvel Enterprises, Inc. (formerly Toy Biz, Inc.) Notwithstanding this Amendment No. 1, the Schedule 13D speaks as of its date. Capitalized terms used without definition have the meanings ascribed to them in the Schedule 13D. This Amendment file the forms of the Stockholders' Agreement and Registration Rights Agreement which have now been finalized. See Items 4,5 and 6. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1 Agreement of joint filing pursuant to Rule 13d-1(k)(1) promulgated under the Securities Exchange Act of 1934, as amended (Previously Filed) Exhibit 2 Stockholders' Agreement Exhibit 3 Registration Rights Agreement 2 SIGNATURES After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this Statement is true, complete and correct. Date: October 22, 1998 DICKSTEIN & CO., L.P. By: Alan S. Cooper, as Vice President of Dickstein Partners Inc., the general partner of Dickstein Partners, L.P., the general partner of Dickstein & Co., L.P. By: /s/ Alan S. Cooper ----------------------------- Name: Alan S. Cooper DICKSTEIN FOCUS FUND L.P. By: Alan S. Cooper, as Vice President of Dickstein Partners Inc., the general partner of Dickstein Partners, L.P., the general partner of Dickstein Focus Fund L.P. By: /s/ Alan S. Cooper ----------------------------- Name: Alan S. Cooper 3 DICKSTEIN INTERNATIONAL LIMITED By: Alan S. Cooper, as Vice President of Dickstein Partners Inc., the agent of Dickstein International Limited By: /s/ Alan S. Cooper ----------------------------- Name: Alan S. Cooper DICKSTEIN PARTNERS, L.P. By: Alan S. Cooper, as Vice President of Dickstein Partners Inc., the general partner of Dickstein Partners, L.P. By: /s/ Alan S. Cooper ----------------------------- Name: Alan S. Cooper DICKSTEIN PARTNERS INC. By: Alan S. Cooper, as Vice President By: /s/ Alan S. Cooper ----------------------------- Name: Alan S. Cooper MARK DICKSTEIN By: /s/ Mark Dickstein ----------------------------- Name: Mark Dickstein ELYSSA DICKSTEIN By: /s/ Elyssa Dickstein ----------------------------- Name: Elyssa Dickstein 4 DICKSTEIN TRUST Elyssa Dickstein, Jeffrey Schwarz, and Alan S. Cooper as Trustees U/T/A/D 12/27/88, Mark Dickstein, Grantor By /s/ Alan S. Cooper ----------------------------- Name: Alan S. Cooper DICKSTEIN FOUNDATION Mark Dickstein and Elyssa Dickstein, as Trustees By /s/ Mark Dickstein ----------------------------- Name: Mark Dickstein 5 EXHIBIT INDEX EXHIBIT DESCRIPTION PAGE 1 Agreement of joint filing pursuant to Rule (Previously 13d-1(k)(1) promulgated under the Securities Filed) Exchange Act of 1934, as amended 2 Stockholders' Agreement 7 3 Registration Rights Agreement 45 6 EX-2 2 STOCKHOLDERS' AGREEMENT EXHIBIT 2 STOCKHOLDERS' AGREEMENT by and among AVI ARAD, VARIOUS DICKSTEIN ENTITIES AND INDIVIDUALS, ISAAC PERLMUTTER, ISAAC PERLMUTTER T.A., THE LAURA & ISAAC PERLMUTTER FOUNDATION INC., OBJECT TRADING CORP., ZIB INC., VARIOUS SECURED LENDERS, and TOY BIZ, INC. Dated as of October 1, 1998 7
TABLE OF CONTENTS Page ............. ......... ARTICLE I DEFINITIONS Section 1.1 Definitions...................................................................3 ARTICLE II MANAGEMENT Section 2.1 Board Representation..........................................................7 Section 2.2 Loss of Board Representation.................................................12 Section 2.3 Committee Representation.....................................................15 Section 2.4 Computation and Notice of Common Equivalent Shares Ownership.................19 Section 2.5 Restriction on Disposition of Stock Held by Subsidiary.......................21 ARTICLE III REPRESENTATIONS Section 3.1 Representations of the Dickstein Entities....................................22 Section 3.2 Representations of the Perlmutter/Arad Group.................................22 Section 3.3 Representations of the Lender Group..........................................22 ARTICLE IV MISCELLANEOUS Section 4.1 Effective Date...............................................................23 Section 4.2 Termination..................................................................23 Section 4.3 Secretary to Retain Copy.....................................................25 Section 4.4 Further Actions..............................................................25 Section 4.5 Specific Performance.........................................................25 Section 4.6 Entire Agreement.............................................................26 Section 4.7 Notices......................................................................26 Section 4.8 Waivers; Amendment...........................................................29 Section 4.9 Binding Effect; Heirs and Successors.........................................29 Section 4.10 No Third Party Beneficiaries.................................................30 Section 4.11 Separability.................................................................30 Section 4.12 Headings.....................................................................30 Section 4.13 Pronouns.....................................................................30 Section 4.14 Counterparts.................................................................30 Section 4.15 Governing Law................................................................30 Section 4.16 No Restriction on Transferability............................................31 Section 4.17 Whippoorwill Obligations Several and Not Joint...............................31
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of October 1, 1998 among Avi Arad ("Arad"); the various Dickstein entities and individuals listed on the signature pages hereto (the "Dickstein Entities"); Isaac Perlmutter ("Perlmutter"); Isaac Perlmutter T.A., a Florida trust (the "Trust"); the Laura & Isaac Perlmutter Foundation Inc., a Florida corporation (the "Foundation"); Object Trading Corp., a Delaware corporation ("Object Trading"); Zib Inc., a Delaware corporation ("Zib" and together with Perlmutter, the Trust, the Foundation, and Object Trading, the "Perlmutter Entities"; the Perlmutter Entities together with Arad, the "Perlmutter/Arad Group"; the Perlmutter/Arad Group together with the Dickstein Entities, the "Investor Group"); The Chase Manhattan Bank ("Chase"); Morgan Stanley & Co. Incorporated ("Morgan Stanley"); Whippoorwill Associates, Incorporated, as agent for or general partner of each institution (a "Whippoorwill Account") set forth on Schedule 1 (collectively, "Whippoorwill"); and Toy Biz, Inc., a Delaware corporation (the "Company"). Each of Chase, Morgan Stanley and each Whippoorwill Account shall be a "Secured Lender" for so long as each remains bound hereby, and all Secured Lenders bound hereby shall collectively constitute, the "Lender Group"). The Secured Lenders are some of the "Secured Lenders" referred to in the Fourth Amended Joint Plan of Reorganization Proposed by those "Secured Lenders" and the Company in the bankruptcy matter of In Re: Marvel Entertainment Group, Inc. et al. (case No. 97-638-RRM) in the United States District Court for the District of Delaware (the "Plan"); and all of the "Secured Lenders" as that term 8 is defined more broadly in the Plan (other than any Dickstein Entity or any of its Affiliates) are referred to in this Agreement collectively as the "Plan Secured Lender Group". W I T N E S S E T H WHEREAS, the Perlmutter Entities, Arad and the Dickstein Entities will own shares of common stock, par value $.01 per share, of the Company (the "Common Stock"), and the Perlmutter Entities and the Dickstein Entities will own shares of 8% Cumulative Convertible Exchangeable Preferred Stock of the Company (the "Preferred Stock"; together with the Common Stock and any other security of the Company which is then currently convertible or exchangeable for Common Stock without the payment of additional consideration, the "Capital Stock"), immediately after the consummation of the Plan; WHEREAS, immediately after the consummation of the Plan, the Secured Lenders will own shares of Common Stock and Preferred Stock; WHEREAS, pursuant to the Plan, the Board of Directors of the Company (the "Board") shall consist of eleven (11) Directors, six (6) of whom, subject to Section 2.2 hereof, are to be designated by the Investor Group (the "Investor Group Designees"), and five (5) of whom, subject to Section 2.2 hereof, are to be designated by the Lender Group (the "Lender Group Designees"); provided, that unless and until the occurrence of a Dickstein Forfeiture Event, one (1) of the Investor Group Designees is to be designated by the Dickstein Entities (the "Dickstein Designee"); 9 WHEREAS, each of the parties hereto desires to enter into this Agreement in order to set forth certain provisions regarding the management of the Company. NOW, THEREFORE, in consideration of the mutual agreements and covenants herein contained, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS Section 1.1. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated: "Affiliate" and "Affiliated" shall have the meanings set forth in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and any successor regulation thereto. "Agreement" shall have the meaning set forth in the Preamble hereto. "Arad" shall have the meaning set forth in the Preamble hereto. "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, and any successor regulation thereto; provided that, a person shall not be deemed to be a Beneficial Owner of a security merely because that person has the right to acquire Beneficial Ownership of that security if that right may be exercised only upon the payment of consideration (other than solely by conversion or exchange of Capital Stock) nor shall a person be deemed to be a Beneficial Owner of a security merely because of the provisions of this Agreement. For the purposes of this definition, "Beneficial Ownership" and "Beneficially Own" shall refer to the ownership interest of a Beneficial Owner. With respect to Whippoorwill, "Beneficially Owned" shall mean only such Capital 10 Stock Beneficially Owned by Whippoorwill Accounts with respect to which Whippoorwill Associates, Incorporated has the power to direct the vote. "Board" shall have the meaning set forth in the Preamble hereto. "Capital Stock" shall have the meaning set forth in the Recitals hereto. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Equivalent Shares" Beneficially Owned by any person shall mean the number of shares of Common Stock Beneficially Owned by such person. "Common Stock" shall have the meaning set forth in the Recitals hereto, together with any other security of the Company for which the Common Stock shall have been exchanged in any recapitalization or similar transaction. "Designee" and "Designees" shall have the meaning set forth in Section 2.1(a) hereof. "Dickstein Designator" shall mean Mark Dickstein or, upon the death or other incapacity of Mark Dickstein, Elyssa Dickstein or, upon the death or other incapacity of Elyssa Dickstein, such other person identified by Dickstein Partners Inc. by written notice to the Secretary of the Company. "Dickstein Designee" shall have the meaning set forth in the Recitals hereto. "Dickstein Entities" shall have the meaning set forth in the Preamble hereto. "Dickstein Forfeiture Event" shall mean a decrease in the Dickstein Entities' Beneficial Ownership of Capital Stock to less than 1,500,000 Common Equivalent Shares, calculated in accordance with Section 2.4 hereof and appropriately adjusted for any stock splits, reverse stock splits, recapitalization of the Capital Stock or capital transaction of a similar nature. "Director" shall mean a member of the Board of Directors of the Company. 11 "Effective Date" shall mean the date on which the Agreement becomes effective in accordance with Section 4.1 hereof. "Election Meeting" shall have the meaning set forth in Section 2.1(b) hereof. