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Sample Business Contracts

Warrant Agreement - Marvel Enterprises Inc. and American Stock Transfer & Trust Co.

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                                                          PLAN WARRANT AGREEMENT


                               WARRANT AGREEMENT
                               -----------------

          WARRANT  AGREEMENT,  dated as of October  1, 1998  (this  "Agreement")
between Marvel Enterprises,  Inc., a Delaware  corporation (the "Company"),  and
American Stock Transfer & Trust Company, as warrant agent (the "Warrant Agent").

          WHEREAS,  as consideration  paid by the Company in connection with the
settlement and resolution of all disputes between certain unsecured creditors of
Marvel  Entertainment Group, Inc., a Delaware  corporation  ("Marvel"),  and the
Debtors (as herein  defined),  in connection with a Fourth Amended Joint Plan of
Reorganization  under  Chapter 11,  Title 11,  United  States Code (the "Plan of
Reorganization"),  for Marvel,  the Asher Candy Company,  Fleer Corp.,  Frank H.
Fleer Corp., Heroes World Distribution, Inc., Malibu Comics Entertainment, Inc.,
Marvel Characters,  Inc., Marvel Direct Marketing Inc., and SkyBox International
Inc. (collectively,  the "Debtors"), jointly proposed by the Company and certain
holders of senior secured  indebtedness of Marvel, the Company proposes to issue
and deliver warrant certificates (the "Warrant Certificates") as provided in the
Plan of  Reorganization to each holder of an Allowed Unsecured Claim (as defined
in the Plan of  Reorganization)  evidencing  Plan Warrants (the  "Warrants")  to
acquire, under certain circumstances,  up to an aggregate of 1,750,000 shares of
the common stock, $.01 par value per share, of the Company (the "Common Stock"),
such number of Warrants and shares of Common Stock being  subject to  adjustment
as set forth herein; and

          WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company,  and the  Warrant  Agent is willing to so act, in  connection  with the
issuance of the Warrant Certificates and other matters provided herein.

          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
agreements  herein set forth,  and for the  purpose of defining  the  respective
rights and  obligations  of the Company,  the Warrant  Agent and the Holders (as
defined herein), the parties hereto agree as follows:

          SECTION  1.  Certain  Definitions.  As  used in  this  Agreement,  the
following terms shall have the following respective meanings:

          "Affiliate" means, (i) with respect to any specified Person, any other
Person that,  directly or  indirectly,  controls,  is  controlled by or is under
direct or indirect common

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control with such specified  Person, or any executive officer or director of any
such  specified  Person  or other  Person or (ii) with  respect  to any  natural
Person, any Person having a relationship with such person by blood,  marriage or
adoption not more remote than first cousin. For the purposes of this definition,
"control," when used with respect to any specified Person, means the possession,
direct or indirect,  of the power to direct the  management and policies of such
Person,  directly  or  indirectly,  whether  through  the  ownership  of  voting
securities,  by  contract  or  otherwise;  provided,  however,  that  beneficial
ownership of 10% or more of the voting  securities of a Person will be deemed to
be control.  The terms "controlling" and "controlled" have meanings  correlative
to the foregoing.

          "Board of Directors"  means the Company's Board of Directors or a duly
appointed committee of the Company's Board of Directors.

          "Business  Day" means each Monday,  Tuesday,  Wednesday,  Thursday and
Friday which is not a day on which banking institutions in The City of New York,
or the city in which the principal  corporate  trust office of the Warrant Agent
is located, are authorized or obligated by law or executive order to be closed.

          "Common Stock" has the meaning set forth in the preamble hereof.

          "Company" means Marvel Enterprises,  Inc., a Delaware corporation, and
its successors and assigns.

          "Consummation  Date"  has  the  meaning  set  forth  in  the  Plan  of
Reorganization.

          "Exchange Act" means the Securities  Exchange Act of 1934, as amended,
and  the  rules  and  regulations  of the  Securities  and  Exchange  Commission
thereunder.

          "Exercise Price" means the purchase price per share of Common Stock to
be paid upon the exercise of each Warrant in  accordance  with the terms hereof,
which price  shall be $17.25 per share of Common  Stock,  subject to  adjustment
from time to time pursuant to Section 11 hereof.

          "Expiration  Date"  means the  first  business  day  after the  fourth
anniversary of the Consummation Date.

          "Fair Market Value" means,  with respect to any share of Common Stock,
as of the date of determination  the average of the daily Closing Price for each
of the 20 consecutive  trading days preceding the date of such computation.  The
closing price for each day shall be:


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          (a) if the Common Stock shall be then listed or admitted to trading on
          the   New   York   Stock   Exchange,   the   closing   price   on  the
          NYSE-Consolidated  Tape (or any  successor  composite  tape  reporting
          transactions  on the New York Stock  Exchange) or, if such a composite
          tape  shall  not be in use or shall  not  report  transactions  in the
          Common  Stock,  or if the  Common  Stock  shall be  listed  on a stock
          exchange  other that the New York Stock  Exchange,  the last  reported
          sales price  regular way or, in case no such reported sale takes place
          on such day, the average of the closing bid and asked  prices  regular
          way for such day, in each case on the  principal  national  securities
          exchange on which the shares of Common Stock are listed or admitted to
          trading (which shall be the national  securities exchange on which the
          greatest  number of shares of the Common Stock have been traded during
          such 20 consecutive trading days); or

          (b) if the Common  Stock is not listed or  admitted  to  trading,  the
          average of the closing sale prices as reported by the NASDAQ  National
          Market  System or, if the Common Stock is not included on such system,
          the average of the closing bid and asked prices of the Common Stock in
          the  over-the-counter  market as reported by any system  maintained by
          the NASD or any  comparable  system  or,  if the  Common  Stock is not
          included for quotation in any such system,  the average of the closing
          bid and asked prices as furnished by two members of the NASD  selected
          reasonably  and in good  faith  from  time to  time  by the  Board  of
          Directors for that purpose; or

          (c) if the Common  Stock is not listed or  admitted  to trading and in
          the  absence of one or more such  quotations,  the Fair  Market  Value
          shall  be as  reasonably  determined  in good  faith  by the  Board of
          Directors  (which  determination  shall be  reasonably  described in a
          written notice delivered to the Warrantholders) or, if an objection is
          made to such  determination by a Qualifying  Warrantholder (as defined
          below) in accordance with the following sentence,  as determined by an
          Independent  Appraiser in accordance with the following  sentence.  In
          the  event  that any  Qualifying  Warrantholder  shall  object  to the
          determination  of the Board of  Directors  of the Fair Market Value by
          delivering written notice to the Company within ten (10) Business Days
          following  the  receipt  by  such  Qualifying  Warrantholder  of  such
          determination  of the Board of Directors,  the Fair Market Value shall
          instead be determined in good faith by an Independent  Appraiser.  The
          determination of the Board of Directors of the Fair Market Value shall
          be  binding  and   conclusive   if  no   objection  is  made  to  such
          determination  by a Qualifying  Warrantholder  in accordance  with the
          terms set forth above in this paragraph.  The fees and expenses of any
          Independent Appraiser determining the Fair Market Value shall be borne
          by the Company and the determination by such Independent  Appraiser of
          the Fair Market Value shall be binding and conclusive.

          "Holder" or "Warrantholder" means the registered holder of a Warrant.

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          "Independent  Appraiser"  means any nationally  recognized  investment
banking  firm or  accounting  firm (other than any  investment  banking  firm or
accounting firm having a significant  ongoing  relationship  with the Company or
the Qualifying  Warrantholder at the time of the appraisal)  selected jointly in
good faith by the Board of Directors  and the  Qualifying  Warrantholder,  whose
fees and expenses shall be paid by the Company.

          "Person" means any individual, corporation, limited liability company,
partnership,   joint   venture,   association,   joint-stock   company,   trust,
unincorporated  organization,  government or any agency or political subdivision
thereof, or other entity.

          "Plan of  Reorganization"  has the meaning  set forth in the  preamble
hereof.

          "Qualifying  Warrantholder"  means  any  Warrantholder  (or  group  of
Warrantholders)  that, at the time of any objection to the  determination of the
Board of Directors of the Fair Market  Value,  beneficially  owns  collectively,
together  with its  Affiliates,  at least ten percent (10%) of the Warrants on a
fully diluted basis.

          "Register" has the meaning set forth in Section 5(c) hereof.

          "Securities Act" means the Securities Act of 1933, as amended,  or any
similar  Federal  statute,  and the rules and  regulations of the Securities and
Exchange Commission thereunder.

