-----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, VXetAmta2vLGb1Vkgb6L97tjmWbgImg5naOBJpZ15uoYp5NPJQ9aAFGrUjqCzVnQ 7lnsTAYfvY8hucddIlu1/w== 0000950172-96-000889.txt : 19970102 0000950172-96-000889.hdr.sgml : 19970102 ACCESSION NUMBER: 0000950172-96-000889 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19961231 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TOY BIZ 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: 1934 Act SEC FILE NUMBER: 005-47191 FILM NUMBER: 96688455 BUSINESS ADDRESS: STREET 1: 333 EAST 38TH ST CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126824700 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ANDREWS GROUP INC /DE/ CENTRAL INDEX KEY: 0000277025 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 952683875 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 3200 WINDY HILL RD STE 1100 WEST CITY: MARIETTA STATE: GA ZIP: 30339 BUSINESS PHONE: 4049550045 MAIL ADDRESS: STREET 1: 3200 WINDY HILL RD STREET 2: 3200SUITE 1100 WEST CITY: ATLANTA STATE: GA ZIP: 30339 FORMER COMPANY: FORMER CONFORMED NAME: COMPACT VIDEO INC /DE/ DATE OF NAME CHANGE: 19880331 FORMER COMPANY: FORMER CONFORMED NAME: COMPACT VIDEO SYSTEMS INC DATE OF NAME CHANGE: 19820205 SC 13D/A 1 SCHEDULE 13D - AMENDMENT NO. 3 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Amendment No. 3) Under the Securities Exchange Act of 1934 Toy Biz, Inc. (Name of Issuer) Class A Common Stock, par value $.01 per share (Title of Class and Securities) 892261108 (CUSIP Number of Class of Securities) Barry F. Schwartz MacAndrews & Forbes Holdings Inc. 35 East 62nd Street New York, NY 10021 Telephone: (212) 572-8600 _____________________________________________________________ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copy to: Alan C. Myers Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 (212) 735-3000 December 27, 1996 (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 Statement because of Rule 13d-1(b)(3) or (4), check the following: ( ) Check the following box if a fee is being paid with this Statement: ( ) SCHEDULE 13D CUSIP No. 892261108 _________________________________________________________________ (1) NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Andrews Group Incorporated _________________________________________________________________ (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) (x) (b) ( ) _________________________________________________________________ (3) SEC USE ONLY _________________________________________________________________ (4) SOURCE OF FUNDS OO _________________________________________________________________ (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ( ) __________________________________________________________________ (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware _________________________________________________________________ (7) SOLE VOTING POWER NUMBER OF 13,656,000 SHARES ___________________________________ BENEFICIALLY (8) SHARED VOTING POWER OWNED BY 7,394,000 EACH ___________________________________ REPORTING (9) SOLE DISPOSITIVE POWER PERSON 13,656,000 WITH ___________________________________ (10) SHARED DISPOSITIVE POWER 7,394,000 _________________________________________________________________ (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,050,000 _________________________________________________________________ (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES ( ) _________________________________________________________________ (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 75.9% _________________________________________________________________ (14) TYPE OF REPORTING PERSON CO _________________________________________________________________ SCHEDULE 13D CUSIP No. 892261108 _________________________________________________________________ (1) NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Mafco Holdings Inc. _________________________________________________________________ (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) (x) (b) ( ) _________________________________________________________________ (3) SEC USE ONLY _________________________________________________________________ (4) SOURCE OF FUNDS OO _________________________________________________________________ (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ( ) __________________________________________________________________ (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware _________________________________________________________________ (7) SOLE VOTING POWER NUMBER OF 13,656,000 SHARES ___________________________________ BENEFICIALLY (8) SHARED VOTING POWER OWNED BY 7,394,000 EACH ___________________________________ REPORTING (9) SOLE DISPOSITIVE POWER PERSON 13,656,000 WITH ___________________________________ (10) SHARED DISPOSITIVE POWER 7,394,000 _________________________________________________________________ (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 21,050,000 _________________________________________________________________ (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES ( ) _________________________________________________________________ (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 75.9% _________________________________________________________________ (14) TYPE OF REPORTING PERSON CO _________________________________________________________________ This statement amends and supplements the Schedule 13D dated October 25, 1996, relating to the Class A common stock, par value $.01 per share (the "Class A Common Stock"), of Toy Biz, Inc. ("Toy Biz"), as originally filed with the Securities and Exchange Commission by Andrews Group Incorporated ("Andrews Group") and Mafco Holdings Inc. ("Mafco" and together with Andrews Group, the "Reporting Persons"), as amended by Amendment No. 1, dated November 22, 1996, filed with the Securities and Exchange Commission by Andrews Group and Mafco, and as amended by Amendment No. 2, dated December 17, 1996, filed with the Securities and Exchange Commission by Andrews Group and Mafco. Except as reported herein, there has been no change in the information previously reported in this Schedule 13D. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Andrews Group has entered into an agreement (the "Merger Agreement") with Toy Biz, dated as of December 27, 1996, under which a subsidiary of Andrews Group (the "Purchaser") will acquire all shares of Class A Common Stock held by the Toy Biz public stockholders at a price of $22.50 per share. The purchase price for the shares of Class A Common Stock will be paid from cash available at the time of the closing, and if and to the extent necessary, from borrowings. ITEM 4. PURPOSE OF THE TRANSACTION. (a-b) Pursuant to the Merger Agreement, the Purchaser will acquire all shares of Class A Common Stock held by the Toy Biz public stockholders at a price of $22.50 per share. Andrews Group's obligation to consummate the Merger is subject to a number of significant conditions, principally that the plan of reorganization (the "Plan") of Marvel Entertainment Group, Inc. ("Marvel") filed on December 27, 1996 with the United States Bankruptcy Court for the District of Delaware, with such changes as Andrews Group shall approve, is confirmed. As part of the Plan, Andrews Group would acquire from Marvel for $365 million in cash or Class A Common Stock, or a combination thereof, newly issued shares of common stock, par value $.01 per share, of Marvel (the "Marvel Common Stock") (or its equivalent), representing 80.8% of the outstanding shares of Marvel Common Stock (or its equivalent) after giving effect to the acquisition. If the Plan is confirmed, it is contemplated that Andrews Group would assign its rights and obligations under the Merger Agreement to Marvel and that Toy Biz would become a wholly owned subsidiary of Marvel. (c) Not applicable. (d) The Merger Agreement provides that the Board of Directors of the surviving corporation will be the Board of Directors of the Purchaser. (e) Not applicable. (f) Not applicable. (g) The Merger Agreement provides that the Certificate of Incorporation and By-Laws of Toy Biz will be amended and restated following the Merger. (h) The Class A Common Stock is expected to be delisted from The New York Stock Exchange upon the acquisition of Class A Common Stock pursuant to the Merger Agreement. (i) The Class A Common Stock will be eligible for termination of registration pursuant to Rule 12(g)(4) of the Securities Exchange Act of 1934, as amended, upon the acquisition of Class A common Stock pursuant to the Merger Agreement. (j) Not applicable. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a)-(b) As of December 27, 1996, Toy Biz had 20,348,794 outstanding shares of Class A Common Stock and 7,394,000 outstanding shares of Class B common stock, par value $.01 per share, (the "Class B Common Stock") of Toy Biz. The shares of Class B Common Stock are convertible at the option of their holder, Marvel, into an equal number of shares of Class A Common Stock. Andrews Group has entered into an agreement, dated as of November 20, 1996, with each of Isaac Perlmutter and Avi Arad pursuant to which Andrews Group will acquire 13,656,000 shares of Class A Common Stock. As a result of the Merger Agreement described in Item 4, following the Merger the Reporting Persons will beneficially own 100.00% of the Class A Common Stock which would be outstanding upon the conversion of the Class B Common Stock. Except as set forth above, the Reporting Persons do not beneficially own any Class A Common Stock. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. Exhibit A Press release by Andrews Group Incorporated and Toy Biz Toy Biz, Inc., dated December 27, 1996. Exhibit B Agreement and Plan of Merger, dated as of December 27, 1996, by and among Andrews Group Incorporated, Andrews Acquisition Corp., and Toy Biz, Inc., Exhibit C Stock Purchase Agreement, dated as of December 27, 1996, by and between Andrews Group Incorporated and Marvel Entertainment Group, Inc. SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 30, 1996 ANDREWS GROUP INCORPORATED MAFCO HOLDINGS INC. By: /s/ Barry F. Schwartz Name: Barry F. Schwartz Title: Executive Vice President and General Counsel Exhibit Index Exhibit A Press release by Andrews Group Incorporated and Toy Biz, Inc., dated December 27, 1996 Exhibit B Agreement and Plan of Merger, dated as of December 27, 1996, by and among Andrews Group Incorporated, Andrews Acquisition Corp. and Toy Biz, Inc. Exhibit C Stock Purchase Agreement, dated as of December 27, 1996, by and between Andrews Group Incorporated and Marvel Entertainment Group, Inc. EX-99 2 EXHIBIT A Andrews Group in Definitive Agreement to Acquire Toy Biz at $22.50 Per Share New York, New York December 27, 1996 -- Andrews Group Incorporated and Toy Biz, Inc. (NYSE:TBZ) announced today that they have entered into a definitive merger agreement under which Andrews Group will acquire all shares of Class A common stock held by the Toy Biz public stock- holders at a price of $22.50 per share. The transaction has been unanimously approved by the boards of directors of both companies. The Toy Biz board of directors, upon the recommendation of a special committee of directors not affiliated with Andrews Group, has determined that the merger is fair and in the best interests of the public holders of the Class A common stock. As previously announced, on November 20, 1996 Andrews Group entered into stock purchase agreements with Isaac Perlmutter and Avi Arad, the holders of approximately 67% of the Toy Biz Class A common stock, to acquire their shares for a combination of cash and Andrews Group debt valued at about $17 per share. Andrews Group's obligation to consummate the merger is subject to a number of significant conditions, principal- ly that the Plan of Reorganization filed today by Marvel Entertainment Group, Inc. (NYSE:MRV) with the United States Bankruptcy Court for the District of Delaware, with such changes as Andrews Group shall approve, being confirmed. As part of Marvel's Plan of Reorganization, Andrews Group would acquire from Marvel for $365 million in cash or Toy Biz Class A common stock, or a combination of the foregoing, newly issued shares of Marvel common stock representing 80.8% of the outstanding shares of Marvel common stock after giving effect to the acquisi- tion. If the Plan of Reorganization is confirmed, it is contemplated that Andrews Group would assign its rights and obligations under the Toy Biz merger agreement to Marvel and that Toy Biz would become a wholly owned subsidiary of Marvel. Toy Biz, Inc. designs, markets and distributes toys in the boys, girls, preschool, activity and electronic toy categories featuring major entertainment and consumer brand name properties. Andrews Group Incorporated is a subsidiary of MacAndrews & Forbes Holdings Inc., a diversified holding company with interests in consumer products, entertainment, publishing and financial services. EX-99 3 EXHIBIT B __________________________________________________ AGREEMENT AND PLAN OF MERGER by and among ANDREWS GROUP INCORPORATED, ANDREWS ACQUISITION CORP. and TOY BIZ, INC. dated as of December 27, 1996 __________________________________________________ Index of Defined Terms Defined Term Section No. Acquisition Proposal . . . . . . . . . . . 5.3 affiliate . . . . . . . . . . . . . . . . . 8.5 Agreement . . . . . . . . . . . . . . . . . Recitals Arad . . . . . . . . . . . . . . . . . . . 1.6 Certificates . . . . . . . . . . . . . . . 2.2(b) Class A Shares . . . . . . . . . . . . . . 2.1 Class B Shares . . . . . . . . . . . . . . 2.1 Closing . . . . . . . . . . . . . . . . . . 1.2 Closing Date . . . . . . . . . . . . . . . 1.2 Common Certificates . . . . . . . . . . . . 2.2(b) Company . . . . . . . . . . . . . . . . . . Recitals Company SEC Documents . . . . . . . . . . . 3.5 DGCL . . . . . . . . . . . . . . . . . . . 1.1 Dissenting Stockholders . . . . . . . . . . 2.1(c) D&O Insurance . . . . . . . . . . . . . . . 5.8(b) Effective Time . . . . . . . . . . . . . . 1.3 Employee Option . . . . . . . . . . . . . . 2.4(a) Exchange Act . . . . . . . . . . . . . . . 1.7(a) Governmental Entity . . . . . . . . . . . . 3.4 Indemnified Party . . . . . . . . . . . . . 5.8(a) Marvel . . . . . . . . . . . . . . . . . . 3.2(c) Merger . . . . . . . . . . . . . . . . . . 1.1 Merger Consideration . . . . . . . . . . . 2.1(c) Parent . . . . . . . . . . . . . . . . . . Recitals Paying Agent . . . . . . . . . . . . . . . 2.2(a) Perlmutter Group . . . . . . . . . . . . . 1.6 Preferred Certificates . . . . . . . . . . 2.2(b) Preferred Merger Consideration . . . . . . 2.1(d) Preferred Shares . . . . . . . . . . . . . 2.1 Preferred Stock . . . . . . . . . . . . . . 3.2(a) Proxy Statement . . . . . . . . . . . . . . 1.7(a) Purchaser . . . . . . . . . . . . . . . . . Recitals Purchaser Common Stock . . . . . . . . . . 2.1 Qualifying Offer . . . . . . . . . . . . . 5.9(b) SEC . . . . . . . . . . . . . . . . . . . . 1.7(a) Secretary of State . . . . . . . . . . . . 1.3 Securities Act . . . . . . . . . . . . . . 3.5 Shares . . . . . . . . . . . . . . . . . . 2.1 Special Committee . . . . . . . . . . . . . 1.6 Special Meeting . . . . . . . . . . . . . . 1.7(a) Stock Option Plan . . . . . . . . . . . . . 2.4(a) Stock Purchase Agreements . . . . . . . . . 1.6 Subsidiary . . . . . . . . . . . . . . . . 3.1 Surviving Corporation . . . . . . . . . . . 1.1 Voting Debt . . . . . . . . . . . . . . . . 3.2(a) TABLE OF CONTENTS ARTICLE I THE MERGER . . . . . . . . . . . . . . . 1 Section 1.1 The Merger . . . . . . . . . . . . . 1 Section 1.2 Closing . . . . . . . . . . . . . . . 2 Section 1.3 Effective Time . . . . . . . . . . . 2 Section 1.4 Certificate of Incorporation and By- Laws . . . . . . . . . . . . . . . 2 Section 1.5 Directors and Officers of the Surviv ing Corporation . . . . . . . . . . . . 2 Section 1.6 Company Actions . . . . . . . . . . . 3 Section 1.7 Stockholders' Meeting and Proxy Statement . . . . . . . . . . . . . 3 ARTICLE II CONVERSION OF SECURITIES . . . . . . . . 5 Section 2.1 Conversion of Capital Stock . . . . . 5 Section 2.2 Exchange of Certificates . . . . . . 6 Section 2.3 Dissenters' Rights . . . . . . . . . 8 Section 2.4 Company Plans . . . . . . . . . . . . 9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . 9 Section 3.1 Organization . . . . . . . . . . . . 9 Section 3.2 Capitalization . . . . . . . . . . . 10 Section 3.3 Authorization; Validity of Agreement; Company Action . . . . . . . . . . 12 Section 3.4 Consents and Approvals; No Violations . . . . . . . . . . . . 12 Section 3.5 SEC Reports and Financial Statements 13 Section 3.6 Information in Proxy Statement . . . 13 Section 3.7 Vote Required . . . . . . . . . . . . 14 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER . . . . . . . . . . . 14 Section 4.1 Organization . . . . . . . . . . . . 14 Section 4.2 Authorization; Validity of Agreement; Necessary Action . . . . . . . . . 14 Section 4.3 Consents and Approvals; No Viola tions . . . . . . . . . . . . . . . . . 15 Section 4.4 Information in Proxy Statement . . . 16 ARTICLE V COVENANTS . . . . . . . . . . . . . . . 16 Section 5.1 Interim Operations of the Company . . 16 Section 5.2 Consents and Approvals . . . . . . . 16 Section 5.3 No Solicitation . . . . . . . . . . . 17 Section 5.4 Brokers or Finders . . . . . . . . . 18 Section 5.5 Additional Agreements . . . . . . . . 19 Section 5.6 Publicity . . . . . . . . . . . . . . 19 Section 5.7 Notification of Certain Matters . . . 19 Section 5.8 Directors' and Officers' Insurance and Indemnification . . . . . . . . 19 Section 5.9 Assignment; Purchase of Shares. . . . 20 Section 5.10 Stock Purchase Agreements . . . . . . 21 ARTICLE VI CONDITIONS . . . . . . . . . . . . . . . 22 Section 6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . 22 Section 6.2 Conditions to Parent's and the Purchaser's Obligations to Effect the Merger . . . . . . . . . . . . . . 22 Section 6.3 Conditions to Company's Obligations to Effect the Merger . . . . . . . 23 ARTICLE VII TERMINATION . . . . . . . . . . . . . . 23 Section 7.1 Termination . . . . . . . . . . . . . 23 Section 7.2 Effect of Termination . . . . . . . . 25 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . 25 Section 8.1 Fees and Expenses . . . . . . . . . . 25 Section 8.2 Amendment, Modification and Other Action. . . . . . . . . . . . . . . 25 Section 8.3 Nonsurvival of Representations and Warranties . . . . . . . . . . . . 25 Section 8.4 Notices . . . . . . . . . . . . . . . 26 Section 8.5 Interpretation . . . . . . . . . . . 27 Section 8.6 Counterparts . . . . . . . . . . . . 27 Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership 27 Section 8.8 Severability . . . . . . . . . . . . 28 Section 8.9 Governing Law . . . . . . . . . . . . 28 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (this "Agree- ment"), dated as of December 27, 1996, by and among Andrews Group Incorporated, a Delaware corporation ("Par- ent"), Andrews Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Parent (the "Purchas- er"), and Toy Biz, Inc., a Delaware corporation (the "Company"). WHEREAS, the Board of Directors of the Company and the Board of Directors of each of Parent and Purchas- er have approved, and deem it advisable and in the best interests of their respective stockholders to consummate, the acquisition of the Company by Parent and the merger of Purchaser with and into the Company upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the forego- ing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I THE MERGER Section 1.1 The Merger. Upon the terms and subject to the conditions of this Agreement and in accor- dance with the General Corporation Law of the State of Delaware (the "DGCL"), at the Effective Time (as defined in Section 1.3), the Company and the Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the Purchaser shall be merged with and into the Company and the separate corporate existence of the Purchaser shall thereupon cease, (b) the Company shall be the successor or surviving corporation in the Merger (some- times hereinafter referred to as the "Surviving Corpora- tion") and shall continue to be governed by the laws of the State of Delaware, and (c) all of the rights, privi- leges, immunities, powers and franchises of the Company and the Purchaser shall vest in the Surviving Corporation and all obligations, duties, debts and liabilities of the Company and the Purchaser shall become the obligations, duties, debts and liabilities of the Surviving Corpora- tion. Section 1.2 Closing. The closing of the Merger (the "Closing") shall take place at 10:00 a.m. on a date to be specified by the parties, which shall be no later than the second business day after satisfaction or waiver of all of the conditions set forth in Article VI hereof (the "Closing Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022, unless another date or place is agreed to in writing by the parties hereto. Section 1.3 Effective Time. As soon as prac- ticable following the satisfaction or waiver of the conditions set forth in Article VI hereof, Parent, the Purchaser and the Company will cause a Certificate of Merger to be executed and filed on the date of the Clos- ing (or on such other date as Parent and the Company may agree) with the Secretary of State of Delaware (the "Secretary of State") as provided in the DGCL. The Merger shall become effective on the date on which the Certificate of Merger has been duly filed with the Secre- tary of State or such time as is agreed upon by the parties and specified in the Certificate of Merger, and such time is hereinafter referred to as the "Effective Time." Section 1.4 Certificate of Incorporation and By-Laws. At the Effective Time, the Amended and Restat- ed Certificate of Incorporation of the Company, as amend- ed, as in effect immediately prior to the Effective Time, shall be amended as set forth in Exhibit A hereto. The Amended and Restated Certificate of Incorporation, as so amended at the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law. The By-Laws of the Company, as in effect immediately prior to the Effective Time, shall be amended as set forth in Exhibit B hereto. The by-laws of the Company, as so amended at the Effective Time, shall be the by-laws of the Surviving Corporation until thereafter amended in accordance with applicable law. The Merger shall have the effects specified in the DGCL. Section 1.5 Directors and Officers of the Surviving Corporation. The directors of the Purchaser and the officers of the Company at the Effective Time shall, from and after the Effective Time, be the direc- tors and officers, respectively, of the Surviving Corpo- ration until their successors shall have been duly elect- ed or appointed or qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's certificate of incorporation and by-laws. Section 1.6 Company Actions. The Company hereby approves of and consents to the Merger and repre- sents that its Board of Directors, at a meeting duly called and held, has (i) upon the recommendation of its Special Committee (the "Special Committee"), unanimously determined that each of the Agreement and the Merger are fair and in the best interests of the holders of the Class A Shares (as defined in Section 2.1), other than Avi Arad ("Arad"), Isaac Perlmutter, Isaac Perlmutter T.A., a Florida trust, and ZIB Inc., a Delaware corpora- tion (collectively, the "Perlmutter Group"), whose shares are to be purchased pursuant to the Stock Purchase Agree- ment, dated as of November 20, 1996, between Parent and Arad and the Stock Purchase Agreement, dated as of Novem- ber 20, 1996, between Parent and the Perlmutter Group (together, the "Stock Purchase Agreements"), (ii) ap- proved this Agreement and the transactions contemplated hereby, including the Merger, and such approval consti- tutes approval of this Agreement and the transactions contemplated hereby, including the Merger, and (iii) resolved to recommend that the stockholders of the Compa- ny approve and adopt this Agreement and the Merger. Section 1.7 Stockholders' Meeting and Proxy Statement. (a) If required by applicable law in order to consummate the Merger, the Company shall, in accordance with applicable law: (i) duly call, give notice of, convene and hold a special meeting of its stockholders (the "Special Meeting") and submit this Agreement and the Merger to a vote of the Company's stockholders for their adoption and approval as promptly as possible