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Independent Director" shall mean either Investor Group Designees or Lender Group Designees who satisfy the requirements of Paragraph 303.00 of the New York Stock Exchange Listed Company Manual (or any successor provision) and who are (a) "non-employee directors" or any related successor concepts under Rule 16b-3 (or any successor provision) promulgated pursuant to Section 16 of the Exchange Act, and (b) "outside directors" or any related successor concepts under Section 162(m) (or any successor provision) of the Code. "Investor Group" shall have the meaning set forth in the Recitals hereto. "Investor Group Designator" shall mean Isaac Perlmutter until his death, disability or resignation. The person serving at any time as Investor Group Designator shall have the right to appoint (or to change), by written notice to the Secretary of the Company, a successor Investor Group Designator who shall become the Investor Group Designator upon the death, disability, or resignation of the Investor Group Designator. "Investor Group Designee" shall have the meaning set forth in the Recitals hereto. "Lender Group" shall have the meaning set forth in the Preamble hereto. "Lender Group Designator" shall mean (i) with respect to the initial configuration of the Board following the Effective Time, a subcommittee of the Lender Group consisting of Chase, Morgan Stanley and Whippoorwill, and (ii) thereafter, any one or more Secured Lenders that Beneficially Own a majority of the Common Equivalent Shares Beneficially 12 Owned by the Lender Group; provided however that, whenever the Company is required to deliver a notice under this Agreement to the Lender Group Designator, such notice shall be delivered to Morgan Stanley, and Morgan Stanley shall promptly deliver a copy thereof to each other Secured Lender still bound hereby "Lender Group Designee" shall have the meaning set forth in the Preamble hereto. "Notice of Designee" shall have the meaning set forth in Section 2.1(b) hereof. "Perlmutter Entities" shall have the meaning set forth in the Preamble hereto. "Perlmutter/Arad Group" shall have the meaning set forth in the Preamble hereto. "Plan" shall have the meaning set forth in the Recitals hereto. "Plan Secured Lender Group" shall have the meaning set forth in the Preamble hereto. "Preferred Stock" shall have the meaning set forth in the Recitals hereto, together with any other security of the Company for which the Preferred Stock shall have been exchanged in any recapitalization or similar transaction. "Secured Lenders" shall have the meaning set forth in the Preamble hereto. "Stockholder Group Designators" shall mean the Investor Group Designator, the Lender Group Designator and the Dickstein Designator. "Stockholder Groups" shall mean the Investor Group, the Lender Group and the Dickstein Entities. "Whippoorwill Account" shall have the meaning set forth in the Preamble. ARTICLE 2 MANAGEMENT Section 2.1. Board Representation. 13 (1) Subject to Section 2.2 hereof, at and following the Effective Date, each party to this agreement will take such action as may reasonably be in its power to cause the Board to include (i) six (6) Investor Group Designees, one (1) of whom, unless and until a Dickstein Forfeiture Event has occurred, shall be the Dickstein Designee, and (ii) five (5) Lender Group Designees. The Investor Group Designees (including the Dickstein Designee) and the Lender Group Designees are sometimes collectively referred to herein as the "Designees" and individually as a "Designee." (2) (1) The Investor Group Designator, the Lender Group Designator and the Dickstein Designator shall each give the Company timely notice (the "Notice of Designee") of the name of each person whom the relevant Stockholder Group wishes to be nominated by the Company for election or re-election to the Board at the next meeting of stockholders, or taking of action by written consent of stockholders, at which Directors are to be elected (an "Election Meeting"). At the option of any Stockholder Group Designator, the Notice of Designee may also specify one or more alternates (an "Alternate Designee") to serve in the event of the incapacity or other inability to serve of a Designee, as provided herein. The Investor Group Designees and the Lender Group Designees shall at all times include such number of Independent Directors as shall be required to comply with the provisions of Sections 2.3(b) and 2.3(c) hereof. Each Notice of Designee shall be in writing and shall be timely if delivered to the Secretary of the Company at the Company's principal executive offices 14 not later than the close of business on the 60th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the Election Meeting is more than 30 days before or after such anniversary date, the Notice of Designee to be timely must be so delivered not later than the later of (x) the close of business on the later of the 60th day prior to the Election Meeting and (y) the 20th day following the day on which public announcement of the date of the Election Meeting is first made by the Company. In no event shall the public announcement of an adjournment of an Election Meeting commence a new time period for the giving of the Notice of Designee as described above. If the Company has not received a Notice of Designee from any Stockholder Group Designator at a time when the relevant Stockholder Group is entitled to name one or more Designee on or before the 10th day before the latest date for delivery of the Notice of Designee specified in the proviso to the next preceding sentence, the Company shall so inform the relevant Stockholder Group Designator by written notice. If the Company has not received a Notice of Designee from any Stockholder Group Designator at a time when the relevant Stockholder Group is entitled to name one or more Designee on or before the latest date for delivery of such Notice, then such Stockholder Group Designator shall be deemed to have delivered on such date a Notice of Designee designating the Designees specified in the most recently delivered Notice of Designee for any prior Election Meeting, or, if any such Designee is unable to serve and an Alternate Designee has been specified therefor, such Alternate Designee. 15 (2) By means of written notice given to a Stockholder Group Designator within ten days of the Company's receipt of a Notice of Designee sent by that Stockholder Group Designator, the Board may reject a Designee if, in the exercise of its fiduciary duties, it reasonably determines that such Designee fails to meet the moral or professional standards required of a director of a public corporation such as the Company. The Company's notice of rejection shall specify the basis for such rejection in accordance with this subsection in reasonable detail. If the Board shall reject any Designee as aforesaid, the relevant Stockholder Group Designator may send a supplemental Notice of Designee designating a replacement for the rejected Designee, which notice shall be timely if received by the Company within fifteen days of that Stockholder Group Designator's receipt of a notice of rejection under the first sentence of this paragraph. If the Stockholder Group Designator does not send a supplemental Notice of Designee within the aforesaid time period and an Alternate Designee was designated for the rejected Designee in the original Notice of Designee, the Alternate Designee, unless rejected in accordance with this subsection, shall be deemed nominated by the Stockholder Group Designator in replacement of the rejected Designee. (3) Each Notice of Designee shall set forth, as to each person whom the Stockholder Group wishes the Company to nominate for election or re-election as a Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 16 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); provided, however, that a Notice of Designee shall not be deemed defective for failure to supply such information unless, after request therefor by the Company to the relevant Stockholder Group Designator, such Stockholder Group Designator fails to supply such information on a timely basis for inclusion in the proxy materials for the relevant Election Meeting. (4) If the parties to this Agreement have received notice from the Company that there are any directorships to be filled at a forthcoming Election Meeting as to which no timely Notice of Designee was received or deemed received, the parties to this Agreement may vote their shares as to those directorships without constraint by this Agreement. (3) The Company shall nominate and recommend those Designees as to whom it has received or is deemed to have received a timely Notice of Designee to the stockholders of the Company for election or re-election as Directors and shall otherwise use its best efforts to cause those Designees to be elected to the Board. Each party to this Agreement agrees to vote, or cause to be voted, all of the shares of Capital Stock Beneficially Owned by it at any Election Meeting and agrees to take all actions otherwise reasonably in its power as a stockholder of the Company to cause the Investor Group Designees (including, in the absence of a Dickstein Forfeiture Event, the Dickstein Designee) and the Lender Group Designees to be elected to the Board as described herein. (4) 17 (1) If, following his election to the Board, a Lender Group Designee shall vacate his position on the Board for any reason, including, but not limited to, the death, removal or retirement of that Designee, but excluding any changes in Board representation pursuant to Section 2.2 hereof, then the Lender Group Designator shall have the right to nominate a successor Designee to fill the vacancy. (2) If, following his election to the Board, the Dickstein Designee shall vacate his position on the Board for any reason, including, but not limited to, the death, removal or retirement of that Designee, but excluding any changes in Board representation pursuant to Section 2.2 hereof, then the Dickstein Designator shall have the right to nominate a successor Designee to fill the vacancy. (3) If, following his election to the Board, an Investor Group Designee shall vacate his position on the Board for any reason, including, but not limited to, the death, removal or retirement of that Designee, or the occurrence of a Dickstein Forfeiture Event, but excluding any other changes in Board representation pursuant to Section 2.2 hereof, then the Investor Group Designator, except in cases covered by Section 2.1(d)(ii), shall have the right to nominate a successor Designee to fill the vacancy. (4) The Company shall cause any successor Designee nominated pursuant to Section 2.1(d)(i)-(iii) (a "Nominated Successor") to be elected to fill such vacancy as promptly as practicable at a special meeting of the Board called for that purpose or by action of the Board by unanimous written consent. If for any reason the Nominated Successor is not made a Director as aforesaid, the parties hereto shall promptly use their 18 respective best efforts (i) to bring about a special meeting of stockholders for the purpose of (A) removing from the Board any Director appointed instead of the Nominated Successor and/or (B) electing the Nominated Successor to the Board or (ii) to execute a written consent in lieu of a meeting of stockholders (A) to remove from the Board any Director appointed instead of the Nominated Successor and/or (B) to elect the Nominated Successor to the Board. (5) Each Stockholder Group Designator shall have the right, at any time, to identify any of that Stockholder Group's Designees whom that Stockholder Group wishes to have removed from his position on the Board and to nominate a successor Designee to fill the resulting vacancy. The parties hereto shall promptly use their respective best efforts (i) to bring about a special meeting of stockholders, and each shall vote, or cause to be voted, all of the shares of Capital Stock Beneficially Owned by it at that meeting, for the purpose of removing from the Board any such Designee(s) so identified and electing the nominated successor(s) to the Board or (ii) to execute a written consent in lieu of a meeting of stockholders to remove from the Board any such Designees so identified and to elect the nominated successor(s) to the Board. (6) The parties to this Agreement shall not, and shall use their best efforts to cause their respective Designees not to, take any action to change from eleven (11) the number of Directors which shall constitute the entire Board without the unanimous written agreement of the Investor Group Designator, the Lender Group Designator and, unless and until a Dickstein Forfeiture Event has occurred, the Dickstein Designator. 