          "Transfer Agent" has the meaning set forth in Section 10 hereof.

          "Warrant  Agent" means  American Stock Transfer & Trust Company or the
successor or successors of such Warrant Agent  appointed in accordance  with the
terms hereof.

          "Warrant  Certificates"  has the  meaning  set  forth in the  preamble
hereof.

          "Warrants" has the meaning set forth in the preamble hereof.

          "Warrants  Shares" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants pursuant to the terms of this Agreement.

          SECTION 2.  Appointment of Warrant Agent.  The Company hereby appoints
the Warrant Agent to act as agent for the Company in  accordance  with the terms
and conditions set forth in this Agreement, and the Warrant Agent hereby accepts
such appointment.

          SECTION 3. Warrant  Certificates.  (a) The Warrant  Certificates to be
delivered  pursuant to this Agreement shall be in registered form only, shall be
substantially  in the form set forth in Exhibit A attached hereto and shall have
such insertions as are appropriate or required or

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permitted by this Agreement and may have such letters, numbers,  designations or
other marks of  identification  and such  legends,  summaries  and  endorsements
stamped,  printed,  lithographed  or  engraved  thereon as the  Company may deem
appropriate and as are not  inconsistent  with the provisions of this Agreement,
or as may be  required  to  comply  with any law or with any rule or  regulation
pursuant  thereto or with any rule or regulation of any  securities  exchange on
which the Warrants may from time to time be listed.  Warrant  Certificates shall
be dated the date of countersignature by the Warrant Agent.

          (b)  Pending  the  preparation  of  definitive  Warrant  Certificates,
temporary   Warrant   Certificates   may  be  issued,   which  may  be  printed,
lithographed, typewritten, mimeographed or otherwise produced, and which will be
substantially  of the tenor of the definitive  Warrant  Certificates  in lieu of
which they are issued.

          (c) If temporary  Warrant  Certificates  are issued,  the Company will
cause definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates,  the temporary Warrant
Certificates  shall be exchangeable  for definitive  Warrant  Certificates  upon
surrender of the temporary  Warrant  Certificates to the Warrant Agent,  without
charge to the Holder. Temporary Warrant Certificates so surrendered for exchange
shall be canceled by the Warrant Agent and disposed of by the Warrant Agent in a
manner  satisfactory to the Company.  Until so exchanged,  the temporary Warrant
Certificates  shall in all respects be entitled to the same benefits  under this
Agreement as definitive Warrant Certificates.

          SECTION 4. Execution of Warrant Certificates. (a) Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board, its Chief
Executive  Officer,  its  President or a Vice  President  of the  Company.  Such
signature  upon  the  Warrant  Certificates  may be  manual  or in the form of a
facsimile  signature of the present or any future  Chairman of the Board,  Chief
Executive  Officer,  President  or Vice  President  of the  Company,  and may be
imprinted  or  otherwise  reproduced  on the Warrant  Certificates  and for that
purpose the Company may adopt and use the facsimile  signature of any person who
shall have been Chairman of the Board,  Chief  Executive  Officer,  President or
Vice  President  of the Company,  notwithstanding  the fact that at the time the
Warrant  Certificates  shall be countersigned and delivered or disposed of he or
she shall have ceased to hold such office.

          (b) In case any  officer of the  Company  who shall have signed any of
the  Warrant  Certificates  shall  cease to be such  officer  before the Warrant
Certificates  so signed shall have been  countersigned  by the Warrant Agent, or
delivered to the Holder thereof, such Warrant Certificates nevertheless shall be
countersigned and delivered with the same force and effect as though such person
had not ceased to be such officer of the Company,  unless the Warrant  Agent has
received  written  instructions  from the Company not to countersign and deliver
such  Certificates;  and any Warrant  Certificate may be signed on behalf of the
Company by any person who, at the actual date of the  execution  of such Warrant
Certificate, shall be a proper officer of

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the  Company  to sign  such  Warrant  Certificate,  although  at the date of the
execution of this Warrant Agreement any such person was not such officer.

          SECTION 5. Registration and Countersignature.  (a) The Company and the
Warrant Agent,  on behalf of the Company,  shall number and register the Warrant
Certificates  in a Register (as  hereinafter  defined) as they are issued by the
Company which such register shall be maintained in accordance  with Section 5(c)
hereof.

          (b)  Warrant  Certificates  shall  be  manually  countersigned  by the
Warrant  Agent and shall not be valid for any purpose  unless so  countersigned.
The Warrant Agent shall, upon written instructions of the Chairman of the Board,
the Chief Executive  Officer,  the President or a Vice President of the Company,
initially countersign,  issue and deliver Warrants entitling the Holders thereof
to purchase not more than the number of Warrant Shares  referred to above in the
first recital  hereof and shall  countersign  and deliver  Warrants as otherwise
provided in this Agreement.

          (c) The Company shall maintain, or cause to be maintained,  a register
(the  "Register")  of the Warrants at its  registered  office,  at the principal
office  of the  Warrant  Agent or at any  other  place in the  United  States of
America  designated  by the Company,  showing (i) the names and the latest known
address of each person who is or has been a Holder;  (ii) the number of Warrants
held by each  Holder;  and  (iii)  the date and  particulars  of the  issue  and
transfer of  Warrants.  The  registered  owner on the Register may be deemed and
treated by the Company, the Warrant Agent and all other persons dealing with the
Warrants  evidenced  thereby as the Holder and  absolute  owner  thereof for any
purpose and as the person entitled to exercise the right represented thereby, or
to the  transfer  on the  books  of the  Company,  any  notice  to the  contrary
notwithstanding,  and,  until  such  transfer  of the  Warrant  on such books in
accordance  with the  provisions  of this  Agreement,  the Company may treat the
registered owner on the Register as the owner for all purposes.

          SECTION 6.  Registration  of Transfers and Exchanges.  (a) The Warrant
Agent shall from time to time,  subject to the  limitations of Section 7 hereof,
register the transfer of any outstanding  Warrant  Certificates upon the records
to be maintained by it for that purpose, upon surrender thereof accompanied by a
written  instrument  or  instruments  of  transfer in form  satisfactory  to the
Warrant  Agent,  duly  executed by the Holder or Holders  thereof or by the duly
appointed legal representative  thereof or by a duly authorized  attorney.  Upon
any such registration of transfer a new Warrant Certificate(s) of like tenor and
representing  in the  aggregate  the number of  Warrants  transferred,  shall be
issued to the transferee(s),  and the surrendered  Warrant  Certificate shall be
canceled  by the  Warrant  Agent.  Upon  any  partial  transfer,  a new  Warrant
Certificate  of like  tenor and  representing  in the  aggregate  the  number of
Warrants which were not so transferred,  shall be issued to, and in the name of,
the Warrantholder. Canceled Warrant Certificates shall thereafter be disposed of
in a manner satisfactory to the Company.


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          (b) Any Warrant  Certificate may be exchanged,  subdivided or combined
with  other  Warrant  Certificates  evidencing  the same  rights  as the  rights
evidenced  thereby upon  presentation  and  surrender  thereof at the  principal
office of the Warrant Agent, together with a written notice signed by the Holder
hereof specifying the denominations in which new Warrant  Certificate(s)  are to
be issued. Upon presentation and surrender of any Warrant Certificates, together
with such written  notice,  for exchange,  subdivision  or  combination  of such
Warrant  Certificates,  the  Company  will issue a new  Warrant  Certificate  or
Warrant Certificates,  in the denominations  requested,  of like tenor entitling
the Holder(s) thereof to purchase the same aggregate number of Warrant Shares as
the Warrant Certificate(s) so surrendered.  Such new Warrant Certificate(s) will
be registered  in the name of the Holder  submitting  such request.  Any Warrant
Certificate  surrendered  for  exchange,  subdivision  or  combination  shall be
canceled promptly upon the issuance of such new Warrant  Certificate(s) and then
be disposed of by such Warrant Agent in a manner satisfactory to the Company.

          (c) The Warrant Agent is hereby authorized to countersign and deliver,
in accordance with the provisions of this Section 6 and of Section 5 hereof, the
new Warrant Certificates required pursuant to the provisions of this Section 6.

          SECTION 7. Terms of Warrants; Exercise of Warrants. (a) Subject to the
terms of this Agreement,  each Holder shall have the right,  upon payment of the
Exercise Price in accordance  with the terms of this  Agreement,  from and after
the date of issuance of such  Warrants  until 5:00 p.m.,  New York City time, on
the Expiration  Date, to receive from the Warrant Agent on behalf of the Company
the number of fully paid and  nonassessable  Warrant Shares which the Holder may
at the time be entitled to receive on exercise  of  Warrants.  Each  Warrant not
exercised on or before 5:00 p.m.,  New York City time,  on the  Expiration  Date
shall become void and all rights  thereunder  and all rights in respect  thereof
under this Agreement shall cease as of such time.

