AMENDED AND RESTATED PROXY AND STOCK OPTION AGREEMENT
THIS PROXY AND STOCK OPTION AGREEMENT (this "Agreement"),
dated as of November 19, 1997, amends and restates the Proxy and Stock Option
Agreement, dated as of October 7, 1997, by and between Xxx Xxxx ("Stockholder"),
and secured creditors of Marvel Entertainment Group, Inc., a Delaware
corporation ("Marvel") and certain of its direct and indirect subsidiaries who
become parties to this Agreement by executing and delivering a separate
Consenting Lender Execution Page in the form attached as Exhibit 1 to this
Agreement (the "Consenting Lenders").
WHEREAS, concurrently herewith, Toy Biz, Inc., a Delaware
corporation ("Toy Biz" or the "Company"), various secured creditors of Marvel
and certain of its direct and indirect subsidiaries and the Panini Lenders (as
defined in the Plan of Reorganization referred to below) that are parties
thereto propose to enter into an amended and restated master agreement (the
"Master Agreement") providing for the filing of a joint plan of reorganization
(the "Plan of Reorganization") and the combination of Marvel and Toy Biz (the
"Merger") pursuant to an Agreement and Plan of Merger (the "Merger Agreement")
whereby shares of Class A Common Stock, par value $.01 per share ("Common
Stock") of Toy Biz issued and outstanding as of the effective date of the Merger
(excluding Common Stock held in treasury by Toy Biz or owned by Marvel or its
affiliates) will be converted into shares of common stock of the combined
corporation ("Newco"); and
WHEREAS, Stockholder owns (beneficially or of record) as of
the date hereof 4,150,000 shares of Common Stock (collectively with any other
shares of Common Stock beneficially owned by Stockholder, the "Existing Shares",
and together with any shares of Common Stock acquired or beneficially owned by
Stockholder after the date hereof and prior to the termination hereof,
hereinafter collectively referred to as the "Shares"); and
WHEREAS, a Proxy and Stock Option Agreement, dated as of the
date of this Agreement, is being entered into by and among Xxxxx Xxxxxxxxxx,
Xxxxx Xxxxxxxxxx T.A. and Zib Inc. (collectively, "Xxxxxxxxxx") and various
secured creditors of Marvel relating to the shares of Common Stock owned by
Xxxxxxxxxx (the "Xxxxxxxxxx Agreement"); and
WHEREAS, the Consenting Lenders are expected to or have
entered into the Master Agreement in reliance on Stockholder's covenants
hereunder;
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, it is
agreed as follows:
1. Proxy. Stockholder hereby appoints the Designated
Consenting Lender as the lawful proxy for Stockholder to vote all of the Shares
which Stockholder is entitled to vote, or which Stockholder controls, directly
or indirectly, in each case, for and in the name, place and stead of
Stockholder, at any annual, special or other meeting of the stockholders of Toy
Biz and at any adjournment thereof, or pursuant to any consent in lieu of a
meeting, at which meeting or in connection with which consent action shall be
taken, and such proxy shall be for the sole purpose of acting (a) in favor of
the transactions contemplated by the Master Agreement and the Plan of
Reorganization, including the Merger; (b) against any action or agreement that
would result in a breach in any material respect of any covenant, representation
or warranty or any other obligation or agreement of Toy Biz under the Master
Agreement or any agreement contemplated thereby, including the Merger Agreement;
(c) against any action or agreement that would, directly or indirectly, impede,
interfere with, delay, postpone or attempt to discourage the Merger or
confirmation of the Plan of Reorganization, including, but not limited to: (i)
any extraordinary corporate transaction (other than the Merger), such as a
merger, other business combination, reorganization or liquidation involving Toy
Biz or its subsidiary; (ii) a sale or transfer of a material amount of assets of
Toy Biz or its subsidiary except as otherwise described on Schedule 1 in the
Disclosure Schedule separately delivered by the Stockholders with this
Agreement;(iii) any change in the management or board of directors of Toy Biz,
except as otherwise agreed to in writing by a Requisite Amount of the Consenting
Lenders (as defined in Section 11); (iv) any change in the present
capitalization or dividend policy of Toy Biz; or (v) any other change in Toy
Biz's corporate structure or business; and (d) in favor of any other action,
directly or indirectly, necessary or appropriate to effect the Merger in
accordance with the terms of the Merger Agreement or confirmation of the Plan of
Reorganization. The foregoing proxy, which is coupled with an interest and
therefore not terminable by Stockholder without the consent of all of the
Consenting Lenders, will remain in effect during the term of this Agreement.