19 Section 2.2. Loss of Board Representation. (1) Decreases in Beneficial Ownership of Capital Stock (including decreases occurring prior to the expiration of twenty-one months after the date of the consummation of the Plan) shall cause decreases in the Stockholder Groups' right to designate Directors, and shall cause forfeitures of Board seats, in accordance with this Section 2.2(a); provided, that such decreases in Stockholder Groups' right to designate Directors, and such forfeitures of Board seats, shall take effect on the first day after the expiration of twenty-one months after the consummation of the Plan and not before. For purposes of this Section 2.2 and Section 2.3(e) hereof, the parties have agreed that such decreases in the Beneficial Ownership of Capital Stock of the Plan Secured Lender Group in the aggregate shall cause such decreases in the Lender Group's right to designate Directors and such forfeitures of Board seats as provided in those sections. (1) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at least twenty percent (20%), but less than forty percent (40%), then the Investor Group or the Lender Group, as the case may be, shall forfeit one (1) Board seat. (2) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at least forty percent (40%), but less than sixty percent (60%), then the Investor Group or the Lender Group, as the case may be, shall forfeit two (2) Board seats. (3) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at 20 least sixty percent (60%), but less than eighty percent (80%), then the Investor Group or the Lender Group, as the case may be, shall forfeit three (3) Board seats. (4) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at least eighty percent (80%), but less than ninety percent (90%), then the Investor Group or the Lender Group, as the case may be, shall forfeit four (4) Board seats. (5) (A) If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares at least ninety percent (90%), but less than ninety-five percent (95%), then the Investor Group shall forfeit five (5) Board seats, and (B) if the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares at least ninety percent (90%), then the Lender Group shall forfeit all five (5) of its Board seats. (6) Upon the occurrence of a Dickstein Forfeiture Event, the Dickstein Entities shall forfeit their one (1) Board seat, but that forfeiture shall not cause a reduction in the number of Directors which the Investor Group has the right to designate unless the Investor Group shall have decreased its Beneficial Ownership of Common Equivalent Shares at least ninety-five percent (95%), in which case the Investor Group shall forfeit all six (6) of its Board seats. If a Dickstein Forfeiture Event has not occurred, none of the Board seats forfeited by the Investor Group under Section 2.2(a)(i)-(v) shall be the Board seat of the Dickstein Designee. (2) In the event of a decrease in Beneficial Ownership that decreases a Stockholder Group's right to name Directors under Section 2.2(a) hereof, that Stockholder 21 Group's Designator shall name the Designee(s) to be removed from the Board in accordance with that section and the parties to this Agreement shall use their respective best efforts to cause the resignations from the Board of any Designee(s) so named. If the number of Designees of a Stockholder Group serving on the Board is not promptly decreased in accordance with Section 2.2(a) hereof, the parties hereto shall promptly use their respective best efforts (i) to bring about a special meeting of stockholders, and each shall vote, or cause to be voted, all of the shares of Capital Stock Beneficially Owned by it at that meeting, for the purpose of removing from the Board such number of the Designees of that Stockholder Group as shall be required in order to comply with Section 2.2(a) or (ii) to execute a written consent in lieu of a meeting of stockholders to remove from the Board such number of Designees of that Stockholder Group. Section 2.3. Committee Representation. (1) Each party to this Agreement shall vote, or cause to be voted, its Capital Stock Beneficially Owned, and shall use its best efforts to cause its respective Stockholder Group's Designees on the Board, subject to the exercise of their fiduciary obligations, to establish the following committees of the Board and to cause those committees of the Board to be comprised and have the functions, powers and authorizations, as set forth below. (2) The Audit Committee shall consist of five (5) Independent Directors, three (3) of whom will be Lender Group Designees named by a majority of the Lender Group Designees then serving on the Board and two (2) of whom will be Investor Group Designees named by a majority of the Investor Group Designees then serving on the Board. The Audit Committee shall exercise, subject to applicable provisions of laws, the functions regularly 22 administered by committees of such type including, without limitation, (A) to review the professional services and independence of the Company's independent auditors and the scope of the annual external audit as recommended by the independent auditors, (B) to ensure that the scope of the annual external audit by the independent auditors of the Company is sufficiently comprehensive, (C) to review, in consultation with the independent auditors and the internal auditors, the plan and results of the annual external audit, the adequacy of the Company's internal control systems and the results of the Company's internal audits, (D) to review with management and the independent auditors, the Company's annual financial statements, financial reporting practices and the results of each external audit, and (E) to consider the qualification of the Company's independent auditors, to make recommendations to the Board as to their selection and to review the relationship between such independent auditors and management. (3) The Compensation and Nominating Committee shall consist of five (5) Directors, two (2) of whom shall be Lender Group Designees named by a majority of the Lender Group Designees then serving on the Board and three (3) of whom shall be Investor Group Designees named, subject to the following sentence, by a majority of the Investor Group Designees then serving on the Board. Unless a Dickstein Forfeiture Event has occurred, one (1) of the three Investor Group Designees on the Compensation and Nominating Committee shall be the Dickstein Designee. At least one of the Lender Group Designees and at least one of the Investor Group Designees (other than the Dickstein Designee) serving on the Compensation and Nominating Committee shall be an Independent Director. The Compensation and Nominating Committee shall exercise, subject to applicable provisions of 23 law, the functions regularly administered by committees of such type including, without limitation, the power to review and recommend to the Board the compensation and benefit arrangements for the officers of the Company, the administering of the stock option plans and executive compensation programs of the Company, including bonus and incentive plans applicable to officers and key employees of the Company and to recommend to the Board nominees for election as Directors. (4) The Finance Committee shall consist of five (5) Directors, two (2) of whom will be Lender Group Designees named by a majority of the Lender Group Designees then serving on the Board and three (3) of whom will be Investor Group Designees named by a majority of the Investor Group Designees then serving on the Board. The Finance Committee shall exercise, subject to applicable provisions of law, the functions regularly administered by committees of such type including, without limitation, to make recommendations to the Board with respect to the Company's credit arrangements, the issuance of equity and long term debt instruments and other financial matters. (5) (1) If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than (33 1/3%), it will forfeit one Audit Committee Seat. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than sixty six and two thirds percent (66 2/3%), it will forfeit both of its Audit Committee seats. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than twenty five percent (25%), the Lender Group will forfeit one Audit Committee seat. If the Plan Secured Lender Group 24 shall decrease its Beneficial Ownership of Common Equivalent Shares by more than fifty percent (50%), the Lender Group will forfeit two Audit Committee seats. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than seventy five percent (75%), the Lender Group will forfeit all three of its Audit Committee seats. (2) If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than (33 1/3%), the Lender Group will forfeit one Compensation and Nominating Committee seat. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than sixty six and two thirds percent (66 2/3%), the Lender Group will forfeit both of its Compensation and Nominating Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than twenty five percent (25%), it will forfeit one Compensation and Nominating Committee seat. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than fifty percent (50%), it will forfeit two Compensation and Nominating Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than seventy five percent (75%) and a Dickstein Forfeiture Event shall have occurred, it will forfeit all three of its Compensation and Nominating Committee seats. If a Dickstein Forfeiture Event has not occurred, none of the Compensation and Nominating Committee seats forfeited by the Investor Group under this Section 2.3(e)(ii) shall be the Compensation and Nominating Committee seat of the Dickstein Designee. 25 (3) If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than (33 1/3%), the Lender Group will forfeit one Finance Committee seat. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than sixty six and two thirds percent (66 2/3%), the Lender Group will forfeit both of its Finance Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than twenty five percent (25%), it will forfeit one Finance Committee seat. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than fifty percent (50%), it will forfeit two Finance Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than seventy five percent (75%), it will forfeit all three of its Finance Committee seats. (6) If a Stockholder Group's right to committee representation decreases under Section 2.3(e) hereof, each party to this Agreement shall use its respective best efforts to cause the required number of the Designees of that Stockholder Group to resign their Committee(s) assignments. (7) The parties to this Agreement shall not, and shall use their best efforts to cause their respective Designees not to, take any action to create any committee of the Board other than as provided in this Agreement without the unanimous written agreement of the Investor Group Designator, the Lender Group Designator and, unless and until a Dickstein Forfeiture Event has occurred, the Dickstein Designator. 