          (b) The Warrants may be exercised  during normal business hours on any
Business Day on or prior to the  Expiration  Date upon  surrender to the Warrant
Agent on behalf of the Company at the  principal  office of the Warrant Agent of
the certificate or certificates evidencing the Warrants to be exercised with the
form of  subscription  to purchase on the reverse  thereof  duly  completed  and
signed,  and upon payment to the Warrant Agent for the account of the Company of
the  Exercise  Price as  adjusted  as herein  provided,  for each of the Warrant
Shares in respect  of which such  Warrants  are then  exercised.  Payment of the
aggregate  Exercise  Price for the number of  Warrant  Shares  specified  in the
subscription  form shall be made by wire  transfer or by  certified  or official
bank check payable to the order of the Company in immediately available funds in
lawful money of the United States of America.

          (c) Upon surrender of Warrants in accordance  with this Section 7, and
payment of the  Exercise  Price as  provided  above,  the  Warrant  Agent  shall
thereupon  promptly  notify the Company,  and the Warrant Agent shall deliver or
cause to be  delivered,  as promptly as  possible  thereafter,  but in any event
within three (3) Business Days of receipt of such surrender and payment,  to the
Holder of such Warrant Certificate appropriate evidence of ownership of any

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Warrant  Shares or other  securities or property  (including any money) to which
the Holder is entitled, and, to the extent possible,  certificates  representing
the Warrant Shares or such other securities shall be in such  denomination(s) as
such Holder shall request,  and registered or otherwise placed in, or payable to
the order of,  such name or names as may be  directed  in writing by the Holder,
and shall  deliver or cause to be delivered  such  evidence of ownership and any
other  securities  or  property  (including  any money) to the person or persons
entitled  to receive  the same,  together  with an amount in cash in lieu of any
fraction  of a share as  provided  in Section 13 hereof.  Any such  evidence  of
ownership shall be deemed to have been issued and any Person so designated to be
named  therein shall be deemed to have become a holder of record of such Warrant
Shares as of the date of the  surrender  of such  Warrants  and  payment  of the
Exercise  Price,  notwithstanding  that the stock  transfer books of the Company
shall then be closed or that  certificates  representing  such shares  shall not
then be actually delivered to the Holder.

          (d) The Warrants shall be  exercisable  either in full or from time to
time in part and, in the event that a Warrant  Certificate is surrendered to the
Warrant Agent for exercise of fewer than all of the Warrants represented by such
Warrant  Certificate at any time prior to the Expiration Date, a new certificate
evidencing  the  remaining  Warrant or Warrants but  otherwise  identical to the
surrendered Warrant  Certificate will be issued by the Company,  and the Warrant
Agent is  hereby  irrevocably  authorized  to  countersign  and to  deliver  the
required new Warrant  Certificate  pursuant to the  provisions of this Section 7
and of Section 4 hereof as promptly as  possible,  but in any event within three
(3) Business Days of receipt of the certificate evidencing the Warrants, and the
Company,  whenever  required by the Warrant Agent, will supply the Warrant Agent
with  Warrant  Certificates  duly  executed  on behalf of the  Company  for such
purpose.

          (e) All Warrant  Certificates  surrendered  upon  exercise of Warrants
shall be canceled by the Warrant Agent. Such canceled Warrant Certificates shall
then be  disposed  of by the  Warrant  Agent  in a  manner  satisfactory  to the
Company. The Warrant Agent shall account promptly to the Company with respect to
such  Warrants  exercised  and  concurrently  pay to the  Company as promptly as
practicable,  but in any event  within five (5)  Business  Days of receipt,  all
monies  received by the  Warrant  Agent for the  purchase of the Warrant  Shares
through the exercise of such Warrants.

          (f) The  Warrant  Agent shall keep  copies of this  Agreement  and any
notices  given or  received  hereunder  by or from  the  Company  available  for
inspection  by the Holders  during  normal  business  hours at its  office.  The
Company  shall  supply the Warrant  Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may reasonably request.

          SECTION 8.  Payment of Taxes.  The  Company  will pay all  documentary
stamp taxes and other governmental  charges attributable to the initial issuance
of Warrant  Shares upon the exercise of Warrants;  provided,  however,  that the
Company  shall not be  required  to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue of any Warrant

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Certificates or any certificates for Warrant Shares in a name other than that of
the Holder of a Warrant Certificate  surrendered upon the exercise of a Warrant,
and the  Company  shall  not be  required  to  issue  or  deliver  such  Warrant
Certificates  unless or until the  Person or  Persons  requesting  the  issuance
thereof  shall  have paid to the  Company  the  amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

          SECTION 9. Mutilated, Destroyed, Lost and Stolen Warrant Certificates.
(a) If (i) any mutilated Warrant Certificate is surrendered to the Warrant Agent
or (ii) the Company and the Warrant Agent receive  evidence to their  reasonable
satisfaction of the destruction,  loss or theft of any Warrant Certificate,  and
there is  delivered  to the Company and the Warrant  Agent such  certificate  or
indemnity as may be required by them to save each of them harmless, then, in the
absence  of  notice to the  Company  or the  Warrant  Agent  that  such  Warrant
Certificate  has been  acquired  by a bona fide  purchaser,  the  Company  shall
execute  and  upon  the  Company's  written  request  the  Warrant  Agent  shall
countersign and deliver,  in exchange for any such mutilated Warrant Certificate
or in lieu of and in substitution for any such destroyed, lost or stolen Warrant
Certificate,  a new Warrant  Certificate  of like tenor and for a like aggregate
number of Warrants. An applicant for such a substitute Warrant Certificate shall
also comply with such other reasonable regulations as the Company may prescribe.

          (b)  Upon the  issuance  of any new  Warrant  Certificate  under  this
Section 9, the Company may require the payment by the Holder of a sum sufficient
to cover any tax or other  governmental  charge  that may be imposed in relation
thereto  and the  payment of such other  reasonable  charges as the  Company may
prescribe,  including  reimbursement  of  reasonable  fees and  expenses  of the
Company and the Warrant Agent incidental thereto.

          (c) The  provisions of this Section 9 are exclusive and shall preclude
(to the  extent  lawful)  all  other  rights or  remedies  with  respect  to the
replacement of mutilated, destroyed, lost or stolen Warrant Certificates.

          SECTION 10. Issuance of Warrant  Shares.  The Company will keep a copy
of this  Agreement  on file with the  transfer  agent for the Common  Stock (the
"Transfer Agent") and with every subsequent transfer agent for any shares of the
Company's  capital  stock  issuable  upon the exercise of the rights of purchase
represented by the Warrants.  The Warrant Agent is hereby irrevocably authorized
to  requisition,  from time to time,  from such Transfer Agent the  certificates
representing  shares of the  Common  Stock and any cash  which may be payable as
provided  in Section  13 hereof  required  to honor  outstanding  Warrants  upon
exercise  thereof in accordance  with the terms of this  Agreement.  The Company
will supply such  Transfer  Agent with duly executed  certificates  representing
shares of Common Stock for such  purposes  and will  provide or  otherwise  make
available  any cash which may be payable as provided  in Section 13 hereof.  The
Company  will furnish such  Transfer  Agent and the Warrant  Agent a copy of all
notices of adjustments and  certificates  related  thereto,  transmitted to each
Holder of the Warrants pursuant to Section 14 hereof.


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<PAGE>



          SECTION 11.  Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The number and kind of Warrant Shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
as follows:

          (a) Stock Dividends.  If at any time after the date of the issuance of
          the Warrants and prior to the  Expiration  Date (i) the Company  shall
          pay a stock dividend or other distribution payable in shares of Common
          Stock or (ii) the  number of shares of Common  Stock  shall  have been
          increased  by a  subdivision  or split-up  of shares of Common  Stock,
          then,  on the date of the  payment of such  dividend  or  distribution
          (retroactive  to the record date) or  immediately  after the effective
          date of  subdivision  or  split-up,  as the case may be, the number of
          Warrant  Shares to be delivered  upon exercise of the Warrants will be
          increased  so that the  Warrantholder  will be entitled to receive the
          number of  Warrant  Shares  that such  Warrantholder  would have owned
          immediately  following  such action had the  Warrants  been  exercised
          immediately  prior  thereto  or,  in the case of a stock  dividend  or
          distribution,   prior  to  the  record  date  for   determination   of
          shareholders entitled thereto, and the Exercise Price will be adjusted
          as provided in Section 11(g) hereof.

