-----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, LJYcRSiI39+dQ33m8YAO/l4wg1bsdMYxL+orRnFHfn9mgHfJWt/AhBmhWb4QkQme LLmcrQRYEQZvatTvk5/C1g== 0000895421-98-000196.txt : 19981030 0000895421-98-000196.hdr.sgml : 19981030 ACCESSION NUMBER: 0000895421-98-000196 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19981029 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MARVEL ENTERPRISES INC CENTRAL INDEX KEY: 0000933730 STANDARD INDUSTRIAL CLASSIFICATION: DOLLS & STUFFED TOYS [3942] IRS NUMBER: 133711775 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-47191 FILM NUMBER: 98732735 BUSINESS ADDRESS: STREET 1: 685 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126824700 MAIL ADDRESS: STREET 1: 685 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: TOY BIZ INC DATE OF NAME CHANGE: 19941213 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER & CO CENTRAL INDEX KEY: 0000895421 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 363145972 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1585 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2127614000 MAIL ADDRESS: STREET 1: 1585 BROADWAY STREET 2: 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: DEAN WITTER DISCOVER & CO DATE OF NAME CHANGE: 19960315 SC 13D/A 1 SCHEDULE 13D ------------------------------------------- OMB APPROVAL ------------------------------------------- OMB Number: Expires: Estimated average burden hours per form................... ------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No.____________) Marvel Enterprises Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 57383M108 - -------------------------------------------------------------------------------- (CUSIP Number) Bruce Bromberg Morgan Stanley Dean Witter & Co. 1585 Broadway New York, NY 10036 (212) 761-4000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 19, 1998 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement of Schedule 13G to report the acquisition which is the subject of the Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with this statement [X]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filed out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following page(s)) Cusip No. 57383M108 13D Page 2 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Morgan Stanley Dean Witter & Co. IRS #39-314-5972 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [x] - -------------------------------------------------------------------------------- 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 The state of organization is Delaware. - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY -------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER ** EACH 5,470,622 REPORTING -------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 5,470,622 - ---=---------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,470,622 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.09% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA, CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! ** Morgan Stanley & Co. Incorporated, a wholly owned subsidiary of the Reporting Person, has executed a Stockholders' Agreement where shared voting power with the signatories will equal 33,001,201 shares, or 71% of the issuer. Cusip No. 57383M108 13D Page 3 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON(S) S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON(S) Morgan Stanley & Co. Incorporated IRS # 13-265-5996 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [x] - -------------------------------------------------------------------------------- 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 The state of organization is Delaware. - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY -------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER ** EACH 4,020,792 REPORTING -------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,020,792 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,020,792 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.09% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* BD, CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! ** The Reporting Person has executed a Stockholders' Agreement where shared voting power with the signatories will equal 33,001,201 shares, or 71% of the issuer. Cusip No. 57383M108 13D Page 4 Item 1. Security and Issuer The class of equity securities to which this statement relates is the common shares (the "Common Shares"), of Marvel Enterprises Inc., a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 685 Third Avenue, New York, NY 10017. Item 2. Identity and Background (a) Morgan Stanley Dean Witter & Co. is (e) an Investment Adviser registered under Section 203 of the Investment Advisers Act of 1940. (b) Morgan Stanley & Co., Incorporated is (a) a Broker Dealer registered under section 15 of the Securities Exchange Act of 1934. Item 3. Source and Amount of Funds or Other Consideration The common shares were received in connection with the reorganization under Chapter 11 of Marvel Entertainment Group, Inc.. Morgan Stanley & Co. Incorporated and Morgan Stanley Dean Witter & Co., or funds managed by units thereof, were senior lenders to Marvel Entertainment Group, Inc. and received the common shares in exchange for the loans. Item 4. Purpose of Transaction See Item 3 above. Item 5. Interest in Securities of the Issuer Once the Stockholder's Agreement is executed the Reporting Persons may be deemed to beneficially own an aggregate of 33,002,000 shares of Common Stock, representing approximately 71% of the outstanding Common Stock as members of the 13(d) Group (as defined below). To the best of the Reporting Persons' knowledge, Avi Arad own 4,150,000 shares of Common Stock; the Dickstein Entities (consisting of Dickstein & Co., L.P., Dickstein Focus Fund L.P., Dickstein International Limited, Elyssa Dickstein, Jeffrey Schwarz and Alan Cooper as Trustees U/T/A/D 12/27/88, Mark Dickstein, Grantor, Mark Dickstein and Elyssa Dickstein, as Trustees of The Mark and Elyssa Dickstein Foundation and Elyssa Dickstein) own 2,315,188 shares of Common Stock and 3,658,061 shares of Preferred Stock; the Perlmutter Entities (consisting of Isaac Perlmutter, Isaac Perlmutter T.A., The Laura & Isaac Perlmutter Foundation, Inc., Object Trading Corp., Zib Inc.) own 9,539,500 shares of Common Stock and 3,492,852 shares of Preferred Stock (the Perlmutter Entities together with Avi Arad and the Dickstein Entities, the "Investor Group"), Whippoorwill Associates, Incorporated ("Whippoorwill") owns 1,350,404 shares of Common Stock and 2,021,581 shares of Preferred Stock, which numbers exclude 74,384 shares of Common Stock and 44,857 shares of Preferred Stock owned by Whippoorwill that are not subject to the Stockholders' Agreement (as defined herein), and Chase Manhattan Bank ("CMB") owns 1,288,778 shares of Common Stock and 777,202 shares of Preferred Stock, (the Reporting Person, Whippoorwill and CMB together, the "Lender Group," and collectively with the Investor Group and the Reporting Person, the "13(d) Group"). The above information with respect to each of the members of the 13(d) Group, other than with respect to the Reporting Persons, was provided by the respective member of the 13(d) Group and was not independently verified by the Reporting Persons. The Reporting Persons do not have any pecuniary interest nor do they have any dispositive power over the shares of Capital Stock owned by the other members of the 13(d) Group. Morgan Stanley & Co. Incorporated is a party to the Stockholders' Agreement and reference is made to Item 7 with respect to the terms thereof. The Reporting Persons may be deemed to share power to vote or direct the vote with respect to all the shares of Capital Stock owned by the other members of the 13(d) Group solely as a result of Morgan Stanley & Co. Incorporated's participation in the Stockholders' Agreement. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Pursuant to the proposed Stockholders Agreement, Morgan Stanley & Co. Incorporated and Morgan Stanley Dean Witter & Co., or units thereof, ("MSDW") are part of a group of shareholders which has agreed to vote as a group for Board members and committee memberships of the Issuer. Morgan Stanley & Co. Incorporated has designated an employee to be elected as a member of the Board of the Issuer. Item 7. Material to be Filed as Exhibits Exhibit "3" - Stockholders agreement Cusip No. 57383M108 13D Page 5 Signature. After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: October 29, 1998 Signature: /s/ Bruce Bromberg ----------------------------------------------------------------- Name/Title Bruce Bromberg / Vice President Morgan Stanley & Co., Incorporated ----------------------------------------------------------------- MORGAN STANLEY DEAN WITTER & CO. Date: October 29, 1998 Signature: /s/ Bruce Bromberg ----------------------------------------------------------------- Name/Title Bruce Bromberg / Vice President Morgan Stanley & Co., Incorporated ----------------------------------------------------------------- MORGAN STANLEY & CO., INCORPORATED INDEX TO EXHIBITS PAGE ----------------- ---- EXHIBIT 1 Agreement to Make a Joint Filing 6 EXHIBIT 2 Secretary's Certificate Authorizing Bruce Bromberg 7 to Sign on behalf of Morgan Stanley Dean Witter & Co. EXHIBIT 3 Stockholders' Agreement 8 * Attention. Intentional misstatements or omissions of fact constitute federal criminal violations (see 18 U.S.C. 1001). (022597DTI) EX-99 2 JOINT FILING AGREEMENT CUSIP No. 57383M108 13D Page 6 EXHIBIT 1 TO SCHEDULE 13D --------------------------------------------------- OCTOBER 29, 1998 --------------------------------------------------- MORGAN STANLEY DEAN WITTER & CO. and MORGAN STANLEY & CO., INCORPORATED hereby agree that, unless differentiated, this Schedule 13D is filed on behalf of each of the parties. MORGAN STANLEY DEAN WITTER & CO. BY: /s/ Bruce Bromberg -------------------------------------------------------------------- Bruce Bromberg / Vice President Morgan Stanley & Co., Incorporated MORGAN STANLEY & CO., INCORPORATED BY: /s/ Bruce Bromberg -------------------------------------------------------------------- Bruce Bromberg / Vice President Morgan Stanley & Co., Incorporated * Attention. Intentional misstatements or omissions of fact constitute federal criminal violations (see 18 U.S.C. 1001). EX-99 3 SECRETARY'S CERTIFICATE PAGE 7 EXHIBIT 2 MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. SECRETARY'S CERTIFICATE I, Charlene R. Herzer, a duly elected and acting Assistant Secretary of Morgan Stanley, Dean Witter, Discover & Co., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), certify that as approved by a Unanimous Consent of Directors in Lieu of a Meeting dated as of May 31, 1997, the following persons are each authorized to sign reports to be filed under Sections 13 and 16 of the Securities Exchange Act of 1934 on behalf of the Corporation, and such authorizations are in full force and effect as of this date: Stuart J.M. Breslow Robert G. Koppenol Bruce Bromberg Robin Sherak IN WITNESS WHEREOF, I have hereunto set my name and affixed the seal of the Corporation as of the 3rd day of June, 1997. /s/ Charlene R. Herzer ------------------------ Charlene R. Herzer Assistant Secretary (120496DTI) EX-99 4 STOCKHOLDERS' AGREEMENT PAGE 8 EXHIBIT 3 STOCKHOLDERS' AGREEMENT STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of October 1, 1998 among Avi Arad ("Arad"); the various Dickstein entities and individuals listed on the signature pages hereto (the "Dickstein Entities"); Isaac Perlmutter ("Perlmutter"); Isaac Perlmutter T.A., a Florida trust (the "Trust"); the Laura & Isaac Perlmutter Foundation Inc., a Florida corporation (the "Foundation"); Object Trading Corp., a Delaware corporation ("Object Trading"); Zib Inc., a Delaware corporation ("Zib" and together with Perlmutter, the Trust, the Foundation, and Object Trading, the "Perlmutter Entities"; the Perlmutter Entities together with Arad, the "Perlmutter/Arad Group"; the Perlmutter/Arad Group together with the Dickstein Entities, the "Investor Group"); The Chase Manhattan Bank ("Chase"); Morgan Stanley & Co. Incorporated ("Morgan Stanley"); Whippoorwill Associates, Incorporated, as agent for or general partner of each institution (a "Whippoorwill Account") set forth on Schedule 1 (collectively, "Whippoorwill"); and Toy Biz, Inc., a Delaware corporation (the "Company"). Each of Chase, Morgan Stanley and each Whippoorwill Account shall be a "Secured Lender" for so long as each remains bound hereby, and all Secured Lenders bound hereby shall collectively constitute, the "Lender Group"). The Secured Lenders are some of the "Secured Lenders" referred to in the Fourth Amended Joint Plan of Reorganization Proposed by those "Secured Lenders" and the Company in the bankruptcy matter of In Re: Marvel Entertainment Group, Inc. et al. (case No. 97-638-RRM) in the United States District Court for the District of Delaware (the "Plan"); and all of the "Secured Lenders" as that term 674683.23 1 is defined more broadly in the Plan (other than any Dickstein Entity or any of its Affiliates) are referred to in this Agreement collectively as the "Plan Secured Lender Group". W I T N E S S E T H WHEREAS, the Perlmutter Entities, Arad and the Dickstein Entities will own shares of common stock, par value $.01 per share, of the Company (the "Common Stock"), and the Perlmutter Entities and the Dickstein Entities will own shares of 8% Cumulative Convertible Exchangeable Preferred Stock of the Company (the "Preferred Stock"; together with the Common Stock and any other security of the Company which is then currently convertible or exchangeable for Common Stock without the payment of additional consideration, the "Capital Stock"), immediately after the consummation of the Plan; WHEREAS, immediately after the consummation of the Plan, the Secured Lenders will own shares of Common Stock and Preferred Stock; WHEREAS, pursuant to the Plan, the Board of Directors of the Company (the "Board") shall consist of eleven (11) Directors, six (6) of whom, subject to Section 2.2 hereof, are to be designated by the Investor Group (the "Investor Group Designees"), and five (5) of whom, subject to Section 2.2 hereof, are to be designated by the Lender Group (the "Lender Group Designees"); provided, that unless and until the occurrence of a Dickstein Forfeiture Event, one (1) of the Investor Group Designees is to be designated by the Dickstein Entities (the "Dickstein Designee"); 674683.23 2 WHEREAS, each of the parties hereto desires to enter into this Agreement in order to set forth certain provisions regarding the management of the Company. NOW, THEREFORE, in consideration of the mutual agreements and covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated: "Affiliate" and "Affiliated" shall have the meanings set forth in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and any successor regulation thereto. "Agreement" shall have the meaning set forth in the Preamble hereto. "Arad" shall have the meaning set forth in the Preamble hereto. "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, and any successor regulation thereto; provided that, a person shall not be deemed to be a Beneficial Owner of a security merely because that person has the right to acquire Beneficial Ownership of that security if that right may be exercised only upon the payment of consideration (other than solely by conversion or exchange of Capital Stock) nor shall a person be deemed to be a Beneficial Owner of a security merely because of the provisions of this Agreement. For the purposes of this definition, "Beneficial Ownership" and "Beneficially Own" shall refer to the ownership interest of a Beneficial Owner. With respect to Whippoorwill, "Beneficially Owned" shall mean only such Capital 674683.23 3 Stock Beneficially Owned by Whippoorwill Accounts with respect to which Whippoorwill Associates, Incorporated has the power to direct the vote. "Board" shall have the meaning set forth in the Preamble hereto. "Capital Stock" shall have the meaning set forth in the Recitals hereto. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Equivalent Shares" Beneficially Owned by any person shall mean the number of shares of Common Stock Beneficially Owned by such person. "Common Stock" shall have the meaning set forth in the Recitals hereto, together with any other security of the Company for which the Common Stock shall have been exchanged in any recapitalization or similar transaction. "Designee" and "Designees" shall have the meaning set forth in Section 2.1(a) hereof. "Dickstein Designator" shall mean Mark Dickstein or, upon the death or other incapacity of Mark Dickstein, Elyssa Dickstein or, upon the death or other incapacity of Elyssa Dickstein, such other person identified by Dickstein Partners Inc. by written notice to the Secretary of the Company. "Dickstein Designee" shall have the meaning set forth in the Recitals hereto. "Dickstein Entities" shall have the meaning set forth in the Preamble hereto. "Dickstein Forfeiture Event" shall mean a decrease in the Dickstein Entities' Beneficial Ownership of Capital Stock to less than 1,500,000 Common Equivalent Shares, calculated in accordance with Section 2.4 hereof and appropriately adjusted for any stock splits, reverse stock splits, recapitalization of the Capital Stock or capital transaction of a similar nature. "Director" shall mean a member of the Board of Directors of the Company. 674683.23 4 "Effective Date" shall mean the date on which the Agreement becomes effective in accordance with Section 4.1 hereof. "Election Meeting" shall have the meaning set forth in Section 2.1(b) hereof. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Independent Director" shall mean either Investor Group Designees or Lender Group Designees who satisfy the requirements of Paragraph 303.00 of the New York Stock Exchange Listed Company Manual (or any successor provision) and who are (a) "non-employee directors" or any related successor concepts under Rule 16b-3 (or any successor provision) promulgated pursuant to Section 16 of the Exchange Act, and (b) "outside directors" or any related successor concepts under Section 162(m) (or any successor provision) of the Code. "Investor Group" shall have the meaning set forth in the Recitals hereto. "Investor Group Designator" shall mean Isaac Perlmutter until his death, disability or resignation. The person serving at any time as Investor Group Designator shall have the right to appoint (or to change), by written notice to the Secretary of the Company, a successor Investor Group Designator who shall become the Investor Group Designator upon the death, disability, or resignation of the Investor Group Designator. "Investor Group Designee" shall have the meaning set forth in the Recitals hereto. "Lender Group" shall have the meaning set forth in the Preamble hereto. "Lender Group Designator" shall mean (i) with respect to the initial configuration of the Board following the Effective Time, a subcommittee of the Lender Group consisting of Chase, Morgan Stanley and Whippoorwill, and (ii) thereafter, any one or more Secured Lenders that Beneficially Own a majority of the Common Equivalent Shares Beneficially 674683.23 5 Owned by the Lender Group; provided however that, whenever the Company is required to deliver a notice under this Agreement to the Lender Group Designator, such notice shall be delivered to Morgan Stanley, and Morgan Stanley shall promptly deliver a copy thereof to each other Secured Lender still bound hereby. "Lender Group Designee" shall have the meaning set forth in the Preamble hereto. "Notice of Designee" shall have the meaning set forth in Section 2.1(b) hereof. "Perlmutter Entities" shall have the meaning set forth in the Preamble hereto. "Perlmutter/Arad Group" shall have the meaning set forth in the Preamble hereto. "Plan" shall have the meaning set forth in the Recitals hereto. "Plan Secured Lender Group" shall have the meaning set forth in the Preamble hereto. "Preferred Stock" shall have the meaning set forth in the Recitals hereto, together with any other security of the Company for which the Preferred Stock shall have been exchanged in any recapitalization or similar transaction. "Secured Lenders" shall have the meaning set forth in the Preamble hereto. "Stockholder Group Designators" shall mean the Investor Group Designator, the Lender Group Designator and the Dickstein Designator. "Stockholder Groups" shall mean the Investor Group, the Lender Group and the Dickstein Entities. "Whippoorwill Account" shall have the meaning set forth in the Preamble. 674683.23 6 ARTICLE II MANAGEMENT Section 2.1. Board Representation. (a) Subject to Section 2.2 hereof, at and following the Effective Date, each party to this agreement will take such action as may reasonably be in its power to cause the Board to include (i) six (6) Investor Group Designees, one (1) of whom, unless and until a Dickstein Forfeiture Event has occurred, shall be the Dickstein Designee, and (ii) five (5) Lender Group Designees. The Investor Group Designees (including the Dickstein Designee) and the Lender Group Designees are sometimes collectively referred to herein as the "Designees" and individually as a "Designee." (b) (i) The Investor Group Designator, the Lender Group Designator and the Dickstein Designator shall each give the Company timely notice (the "Notice of Designee") of the name of each person whom the relevant Stockholder Group wishes to be nominated by the Company for election or re-election to the Board at the next meeting of stockholders, or taking of action by written consent of stockholders, at which Directors are to be elected (an "Election Meeting"). At the option of any Stockholder Group Designator, the Notice of Designee may also specify one or more alternates (an "Alternate Designee") to serve in the event of the incapacity or other inability to serve of a Designee, as provided herein. The Investor Group Designees and the Lender Group Designees shall at all times include such number of Independent Directors as shall be required to comply with the provisions of Sections 2.3(b) and 674683.23 7 2.3(c) hereof. Each Notice of Designee shall be in writing and shall be timely if delivered to the Secretary of the Company at the Company's principal executive offices not later than the close of business on the 60th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the Election Meeting is more than 30 days before or after such anniversary date, the Notice of Designee to be timely must be so delivered not later than the later of (x) the close of business on the later of the 60th day prior to the Election Meeting and (y) the 20th day following the day on which public announcement of the date of the Election Meeting is first made by the Company. In no event shall the public announcement of an adjournment of an Election Meeting commence a new time period for the giving of the Notice of Designee as described above. If the Company has not received a Notice of Designee from any Stockholder Group Designator at a time when the relevant Stockholder Group is entitled to name one or more Designee on or before the 10th day before the latest date for delivery of the Notice of Designee specified in the proviso to the next preceding sentence, the Company shall so inform the relevant Stockholder Group Designator by written notice. If the Company has not received a Notice of Designee from any Stockholder Group Designator at a time when the relevant Stockholder Group is entitled to name one or more Designee on or before the latest date for delivery of such Notice, then such Stockholder Group Designator shall be deemed to have delivered on such date a Notice of Designee designating the Designees specified in the most recently