26 Section 2.4. Computation and Notice of Common Equivalent Shares Ownership. (1) For the purposes of this Agreement, the Investor Group's Beneficial Ownership of Common Equivalent Shares shall be determined with reference only to the Perlmutter/Arad Group's Beneficial Ownership of Common Equivalent Shares and shall not be determined by reference to, or affected by, any change in the Dickstein Entities' Beneficial Ownership of Common Equivalent Shares. (2) For the purposes of Section 2.2 and Section 2.3 hereof, a group's reduction in its Beneficial Ownership of Common Equivalent Shares shall be determined by comparing, at any particular time, that group's Beneficial Ownership of Common Equivalent Shares (including after-acquired Capital Stock) to that group's Beneficial Ownership of Common Equivalent Shares immediately following the consummation of the Plan, as adjusted for any stock splits, reverse stock splits, recapitalization of the Common Equivalent Shares or capital transaction of a similar nature. Any of the Investor Group, the Dickstein Group, the Lender Group and the Plan Secured Lender Group may use the Common Equivalent Shares held by Affiliates of its members to calculate its total Common Equivalent Shares ownership if such Affiliates have agreed in writing, for the benefit of all parties to this Agreement, to be bound by this Agreement. (3) Any reduction in Common Equivalent Shares Beneficially Owned by any Secured Lender shall constitute a reduction in the number of Common Equivalent Shares Beneficially Owned by the Plan Secured Lender Group for purposes of Section 2.2, 2.3 and 27 4.2(e)(iii) hereof, except to the extent that (i) any or all of the Common Equivalent Shares no longer so Beneficially Owned are Beneficially Owned by any member of the Plan Secured Lender Group (or any Affiliate of such a member) who is, or who agrees to be, bound hereby or (ii) the Lender Group Designator delivers to the Investor Group Designator, on or prior to the date on which the Lender Group Designator delivers a Notice of Designee with respect to an Election Meeting, an irrevocable proxy from one or more members of the Plan Secured Lender Group (which are not Secured Lenders), authorizing the Investor Group Designator and the Dickstein Group Designator, acting jointly, to vote a specified number Common Equivalent Shares Beneficially Owned by such member in the manner required by this Agreement with respect to the election of directors at such Election Meeting; provided that even if such an irrevocable proxy has been delivered this clause (ii) shall not apply with respect to the Common Equivalent Shares covered thereby with respect to any period after that meeting if such Common Equivalent Shares fail to be voted in a manner in which such Common Equivalent Shares would otherwise be required to be voted under this Agreement if they were Beneficially Owned by a party to this Agreement. For example, (x) if a Secured Lender sells two million Common Equivalent Shares to a third party which is not and does not agree to be bound by this Agreement and does not deliver an irrevocable proxy as provided in the preceding sentence, the number of Common Equivalent Shares Beneficially Owned by the Plan Secured Lender Group shall be deemed to have been reduced by two million Common Equivalent Shares, whether or not offsetting acquisitions of Common Equivalent Shares have been made by other members of the Plan Secured Lender Group, (y) if, the facts are the same as in clause (x) but another member of the Plan Secured Lender Group delivers a proxy 28 described in the preceding sentence and after the meeting to which the proxy relates the holder of those shares fails to take an action required by Section 2.1, 2.2 or 2.3 of this Agreement, clause (ii) of Section 2.4(c) shall no longer apply with respect to those shares. (4) If at any time a Stockholder Group Designator has actual knowledge (but without any duty of inquiry) that the Beneficial Ownership of Common Equivalent Shares of the related Stockholder Group (including, for purposes of the Lender Group Designator, the Plan Secured Lender Group) has been reduced such that such Stockholder Group would be required to forfeit one or more or any additional Board seats pursuant to Section 2.2 or Committee seats pursuant to Section 2.3, it shall as promptly as practicable thereafter notify the Company and the other parties to this Agreement. Section 2.5. Restriction on Disposition of Stock Held by Subsidiary. The parties to this Agreement shall not, and shall use their best efforts to cause their respective Designees not to, (i) permit Marvel Characters, Inc. to transfer or otherwise convey any interest in any of the shares of Common Stock held by Marvel Characters, Inc. unless such transfer or other conveyance (A) has been approved in writing by a majority in voting power of each Stockholder Group, or (B) is to the Company, or (ii) allow such shares of Common Stock to be entitled to vote with respect to matters to be voted upon or consented to by the stockholders of the Company unless adequate provision is made to assure that such shares of Common Stock will thereafter be voted, on all such matters, proportionately with all other outstanding shares of Common Stock voting on all such matters. 29 ARTICLE 3 REPRESENTATIONS Section 3.1. Representations of the Dickstein Entities. The Dickstein Entities represent to the other parties to this Agreement that they will Beneficially Own approximately 6,115,000 Common Equivalent Shares in the aggregate immediately following the consummation of the Plan. Section 3.2. Representations of the Perlmutter/Arad Group. The Perlmutter/Arad Group represents to the other parties to this Agreement that it will Beneficially Own approximately 17,318,000 Common Equivalent Shares in the aggregate immediately following the consummation of the Plan. Section 3.3. Representations of the Lender Group. (1) The Chase Manhattan Bank represents to the other parties to this Agreement that it will Beneficially Own approximately 2,096,291 Common Equivalent Shares immediately following the consummation of the Plan and that it does not share Beneficial Ownership of any of those shares with any other member of the Lender Group. (2) Morgan Stanley & Co. Incorporated represents to the other parties to this Agreement that it will Beneficially Own approximately 4,020,592 Common Equivalent Shares immediately following the consummation of the Plan and that it does not share Beneficial Ownership of any of those shares with any other member of the Lender Group. (3) Whippoorwill represents to the other parties to this Agreement that each Whippoorwill Account will Beneficially Own approximately the number of shares of Capital Stock set forth on Schedule 1 to this Agreement immediately following the consummation of 30 the Plan and that none of the Whippoorwill Accounts shares Beneficial Ownership of any of those shares with any other member of the Lender Group. ARTICLE 4 MISCELLANEOUS Section 4.1. Effective Date. This Agreement shall become effective upon the consummation of the Plan. Section 4.2. Termination. (a) This Agreement shall terminate: (1) Upon consent of all of the parties hereto who are then subject to this Agreement; (2) As to the Perlmutter/Arad Group, in the event that the Investor Group, or any of its Affiliates that have agreed to be bound by this Agreement, shall cease to be entitled to the election of any Designee (exclusive of the Dickstein Designee) to the Board hereunder; (3) As to the Lender Group, in the event that the Lender Group, or any of their Affiliates that have agreed to be bound by this Agreement, shall cease to be entitled to the election of any Designee to the Board hereunder and, with respect to any individual Secured Lender, when the Common Equivalent Shares Beneficially Owned by such Secured Lender have been less than 10% of the Common Equivalent Shares Beneficially Owned by such Secured Lender immediately following the consummation of the Plan for a period of 184 consecutive calendar days; provided, that this Agreement shall terminate with respect to Whippoorwill Associates, Incorporated and each 31 Whippoorwill Account when the Common Equivalent Shares Beneficially Owed by all of them in the aggregate have totaled less than 10% of all Common Equivalent Shares Beneficially Owed by all of them immediately following the consummation of the Plan for a period of 184 consecutive calendar days; and provided further, that the termination of this Agreement with respect to any Secured Lender shall be deemed to result in a reduction in the total amount of Common Equivalent Shares Beneficially Owed by the Plan Secured Lender Group by an amount equal to the amount of Common Equivalent Shares Beneficially Owned by such Secured Lender at such time; (4) As to the Dickstein Entities, in the event that the Dickstein Entities, or any of their Affiliates that have agreed to be bound by this Agreement, shall cease to be entitled to the election of their Designee to the Board hereunder. (b) In the event that a material violation of any covenant hereunder by a member of a Stockholder Group that is not cured within thirty days of written notice thereof by a member of one of the other Stockholder Groups shall occur and be continuing, the Stockholder Group of the breaching party shall not be deemed to be the Beneficial Owner of any Capital Stock for purposes of Board representation under Section 2.2 hereof or committee representation under Section 2.3 hereof, and shall have no further rights under this Agreement. Such member and such Stockholder Group shall nonetheless continue to be deemed to Beneficially Own its Capital Stock for all other purposes and to be bound to perform its obligations under this Agreement. Section 4.3. Secretary to Retain Copy. A copy of this Agreement shall be filed with the Secretary of the Company. 32 Section 4.4. Further Actions. At any time and from time to time each party agrees, at its or his expense, to take such actions and to execute and deliver such documents as may be necessary to effectuate the purposes of this Agreement. Each party hereto will not take any action that would (x) result in a breach of any covenant or any other obligation of such party under this Agreement or (y) impede, interfere with or discourage the transactions contemplated by this Agreement. Section 4.5. Specific Performance. The parties hereto acknowledge that failure on any of their parts to comply with the terms of this Agreement shall cause the other parties hereto immediate and irreparable harm that cannot be adequately compensated by the remedies at law, and that in the event of such breach or violation, or threatened breach or violation, the other parties hereto shall have such provisions of this Agreement specifically enforced by preliminary and permanent injunctive relief without having to prove the inadequacy of the available remedies at law or any actual damages and without posting bond or other security. Any remedy sought or obtained by a party hereto shall not be considered either exclusive or a waiver of the rights of a party hereto or any other person to assert any other remedies they have in law or equity. In any proceeding upon a motion for any such injunctive relief, a party's ability to answer in damages shall not be a bar, or be interposed as a defense, to the granting of such injunctive relief. Any rights under this Section 4.5 may be enforced in any appropriate court in the State of Delaware. Section 4.6. Entire Agreement. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all 33 prior and contemporaneous agreements and understandings among the parties hereto except as herein contained, with any of the terms hereof. Section 4.7. Notices. All notices and other communications hereunder shall be in writing and shall be delivered personally against receipt thereof, or transmitted by telecopier or by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to the Company, to Toy Biz, Inc. 685 Third Avenue New York, New York 10017 Attention: Secretary Telecopy: (212) 588-5100 with a copy to: Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attention: John Turitzin, Esq. Telecopy: (212) 856-7813 if to Perlmutter, the Trust, the Foundation, Object Trading or Zib, to: P.O. Box 1028 Lake Worth, Florida 33460-1028 Telecopy: c/o Daniel Golden (212) 806-6006 and c/o Lawrence Mittman (212) 856-7807 34 with a copy to: Stroock & Stroock & Lavan 180 Maiden Lane New York, New York 10004 Attention: Daniel Golden Telecopy: (212) 806-6006 and Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attention: Lawrence Mittman, Esq. Telecopy: (212) 856-7807 if to Arad, to: c/o Avi Arad & Associates 1698 Post Road East Westport, Connecticut 06880 Telecopy: (203) 254-2613 with a copy to: Stroock & Stroock & Lavan 180 Maiden Lane New York, New York 10004 Attention: Daniel Golden Telecopy: (212) 806-6006 and Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attention: Lawrence Mittman, Esq. Telecopy: (212) 856-7807 if to any of the Dickstein Entities, to: Dickstein Partners, Inc. 600 Madison Avenue, 16th Floor 35 New York, New York 10021 Attention: Alan Cooper Telecopy: (212) 754-5825 with a copy to: Kramer, Levin, Naftalis & Frankel 919 Third Avenue New York, New York 10022 Attention: Abbe Dienstag, Esq. Telecopy: (212) 715-8000 if to The Chase Manhattan Bank, to: The Chase Manhattan Bank 270 Park Avenue New York, New York 10017 Attention: Anthony J. Horan Telecopy: (212) 270-4240 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Scott K. Charles, Esq. Telecopy: (212) 403-1000 if to Morgan Stanley & Co. Incorporated, to: Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attention: Michael J. Petrick Telecopy: (212) 761-0713 with a copy to: Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas New York, New York 10026 Attention: Laura DeForest, Esq. Telecopy: (212) 762-8831 36 if to any Whippoorwill Account, to: Whippoorwill Associates, Incorporated 11 Martine Avenue White Plains, New York 10606 Attention: Shelley Telecopy: (914) 683-1242 with a copy to: Kramer, Levin, Naftalis & Frankel 919 Third Avenue New York, New York 10022 Attention: Thomas Mayer, Esq. Telecopy: (212) 715-8000 Any notice shall be deemed to have been given on the date of receipt if delivered personally or by overnight courier, the date of transmission with confirmation back if transmitted by telecopier, or the third day following posting if transmitted by mail. Section 4.8. Waivers; Amendment. This Agreement may not be modified, amended or waived other than by a written instrument executed by the parties hereto. Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. Section 4.9. Binding Effect; Heirs and Successors. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and shall be assignable only to an Affiliate of a party hereto and, with respect to assignment by Secured 37 Lenders, to any member of the Plan Secured Lender Group and any Affiliate of such a member, and only if such Affiliate of a party hereto, member of the Plan Secured Group or Affiliate of a member of the Plan Secured Lender Group agrees in writing to be bound by this Agreement. The provisions of this Agreement shall be binding upon and inure to the benefit of the heirs and successors of the parties hereto. Section 4.10. No Third Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement (except as provided in Section 4.9). Section 4.11. Separability. If any provision of this Agreement shall be adjudicated to be invalid, illegal or unenforceable, such provision shall be amended to delete therefrom the portion thus adjudicated to be invalid, illegal or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made, and the balance of this Agreement shall remain in effect. Section 4.12. Headings. The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of any provision of this Agreement. Section 4.13. Pronouns. Any masculine personal pronoun shall be considered to mean the corresponding feminine or neuter personal pronoun, as the context requires. Section 4.14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 38 Section 4.15. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of the conflict of laws thereof. Section 4.16. No Restriction on Transferability. Nothing in this Agreement shall restrict the ability of any of the parties to this Agreement to sell or otherwise transfer any shares of Common Stock, Preferred Stock or other securities of the Company, nor shall a purchaser or other transferee of any Capital Stock sold or transferred by a signatory hereto be subject to any of the obligations created hereby unless such purchaser or transferee has agreed in writing, for the benefit of all parties to this Agreement, to be so bound. Section 4.17. Whippoorwill Obligations Several and Not Joint. With respect to any obligations hereunder assumed by any Whippoorwill Account, such obligations shall be several and not joint and shall be limited to the percentage held by such Whippoorwill Account of the total Common Equivalent Shares held by all such Whippoorwill Accounts, and no such Whippoorwill Account shall be liable for any obligation of any other Whippoorwill Account. 39 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above. ---------------------------- Avi Arad ---------------------------- Mark Dickstein DICKSTEIN & CO., L.P. By: Dickstein Partners, L.P. By: Dickstein Partners Inc. By: --------------------------- Name: Alan S. Cooper Title: Vice President DICKSTEIN FOCUS FUND L.P. By: Dickstein Partners, L.P. By: Dickstein Partners Inc. By: --------------------------- Name: Alan S. Cooper Title: Vice President DICKSTEIN INTERNATIONAL LIMITED By: Dickstein Partners Inc. By: --------------------------- Name: Alan S. Cooper Title: Vice President 40 ELYSSA DICKSTEIN, JEFFREY SCHWARZ AND ALAN COOPER AS TRUSTEES U/T/A/D 12/27/88, MARK DICKSTEIN, GRANTOR By: --------------------------- Alan S. Cooper Trustee MARK DICKSTEIN AND ELYSSA DICKSTEIN, AS TRUSTEES OF THE MARK AND ELYSSA DICKSTEIN FOUNDATION By: --------------------------- Mark Dickstein Trustee --------------------------- Elyssa Dickstein --------------------------- Isaac Perlmutter ISAAC PERLMUTTER T.A. By: --------------------------- Isaac Perlmutter Trustee THE LAURA & ISAAC PERLMUTTER FOUNDATION, INC. By: --------------------------- Name: Isaac Perlmutter Title: President 41 OBJECT TRADING CORP. By: --------------------------- Name: Isaac Perlmutter Title: President ZIB INC. By: --------------------------- Name: Isaac Perlmutter Title: President and Chief Executive Officer THE CHASE MANHATTAN BANK By: --------------------------- Name: Title: MORGAN STANLEY & CO. INCORPORATED By: --------------------------- Name: Mitchael J. Petrick Title: Managing Director 42 WHIPPOORWILL ASSOCIATES, INCORPORATED, as agent of and/or general partner for the accounts listed on Schedule 1 hereto By: --------------------------- Name: Shelley Greenhaus Title: Managing Director TOY BIZ, INC. By: --------------------------- Name: Joseph M. Ahearn Title: President and Chief Executive Officer 43
Schedule 1 Fund/Account Common Preferred Common Share Shares Shares Equivalents The President and Fellows of Harvard College .................................. 484,997 551,300 1,057,776 The Rockefeller Foundation ....................... 121,546 208,495 338,164 Vega Partners II, L.P. ........................... 137,455 234,589 381,183 Vega Partners III, L.P. .......................... 317,587 543,269 882,022 Vega Partners IV, L.P. ........................... 200,821 342,659 556,830 Vega Offshore Fund Trust ......................... 86,108 138,552 230,058 Whippoorwill Profit Sharing Plan ................. 1,890 2,717 4,712 Total ............................................ 1,350,404 2,021,581 3,450,745
44 EX-3 3 REGISTRATION RIGHTS AGREEMENT EXHIBIT 3 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of October 1, 1998, is entered into by and among TOY BIZ, INC., a Delaware corporation (the "Company"), and the undersigned stockholders (each, a "Buyer," and collectively, the "Buyers"). RECITALS: --------- WHEREAS, the Buyers have entered into either (i) a Stock Purchase Agreement, dated as of October 1, 1998 (the "Stock Purchase Agreement") with the Company or (ii) have executed a Subscription Election Form (the "Subscription Election Forms") with the Company, pursuant to which the Company is selling to Buyers, and Buyers are purchasing from the Company, 9,000,000 shares (the "Shares") of the Company's 8% cumulative convertible exchangeable preferred stock, par value $0.01 per share (the "Preferred Stock"); WHEREAS, the Buyers are requiring the Company to enter into this Agreement in connection with the Stock Purchase Agreement and the Subscription Election Forms and as a condition to the purchase of the Shares by the Buyers; WHEREAS, pursuant to the Fourth Amended and Restated Joint Plan of Reorganization Plan Proposed by the Secured Lenders and the Company, In Re: Marvel Entertainment Group, Inc. et al (case No. 97-638-RRM) in the United States District Court for the District of Delaware (the "Plan"), those Buyers who are Secured Lenders (as defined in the Plan) will receive shares of Preferred Stock (the "Plan Preferred Shares") and shares of Common Stock (as herein defined) (the "Plan Common Shares") in respect of their Allowed Fixed Senior Secured Claims (as defined in the Plan); WHEREAS, the Board of Directors of the Company has authorized the officers of the Company to execute and deliver this Agreement in the name and on behalf of the Company; NOW, THEREFORE, in consideration of these premises and the mutual promises herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. Business Day: Any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in the City of New York are authorized by law, regulation or executive order to close. 45 Common Stock: The common stock, par value $0.01 per share, of the Company or any securities issued in exchange therefor in any recapitalization, reclassification, merger, consolidation or similar transaction. Debentures: The 8% Convertible Subordinated Voting Debentures of the Company. Effective Date: The Consummation Date (as defined in the Plan of Reorganization). Exchange Act: The Securities Exchange Act of 1934, as amended from time to time, or any successor statute, and the rules and regulations of the SEC thereunder, all as in effect at the time. Holder: Each of the Buyers and any other Person that becomes an owner of Registrable Securities; provided, however, that no Person shall become a Holder unless such Person has executed and delivered to the Company, an agreement, in the form of Annex A hereto, to be bound by the provisions of this Agreement. Person: An individual, partnership, corporation, limited liability company, joint venture trust or unincorporated organization, a government or agency or political subdivision thereof or any other entity. Plan of Reorganization: The Fourth Amended Joint Plan of Reorganization filed by the Secured Lenders and by the Company, as the same may be amended or modified. Prospectus: The prospectus included in any Registration Statement, as amended or supplemented by a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. Registration Expenses: All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications or registrations (or the obtaining of exemptions therefrom) of the Registrable Securities), printing expenses (including expenses of printing Prospectuses), messenger and delivery expenses, internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), fees and disbursements of its counsel and its independent certified public accountants (including the expenses of any special audit or "comfort" letters required by or incident to such performance or compliance), securities acts liability insurance (if the Company elects to obtain such insurance), fees and expenses of any special experts retained by the Company in connection with any registration hereunder, and 46 fees and expenses of other Persons retained by the Company; provided, however, that Registration Expenses shall not include any underwriting discounts, commissions or fees attributable to the sale of the Registrable Securities. Registrable Securities: (i) The Shares, (ii) Plan Preferred Shares, (iii) any shares of Common Stock into which the Shares or the Plan Preferred Shares may be converted from time to time, (iv) any Debentures issued in exchange for the Shares, or the Plan Preferred Shares, (v) if the Debentures are issued, any shares of Common Stock issued or issuable upon conversion of the Debentures, (vi) the Plan Common Shares, (vii) all other shares of Common Stock held by any of the Buyers as of the date hereof and (viii) any other securities issued or issuable as a result of or in connection with any stock dividend, stock split or reverse stock split, combination, recapitalization, reclassification, merger or consolidation, exchange or distribution in respect of the securities referred to in clauses (i) through (v) above; provided, however, that any Registrable Security shall cease to be such if (A) such Registrable Security shall have been transferred pursuant to an effective Registration Statement or in compliance with Rule 144 or (B) such Registrable Securities may be sold pursuant to section (k) of Rule 144. Registration Statement: Any registration statement of the Company, including, without limitation, the Shelf Registration Statement, filed with the SEC which provides for the registration for sale or other transfer of the Registrable Securities, including the Prospectus included therein, all amendments and any supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule thereto that may be promulgated by the SEC. SEC: The United States Securities and Exchange Commission. Securities Act: The Securities Act of 1933, as amended from time to time, or any successor statute, and the rules and regulation of the SEC thereunder, all as in effect from time to time. Underwritten Offering: A registered offering in which securities are sold to one or more underwriters on a firm commitment basis for reoffering to the public. 