          (b)  Combination  of Stock.  If the  number of shares of Common  Stock
          outstanding at any time after the date of the issuance of the Warrants
          shall have been decreased by a combination of the  outstanding  shares
          of Common Stock,  then,  immediately  after the effective date of such
          combination,  the  number  of  Warrant  Shares  to be  delivered  upon
          exercise of each Warrant  will be decreased so that the  Warrantholder
          thereafter  will be entitled  to receive the number of Warrant  Shares
          that such  Warrantholder  would have owned immediately  following such
          action had such Warrant been exercised  immediately prior thereto, and
          the  Exercise  Price will be adjusted  as  provided  in Section  11(g)
          hereof.

          (c) Reorganization, Etc. If any capital reorganization of the Company,
          or any  reclassification  of the Common Stock, or any consolidation of
          the  Company  with or  merger  of the  Company  with or into any other
          Person or any sale,  lease or other  transfer of all or  substantially
          all of the  assets  of the  Company  to any  other  Person,  shall  be
          effected  in such a way that the  holders  of  Common  Stock  shall be
          entitled to receive  stock,  other  securities,  cash or other  assets
          (whether such stock, other securities, cash or other assets are issued
          or distributed by the Company or another Person) with respect to or in
          exchange for Common Stock,  then,  upon exercise of each Warrant,  the
          Warrantholder  shall have the right to receive  the kind and amount of
          stock,  other  securities,  cash or other assets  receivable upon such
          reorganization, reclassification, consolidation, merger or sale, lease
          or other  transfer  by a holder of the number of Warrant  Shares  that
          such  Warrantholder  would have been entitled to receive upon exercise
          of such  Warrant had such Warrant been  exercised  immediately  before
          such reorganization, reclassification,

677106.12
                                       10

<PAGE>



          consolidation,  merger or sale,  lease or other  transfer,  subject to
          adjustments  (as determined in good faith by the Board of Directors of
          the Company).  Adjustments for events subsequent to the effective date
          of such a  reorganization,  reclassification,  consolidation,  merger,
          sale or transfer  of assets  shall be as nearly  equivalent  as may be
          practicable to the adjustments provided for in this Agreement.  In any
          such event,  effective  provisions shall be made in the certificate or
          articles of incorporation  of the resulting or surviving  corporation,
          in any  contract  of sale,  merger,  conveyance,  lease,  transfer  or
          otherwise so that the  provisions  set forth herein for the protection
          of the rights of the  Warrantholders  shall thereafter  continue to be
          applicable;  and any such  resulting  or surviving  corporation  shall
          expressly assume the obligation to deliver, upon exercise, such shares
          of stock, other securities,  cash and property. The provisions of this
          Section  11  shall  similarly  apply  to  successive   consolidations,
          mergers, sales, leases or transfers.

          (d)  Adjustment  for Rights  Issue.  In case the  Company  shall issue
          rights,  options  or  warrants  or  other  securities  convertible  or
          exchangeable  for Common Stock or for any other such right,  option or
          warrant  (collectively,  "Rights")  to all holders of its  outstanding
          Common Stock  entitling  them to subscribe for purchase or obtain upon
          conversion  or exchange to shares of Common Stock at a Price Per Share
          which is lower at the record date mentioned  below than either (x) the
          then  current  Fair Market  Value per share of Common Stock or (y) the
          Exercise  Price,  or both,  the  number of Warrant  Shares  thereafter
          purchasable  upon the exercise of each Warrant  shall be determined by
          multiplying the number of Warrant Shares theretofore  purchasable upon
          exercise of each Warrant by a fraction,  the  numerator of which shall
          be the  number of shares of Common  Stock  outstanding  on the date of
          issuance of such Rights plus the additional Number of Shares of Common
          Stock offered for  subscription,  purchase or issuance upon conversion
          or exchange in  connection  with such  Rights and the  denominator  of
          which shall be the number of shares of Common Stock outstanding on the
          date of issuance  of such  Rights plus the number of shares  which the
          aggregate Proceeds received or receivable by the Company upon exercise
          of such  Rights  would  purchase at the greater of (x) the Fair Market
          Value  per  share  of  Common  Stock  at such  record  date or (y) the
          Exercise  Price.  Such  adjustment  shall be made whenever  Rights are
          issued,  and shall become effective  immediately after the record date
          for the  determination of stockholders  entitled to receive Rights. As
          used  herein,  "Price Per Share"  shall be defined and  determined  in
          accordance with the following formula:

               P = R/N

               where

               P = Price Per Share;


677106.12
                                       11

<PAGE>



               R = the  "Proceeds"  received  or  receivable  by the  Company in
               respect of Rights  which  shall be the total  amount  received or
               receivable by the Company in  consideration  for the issuance and
               sale of such  Rights  plus the  aggregate  amount  of  additional
               consideration  payable  to the  Company  upon  exercise  thereof;
               provided that the proceeds  received or receivable by the Company
               shall  be  the  cash  proceeds  before  deducting  therefrom  any
               compensation  paid or discount allowed in the sale,  underwriting
               or  purchase   thereof  by  underwriters  or  dealers  or  others
               performing similar services; and

               N = the  "Number of  Shares,"  which in the case of Rights is the
               maximum number of shares of Common Stock initially  issuable upon
               exercise thereof.

          (e)  Adjustment  for Other  Distributions.  In case the Company  shall
          distribute  to all holders of its shares of Common Stock (x) evidences
          of indebtedness or assets  (excluding cash dividends or  distributions
          payable out of the consolidated  earnings or surplus legally available
          for such  dividends or  distributions  and dividends or  distributions
          referred to in paragraphs (a), (c) or (d) above) of the Company or any
          subsidiary  or (y)  shares of  capital  stock of a  subsidiary  of the
          Company (such evidences of indebtedness,  assets and securities as set
          forth in clauses (x) and (y) above,  collectively,  "Assets"), then in
          each case the number of Warrant Shares thereafter purchasable upon the
          exercise of each Warrant shall be determined by multiplying the number
          of Warrant Shares  theretofore  purchasable  upon the exercise of each
          Warrant by a fraction, the numerator of which shall be the Fair Market
          Value per share of Common Stock on the date of such  distribution  and
          the  denominator of which shall be such Fair Market Value per share of
          Common Stock less the fair value as of such record date as  determined
          reasonably  and in good faith by the Board of Directors of the Company
          of the portion of the Assets  applicable to one share of Common Stock.
          Such adjustment shall be made whenever any such  distribution is made,
          and shall become effective on the date of distribution  retroactive to
          the record  date for the  determination  of  stockholders  entitled to
          receive such distribution.

          (f) Carryover. Notwithstanding any other provision of this Section 11,
          no  adjustment  shall be made to the  number of  Warrant  Shares to be
          delivered  to the  Warrantholder  (or to the  Exercise  Price) if such
          adjustment  represents less than 1% of the number of Warrant Shares to
          be so delivered,  but any lesser  adjustment  shall be carried forward
          and shall be made at the time and  together  with the earlier to occur
          of (i) the  exercise  of all or any  portion of a Warrant and (ii) the
          next  subsequent  adjustment  that,  together with any  adjustments so
          carried  forward,  shall amount to 1% or more of the number of Warrant
          Shares to be so delivered.

677106.12
                                       12

<PAGE>




          (g) Exercise Price Adjustment.

               (i) Whenever the number of Warrant  Shares  purchasable  upon the
               exercise of the Warrants is adjusted as provided pursuant to this
               Section 11, the  Exercise  Price  payable  upon the exercise of a
               Warrant  shall be adjusted by  multiplying  such  Exercise  Price
               immediately prior to such adjustment by a fraction, the numerator
               of which shall be the number of Warrant Shares  purchasable  upon
               the exercise of the Warrant immediately prior to such adjustment,
               and the  denominator  of which  shall be the  number  of  Warrant
               Shares purchasable  immediately  thereafter;  provided,  however,
               that the Exercise  Price for each Warrant Share shall in no event
               be less than the par value of such Warrant Share.

               (ii) If at any time after the date of the  issuance of a Warrant,
               the  Company  shall pay to holders of record of Common  Stock any
               cash dividends or other cash distributions,  then, on the date of
               the payment of such dividend or distribution  (retroactive to the
               record  date),  the Exercise  Price  payable upon the exercise of
               such Warrant shall be adjusted by reducing the Exercise  Price by
               the amount of such  dividend or  distribution  applicable  to one
               share of Common Stock; provided, however, that the Exercise Price
               for each  Warrant  Share  shall in no event be less  than the par
               value of such Warrant Share.