"Designated Consenting Lender" means a Consenting Lender designated in writing
by a Requisite Amount of the Consenting Lenders who agrees to act as agent for
the Consenting Lenders hereunder.
2. Option to Purchase and Sell.
2.1. Grant of Option. Stockholder hereby grants to the
Consenting Lenders an irrevocable option (the "Option") to
purchase all, but not less than all, of the Shares, on the terms
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and subject to the conditions set forth herein. The Option shall be exercisable
only if (a) the Master Agreement is terminated pursuant to Section 7.1(d) of the
Master Agreement (a "Toy Biz Breach Event") (other than as a result of a breach
or failure by Toy Biz to perform or comply with any of its covenants or
agreements contained in the Master Agreement which (i) (x) occurs after there
has been a change in control of Toy Biz (as defined below) and (y) is caused by
the action or inaction of the new board of directors or new management of Toy
Biz or (ii) occurs as a result of an order of any court of competent
jurisdiction preventing Toy Biz from complying with the Master Agreement or
consummating the Plan of Reorganization based wholly or in part on any
contention that the board of directors of Toy Biz which approved the Master
Agreement was not the duly authorized board of directors of Toy Biz at such time
(a "New Management Breach"))or (b) if there is a Stockholder Breach Event. The
right of the Consenting Lenders to exercise the Option shall be in addition to,
and shall in no way limit, their rights against Toy Biz for breach by Toy Biz of
the Master Agreement, against Stockholder for breach by Stockholder of this
Agreement, or against Xxxxxxxxxx for breach by Xxxxxxxxxx of the Xxxxxxxxxx
Agreement, and shall be in addition to their rights under Section 14 of this
Agreement. A change in control shall mean a determination of any court that the
board of directors of Toy Biz which approved the Master Agreement was not at
such time the duly authorized board of directors of Toy Biz.
2.2. Exercise of Option. The Option may be exercised only by
action of a Requisite Amount of the Consenting Lenders at any time after the
occurrence of (i) a Toy Biz Breach Event which is not a New Management Breach or
(ii) a Stockholder Breach Event, prior to the termination of this Agreement
pursuant to Section 5 hereof. A "Stockholder Breach Event" means (i) a material
breach by Stockholder or a failure of Stockholder in any material respect to
perform or comply with any of his covenants and agreements contained herein,
and/or(ii) a breach by Stockholder of his representations and warranties
contained herein in any material respect if such breach has not been cured
within 10 days of notice by the Consenting Lenders of such breach. A Requisite
Amount of the Consenting Lenders may exercise the Option by sending a written
notice of such exercise to Stockholder specifying a date (not less than two
business days nor more than twenty days from the date such notice is given) for
the closing of such purchase (the "Closing"). The Closing shall take place at
the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, at 10:00 a.m. on the day specified in such notice or at such other
place, and at such other time or date as the parties hereto may agree. At the
Closing, Stockholder shall deliver to the Designated Consenting Lender, as agent
for the Consenting Lenders, all of the Shares by delivery of certificates
evidencing such Shares, properly endorsed by Stockholder and accompanied by such
stock powers and
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other documents as may be necessary to transfer record ownership of the Shares
into the Designated Consenting Lender's name on the stock transfer books of Toy
Biz, together with evidence of payment of all applicable transfer and
documentary stamp taxes and other fees. At the time of the Closing, Stockholder
agrees that (i) he shall promptly resign as a director of Toy Biz, (ii) the
Stockholders' Agreement, dated as of March 2, 1995, by and among Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxxxx T.A., Zib Inc., Stockholder, Marvel and Toy Biz
(the "Stockholders Agreement"), if still in effect, shall be terminated as to
Stockholder, and (iii) the Voting Trust Agreement, dated as of March 2, 1995, by
and among Marvel, Stockholder and Toy Biz (the "Voting Trust Agreement"), if
still in effect, shall terminate, with the result that the shares of class B
common stock of Toy Biz ("Class B Common Stock") held by the voting trust
established thereunder shall be deemed transferred to Marvel.