47 Whippoorwill Account: Each partnership or account which enters into this Agreement as a Buyer through execution and delivery hereof by Whippoorwill Associates, Incorporated as its agent or General Partner. 2. Registration under the Securities Act (a) Filing and Effectiveness. As soon as reasonably practicable following the date hereof (and in no event later than fifty (50) days after the Effective Date), the Company shall file with the SEC a shelf registration statement under the Securities Act registering the resale of the Registrable Securities by the Holders (the "Shelf Registration Statement"). The Company shall use its reasonable best efforts to cause the Shelf Registration Statement to be declared effective as soon as practicable after the filing thereof, and thereafter to keep it continually effective until such time as there shall cease to be outstanding any Registrable Securities. (b) Subsequent Holders. If any Person becomes a Holder of Registrable Securities that were included in the Shelf Registration Statement subsequent to the time that the Shelf Registration Statement became effective, the Company shall add such Holder to the Shelf Registration Statement, on a timely basis, through a post-effective amendment or a supplement to the Prospectus, as shall be necessary in accordance with the rules of the SEC under the Securities Act to include such Holder as a selling securityholder in a distribution under the Shelf Registration Statement. (c) Methods of Distribution. The Registrable Securities may be sold or distributed under the Shelf Registration Statement directly by the Holders as principal or through one or more brokers, dealers or agents from time to time in one or more transactions, including, without limitation, (i) on any securities exchange (or quotation system operated by a national securities association) on which the Registrable Securities are then listed, (ii) in private transactions, (iii) in block trades, or (iv) though the writing of options (whether such options are listed on an exchange or otherwise) on, or settlement of short sales of, the Registrable Securities in compliance with applicable law. The Holders may not sell or distribute the Registrable Securities under the Shelf Registration Statement in an Underwritten Offering except as provided in Section 3 hereof. Nothing in this Agreement shall in any way restrict any Holder from selling or otherwise transferring the risk or benefit of ownership of securities of the Company in any manner not provided in this Agreement in accordance with the Securities Act and other applicable law. 3. Piggyback Registration. (a) Piggyback Registration. If the Company at any time proposes to effect an Underwritten Offering of any class of its equity securities for its own account or for the 48 account of a holder of securities of the Company pursuant to registration rights granted by the Company (a "Requesting Shareholder"), whether under a previously effective shelf registration statement or a registration statement filed for the purpose of such Underwritten Offering (a "Piggyback Registration"), then the Company shall in each case give written notice of such proposed offering to the Holders at least ten (10) Business Days before the proposed date of filing of such registration statement (or, in the case of a previously effective shelf registration statement, the filing of any amendment or supplement to such shelf registration statement to permit such Underwritten Offering), and such notice shall offer to all Holders the opportunity to have any or all of the Registrable Securities then held by the Holders included in such Underwritten Offering. Each Holder desiring to have its Registrable Securities offered under this Section shall so advise the Company in writing within five (5) Business Days after the date of receipt of the Company's aforesaid notice (which request shall set forth the amount of Registrable Securities proposed to be offered), and the Company shall cause to be included in such Underwritten Offering all such Registrable Securities so requested to be included therein, provided that the Holders thereof execute and deliver the underwriting agreement and other customary documents related to such offering including, if requested by the managing underwriter or underwriters, selling stockholder questionnaires, powers of attorney and custody agreements. (b) Cutback. (i) Priority on Primary Registrations. If a Piggyback Registration is an Underwritten Offering by the Company on a primary basis (a "Primary Registration"), and the managing underwriters advise the Company in writing that in their good faith opinion the amount of securities requested to be included in such registration is sufficiently large as to be likely to materially adversely affect the success of such offering, the Company will include in such registration, to the extent such managing underwriters advise the Company that such securities can be included in the Offering without being likely to materially adversely affect the success of the Offering (i) first, the securities the Company proposes to sell, and (ii) second, the securities requested to be sold by any of the Holders and other holders of securities of the Company exercising similar piggy-back registration rights with respect to that Offering, pro rata, based on the number of securities requested to be sold by the Holders and the holders. (ii) Priority on Secondary Registrations. If a Piggyback Registration is an Underwritten Offering other than a Primary Registration, and the managing underwriters advise the Company in writing that in their good faith opinion the amount of securities requested to be included in such registration is sufficiently large as to be likely to materially adversely affect the success of such registration, the Company will include in such registration, to the extent such managing underwriters advise the Company that such securities can be included in the Offering without being likely to materially adversely affect the success of the Offering (i) first, the securities requested to be included therein by a Requesting Shareholder exercising demand registration rights, (ii) second, the securities requested to be included therein by the Company and (iii) third, as requested by any other Holders and other holders of securities of the Company exercising similar piggy-back registration rights with respect to that 49 Offering, pro rata, based on the number of securities requested to be sold by those Holders or holders. 4. Registration Procedures. (a) General. In connection with the Company's registration obligations pursuant to this Agreement, the Company shall: (i) prepare and file with the SEC the Shelf Registration Statement and such amendments and post-effective amendments thereto as may be necessary to keep the Shelf Registration Statement continuously effective for the time period set forth in Section 2, including as required in accordance with Item 512(a) of Regulation S-K under the Securities Act; provided that as soon as practicable, but in no event later than three (3) Business Days before the filing of any Registration Statement and any amendment thereto, any related Prospectus or any amendment or supplement thereto (other than any amendment or supplement made solely as result of incorporation by reference of documents filed with the SEC subsequent to the filing of such Registration Statement), the Company shall furnish to the Holders of the Registrable Securities covered by such Registration Statement, copies of all such documents proposed to be filed, which documents shall be subject to the review of such Holders; not file any Registration Statement or any amendment thereto or any Prospectus or any supplement thereto (other than any amendment or supplement made solely as a result of incorporation by reference of documents filed with the SEC subsequent to the filing of such Registration Statement) to which the Holders of a majority of the Registrable Securities shall have reasonably objected in writing within (2) Business Days after receipt of such documents to the effect that such Registration Statement or amendment thereto or Prospectus or supplement thereto does not comply in all material respects with the requirements of the Securities Act; and comply with the provisions of the Securities Act applicable to the Company with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus in accordance with this Agreement; (ii) notify the selling Holders of Registrable Securities promptly (1) when a Registration Statement, Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or post-effective amendment, when it has become effective, (2) of any request by the SEC for amendments or supplements to any Registration Statement or Prospectus or for additional information, (3) of the issuance by the SEC of any comments with respect to any filing, (4) of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose, (5) of any suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation 50 or threatening of any proceeding for such purpose and (6) of the happening of any event which makes any statement of a material fact made in any Registration Statement, Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in any Registration Statement, Prospectus or any document incorporated therein by reference in order to make the statements therein (in the case of any Prospectus, in the light of the circumstances under which they were made) not misleading; and use reasonable best efforts to obtain as promptly as practicable the withdrawal of any order or other action suspending the effectiveness of any Registration Statement or suspending the qualification or registration (or exemption therefrom) of the Registrable Securities for sale in any jurisdiction; (iii) promptly after the filing of any document which is to be incorporated by reference into a Registration Statement or Prospectus, provide without charge copies of such document to the Holders of the Registrable Securities covered thereby; (iv) furnish to the selling Holders of Registrable Securities, without charge, at least one manually signed or "edgarized" copy, and as many conformed copies as may reasonably be requested, of the then effective Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (v) deliver to the selling Holders, without charge, as many copies of the then effective Prospectus (including each prospectus subject to completion) and any amendments or supplements thereto as such Persons may reasonably request; (vi) use reasonable best efforts to register or qualify or cooperate with the selling Holders and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any selling Holder reasonably requests in writing and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the then effective Registration Statement; provided, however, that the Company will not be required to (1) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (vi) or (2) subject itself to general taxation in any such jurisdiction; (vii) cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the Holders may request at least 51 two (2) Business Days prior to any sale of Registrable Securities to the underwriters, if any; (viii) upon the occurrence of any event contemplated by clause (6) of paragraph (ii) above, promptly prepare a supplement or post-effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; (ix) cause all Registrable Securities covered by the Registration Statement to be listed on each securities exchange (or quotation system operated by a national securities association) on which identical securities issued by the Company are then listed, and enter into customary agreements to effect that listing, including, if necessary, a listing application in customary form, and provide a transfer agent for such Registrable Securities; (x) if the Registrable Securities are to be sold in an Underwritten Offering pursuant to Section 3 or in a block trade or other private placement: (1) obtain an opinion of counsel covering matters that are no more extensive in scope than would be