          (h) Decrease in Exercise Price.  The Company,  in its sole discretion,
          shall have the right at any time,  or from time to time,  to  decrease
          the  Exercise  Price of the  Warrants  and/or  increase  the number of
          Warrants Shares issuable upon the exercise of the Warrants,  including
          as it considers  to be  advisable in order that any event  treated for
          federal  income tax  purposes as a dividend  of stock or stock  rights
          shall not be taxable to recipients.

          (i) Other  Adjustments.  If any event occurs as to which the foregoing
          provisions  of this  Section  11 are not  strictly  applicable  or, if
          strictly  applicable,  would not,  in the good faith  judgment  of the
          Board of Directors,  fairly protect the purchase rights of the Holders
          in  accordance  with  the  essential  intent  and  principles  of such
          provisions, then the Board of Directors shall make such adjustments in
          the application of such provisions,  in accordance with such essential
          intent and principles,  as shall be reasonably necessary,  in the good
          faith  opinion of the Board of  Directors,  to protect  such  purchase
          rights as aforesaid.

          (j) Further Equitable  Adjustments.  If, after one or more adjustments
          to the Exercise  Price pursuant to this Section 11, the Exercise Price
          cannot be reduced  further  without  falling  below the greater of (i)
          $0.01 or (ii) the lowest positive

677106.12
                                       13

<PAGE>



          exercise price legally  permissible  for warrants to acquire shares of
          Common Stock, the Company shall make further adjustments to compensate
          the Holder,  consistent with the foregoing principles, as the Board of
          Directors,  acting  in  good  faith,  deems  necessary,  including  an
          increase in the number of Warrant  Shares  issuable  upon  exercise of
          outstanding Warrants and/or a cash payment to the Holders.

          SECTION 12. Statement on Warrants.  Irrespective of any  adjustment(s)
in the number or kind of Warrant  Shares  issuable upon the exercise in whole or
in  part  of the  Warrants  or  the  Exercise  Price,  Warrants  theretofore  or
thereafter  issued may  continue  to express the same number and kind of Warrant
Shares  as are  stated  in the  Warrants  initially  issuable  from time to time
pursuant  to this  Agreement,  all  subject to further  adjustment  as  provided
herein.

          SECTION 13. Fractional Interest.  The Company shall not be required to
issue  fractional  shares of Common Stock on the  exercise of Warrants.  If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full Warrant Shares which shall be issuable upon such
exercise  shall be  computed on the basis of the  aggregate  number of shares of
Common  Stock  acquirable  on exercise  of the  Warrants  so  presented.  If any
fraction of a share of Common Stock  would,  except for the  provisions  of this
Section  13, be issuable on the  exercise of any Warrant (or  specified  portion
thereof),  the Company  shall (i) direct and deposit with the Transfer  Agent an
amount  sufficient  to pay an amount in cash  calculated by it to equal the then
current Fair Market Value per share multiplied by such fraction  computed to the
nearest whole cent and (ii) deliver to the Transfer Agent a written  certificate
of an officer of the Company  setting  forth the then  current Fair Market Value
per share which certificate  shall be conclusive  evidence of the correctness of
the matters  set forth  therein,  absent  clear  error.  The  Holders,  by their
acceptance of the Warrant  Certificates,  expressly  waive any and all rights to
receive  any  fraction  of a  share  of  Common  Stock  or a  stock  certificate
representing a fraction of a share of Common Stock.

          SECTION 14. Notices to Warrantholders.  (a) Upon any adjustment of the
Exercise  Price or number of  Warrant  Shares  issuable  pursuant  to Section 11
hereof,  the  Company  shall as  promptly  as  practicable  (x)  give a  written
certificate  of  the  Company  to  the  Warrant  Agent  of  such  adjustment  or
adjustments  which  certificate shall set forth (i) the number of Warrant Shares
issuable  upon the  exercise  of a Warrant  and the  Exercise  Price  after such
adjustment, (ii) a brief statement of the facts requiring such adjustment, (iii)
the  computation by which such adjustment was made, and (y) cause to be given to
each of the  registered  Holders  of the  Warrant  Certificates  at his  address
appearing on the Register  written  notice of such  adjustments  by  first-class
mail,  postage  prepaid.  The  Warrant  Agent  shall be  entitled to rely on the
above-referenced  certificate(s)  and  shall be under no duty or  responsibility
with respect to any such certificate(s), except to exhibit the same from time to
time to any Holder  desiring an inspection  thereof during  reasonable  business
hours.  The  Warrant  Agent  shall  not  at  any  time  be  under  any  duty  or
responsibility  to any  Holder to  determine  whether  any facts  exist that may
require  any  adjustment  of the  number of  Warrant  Shares  or other  stock or
property  issuable on exercise of the  Warrants or the Exercise  Price,  or with
respect to the nature or extent of any such adjustment when made,

677106.12
                                       14

<PAGE>



or with respect to the method employed in making such adjustment or the validity
or  value  (or the kind or  amount)  of any  Warrant  Shares  or other  stock or
property  which may be issuable on exercise of the  Warrants.  The Warrant Agent
shall not be responsible for any failure of the Company to make any cash payment
or to issue,  transfer  or deliver any Warrant  Share or stock  certificates  or
other stock, securities or property upon the exercise of any Warrant.

          (b) Prior to the Expiration Date, and for so long as the Warrants have
not been exercised in full, in the event of:

          (i) any taking by the  Company of a record of the holders of any class
     of securities  for the purpose of determining  the holders  thereof who are
     entitled to receive any  dividend  or other  distribution,  or any right to
     subscribe  for,  purchase or  otherwise  acquire any shares of stock of any
     class or any other securities,  indebtedness or property, or to receive any
     other right, option or warrant; or

          (ii) any capital  reorganization of the Company,  any reclassification
     or  recapitalization  of the  capital  stock of the  Company  (other than a
     change  in par  value,  or from par value to no par  value,  or from no par
     value to par value,  or as a result of a subdivision or  combination),  any
     consolidation  or merger  involving  the Company and any other party or any
     transfer of all or substantially all the assets of the Company to any other
     party or any tender  offer or  exchange  offer by the Company for shares of
     Common Stock; or

          (iii)  any  voluntary  or  involuntary  dissolution,   liquidation  or
     winding-up of the Company,

then the Company  shall cause to be filed with the Warrant Agent and shall cause
to be  given to each  Warrantholder  at its  address  appearing  on the  Warrant
Register,  at least  twenty  (20)  days  prior  to the  applicable  record  date
hereinafter  specified,  or promptly in the case of events for which there is no
record date, by first class mail,  postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock entitled to
receive  any  such  rights,  options,   warrants  or  distributions  are  to  be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange  offer for shares of Common Stock,  or (iii) the date on which any such
reclassification,  consolidation,  merger,  conveyance,  transfer,  dissolution,
liquidation  or winding up is expected to become  effective or  consummated,  as
well as the date as of which it is expected that the holders of record of shares
of Common  Stock shall be entitled to  exchange  such shares for  securities  or
other property, if any, deliverable upon such  reclassification,  consolidation,
merger,  conveyance,  transfer,  dissolution,  liquidation  or  winding-up.  The
failure to give the notice  required  by this  Section 14 or any defect  therein
shall not affect the legality or validity of any  distribution,  right,  option,
warrant,   reclassification,   consolidation,   merger,  conveyance,   transfer,
dissolution,  liquidation,  winding  up or  action,  or the vote upon any of the
foregoing.


677106.12
                                       15

<PAGE>



          SECTION 15.  Reservation  of Warrant  Shares,  Etc. The Company hereby
agrees that at all times there shall be reserved for issuance and delivery  upon
exercise of the Warrants, free from preemptive rights, liens, security interests
and other  encumbrances,  such number of shares of  authorized  but  unissued or
treasury  shares of  Common  Stock,  or other  stock or  securities  deliverable
pursuant  to Section  11, as shall be required  for  issuance  or delivery  upon
exercise of the Warrants.  Without limiting the generality of the foregoing, the
Company  agrees that it will not take any action  which would  result in Warrant
Shares  when  issued not being  validly  and  legally  issued and fully paid and
nonassessable. The Company hereby represents that, as of the date hereof, it has
sufficient  shares of Common Stock  reserved for issuance  upon  exercise of all
outstanding Warrants.

