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Sample Business ContractsHome: Sample Business Contracts:
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
)
IN RE: )
)
MARVEL ENTERTAINMENT GROUP, INC.; THE )
ASHER CANDY COMPANY; FLEER CORP.; )
FRANK H. FLEER CORP.; HEROES WORLD )
DISTRIBUTION, INC.; MALIBU COMICS ) Case No. 97-638-RRM
ENTERTAINMENT, INC.; MARVEL )
CHARACTERS, INC.; MARVEL DIRECT )
MARKETING INC.; and SKYBOX )
INTERNATIONAL, INC., )
)
Debtors. )
FOURTH AMENDED JOINT PLAN OF REORGANIZATION PROPOSED BY THE
SECURED LENDERS AND TOY BIZ, INC.
--------------------------------
WACHTELL, LIPTON, ROSEN & KATZ BATTLE FOWLER LLP
Attorneys for Toy Biz, Inc. Attorneys for The Secured
Lenders 75 East 55th Street
51 West 52nd Street New York, New York 10022
New York, New York 10019 (212) 856-7000
(212) 403-1000
-and- -and-
RICHARDS, LAYTON & FINGER, P.A. PEPPER HAMILTON LLP
Attorneys for The Secured Attorneys for Toy Biz, Inc.
Lenders 1201 Market Street
One Rodney Square P.O. Box 1709
Wilmington, Delaware 19899 Wilmington, Delaware 19899
(302) 658-6541 (302) 777-6500
Dated: Wilmington, Delaware
July 31, 1998
729939.15
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SECTION 1. DEFINITIONS AND INTERPRETATION..............................................................1
A. Definitions........................................................................1
B. Interpretation; Application of Definitions
and Rules of Construction..............................................24
C. Exhibits and Schedules............................................................25
SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION EXPENSE
CLAIMS AND PRIORITY TAX CLAIMS ...........................................................25
2.1 Administration Expense Claims.........................................................25
2.2 Compensation and Reimbursement Claims.................................................25
2.3 Priority Tax Claims...................................................................26
SECTION 3. CLASSIFICATION OF CLAIMS
AND EQUITY INTERESTS...................................................26
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN....................................27
4.1 Priority Non-Tax Claims (Class 1).....................................................27
4.2 Senior Secured Claims.................................................................27
(a) Allowance of Senior Secured Claims................................................27
(b) Treatment of Allowed Fixed Senior Secured
Claims............................................................................27
(i) No Qualifying.................................................................27
(ii)Qualifying....................................................................29
(c) Treatment of Allowed Contingent Senior Secured
Claims............................................................................29
(i) No Panini....................................................................29
(ii) Panini.......................................................................29
4.3 Other Secured Claims (Class 3)........................................................29
4.4 Unsecured Claims (Class 4)............................................................30
(a) Distributions.....................................................................30
(i) No Qualifying.................................................................30
(ii) Qualifying...................................................................31
(b) Intercompany Claims...............................................................31
(c) LaSalle Claim.....................................................................31
4.5 Class Securities Litigation Claims
(Class 5)..............................................................31
(a) Distributions.....................................................................31
(b) Calculation of Distribution.......................................................32
(c) Parity of and Limitation on Distributions.........................................32
4.6 Equity Interests (Class 6)............................................................32
(a) Entertainment (Subclass 6A).......................................................32
(i) Distributions................................................................32
(ii) Parity of and Limitation on
Distributions..........................................................33
(b) Subsidiary Equity Interest (Subclass 6B)..........................................33
4.7 Existing Warrants (Class 7)...........................................................33
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SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS
IMPAIRED AND NOT IMPAIRED UNDER THE PLAN; ACCEPTANCE
OR REJECTION OF THE PLAN...................................................................33
5.1 Holders of Claims and Equity Interests Entitled
to Vote...........................................................................33
5.2 Nonconsensual Confirmation............................................................34
5.3 Severability of Plan of Reorganization................................................34
SECTION 6. MEANS OF IMPLEMENTATION....................................................................34
6.1 Closing of Transaction................................................................34
6.2 Derivative Securities Litigation Claims...............................................34
6.3 Board of Directors of the Reorganized
Debtors................................................................35
6.4 Officers of the Reorganized Debtors...................................................35
6.5 Distribution to New Investors.........................................................35
6.6 Toy Biz Distribution..................................................................35
(a) No Qualifying Transaction.........................................................35
(b) Qualifying Transaction............................................................35
6.7 Fees to New Investors.................................................................36
6.8 Dissolution of Committees.............................................................36
6.9 Intentionally deleted.................................................................36
6.10 Newco Financing......................................................................36