2.3. Payments.
(a) Purchase Price. The purchase and sale of the Shares
pursuant to the Option shall be at a purchase price of $4.00 per Share (the
"Purchase Price"). At the Closing, the Designated Consenting Lender, as agent
for the Consenting Lenders, shall pay to Stockholder in cash by wire transfer or
by certified or bank check payable to the order of Stockholder an amount equal
to the product of the Purchase Price multiplied by the number of Shares sold
pursuant to this Section 2.
(b) Adjustments. If at any time the outstanding shares of
Common Stock are changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment or if a stock dividend thereon is declared
with a record date prior to the termination of this Agreement, then the number
of shares of Common Stock subject to the option and the per share consideration
to be paid by the Designated Consenting Lender, upon exercise of the Option (but
not the total purchase price) shall be appropriately and equitably adjusted so
that the Designated Consenting Lender shall receive upon exercise of the Option
the number and class of shares or other securities or property that the
Designated Consenting Lender would have received in respect of the Shares that
the Designated Consenting Lender is entitled to purchase upon exercise of the
Option if the Option had been exercised immediately prior to such event.
3. Representations and Warranties of Stockholder.
Stockholder represents and warrants to each of the Consenting
Lenders as follows:
3.1. Ownership of Shares. On the date hereof the
Shares are, and on the date of the Closing all Shares owned by
Stockholder on such date will be, owned of record or beneficially
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by Stockholder, free and clear of all liens, charges, encumbrances, voting
agreements or commitments of any kind, and constitute, and will constitute, all
of the shares of Common Stock or preferred stock of Toy Biz owned of record or
beneficially by Stockholder. Stockholder does not have any options, warrants or
rights to purchase or acquire, any additional shares of Common Stock or
preferred stock of Toy Biz.
3.2. Power; Binding Agreement; Non-Contravention. Stockholder
has full legal right, power and authority to enter into and perform all of his
obligations under this Agreement. This Agreement has been duly executed and
delivered by Stockholder and constitutes a legal, valid and binding agreement of
Stockholder, enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors' rights and
remedies generally or general principles of equity. Neither the execution of
this Agreement nor the consummation by Stockholder of the transactions
contemplated hereby will (i) if Stockholder is an entity, conflict with or
result in any breach of any provision of the certificate of incorporation,
by-laws or similar governing documents of such Stockholder, (ii) require any
consent or approval of or filing with any governmental or other regulatory body
except for the filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and filings required
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Stockholder or any of his properties or assets. The execution delivery and
performance of this Agreement by the Stockholder do not breach, violate,
conflict with or constitute a default under any material agreement to which the
Stockholder is a party.
3.3. Shares. Stockholder has, and on the date of the Closing
hereunder Stockholder will have, good, valid and marketable title to the Shares
free and clear of all liens, encumbrances, restrictions and claims of every kind
(other than the encumbrance created by this Agreement and restrictions on resale
imposed by the Securities Act of 1933, as amended). There are no outstanding
options, warrants or rights to purchase or acquire, or agreements relating to,
the Shares (other than this Agreement or as disclosed herein).
3.4. Title. The delivery of the Shares to the Designated
Consenting Lender, as agent for the Consenting Lenders, hereunder will transfer
to the Consenting Lenders good, valid and marketable title to the Shares, free
of all liens, encumbrances, restrictions and claims of every kind, other than
restrictions on resale imposed by the Securities Act of 1933, as amended.
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3.5. Finder's Fees. No person is, or will be, entitled to any
commission or finder's fees from Stockholder in connection with this Agreement
or the transactions contemplated hereby.
3.6 No Ownership of Marvel Claims. The Stockholder does not
own or have any interest of any kind in respect of (including, without
limitation, any control thereof), directly or indirectly, any Claims against, or
Equity Interests in, any of the Debtors (as those terms are defined in the Plan
of Reorganization) except as disclosed on Schedule 3.6 included in the
Disclosure Schedule.
The Consenting Lenders acknowledge that Toy Biz is engaged in
litigation with Marvel concerning the status of Toy Biz' class B common stock
and its Stockholders Agreement (the "Stockholder Agreement Litigation"). The
representations in this Section 3 are qualified by the Stockholder Agreement
Litigation solely with respect to the Stockholder's ability to vote the Shares.
4. Conditions to Closing. (a) The obligations of the parties
to close hereunder shall be subject to the conditions that there shall be no
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction in effect which prohibits the consummation of the
transactions contemplated herein. Stockholder and the Consenting Lenders agree
that they will not seek, will oppose, and will seek the immediate lifting of,
any such injunction or order.