          SECTION 16. Warrant Agent. The Warrant Agent undertakes the duties and
obligations  imposed by this Agreement upon the following  terms and conditions,
by all of which the Company and the Holders, by their acceptance thereof,  shall
be bound:

          (a) The statements  contained  herein and in the Warrant  Certificates
          shall be taken as  statements  of the Company,  and the Warrant  Agent
          assumes  no  responsibility  for the  correctness  of any of the  same
          except such as describe  the  Warrant  Agent or action  taken or to be
          taken by it. The Warrant Agent assumes no responsibility  with respect
          to the  distribution of the Warrant  Certificates or Warrant Shares or
          payment or refund of the  Exercise  Price  except as herein  otherwise
          provided.

          (b)  The  Warrant   Agent  may  consult  at  any  time  with   counsel
          satisfactory  to it and the Warrant  Agent shall incur no liability or
          responsibility  to  the  Company  or to  any  holder  of  any  Warrant
          Certificate in respect to any action taken,  suffered or omitted by it
          hereunder  in good  faith and in  accordance  with the  opinion or the
          advice of such counsel.

          (c)  The  Company  agrees  to  pay  to the  Warrant  Agent  reasonable
          compensation  for all  services  rendered by the Warrant  Agent in the
          execution of this  Agreement,  to reimburse  the Warrant Agent for all
          expenses, taxes and governmental charges and other charges of any kind
          and nature  reasonably  incurred by the Warrant Agent in the execution
          of this  Agreement  and to  indemnify  the  Warrant  Agent and save it
          harmless  against  any  and  all  liabilities,   including  judgments,
          reasonable costs and counsel fees, for anything done or omitted by the
          Warrant Agent in the execution of this Agreement except as a result of
          its negligence, bad faith or willful misconduct.

          (d) The Warrant  Agent shall be under no  obligation  to institute any
          action, suit or legal proceeding or to take any other action likely to
          involve  expense  unless  the  Company  or one or more  Holders  shall
          furnish the Warrant Agent with  reasonable  security for any costs and
          expenses which may be incurred, but this provision shall

677106.12
                                       16

<PAGE>



          not affect the power of the  Warrant  Agent to take such  action as it
          may consider  proper,  whether with or without any such security.  All
          rights of action under this Agreement or under any of the Warrants may
          be enforced by the Warrant Agent without the  possession of any of the
          Warrant  Certificates or the production  thereof at any trial or other
          proceeding  relative thereto,  and any such action, suit or proceeding
          instituted  by the  Warrant  Agent  shall  be  brought  in its name as
          Warrant  Agent and any  recovery of judgment  shall be for the ratable
          benefit of the Holders,  as the  respective  rights or  interests  may
          appear.

          (e) The  Warrant  Agent,  and any  stockholder,  director,  officer or
          employee of it, may buy,  sell or deal in any of the Warrants or other
          securities  of the  Company or become  pecuniarily  interested  in any
          transaction in which the Company may be  interested,  or contract with
          or lend money to the Company or  otherwise  act as fully and freely as
          though it were not Warrant Agent under this Agreement.  Nothing herein
          shall preclude the Warrant Agent from acting in any other capacity for
          the Company or for any other legal entity.

          (f) The  Warrant  Agent  shall  not at any time be  under  any duty or
          responsibility  to any  Holder or the  Company  to make or cause to be
          made any  adjustment  of the  Exercise  Price or number of the Warrant
          Shares or other securities or property deliverable as provided in this
          Agreement,  or to determine  whether any facts exist which may require
          any of such  adjustments,  or with  respect to the nature or extent of
          any  such  adjustments,  when  made,  or with  respect  to the  method
          employed  in  making  the  same.   The  Warrant  Agent  shall  not  be
          accountable  with  respect  to the  validity  or  value or the kind or
          amount of any Warrant  Shares or of any  securities or property  which
          may at any  time be  issued  or  delivered  upon the  exercise  of any
          Warrant or with  respect to whether any such  Warrant  Shares or other
          securities  will when  issued be  validly  issued  and fully  paid and
          nonassessable, and makes no representation with respect thereto.

          SECTION 17. Merger,  Consolidation or Change of Name of Warrant Agent.
(a) Any corporation  into which the Warrant Agent may be merged or with which it
may  be  consolidated,   or  any  corporation   resulting  from  any  merger  or
consolidation  to which the Warrant Agent shall be a party,  or any  corporation
succeeding to the business of the Warrant  Agent,  shall be the successor to the
Warrant  Agent  hereunder  without the  execution  or filing of any paper or any
further act on the part of any of the parties  hereto.  In case at the time such
successor  to the  Warrant  Agent  shall  succeed to the agency  created by this
Agreement,  and in case at that time any of the Warrant  Certificates shall have
been  countersigned  but not delivered,  any such successor to the Warrant Agent
may adopt the  countersignature  of the original  Warrant Agent;  and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant  Certificates either
in the name of the predecessor  Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such

677106.12
                                       17

<PAGE>



cases such Warrant Certificates shall have the full force and effect provided in
the Warrant Certificates and in this Agreement.

          (b) In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant  Certificates  shall have been countersigned
but not  delivered,  the Warrant Agent whose name has been changed may adopt the
countersignature  under  its  prior  name,  and in case at that  time any of the
Warrant  Certificates shall not have been  countersigned,  the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant  Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.

          SECTION 18.  Resignation and Removal of Warrant Agent;  Appointment of
Successor. (a) No resignation or removal of the Warrant Agent and no appointment
of a successor  warrant  agent shall become  effective  until the  acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be  discharged  from all further  duties and liability
hereunder  (except  liability  arising as a result of the  Warrant  Agent's  own
negligence or willful  misconduct)  after giving  written notice to the Company.
The Company may remove the Warrant  Agent upon written  notice,  and the Warrant
Agent shall  thereupon in like manner be discharged  from all further duties and
liabilities  hereunder,  except as aforesaid.  The Warrant  Agent shall,  at the
Company's expense,  cause to be mailed (by first class mail, postage prepaid) to
each Holder at his last  address as shown on the  Register a copy of said notice
of resignation or notice of removal,  as the case may be. Upon such  resignation
or removal,  the Company  shall appoint in writing a new warrant  agent.  If the
Company shall fail to make such appointment  within a period of 30 days after it
has been notified in writing of such resignation by the resigning  Warrant Agent
or after such  removal,  then the  resigning  Warrant Agent or the Holder of any
Warrant may apply to any court of competent  jurisdiction for the appointment of
a new warrant agent. Any new warrant agent,  whether appointed by the Company or
by such a court,  shall be a corporation  doing  business  under the laws of the
United  States or any state  thereof,  in good  standing  and  having a combined
capital and surplus of not less than US$50,000,000.  After acceptance in writing
of such  appointment by the new warrant agent,  it shall be vested with the same
powers,  rights,  duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance,  conveyance,  act or
deed;  but if for any reason it shall be  necessary  or expedient to execute and
deliver any further assurance,  conveyance,  act or deed, the same shall be done
at the expense of the Company  and shall be legally  and  validly  executed  and
delivered  by the  resigning  or  removed  Warrant  Agent.  Not  later  than the
effective date of any such appointment, the Company shall give notice thereof to
the resigning or removed Warrant Agent.  Failure to give any notice provided for
in this Section  18(a),  however,  or any defect  therein,  shall not affect the
legality or validity of the  resignation of the Warrant Agent or the appointment
of a new warrant agent, as the case may be.

          (b) Any  corporation  into which the Warrant  Agent or any new warrant
agent may be merged  shall be a successor  Warrant  Agent  under this  Agreement
without any further act.

677106.12
                                       18

<PAGE>



Any such successor Warrant Agent shall, at the Warrant Agent's expense, promptly
cause  notice of its  succession  as Warrant  Agent to be mailed (by first class
mail,  postage prepaid) to each Holder at such Holder's last address as shown on
the Register.

          SECTION 19. Money and Other Property Deposited with the Warrant Agent.
Any money, securities and other property which at any time shall be deposited by
the Company or on its behalf with the Warrant Agent  pursuant to this  Agreement
shall be and are hereby assigned,  transferred and set over to the Warrant Agent
in trust for the purpose for which such  moneys,  securities  or other  property
shall  have been  deposited,  which such  purpose  shall be stated in writing in
reasonable  detail  and  delivered  to  the  Warrant  Agent;  but  such  moneys,
securities or other property need not be segregated from other funds, securities
or other property of the Warrant Agent except to the extent required by law. The
Warrant  Agent  shall  distribute  any money  deposited  with it for payment and
distribution to any Holder by mailing by first-class mail a check in such amount
as is appropriate to such Holder at the address shown on the Register,  or as it
may be  otherwise  directed in writing by such  Holder,  upon  surrender of such
Holder's Warrants.  Any money or other property deposited with the Warrant Agent
for payment and distribution to any Holder that remains unclaimed for two years,
less one day  after the date the money was  deposited  with the  Warrant  Agent,
shall be paid to the Company upon its request therefor.