6.11 Vote of Characters' Toy Biz Stock....................................................36
6.12 Forgiveness of Panini Obligations....................................................37
6.13 Panini Indemnity.....................................................................37
6.14 Outstanding Toy Biz Stock Interests..................................................37
6.15 Distribution of Subsidiary Equity
Interests..............................................................37
6.16 Continuation of Creditors Committee..................................................37
6.17 Right to Object to Fees..............................................................37
6.18 Certain Securities Law Matters.......................................................38
6.19 Settlement Amount....................................................................39
6.20 Excess Administration Claims Amount Loan.............................................39
6.21 Perlmutter Capital Contribution..................................................... 39
SECTION 7. LITIGATION TRUST...........................................................................39
7.1 Assignment of Rights..................................................................39
(a) Avoidance Litigation Trust............................................................39
(b) MAFCO Litigation Trust................................................................40
7.2 Control of Litigation.................................................................40
7.3 Liability of Trustee..................................................................40
7.4 Distribution of Net Avoidance Litigation
Proceeds and Net MAFCO Litigation Proceeds........................................41
7.5 Professional Fees and Expenses........................................................41
(a) Avoidance Litigation Trust............................................................41
(b) MAFCO Litigation Trust................................................................42
7.6 Commencement of Avoidance Actions.....................................................43
7.7 Reduction of Judgment and Indemnifications............................................43
7.8 Timing of Distributions...............................................................45
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7.9 Objections to Claims..................................................................45
7.10 Jurisdiction.........................................................................46
SECTION 8. PROVISIONS GOVERNING DISTRIBUTIONS.........................................................46
8.1 Date of Distributions.................................................................46
8.2 Entities to Exercise Function of Disbursing
Agent.............................................................................47
8.3 Surrender and Cancellation of Instruments.............................................47
8.4 (a)Delivery of Distributions......................................................47
(b)LaSalle Distributions..........................................................48
8.5 Manner of Payment Under Plan of
Reorganization.........................................................48
8.6 Reserves and Distributions............................................................49
8.7 Resulting Claims......................................................................49
8.8 Distributions After Consummation Date.................................................49
8.9 Rights And Powers Of Disbursing Agent.................................................49
(a) Powers of the Disbursing Agent....................................................49
(b) Expenses Incurred on or after the
Consummation Date......................................................50
(c) Exculpation.......................................................................50
8.10 Distributions of Certain Warrants.....................................................50
SECTION 9. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER THE
PLAN OF REORGANIZATION.....................................................................51
9.1 Objections to Claims..................................................................51
9.2 No Distributions Pending Allowance....................................................51
9.3 Cash Reserve..........................................................................51
9.4 Distributions After Allowance.........................................................51
9.5 Fractional Securities.................................................................52
SECTION 10. PROVISION GOVERNING EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN............................................................52
10.1 General Treatment....................................................................52
10.2 Amendments to Schedule; Effect of
Amendments.............................................................53
10.3 Bar to Rejection Damage Claims.......................................................53
10.4 Certain Panini Agreements............................................................54
(a) Panini Sticker Agreement.........................................................54
(b) Panini Comic Distribution Agreement..............................................54
(c) Other Panini Agreements..........................................................54
SECTION 11. CONDITIONS PRECEDENT TO CONFIRMATION DATE AND
CONSUMMATION DATE..........................................................................54
11.1 Conditions Precedent to Confirmation of Plan
of Reorganization.................................................................54
(a) Confirmation Order................................................................54
11.2 Conditions Precedent to Consummation Date of
Plan of Reorganization............................................................55
(a) SEC Proxy Statement...............................................................55
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(b) HSR ..................................................................................55
(c) Restructured Panini Loan Documents....................................................56
(d) Secured Lender Consummation Date......................................................56
(e) Toy Biz Consummation Date.............................................................56
(f) Standstill Agreements.................................................................56