(b) The obligation of the Consenting Lenders to close the
exercise of the Option pursuant to Section 2 shall be subject to the additional
condition that all representations and warranties of Stockholder shall be true
and correct in all material respects as of the date hereof and at and as of the
Closing, with the same force and effect as though made on and as of the Closing.
5. Termination. This Agreement shall terminate on the earlier
of: (i) the Effective Time (as defined in the Merger Agreement),(ii) the
termination of the Master Agreement for a reason other than (x) a Toy Biz Breach
Event which is not a New Management Breach, or (y) a Stockholder Breach Event,
(iii) 90 days after the termination of the Master Agreement as a result of (x) a
Toy Biz Breach Event which is not a New Management Breach, or (y) a Stockholder
Breach Event, provided that if there is an order or injunction issued by a court
of competent jurisdiction in effect on that 90th day which prohibits the
exercise of the Option, that 90 day period shall be extended for an additional
60 days to a total of 150 days after the termination of the Master Agreement, or
(iv) at the discretion of Stockholder, if the Consummation Date has not occurred
by September 21, 1998.
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6. Expenses. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of its counsel and other advisers.
7. Certain Covenants of Stockholder. (i) Except in accordance
with the provisions of this Agreement, Stockholder agrees, while this Agreement
is in effect, that he shall not:
(a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares except pursuant
to this Agreement;
(b) grant any proxies (other than the proxy granted
hereunder), deposit any Shares into a voting trust or enter into a
voting agreement or otherwise transfer or convey any voting rights with
respect to any Shares;
(c) solicit or initiate, or encourage or support the
submission of, any plan of reorganization with respect to Marvel, other
than the Plan of Reorganization contemplated by the Master Agreement;
(d) take any action, directly or indirectly, in conflict or
inconsistent with Stockholder's obligations hereunder;
(e) acquire, directly or indirectly, any Claims against, any
interest therein, or Equity Interests in, any of the Debtors; or
(f) take any action, directly or indirectly, that would cause
Toy Biz to breach or fail in any material respect to perform or comply
with any of its covenants and agreements contained in the Master
Agreement or to breach its representations and warranties contained in
the Master Agreement in any material respect.
(ii) Stockholder agrees, while this Agreement is in effect, to
promptly notify the Designated Consenting Lender of the number of any new shares
of Common Stock acquired by him after the date hereof.
8. Survival of Representations and Warranties. All
representations, warranties, covenants and agreements made by Stockholder in
this Agreement shall survive the Closing hereunder and any investigation at any
time made by or on behalf of any party.
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9. 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 any Consenting Lender:
To the address of that Consenting Lender set forth
adjacent to the signature of that Consenting Lender
on the signature pages to this Agreement
with a copy to:
Xxxxx Xxxxxxxx
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
if to Stockholder, to:
Xxx Xxxx
0000 Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Telephone No.:
Telecopy No.:
with copies to:
Xxxxxx Xxxxxx
Stroock & Stroock & Xxxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and:
Xxxxxxxx Xxxxxxx
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
10. Entire Agreement. This Agreement, together with
the documents expressly referred to herein, constitutes the
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entire agreement among the parties hereto with respect to the subject matter
contained herein and supersedes all prior agreements and understandings among
the parties with respect to such subject matter.
11. Amendment; Waiver; Action of Requisite Amount of the
Consenting Lenders. This Agreement may be modified, amended, altered,
supplemented or waived only in a writing signed by the Stockholders and all
Consenting Lenders. A "Requisite Amount of the Consenting Lenders" means
Consenting Lenders who hold at least two-thirds in principal amount of the Fixed
Senior Secured Claims (as defined in the Plan of Reorganization) held by all of
the Consenting Lenders as shown on the Consenting Lender Execution Pages signed
by the Consenting Lenders.
12. Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement and the rights of the Consenting Lenders hereunder may
be assigned by the Consenting Lenders without the prior written consent of
Stockholder.
13. 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.