following the execution and delivery of this Agree- ment; (ii) prepare and file with the Securities and Exchange Commission (the "SEC"), in accordance with Regulation 14A and Rule 13e-3 under the Securi- ties Exchange Act of 1934 (the "Exchange Act"), a preliminary Proxy Statement (as hereinafter defined) relating to the Merger and this Agreement and use its best efforts (x) to obtain and furnish the information required to be included by the SEC in the Proxy Statement and, after consultation with Parent, to respond promptly to any comments made by the SEC with respect to the preliminary Proxy State- ment, provided that no amendment or supplement thereto will be made by the Company without consul- tation with Parent and its counsel, (y) cause a letter to stockholders, notice of meeting, defini- tive Proxy Statement, including any amendment or supplement thereto, and form of proxy (collectively, the "Proxy Statement") to be mailed to its stock- holders in connection with the Merger and (z) to obtain the necessary approvals of the Merger and this Agreement by its stockholders; (iii) subject to the fiduciary obliga- tions of the Board of Directors under applicable law as advised by independent counsel, include in the Proxy Statement its recommendation that the stock- holders of the Company vote in favor of the approval of the Merger and the adoption of this Agreement; and (iv) include in the Proxy Statement the written opinion of Wasserstein Perella & Co. that the Merger Consideration (as defined in Section 2.1(c)) is fair to the holders of the Class A Shares (other than Arad and the Perlmutter Group) from a financial point of view. (b) Parent shall furnish to the Company written information concerning itself and Purchaser expressly for inclusion in the Proxy Statement. (c) Parent shall vote, or cause to be voted, all of the capital stock of the Company then owned by it, the Purchaser or any of its other affiliates in favor of the approval of the Merger and the adoption of this Agreement. ARTICLE II CONVERSION OF SECURITIES Section 2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of the Merger and with- out any action on the part of Parent, Purchaser, the Company or the holders of any shares of Class A common stock, par value $.01 per share (the "Class A Shares"), or Class B common stock, par value $.01 per share, of the Company (the "Class B Shares" and, collectively with the Class A Shares, the "Shares"), or the holders of any shares of Series A Preferred Stock (the "Preferred Shares") of the Company, or holders of common stock, par value $1.00 per share, of the Purchaser (the "Purchaser Common Stock") (a) Purchaser Common Stock. Each issued and outstanding share of the Purchaser Common Stock shall be converted into and become one fully paid and nonassess- able share of common stock of the Surviving Corporation. (b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares that are owned by the Company as treasury stock and any Shares or other capital stock owned by Parent, the Purchaser or any other wholly owned Subsidiary (as defined in Section 3.1) of Parent shall be cancelled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor. (c) Exchange of Shares. Each issued and outstanding Share (other than Shares to be cancelled in accordance with Section 2.1(b) and any Shares which are held by stockholders ("Dissenting Stockholders") exercis- ing appraisal rights pursuant to Section 262 of the DGCL, which Shares shall be converted into the right, if any, to receive payment from the Surviving Corporation of the "fair value" of such Shares as determined in accordance with Section 262 of the DGCL) shall be converted into the right to receive $22.50 per Share in cash, payable to the holder thereof, without interest (the "Merger Consider- ation"), upon surrender of the certificate formerly representing such Share in the manner provided in Section 2.2. All such Shares, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the sur- render of such certificate in accordance with Section 2.2. (d) Exchange of Preferred Shares. Each issued and outstanding Preferred Share (other than any Preferred Shares which are held by stockholders who are Dissenting Stockholders, which Shares shall be converted into the right, if any, to receive payment from the Surviving Corporation of the "fair value" of such Preferred Shares as determined in accordance with Section 262 of the DGCL) shall be converted into the right to receive an amount per Preferred Share equal to the then applicable Redemp- tion Price (as defined and as set forth in the Certifi- cate of Designation for the Preferred Shares), payable to the holder thereof, without interest (the "Preferred Merger Consideration"), upon surrender of the certificate formerly representing such Preferred Share in the manner provided in Section 2.2. All such Preferred Shares, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such Preferred Shares shall cease to have any rights with respect thereto, except the right to receive the Pre- ferred Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.2. Section 2.2 Exchange of Certificates. (a) Paying Agent. Prior to the Effective Time, Parent shall designate a bank or trust company to act as agent for the holders of the Shares and the Preferred Shares in connec- tion with the Merger (the "Paying Agent") to receive the funds, as needed, to which holders of the Shares and the Preferred Shares shall become entitled pursuant to Sec- tion 2.1(c) and 2.1(d). Such funds shall be invested by the Paying Agent as directed by Parent or the Surviving Corporation. All interest earned on such funds shall be paid to Parent. (b) Exchange Procedures. As soon as reason- ably practicable after the Effective Time, the Paying Agent shall mail to each holder of record of a certifi- cate or certificates, which immediately prior to the Effective Time represented outstanding Shares (the "Com- mon Certificates") or Preferred Shares (the "Preferred Certificates," and together with the Common Certificates, the "Certificates"), whose Shares or Preferred Shares were converted pursuant to Section 2.1 into the right to receive the Merger Consideration and the Preferred Merger Consideration, respectively, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Parent and the Company may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Merger Consideration or the Preferred Merger Consid- eration, as the case may be. Upon surrender of a Certif- icate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration or the Preferred Merger Consideration for each Share or Preferred Share formerly represented by such Certificate and the Certificate so surrendered shall forthwith be cancelled. If payment of the Merger Consideration or Preferred Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other non-income taxes required by reason of the payment of the Merger Consider- ation or Preferred Merger Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration or Preferred Merger Consideration in cash as contemplated by this Section 2.2. (c) Transfer Books; No Further Ownership Rights in the Shares. At the Effective Time, the stock transfer books of the Company shall be closed and there- after there shall be no further registration of transfers of the Shares or the Preferred Shares on the records of the Company. From and after the Effective Time, the holders of Certificates evidencing ownership of the Shares or the Preferred Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares or Preferred Shares, except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II. (d) Termination of Fund; No Liability. At any time following six months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) which had been made available to the Paying Agent and which have not been disbursed to holders of Certificates, and thereafter such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration or Preferred Merger Consideration payable upon due surrender of their Certificates, without any interest thereon. Notwith- standing the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate for Merger Consideration or Preferred Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Section 2.3 Dissenters' Rights. If any Dis- senting Stockholder shall be entitled to be paid the "fair value" of such holder's Shares or Preferred Shares, as provided in Section 262 of the DGCL, the Company shall give the Parent notice thereof and the Parent shall have the right to participate in all negotiations and proceed- ings with respect to any such demands. Neither the Company nor the Surviving Corporation shall, except with the prior written consent of the Parent, voluntarily make any payment with respect to, or settle or offer to set- tle, any such demand for payment. If any Dissenting Stockholder shall fail to perfect or shall have effec- tively withdrawn or lost the right to dissent, the Shares held by such Dissenting Stockholder shall thereupon be treated as though such Shares or Preferred Shares had been converted into the Merger Consideration or Preferred Merger Consideration pursuant to Section 2.1. Section 2.4 Company Plans. (a) With respect to each outstanding employee stock option to purchase Shares (an "Employee Option") granted under the Company's 1995 Stock Option Plan (the "Stock Option Plan"), the Company shall, effective as of immediately prior to the Effective Time, and subject to the consent, if required, of the holder of such Employee Option, (i) cause each Employee Option, whether or not then exercisable or vested, to become fully exercisable and vested, (ii) cause each Employee Option that is then outstanding to be cancelled and (iii) in consideration of such cancellation, pay to such holder of an Employee Option an amount in respect thereof equal to the product of (A) the excess, if any, of the Merger Consideration over the exercise price of each such Employee Option and (B) the number of Shares previously subject to the Employee Option immediately prior to its cancellation (such payment to be net of withholding taxes). (b) Except as may be otherwise agreed to by the Parent or the Purchaser and the Company, the Stock Option Plan shall terminate as of the Effective Time and the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its subsidiaries shall be deleted as of the Effective Time and no holder of Employee Options or any participant in the Stock Option Plan or any other plans, programs or arrangements shall have any right thereunder to acquire any equity securities of the Company, the Surviving Corporation or any subsidiary thereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and the Purchaser as follows: Section 3.1 Organization. Each of the Company and its Subsidiary (as defined below) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority and governmental approvals would not, individually or in the aggregate, have a material adverse effect on the Company and its Subsidiary, taken as a whole. As used in this Agreement, the term "Subsidiary" shall mean all corporations or other entities in which the Company or the Parent, as the case may be, owns a majority of the issued and outstanding capital stock or similar interests. As used in this Agreement, any refer- ence to any state of facts, event or effect being materi- al or having a material adverse effect on or with respect to any entity (or group of entities taken as a whole) means such state of facts, event or effect is materially adverse to the consolidated financial condition, busi- nesses or results of operations of such entity (or, if used with respect thereto, of such group of entities taken as a whole). Each of the Company and its Subsid- iary is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a material adverse effect on the Company and its Subsidiary, taken as a whole. Section 3.2 Capitalization. (a) The autho- rized capital stock of the Company consists of 100,000,000 Class A Shares, 20,000,000 Class B Shares and 25,000,000 shares of preferred stock, par value $.01 per share (the "Preferred Stock"). As of the date hereof, (i) 20,348,794 Class A Shares are issued and outstanding and no Class A Shares are held in the treasury of the Company, (ii) 7,394,000 Class B Shares are issued and outstanding and no Class B Shares are held in the trea- sury of the Company, (iii) 59,091 Preferred Shares are issued and outstanding, and (iv) 1,321,471 Class A Shares are reserved for issuance upon exercise of then outstand- ing Employee Options granted under the Stock Option Plan. All the outstanding shares of the Company's capital stock are, and all Class A Shares which may be issued pursuant to the exercise of outstanding Employee Options will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Company or its Subsidiary issued and out- standing. Except as set forth above, as of the date hereof, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are no existing options, warrants, calls, pre-emptive rights, subscriptions or other rights, agreements, ar- rangements or commitments of any character, relating to the issued or unissued capital stock of the Company or its Subsidiary, obligating the Company or its Subsidiary to issue, transfer or sell or cause to be issued, trans- ferred or sold any shares of capital stock or Voting Debt of the Company or its Subsidiary or securities convert- ible into or exchangeable for such shares or equity interests, or obligating the Company or its Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment. (b) All of the outstanding shares of capital stock of its Subsidiary are beneficially owned by the Company, directly or indirectly, and all such shares have been validly issued and are fully paid and nonassessable and are owned by either the Company free and clear of all liens, charges, claims or encumbrances. (c) Except for the Stockholders Agreement, dated as of March 2, 1995, by and among Arad, the Perlmutter Group, Marvel Entertainment Group, Inc. ("Mar- vel") and the Company, the Voting Trust Agreement, dated as of March 2, 1995, among Marvel, Isaac Perlmutter and the Company and the Voting Trust Agreement, dated as of March 2, 1995, among Marvel, Arad and the Company, there are no voting trusts or other agreements or understand- ings to which the Company or its Subsidiary is a party with respect to the voting of the capital stock of the Company or its Subsidiary. (d) Neither the Company nor its Subsidiary is required to redeem, repurchase or otherwise acquire shares of capital stock of the Company, or its Subsid- iary, respectively, as a result of the transactions contemplated by this Agreement. Section 3.3 Authorization; Validity of Agreement; Company Action. The Company has full corpo- rate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the transactions contemplated hereby, have been duly authorized by the Board of Directors of the Company and, except for obtaining the approval of its stockholders as contemplated by Section 3.7 or as otherwise required by Delaware law, no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consum- mation by it of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery hereof by Parent and the Purchas- er, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms. Section 3.4 Consents and Approvals; No Violations. Except for the filings, permits, authoriza- tions, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act and the DGCL, neither the execution, delivery or perfor- mance of this Agreement by the Company nor the consumma- tion by the Company of the transactions contemplated hereby nor compliance by the Company with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the certificate of incorpora- tion or the by-laws of the Company or of its Subsidiary, (ii) require any filing with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or regulatory authority or agency (a "Governmental Enti- ty"), (iii) except as set forth in Section 3.4 of the Company Disclosure Schedule, result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceler- ation) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or its Subsidiary is a party or by which either of them or any of their properties or assets may be bound or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, its Subsidiary or any of their properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a material adverse effect on the Company and its Subsid- iary, taken as a whole, and which will not materially impair the ability of the Company to consummate the transactions contemplated hereby. Section 3.5 SEC Reports and Financial Statements. The Company has filed with the SEC, and has heretofore delivered to Parent, true and complete copies of, all forms, reports, schedules, statements and other documents required to be filed by it under the Exchange Act or the Securities Act of 1933, as amended (the "Secu- rities Act") (as such documents have been amended since the time of their filing, collectively, the "Company SEC Documents"). As of their respective dates or, if amend- ed, as of the date of the last such amendment, the SEC Documents (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. Section 3.6 Information in Proxy Statement. The Proxy Statement (or any amendment thereof or supple- ment thereto) will, at the date mailed to Company stock- holders and at the time of the Special Meeting, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation is made by the Company with respect to statements made therein based on information supplied by Parent or the Purchaser for inclusion in the Proxy Statement. The Proxy Statement will comply in all material respects with the provisions of the Exchange Act and the rules and regulations there- under, including, without limitation, Regulation 14A and Rule 13e-3. Section 3.7 Vote Required. The affirmative vote of the holders of a majority of the votes represent- ed by the outstanding Class A Shares and Class B Shares, voting together as one class, and the affirmative unani- mous vote of the holders of the outstanding Class B Shares are the only votes of the holders of any class or series of the Company's capital stock necessary to ap- prove this Agreement and the transactions contemplated hereby, subject to any other vote which may be required by Delaware law. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER Parent and the Purchaser represent and warrant to the Company as follows: Section 4.1 Organization. Each of Parent and the Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority and governmental approvals would not, individually or in the aggregate, have a material adverse effect on Parent and the Purchaser, taken as a whole. Each of Parent and the Purchaser is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a material adverse effect on Parent and its Subsidiaries, taken as a whole. Section 4.2 Authorization; Validity of Agreement; Necessary Action. Each of Parent and the Purchaser has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, deliv- ery and performance by Parent and the Purchaser of this Agreement, and the consummation by them of the transac- tions contemplated hereby, have been duly authorized by the Boards of Directors of Parent and the Purchaser and by Parent as the sole stockholder of the Purchaser and no other corporate action on the part of Parent and the Purchaser is necessary to authorize the execution and delivery by Parent and the Purchaser of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and deliv- ered by Parent and the Purchaser, and, assuming due and valid authorization, execution and delivery hereof by the Company, is a valid and binding obligation of Parent and the Purchaser, enforceable against them in accordance with its terms. Section 4.3 Consents and Approvals; No Violations. Except for the filings, permits, authoriza- tions, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act and the DGCL, neither the execution, delivery or perfor- mance of this Agreement by Parent or the Purchaser nor the consummation by Parent or the Purchaser of the trans- actions contemplated hereby nor compliance by Parent or the Purchaser with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the respective certificate of incorporation or by-laws of Parent or the Purchaser, (ii) require any filing with, or permit, authorization, consent or approval of, any Gov- ernmental Entity, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent or the Purchaser is a party or by which any of them or any of their respective properties or assets may be bound or (iv) violate any order, writ, injunction, decree, stat- ute, rule or regulation applicable to Parent, any of its Subsidiaries or any of their properties or assets, ex- cluding from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults which would not, individually or in the aggregate, have a material adverse effect on Parent and its Subsidiaries, taken as a whole and which will not materially impair the ability of Parent or the Purchaser to consummate the transactions contemplated hereby. Section 4.4 Information in Proxy Statement. The information supplied by Parent or the Purchaser specifically for inclusion or incorporation by reference in the Proxy Statement will, at the date mailed to stock- holders and at the time of the Special Meeting, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. All information supplied by Parent or the Purchaser specifically for inclusion or incorporation by reference in the Proxy Statement will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation 14A and Rule 13e-3. ARTICLE V COVENANTS Section 5.1 Interim Operations of the Company. The Company covenants and agrees that, except (i) as expressly contemplated by this Agreement or (ii) as agreed in writing by Parent, after the date hereof and prior to the Effective Time, the business of the Company and its Subsidiary shall be conducted only in the ordi- nary and usual course, and, in particular: the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any of the Shares (other than Class A Shares reserved for issuance on the date hereof pursuant to the exercise of Options outstanding on the date hereof) Preferred Stock or capi- tal stock of its Subsidiary beneficially owned by it; (ii) amend its certificate of incorporation or by-laws; (iii) split, combine or reclassify the outstanding Shares or Preferred Shares; (iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; or (v) redeem (except pursuant to the Certificate of Designation relat- ing to the Preferred Shares), purchase or otherwise acquire directly or indirectly any of its capital stock. Section 5.2 Consents and Approvals. (a) Upon the terms and subject to the conditions of this Agree- ment, each of the parties hereto agrees to use all rea- sonable efforts to take, or cause to be taken, all ac- tions, and to do, or cause to be done, all things neces- sary, proper or advisable under applicable laws and regulations to consummate and make effective the transac- tions contemplated by this Agreement as promptly as practicable including, but not limited to, (i) the prepa- ration and filing of all forms, registrations and notices required to be filed to consummate the transactions contemplated by this Agreement and the taking of such actions as are necessary to obtain any requisite approv- als, consents, order, exemptions or waivers by any third party or Governmental Entity, and (ii) causing the satis- faction of all conditions to the Closing. (b) Each of Parent and the Company shall promptly consult with the other with respect to, provide any necessary information that is not subject to legal privilege with respect to, and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Entity or any other information supplied by such party to a Governmental Entity in connection with this Agreement and the transactions contemplated by this Agreement. Each of Parent and the Company shall promptly inform the other of any communication from any Governmen- tal Entity regarding any of the transactions contemplated by this Agreement. If such party receives a request from any such Governmental Entity with respect to the transac- tions contemplated by this Agreement, then such party will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compli- ance with such request. Section 5.3 No Solicitation. Neither the Company nor its Subsidiary or affiliates shall (and the Company shall use its best efforts to cause its officers, directors, employees, representatives and agents, includ- ing, but not limited to, investment bankers, attorneys and accountants, not to), directly or indirectly, encour- age, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Parent, any of its affiliates or representa- tives) concerning any merger, tender offer, exchange offer, sale of assets, sale of shares of capital stock or debt securities or similar transactions involving the Company, its Subsidiary or any division or operating or principal business unit of the Company (an "Acquisition Proposal"). Notwithstanding the foregoing, the Company may furnish information concerning its business, proper- ties or assets to any corporation, partnership, person or other entity or group pursuant to appropriate confidenti- ality agreements, and may negotiate and participate in discussions and negotiations with such entity or group concerning an Acquisition Proposal, if the Board of Directors of the Company concludes in good faith after consultation with independent legal counsel that the failure to take such action would present a reasonable possibility of violating the fiduciary obligations of such Board under applicable law. Nothing shall prohibit the Company from taking and disclosing a position with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 under the Exchange Act or, with respect to any Acquisition Proposal, from making any other disclosure required by applicable law. The Company will immediately communicate to Parent the terms of any Acquisition Pro- posal or request for information or to negotiate (and will disclose any written materials received by the Company in connection therewith) and the identity of the party making such Acquisition Proposal or request which it may receive in respect of any such transaction. Section 5.4 Brokers or Finders. Each of Parent and the Company represents, as to itself, its Subsidiaries and its affiliates (other, than in the case of Parent, the Company, and in the case of the Company, Parent or any of its affiliates, other than the Company and its Subsidiary), that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any brokers' or finders' fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement (other than, in the case of the Company, Wasserstein Perella & Co., and in the case of the Parent and its affiliates other than the Company and its Subsidiary, Donaldson, Lufkin & Jenrette, Bear Stearns & Co. Inc., and CS First Boston Corporation) and each of Parent and the Company agrees to indemnify and hold the other harmless from and against any and all claims, liabilities or obligations with respect to any other fees, commissions or expenses asserted by any person on the basis of any act or state- ment alleged to have been made by such party or its affiliates. Section 5.5 Additional Agreements. Subject to the terms and conditions herein provided, each of the parties hereto shall use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, or to remove any injunc- tions or other impediments or delays, legal or otherwise, to consummate and make effective the Merger and the other transactions contemplated by this Agreement. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of the Company and Parent shall use all reasonable efforts to take, or cause to be taken, all such necessary actions. Section 5.6 Publicity. The initial press release with respect to the execution of this Agreement shall be a joint press release acceptable to Parent and the Company. Thereafter, so long as this Agreement is in effect, neither the Company, Parent nor any of their respective affiliates shall issue or cause the publica- tion of any press release or other announcement with respect to the Merger, this Agreement or the other trans- actions contemplated hereby without the prior consulta- tion of the other party, except as may be required by law or by any listing agreement with a national securities exchange or trading market. Section 5.7 Notification of Certain Matters. The Company shall give prompt notice to Parent and Parent shall give prompt notice to the Company, of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Effective Time and (ii) any material failure of the Company or Parent, as the case may be, to comply with or satisfy any covenant, condition or agreement to be com- plied with or satisfied by it hereunder; provided, howev- er, that the delivery of any notice pursuant to this Section 5.7 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. Section 5.8 Directors' and Officers' Insurance and Indemnification. (a) Parent shall cause the Surviv- ing Corporation (or any successor to the Surviving Corpo- ration) to indemnify, defend and hold harmless the pres- ent and former officers, directors, employees and agents of the Company and its Subsidiary (each an "Indemnified Party") against all losses, claims, damages, liabilities, fees and expenses arising out of actions or omissions occurring at or prior to the Effective Time to the full extent permitted under Delaware law, subject to the terms of the Company's certificate of incorporation and by- laws, all as in effect at the date hereof. (b) Parent or the Surviving Corporation shall maintain the Company's existing officers' and directors' liability insurance ("D&O Insurance") for a period of not less than five years after the Effective Time; provided, that the Parent may substitute therefor policies of substantially similar coverage and amounts containing terms no less favorable to such former directors or officers; provided, further, that in no event shall the Parent or the Surviving Corporation be required to pay annual premiums for insurance under this Section in excess of 150% of the premiums paid by the Company in 1996; and provided further, however, that if the annual premiums for such insurance coverage exceed such amount Parent or the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount. Section 5.9 Assignment; Purchase of Shares. (a) In the event that the condition set forth in Section 6.2(c) is satisfied, Parent shall (i) transfer all the outstanding shares of capital stock of the Pur- chaser to Marvel and, if necessary, cause Marvel to authorize the consummation of the transactions contem- plated hereby as the then sole stockholder of the Pur- chaser, and (ii) assign its rights, interests and obliga- tions hereunder to Marvel (it being understood that Marvel is not an "interested stockholder" for purposes of Section 203 of the DGCL). (b) In the event that the condition set forth in Section 6.2(c) is not satisfied but is waived, Parent, Purchaser or any of their affiliates (other than Marvel) shall have the right to offer to purchase all of the Class A Shares directly from the stockholders of the Company, provided that (i) such offer shall be for any and all outstanding Class A Shares, (ii) such offer shall be for cash in an amount per share not less than the Merger Consideration, and (iii) such offer shall not contain any conditions not customary for an offer of this type (a "Qualifying Offer"). (c) Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by opera- tion of law or otherwise) without the prior written consent of the other parties, except (i) as provided in Section 5.9(a)(ii) or (ii) that Parent may assign, in its sole discretion, any or all of its rights, interests and obligations hereunder to any direct or indirect Subsid- iary of Parent. Upon any such assignment (whether pursu- ant to Section 5.9(a)(ii) or otherwise), Parent's assign- ee shall deliver to the Company a writing evidencing its agreement to perform Parent's covenants hereunder and in which it makes representations to the Company substan- tially in the form made by Parent in Article IV. No such assignment (whether pursuant to Section 5.9(a)(ii) or otherwise), however, shall relieve Parent of its obliga- tions under this Agreement. (d) The parties hereto shall take all reason- able actions as are necessary, proper or advisable to give effect to the provisions of this Section 5.9, in- cluding, without limitation, the execution of an amend- ment to this Agreement. Section 5.10 Stock Purchase Agreements. Parent shall not alter or amend (i) the Stock Purchase Agree- ments or (ii) the Performance Bonus Agreement between the Company and Arad, the Performance Bonus Agreement be- tween the Company and Isaac Perlmutter, the Amended and Restated Consulting Agreement between the Company and Arad or the Consulting Agreement between the Company and Isaac Perlmutter (in the case of the documents referred to in this clause (ii), in the form previously provided to the Company) so as to make such arrangements economi- cally more favorable to Arad or Isaac Perlmutter, or enter into any similar agreements, without the consent of the Company, which consent shall not unreasonably be withheld. ARTICLE VI CONDITIONS Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obliga- tion of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions, any and all of which may be waived in whole or in part by the Company, Parent or the Purchaser, as the case may be, to the extent permitted by applicable law: (a) Stockholder Approval. This Agreement shall have been approved and adopted by the requisite vote of the holders of the Shares, if required by appli- cable law or the Company's certificate of incorporation, in order to consummate the Merger; (b) Statutes; Consents. No statute, rule, order, decree or regulation shall have been enacted or promulgated by any Governmental Entity which prohibits the consummation of the Merger and all governmental consents, orders and approvals required for the consumma- tion of the Merger and the transactions contemplated hereby shall have been obtained and shall be in effect at the Effective Time; and (c) Injunctions. There shall be no order or injunction of a Governmental Entity of competent juris- diction in effect precluding, restraining, enjoining or prohibiting consummation of the Merger. Section 6.2 Conditions to Parent's and the Purchaser's Obligations to Effect the Merger. The obli- gations of Parent and the Purchaser to consummate the Merger are further subject to the fulfillment of the following conditions, which may be waived in whole or in part by Parent and the Purchaser: (a) The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects both when made and (except for those representations and warranties that address matters only as of a particular date which need only be true and correct in all material respects as of such date) as of the Effective Time after giving effect to the Merger as if made at and as of such time; (b) The Company shall have performed in all material respects each of its obligations under this Agreement required to be performed by it at or prior to the Effective Time; (c) The Plan of Reorganization (with such changes as Parent shall approve) attached as Exhibit A to the Stock Purchase Agreement dated December 27, 1996 between Parent and Marvel shall have been confirmed and all conditions to closing under such agreement (excluding the condition that all conditions to the closing of this Agreement be satisfied) shall have been satisfied or waived. Section 6.3 Conditions to Company's Obliga- tions to Effect the Merger. The obligations of the Company to consummate the Merger are further subject to the fulfillment of the following conditions, which may be waived in whole or in part by the Company: (a) The representations and warranties of the Parent and Purchaser contained in this Agreement shall be true and correct in all material respects both when made and (except for those representations and warranties that address matters only as of a particular date which need only be true and correct in all material respects as of such date) as of the Effective Time after giving effect to the Merger as if made at and as of such time; (b) Each of the Parent and Purchaser shall have performed in all material respects each of its obligations under this Agreement required to be performed by it at or prior to the Effective Time. ARTICLE VII TERMINATION Section 7.1 Termination. This Agreement may be terminated and the Merger contemplated herein may be abandoned at any time prior to the Effective Time, wheth- er before or after stockholder approval thereof: (a) By mutual agreement of Parent, Purchaser and the Company. (b) By Parent or the Company: (i) if the Merger shall not have been consummated by June 30, 1997; provided, however, that the right to terminate this Agreement under this Section 7.1(b)(i) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Merger to occur on or prior to such date; (ii) if the stockholders of the Company fail to approve and adopt this Agreement at the Special Meeting; provided, however, that the right to terminate this Agreement under this Section 7.1(b)(ii) shall not be available to any party whose failure to fulfill any obligation under this Agree- ment has been the cause of, or resulted in, the failure of the stockholders of the Company to ap- prove and adopt this Agreement at the Special Meet- ing; (iii) if any Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their reasonable efforts to lift), in each case permanently restrain- ing, enjoining or otherwise prohibiting the transac- tions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non-appealable; or (iv) if, prior to the consummation of the Merger, (x) the Board of Directors of the Company shall (A) have withdrawn, or modified or changed in a manner adverse to Parent or the Purchaser its approval of this Agreement or the Merger in order to execute a definitive agreement relating to an Acqui- sition Proposal which is a superior proposal to the Merger, reasonably capable of being consummated, and (B) have concluded in good faith after consultation with independent legal counsel that the failure to take such action as set forth in the preceding clause (A) would result in the Board of Directors violating its fiduciary obligations under applicable law. (c) By Parent, if it shall have purchased Shares pursuant to a Qualifying Offer. Section 7.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 7.1, written notice thereof shall forthwith be given to the other party or parties specifying the provi- sion hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void, and there shall be no liability on the part of any party hereto except (A) for fraud or for material breach of this Agreement and (B) as set forth in this Section 7.2 and Section 8.1. ARTICLE VIII MISCELLANEOUS Section 8.1 Fees and Expenses. Except as contemplated by this Agreement, all costs and expenses incurred in connection with this Agreement and the con- summation of the transactions contemplated hereby shall be paid by the party incurring such expenses. Section 8.2 Amendment, Modification and Other Action. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all re- spects, whether before or after any vote of the stock- holders of the Company contemplated hereby, by written agreement of the parties hereto, at any time prior to the Closing Date with respect to any of the terms contained herein; provided, however, that after the approval of this Agreement by the stockholders of the Company, no such amendment, modification or supplement shall reduce the amount or change the form of the Merger Consider- ation. Notwithstanding any provision of this Agreement to the contrary, no action by the Company referred to in Sections 1.2 or 1.3, Article VI or VII or this Article VIII, and no consent under the first sentence of Section 5.9(c), shall be effective without the approval of the Special Committee. Section 8.3 Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Effective Time. Section 8.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by an overnight courier service, such as Federal Express, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): if to Parent or the Purchaser, to: Andrews Group Incorporated 3200 Windy Hill Road Atlanta, Georgia 30339 Attention: General Counsel Telephone No.: (212) 572-8600 Telecopy No.: (770) 563-9610 with a copy to: MacAndrews & Forbes Holdings Inc. 35 East 62nd Street New York, New York 10021 Attention: Barry F. Schwartz, Esq. Telephone No.: 212-572-5170 Telecopy: 212-572-5056 with an additional copy to: Alan C. Myers, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Telephone No.: (212) 735-3000 Telecopy No.: (212) 735-2001 and if to the Company, to: Toy Biz, Inc. 333 East 38th Street New York, New York 10016 Attention: General Counsel Telephone No.: (212) 682-4700 Telecopy No.: (212) 682-3516 with a copy to: Allen Finkelson, Esq. Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Telephone No.: (212) 474-1000 Telecopy No.: (212) 474-3700 Section 8.5 Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words "include", "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation". As used in this Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the Exchange Act. Section 8.6 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties. Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership. This Agreement (including the documents and the instruments referred to herein): (a) constitute the entire agreement and super- sedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) except as provided in Section 5.8 is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. Section 8.8 Severability. If any term, provi- sion, covenant or restriction of this Agreement is held by a Governmental Entity of competent jurisdiction to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, im- paired or invalidated. Section 8.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof. IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. ANDREWS GROUP INCORPORATED By: Name: Title: ANDREWS ACQUISITION CORP. By: Name: Title: TOY BIZ, INC. By: Name: Title: EX-99 4 EXHIBIT C STOCK PURCHASE AGREEMENT dated as of December 27, 1996 by and between ANDREWS GROUP INCORPORATED and MARVEL ENTERTAINMENT GROUP, INC TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 1.1 Defined Terms . . . . . . . . . . . . . . . . . 1 1.2 Other Definitional Provisions . . . . . . . . . 3 ARTICLE II SALE AND PURCHASE OF THE SHARES 2.1 Purchase and Sale of the Shares . . . . . . . . 3 2.2 Consideration . . . . . . . . . . . . . . . . . 3 2.3 Closing . . . . . . . . . . . . . . . . . . . . 4 2.4 Deliveries by Reorganized Seller . . . . . . . 4 2.5 Deliveries by Purchaser . . . . . . . . . . . . 4 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 3.1 Organization . . . . . . . . . . . . . . . . . 5 3.2 Authority . . . . . . . . . . . . . . . . . . . 5 3.3 Capitalization . . . . . . . . . . . . . . . . 5 3.4 Acceptance of the Plan . . . . . . . . . . . . 6 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 4.1 Organization . . . . . . . . . . . . . . . . . 6 4.2 Authority; Enforceability . . . . . . . . . . . 6 4.3 Funds . . . . . . . . . . . . . . . . . . . . . 6 4.4 Status and Investment Intent . . . . . . . . . 6 ARTICLE V COVENANTS 5.1 Reasonable Best Efforts . . . . . . . . . . . . 7 5.2 Capitalization . . . . . . . . . . . . . . . . 8 5.3 No Changes To Plan . . . . . . . . . . . . . . 8 5.4 Expenses . . . . . . . . . . . . . . . . . . . 8 5.5 Further Assurances . . . . . . . . . . . . . . 8 ARTICLE VI CONDITIONS TO THE CLOSING 6.1 Conditions to the Obligations of Each Party . . 9 6.2 Additional Conditions to the Obligations of Purchaser . . . . . . . . . . . . . . . . . . . 9 6.3 Additional Conditions to the Obligations of Seller . . . . . . . . . . . . . . . . . . . . 11 ARTICLE VII TERMINATION 7.1 Termination . . . . . . . . . . . . . . . . . . 11 7.2 Effect of Termination . . . . . . . . . . . . . 12 ARTICLE VIII MISCELLANEOUS 8.1 Survival of Representations and Warranties; Indemnification . . . . . . . . . . . . . . . . 13 8.2 Notices . . . . . . . . . . . . . . . . . . . . 13 8.3 Interpretation . . . . . . . . . . . . . . . . 14 8.4 No Third Party Beneficiaries . . . . . . . . . 15 8.5 Amendment . . . . . . . . . . . . . . . . . . . 15 8.6 Extension; Waiver . . . . . . . . . . . . . . . 15 8.7 Entire Agreement . . . . . . . . . . . . . . . 15 8.8 Successors and Assigns . . . . . . . . . . . . 15 8.9 Governing Law . . . . . . . . . . . . . . . . . 15 8.10 Counterparts . . . . . . . . . . . . . . . . . 15 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT, dated as of December 27, 1996, by and between ANDREWS GROUP INCORPORATED, a Delaware corporation ("Purchaser"), and MARVEL ENTERTAINMENT GROUP, INC., a Delaware corporation ("Seller"). WHEREAS, the Board of Directors of Seller (the "Board of Directors") has considered various strategic transaction alternatives involving Seller and has determined that a restructuring transaction pursuant to a plan of reorganization (the "Plan") under Chapter 11 of the United States Bankruptcy Code ("Chapter 11") will maximize the value of Seller as a whole; WHEREAS, Purchaser desires to make an investment in conjunction with the Plan and in exchange for an equity interest in Seller following its reorganization pursuant to the Plan (the "Reorganized Seller"); WHEREAS, Seller and Purchaser desire to cooperate in the formulation of the Plan substantially in the form annexed hereto as Exhibit A, with such changes as may be acceptable to Purchaser, a disclosure statement pertaining to the Plan (the "Disclosure Statement"), and the confirmation and consummation of the Plan; and WHEREAS, as a part of the Plan, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Reorganized Seller, that number of newly issued shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of Reorganized Seller, on the terms and subject to the conditions set forth in this Agreement, such that upon issuance and after giving effect to the terms of the Plan and all distributions thereunder, the Shares shall constitute 80.8% of the outstanding Common Stock of Reorganized Seller. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, intending to be legally bound thereby, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1 Defined Terms. For purposes of this Agreement (including the schedules and exhibits hereto), the terms defined in this Agreement shall have the respective meanings specified in the Preamble hereof; in addition, the following terms shall have the following meanings: "Agreement": this Stock Purchase Agreement, as amended, modified or supplemented from time to time. "Bankruptcy Court": the United States Bankruptcy Court for the District of Delaware. "business day": any day, other than a Saturday or Sunday, on which banks in New York are required to be open for the conduct of business. "Cash Component": that portion, if any, of the Purchase Price that Purchaser elects to pay in cash pursuant to Section 2.2. "Closing": the Closing of the sale of the Shares, as set forth in Section 2.3. "Closing Date": the date of the Closing, as set forth in Section 2.3. "Damages": any and all losses, liabilities, damages, costs and expenses. "Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity (including, without limitation, a court) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever and any restriction on the Shares pursuant to a voting, stockholders or similar agreement or any other restriction on the Shares of any kind, other than those imposed by applicable securities laws. "New Bank Credit Agreements": collectively the credit facilities provided by The Chase Manhattan Bank, as administrative agent for a syndicate of banks, (A) in the aggregate amount of $160 million for Toy Biz and (B) for Reorganized Seller in amounts and subject to the terms and conditions described in the Disclosure Statement and Plan. "person": an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Purchase Price": the $365,000,000 payable for the Shares, as set forth in Section 2.2. "Special Committee": the Special Committee of the Board of Directors of Seller. "Stock Component": that portion, if any, of the Purchase Price that Purchaser elects to pay in Toy Biz Common Stock pursuant to Section 2.2. "Toy Biz Common Stock": the Class A common stock, par value $.01 per share, of Toy Biz. "Toy Biz": Toy Biz, Inc., a Delaware corporation. 1.2 Other Definitional Provisions. (a) The words "hereof," "herein" and "hereunder" and other words of similar import when used in this Agreement shall refer to this Agreement and the schedules and exhibits hereto as a whole and not to any particular part or subdivision thereof, and Section references are to this Agreement unless otherwise specified. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms, and the words of either gender shall include the other gender where appropriate. ARTICLE II SALE AND PURCHASE OF THE SHARES 2.1 Purchase and Sale of the Shares. Upon the terms and subject to the conditions of this Agreement, at the Closing (as defined in Section 2.3 hereof), Reorganized Seller shall issue to Purchaser, and Purchaser shall purchase, acquire and accept from Reorganized Seller, all of the Shares. 2.2 Consideration. (a) Upon the terms and subject to the conditions of this Agreement, in consideration of the aforesaid issuance of the Shares, Purchaser shall pay to Reorganized Seller the Purchase Price. The Purchase Price shall be payable, at the option of Purchaser, in (i) cash, (ii) shares of Toy Biz Common Stock, or (iii) subject to the last sentence of Section 2.2(b), any combination of (i) and (ii). (b) For purposes of this Agreement, each share of Toy Biz Common Stock, if any, paid by Purchaser as part or all of the Purchase Price shall be valued at the price actually paid by Purchaser to acquire such Toy Biz Common Stock. With respect to shares of Toy Biz Common Stock acquired pursuant to the Arad/Perlmutter Agreements (as hereinafter defined), such shares shall be valued at the cash price paid therefor and Reorganized Seller shall issue to Purchaser, in addition to the Shares, a note in the aggregate principal amount equal to, and in all other respects identical to, any notes issued by Purchaser pursuant to the Arad/Perlmutter Agreements, except that such note shall be subordinated to all obligations under the New Bank Credit Agreements. If Purchaser pays any portion of the Purchase Price in Toy Biz Common Stock, Purchaser must deliver to Reorganized Seller all of the shares of Toy Biz Common Stock beneficially owned by it. 2.3 Closing. The transactions contemplated herein shall be consummated at the Closing. The Closing will take place at such time and date specified by the parties hereto (the "Closing Date"), subject to the satisfaction or waiver of the conditions set forth in Article VI hereof, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022. The Closing shall constitute an integral and nonseverable part of consummation of the Plan. 2.4 Deliveries by Reorganized Seller. At the Closing, Reorganized Seller will deliver or cause to be delivered (unless previously delivered) to Purchaser, the following: (a) A stock certificate or stock certificates representing the Shares duly registered in the name of Purchaser on the books of Seller, and any other documents that are necessary to issue to Purchaser good and valid title to the Shares. (b) All other documents, instruments and writings required to be delivered by Seller or Reorganized Seller at the Closing, including, if applicable, the note contemplated by Section 2.2(b) hereof. 2.5 Deliveries by Purchaser. At the Closing, Purchaser will deliver or cause to be delivered (unless previously delivered) to Reorganized Seller, the following: (a) the Purchase Price, payable (i) with respect to the Cash Component, if any, in immediately available funds by wire transfer to an account designated by Reorganized Seller or Seller to Purchaser at least two business days prior to the Closing and (ii) with respect to the Stock Component, if any, a stock certificate or stock certificates representing the number of shares of Toy Biz Common Stock Shares payable as the Stock Component, accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer, and any other documents that are necessary to transfer to Reorganized Seller good and valid title to such shares of Toy Biz Common Stock free and clear of all Liens, with all necessary transfer tax stamps affixed or accompanied by evidence that all stock transfer taxes have been paid. (b) All other documents, instruments and writings required to be delivered by Purchaser at the Closing. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Purchaser as follows: 3.1 Organization. Seller is, and Reorganized Seller will be, a corporation duly organized and validly existing under the laws of the State of Delaware and has and will continue to have all requisite corporate power and corporate authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such power or authority would not have a material adverse effect on the business, operations or financial condition of Seller or Reorganized Seller. 3.2 Authority. Seller has, and Reorganized Seller will have, full corporate power and corporate authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Seller and the consummation by Seller of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Seller, on the recommendation of the Special Committee, and no other corporate proceedings on the part of Seller or Reorganized Seller are necessary to authorize the execution and delivery of this Agreement or, following confirmation of the Plan by the Bankruptcy Court, to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Seller and, subject to Bankruptcy Court approval, constitutes a valid and binding agreement of Seller and Reorganized Seller, enforceable against Seller and Reorganized Seller in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedies of specific performance and injunctive relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 3.3 Capitalization. The authorized capital stock of Seller consists of 250,000,000 shares of Common Stock and 50,000,000 shares of preferred stock, par value $.01 per share, and the outstanding capital stock consists of 101,809,657 shares of Common Stock. The Shares, when issued, will constitute 80.8% of the issued and outstanding capital stock of Reorganized Seller, both at the time of their issuance and after giving effect to all the terms of the Plan and all distributions thereunder. The Shares will be on the Closing Date duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights and will remain so after giving effect to all the terms of the Plan and all distributions thereunder. 3.4 Acceptance of the Plan. The Plan in the form annexed hereto as Exhibit A has been accepted by holders of claims in Class 2 (as defined in the Plan) in accordance with the requirements of the United States Bankruptcy Code and Bankruptcy Rules, and the solicitation of the holders of such claims was conducted in accordance with Section 1126(b)(ii) of the Bankruptcy Code and Bankruptcy Rules. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser hereby represents and warrants to Seller as follows: 4.1 Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own all of its properties and assets and to carry on its business as it is now being conducted, except where the failure to have such power or authority would not have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated hereby. 4.2 Authority; Enforceability. Purchaser has the corporate power and corporate authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by the Board of Directors of Purchaser and, no other proceedings on the part of Purchaser are necessary following confirmation of the Plan by the Bankruptcy Court to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby. This Agreement and the Arad/Perlmutter Agreements have been duly executed and delivered by Purchaser and constitute the legal, valid and binding agreements of Purchaser, enforceable against it in accordance with their respective terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, and other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedies of specific performance and injunctive relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 4.3 Funds. Purchaser has access to, and immediately prior to the Closing will have, the funds necessary to consummate the purchase of the Shares to be purchased by it hereunder. 4.4 Status and Investment Intent. (a) Purchaser is an "accredited investor" as defined in Rule 501(a) under the Securities Act, and it is acquiring the Shares hereunder for its own account for investment purposes only and (subject to its property being at all times within its control) not with a view to, or with any present intention of, resale, distribution or other disposition thereof. (b) Purchaser has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Shares and Purchaser is capable of bearing the economic risks of such investment, including a complete loss of its investment. (c) Purchaser has had the opportunity to ask questions of, and receive answers from, Seller concerning the terms of the Shares and other related matters. Purchaser further acknowledges that Seller made available to Purchaser or its agents all documents and information relating to an investment in the Shares reasonably requested by or on behalf of Purchaser. (d) Except as specifically set forth herein Seller has not made any representations or warranties to Purchaser and except for information provided by Seller in writing, Purchaser has not relied on any statements made or other information received from any person with respect to the purchase of the Shares hereunder. ARTICLE V COVENANTS 5.1 Reasonable Efforts. (a) Upon the terms and subject to the conditions of this Agreement, each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable including, but not limited to: (i) the preparation and filing of all forms, registrations and notices required to be filed to consummate the transactions contemplated by this Agreement and the taking of such actions as are necessary to obtain any requisite approvals, consents, orders, exemptions or waivers by any third party or Governmental Authority; (ii) the filing of (A) the Plan and Disclosure Statement no later than December 31, 1996, and (B) appropriate pleadings to obtain hearing dates for the approval of the Disclosure Statement and confirmation of the Plan, in each case as promptly as possible; (iii) requesting the earliest practicable date for consideration and approval of the Disclosure Statement, the time for acceptance or rejection of the Plan by impaired classes of claims and interests that have not previously accepted the Plan, confirmation of the Plan, and using its best efforts to obtain confirmation of the Plan as promptly as possible after Seller files its Chapter 11 petition; (iv) using its reasonable efforts to promptly obtain the dismissal of all appeals and applications and motions for reconsideration or rehearing with respect to the Disclosure Statement, the Plan, or the order confirming the Plan; and (v) causing the satisfaction of all conditions to the Closing and the Plan. (b) Each party shall promptly consult with the other with respect to, provide any necessary information that is not subject to legal privilege with respect to, and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Authority or any other information supplied by such party to a Governmental Authority in connection with this Agreement and the transactions contemplated by this Agreement. Each party hereto shall promptly inform the other of any communication from any Governmental Authority regarding any of the transactions contemplated by this Agreement. If either party receives a request for additional information or documentary material from any such Governmental Authority with respect to the transactions contemplated by this Agreement, then such party will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. 5.2 Capitalization. Except for those actions contemplated hereby, Seller and Reorganized Seller shall not: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock or (ii) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of Seller or Reorganized Seller. The authorized, issued and outstanding capital stock of Reorganized Seller shall consist of such number of shares of Common Stock as the parties hereto may agree, provided that the Shares, after giving effect to this Agreement and the distributions provided for in the Plan, shall constitute 80.8% of the outstanding Common Stock of Reorganized Seller. 5.3 No Changes To Plan. Notwithstanding any provision of applicable law or the Plan that purports to grant to Seller or Reorganized Seller the right or ability to modify the Plan attached hereto as Exhibit A, or to consent to the alteration or severance of Plan provisions under Section 15.5 of the Plan, Seller and Reorganized Seller will not modify the Plan (attached hereto as Exhibit A) without Purchaser's consent. 5.4 Expenses. Whether or not the transactions contemplated hereby are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses, except as otherwise provided herein. 5.5 Further Assurances. From time to time after the Closing, without additional consideration, each party shall execute and deliver such further instruments and take such other action as may be reasonably necessary to make effective the transactions contemplated by this Agreement. ARTICLE VI CONDITIONS TO THE CLOSING 6.1 Conditions to the Obligations of Each Party. The respective obligations of each party to effect the Closing are subject to the fulfillment at or prior to the Closing Date of each of the following conditions precedent: (a) No Injunction or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect, nor shall any proceeding by any Governmental Authority seeking any of the foregoing be pending. There shall not be in effect any statute, rule, regulation or order of any court, or governmental or regulatory body which prohibits or makes illegal the transactions contemplated by this Agreement. (b) Confirmation of Plan. The Plan shall have been confirmed by the Bankruptcy Court, and the confirmation order relating to the Plan (the "Confirmation Order") shall have been entered. 6.2 Additional Conditions to the Obligations of Purchaser. The obligations of Purchaser are also subject to fulfillment (or waiver by Purchaser in its sole and absolute discretion, without further notice to or approval by the Bankruptcy Court or parties in interest in Seller's Chapter 11 case) at or prior to the Closing Date of each of the following conditions precedent: (a) Representations and Warranties. The representations and warranties of Seller contained in Article III of this Agreement shall be true and correct in all material respects as of the Closing Date as though made at and as of the Closing Date by both Seller and Reorganized Seller, except to the extent that they expressly refer to an earlier time, in which case they shall be true and correct as of such time. (b) Performance of Covenants. Seller and Reorganized Seller shall have duly performed and complied in all material respects with each covenant, agreement and condition required by this Agreement to be performed or complied with by Seller or Reorganized Seller prior to or on the Closing Date. (c) Toy Biz Acquisition. Seller, an affiliate thereof, or an affiliate of Purchaser shall have entered into an agreement with Toy Biz pursuant to which it would acquire all outstanding shares of Toy Biz Common Stock and all conditions to closing thereunder (excluding the condition that all conditions to the closing of this Agreement be satisfied) shall have been satisfied. (d) Arad/Perlmutter Agreements. All conditions to closing under the stock purchase agreements, dated as of November 20, 1996, between Purchaser and each of Isaac Perlmutter and Avi Arad (the "Arad/Perlmutter Agreements"), for the purchase of an aggregate of 13,656,000 shares of Toy Biz Common Stock, shall have been satisfied or waived and Purchaser either (i) shall have acquired shares of Toy Biz Common Stock pursuant to the Arad/Perlmutter Agreements (which shares may be used in the Stock Component) or (ii) shall have assigned to Seller or Reorganized Seller, and Seller or Reorganized Seller shall have assumed, Purchaser's rights and obligations under the Arad/Perlmutter Agreements, it being contemplated that, if notwithstanding such assumption Purchaser shall be required to issue and leave outstanding $40 million of its notes to Messrs. Perlmutter and Arad, and that accordingly, Reorganized Seller shall issue to Purchaser Reorganized Sellers' $40 million note, which note shall be subordinated to all obligations under the New Bank Credit Agreements and otherwise have terms identical to the notes issuable by Purchaser under the Arad/Perlmutter Agreements. (e) Motions. Any motion for reconsideration or rehearing of the Confirmation Order shall have been denied or withdrawn. (f) Appeals. The time allowed to appeal or petition for certiorari with respect to the Confirmation Order shall have expired without any appeal having been taken or writ of certiorari having been filed. (g) Plan and Confirmation Order. The Plan and the Confirmation Order shall be acceptable to Purchaser in all respects. (h) Litigation. There shall not be pending or threatened against Purchaser, Seller, Reorganized Seller or any affiliate of any of them any litigation arising out of or relating to the Plan or any of the transactions contemplated by this Agreement. (i) Material Adverse Change. There shall have been no material adverse change in Seller's financial condition, business, operations or prospects taken as a whole from the date hereof. (j) Financing of Reorganized Seller and Toy Biz, Inc.. Upon consummation of the Plan, the credit facilities under the New Bank Credit Agreements shall be available to Reorganized Seller and Toy Biz in the aggregate amounts and subject to the terms and conditions described in the Disclosure Statement and Plan on the date hereof. (k) Registration Rights Agreement. The Seller shall have executed a registration rights agreement between Purchaser and Seller substantially in the form of Exhibit B attached hereto. 6.3 Additional Conditions to the Obligations of Seller. The obligations of Seller are also subject to fulfillment (or waiver by Seller in its sole and absolute discretion, without further notice to or approval by the Bankruptcy Court or parties in interest in Seller's Chapter 11 Case) at or prior to the Closing Date of each of the following conditions precedent: (a) Representations and Warranties. The representations and warranties of Purchaser contained in Article IV of this Agreement shall be true and correct in all material respects as of the Closing Date as though made at and as of the Closing Date, except to the extent they expressly refer to an earlier time, in which case they shall be true and correct as of such time. (b) Performance of Covenants. Purchaser shall have duly performed and complied in all material respects with each covenant, agreement and condition required by this Agreement to be performed or complied with by it prior to or on the Closing Date. (c) Toy Biz Acquisition. Either Purchaser shall have assigned its rights to Seller or Reorganized Seller under the Arad/Perlmutter Agreements and the agreement to acquire shares of Toy Biz Common Stock, or Purchaser shall have delivered shares of Toy Biz Common Stock in the manner required by this Agreement. ARTICLE VII TERMINATION 7.1 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual agreement of Seller and Purchaser; (b) by Purchaser, if (i) the Disclosure Statement has not been approved by January 31, 1997, or (ii) the Plan has not been confirmed by the Bankruptcy Court by April 18, 1997; (c) by Purchaser, if the Closing shall not have taken place on or before April 30, 1997; provided that the failure of the Closing to occur on or before such date is not the result of the breach of the covenants, agreements, representations or warranties hereunder of Purchaser; (d) by Purchaser or Seller, upon notice given to the other if any Governmental Authority of competent jurisdiction shall have issued a final permanent order enjoining or otherwise prohibiting the transactions contemplated by this Agreement; (e) (i) by Purchaser or Seller, if prior to the purchase of the Shares, the Board of Directors of Seller, on the recommendation of the Special Committee, shall have (A) withdrawn, or modified or changed in a manner adverse to Purchaser its approval of the purchase of the Shares or this Agreement in order to permit Seller to execute a definitive agreement relating to an Acquisition Proposal which is a superior proposal to the transactions contemplated hereby, reasonably capable of being consummated, and (B) determined, only after receipt of oral or written advice from independent legal counsel to Seller, that the failure to take such action as set forth in the preceding clause (A) could reasonably be expected to cause the Board of Directors to violate its fiduciary duties to Seller's stockholders or creditors under applicable law; for purposes of this section, "Acquisition Proposal" means any merger, tender offer, exchange offer, sale of material assets, business combination, sale of shares of capital stock or debt securities or similar transactions involving Seller, its subsidiaries, or any division or operating or principal business unit of Seller; or (ii) by Purchaser or Seller, if the other party breaches or fails in any material respect to perform or comply with any of its covenants and agreements contained herein or breaches its representations and warranties in any material respect; provided, however, that if any such breach is curable by the breaching party through the exercise of the breaching party's reasonable best efforts and for so long as such breaching party shall be so attempting to cure such breach for a period not to exceed 20 days, except as provided in subparagraph (f) below, the non-breaching party may not terminate this Agreement pursuant to this Section. (f) by Purchaser, if Seller shall have failed to comply with or meet the deadlines set forth in Sections 5.1(a) above. 7.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 7.1 hereof, the obligations of the parties hereto shall terminate, except that the provisions of Sections 5.4 and 7.2 hereof shall survive and neither party shall be relieved of any liability for any breach of any provision contained in this Agreement. ARTICLE VIII MISCELLANEOUS 8.1 Survival of Representations and Warranties; Indemnification. (a) The representations and warranties made by the parties in this Agreement shall survive the Closing, and the covenants shall survive the Closing to the extent that by their terms they are to be performed thereafter. (b) In connection with any assignment of the Arad/Perlmutter Agreements or the agreement to acquire shares of Toy Biz, Purchaser shall indemnify Seller against any claim by or liability to the other party or parties to such assigned agreement (including reasonable expenses) arising out of any breach, act or omission by Purchaser. 8.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or transmitted by facsimile or mailed by registered or certified mail (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 Purchaser, to: Andrews Group Incorporated 3200 Windy Hill Road Atlanta, Georgia 30339 Attention: General Counsel Telecopy: 770-563-9610 with a copy to: MacAndrews & Forbes Holdings Inc. 35 East 62nd Street New York, New York 10021 Attention: Barry F. Schwartz, Esq. Telecopy: 212-572-5056 with an additional copy to: Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Attention: Alan C. Myers, Esq. Telecopy: 212-735-2000 if to Seller, to: Marvel Entertainment Group, Inc. 387 Park Avenue South New York, New York, 10016 Attention: General Counsel Telecopy: 212-576-9346 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Simeon Gold, Esq. Telecopy: 212-310-8007 8.3 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 8.4 No Third Party Beneficiaries. Nothing herein express or implied shall confer upon any person other than the parties hereto any rights, benefits or remedies of any nature or kind under or by reason of this Agreement. 8.5 Amendment. This Agreement may be amended by the parties hereto, but may not be amended except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto. 8.6 Extension; Waiver. At any time prior to the Closing Date or the termination of this Agreement pursuant to Section 7.1, any party hereto which is entitled to the benefits hereof may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracy in the representations and warranties of the other party contained herein or in any schedule hereto or in any document delivered pursuant hereto, or (c) waive compliance with any of the agreements of the other party hereto or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid if set forth in an instrument in writing signed and delivered on behalf of such party. 8.7 Entire Agreement. This Agreement, including the schedules, exhibits, documents and instruments referred to herein, constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. 