delivered Notice of Designee for any prior Election Meeting, or, if 674683.23 8 any such Designee is unable to serve and an Alternate Designee has been specified therefor, such Alternate Designee. (ii) By means of written notice given to a Stockholder Group Designator within ten days of the Company's receipt of a Notice of Designee sent by that Stockholder Group Designator, the Board may reject a Designee if, in the exercise of its fiduciary duties, it reasonably determines that such Designee fails to meet the moral or professional standards required of a director of a public corporation such as the Company. The Company's notice of rejection shall specify the basis for such rejection in accordance with this subsection in reasonable detail. If the Board shall reject any Designee as aforesaid, the relevant Stockholder Group Designator may send a supplemental Notice of Designee designating a replacement for the rejected Designee, which notice shall be timely if received by the Company within fifteen days of that Stockholder Group Designator's receipt of a notice of rejection under the first sentence of this paragraph. If the Stockholder Group Designator does not send a supplemental Notice of Designee within the aforesaid time period and an Alternate Designee was designated for the rejected Designee in the original Notice of Designee, the Alternate Designee, unless rejected in accordance with this subsection, shall be deemed nominated by the Stockholder Group Designator in replacement of the rejected Designee. (iii) Each Notice of Designee shall set forth, as to each person whom the Stockholder Group wishes the Company to nominate for election or re-election as a Director, all information relating to such person that is required to be disclosed in 674683.23 9 solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); provided, however, that a Notice of Designee shall not be deemed defective for failure to supply such information unless, after request therefor by the Company to the relevant Stockholder Group Designator, such Stockholder Group Designator fails to supply such information on a timely basis for inclusion in the proxy materials for the relevant Election Meeting. (iv) If the parties to this Agreement have received notice from the Company that there are any directorships to be filled at a forthcoming Election Meeting as to which no timely Notice of Designee was received or deemed received, the parties to this Agreement may vote their shares as to those directorships without constraint by this Agreement. (c) The Company shall nominate and recommend those Designees as to whom it has received or is deemed to have received a timely Notice of Designee to the stock holders of the Company for election or re-election as Directors and shall otherwise use its best efforts to cause those Designees to be elected to the Board. Each party to this Agreement agrees to vote, or cause to be voted, all of the shares of Capital Stock Beneficially Owned by it at any Election Meeting and agrees to take all actions otherwise reasonably in its power as a stockholder of the Company to cause the Investor Group Designees (including, in the absence of a Dickstein Forfeiture Event, the Dickstein Designee) and the Lender Group Designees to be elected to the Board as described herein. 674683.23 10 (d) (i) If, following his election to the Board, a Lender Group Designee shall vacate his position on the Board for any reason, including, but not limited to, the death, removal or retirement of that Designee, but excluding any changes in Board representation pursuant to Section 2.2 hereof, then the Lender Group Designator shall have the right to nominate a successor Designee to fill the vacancy. (ii) If, following his election to the Board, the Dickstein Designee shall vacate his position on the Board for any reason, including, but not limited to, the death, removal or retirement of that Designee, but excluding any changes in Board representation pursuant to Section 2.2 hereof, then the Dickstein Designator shall have the right to nominate a successor Designee to fill the vacancy. (iii) If, following his election to the Board, an Investor Group Designee shall vacate his position on the Board for any reason, including, but not limited to, the death, removal or retirement of that Designee, or the occurrence of a Dickstein Forfeiture Event, but excluding any other changes in Board representation pursuant to Section 2.2 hereof, then the Investor Group Designator, except in cases covered by Section 2.1(d)(ii), shall have the right to nominate a successor Designee to fill the vacancy. (iv) The Company shall cause any successor Designee nominated pursuant to Section 2.1(d)(i)-(iii) (a "Nominated Successor") to be elected to fill such vacancy as promptly as practicable at a special meeting of the Board called for that purpose or by action of the Board by unanimous written consent. If for any reason the 674683.23 11 Nominated Successor is not made a Director as aforesaid, the parties hereto shall promptly use their respective best efforts (i) to bring about a special meeting of stockholders for the purpose of (A) removing from the Board any Director appointed instead of the Nominated Successor and/or (B) electing the Nominated Successor to the Board or (ii) to execute a written consent in lieu of a meeting of stockholders (A) to remove from the Board any Director appointed instead of the Nominated Successor and/or (B) to elect the Nominated Successor to the Board. (e) Each Stockholder Group Designator shall have the right, at any time, to identify any of that Stockholder Group's Designees whom that Stockholder Group wishes to have removed from his position on the Board and to nominate a successor Designee to fill the resulting vacancy. The parties hereto shall promptly use their respective best efforts (i) to bring about a special meeting of stockholders, and each shall vote, or cause to be voted, all of the shares of Capital Stock Beneficially Owned by it at that meeting, for the purpose of removing from the Board any such Designee(s) so identified and electing the nominated successor(s) to the Board or (ii) to execute a written consent in lieu of a meeting of stockholders to remove from the Board any such Designees so identified and to elect the nominated successor(s) to the Board. (f) The parties to this Agreement shall not, and shall use their best efforts to cause their respective Designees not to, take any action to change from eleven (11) the number of Directors which shall constitute the entire Board without the unanimous written agreement of the Investor Group Designator, the Lender Group Designator and, unless and until a Dickstein Forfeiture Event has occurred, the Dickstein Designator. 674683.23 12 Section 2.2. Loss of Board Representation. (a) Decreases in Beneficial Ownership of Capital Stock (including decreases occurring prior to the expiration of twenty-one months after the date of the consummation of the Plan) shall cause decreases in the Stockholder Groups' right to designate Directors, and shall cause forfeitures of Board seats, in accordance with this Section 2.2(a); provided, that such decreases in Stockholder Groups' right to designate Directors, and such forfeitures of Board seats, shall take effect on the first day after the expiration of twenty-one months after the consummation of the Plan and not before. For purposes of this Section 2.2 and Section 2.3(e) hereof, the parties have agreed that such decreases in the Beneficial Ownership of Capital Stock of the Plan Secured Lender Group in the aggregate shall cause such decreases in the Lender Group's right to designate Directors and such forfeitures of Board seats as provided in those sections. (i) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at least twenty percent (20%), but less than forty percent (40%), then the Investor Group or the Lender Group, as the case may be, shall forfeit one (1) Board