          SECTION 20.  Compliance  with  Government  Regulations;  Qualification
under the Securities Laws.

          (a) The Company  covenants that if the shares of Common Stock required
          to be reserved for purposes of exercise of Warrants require, under any
          federal  or  state  law,   registration   with  or   approval  of  any
          governmental  authority before such shares may be issued upon exercise
          or to allow the resale or transfer  of the  Warrants or of such shares
          by the Holders  generally,  the Company  will,  unless the Company has
          received an opinion of counsel to the effect that such registration is
          not then permitted by such laws, use reasonable  best efforts to cause
          such shares to be duly so registered or approved,  as the case may be;
          provided that in no event shall such shares of Common Stock be issued,
          and the exercise of all Warrants  shall be  suspended,  for the period
          during  which any such  registration  or approval is required  for the
          issuance  of such shares upon  exercise  but not in effect;  provided,
          further,  that the Expiration  Date shall be extended one day for each
          day (or portion  thereof) that any such  suspension is in effect.  The
          Company  shall   promptly   notify  the  Warrant  Agent  of  any  such
          suspension,  and the Warrant Agent shall have no duty,  responsibility
          or  liability  in  respect  of any  shares of Common  Stock  issued or
          delivered  prior to its  receipt of such  notice.  The  Company  shall
          promptly  notify  the  Warrant  Agent of the  termination  of any such
          suspension,  and such  notice  shall set forth the number of days that
          the Exercise Period shall be extended as a result of such  suspension.
          The foregoing provisions of this Section 20 shall not require that the
          Company  effect or obtain any such  registration  or  approval  of the
          Warrants

677106.12
                                       19

<PAGE>



          or Warrant Shares in order to allow the resale or transfer  thereof by
          any Person that may be an underwriter  for purposes of Section 1145 of
          Chapter  11,  Title  11 of the  United  States  Code or to  whom  such
          registration or approval requirement is applicable as a result of that
          Person being an Affiliate of the Company or Marvel.

          (b) The Company  covenants that it shall,  until the expiration of one
          year after the Expiration Date, make available adequate current public
          information with respect to the Company so as to satisfy paragraph (c)
          of Rule 144 under the Securities Act.

          (c) The Company covenants that it shall use reasonable best efforts to
          have the  Warrants  and the Common  Stock listed on the New York Stock
          Exchange or the American Stock Exchange, subject to official notice of
          issuance  and subject to  satisfaction  of the  Warrants  with listing
          requirements, as soon as practicable after the date hereof.

          SECTION 21.  Notices.  (a) Any notice pursuant to this Agreement to be
given by the Warrant Agent or by any Holder to the Company shall be deemed given
(x) if  delivered  personally,  then  at the  time of  delivery,  (y) if sent by
overnight  courier  service,  then at the time of delivery,  or (z) if mailed by
first-class,  certified or overnight  mail,  five (5) Business Days after having
been deposited in the mail with postage  prepaid,  in each case addressed (until
another address is filed in writing by the Company with the Warrant  Agent),  as
follows:

                     Marvel Enterprises, Inc.
                     685 Third Avenue
                     New York, New York  10017
                     Facsimile No.: 212-682-5272
                     Telephone: 212-588-5100
                     Attention: Corporate Secretary

          (b) In case the Company  shall fail to maintain  such office or agency
or shall  fail to give  such  notice  of the  location  or of any  change in the
location  thereof,  presentations  may be made and  notices  and  demands may be
served at the principal office of the Warrant Agent.

          (c) Any notice  pursuant to this  Agreement to be given by the Company
or by any Holder to the  Warrant  Agent shall be deemed  given (x) if  delivered
personally,  then at the  time of  delivery,  (y) if sent by  overnight  courier
service,  then  at the  time  of  delivery,  or (z) if  mailed  by  first-class,
certified or overnight  mail, five (5) Business Days after having been deposited
in the mail with postage prepaid,  in each case addressed (until another address
is filed in writing by the Warrant Agent with the Company) as follows:


677106.12
                                       20

<PAGE>



                     American Stock Transfer & Trust Company
                     40 Wall Street
                     New York, NY  10005

          (d) Any notice  pursuant to this  Agreement to be given by the Company
or by the Warrant  Agent to any Holder  shall be deemed  given (x) if  delivered
personally,  then at the  time of  delivery,  (y) if sent by  overnight  courier
service,  then  at the  time  of  delivery,  or (z) if  mailed  by  first-class,
certified or overnight  mail, five (5) Business Days after having been deposited
in the mail with postage  prepaid,  in each case addressed to the Holder at such
Holder's  address  as  shown  on the  Register.  Failure  to  mail a  notice  or
communication  to a Holder or any defect in it shall not affect its  sufficiency
with respect to other Holders.

          (e) If a notice or  communication  is mailed  in the  manner  provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.

          (f) If the  Company  mails a notice  or  communication  to a Holder or
Holders, it shall deliver a copy of such notice to the Warrant Agent at the same
time.

          SECTION 22.  Supplements and  Amendments.  The Company and the Warrant
Agent may from time to time  supplement  or amend  this  Agreement  without  the
approval  of any  Holders  in order  to cure  any  ambiguity  or to  correct  or
supplement any provision contained herein which may be defective or inconsistent
with any other provision  herein,  or to make any other  provisions in regard to
matters or questions  arising  hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not in any way adversely  affect
the interests of the Holders. Any amendment or supplement to this Agreement that
has an adverse  effect on the  interests of Holders,  including  supplements  or
amendments  referred to in the first  sentence of this Section 22, shall require
the written consent of Holders  representing a majority of the then  outstanding
Warrants.  The  consent  of each  Holder  affected  shall  be  required  for any
amendment  pursuant to which the Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased.

          SECTION 23.  Successors.  All the  covenants  and  provisions  of this
Agreement  by or for the benefit of the Company or the Warrant  Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

          SECTION 24.  Termination.  This  Agreement  (other than the  Company's
obligations  with respect to Warrants  previously  exercised and with respect to
indemnification under Section 16(c)) shall terminate at 5:00 p.m., New York City
time, on the Expiration Date.

          SECTION 25. Governing Law. This Agreement and each Warrant Certificate
issued  hereunder shall be governed by and construed in accordance with the laws
of the State of Delaware.


677106.12
                                       21

<PAGE>



          SECTION 26. Benefits of This Agreement.  (a) Nothing in this Agreement
shall be construed to give any person other than the Company,  the Warrant Agent
and the Warrantholders (or other respective  successors or assigns) any legal or
equitable right,  remedy or claim under this Agreement.  This Agreement shall be
for the sole and  exclusive  benefit of the Company,  the Warrant  Agent and the
Warrantholders (and other respective successors or assigns).

          (b) Prior to the exercise of the Warrants, no Holder as such, shall be
entitled  to any rights of a  stockholder  of the  Company,  including,  without
limitation,  the right to receive dividends or subscription rights, the right to
vote, to consent,  to exercise any  preemptive  right,  to receive any notice of
meetings of  stockholders  for the  election of  directors of the Company or any
other matter or to receive any notice of any proceedings of the Company,  except
as may be specifically provided for herein. No provisions hereof, in the absence
of affirmative  action by the  Warrantholder  hereof to purchase Warrant Shares,
and no enumeration herein of the rights or privileges of the Warrantholder shall
give  rise  to any  liability  of such  Warrantholder  as a  stockholder  of the
Company.

          (c) All rights of action in respect  of this  Agreement  are vested in
the  Holders,  and any Holder  without the  consent of the Warrant  Agent or the
Holder,  may, on such  Holder's  own behalf and for such  Holder's  own benefit,
enforce,  and may institute and maintain any suit, action or proceeding  against
the Company  suitable  to enforce,  or  otherwise  in respect of, such  Holder's
rights  hereunder,  including  the right to exercise,  exchange or surrender for
purchase such Holder's Warrants in the manner provided in this Agreement.

          SECTION 27. Counterparts. This Agreement may be executed in any number
of counterparts and each of such  counterparts  shall for all purposes be deemed
to be an original,  and all such counterparts shall together  constitute but one
and the same instrument.