(g) NBA Agreement.........................................................................56
(h) Receipt of Certain Funds..............................................................56
(i) Receipt of Settlement Amount..........................................................56
(j) Certain Payments for Contingent Senior
Secured Claims.........................................................56
(k) Shareholders Agreement................................................................56
11.3 Waiver of Conditions Precedent........................................................57
SECTION 12. EFFECT OF CONFIRMATION.....................................................................57
12.1 General Authority....................................................................57
12.2 Discharge of Debtors.................................................................57
(a) General Discharge.................................................................57
(b) Exculpations......................................................................58
12.3 Term of Injunctions or Stays.........................................................59
SECTION 13. WAIVER OF CLAIMS...........................................................................59
13.1 Avoidance Actions....................................................................59
SECTION 14. RETENTION OF JURISDICTION..................................................................60
14.1 Retention of Jurisdiction............................................................60
14.2 Amendment of Plan of Reorganization..................................................61
SECTION 15. MISCELLANEOUS PROVISIONS...................................................................62
15.1 Payment of Statutory Fees............................................................62
15.2 Retiree Benefits.....................................................................62
15.3 Compliance with Tax Requirements.....................................................63
15.4 Recognition of Guaranty Rights.......................................................63
15.5 Severability of Plan Provisions......................................................63
15.6 Governing Law........................................................................64
15.7 Further Assurances...................................................................64
15.8 Time of the Essence..................................................................64
15.9 Counterparts.........................................................................64
15.10 Notices..............................................................................64
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EXHIBITS
1.Avoidance Litigation Trust Agreement
2.Avoidance Litigation Trust Loan Agreement
3.Avoidance Professional Fee Reimbursement Note
4.Bylaws for Newco
5.Charter for Newco
6.Designated Competitors
7.Excess Administration Claims Note
8.MAFCO Litigation Trust Agreement
9.MAFCO Litigation Trust Loan Agreement
10.MAFCO Professional Fee Reimbursement Note
11.Merger Agreement
12.New Investors
13.Newco Guaranty
14.Panini Indemnity
15.Plan Warrant Agreement
16.Secured Lenders
17.Standstill Agreements
18.Stockholder Series A Warrant Agreement
19.Stockholder Series B Warrant Agreement
20.Stockholder Series C Warrant Agreement
21.Transmittal Material
SCHEDULES
6.1. Letter of Credit and related obligations
10.1. Rejection Schedule
v
<PAGE>
JOINT PLAN OF REORGANIZATION
The Secured Lenders and Toy Biz, Inc., creditors and parties
in interest in these chapter 11 cases, hereby propose this Plan of
Reorganization dated July 31, 1998 for Marvel Entertainment Group, Inc., The
Asher Candy Company, Fleer Corp., Frank H. Fleer Corp., Heroes World
Distribution, Inc., Malibu Comics Entertainment, Inc., Marvel Characters, Inc.,
Marvel Direct Marketing Inc. and SkyBox International Inc.
SECTION 1. DEFINITIONS AND INTERPRETATION
------------------------------
A. Definitions.
----------
The following terms used herein shall have the respective
meanings defined below:
"Administration Expense Claim" means any right to payment
constituting a cost or expense of administration of any of the Reorganization
Cases allowed under Sections 503(b) and 507(a)(1) of the Bankruptcy Code,
including, without limitation, (a) any actual and necessary costs and expenses
of preserving the estates of the Debtors, (b) any actual and necessary costs and
expenses of operating the business of the Debtors, (c) any allowances of
compensation and reimbursement of expenses to the extent allowed by Final Order
under Section 330 or 503 of the Bankruptcy Code, and (d) any fees or charges
assessed against the estates of the Debtors under Section 1930, title 28, United
States Code.
"Administrative Agent" means The Chase Manhattan Bank as
administrative agent under each of the applicable Existing Credit Agreements or
any successor administrative agent appointed in accordance with any of the
applicable Existing Credit Agreements.
"Affiliate" means, with reference to any person or entity, any
other person or entity that, within the meaning of Rule 12b-2 promulgated under
the Securities Exchange Act of 1934, as amended, "controls," is "controlled by"
or is under "common control with" such entity or person.
"Allowed" means, with reference to any Claim or Equity
Interest, (a) any and all DIP Claims, (b) any Claim or Equity Interest or any
portion thereof against any Debtor which has been listed by such Debtor in its
Schedules, as such Schedules may be amended by the Debtors from time to time in
accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed
or contingent and for which no contrary proof of claim has been filed, (c) any
Claim or Equity Interest allowed by Final Order, (d) any Claim or Equity
Interest as to which the liability of the
729939.15
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Debtors and the amount thereof are determined by final order of a court of
competent jurisdiction other than the Bankruptcy Court,(e) any Claim allowed
expressly hereunder, or (f) for purposes of voting only, any Claim evidenced by
a proof of Claim filed by or before the last date designated by the Bankruptcy
Court as the last date for filing Claims against the Debtors, provided that such
Claim has not been disallowed by order of the Court or the Bankruptcy Court, and
is not the subject of an objection filed at least ten (10) days prior to the
voting deadline.