customarily covered in opinions obtained in such types of transactions by issuers with similar market capitalization and reporting and financial histories; (2) obtain a "cold comfort" letter from the independent public accountants of the Company and covering matters that are no more extensive in scope than would be customarily covered in "cold comfort" letters and updates obtained in secondary Underwritten Offerings by issuers with similar market capitalization and reporting and financial histories, provided, however, that the letter described in this clause (2) shall only be required in connection with a block trade or other private placement to the extent such letters are being issued in respect of such types of transactions under then prevailing accounting practices and to the extent the Company's independent public accountants do not have a policy against issuing such letters in connection with such offerings; and (3) deliver a certificate of a senior executive officer of the Company to cover matters no more extensive in scope than those matters customarily covered in officer's certificates delivered in connection with Underwritten Offerings by issuers with similar market capitalization and reporting and financial histories; (xi) provide a CUSIP number for the Registrable Securities no later than the effective date of a Registration Statement applicable thereto; (xii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC relating to such registration and the 52 distribution of the securities being offered and make generally available to its securities holders earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no later than 60 days after the end of any 12-month period (or 90 days, if such period is a fiscal year) commencing at the end of any fiscal quarter in which the Registrable Securities are sold in an Underwritten Offering, block trade or other private placement, which earnings statements shall cover such 12-month periods; (xiii) cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc.; and (xiv) make available for inspection by representatives of the Holders of the Registrable Securities, and any attorneys or accountants retained by the Holders, all financial and other records, pertinent corporate documents and properties of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by, and to reasonably cooperate with, any such representative, attorney or accountant in connection with such registration, and otherwise to cooperate fully in connection with any due diligence investigation, including making reasonably available its officers during ordinary business hours, and permitting discussions with the independent public accountants who have certified the Company's most recent annual financial statements, in each case to the extent necessary to enable any Holder to conduct a "reasonable investigation" for purposes of Section 11(a) of the Securities Act; provided, however, that such representatives, attorneys or accountants enter into a confidentiality agreement, in customary form and substance reasonably satisfactory to the Company, prior to the release or disclosure to them of any such information, records or documents. (b) Holder Information. The Company may require each selling Holder to furnish to the Company such information regarding such Holder and the distribution of Registrable Securities to be sold by such Holder as the Company may from time to time reasonably request in writing. (c) Occurrence of Certain Events. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Subsection (a)(ii)(4), (5) or (6) above, such Holder will forthwith refrain from disposing or discontinue disposition of Registrable Securities pursuant to the then current Prospectus (but, in the case of an event described in Subsection (a)(ii)(5), only in the affected jurisdiction(s)) until such Holder is advised in writing by the Company that the use of the Prospectus may be resumed. The Company shall use its best efforts to limit the duration of any discontinuance with respect to the disposition of Registrable Securities pursuant to this paragraph. (d) Additional Procedures. If the Holders become entitled, pursuant to an event described in clause (viii) of the definition of Registrable Securities, to receive any 53 securities in respect of Registrable Securities that were already included in the Shelf Registration Statement subsequent to the date the Shelf Registration Statement is declared effective, and the Company is unable under the securities laws to add such securities to the Shelf Registration Statement, the Company, as promptly as reasonably practicable, shall file, in accordance with the procedures more particularly set forth in this Section, an additional Shelf Registration Statement with respect to any such Registrable Securities. The Company shall use its reasonable best efforts to have any such additional Registration Statement declared effective as promptly as reasonably practicable after such filing and to keep such additional Shelf Registration Statement continuously effective during the period specified in Section 2. 5. Holdback Agreements. (a) Hold-Back Election. Subject to subsection (c) and the final sentence of this Subsection (a), in the case of any Underwritten Offering by the Company, whether for its own account or for the account of a holder of securities of the Company pursuant to registration rights granted by the Company, each Holder agrees, if and to the extent requested in writing by the managing underwriter or underwriters administering such offering as promptly as reasonably practicable prior to the commencement of the 10-day period referred to below (a "Hold-Back Election"), not to effect any public sale or distribution of securities of the Company except as part of such Underwritten Offering, during the period beginning ten (10) days prior to the closing date of such underwritten offering and during the period ending on the earlier of (i) sixty (60) days after such closing date and (ii) the date such sale or distribution is permitted by such managing underwriter or underwriters, provided that, if and to the extent it is reasonable to do so, the Company will request of the managing underwriter or underwriters to permit such sale or distribution prior to the date permitted under clause (i) above. (b) Material Development Election. Subject to Subsection (c), the Company shall be entitled, for a period of time not to exceed forty-five (45) consecutive days, to require that the Holders refrain from effecting any distribution of their Registrable Securities pursuant to the Shelf Registration Statement if the chief executive officer of the Company determines in his reasonable good faith judgment that, in accordance with his understanding of the disclosure requirements of applicable securities law, such distribution would require disclosure of any financing (other than an underwritten secondary offering of any securities of the Company), acquisition, disposition, corporate reorganization or other transaction or development involving the Company or any subsidiary of the Company that is or would be material to the Company and that, in the reasonable good faith business judgment of such chief executive officer, such disclosure would not at that time be in the best interests of the Company (a "Material Development Election"). The Company shall, as promptly as practicable, give the Holders written notice of any such Material Development Election. If the Holders have been required to refrain from disposing of their Registrable Securities as a result of a Material Development Election, the Company shall, as promptly as practicable following the determination that the Holders may recommence such sales, notify such Holders in writing of such determination (but in any event no later than the end of such 45-day period). 54 (c) Limitation. In no event shall the restrictions under Subsection (a) or Subsection (b), pursuant to one or more Hold-Back Elections or Material Development Elections, remain in effect for more than ninety (90) days in the aggregate in any calendar year. 6. Registration Expenses The Company shall pay all Registration Expenses in connection with the registration, offering and sale of the Registrable Securities pursuant to this Agreement. The Holders shall pay any underwriting discounts, commissions or fees, fees and expenses of their counsel and all other expenses incurred by them which are attributable to the offering and sale of any Registrable Securities in accordance with this Agreement. 7. Rule 144 The Company shall use its reasonable best efforts to make publicly available, pursuant to Rule 144, such information as is necessary to enable the Holders to make sales of Registrable Securities pursuant to that Rule. The Company shall use its reasonable best efforts to file timely with the SEC all documents and reports required of the Company under the Exchange Act. The Company shall furnish to any Holder, upon request, a written statement executed on behalf of the Company as to compliance with the current public information requirements of Rule 144. 8. Indemnification. (a) Indemnification by The Company. The Company agrees to indemnify, to the extent permitted by law (or if indemnification is held by a court of competent jurisdiction to be unavailable, to contribute to the amount paid or payable by), each Holder and (as applicable) its officers and directors and each person or entity who controls such Holder (within the meaning of the Securities Act) and each person or entity which participates as or may be deemed to be an underwriter in the offering or sale of such securities against all losses, claims, damages, liabilities and expenses to which the Holders may be subject under the Securities Act or any other statute or common law, insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon (i) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, (in the case of a prospectus, always in light of the circumstances under which the statements are made) or (iii) any violation by the Company of the Securities Act or any state securities law, "blue sky" law, or any other law, applicable to the Company in connection with such registration, qualification, or compliance; provided, however, that the Company will not be liable to any holder in such case to the extent that any such loss, claim, damage, liability or 55 expense arises out of or is based upon (a) any untrue statement or omission made in such Registration Statement or amendment or supplement thereto in reliance upon and in conformity with the written information furnished to the Company by such Holder expressly for use in the registration statement or (b) any untrue statement or alleged untrue statement of a material fact contained in, or any omission or alleged omission of a material fact from, a Registration Statement if (x) such Registration Statement had been later amended or supplemented in a manner that would correct the untrue statement or alleged untrue statement, omission or alleged omission, which is the basis of the loss, liability, claim, damage or expense for which indemnification is sought, (y) a copy of such amendment or supplement had been timely provided to the Holder and had not been sent to or given to a purchaser at or prior to confirmation of sale to such purchaser and the Holder shall have been under an obligation to deliver such amendment or supplement, and (z) there would have been no such liability but for such failure to deliver such prospectus by the Holder. The Company will also indemnify underwriters participating in the distribution, their officers, directors, employees, partners and agents, and each Person who controls such underwriters (within the meaning of the Securities Act), to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities, if so requested. (b) Indemnification by the Holders. Each Holder agrees to indemnify, to the extent permitted by law (or if indemnification is held by a court of competent jurisdiction to be unavailable, to contribute to the amount paid or payable by), the Company, its directors and officers and each person or entity who controls the Company (within the meaning of the Securities Act) and each person or entity which participates as or may be deemed to be an underwriter in the offering or sale of such securities against