seat. (ii) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at least forty percent (40%), but less than sixty percent (60%), then the Investor Group or the Lender Group, as the case may be, shall forfeit two (2) Board seats. (iii) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at 674683.23 13 least sixty percent (60%), but less than eighty percent (80%), then the Investor Group or the Lender Group, as the case may be, shall forfeit three (3) Board seats. (iv) If either the Investor Group or the Plan Secured Lender Group, as the case may be, shall decrease its Beneficial Ownership of Common Equivalent Shares at least eighty percent (80%), but less than ninety percent (90%), then the Investor Group or the Lender Group, as the case may be, shall forfeit four (4) Board seats. (v) (A) If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares at least ninety percent (90%), but less than ninety-five percent (95%), then the Investor Group shall forfeit five (5) Board seats, and (B) if the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares at least ninety percent (90%), then the Lender Group shall forfeit all five (5) of its Board seats. (vi) Upon the occurrence of a Dickstein Forfeiture Event, the Dickstein Entities shall forfeit their one (1) Board seat, but that forfeiture shall not cause a reduction in the number of Directors which the Investor Group has the right to designate unless the Investor Group shall have decreased its Beneficial Ownership of Common Equivalent Shares at least ninety-five percent (95%), in which case the Investor Group shall forfeit all six (6) of its Board seats. If a Dickstein Forfeiture Event has not occurred, none of the Board seats forfeited by the Investor Group under Section 2.2(a)(i)-(v) shall be the Board seat of the Dickstein Designee. (b) In the event of a decrease in Beneficial Ownership that decreases a Stockholder Group's right to name Directors under Section 2.2(a) hereof, that Stockholder 674683.23 14 Group's Designator shall name the Designee(s) to be removed from the Board in accordance with that section and the parties to this Agreement shall use their respective best efforts to cause the resignations from the Board of any Designee(s) so named. If the number of Designees of a Stockholder Group serving on the Board is not promptly decreased in accordance with Section 2.2(a) hereof, the parties hereto shall promptly use their respective best efforts (i) to bring about a special meeting of stockholders, and each shall vote, or cause to be voted, all of the shares of Capital Stock Beneficially Owned by it at that meeting, for the purpose of removing from the Board such number of the Designees of that Stockholder Group as shall be required in order to comply with Section 2.2(a) or (ii) to execute a written consent in lieu of a meeting of stockholders to remove from the Board such number of Designees of that Stockholder Group. Section 2.3. Committee Representation. (a) Each party to this Agreement shall vote, or cause to be voted, its Capital Stock Beneficially Owned, and shall use its best efforts to cause its respective Stockholder Group's Designees on the Board, subject to the exercise of their fiduciary obligations, to establish the following committees of the Board and to cause those committees of the Board to be comprised and have the functions, powers and authorizations, as set forth below. (b) The Audit Committee shall consist of five (5) Independent Directors, three (3) of whom will be Lender Group Designees named by a majority of the Lender Group Designees then serving on the Board and two (2) of whom will be Investor Group Designees named by a majority of the Investor Group Designees then serving on the Board. The Audit Committee shall exercise, subject to applicable provisions of laws, the functions regularly 674683.23 15 administered by committees of such type including, without limitation, (A) to review the professional services and independence of the Company's independent auditors and the scope of the annual external audit as recommended by the independent auditors, (B) to ensure that the scope of the annual external audit by the independent auditors of the Company is sufficiently comprehensive, (C) to review, in consultation with the independent auditors and the internal auditors, the plan and results of the annual external audit, the adequacy of the Company's internal control systems and the results of the Company's internal audits, (D) to review with management and the independent auditors, the Company's annual financial statements, financial reporting practices and the results of each external audit, and (E) to consider the qualification of the Company's independent auditors, to make recommendations to the Board as to their selection and to review the relationship between such independent auditors and management. (c) The Compensation and Nominating Committee shall consist of five (5) Directors, two (2) of whom shall be Lender Group Designees named by a majority of the Lender Group Designees then serving on the Board and three (3) of whom shall be Investor Group Designees named, subject to the following sentence, by a majority of the Investor Group Designees then serving on the Board. Unless a Dickstein Forfeiture Event has occurred, one (1) of the three Investor Group Designees on the Compensation and Nominating Committee shall be the Dickstein Designee. At least one of the Lender Group Designees and at least one of the Investor Group Designees (other than the Dickstein Designee) serving on the Compensation and Nominating Committee shall be an Independent Director. The Compensation and Nominating Committee shall exercise, subject to applicable provisions of 674683.23 16 law, the functions regularly administered by committees of such type including, without limitation, the power to review and recommend to the Board the compensation and benefit arrangements for the officers of the Company, the administering of the stock option plans and executive compensation programs of the Company, including bonus and incentive plans applicable to officers and key employees of the Company and to recommend to the Board nominees for election as Directors. (d) The Finance Committee shall consist of five (5) Directors, two (2) of whom will be Lender Group Designees named by a majority of the Lender Group Designees then serving on the Board and three (3) of whom will be Investor Group Designees named by a majority of the Investor Group Designees then serving on the Board. The Finance Committee shall exercise, subject to applicable provisions of law, the functions regularly administered by committees of such type including, without limitation, to make recommendations to the Board with respect to the Company's credit arrangements, the issuance of equity and long term debt instruments and other financial matters. (e) (i) If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than (331/3%), it will forfeit one Audit Committee Seat. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than sixty six and two thirds percent (662/3%), it will forfeit both of its Audit Committee seats. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than twenty five percent (25%), the Lender Group will forfeit one Audit Committee seat. If the Plan Secured 674683.23 17 Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than fifty percent (50%), the Lender Group will forfeit two Audit Committee seats. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than seventy five percent (75%), the Lender Group will forfeit all three of its Audit Committee seats. (ii) If the Plan Secured Lender Group shall decrease its Beneficial Owner ship of Common Equivalent Shares by more than (331/3%), the Lender Group will forfeit one Compensation and Nominating Committee seat. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than sixty six and two thirds percent (662/3%), the Lender Group will forfeit both of its Compensation and Nominating Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than twenty five percent (25%), it will forfeit one Compensation and Nominating Committee seat. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than fifty percent (50%), it will forfeit two Compensation and Nominating Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than seventy five percent (75%) and a Dickstein Forfeiture Event shall have occurred, it will forfeit all three of its Compensation and Nominating Committee seats. If a Dickstein Forfeiture Event has not occurred, none of the Compensation and Nominating Committee seats forfeited by the Investor Group under this Section 2.3(e)(ii) shall be the Compensation and Nominating Committee seat of the Dickstein Designee. 674683.23 18 (iii) If the Plan Secured Lender Group shall decrease its Beneficial Owner ship of Common Equivalent Shares by more than (331/3%), the Lender Group will forfeit one Finance Committee seat. If the Plan Secured Lender Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than sixty six and two thirds percent (662/3%), the Lender Group will forfeit both of its Finance Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than twenty five percent (25%), it will forfeit one Finance Committee seat. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than fifty percent (50%), it will forfeit two Finance Committee seats. If the Investor Group shall decrease its Beneficial Ownership of Common Equivalent Shares by more than seventy five percent (75%), it will forfeit all three of its Finance Committee seats. (f) If a Stockholder Group's right to committee representation decreases under Section 2.3(e) hereof, each party to this Agreement shall use its respective best efforts to cause the required number of the Designees of that Stockholder Group to resign their Committee(s) assignments. (g) The parties to this Agreement shall not, and shall use their best efforts to cause their respective Designees not to, take any action to create any committee of the Board other than as provided in this Agreement without the unanimous written agreement of the Investor Group Designator, the Lender Group Designator and, unless and until a Dickstein Forfeiture Event has occurred, the Dickstein Designator. 674683.23 19 Section 2.4. Computation and Notice of Common Equivalent Shares Ownership. (a) For the purposes of this Agreement, the Investor Group's Beneficial Ownership of Common Equivalent Shares shall be determined with reference only to the Perlmutter/Arad Group's Beneficial Ownership of Common Equivalent Shares and shall not be determined by reference to, or affected by, any change in the Dickstein Entities' Beneficial Ownership of Common Equivalent Shares. (b) For the purposes of Section 2.2 and Section 2.3 hereof, a group's reduction in its Beneficial Ownership of Common Equivalent Shares shall be determined by comparing, at any particular time, that group's Beneficial Ownership of Common Equivalent Shares (including after-acquired Capital Stock) to that group's Beneficial Ownership of Common Equivalent Shares immediately following the consummation of the Plan, as adjusted for any stock splits, reverse stock splits, recapitalization of the Common Equivalent Shares or capital transaction of a similar nature. Any of the Investor Group, the Dickstein Group, the Lender Group and the Plan Secured Lender Group may use the Common Equivalent Shares held by Affiliates of its members to calculate its total Common Equivalent Shares ownership if such Affiliates have agreed in writing, for the benefit of all parties to this Agreement, to be bound by this Agreement. (c) Any reduction in Common Equivalent Shares Beneficially Owned by any Secured Lender shall constitute a reduction in the number of Common Equivalent Shares Beneficially Owned by the Plan Secured Lender Group for purposes of Section 2.2, 2.3 and 4.2(e)(iii) hereof, except to the extent that (i) any or all of the Common Equivalent Shares no 674683.23 20 longer so Beneficially Owned are Beneficially Owned by any member of the Plan Secured Lender Group (or any Affiliate of such a member) who is, or who agrees to be, bound hereby or (ii) the Lender Group Designator delivers to the Investor Group Designator, on or prior to the date on which the Lender Group Designator delivers a Notice of Designee with respect to an Election Meeting, an irrevocable proxy from one or more members of the Plan Secured Lender Group (which are not Secured Lenders), authorizing the Investor Group Designator and the Dickstein Group Designator, acting jointly, to vote a specified number Common Equivalent Shares Beneficially Owned by such member in the manner required by this Agreement with respect to the election of directors at such Election Meeting; provided that even if such an irrevocable proxy has been delivered this clause (ii) shall not apply with respect to the Common Equivalent Shares covered thereby with respect to any period after that meeting if such Common Equivalent Shares fail to be voted in a manner in which such Common Equivalent Shares would otherwise be required to be voted under this Agreement if they were Beneficially Owned by a party to this Agreement. For example, (x) if a Secured Lender sells two million Common Equivalent Shares to a third party which is not and does not agree to be bound by this Agreement and does not deliver an irrevocable proxy as provided in the preceding sentence, the number of Common Equivalent Shares Beneficially Owned by the Plan Secured Lender Group shall be deemed to have been reduced by two million Common Equivalent Shares, whether or not offsetting acquisitions of Common Equivalent Shares have been made by other members of the Plan Secured Lender Group, (y) if, the facts are the same as in clause (x) but another member of the Plan Secured Lender Group delivers a proxy described in the preceding sentence and after the meeting to which the proxy relates the holder 674683.23 21 of those shares fails to take an action required by Section 2.1, 2.2 or 2.3 of this Agreement, clause (ii) of Section 2.4(c) shall no longer apply with respect to those shares. (d) If at any time a Stockholder Group Designator has actual knowledge (but without any duty of inquiry) that the Beneficial Ownership of Common Equivalent Shares of the related Stockholder Group (including, for purposes of the Lender Group Designator, the Plan Secured Lender Group) has been reduced such that such Stockholder Group would be required to forfeit one or more or any additional Board seats pursuant to Section 2.2 or Committee seats pursuant to Section 2.3, it shall as promptly as practicable thereafter notify the Company and the other parties to this Agreement. Section 2.5. Restriction on Disposition of Stock Held by Subsidiary. The parties to this Agreement shall not, and shall use their best efforts to cause their respective Designees not to, (i) permit Marvel Characters, Inc. to transfer or otherwise convey any interest in any of the shares of Common Stock held by Marvel Characters, Inc. unless such transfer or other conveyance (A) has been approved in writing by a majority in voting power of each Stockholder Group, or (B) is to the Company, or (ii) allow such shares of Common Stock to be entitled to vote with respect to matters to be voted upon or consented to by the stockholders of the Company unless adequate provision is made to assure that such shares of Common Stock will thereafter be voted, on all such matters, proportionately with all other outstanding shares of Common Stock voting on all such matters. 