8.8 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Notwithstanding the foregoing, this Agreement shall not be assignable by either party hereto (other than by operation of law) without the prior written consent of the other party hereto; provided, that Purchaser may assign its rights and obligations hereunder to any of its affiliates. 8.9 Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Delaware. 8.10 Counterparts. This Agreement may be executed by facsimile and in counterparts, all of which for all purposes shall be deemed to be an original and all of which shall, taken together, constitute the same Agreement. IN WITNESS WHEREOF, the parties hereto have executed or have caused this Agreement to be executed by their duly authorized officers or representatives, all as of the date first written above. ANDREWS GROUP INCORPORATED By: Name: Title: MARVEL ENTERTAINMENT GROUP, INC. By: Name: Title: - ------------------ EXHIBIT A IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE -----------------------------------x : In re : : Chapter 11 Case Nos. Marvel Entertainment Group, Inc. : 96-[]( ) through 96-[]( ) et al., : : (Jointly Administered) Debtors. : : -----------------------------------x JOINT PLAN OF REORGANIZATION WEIL, GOTSHAL & MANGES LLP Attorneys for the Debtors and Debtors in Possession 767 Fifth Avenue New York, New York 10153 (212) 310-8000 -and- YOUNG, CONAWAY, STARGATT & TAYLOR Attorneys for the Debtors and Debtors in Possession Rodney Square North Wilmington, Delaware 19899 (302) 571-6600 Dated: Wilmington, Delaware December 27, 1996 JOINT PLAN OF REORGANIZATION Marvel Entertainment Group, Inc., The Asher Candy Company, Fleer Corp., Frank H. Fleer Corp., Heroes World Distribution, Inc., Malibu Comics Entertainment, Inc., Marvel Characters, Inc., Marvel Direct Marketing, Inc. and SkyBox International Inc. jointly and severally propose the following Joint Plan of Reorganization: SECTION 1. DEFINITIONS AND INTERPRETATION A. Definitions. The following terms used herein shall have the respective meanings defined below: 1.1. Acquisition Agreement means that certain Stock Purchase Agreement dated as of December 27, 1996 between Andrews Group Incorporated and Marvel Entertainment Group, Inc. annexed as Exhibit A hereto. 1.2. Administration Expense Claim means any right to payment constituting a cost or expense of administration of any of the Reorganization Cases allowed under sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without limitation, any actual and necessary costs and expenses of preserving the estates of the Debtors, any actual and necessary costs and expenses of operating the business of the Debtors, any indebtedness or obligations incurred or assumed by the Debtors in Possession in connection with the conduct of their business, including, without limitation, for the acquisition or lease of property or an interest in property or the rendition of services, any allowances of compensation and reimbursement of expenses to the extent allowed by Final Order under section 330 or 503 of the Bankruptcy Code, and any fees or charges assessed against the estates of the Debtors under section 1930, chapter 123, title 28, United States Code. 1.3. Affiliate means, with reference to any entity, any other entity that, within the meaning of Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, "controls," is "controlled by" or is under "common control with" such entity. 1.4. Affiliate Unsecured Claim means any Unsecured Claim held by any Debtor against any other Debtor or any Unsecured Claim held by any Affiliate of a Debtor against such Debtor. 1.5. Allowed means, with reference to any Claim or Equity Interest, (a) any Claim or Equity Interest against any Debtor which has been listed by such Debtor in its Schedules, as such Schedules may be amended by the Debtors from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent and for which no contrary proof of claim has been filed, (b) any Claim or Equity Interest allowed by Final Order, (c) any Claim or Equity Interest as to which the liability of the Debtors and the amount thereof are determined by final order of a court of competent jurisdiction other than the Bankruptcy Court or (d) any Claim allowed hereunder. 1.6. Ballot means the form or forms distributed to each holder of an impaired Claim or Equity Interest on which is to be indicated acceptance or rejection of this Plan of Reorganization. 1.7. Ballot Date means the date fixed by the Bankruptcy Court as the date by which all Ballots for acceptance or rejection of this Plan of Reorganization must be received by the Balloting Agent (as such term is defined in the Disclosure Statement) from holders of impaired Claims and Equity Interests other than holders of claims in Class 2 (Senior Secured Claims) to be counted as acceptances or rejections of this Plan of Reorganization. 1.8. Bankruptcy Code means title 11, United States Code, as applicable to the Reorganization Cases. 1.9. Bankruptcy Court means the United States District Court for the District of Delaware having jurisdiction over the Reorganization Cases and, to the extent of any reference under section 157, title 28, United States Code, the unit of such District Court under section 151, title 28, United States Code. 1.10. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075, title 28, United States Code, and any Local Rules of the Bankruptcy Court. 1.11. Business Day means any day other than a Saturday, a Sunday or any other day on which banking institutions in New York, New York are required or authorized to close by law or executive order. 1.12. Cash means legal tender of the United States of America. 1.13. Causes of Action means, without limitation, any and all actions, causes of action, liabilities, obligations, rights, suits, debts, sums of money, damages, judgments, claims and demands whatsoever, whether known or unknown, in law, equity or otherwise. 1.14. Claim means (a) any right to payment from any of the Debtors, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (b) any right to an equitable remedy for breach of performance if such breach gives rise to a right of payment from any of the Debtors, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 1.15. Class Securities Litigation Claims means any Claim whether or not the subject of an existing lawsuit (other than a Derivative Securities Litigation Claim) arising from rescission of a purchase or sale of shares of common stock of Marvel Entertainment Group, Inc., for damages arising from the purchase or sale of any such security, or for reimbursement or contribution allowed under section 502 of the Bankruptcy Code on account of any such Claim including but not limited to any such Claims identified on Schedule 1.15 hereto, which Claims shall be subordinated in accordance with section 510(b) of the Bankruptcy Code. 1.16. Collateral means any property or interest in property of the estate of any Debtor subject to a Lien to secure the payment or performance of a Claim, which Lien is not subject to avoidance under the Bankruptcy Code. 1.17. Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on its docket. 1.18. Confirmation Hearing means the hearing held by the Bankruptcy Court on confirmation of this Plan of Reorganization, as such hearing may be adjourned or continued from time to time. 1.19. Confirmation Order means the order of the Bankruptcy Court confirming this Plan of Reorganization. 1.20. Consummation Date means the later to occur of (a) the eleventh day (calculated under Bankruptcy Rule 9006) after the Confirmation Date if no stay of the Confirmation Order is then in effect or (b) such other date as is fixed from time to time after the Confirmation Date by the Debtors by filing a notice thereof with the Bankruptcy Court, but in no event shall the Consummation Date occur earlier than the date of the satisfaction of each of the conditions precedent to the occurrence of the Consummation Date of this Plan of Reorganization in section 10.2 hereof unless waived as provided in section 10.3 hereof. 1.21. Creditors' Committee means, on and after the date of its organization by the U.S. Trustee, the statutory unsecured creditors' committee appointed in the Reorganization Cases under section 1102 of the Bankruptcy Code. 1.22. Debtor means each of Marvel Entertainment Group, Inc., The Asher Candy Company, Fleer Corp., Frank H. Fleer Corp., Heroes World Distribution, Inc., Malibu Comics Entertainment, Inc., Marvel Characters, Inc., Marvel Direct Marketing Inc., and Skybox International Inc., each other than Malibu Comics Entertainment, Inc. being a Delaware corporation and Malibu Comics Entertainment, Inc. being a California corporation, the debtors in Chapter 11 Case Nos. 96-[ ] ([ ]) through 96-[ ] ([ ]), respectively. 1.23. Debtor in Possession means each Debtor in its capacity as a debtor in possession under sections 1107(a) and 1108 of the Bankruptcy Code. 1.24. Derivative Securities Litigation Claims means any Claim being or admitting of being prosecuted derivatively, including, without limitation, those identified on Schedule 1.24. 1.25. Disbursing Agent means any entity in its capacity as a disbursing agent under section 7.2 hereof. 1.26. Disclosure Statement means the Disclosure Statement, including, without limitation, all exhibits and schedules thereto, in the form approved by the Bankruptcy Court relating to this Plan of Reorganization. 1.27. Disputed Claim means a Claim against a Debtor to the extent that such Claim is not an Allowed Claim. 1.28. Equity Interest means any share of common stock or other instrument evidencing a present ownership interest in any of the Debtors, whether or not transferable, or any option, warrant or right, contractual or otherwise, to acquire any such interest. 1.29. Existing Credit Agreements means, collectively, (a) that certain Amended and Restated Credit and Guarantee Agreement dated as of August 30, 1994, as amended, among Marvel Entertainment Group, Inc., Fleer Corp., the financial institutions parties thereto, the co- agents named therein and The Chase Manhattan Bank (formerly named Chemical Bank) as administrative agent, (b) that certain Credit and Guarantee Agreement dated as of April 24, 1995, as amended, by and among Marvel Entertainment Group, Inc., Fleer Corp., the financial institutions party thereto, the co-agents named therein and The Chase Manhattan Bank (formerly named Chemical Bank) as administrative agent, (c) that certain Term Loan and Guarantee Agreement dated as of August 30, 1994, as amended, among Marvel Entertainment Group, Inc., Panini, S.p.A. (formerly named Marvel Comics Italia S.r.l.), and Instituto Bancario San Paolo Di Torino, S.p.A. and the related Participation Agreement dated as of August 30, 1994 among Instituto Bancario San Paolo Di Torino, S.p.A., New York Limited Branch, as Italian Lender, The Chase Manhattan Bank, as Administrative Agent, and the financial institutions signatory thereto, as participants, (d) that certain Line of Credit, dated as of March 27, 1996, as amended, among Fleer Corp., the banks and other financial institutions parties thereto and The Chase Manhattan Bank as Administrative Agent, (e)(i)(A) any letter of credit issued for the account of Marvel Entertainment Group, Inc. or any of its subsidiaries by a bank or other financial institution which is a party to any of the Existing Credit Agreements referred to in clauses (a) or (b) of this section 1.29 and (B) any related letter of credit applications and any agreements governing or evidencing reimbursement obligations relating to any letters of credit referred to in clause (e)(i)A) of this section 1.29 or (ii) any interest rate agreement between Marvel Entertainment Group, Inc. or any of its subsidiaries and a bank or other financial institution which is a party to any of the Existing Credit Agreements referred to in clauses (a) through (d) inclusive, of this section 1.29 and (f) any guarantees and security documents executed and delivered in connection with any of the foregoing agreements. 1.30. Existing Credit Agreements Amendments means, collectively, (a) proposed Waiver Number 2 and Sixth Amendment to Amended and Restated Credit and Guaranty Agreement dated as of August 30, 1994, (b) proposed Consent Number 5 and Third Amendment to Credit and Guarantee Agreement dated as of April 24, 1995, (c) proposed Consent Number 2 and First Amendment to Term Loan and Guarantee Agreement dated as of August 30, 1994, as amended, among Marvel Entertainment Group, Inc., Panini, S.p.A. (formerly named Marvel Comics Italia, S.r.l) and Instituto Bancario San Paolo Di Torino, S.p.A., New York Limited Branch and the related Participation Agreement dated as of August 30, 1994 among Instituto Bancario San Paolo Di Torino, S.p.A., New York Limited Branch, as Italian Lender, the Chase Manhattan Bank, as Administrative Agent, and the financial institutions signatory thereto, as participants, (d) proposed Second Amendment to Line of Credit, dated as of March 27, 1996 among Fleer Corp., the banks and other financial institutions parties thereto and the Chase Manhattan Bank, as Administrative Agent and (e) proposed First Amendment to each of the Security Documents referred to therein in substantially the forms of Exhibits B-1, B-2, B-3, B-4 and B-5, respectively, hereto. 1.31. Final Order means an order or judgment of the Bankruptcy Court entered by the Clerk of the Bankruptcy Court on the docket in the Reorganization Cases, which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for a new trial, reargument or rehearing shall then be pending or (b) if an appeal, writ of certiorari, new trial, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied or a new trial, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument or rehearing shall have expired; provided, that the possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order shall not cause such order not to be a Final Order. 1.32. General Unsecured Claim means any Unsecured Claim other than an Affiliate Unsecured Claim. 1.33. Lien means any charge against or interest in property or an interest in property to secure payment of a debt or performance of an obligation. 1.34. Other Secured Claims means any Secured Claim not constituting a Senior Secured Claim. 1.35. Petition Date means December 26, 1996, the date on which each of the Debtors filed its voluntary petition for relief under the Bankruptcy Code. 1.36. Plan of Reorganization means this Joint Plan of Reorganization, including, without limitation, the exhibits and schedules hereto, as the same may be amended or modified from time to time in accordance with the terms hereof. 1.37. Priority Non-Tax Claim means any Claim of a kind specified in section 507(a)(2), (3), (4), (5), (6), (7) or (9) of the Bankruptcy Code. 1.38. Priority Tax Claim means any Claim of a governmental unit of the kind specified in section 507(a)(8) of the Bankruptcy Code. 1.39. Ratable Proportion means, with reference to any distribution on account of any Allowed Claim or Allowed Equity Interest in any class or subclass, as applicable, a distribution equal in amount to the ratio (expressed as a percentage) that the amount of such Allowed Claim or Allowed Equity Interest, as applicable, bears to the aggregate amount of Allowed Claims or Allowed Equity Interests of the same class or subclass. 1.40. Releasees means (a) (i) each of the Debtors and (ii) their respective successors, predecessors, assignors, assignees, parents and subsidiaries, (b) all present and former officers, directors, trustees, partners, employees, attorneys, accountants, financial advisors, investment bankers, stockholders, affiliates, heirs, receivers, conservators, beneficiaries, executors, administrators, agents and advisors of or to any of the entities identified in clause (a) above, and (c) any Affiliate of any entity specified in clause (a) or (b) above. 1.41. Rejection Claims means any Claim against any of the Debtors arising from the rejection of any executory contract or unexpired lease, including any Claim of (i) a lessor for damages resulting from the rejection of a lease of real property as any such Claim shall be calculated in accordance with section 502(b)(6) of the Bankruptcy Code or (ii) an employee for damages resulting from the rejection of an employment agreement as any such Claim shall be calculated in accordance with section 502(b)(7) of the Bankruptcy Code. 1.42. Reorganization Cases means the cases commenced under chapter 11 of the Bankruptcy Code by the Debtors on the Petition Date. 1.43. Reorganized means, with reference to any Debtor, such Debtor (unless such Debtor is a Debtor for which this Plan of Reorganization is not confirmed in accordance with section 5.4 hereof) or any successor in interest thereto from and after the Consummation Date. 1.44. Schedules means the schedules of assets and liabilities and the statements of financial affairs filed by the Debtors under section 521 of the Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules as such schedules and statements have been or may be supplemented or amended. 1.45. Secured Claim means a Claim secured by a Lien on Collateral to the extent of the value of such Collateral, as determined in accordance with section 506(a) of the Bankruptcy Code or, in the event that such Claim is subject to setoff under section 553 of the Bankruptcy Code, to the extent of such setoff. 1.46. Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 1.47. Senior Secured Claim means any Secured Claim governed by any of the Existing Credit Agreements or evidenced by any of the promissory notes issued thereunder or any letter of credit issued by a bank or other financial institution which is a party to any of the Existing Credit Agreements for the account of Marvel Entertainment Group, Inc. or any of its subsidiaries or any interest rate agreement between Marvel Entertainment Group, Inc. or any of its subsidiaries and a bank or other financial institution which is a party to any of the Existing Credit Agreements. 1.48. Subsidiary Equity Interests means the Equity Interests in any of the Debtors held by any of the other Debtors. 1.49. Transaction means collectively (i) the acquisition by Andrews Group Incorporated, a Delaware corporation, or an affiliate thereof, from Reorganized Marvel Entertainment Group, Inc. of a number of shares of common stock, par value $.01 per share, of Reorganized Marvel Entertainment Group, Inc. determined in accordance with the Acquisition Agreement; and (ii) the acquisition by Reorganized Marvel Entertainment Group, Inc. of all the issued and outstanding shares of capital stock of Toy Biz, Inc. not held by Marvel Entertainment Group, Inc. on the Petition Date pursuant to the Acquisition Agreement or pursuant to a merger agreement with Toy Biz, Inc. 1.50. Unsecured Claim means any Claim against a Debtor that is not an Administration Expense Claim, a Priority Non-Tax Claim, a Priority Tax Claim or a Secured Claim. 1.51. U.S. Trustee means the United States Trustee appointed under section 581, title 28, United States Code to serve in the District of Delaware. 1.52. Warrants means, collectively, all incentive stock options, non-qualified stock options and stock appreciation rights granted under that certain Marvel Entertainment Group, Inc. Amended and Restated Stock Option Plan and any other options, warrants or rights, contractual or otherwise, if any, to acquire an Equity Interest. B. Interpretation; Application of Definitions and Rules of Construction. Unless otherwise specified, all section, schedule or exhibit references in this Plan of Reorganization are to the respective section in, article of, or schedule or exhibit to, this Plan of Reorganization, as the same may be amended, waived, or modified from time to time. The words "herein," "hereof," "hereto," "hereunder," and other words of similar import refer to this Plan of Reorganization as a whole and not to any particular section, subsection or clause contained in this Plan of Reorganization. A term used herein that is not defined herein shall have the meaning assigned to that term in the Bankruptcy Code. The rules of construction contained in section 102 of the Bankruptcy Code shall apply to the construction of this Plan of Reorganization. The headings in this Plan of Reorganization are for convenience of reference only and shall not limit or otherwise affect the provisions hereof. SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION EXPENSE CLAIMS AND PRIORITY TAX CLAIMS 2.1. Administration Expense Claims. On the Consummation Date, each holder of an Allowed Administration Expense Claim shall be distributed on account of such Allowed Administration Expense Claim an amount in Cash equal to the amount of such Allowed Administration Expense Claim, except to the extent that any entity entitled to payment of any Allowed Administration Expense Claim agrees to a different treatment of such Administration Expense Claim; provided, that Allowed Administration Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors in Possession or liabilities arising under loans or advances to or other obligations incurred by the Debtors in Possession, whether or not incurred in the ordinary course of business, shall be assumed and paid by the Reorganized Debtors in accordance with the terms and subject to the conditions of any agreements governing, instruments evidencing or other documents relating to such transactions. 2.2. Compensation and Reimbursement Claims. All entities seeking an award by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Consummation Date under sections 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code (a) shall file their respective final applications for allowances of compensation for services rendered and reimbursement of expenses incurred by the date that is 45 days after the Consummation Date and, if granted such an award by the Bankruptcy Court, (b) shall be paid in full in such amounts as are allowed by the Bankruptcy Court (i) upon the later of (A) the Consummation Date and (B) the date upon which the order relating to any such Administration Expense Claim becomes a Final Order or (ii) upon such other terms as may be mutually agreed upon between such holder of an Administration Expense Claim and the Debtors or, on and after the Consummation Date, the Reorganized Debtors. 2.3. Priority Tax Claims. On the Consummation Date, each holder of an Allowed Priority Tax Claim shall be distributed on account of such Allowed Priority Tax Claim a payment in Cash equal to the amount of such Allowed Priority Tax Claim. SECTION 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS Claims against and Equity Interests in the Debtors are divided into the following classes: Class 1 - Priority Non-Tax Claims Class 2 - Senior Secured Claims Class 3 - Other Secured Claims Subclass 3A - Marvel Entertainment Group, Inc. Subclass 3B - The Asher Candy Company Subclass 3C - Fleer Corp. Subclass 3D - Frank H. Fleer Corp. Subclass 3E - Heroes World Distribution, Inc. SubClass 3F Malibu Comics Entertainment, Inc. Subclass 3G - Marvel Characters, Inc. SubClass 3H Marvel Direct Marketing Inc. Subclass 3I - SkyBox International Inc. Class 4 - General Unsecured Claims Subclass 4A - Marvel Entertainment Group, Inc. Subclass 4B - The Asher Candy Company Subclass 4C - Fleer Corp. Subclass 4D - Frank H. Fleer Corp. Subclass 4E - Heroes World Distribution, Inc. SubClass 4F Malibu Comics Entertainment, Inc. Subclass 4G - Marvel Characters, Inc. SubClass 4H Marvel Direct Marketing Inc. Subclass 4I - SkyBox International Inc. Class 5 - Rejection Claims Class 6 - Affiliate Unsecured Claims Subclass 6A - Marvel Entertainment Group, Inc. Subclass 6B - The Asher Candy Company Subclass 6C - Fleer Corp. Subclass 6D - Frank H. Fleer Corp. Subclass 6E - Heroes World Distribution, Inc. SubClass 6F Malibu Comics Entertainment, Inc. Subclass 6G - Marvel Characters, Inc. SubClass 6H Marvel Direct Marketing Inc. Subclass 6I - SkyBox International Inc. Class 7 - Class Securities Litigation Claims Class 8 - Equity Interests Subclass 8A - Marvel Entertainment Group, Inc. Subclass 8B - Subsidiary Equity Interests Class 9 - Warrants SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN 4.1. Priority Non-Tax Claims (Class 1). On the Consummation Date, each holder of an Allowed Priority Non-Tax Claim shall be distributed on account of such Allowed Priority Claim a payment in Cash equal to the amount of its Allowed Priority Non-Tax Claim. 