          SECTION 28.  Headings.  The headings of the Sections of this Agreement
have been inserted for convenience of reference only, are not to be considered a
part  hereof  and  shall  in no way  modify  or  restrict  any of the  terms  or
provisions hereof.

          SECTION 29.  Severability.  Any term or provision of this Agreement or
the Warrants 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 other terms and
provisions  of this  Agreement  or the  Warrants or  affecting  the  validity or
enforceability  of any of the  terms  or  provisions  of this  Agreement  or the
Warrants in any other jurisdiction.


677106.12
                                       22

<PAGE>



          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.

                                   MARVEL ENTERPRISES, INC.


                                   By:       /s/ WILLIAM H. HARDIE, III
                                             ----------------------------------
                                   Name:     William H. Hardie, III
                                   Title:    Executive Vice President, Business
                                             Affairs


                                   AMERICAN STOCK TRANSFER & TRUST
                                   COMPANY


                                   By:       /s/ HERBERT J. LEMMER
                                             ----------------------------------
                                   Name:     Herbert J. Lemmer
                                   Title:    Vice President


677106.12
                                       23

<PAGE>



                                                                       EXHIBIT A


          EXERCISABLE   ON  OR  BEFORE   5:00   P.M.   NEW  YORK  CITY  TIME  ON
          -----------------.

 No.__________                                          Cusip No. _____________

                                                         _____________ Warrants



                       [Form of Plan Warrant Certificate]

                            MARVEL ENTERPRISES, INC.

             (Incorporated under the laws of the State of Delaware)


          This Warrant  Certificate  certifies  that _________ or its registered
assigns,   is  the  registered  holder  of  Warrants  expiring  __________  (the
"Warrants") to purchase shares of Common Stock (the "Common  Stock"),  of Marvel
Enterprises, Inc., a Delaware corporation (the "Company"). Each Warrant entitles
the  registered  holder upon exercise at any time during normal  business  hours
after the date  hereof  and on or before  5:00  p.m.,  New York  City  time,  on
_______________,   to  receive  from  the  Company   _________  fully  paid  and
nonassessable  shares of Common Stock (each such share a "Warrant Share") at the
initial  exercise  price (the  "Exercise  Price") of $17.25 per share payable in
accordance  with the terms,  provisions and conditions of the Warrant  Agreement
referred to on the reverse hereof upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent,  but
only subject to the terms, provisions and conditions set forth herein and in the
Warrant Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the  Warrants are subject to  adjustment  from time to time upon the
occurrence of certain events set forth in the Warrant Agreement.

          No Warrant may be exercised  after 5:00 p.m.,  New York City time,  on
___________  and, to the extent not exercised by such time,  such Warrants shall
become void.

          Reference  is hereby made to the further  provisions  of this  Warrant
Certificate  set forth on the reverse hereof and such further  provisions  shall
for all purposes have the same effect as though fully set forth at this place.

          The terms of this Warrant  Certificate are qualified in their entirety
by reference to the Warrant  Agreement  and, in the event of a conflict  between
the terms of this Warrant  Certificate  and the terms of the Warrant  Agreement,
the terms of the Warrant Agreement shall

                                       A-1
677106.12

<PAGE>



control the rights,  interests and  obligations  of the holders of the Warrants,
the Warrant Agent and the Company with respect to the Warrants.

          This Warrant  Certificate  shall not be valid unless  countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.

          This  Warrant  Certificate  shall  be  governed  by and  construed  in
accordance with the laws of the State of Delaware.

          IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by a duly authorized Officer.

Dated:

                                       MARVEL ENTERPRISES, INC.


                                       By______________________________________
                                       Name:
                                       Title:


Countersigned:

AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent


By________________________________________
         Authorized Signature



                                       A-2
677106.12

<PAGE>



                                 [REVERSE SIDE]

          The Warrants evidenced by this Warrant  Certificate are part of a duly
authorized  issue of Warrants  expiring on the  Expiration  Date  entitling  the
holder on  exercise  to receive  shares of Common  Stock of the  Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of _______, 1998
(the  "Warrant  Agreement"),  duly  executed  and  delivered  by the  Company to
American Stock Transfer & Trust Company, as Warrant Agent (the "Warrant Agent"),
which Warrant  Agreement is hereby  incorporated by reference in and made a part
of this  instrument  and is hereby  referred to for a description of the rights,
limitation  of rights,  obligations,  duties and  immunities  thereunder  of the
Warrant  Agent,  the Company and the holders  (the words  "holders"  or "holder"
meaning the registered holders or registered holders) of the Warrants. A copy of
the Warrant  Agreement may be obtained by the holder hereof upon written request
to the Company.  By  accepting  initial  delivery,  transfer or exchange of this
Warrant,  the duly registered holder shall be deemed to have agreed to the terms
of the Warrant Agreement as it may be in effect from time to time, including any
amendments or supplements duly adopted in accordance therewith.

          Payment  of the  Exercise  Price  may be made,  at the  option  of the
holder,  in cash by wire transfer or by certified or official bank check payable
to the order of the Company in  immediately  available  funds in lawful money of
the United States of America.

          Upon due  presentation  for  registration  of transfer of this Warrant
Certificate,  with or without other Warrant  Certificates,  at the office of the
Warrant Agent, a new Warrant  Certificate or Warrant  Certificates of like tenor
and evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s)  in exchange for this Warrant  Certificate,  with or without other
Warrant  Certificates,  subject  to the  limitations  provided  in  the  Warrant
Agreement,  without  charge  except  for any tax or  other  governmental  charge
imposed in connection therewith.

          The Company and the  Warrant  Agent may deem and treat the  registered
holder(s)  thereof  as  the  absolute  owner(s)  of  this  Warrant   Certificate
(notwithstanding  any  notation of  ownership  or other  writing  hereon made by
anyone),  for the purpose of any exercise  hereof,  of any  distribution  to the
holder(s)  hereof,  and for all other  purposes.  Neither the  Warrants nor this
Warrant Certificate entities any holder hereof to any rights of a stockholder of
the Company.



                                       A-3
677106.12

<PAGE>



                                SUBSCRIPTION FORM

          (To be executed  only upon  exercise of Warrants  represented  by this
Warrant Certificate)

To:      American Stock Transfer & Trust Company,
             as Warrant Agent
         40 Wall Street
         New York, New York  10005

          The undersigned  hereby irrevocably  exercises  [_____________] of the
Warrants  represented by this Warrant  Certificate and herewith makes payment in
accordance with the terms and conditions  specified in this Warrant  Certificate
and in the Warrant  Agreement and surrenders  this Warrant  Certificate  and all
right, title and interest therein to and directs that the shares of Common Stock
of Marvel Enterprises, Inc. (the "Warrant Shares") deliverable upon the exercise
of such  Warrants  be  registered  or  placed  in the  name  and at the  address
specified below and delivered thereto.

Dated:
                                        ---------------------------------------
                                        (Signature of Owner)

                                        ---------------------------------------
                                        (Street Address)

                                        ---------------------------------------
                                        (City)         (State)       (Zip Code)

                                        Signature Guaranteed By:


                                        ---------------------------------------

Securities and/or check or other property (including, if such number of Warrants
exercised  shall  not  be  all  of  the  Warrants   evidenced  by  this  Warrant
Certificate,  a new  Warrant  Certificate  for  the  balance  remaining  of such
Warrants) to be issued or delivered to:

Name:

Street Address:

City, State and Zip Code:

Please insert social security or identifying number:


                                       A-4
677106.12

<PAGE>


                               FORM OF ASSIGNMENT

          For value received from the Assignee(s)  named below,  the undersigned
registered  Holder  of this  Warrant  Certificate  hereby  sells,  assigns,  and
transfers  unto the  Assignee(s)  named below  (including the  undersigned  with
respect to any Warrants  constituting  a part of the Warrants  evidenced by this
Warrant  Certificate  not  being  assigned  hereby)  all  of  the  right  of the
undersigned  under  this  Warrant  Certificate,  with  respect  to the number of
Warrants set forth below:

                                           Social Security
                                               or other
Name of Assignee            Address         Identifying No.     No. of Warrants
----------------            -------        ----------------     ---------------






and does hereby irrevocably constitute and appoint the undersigned's attorney to
make such transfer on the books of maintained for the purposes,  with full power
of substitution in the premises.

Dated:

                                        ---------------------------------------
                                        (Signature of Owner)

                                        ---------------------------------------
                                        (Street Address)

                                        ---------------------------------------
                                        (City)      (State)          (Zip Code)

                                        Signature Guaranteed By:


                                        ---------------------------------------




                                       A-5
677106.12