any losses, claims, damages, liabilities and expenses resulting from (i) any untrue or alleged untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, (in the case of a prospectus, always in light of the circumstances under which the statements are made) or (iii) any violation by the Company of the Securities Act or any state securities law, "blue sky" law, or any other law, applicable to the Company in connection with such registration, qualification, or compliance, but only to the extent that such loss, claim, damage, liability or expense arises out of or is based upon any untrue statement or omission made in such registration statement or amendment or supplement thereto or any document in reliance upon and in conformity with the written information furnished to the Company by such Holder expressly for use in the registration statement. (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided, however, that failure to give such notice will not prejudice such person's or entity's right to indemnification from the indemnifying party, except as to any losses suffered by such Person which are attributable to such Person's failure to promptly give such notice to such indemnifying party and (ii) (A) have 56 the right to assume the defense of any claim with respect to which it seeks indemnification and with respect to which it has given the notice required by clause (i) of this Subsection if (x) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified party in a timely manner or (y) in the reasonable judgment of such Person, based upon advise of its counsel, a conflict of interest may exist between such person and the indemnifying party with respect to such claims (in which case, if such Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person) or (B) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. The indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim (as well as one local counsel in each relevant jurisdiction), unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. The indemnifying party will not consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the indemnified party of a release from all liability in respect of such claim or litigation. (d) Contribution. If for any reason the indemnification provided for in this Section is unavailable to an indemnified party or insufficient to hold it harmless as contemplated by this Section, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations, provided, however, that no indemnifying Holder shall be required to contribute an amount greater than the dollar amount of the net proceeds received by such indemnifying Holder with respect to the sale of the Registrable Securities giving rise to such indemnification obligation. The relative fault of any indemnifying or indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying or indemnified party or its affiliates or representatives, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Subsection were determined by (i) pro rata allocation (even if all Holders or any agents for the Holders or any underwriters of the Registrable Securities, or all of them, were treated as one entity for such purpose), or (ii) by any other method that does not take into account the equitable consideration referred to in this Subsection. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or 57 proceedings in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentations. (e) The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and will survive the transfer of securities and the termination of this Agreement. 9. Miscellaneous. (a) No Inconsistent Agreements. The Company has not entered into and will not on or after the date of this Agreement enter into any agreement which is inconsistent with the rights granted in this Agreement to the Holders or which otherwise conflicts with the provisions hereof. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without the consent in writing of the Company and all affected Holders. (c) Notices. All notices, requests, demands, deliveries and other communications (collectively, "Notices") that are required or may be given under this Agreement shall be in writing. All Notices shall be deemed to have been duly given or made: if by hand, immediately upon delivery; if by telecopier or similar device, immediately upon sending, provided notice is sent on a business day during the hours of 9:00 a.m. and 6:00 p.m. at the location of the party receiving the Notice, but if not, then immediately upon the beginning of the first business day after being sent; if by Federal Express, United States Postal Service, Express Mail or any other reputable overnight delivery service, on the scheduled delivery date thereof; and if mailed by certified mail, return receipt requested, ten Business Days after mailing. Notwithstanding the foregoing, with respect to any Notice given or made by telecopier or similar device, such Notice shall not be effective unless and until (i) the telecopier or similar device being used prints a written confirmation of the successful completion of such communication by the party sending the Notice, and (ii) a copy of such Notice is deposited in first class mail to the appropriate address for the party to whom the Notice is sent. In addition, notwithstanding the foregoing, a Notice of a change of address by a party hereto shall not be effective until received by the party to whom such Notice of a change of address is sent. All notices are to be given or made to the parties at the following addresses (or to such other address as either party may designate by Notice in accordance with the provisions of this Section): 58 i. if to any of the Holders, to its address set forth on Schedule 1 hereto or on the Secured Lender Execution Pages attached: ii. If to Toy Biz, to Toy Biz, Inc. 685 Third Avenue New York, New York 10017 Attention: Secretary Facsimile No.: 212-682-5272 Confirm: 212-558-5100 with a copy to Battle Fowler LLP Park Avenue Tower 75 East 55th Street New York, New York 10022 Attention: Lawrence Mittman, Esq. Facsimile No.: 212-856-7807 Confirm: 212-856-7000 (d) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (f) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware. (g) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (h) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective 59 successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of Holders are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities. (i) Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically or to recover damages or to exercise any other remedy available to it at law or in equity. The foregoing rights and remedies shall be cumulative and the exercise of any right or remedy provided herein shall not preclude any Person from exercising any other right or remedy provided herein. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (j) Jurisdiction; Forum. Each party hereto consents and submits to the non-exclusive jurisdiction of any state court sitting in the County of New York or federal court sitting in the Southern District of the State of New York in connection with any dispute arising out of or relating to this Agreement. Each party hereto waives any objection to the laying of venue in such courts and any claim that any such action has been brought in an inconvenient forum. To the extent permitted by law, any judgment in respect of a dispute arising out of or relating to this Agreement may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of such judgment being conclusive evidence of the fact and amount of such judgment. Each party hereto agrees that personal service of process may be effected by any of the means specified in Subsection (c), addressed to such party. The foregoing shall not limit the rights of any party to serve process in any other manner permitted by law. (k) Whippoorwill Obligations Several and Not Joint. With respect to any obligations hereunder assumed by any Whippoorwill Account, such obligations shall be several and not joint and shall be limited to the percentage held by such Whippoorwill Account of the total Registrable Shares held by all such Whippoorwill Accounts, and no such Whippoorwill Account shall be liable for any obligation of any other Whippoorwill Account. 60 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TOY BIZ, INC. By: ---------------------------------------- Name: Joseph Ahearn Title: President and Chief Executive Officer DICKSTEIN & CO., L.P. By: Dickstein Partners, L.P. By: Dickstein Partners Inc. By: ---------------------------------------- Name: Alan S. Cooper Title: Vice President DICKSTEIN FOCUS FUND L.P. By: Dickstein Partners, L.P. By: Dickstein Partners Inc. By: ---------------------------------------- Name: Alan S. Cooper Title: Vice President DICKSTEIN INTERNATIONAL LIMITED By: Dickstein Partners Inc. By: ---------------------------------------- Name: Alan S. Cooper Title: Vice President 61 ELYSSA DICKSTEIN, JEFFREY SCHWARZ AND ALAN COOPER AS TRUSTEES U/T/A/D 12/27/88, MARK DICKSTEIN, GRANTOR By: ----------------------------------------- Alan S. Cooper Trustee MARK DICKSTEIN AND ELYSSA DICKSTEIN, AS TRUSTEES OF THE MARK AND ELYSSA DICKSTEIN FOUNDATION By: ----------------------------------------- Mark Dickstein Trustee ----------------------------------------- Elyssa Dickstein OBJECT TRADING CORP. By: ----------------------------------------- Name: Isaac Perlmutter Title: President WHIPPOORWILL/MARVEL OBLIGATIONS TRUST - 1997 By; Whippoorwill Associates, Inc., solely in its capacity as investment advisor for the Whippoorwill/Marvel Obligations Trust - 1997, and not in its individual capacity By: ------------------------------------- Name: Shelley Greenhaus Title: Managing Director 62 WHIPPOORWILL ASSOCIATES, INCORPORATED, as agent for and/or general partner for the accounts listed on Schedule 1 hereto By: --------------------------------------- Name: Shelley Greenhaus Title: Managing Director 63 Schedule 1 ---------- Name and Address - ---------------- Dickstein Parties: DICKSTEIN & CO., L.P. c/o Dickstein Partners, Inc. 660 Madison Avenue New York, New York 10021 Attention: Alan Cooper DICKSTEIN FOCUS FUND L.P. c/o Dickstein Partners, Inc. 660 Madison Avenue New York, New York 10021 Attention: Alan Cooper DICKSTEIN INTERNATIONAL LIMITED c/o Dickstein Partners, Inc. 660 Madison Avenue New York, New York 10021 Attention: Alan Cooper ELYSSA DICKSTEIN, JEFFREY SCHWARZ AND ALAN COOPER AS TRUSTEES U/T/A/D 12/27/88, MARK DICKSTEIN, GRANTOR c/o Dickstein Partners, Inc. 660 Madison Avenue New York, New York 10021 Attention: Alan Cooper MARK DICKSTEIN AND ELYSSA DICKSTEIN, AS TRUSTEES OF THE MARK AND ELYSSA DICKSTEIN FOUNDATION c/o Dickstein Partners, Inc. 660 Madison Avenue New York, New York 10021 Attention: Alan Cooper Elyssa Dickstein c/o Dickstein Partners, Inc. 64 Name and Address - ---------------- 660 Madison Avenue New York, New York 10021 OBJECT TRADING CORP. P. O. Box 1028 Lake Worth, Florida WHIPPOORWILL/MARVEL OBLIGATIONS TRUST - 1997 c/o Whippoorwill Associates, Incorporated 11 Martine Avenue White Plains, NY 10606 WHIPPOORWILL ASSOCIATES, INCORPORATED, as agent for or general partner of each account or partnership listed on the Addendum to Schedule 1 11 Martine Avenue White Plains, NY 10606 65 Addendum to Schedule 1 ---------------------- Fund/Account - ------------ President and Fellows of Harvard College The Rockefeller Foundation Vega Partners II, L.P. Vega Partners III, L.P. Vega Partners IV, L.P. Vega Offshore Fund Trust Whippoorwill Profit Sharing Plan Saranac Partners, L.P. 25307 Partners Vega Partners, L.P. 66 SECURED LENDER EXECUTION PAGE By signing below, the undersigned is hereby executing and agreeing to be bound by the Registration Rights Agreement, dated October 1, 1998, by and among Object Trading Corp., Toy Biz, Inc., certain affiliates of Dickstein Partners, Inc., Whippoorwill Marvel Obligations Trust - 1997 and certain purchasers of Preferred Stock who have executed subscription election forms with the Chase Manhattan Bank. NAME OF SECURED LENDER By: ------------------------------------- Name: --------------------- Title: --------------------- Address for Notices: ------------------------------- ------------------------------- ------------------------------- Telecopy No. ------------------ 67 -----END PRIVACY-ENHANCED MESSAGE-----