4.2. Senior Secured Claims (Class 2). (a) Allowance of Senior Secured Claims. On the Consummation Date, the Claims of each holder of a Senior Secured Claim under each of the Existing Credit Agreements shall be allowed in the amounts owing to such holder under the applicable Existing Credit Agreement. (b) Treatment of Allowed Senior Secured Claims. On the Consummation Date, each holder of an Allowed Senior Secured Claim shall be treated on account of such Allowed Senior Secured Claim in accordance with the applicable Existing Credit Agreements as amended by the applicable Existing Credit Agreements Amendments. 4.3. Other Secured Claims (Class 3). On the Consummation Date, each Allowed Other Secured Claim in each subclass of Class 3 shall be reinstated as against the applicable Reorganized Debtor and made unimpaired in accordance with section 1124(2) of the Bankruptcy Code, notwithstanding any contractual provision or applicable nonbankruptcy law that entitles the holder of an Allowed Other Secured Claim to demand and receive payment of such Claim prior to the stated maturity of such Claim from and after the occurrence of a default. 4.4. General Unsecured Claims (Class 4). (a) Marvel Entertainment Group, Inc., The Asher Candy Company, Fleer Corp., Frank H. Fleer Corp., Malibu Comics Entertainment, Inc., Marvel Characters, Inc., Marvel Direct Marketing, Inc. and Skybox International Inc. (Subclasses 4A, 4B, 4C, 4D, 4F, 4G, 4H and 4I). On the Consummation Date, each holder of an Allowed General Unsecured Claim in each of Subclass 4A (Marvel Entertainment Group, Inc.), Subclass 4B (The Asher Candy Company), Subclass 4C (Fleer Corp.), Subclass 4D (Frank H. Fleer Corp.), Subclass 4F (Malibu Comics Entertainment, Inc.), Subclass 4G (Marvel Characters, Inc.), Subclass 4H (Marvel Direct Marketing Inc.) and Subclass 4I (Skybox International Inc.) of Class 4 (General Unsecured Claims) shall, to the extent not paid prior to the Consummation Date, be paid in full by the applicable Reorganized Debtor in accordance with the terms and subject to the conditions of any agreement governing, instrument evidencing or other document relating to such Claim. (b) Heroes World Distribution, Inc. (Subclass 4E). On the Consummation Date, each holder of an Allowed General Unsecured Claim in Subclass 4E (Heroes World Distribution, Inc.) of Class 4 (General Unsecured Claims) shall be paid on account of such Allowed General Unsecured Claim a payment in cash equal to the lesser of (i) its Allowed General Unsecured Claim and (ii) in the event Marvel Entertainment Group, Inc. elects to liquidate Heroes World Distribution, Inc., its Ratable Proportion of the net cash proceeds realized from the liquidation of the properties and interests in property of Heroes World Distribution, Inc. 4.5. Rejection Claims (Class 5). On the Consummation Date, each holder of an Allowed Rejection Claim against the Debtors shall be paid on account of such Allowed Rejection Claim a payment in cash equal to such Allowed Rejection Claim; provided, however, in the event that Allowed General Unsecured Claims against Heroes World Distribution, Inc. are treated in accordance with section 4.4(b)(ii) hereof, then the Allowed Rejection Claims against Heroes World Distribution, Inc. shall be treated in accordance with such section 4.4(b)(ii). 4.6. Affiliate Unsecured Claims (Class 6). On the Consummation Date, each holder of an Allowed Affiliate Unsecured Claim in each subclass of Class 6 (Affiliate Unsecured Claims) shall retain unaltered the legal, equitable and contractual rights to which such Allowed Claim entitles such holder and be made unimpaired in accordance with section 1124(1) of the Bankruptcy Code. 4.7. Class Securities Litigation Claims (Class 7). On the Consummation Date, each holder of any Allowed Class Securities Litigation Claim Order shall be distributed on account of such Allowed Class Securities Litigation Claim a distribution in shares of common stock, par value $.01 per share, of Marvel Entertainment Group, Inc. valued at the per share price being paid for such shares under the Acquisition Agreement equal to the amount of such Allowed Class Securities Litigation Claim; provided, that, taken together, the shares of common stock of Reorganized Marvel Entertainment Group, Inc. issued or to be issued to all holders of Claims and Equity Interests in Class 7 (Class Securities Litigation Claims) and Subclass 8A (Marvel Entertainment Group, Inc.) of Class 8 (Equity Interests) shall not exceed 19.2% of the issued and outstanding common stock of Reorganized Marvel Entertainment Group, Inc. 4.8. Equity Interests (Class 8). (a) Marvel Entertainment Group, Inc. (Subclass 8A). On the Consummation Date, each holder of an Allowed Equity Interest in Marvel Entertainment Group, Inc. shall retain unaltered the legal, equitable and contractual rights to which such Allowed Equity Interest entitles such holder, subject to the dilution associated with the Transaction and section 4.7 above; provided, that, taken together, the shares of common stock of Reorganized Marvel Entertainment Group, Inc. issued or to be issued to all holders of Claims and Equity Interests in Class 7 (Class Securities Litigation Claims) and Subclass 8A (Marvel Entertainment Group, Inc.) of Class 8 (Equity Interest) shall not exceed 19.2% of the issued and outstanding common stock of Reorganized Marvel Entertainment Group, Inc. (b) Subsidiary Equity Interests (Subclass 8B). On the Consummation Date, each holder of an Allowed Subsidiary Interest shall retain unaltered the legal equitable and contractual rights to which such Allowed Subsidiary Equity Interest entitles such holder and be made unimpaired in accordance with section 1124(1) of the Bankruptcy Code. 4.9. Warrants (Class 9). On the Consummation Date, the Warrants shall be cancelled, and the holders of Warrants shall not be entitled to, and shall not, receive or retain any property or interest in property on account of such Class 9 Warrants. SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS IMPAIRED AND NOT IMPAIRED UNDER THE PLAN; ACCEPTANCE OR REJECTION OF THE PLAN 5.1. Holders of Claims and Equity Interests Entitled to Vote. Each of Classes 2 (Senior Secured Claims), Subclass 4E (Heroes World Distribution, Inc.) of Class 4 (General Unsecured Claims), Class 5 (Rejection Claims), Class 7 (Securities Litigation Claims), Subclass 8A (Marvel Entertainment Group) of Class 8 (Equity Interests) and Class 9 (Warrants) and, as applicable, each subclass thereof are impaired hereunder, and the holders of Claims or Equity Interests in each of Class 2 (Senior Secured Claims), Class 7 (Class Securities Litigation Claims) and Subclass 8A (Marvel Entertainment Group) of Class 8 (Equity Interests) and, as applicable, each subclass thereof are entitled to vote separately on this Plan of Reorganization. Holders of Equity Interests in Class 9 (Warrants) are not entitled to vote on this Plan of Reorganization and are presumed to have rejected it in accordance with section 1126(g) of the Bankruptcy Code. Each holder of an Allowed Claim or an Allowed Equity Interest in an impaired class or subclass of Claims against or Equity Interests in any Debtor other than holders of Warrants in Class 9 (Warrants) shall be entitled to vote separately to accept or reject this Plan of Reorganization as provided in the order of the Bankruptcy Court fixing the Ballot Date and otherwise approving or governing, as applicable, the balloting procedures applicable to this Plan of Reorganization, including, without limitation, the solicitation of the votes to accept or reject this Plan of Reorganization prior to the Petition Date from holders of Allowed Claims in Class 2 (Senior Secured Claims). For purposes of calculating the number of Allowed Claims held by holders of Allowed Claims that have voted to accept or reject this Plan of Reorganization under section 1126(c) of the Bankruptcy Code, all Allowed Claims held by any entity or any Affiliate thereof that acquired record ownership of such Allowed Claims after the Petition Date shall be aggregated and treated as one Allowed Claim. Each of Classes 3 (Other Secured Claims), 4 (General Unsecured Claims) other than Subclass 4E (Heroes World Distribution, Inc.) of Class 4 (General Unsecured Claims), 5 (Rejection Claims), 6 (Affiliate Unsecured Claims) and Subclass 8B (Subsidiary Equity Interests) of Class 8 (Equity Interests) and, as applicable, each subclass thereof are not impaired hereunder, and the holders of Claims and Equity Interests in such classes and, as applicable, each subclass thereof are conclusively presumed under section 1126(f) of the Bankruptcy Code to have accepted this Plan of Reorganization and are not entitled to vote on this Plan of Reorganization. 5.2. Subtraction and Addition of Classes and Subclasses. (a) Subtraction of Classes and Subclasses. Any class or subclass of Claims that does not contain as an element thereof an Allowed Claim or a Claim temporarily allowed under Bankruptcy Rule 3018 as of the date of the commencement of the Confirmation Hearing shall be deemed subtracted from this Plan of Reorganization for purposes of voting to accept or reject this Plan of Reorganization and for purposes of determining acceptance or rejection of this Plan of Reorganization by such class or subclass under section 1129(a)(8) of the Bankruptcy Code. (b) Addition of Classes and Subclasses. In the event that any subclass of Class 3 (Other Secured Claims) would contain as elements thereof two or more Secured Claims collateralized by different properties or interests in property or collateralized by liens against the same property or interest in property having different priority, such Claims shall be divided into separate subclasses of such subclass of Class 3 (Other Secured Claims). 5.3. Nonconsensual Confirmation. If any impaired class of Claims or Equity Interests entitled to vote shall not accept this Plan of Reorganization by the requisite statutory majorities provided in sections 1126(c) or 1126(d) of the Bankruptcy Code, as applicable, the Debtors reserve the right, subject to their obligations under the Acquisition Agreement, to amend this Plan of Reorganization in accordance with section 14.2 hereof or undertake to have the Bankruptcy Court confirm this Plan of Reorganization under section 1129(b) of the Bankruptcy Code or both. The Debtors intend to seek confirmation of this Plan of Reorganization under section 1129(b) of the Bankruptcy Code notwithstanding the deemed rejection of this Plan of Reorganization by holders of Equity Interests in Class 9 (Warrants). 5.4. Severability of Plan of Reorganization. This Plan of Reorganization is, severally, a plan of reorganization for each of the Debtors. In the event that this Plan of Reorganization is not confirmed for all Debtors, then this Plan of Reorganization may not be confirmed for any Debtor; provided, that, notwithstanding the foregoing, in the event that this Plan of Reorganization is not confirmed for Heroes World Distribution, Inc., the other Debtors may, subject to their obligations under the Acquisition Agreement, waive this limitation and this Plan of Reorganization may be confirmed for such other Debtors. 5.5. Revocation of Plan of Reorganization. The Debtors reserve the right to revoke and withdraw this Plan of Reorganization as to any or all Debtors at any time prior to entry of the Confirmation Order, subject to their obligations under the Acquisition Agreement. In the event that this Plan of Reorganization is so revoked or withdrawn as to any or all Debtors, then this Plan of Reorganization shall be deemed null and void as it relates to each such Debtor. SECTION 6. MEANS OF IMPLEMENTATION 6.1. Closing of Transaction. On the Consummation Date, the closing of the Transaction shall occur in accordance with the Acquisition Agreement and, if applicable, a merger agreement with Toy Biz, Inc., and, on the terms and subject to the conditions contained in such agreements, the Debtors shall receive the consideration provided therein and shall make the distributions provided hereunder. 6.2. Dismissal of Derivative Securities Litigation Claims. The Derivative Securities Litigation Claims are property of the estate of Marvel Entertainment Group, Inc. under section 541 of the Bankruptcy Code. For good and valuable consideration, including the benefits of this Plan of Reorganization, and to facilitate expeditious and effective reorganizations of the Debtors, on or after the Consummation Date, all Derivative Securities Litigation Claims shall be dismissed with prejudice and the Reorganized Debtors shall be entitled to effect any actions may be necessary or appropriate, and to execute, deliver and file in all courts in which the Derivative Securities Litigation Claims are pending, all documents and instruments, including, without limitation, stipulations of dismissal of the Derivative Securities Litigation Claims, to fully implement and effect the dismissal of the Derivative Securities Litigation Claims. The Confirmation Order shall provide that all named plaintiffs in the action relating to the Derivative Securities Litigation Claim and their respective servants, agents, attorneys and representatives shall, on and after the Confirmation Date, be permanently enjoined, stayed and restrained from pursuing or prosecuting any of the Derivative Securities Litigation Claims. 6.3. Board of Directors of the Reorganized Debtors. The initial members of the Board of Directors of the Reorganized Debtors are or shall be stated in the Disclosure Statement under "GENERAL INFORMATION - Board of Directors and Executive Officers of the Reorganized Debtors" or an amendment or supplement to the Disclosure Statement or such other filing as may be made with the Bankruptcy Court. 6.4. Officers of the Reorganized Debtors. The initial officers of the Reorganized Debtors are stated in the Disclosure Statement under "GENERAL INFORMATION - Board of Directors and Executive Officers of the Reorganized Debtors." The selection of officers of the Reorganized Debtors after the Consummation Date shall be as provided in the articles or certificates of incorporation and bylaws. SECTION 7. PROVISIONS GOVERNING DISTRIBUTIONS 7.1. Date of Distributions. Any distributions and deliveries to be made hereunder shall be made on the Consummation Date or as soon as practicable thereafter. In the event that any payment or act under this Plan of Reorganization is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day, but shall be deemed to have been completed as of the required date. 7.2. Entities to Exercise Function of Disbursing Agent. All distributions under this Plan of Reorganization shall be made by the applicable Reorganized Debtor as Disbursing Agent or such other entity designated by the applicable Reorganized Debtor as a Disbursing Agent. A Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties unless otherwise ordered by the Bankruptcy Court; and, in the event that a Disbursing Agent is so otherwise ordered, all costs and expenses of procuring any such bond or surety shall be borne by the applicable Reorganized Debtor. 7.3. Surrender and Cancellation of Instruments. Each holder of a promissory note, Warrant or other instrument evidencing a Claim (other than a holder of a promissory note issued under any of the Existing Credit Agreements) shall surrender such promissory note, Warrant or instrument to the Disbursing Agent, and the Disbursing Agent shall distribute or shall cause to be distributed to the holder thereof the appropriate distribution (if any) hereunder. No distribution hereunder shall be made to or on behalf of any holder of such a Claim unless and until such promissory note, Warrant or instrument is received or the unavailability of such note, Warrant or instrument is reasonably established to the satisfaction of the Disbursing Agent. In accordance with section 1143 of the Bankruptcy Code, any such holder of such a Claim that fails to (a) surrender or cause to be surrendered such promissory note, Warrant or instrument or to execute and deliver an affidavit of loss and indemnity reasonably satisfactory to the Disbursing Agent and (b) in the event that the Disbursing Agent requests, furnish a bond in form and substance (including, without limitation, amount) reasonably satisfactory to the Disbursing Agent, within 5 years from and after the Consummation Date shall be deemed to have forfeited all rights, claims and interests and shall not participate in any distribution hereunder. 7.4. Delivery of Distributions. Subject to Bankruptcy Rule 9010, all distributions to any holder of an Allowed Claim shall be made at the address of such holder as scheduled on the Schedules filed with the Bankruptcy Court unless the Debtors or Reorganized Debtors, as applicable, have been notified in writing of a change of address, including, without limitation, by the filing of a proof of claim or interest by such holder that relates an address for such holder different from the address reflected on such Schedules for such holder. In the event that any distribution to any holder is returned as undeliverable, the Disbursing Agent shall use reasonable efforts to determine the current address of such holder, but no distribution to such holder shall be made unless and until the Disbursing Agent has determined the then current address of such holder, at which time such distribution shall be made to such holder without interest; provided that such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one year from the Consummation Date. After such date, all unclaimed property or interest in property shall revert to the applicable Reorganized Debtor, and the claim of any other holder to such property or interest in property shall be discharged and forever barred. The distributions to be made on the Consummation Date to each holder of an Allowed Senior Secured Claim shall be made to The Chase Manhattan Bank, as agent under the Existing Credit Agreements, for distribution to holders of Allowed Senior Secured Claims in accordance with the provisions of the Existing Credit Agreements as amended by the Existing Credit Agreements Amendments. 7.5. Manner of Payment Under Plan of Reorganization. At the option of the Reorganized Debtors, any Cash payment to be made hereunder may be made by a check or wire transfer or as otherwise required or provided in applicable agreements. 7.6. Distributions After Consummation Date. Distributions made after the Consummation Date to holders of Claims that are not Allowed Claims as of the Consummation Date but which later become Allowed Claims shall be deemed to have been made on the Consummation Date. 7.7. Rights And Powers Of Disbursing Agent. (a) Powers of the Disbursing Agent. The Disbursing Agent shall be empowered to (a) effect all actions and execute all agreements, instruments and other documents necessary to implement this Plan of Reorganization (b) make distributions contemplated hereby, (c) liquidate property as required to make distributions contemplated hereby, (d) comply herewith and the obligations hereunder, (e) employ professionals to represent it with respect to its responsibilities, and (f) exercise such other powers as may be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant to this Plan of Reorganization, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions hereof. (b) Expenses Incurred on or After the Consummation Date. Except as otherwise ordered by the Bankruptcy Court, the amount of any fees and expenses incurred by the Disbursing Agent on or after the Consummation Date (including, without limitation, taxes) and any compensation and expense reimbursement claims (including, without limitation, reasonable fees and expenses of counsel) made by the Disbursing Agent, shall be paid in Cash by the Reorganized Debtors. (c) Exculpation. Each Disbursing Agent, from and after the Consummation Date, is hereby exculpated by all entities, including, without limitation, holders of Claims and Equity Interests and other parties in interest from any and all claims, causes of action and other assertions of liability (including, without limitation, breach of fiduciary duty) arising out of the discharge by such Disbursing Agent of the powers and duties conferred upon it hereby or any order of the Bankruptcy Court entered pursuant to or in furtherance hereof, or applicable law, except solely for actions or omissions arising out of the gross negligence or willful misconduct of such Disbursing Agent. No holder of a Claim or an Equity Interest or other party in interest shall have or pursue any claim or cause of action against the Disbursing Agent for making payments in accordance herewith or for implementing the terms hereof. SECTION 8. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER THE PLAN OF REORGANIZATION 8.1. Objections to Claims. The Reorganized Debtors shall be entitled to object to Claims. 8.2. No Distributions Pending Allowance. Notwithstanding any other provision hereof, if any portion of a Claim is a Disputed Claim, no payment or distribution provided hereunder shall be made on account of the portion of such Claim that is a Disputed Claim unless and until such Disputed Claim becomes an Allowed Claim but the payment or distribution provided hereunder shall be made on account of the portion of such Claim that is an Allowed Claim. 8.3. Distributions After Allowance. Payments and distributions to each holder of a Disputed Claim or Equity Interest or any other Claim or Equity Interest that is not an Allowed Claim or Equity Interest, to the extent that such Claim or Equity Interest ultimately becomes an Allowed Claim or Equity Interest, shall be made in accordance with the provisions hereof governing the class or subclass of Claims or Equity Interests in which such Claim or Equity Interest is classified. As soon as practicable after the date that the order or judgment of the Bankruptcy Court allowing any Disputed Claim or Equity Interest or any other Claim or Equity Interest that is not an Allowed Claim or Equity Interest becomes a Final Order, the Disbursing Agent shall distribute to the holders of such Claim or Equity Interest any payment or property that would have been distributed to such holder if the Claim or Equity Interest had been allowed on the Consummation Date, without any interest thereon. SECTION 9. PROVISIONS GOVERNING EXECUTORY CONTRACTS AND UNEXPIRED LEASES UNDER THE PLAN 9.1. General Treatment. This Plan of Reorganization constitutes a motion by the Debtors governed by this Plan of Reorganization to assume, as of the Consummation Date, all executory contracts and unexpired leases to which any of the Debtors are parties, except for an executory contract or unexpired lease that (a) has been assumed or rejected pursuant to Final Order of the Bankruptcy Court, (b) is specifically rejected on Schedule 9.1 hereto filed by the Debtors on or before the commencement of the hearing on approval of the Disclosure Statement or such later date as may be fixed by the Bankruptcy Court, (c) is the subject of a separate motion filed under section 365 of the Bankruptcy Code by the Debtors prior to the filing of the schedule described in section 9.1(b) hereof or (d) is otherwise assumed hereunder. For purposes hereof, each executory contract and unexpired lease listed on Schedule 9.1 hereto that relates to the use of occupancy of real property shall include (a) modifications, amendments, supplements, restatements, or other agreements made directly or indirectly by any agreement, instrument, or other document that in any manner affects such executory contract or unexpired lease, without regard to whether such agreement, instrument or other document is listed on Schedule 9.1 hereto and (b) executory contracts or unexpired leases appurtenant to the premises listed on Schedule 9.1 hereto including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, powers, uses, usufructs, reciprocal easement agreements, vault, tunnel or bridge agreements or franchises, and any other interests in real estate or rights in rem relating to such premises to the extent any of the foregoing are executory contracts or unexpired leases, unless any of the foregoing agreements are assumed. 