14. Remedies.
14.1. Specific Performance and Liquidated Damages. The parties
agree that it would be difficult, if not impossible, to calculate the damages
that would be suffered by the Consenting Lenders as a result of a breach of this
Agreement by Stockholder or a Toy Biz Breach Event and that the Consenting
Lenders would suffer irreparable damage in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that:
(a) The Consenting Lenders shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the state of Delaware or New York or in any Delaware state court. The
parties agree that the foregoing remedies of specific performance are not
exclusive and are in addition to the right of the Consenting Lenders to seek any
other remedies to which they are entitled at law or in equity.
(b) Upon the occurrence of a Toy Biz Breach Event, the
Consenting Lenders shall be entitled to the payment of liquidated damages from
Stockholder and Xxxxxxxxxx, on a joint and several
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basis, in the aggregate amount of $10,000,000 if Toy Biz breaches its
obligations under Article 6 of the Master Agreement, provided that if there has
not been a Stockholder Breach Event, Stockholder shall have no liability for
such liquidated damages if the breach by Toy Biz is a result of an Adverse Order
(as defined in the Master Agreement) or if a change in control of Toy Biz, as
defined in Section 2.1 of this Agreement, has occurred. The payment of such
liquidated damages shall be in lieu of any other claim for money damages by the
Consenting Lenders against the Stockholder and Xxxxxxxxxx as a result of the Toy
Biz Breach Event, but shall be in addition to the right of the Consenting
Lenders to seek any remedies to which they are entitled against Toy Biz and, in
the event of a Stockholder Breach Event, against Stockholder.
15. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one and
the same document.
16. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in another jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only so broad as is enforceable.
17. Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable to consummate
the transactions contemplated by this Agreement.
18. Third-Party Beneficiaries; No Impairment of Stockholder
Agreement Litigation. Nothing in this Agreement, expressed or implied, shall be
construed to give any person other than the parties hereto any legal or
equitable right, remedy or claim under or by reason of this Agreement or any
provision contained herein or be construed as an admission of any fact or
conclusion of law by Toy Biz or Stockholder with respect to any issue in the
Stockholder Agreement Litigation, or in any other legal action which is pending
now or at any time in the future.
19. Legend. As soon as practicable after the
execution of this Agreement, Stockholder shall cause the following legend to be
placed on the certificates representing the Shares:
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The shares of common stock represented by this certificate are subject
to the terms of an Amended and Restated Proxy and Stock Option
Agreement, dated as of November 19, 1997, by and between Xxx Xxxx, the
Consenting Lenders and the Panini Lenders who are parties thereto (the
"Agreement"), and are held and may not be transferred or encumbered,
except in accordance therewith. No registration or transfer will be
recorded on the books of Toy Biz, Inc. unless the transfer is made to a
transferee who agrees to be bound by the Agreement.
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IN WITNESS WHEREOF, the Consenting Lenders have caused this
Proxy and Stock Option Agreement to be executed by their respective duly
authorized officers by their execution and delivery of a Consenting Lender
Execution Page as described in the preamble to this Agreement, and Stockholder
has duly executed this Agreement, as of the date and year first above written.
XXX XXXX
/s/Xxx Xxxx
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EXHIBIT 1
CONSENTING LENDER EXECUTION PAGE
By signing below, the undersigned is hereby executing and agreeing to be bound
by the (a) Amended and Restated Master Agreement (the "Master Agreement"), dated
as of November 19, 1997, by and among (i) Toy Biz, Inc., (ii) certain secured
creditors of Marvel Entertainment Group, Inc. and certain of its direct and
indirect subsidiaries (the "Marvel Debtors"), and (iii) the Panini Lenders (as
defined in the Plan of Reorganization referred to in the Master Agreement), (b)
Amended and Restated Proxy and Stock Option Agreement, dated as of November 19,
1997, by and among Xxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxxxx, T.A. and Zib, Inc. and
certain secured creditors of the Marvel Debtors, and (c) Amended and Restated
Proxy and Stock Option Agreement, dated as of November 19, 1997, by and among
Xxx Xxxx and certain secured creditors of the Marvel Debtors. This Consenting
Lender Execution Page shall be deemed to be a signature page to each of the
agreements listed above and the undersigned shall be deemed to have signed each
as a "Consenting Lender."
Name of Consenting Lender:
-------------------------------
By:____________________________
Name:
Title:
Address for Notices:
-------------------------------
-------------------------------
Telephone No.:_________________
Telecopy No.:__________________
Principal amount of Fixed
Senior Secured Claims owned
or beneficially owned and
which is consenting as set
forth above: $__________.
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