674683.23 22 ARTICLE III REPRESENTATIONS Section 3.1. Representations of the Dickstein Entities. The Dickstein Entities represent to the other parties to this Agreement that they will Beneficially Own approximately 6,115,000 Common Equivalent Shares in the aggregate immediately following the consummation of the Plan. Section 3.2. Representations of the Perlmutter/Arad Group. The Perlmutter/Arad Group represents to the other parties to this Agreement that it will Beneficially Own approximately 17,318,000 Common Equivalent Shares in the aggregate immediately following the consummation of the Plan. Section 3.3. Representations of the Lender Group. (a) The Chase Manhattan Bank represents to the other parties to this Agreement that it will Beneficially Own approximately 2,096,291 Common Equivalent Shares immediately following the consummation of the Plan and that it does not share Beneficial Ownership of any of those shares with any other member of the Lender Group. (b) Morgan Stanley & Co. Incorporated represents to the other parties to this Agreement that it will Beneficially Own approximately 4,020,592 Common Equivalent Shares immediately following the consummation of the Plan and that it does not share Beneficial Ownership of any of those shares with any other member of the Lender Group. (c) Whippoorwill represents to the other parties to this Agreement that each Whippoorwill Account will Beneficially Own approximately the number of shares of Capital Stock set forth on Schedule 1 to this Agreement immediately following the consummation of 674683.23 23 the Plan and that none of the Whippoorwill Accounts shares Beneficial Ownership of any of those shares with any other member of the Lender Group. ARTICLE IV MISCELLANEOUS Section 4.1. Effective Date. This Agreement shall become effective upon the consummation of the Plan. Section 4.2. Termination. (a) This Agreement shall terminate: (i) Upon consent of all of the parties hereto who are then subject to this Agreement; (ii) As to the Perlmutter/Arad Group, in the event that the Investor Group, or any of its Affiliates that have agreed to be bound by this Agreement, shall cease to be entitled to the election of any Designee (exclusive of the Dickstein Designee) to the Board hereunder; (iii) As to the Lender Group, in the event that the Lender Group, or any of their Affiliates that have agreed to be bound by this Agreement, shall cease to be entitled to the election of any Designee to the Board hereunder and, with respect to any individual Secured Lender, when the Common Equivalent Shares Beneficially Owned by such Secured Lender have been less than 10% of the Common Equivalent Shares Beneficially Owned by such Secured Lender immediately following the consummation of the Plan for a period of 184 consecutive calendar days; provided, that this Agreement shall terminate with respect to Whippoorwill Associates, Incorporated and 674683.23 24 each Whippoorwill Account when the Common Equivalent Shares Beneficially Owed by all of them in the aggregate have totaled less than 10% of all Common Equivalent Shares Beneficially Owed by all of them immediately following the consummation of the Plan for a period of 184 consecutive calendar days; and provided further, that the termination of this Agreement with respect to any Secured Lender shall be deemed to result in a reduction in the total amount of Common Equivalent Shares Beneficially Owed by the Plan Secured Lender Group by an amount equal to the amount of Common Equivalent Shares Beneficially Owned by such Secured Lender at such time; (iv) As to the Dickstein Entities, in the event that the Dickstein Entities, or any of their Affiliates that have agreed to be bound by this Agreement, shall cease to be entitled to the election of their Designee to the Board hereunder. (b) In the event that a material violation of any covenant hereunder by a member of a Stockholder Group that is not cured within thirty days of written notice thereof by a member of one of the other Stockholder Groups shall occur and be continuing, the Stockholder Group of the breaching party shall not be deemed to be the Beneficial Owner of any Capital Stock for purposes of Board representation under Section 2.2 hereof or committee representation under Section 2.3 hereof, and shall have no further rights under this Agreement. Such member and such Stockholder Group shall nonetheless continue to be deemed to Beneficially Own its Capital Stock for all other purposes and to be bound to perform its obligations under this Agreement. Section 4.3. Secretary to Retain Copy. A copy of this Agreement shall be filed with the Secretary of the Company. 674683.23 25 Section 4.4. Further Actions. At any time and from time to time each party agrees, at its or his expense, to take such actions and to execute and deliver such documents as may be necessary to effectuate the purposes of this Agreement. Each party hereto will not take any action that would (x) result in a breach of any covenant or any other obligation of such party under this Agreement or (y) impede, interfere with or discourage the transactions contemplated by this Agreement. Section 4.5. Specific Performance. The parties hereto acknowledge that failure on any of their parts to comply with the terms of this Agreement shall cause the other parties hereto immediate and irreparable harm that cannot be adequately compensated by the remedies at law, and that in the event of such breach or violation, or threatened breach or violation, the other parties hereto shall have such provisions of this Agreement specifically enforced by preliminary and permanent injunctive relief without having to prove the inadequacy of the available remedies at law or any actual damages and without posting bond or other security. Any remedy sought or obtained by a party hereto shall not be considered either exclusive or a waiver of the rights of a party hereto or any other person to assert any other remedies they have in law or equity. In any proceeding upon a motion for any such injunctive relief, a party's ability to answer in damages shall not be a bar, or be interposed as a defense, to the granting of such injunctive relief. Any rights under this Section 4.5 may be enforced in any appropriate court in the State of Delaware. Section 4.6. Entire Agreement. This Agreement contains the entire under standing between the parties hereto with respect to the subject matter hereof, and supersedes all 674683.23 26 prior and contemporaneous agreements and understandings among the parties hereto except as herein contained, with any of the terms hereof. Section 4.7. Notices. All notices and other communications hereunder shall be in writing and shall be delivered personally against receipt thereof, or transmitted by telecopier or by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to the Company, to Toy Biz, Inc. 685 Third Avenue New York, New York 10017 Attention: Secretary Telecopy: (212) 588-5100 with a copy to: Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attention: John Turitzin, Esq. Telecopy: (212) 856-7813 if to Perlmutter, the Trust, the Foundation, Object Trading or Zib, to: P.O. Box 1028 Lake Worth, Florida 33460-1028 Telecopy: c/o Daniel Golden (212) 806-6006 and c/o Lawrence Mittman (212) 856-7807 674683.23 27 with a copy to: Stroock & Stroock & Lavan 180 Maiden Lane New York, New York 10004 Attention: Daniel Golden Telecopy: (212) 806-6006 and Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attention: Lawrence Mittman, Esq. Telecopy: (212) 856-7807 if to Arad, to: c/o Avi Arad & Associates 1698 Post Road East Westport, Connecticut 06880 Telecopy: (203) 254-2613 with a copy to: Stroock & Stroock & Lavan 180 Maiden Lane New York, New York 10004 Attention: Daniel Golden Telecopy: (212) 806-6006 and Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attention: Lawrence Mittman, Esq. Telecopy: (212) 856-7807 if to any of the Dickstein Entities, to: Dickstein Partners, Inc. 600 Madison Avenue, 16th Floor 674683.23 28 New York, New York 10021 Attention: Alan Cooper Telecopy: (212) 754-5825 with a copy to: Kramer, Levin, Naftalis & Frankel 919 Third Avenue New York, New York 10022 Attention: Abbe Dienstag, Esq. Telecopy: (212) 715-8000 if to The Chase Manhattan Bank, to: The Chase Manhattan Bank 270 Park Avenue New York, New York 10017 Attention: Anthony J. Horan Telecopy: (212) 270-4240 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Scott K. Charles, Esq. Telecopy: (212) 403-1000 if to Morgan Stanley & Co. Incorporated, to: Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attention: Michael J. Petrick Telecopy: (212) 761-0713 with a copy to: Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas New York, New York 10026 Attention: Laura DeForest, Esq. Telecopy: (212) 762-8831 674683.23 29 if to any Whippoorwill Account, to: Whippoorwill Associates, Incorporated 11 Martine Avenue White Plains, New York 10606 Attention: Shelley Greenhaus Telecopy: (914) 683-1242 with a copy to: Kramer, Levin, Naftalis & Frankel 919 Third Avenue New York, New York 10022 Attention: Thomas Mayer, Esq. Telecopy: (212) 715-8000 Any notice shall be deemed to have been given on the date of receipt if delivered personally or by overnight courier, the date of transmission with confirmation back if transmitted by telecopier, or the third day following posting if transmitted by mail. Section 4.8. Waivers; Amendment. This Agreement may not be modified, amended or waived other than by a written instrument executed by the parties hereto. Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. Section 4.9. Binding Effect; Heirs and Successors. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and shall be assignable only to an Affiliate of a party hereto and, with respect to assignment by Secured 674683.23 30 Lenders, to any member of the Plan Secured Lender Group and any Affiliate of such a member, and only if such Affiliate of a party hereto, member of the Plan Secured Group or Affiliate of a member of the Plan Secured Lender Group agrees in writing to be bound by this Agreement. The provisions of this Agreement shall be binding upon and inure to the benefit of the heirs and successors of the parties hereto. Section 4.10. No Third Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement (except as provided in Section 4.9). Section 4.11. Separability. If any provision of this Agreement shall be adjudicated to be invalid, illegal or unenforceable, such provision shall be amended to delete therefrom the portion thus adjudicated to be invalid, illegal or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made, and the balance of this Agreement shall remain in effect. Section 4.12. Headings. The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of any provision of this Agreement. Section 4.13. Pronouns. Any masculine personal pronoun shall be considered to mean the corresponding feminine or neuter personal pronoun, as the context requires. Section 4.14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 674683.23 31 Section 4.15. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of the conflict of laws thereof. Section 4.16. No Restriction on Transferability. Nothing in this Agreement shall restrict the ability of any of the parties to this Agreement to sell or otherwise transfer any shares of Common Stock, Preferred Stock or other securities of the Company, nor shall a purchaser or other transferee of any Capital Stock sold or transferred by a signatory hereto be subject to any of the obligations created hereby unless such purchaser or transferee has agreed in writing, for the benefit of all parties to this Agreement, to be so bound. Section 4.17. Whippoorwill Obligations Several and Not Joint. With respect to any obligations hereunder assumed by any Whippoorwill Account, such obligations shall be several and not joint and shall be limited to the percentage held by such Whippoorwill Account of the total Common Equivalent Shares held by all such Whippoorwill Accounts, and no such Whippoorwill Account shall be liable for any obligation of any other Whippoorwill Account. 674683.23 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above. Avi Arad Mark Dickstein DICKSTEIN & CO., L.P. By: Dickstein Partners, L.P. By: Dickstein Partners Inc. By: Name: Alan S. Cooper Title: Vice President DICKSTEIN FOCUS FUND L.P. By: Dickstein Partners, L.P. By: Dickstein Partners Inc. By: Name: Alan S. Cooper Title: Vice President DICKSTEIN INTERNATIONAL LIMITED By: Dickstein Partners Inc. By: Name: Alan S. Cooper Title: Vice President 674683.23 ELYSSA DICKSTEIN, JEFFREY SCHWARZ AND ALAN COOPER AS TRUSTEES U/T/A/D 12/27/88, MARK DICKSTEIN, GRANTOR By: Alan S. Cooper Trustee MARK DICKSTEIN AND ELYSSA DICKSTEIN, AS TRUSTEES OF THE MARK AND ELYSSA DICKSTEIN FOUNDATION By: Mark Dickstein Trustee Elyssa Dickstein Isaac Perlmutter ISAAC PERLMUTTER T.A. By: Isaac Perlmutter Trustee THE LAURA & ISAAC PERLMUTTER FOUNDA TION, INC. By: Name: Isaac Perlmutter Title: President 674683.23 OBJECT TRADING CORP. By: Name: Isaac Perlmutter Title: President ZIB INC. By: Name: Isaac Perlmutter Title: President and Chief Executive Officer THE CHASE MANHATTAN BANK By: Name: Title: MORGAN STANLEY & CO. INCORPORATED By: Name: Mitchael J. Petrick Title: Managing Director 674683.23 WHIPPOORWILL ASSOCIATES, INCORPORATED, as agent of and/or general partner for the accounts listed on Schedule 1 hereto By: Name: Shelley Greenhaus Title: Managing Director TOY BIZ, INC. By: Name: Joseph M. Ahearn Title: President and Chief Executive Officer 674683.23
Schedule 1 Common Common Share Fund/Account Shares Preferred Shares Equivalents The President and Fellows of Harvard College 484,997 551,300 1,057,776 The Rockefeller Foundation 121,546 208,495 338,164 Vega Partners II, L.P. 137,455 234,589 381,183 Vega Partners III, L.P. 317,587 543,269 882,022 Vega Partners IV, L.P. 200,821 342,659 556,830 Vega Offshore Fund Trust 86,108 138,552 230,058 Whippoorwill Profit Sharing Plan 1,890 2,717 4,712 Total 1,350,404 2,021,581 3,450,745
674683.23 EXHIBIT 99.4 STOCKHOLDERS' AGREEMENT by and among AVI ARAD, VARIOUS DICKSTEIN ENTITIES AND INDIVIDUALS, ISAAC PERLMUTTER, ISAAC PERLMUTTER T.A., THE LAURA & ISAAC PERLMUTTER FOUNDATION INC., OBJECT TRADING CORP., ZIB INC., VARIOUS SECURED LENDERS, and TOY BIZ, INC. Dated as of October 1, 1998 674683.23 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS Section 1.1. Definitions.......................................3 ARTICLE II MANAGEMENT Section 2.1. Board Representation..............................7 Section 2.2. Loss of Board Representation.....................12 Section 2.3. Committee Representation........... .............15 Section 2.4. Computation and Notice of Common Equivalent Shares Ownership........................................19 Section 2.5. Restriction on Disposition of Stock Held by Subsidiary.......................................21 ARTICLE III REPRESENTATIONS Section 3.1. Representations of the Dickstein Entities........22 Section 3.2. Representations of the Perlmutter/Arad Group.....22 Section 3.3. Representations of the Lender Group..............22 ARTICLE IV MISCELLANEOUS Section 4.1. Effective Date...................................23 Section 4.2. Termination......................................23 Section 4.3. Secretary to Retain Copy.........................25 Section 4.4. Further Actions..................................25 Section 4.5. Specific Performance.............................25 Section 4.6. Entire Agreement.................................26 Section 4.7. Notices..........................................26 Section 4.8. Waivers; Amendment...............................29 Section 4.9. Binding Effect; Heirs and Successors.............29 Section 4.10. No Third Party Beneficiaries.....................30 Section 4.11. Separability.....................................30 Section 4.12. Headings.........................................30 Section 4.13. Pronouns.........................................30 Section 4.14. Counterparts.....................................30 Section 4.15. Governing Law....................................30 Section 4.16. No Restriction on Transferability................31 Section 4.17. Whippoorwill Obligations Several and Not Joint......31 674683.23 -----END PRIVACY-ENHANCED MESSAGE-----