9.2. Amendments to Schedule; Effect of Amendments. The Debtors shall assume each of the executory contracts and unexpired leases not listed on Schedule 9.1 hereto; provided, that the Debtors may at any time on or before the first Business Day before the date of the commencement of the Confirmation Hearing amend Schedule 9.1 hereto to delete or add any executory contract or unexpired lease thereto, in which event such executory contract or unexpired lease shall be deemed to be, respectively, assumed and, if applicable, assigned as provided therein, or rejected. The Debtors shall provide notice of any amendments to Schedule 9.1 hereto to the parties to the executory contracts or unexpired leases affected thereby. The fact that any contract or lease is scheduled on Schedule 9.1 hereto shall not constitute or be construed to constitute an admission by any Debtor that any Debtor has any liability thereunder. 9.3. Effect of Rejection. In no event shall the rejection of executory contracts and unexpired leases rejected under sections 9.1 and 9.2 hereof have a Material Adverse Effect (as such term is defined in each of the Existing Credit Agreements). 9.4. Bar to Rejection Damage Claims. In the event that the rejection of an executory contract or unexpired lease by any of the Debtors results in damages to the other party or parties to such contract or lease, a Claim for such damages, if not heretofore evidenced by a filed proof of claim, shall be forever barred and shall not be enforceable against the Debtors, or their respective properties or interests in property as agents, successors, or assigns, unless a proof of claim is filed with the Bankruptcy Court and served upon counsel for the Debtors on or before 30 days after the earlier to occur of (a) the giving of notice to such party under section 9.1 or 9.2 hereof and (b) the entry of an order by the Bankruptcy Court authorizing rejection of a particular executory contract or lease. SECTION 10. CONDITIONS PRECEDENT TO CONFIRMATION DATE AND CONSUMMATION DATE 10.1. Conditions Precedent to Confirmation of Plan of Reorganization. The confirmation of this Plan of Reorganization is subject to satisfaction of the following condition precedent: (a) Acquisition Agreement. The Acquisition Agreement shall then be in full force and effect. 10.2. Conditions Precedent to Consummation Date of Plan of Reorganization. The occurrence of the Consummation Date of this Plan of Reorganization is subject to satisfaction of the following conditions precedent: (a) Finality of the Confirmation Order. The Clerk of the Bankruptcy Court shall have entered the Confirmation Order, and the Confirmation Order shall have become a Final Order; (b) Acquisition Agreement. All conditions precedent to the obligations of the Purchaser (as such term is defined in the Acquisition Agreement) and the Seller (as such term is defined in the Acquisition Agreement) shall have been satisfied or waived in accordance with the Acquisition Agreement; (c) Acquisition of Toy Biz. Marvel Entertainment Group, Inc. shall directly or indirectly have acquired all of the issued and outstanding shares of capital stock of Toy Biz, Inc. not held by Marvel Entertainment Group, Inc. directly or indirectly on the Petition Date; and (d) Execution and Delivery of Documents. All other actions and documents necessary to implement the terms and provisions hereof shall have been effected or executed and delivered. 10.3. Waiver of Conditions Precedent. Each of the conditions precedent in sections 10.1 and 10.2 hereof may be waived, in whole or in part, by the Debtors, subject to their obligations under the Acquisition Agreement. Any such waiver of a condition precedent in section 10.1 or 10.2 hereof may be effected at any time, without notice, without leave or order of the Bankruptcy Court and without any formal action other than proceeding to consummate this Plan of Reorganization. SECTION 11. EFFECT OF CONFIRMATION 11.1. General Authority. Until the Consummation Date, the Bankruptcy Court shall retain custody and jurisdiction of each of the Debtors, its properties and interests in property and its operations. On the Consummation Date, each of the Debtors, its properties and interests in property and its operations shall be released from the custody and jurisdiction of the Bankruptcy Court, except as provided in section 15.1 hereof. 11.2. Discharge of Debtors. Subject to section 11.5 hereof, the treatment of all Claims against or Equity Interests in each of the Debtors hereunder shall be in exchange for and in complete satisfaction, discharge and release of all Claims against or Equity Interests in such Debtor of any nature whatsoever, known or unknown, including, without limitation, any interest accrued or expenses incurred thereon from and after the Petition Date, or against its estate or properties or interests in property. Except as otherwise provided herein, upon the Consummation Date, all Claims against and Equity Interests in each of the Debtors will be satisfied, discharged and released in full exchange for the consideration provided hereunder. All entities shall be precluded from asserting against any Debtor or Reorganized Debtor or their respective properties or interests in property, any other Claims based upon any act or omission, transaction or other activity of any kind or nature that occurred prior to the Consummation Date. 11.3. Injunction. Except as otherwise expressly provided in the Confirmation Order, all entities who have held, hold or may hold Claims against or Equity Interests in any of the Debtors are permanently enjoined, on and after the Consummation Date from directly or derivatively (a) commencing or continuing in any manner any action or other proceeding of any kind relating to any such Claim or Equity Interest against any such Debtor, (b) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order against any such Debtor (c) creating, perfecting, or enforcing any encumbrance of any kind against any such Debtor or against the property or interests in property of any such Debtor on account of any such Claim, and (d) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due any such Debtor or against the property or interests in property of any such Debtor on account of any such Claim. The benefits of such injunction shall extend the Releasees and their respective properties and interests in property. In connection therewith, such injunction shall permanently enjoin and restrain all entities from effecting any of the following actions (other than actions commenced to enforce any right or obligation provided hereby): commencement or continuation of any action or proceeding against or affecting any Debtor or any property or interest in property of such Debtor, and commencement or continuation of any action or proceeding against or affecting any of the Releasees or any property or interest in property of the Releasees in connection herewith. 11.4. Term of Injunctions or Stays. Unless otherwise provided, all injunctions or stays provided for in the Reorganization Cases under sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the Consummation Date. 11.5. Indemnification Obligations. Notwithstanding any other provision hereof to the contrary, the obligations of the Debtors to indemnify its present and all former directors or officers that were directors or officers, respectively, at any time preceding the Petition Date against any obligations pursuant to certificates or articles of incorporation, bylaws, applicable state law or any of the foregoing shall survive confirmation of this Plan of Reorganization, remain unaffected thereby and not be discharged in accordance with section 1141 of the Bankruptcy Code, irrespective of whether indemnification is owed in connection with an event occurring before, on or after the Petition Date. SECTION 12. RELEASES AND WAIVER OF CLAIMS 12.1. General Release of Releasees. Effective as of the Consummation Date, each of the Debtors and Debtors in Possession releases the Releasees from any and all costs, expenses, claims, causes of action or liability whatsoever, known or unknown, liquidated or unliquidated, matured or not matured, contingent or direct, and whether arising at common law, in equity, or under any statute which such Debtor has as of, or prior to, the Consummation Date against the Releasees which in any way relate to such Debtor or the applicable Reorganization Case. 12.2. Release from Claims and Liabilities. (a) Except for those obligations arising hereunder, effective as of the Consummation Date, each of the Debtors hereby is released and discharged from any and all claims and liabilities arising from or in connection with, by reason of, or related in any way to, such Debtor, the Senior Secured Claims, the Existing Credit Agreement, any other Claim, the Reorganization Case of such Debtor or this Plan of Reorganization, and the Releasees hereby are released and discharged from any and all claims or liabilities arising from actions effected in their capacity as present or, in the event applicable, former officers and directors of any of the Debtors and their Affiliates, and from any and all Causes of Action of any entity, including, without limitation, each holder of a Senior Secured Claim, or any other Claim and all of the successors, predecessors, assignors, assignees, parents, subsidiaries, present and former directors, trustees, officers, employees, agents, attorneys, advisors, accountants, financial advisors, investment bankers, stockholders, partners, affiliates, heirs, receivers, conservators, beneficiaries, executors and administrators of or to the holders of Senior Secured Claims or other Claims, arising from or in connection with, by reason of, or related in any way to, such Debtor, the Senior Secured Claims, the Existing Credit Agreement, any other Claim, the Reorganization Case of such Debtor or this Plan of Reorganization, including, without limitation, in each case any claims arising from, (i) the ownership, management, and operation of the Debtors by any Releasee; (ii) the preparation by any Releasee of financial statements in respect of any or all of the Debtors; (iii) the actions by the Releasees to restructure the Existing Credit Agreement, including, without limitation, any actions in connection with or related to the formulation, negotiation, preparation, dissemination, confirmation or consummation of this Plan of Reorganization and any agreement, instrument or other document issued hereunder or related hereto. (b) Effective as of the Consummation Date, the Releasees are released and discharged from any and all claims, obligations, rights, causes of action and liabilities which any holder of a Claim against or Equity Interest in any of the Debtors may be entitled to assert, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, based in whole or in part upon any act or omission or other event occurring on or at any time prior to the Consummation Date in any way relating to the Debtors, the Reorganization Cases or this Plan of Reorganization. (c) Nothing contained herein shall affect any rights of the Releasees to assert and prosecute (i) any direct claim, counterclaim, cross-claim, separate action, or similar claim against any entity which maintains that it has a cause of action of the kind described in this section 12.2 (other than a claim described in clause (ii) immediately below) against a Releasee that has not been discharged hereunder or (ii) any claim for indemnification, contribution or otherwise, however denominated, against any entity relating to any cause of action against such Releasee that has not been released and discharged hereunder. (d) Each holder of a Claim, including, without limitation, a Senior Secured Claim shall be deemed to have agreed to the provision of this section 12.2, and shall be bound thereby, by reason of, among other things, its acceptance of this Plan of Reorganization and its receipt of any distributions hereunder. (e) Notwithstanding anything to the contrary herein, the Reorganized Debtors and their respective Affiliates shall not be released from any obligations under the Existing Credit Agreements as amended by the Existing Credit Agreements Amendments by operation of this section 12. 12.3. Avoidance Actions. Effective as of the Consummation Date, the Debtors waive the right to prosecute and release any avoidance or recovery actions under sections 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code, that belong to the Debtors or Debtors in Possession, other than any such actions that may be pending on such date. The Reorganized Debtors shall retain and may prosecute any such actions that may be pending on such date. SECTION 13. CREDITORS' COMMITTEE 13.1. Dissolution of Creditors' Committee. The Creditors' Committee shall be dissolved on the Consummation Date. 13.2. Exculpation. Each member of the Creditors' Committee and each of their respective advisors and attorneys, effective as of the Consummation Date, is hereby exculpated by all entities, including, without limitation, holders of Claims against and Equity Interests in any of the Debtors and other parties in interest, from any and all Claims, Causes of Action and other assertions of liability (including, without limitation, breach of fiduciary duty), whether known or unknown, foreseen or unforeseen, existing or arising hereafter, arising out of or related to the Debtors, the Reorganization Cases or the exercise by such entities of their functions as members of or advisors to or attorneys for any such committee or otherwise under applicable law, including, without limitation, in connection with or related to the formulation, negotiation, preparation, dissemination, confirmation and consummation of this Plan of Reorganization and any agreement, instrument or other document issued hereunder or related hereto. SECTION 14. RETENTION OF JURISDICTION 14.1. Retention of Jurisdiction. The Bankruptcy Court may retain jurisdiction of and, if the Bankruptcy Court exercises its retained jurisdiction, shall have exclusive jurisdiction of all matters arising out of, and related to, the Reorganization Cases and this Plan of Reorganization pursuant to, and for the purposes of, sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the following purposes: (a) To hear and determine pending applications for the assumption or rejection of executory contracts or unexpired leases, if any are pending, and the allowance of Claims resulting therefrom; (b) To determine any and all adversary proceedings, applications and contested matters; (c) To ensure that distributions to holders of Allowed Claims and Allowed Equity Interests are accomplished as provided herein; (d) To hear and determine any timely objections to Administration Expense Claims or to proofs of claim and equity interests filed, both before and after the Confirmation Date, including, without limitation, any objections to the classification of any Claim or Equity Interest, and to allow or disallow any Disputed Claim or Equity Interest, in whole or in part; (e) To enter and implement such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, revoked, modified, or vacated; (f) To issue such orders in aide of execution of this Plan of Reorganization, to the extent authorized by section 1142 of the Bankruptcy Code; (g) To consider any amendments to or modifications of this Plan of Reorganization, to cure any defect or omission, or reconcile any inconsistency in any order of the Bankruptcy Court, including, without limitation, the Confirmation Order; (h) To hear and determine all applications for awards of compensation for services rendered and reimbursement of expenses incurred prior to the Consummation Date; (i) To hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of this Plan of Reorganization; (j) To hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code; (k) To hear any other matter not inconsistent with the Bankruptcy Code; (l) To hear and determine all disputes involving the existence, scope and nature of the discharges granted under section 11.2 hereof, the injunction issued under section 11.3 hereof and the releases granted under section 12 hereof; (m) To issue injunctions and effect any other actions that may be necessary or desirable to restrain interference by any entity with the consummation or implementation of this Plan of Reorganization; and (n) To enter a final decree closing the Reorganization Cases. 14.2. Amendment of Plan of Reorganization. Subject to the Acquisition Agreement, amendments of this Plan of Reorganization may be proposed in writing by the Debtors at any time before confirmation, provided that this Plan of Reorganization, as amended, satisfies the conditions of sections 1122 and 1123 of the Bankruptcy Code, and the Debtors shall have complied with section 1125 of the Bankruptcy Code. Subject to the Acquisition Agreement, this Plan of Reorganization may be amended at any time after confirmation and before substantial consummation, provided that this Plan of Reorganization, as amended, satisfies the requirements of sections 1122 and 1123 of the Bankruptcy Code and the Bankruptcy Court, after notice and a hearing, confirms this Plan of Reorganization as amended under section 1129 of the Bankruptcy Code and the circumstances warrant such amendments. A holder of a Claim or Equity Interest that has accepted this Plan of Reorganization shall be deemed to have accepted this Plan of Reorganization as amended if the proposed amendment does not materially and adversely change the treatment of the Claim or Equity Interest of such holder. SECTION 15. MISCELLANEOUS PROVISIONS 15.1. Payment of Statutory Fees. All fees payable under section 1930, chapter 123, title 28, United States Code, as determined by the Bankruptcy Court at the Confirmation Hearing, shall be paid on the Consummation Date. Any such fees accrued after the Consummation Date will constitute an Allowed Administration Expense Claim and be treated in accordance with section 2.1 hereof. 15.2. Retiree Benefits. On and after the Consummation Date, pursuant to section 1129(a)(13) of the Bankruptcy Code, the Reorganized Debtors shall, subject to the provisions of section 9.4 hereof, continue to pay all retiree benefits (within the meaning of section 1114 of the Bankruptcy Code), at the level established in accordance with subsection (e)(1)(B) or (g) of section 1114 of the Bankruptcy Code, at any time prior to the Confirmation Date, for the duration of the period each Debtor has obligated itself to provide such benefits. 15.3. Compliance with Tax Requirements. Withholding. In connection with the consummation of this Plan of Reorganization, the Debtors and shall comply with all withholding and reporting requirements imposed by any taxing authority, and all distributions hereunder shall be subject to such withholding and reporting requirements. 15.4. Recognition of Guarantee Rights. The classification of and manner of satisfying all Claims hereunder take into account (a) the existence of guarantees by certain Debtors of obligations of other Debtors and (b) the fact that the Debtors may be joint obligors with each other or other entities with respect to an obligation. All Claims against the Debtors based upon any such guarantees or joint obligations shall be discharged in the manner provided in this Plan of Reorganization; provided, that no creditor shall be entitled to receive more than a single satisfaction of its Allowed Claims. 15.5. Severability of Plan Provisions. In the event that, prior to the Confirmation Date, any term or provision of this Plan of Reorganization is held by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court shall, with the consent of the Debtors, have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision hereof, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms. 15.6. Governing Law. Except to the extent that the Bankruptcy Code or other federal law is applicable, or to the extent an Exhibit hereto provides otherwise, the rights, duties and obligations arising under this Plan of Reorganization shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. 15.7. Notices. All notices, requests, and demands to or upon the Debtors to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows: If to the Debtors: MARVEL ENTERTAINMENT GROUP, INC. 387 Park Avenue South 12th Floor New York, New York 10016 Attn: Steven R. Isko, Esq. Telephone: (212) 696-0808 Telecopier: (212) 576-9349 -and- WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Attn: Harvey R. Miller, Esq. Marcia L. Goldstein, Esq. Edward A.C. Sutherland, Esq. Telephone: (212) 310-8000 Telecopier: (212) 310-8007 -and- YOUNG, CONAWAY, STARGATT & TAYLOR Rodney Square North Wilmington, Delaware 19899 Attn: James L. Patton, Jr., Esq. Telephone: (302) 571-6600 Telecopier: (302) 571-1253 If to the holders of Senior Secured Claims: SIMPSON THACHER & BARTLETT 425 Lexington Avenue New York, New York 10017 Attn: Mark J. Thompson, Esq. Telephone: (212) 455-2000 Telecopier: (212) 455-2502 Dated: Wilmington, Delaware December 27, 1996 Respectfully submitted, MARVEL ENTERTAINMENT GROUP, INC. THE ASHER CANDY COMPANY FLEER CORP. FRANK H. FLEER CORP. HEROES WORLD DISTRIBUTIONS, INC. MALIBU COMICS ENTERTAINMENT, INC. MARVEL CHARACTERS, INC. MARVEL DIRECT MARKETING, INC. SKYBOX INTERNATIONAL INC. By: Name: Steven R. Isko, Esq. Title: Vice President Legal Affairs WEIL, GOTSHAL & MANGES LLP Attorneys for the Debtors and Debtors in Possession 767 Fifth Avenue New York, New York 10153 (212) 310-8000 -and- YOUNG, CONAWAY, STARGATT & TAYLOR Attorneys for the Debtors and Debtors in Possession Rodney Square North Wilmington, Delaware 19899 (302) 571-6600 By: James L. Patton, Jr. TABLE OF CONTENTS SECTION 1. DEFINITIONS AND INTERPRETATION . . . . . . 1 A. Definitions . . . . . . . . . . . . . . . . 1 B. Interpretation; Application of Definitions and Rules of Construction . . . 9 SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION EXPENSE CLAIMS AND PRIORITY TAX CLAIMS . . 10 2.1. Administration Expense Claims . . . . . . . 10 2.2. Compensation and Reimbursement Claims . . . 10 2.3. Priority Tax Claims . . . . . . . . . . . . 10 SECTION 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . 11 SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN . . . . 12 4.1. Priority Non-Tax Claims (Class 1) . . . . . 12 4.2. Senior Secured Claims (Class 2) . . . . . . 12 (a) Allowance of Senior Secured Claims . . 12 (b) Treatment of Allowed Senior Secured Claims . . . . . . . . . . . . . . . . 12 4.3. Other Secured Claims (Class 3) . . . . . . 12 4.4. General Unsecured Claims (Class 4) . . . . 12 (a) Marvel Entertainment Group, Inc., The Asher Candy Company, Fleer Corp., Frank H. Fleer Corp., Malibu Comics Entertainment, Inc., Marvel Characters, Inc., Marvel Direct Marketing, Inc. and Skybox International Inc. (Subclasses 4A, 4B, 4C, 4D, 4F, 4G, 4H and 4I) . . 13 4.5. Rejection Claims (Class 5). . . . . . . . . 13 4.6. Affiliate Unsecured Claims (Class 6) . . . 14 4.7. Class Securities Litigation Claims (Class 7). 14 4.8. Equity Interests (Class 8) . . . . . . . . 14 4.9. Warrants (Class 9) . . . . . . . . . . . . 15 SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS IMPAIRED AND NOT IMPAIRED UNDER THE PLAN; ACCEPTANCE OR REJECTION OF THE PLAN . . . . . . . . . . . . . . . . . . . 15 5.1. Holders of Claims and Equity Interests Entitled to Vote . . . . . . . . . . . . . 15 5.2. Subtraction and Addition of Classes and Subclasses . . . . . . . . . . . . . . . . 16 (a) Subtraction of Classes and Subclasses . . . . . . . . . . . . . . 16 (b) Addition of Classes and Subclasses . . 16 5.3. Nonconsensual Confirmation. . . . . . . . . 16 5.4. Severability of Plan of Reorganization . . 17 5.5. Revocation of Plan of Reorganization . . . 17 SECTION 6. MEANS OF IMPLEMENTATION . . . . . . . . . . 17 6.1. Closing of Transaction . . . . . . . . . . 17 6.2. Dismissal of Derivative Securities Litigation Claims. . . . . . . . . . . . . 18 6.3. Board of Directors . . . . . . . . . . . . 18 6.4. Officers of the Reorganized Debtors . . . . 18 SECTION 7. PROVISIONS GOVERNING DISTRIBUTIONS . . . . 19 7.1. Date of Distributions . . . . . . . . . . . 19 7.2. Entities to Exercise Function of Disbursing Agent . . . . . . . . . . . . . . . . . . . 19 7.3. Surrender and Cancellation of Instruments . 19 7.4. Delivery of Distributions . . . . . . . . . 20 7.5. Manner of Payment Under Plan of Reorganization . . . . . . . . . . . . . . 20 7.6. Distributions After Consummation Date . . . 20 7.7. Rights And Powers Of Disbursing Agent . . . 20 (a) Powers of the Disbursing Agent. . . . 20 (b) Expenses Incurred on or After the Consummation Date. . . . . . . . . . . 20 (c) Exculpation. . . . . . . . . . . . . . 21 SECTION 8. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER THE PLAN OF REORGANIZATION . . . . . . . . 21 8.1. Objections to Claims . . . . . . . . . . . 21 8.2. No Distributions Pending Allowance . . . . 