November 19, 1997
Xxxxxxxxx Partners, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
Purchase of 8% Cumulative Convertible Preferred Stock
Gentlemen:
The undersigned are the record or beneficial owners of common
stock of Toy Biz, Inc. ("TB") (the "Stockholders") and have requested that you
execute and deliver to TB an agreement pursuant to which you will commit to
purchase shares of the 8% Cumulative Convertible Preferred Stock, par value $.01
per share (the "Preferred Stock"), of Marvel Entertainment Group, Inc. or such
other entity as is the issuer of the Preferred Stock pursuant to the Plan of
Reorganization (the "Commitment Letter"). As a condition to executing and
delivering the Commitment Letter you have requested that the Stockholders
execute and deliver this letter agreement (the "Letter Agreement"). Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Commitment Letter.
In consideration of your execution of the Commitment Letter,
the Stockholders hereby severally agree in their capacities as record and
beneficial owners of common stock of TB that:
1. If (a) a Final Change of Control shall occur and, but for
the Final Change of Control, Xxxxxxxxx Partners, Inc. ("Xxxxxxxxx") would be
entitled under the terms of the Commitment Letter to receive an Alternative
Transaction Fee, (b) an Adverse Order shall be entered which has the effect,
legal or otherwise, of preventing the payment of the Alternative Transaction Fee
in accordance with the terms of the Commitment Letter and Xxxxxxxxx is otherwise
entitled under the terms of the Commitment Letter to receive an Alternative
Transaction Fee or (c) a Marvel Board Change occurs and the Alternative
Transaction Fee is not paid when due, then Xxxxxxxxxx and Arad shall each be
severally obligated to pay to Xxxxxxxxx, at the same time that the Alternative
Transaction Fee would have been payable in accordance with the terms of the
Commitment Letter but for the Final Change
656192.3
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of Control, Adverse Order or Marvel Board Change, a cash fee (the "Substitute
Fee") equal to ten percent (10%) of the product of (a) the number of TB Shares
owned, directly or indirectly, by each of them as of the date hereof and (b) the
amount by which (i) the consideration per TB Share received, to be received or
deemed received by holders of TB Shares in the Alternative Transaction,
determined in the same manner as provided in the Commitment Letter, exceeds (ii)
$9.00 (appropriately adjusted for any TB Recapitalization); provided, however,
that no Substitute Fee shall be payable by Xxxxxxxxxx or Arad, as the case may
be, in respect of any shares sold upon exercise of the Option granted by him in
the Amended and Restated Proxy and Stock Option Agreement, dated as of November
19, 1997, or any amendment thereto, executed by him in favor of the Consenting
Lenders (as defined therein). Xxxxxxxxxx and Arad acknowledge the substantial
personal benefit to their investments in TB attributable to the execution of the
Commitment Letter by Xxxxxxxxx and that, but for the agreements of Xxxxxxxxxx
and Arad set forth in this paragraph, Xxxxxxxxx would not have entered into the
Commitment Letter.
2. Each of the undersigned shall use his respective reasonable
best efforts (subject to their fiduciary duties as directors and/or officers of
TB) to cause TB to comply with the terms of the Commitment Letter irrespective
of any Adverse Order, Change in Control or other judicial determination as to
the authorized composition of the Board of Directors of TB.
This Letter Agreement shall not be assignable by you and is
intended to be solely for the benefit of the parties hereto and is not intended
to confer any benefits upon, or create any rights in favor of, any person other
than the parties hereto. This Letter Agreement may not be amended or waived
except by an instrument in writing signed by the parties hereto. This Letter
Agreement may be executed in any number of counterparts, each of which shall be
an original, and all of which, when taken together, shall constitute one
agreement. Delivery of an executed signature page of this Letter Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
This Letter Agreement is the only agreement that has been
entered into among us with respect to the matters contained herein and sets
forth the entire understanding of the parties with respect thereto. This Letter
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York, without giving effect to conflict of law principles
thereof.
656192.3
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If any provisions of this Letter Agreement is held to be
illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Letter Agreement.
Such provision shall be deemed to be modified to the extent necessary to render
it legal, valid and enforceable.
Very truly yours,
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Xxxxx Xxxxxxxxxx
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Xxx Xxxx
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Xxxxxx X. Xxxxxx
(with respect to paragraph 2 only)
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