21 8.3. Distributions After Allowance . . . . . . . 22 SECTION 9. PROVISIONS GOVERNING EXECUTORY CONTRACTS AND UNEXPIRED LEASES UNDER THE PLAN . . . . 22 9.1. General Treatment . . . . . . . . . . . . . 22 9.2. Amendments to Schedule; Effect of Amendments . . . . . . . . . . . 23 9.3. Effect of Rejection . . . . . . . . . . . . 23 9.4. Bar to Rejection Damage . . . . . . . . . . 23 SECTION 10. CONDITIONS PRECEDENT TO CONFIRMATION DATE AND CONSUMMATION DATE . . . . . . . . 24 10.1. Conditions Precedent to Confirmation of Plan of Reorganization . . . . . . . . . . 24 10.2. Conditions Precedent to Consummation Date of Plan of Reorganization . . . . . . 24 10.3. Waiver of Conditions Precedent . . . . . . 25 SECTION 11. EFFECT OF CONFIRMATION . . . . . . . . . . 25 11.1. General Authority . . . . . . . . . . . . . 25 11.2. Discharge of Debtors . . . . . . . . . . . 25 11.3. Injunction . . . . . . . . . . . . . . . . 26 11.4. Term of Injunctions or Stays . . . . . . . 26 11.5. Indemnification Obligations . . . . . . . . 26 SECTION 12. RELEASES AND WAIVER OF CLAIMS . . . . . . . 27 12.1. General Release of Releasees . . . . . . . 27 12.2. Release from Claims and Liabilities . . . . 27 12.3. Avoidance Actions. . . . . . . . . . . . . 29 SECTION 13. CREDITORS' COMMITTEE . . . . . . . . . . . 29 13.1. Dissolution of Creditors' Committee . . . . 29 13.2. Exculpation . . . . . . . . . . . . . . . . 29 SECTION 14. RETENTION OF JURISDICTION . . . . . . . . . 30 14.1. Retention of Jurisdiction . . . . . . . . . 30 14.2. Amendment of Plan of Reorganization . . . . 31 SECTION 15. MISCELLANEOUS PROVISIONS . . . . . . . . . 32 15.1. Payment of Statutory Fees . . . . . . . . . 32 15.2. Retiree Benefits . . . . . . . . . . . . . 32 15.3. Compliance with Tax Requirements . . . . . 32 15.4. Recognition of Guarantee Rights . . . . . . 32 15.5. Severability of Plan Provisions . . . . . . 33 15.6. Governing Law . . . . . . . . . . . . . . . 33 15.7. Notices . . . . . . . . . . . . . . . . . . 33 LIST OF EXHIBITS AND SCHEDULES Exhibit A - Acquisition Agreement Exhibits B-1-B-5 - Term Sheets Relating to Existing Credit Agreements Amendments Schedule 1.15 - Class Securities Litigation Claims Schedule 1.24 - Derivative Securities Litigation Claims Schedule 9.1 - Certain Executory Contracts and Unexpired Leases SCHEDULE 1.15 CLASS SECURITIES LITIGATION CLAIMS SCHEDULE 1.24 DERIVATIVE SECURITIES LITIGATION CLAIMS SCHEDULE 9.1 SCHEDULE OF EXECUTORY CONTRACTS (To be Supplied) EXHIBIT A ACQUISITION AGREEMENT EXHIBIT B TERM SHEETS RELATING TO EXISTING CREDIT AGREEMENT AMENDMENTS - ---------------------- EXHIBIT B FORM OF REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT dated as of December [ ], 1996, between Andrews Group Incorporated ("Andrews") and Marvel Entertainment Group, Inc. (the "Company"). WHEREAS, the Company has executed on December [ ], 1996 a Stock Purchase Agreement by and between Andrews and the Company (the" Stock Purchase Agreement"), as part of the Company's Plan of Reorganization; WHEREAS, the Stock Purchase Agreement contemplates that the Company will sell and Andrews will purchase that number of newly issued shares (the "Shares") of Common Stock of the Company, on the terms and subject to the conditions set forth in the Stock Purchase Agreement such that upon issuance and after giving effect to the terms of the Company's Plan of Reorganization and all distributions thereunder, the Shares constitute 80.8% of the outstanding Common Stock of the Company. WHEREAS, in order to induce Andrews to consummate into the Stock Purchase Agreement, the Company has agreed to provide registration rights with respect to the Shares. 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 the mutual covenants and agreements herein contained, the parties to this Agreement hereby agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Holder" means Andrews and any other person that owns Registrable Securities, including their respective successors and assigns who acquire Registrable Securities, directly or indirectly, from Andrews or such other person. For purposes of this Agreement, the Company may deem and treat the registered holder of a Registrable Security as the Holder and absolute owner thereof, and the Company shall not be affected by any notice to the contrary. "Plan of Reorganization" means the Company's plan of reorganization pursuant to Chapter 11 of the United States Bankruptcy Code. "Registrable Securities" means (a) the Common Stock owned by Andrews upon consummation of the Stock Purchase Agreement, (b) any Common Stock acquired by Andrews in the open market at a time when Andrews is deemed to be an Affiliate (as such term is defined under Rule 144 under the Securities Act) of the Company so long as (i) such Common Stock has not been transferred by Andrews to a person that is not a Permitted Transferee (as such term is defined in the Certificate of Incorporation of the Company) and (ii) Andrews or such Permitted Transferee continues to be deemed an Affiliate of the Company, and (c) any securities issued or issuable in respect of the Common Stock referred to in clauses (a) and (b) above, by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger or consolidation, and any other securities issued pursuant to any other pro rata distribution with respect to such Common Stock. For purposes of this Agreement, a Registrable Security ceases to be a Registrable Security when (x) it has been effectively registered under the Securities Act and sold or distributed to the public in accordance with an effective registration statement covering it (and has not been reacquired in the manner described in clause (b) above), or (y) it is sold or distributed to the public pursuant to Rule 144 (or any successor or similar provision) under the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended from time to time. 2. Demand Registration. (a) Subject to Section 5 hereof, if at any time any Holder shall request the Company in writing to register under the Securities Act all or a part of the Registrable Securities held by such Holder (a "Demand Registration"), the Company shall use all reasonable efforts to cause to be filed and declared effective as soon as reasonably practicable a registration statement, on such appropriate form as the Company in its discretion shall determine, providing for the sale of all such Registrable Securities by such Holder. The Company agrees to use its best efforts to keep any such registration statement continuously effective and usable for resale of Registrable Securities for so long as the Holder whose Registrable Securities are included therein shall request. The Company shall be obligated to file registration statements pursuant to this Section 2(a) until all Registrable Securities have ceased to be Registrable Securities. Each registration statement filed pursuant to this Section 2(a) is hereinafter referred to as a "Demand Registration Statement." (b) The Company agrees (i) not to effect any public or private sale, distribution or purchase of any of its securities which are the same as or similar to the Registrable Securities, including a sale pursuant to Regulation D under the Securities Act, during the 15-day period prior to, and during the 45-day period beginning on, the closing date of each underwritten offering under any Demand Registration Statement, and (ii) to use reasonable best efforts to cause each holder of its securities purchased from the Company, at any time on or after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution of any such securities during such period, including a sale pursuant to Rule 144 under the Securities Act. (c) The Company may postpone for a reasonable period of time, not to exceed 30 days, the filing or the effectiveness of any Demand Registration Statement if the Board of Directors of the Company in good faith determines that (A) such registration might have a material adverse effect on any plan or proposal by the Company with respect to any financing, acquisition, recapitalization, reorganization or other material transaction, or (B) the Company is in possession of material non-public information that, if publicly disclosed, could result in a material disruption of a major corporate development or transaction then pending or in progress or in other material adverse consequences to the Company. (d) If at any time any Holder of Registrable Securities to be covered by a Demand Registration Statement desires to sell Registrable Securities in an underwritten offering, such Holder shall have the right to select any nationally recognized investment banking firm(s) to administer the offering, subject to the approval of the Company, which approval shall not be unreasonably withheld, and the Company shall enter into underwriting agreements with the underwriter(s) of such offering, which agreements shall contain such representations and warranties by the Company, and such other terms, conditions and indemnities as are at the time customarily contained in underwriting agreements for similar offerings. 3. Incidental Registration. Subject to Section 5 hereof and the other terms and conditions set forth in this Section 3, if the Company proposes at any time to register any shares of Common Stock (the "Initially Proposed Shares") under the Securities Act for sale, whether or not for its own account, pursuant to an underwritten offering, the Company will promptly give written notice to the Holders of its intention to effect such registration (such notice to specify, among other things, the proposed offering price, the kind and number of securities proposed to be registered and the distribution arrangements, including identification of the underwriter(s)), and the Holders shall be entitled to include in such registration statements, as a part of such underwritten offering, such number of shares (the "Holder Shares") to be sold for the account of the Holders (on the same terms and conditions as the Initially Proposed Shares) as shall be specified in a request in writing delivered to the Company within 15 days after the date upon which the Company gave the aforementioned notice. The Company's obligations to include Holder Shares in a registration statement pursuant to this Section 3 is subject to each of the following limitations, conditions and qualifications: (i) If, at any time after giving written notice of its intention to effect a registration of any of its shares of Common Stock and prior to the effective date of any registration statement filed in connection with such registration, the Company shall determine for any reason not to register all of such shares, the Company may, at its election, give written notice of such determination to the Holders and thereupon it shall be relieved of its obligation to use any efforts to register any Holder Shares in connection with such aborted registration. (ii) If, in the opinion of the managing underwriter(s) of such offering, the distribution of all or a specified portion of the Holder Shares would materially interfere with the registration and sale, in accordance with the intended method thereof, of the Initially Proposed Shares, then the number of Holder Shares to be included in such registration statement shall be reduced to such number, if any, that, in the opinion of such managing underwriter(s), can be included without such interference. If, as a result of the cutback provisions of the preceding sentence, the Holders are not entitled to include all of the Holder Shares in such registration, such Holders may elect to withdraw their request to include Holder Shares in such registration (a "Withdrawal Election"). If the Company shall so request in writing, each Holder agrees not to effect any public or private sale or distribution of any Registrable Securities (other than the Holder Shares) during the 15-day period prior to and during the 45-day period beginning on, the closing date of any underwritten public offering of shares of Common Stock made for the Company's own account. 4. Registration Procedures. (a) Whenever the Company is required to use all reasonable efforts to effect the registration of any Registrable Securities under the Securities Act pursuant to the terms and conditions of Section 2(a) or 3 (such Registrable Securities being hereinafter referred to as "Subject Shares"), the Company will use all reasonable efforts to effect the registration and sale of the Subject Shares in accordance with the intended method of disposition thereof. Without limiting the generality of the foregoing, the Company will as soon as practicable: (i) prepare and file with the Securities and Exchange Commission (the "SEC") a registration statement with respect to the Subject Shares in form and substance satisfactory to the Holders of the Subject Shares, and use all reasonable efforts to cause such registration statement to become effective as soon as possible; (ii) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the applicable period and to comply with the provisions of the Securities Act with respect to the disposition of all Subject Shares and other securities covered by such registration statement; (iii) furnish the Holders covered by such registration statement, without charge, such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus), such documents incorporated by reference in such registration statement or prospectus, and such other documents, as such Holders may reasonably request; (iv) use all reasonable efforts to register or qualify the Subject Shares covered by such registration statement under the securities or blue sky laws of such jurisdictions as the managing underwriter(s) shall reasonably recommend, and do any and all other acts and things which may be reasonably necessary or advisable to enable the Holders to consummate the disposition in such jurisdictions of the Subject Shares covered by such registration statement, except that the Company shall not for any such purpose be required to (A) qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, (B) subject itself to taxation in any jurisdiction wherein it is not so subject, or (C) consent to general service of process in any such jurisdiction or otherwise take any action that would subject it to the general jurisdiction of the courts of any jurisdiction in which it is not so subject; (v) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC; (vi) furnish, at the Company's expense, unlegended certificates representing ownership of the securities being sold in such denominations as shall be requested and instruct the transfer agent to release any stop transfer orders with respect to the Subject Shares being sold; (vii) notify each Holder at any time when a prospectus relating to the Subject Shares is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such Registration Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the prospectus or any preliminary prospectus, in light of the circumstances under which they were made) not misleading, and the Company will, as promptly as practicable thereafter, prepare and file with the SEC and furnish a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of Subject Shares such prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (viii) enter into customary agreements (including an underwriting agreement in customary form in the case of an underwritten offering) and make such representations and warranties to the sellers and underwriter(s) as in form and substance and scope are customarily made by issuers to underwriters in underwritten offerings and take such other actions as the Holders or the managing underwriter(s) or agent, if any, reasonably require in order to expedite or facilitate the disposition of such Subject Shares; (ix) make available for inspection by the Holders, any underwriter or agent participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other similar professional advisor retained by any such holders or underwriter (collectively the "Inspectors"), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with such Registration Statement. The Holders agree that Records and other information which the Company determines, in good faith, to be confidential and of which determination the Inspectors are so notified shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena, court order or regulatory or agency request or (iii) the information in such Records has been generally disseminated to the public. Each Holder agrees that it will, upon learning that disclosure of such Record is sought in a court of competent jurisdiction or by a governmental agency, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential; (x) obtain for delivery to the Company, the underwriter(s) or their agent, with copies to the Holders, a "cold comfort" letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by "cold comfort" letters as the Holders or the managing underwriter(s) reasonably request; (xi) obtain for delivery to the Holders and the underwriter(s) or their agent an opinion or opinions from counsel for the Company in customary form and reasonably satisfactory to the Holder, underwriters or agents and their counsel; (xii) make available to its security holders earnings statements, which need not be audited, satisfying the provisions of Section ll(a) of the Securities Act no later than 90 days after the end of the 12-month period beginning with the first month of the Company's first quarter commencing after the effective date of the Registration Statement, which earnings statements shall cover said 12-month period; (xiii) make every reasonable effort to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the effectiveness of such registration statement at the earliest possible moment; (xiv) cause the Subject Shares to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary to enable the sellers thereof or the underwriters(s), if any, to consummate the disposition of such Subject Shares; (xv) cooperate with the Holders and the managing underwriter(s), if any, or any other interested party (including any interested broker-dealer) in making any filings or submission required to be made, and the furnishing of all appropriate information in connection therewith, with the National Association of Securities Dealers, Inc. ("NASD"); (xvi) cause its subsidiaries to take action necessary to effect the registration of the Subject Shares contemplated hereby, including filing any required financial information; (xvii) effect the listing of the Subject Shares on the New York Stock Exchange or such other national securities exchange or over-the-counter market on which shares of the Common Stock shall then be listed; and (xviii) take all other steps necessary to effect the registration of the Subject Shares contemplated hereby. (b) The Holders shall provide (in writing and signed by the Holders and stated to be specifically for use in the related registration statement, preliminary prospectus, prospectus or other document incident thereto) all such information and materials and take all such action as may be required in order to permit the Company to comply with all applicable requirements of the SEC and any applicable state securities laws and to obtain any desired acceleration of the effective date of any registration statement prepared and filed by the Company pursuant to this Agreement. (c) The Holders shall, if requested by the Company or the managing underwriter(s) in connection with any proposed registration and distribution pursuant to this Agreement, (i) agree to sell the Subject Shares on the basis provided in any underwriting arrangements entered into in connection therewith and (ii) complete and execute all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents customary in similar offerings. (d) Upon receipt of any notice from the Company that the Company has become aware that the prospectus (including any preliminary prospectus) included in any registration statement filed pursuant to Section 2(a) or 3, as then in effect, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, the Holders shall forthwith discontinue disposition of Subject Shares pursuant to the registration statement covering the same until the Holders' receipt of copies of a supplemented or amended prospectus and, if so directed by the Company, deliver to the Company (at the Company's expense) all copies other than permanent file copies then in the Holder's possession, of the prospectus covering the Subject Shares that was in effect prior to such amendment or supplement. (e) The Holders shall pay all out-of-pocket expenses incurred in connection with any Demand Registration Statements filed pursuant to Section 2(a) of this Agreement, including, without limitation, all SEC and blue sky registration and filing fees (including NASD fees), printing expenses, transfer agents and registrars' fees, underwriting discounts, commissions and expenses attributable to securities sold for the account of the Holders pursuant to such registration statement, fees and disbursements of the Company's counsel and accountants and fees and disbursements of experts used by the Company in connection with such registration statement. The Company shall pay any such out-of-pocket expenses incurred in connection with any registration statement filed pursuant to Section 3 of this Agreement, except that the Holders shall pay all underwriting discounts, commissions and expenses attributable to the Subject Shares sold pursuant to any such registration statement. (f) In connection with any sale of Subject Shares that are registered pursuant to this Agreement, the Company and the Holders shall enter into an agreement providing for indemnification of the Holders by the Company, and indemnification of the Company by the Holders, on terms customary for such agreements at that time (it being understood that any disputes arising as to what is customary shall be resolved by counsel to the underwriter(s)). 5. Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or delivery by telex (with correct answerback received), telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the third business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: If to the Company, to: Marvel Entertainment Group, Inc. 387 Park Avenue South New York, New York 10016 Attention: General Counsel Telecopy: (212) 576-9346 If to Andrews, to: Andrews Group Incorporated 3200 Windy Hill Road Atlanta, Georgia 30339 Attention: General Counsel Telecopy: 770-563-9610 With a copy to: MacAndrews & Forbes Holdings Inc. 35 East 63rd Street New York, New York 10021 Attention: Barry F. Schwartz Telecopy: (212) 572-5056 If to any other Holder, to such name at such address as such Holder shall have indicated in a written notice delivered to the other parties to this Agreement. Any party hereto may from time to time change its address for notices under this Section 5 by giving at least 10 days' notice of such changes to the other parties hereto. 6. Waivers. No waiver by any party of any default with respect to any provision, condition or requirement hereof shall be deemed to be a continuing waiver in the future thereof or a waiver of any other provision, condition or requirement hereof; nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. 7. Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 8. Successors and Assigns; Amendments. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns, including without limitation and without the need for an express assignment each subsequent Holder of any Registrable Securities. Except as provided in this Section 8, neither the Company nor any Holder shall assign this Agreement or any rights hereunder without the prior written consent of the other parties hereto. The assignment by a party of this Agreement or any rights hereunder shall not affect the obligations of such party hereunder. This Agreement may not be amended except by a written instrument executed by the parties hereto. 9. No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 10. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware without regard to the principles of conflicts of laws. 11. Entire Agreement. This Agreement contains the entire agreement of the parties hereto in respect of the subject matter hereof and supersedes all prior agreements and understandings between the parties with respect to the subject matter hereof. 12. Execution. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date hereof. MARVEL ENTERTAINMENT GROUP, INC. By: Name: Title: ANDREWS GROUP INCORPORATED By: Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----