"Avoidance Beneficiaries" means Newco, all holders of Allowed
Fixed Senior Secured Claims and all holders of Allowed Unsecured Claims (other
than Intercompany Claims and the LaSalle Claim).
"Avoidance Litigation Trust" means the trust created by the
Avoidance Litigation Trust Agreement to be executed on the Consummation Date
pursuant to Section 7.1 hereof by the Debtors and the Avoidance Litigation
Trustee.
"Avoidance Litigation Trust Agreement" means the trust
agreement to be executed by the Debtors and the Avoidance Litigation Trustee in
the form of Exhibit 1 hereto, subject to non-substantive changes.
"Avoidance Litigation Trust Assets" means all assets of
the Avoidance Litigation Trust.
"Avoidance Litigation Trustee" means the individual designated
by the Creditors Committee subject to the consent of the Proponents, and from
and after the Consummation Date, any successor trustees designated in accordance
with the Avoidance Litigation Trust Agreement.
"Avoidance Litigation Trust Loan Agreement" means the Loan
Agreement to be executed by Newco in the form of Exhibit 2 hereto, subject to
non-substantive changes.
"Avoidance Professional Fee Reimbursement Note" means the note
to be executed by the Avoidance Litigation Trustee on behalf of the Avoidance
Litigation Trust in the form of Exhibit 3 hereto, subject to non-substantive
changes.
"Bankruptcy Code" means title 11, United States Code, as
applicable to the Reorganization Cases as in effect on the Confirmation Date.
"Bankruptcy Court" means the United States District Court for
the District of Delaware having jurisdiction over the Reorganization Cases and,
to the extent of any reference under
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section 157, title 28, United States Code, the unit of such District Court under
section 151, title 28, United States Code.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure as promulgated by the United States Supreme Court under section 2075,
title 28, United States Code, and any Local Rules of the Bankruptcy Court.
"Beneficiaries" means all Avoidance Beneficiaries and
all MAFCO Beneficiaries.
"Breakup Fee" means Cash in the amount of the breakup fee
payable pursuant to the Convertible Preferred Stock Purchase Agreement to DPI or
its assignees, but in no event more than eight million dollars ($8,000,000).
"Business Day" means any day other than a Saturday, a Sunday
or any other day on which banking institutions in New York, New York are
required or authorized to close by law or executive order.
"Bylaws" means the bylaws for Newco in the form of Exhibit 4
hereto, subject to non-substantive changes.
"Cash" means legal tender of the United States of America and,
with respect to payments under this Plan of Reorganization, cash (U.S. dollars),
certified check, bank check or wire transfer from a domestic bank.
"Causes of Action" means, without limitation, any and all
actions, causes of action, liabilities, obligations, rights, suits, debts, sums
of money, damages, judgments, claims and demands whatsoever, whether known or
unknown, in law, equity or otherwise.
"Characters" means Marvel Characters, Inc., one of the
Debtors herein.
"Charter" means the Certificate of Incorporation for Newco in
the form of Exhibit 5 hereto, subject to non-substantive changes.
"Chase" means The Chase Manhattan Bank in its capacity as
agent under the Existing Credit Agreements.
"Claim" means (a) any right to payment from any of the
Debtors, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, or (b) any right to an equitable remedy
for breach of performance if such breach gives rise to a right of payment from
any of the Debtors, whether or not such right to an equitable remedy is
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reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured.
"Class Securities Litigation Claim" means any Claim whether or
not the subject of an existing lawsuit arising from rescission of a purchase or
sale of shares of common stock of Entertainment, for damages arising from the
purchase or sale of any such security, or for reimbursement or contribution
allowed under section 502 of the Bankruptcy Code on account of any such Claim
(which shall exclude the LaSalle Claim) which Claims shall be subordinated in
accordance with section 510(b) of the Bankruptcy Code.
"Collateral" means any property or interest in property of the
estate of any Debtor subject to a Lien to secure the payment or performance of a
Claim, which Lien is not subject to avoidance under the Bankruptcy Code.
"Confection Business" means any and all of the assets and
properties relating to the confection business operated and owned by Fleer
including, without limitation, all of its rights relating to Dubble Bubble,
Razzles and any other food and candy products produced thereby.
"Confirmation Date" means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on its docket.
"Confirmation Hearing" means the hearing held by the
Bankruptcy Court on confirmation of this Plan of Reorganization, as such hearing
may be adjourned or continued from time to time.
"Confirmation Order" means the order of the Bankruptcy Court
confirming this Plan of Reorganization.
"Consummation Date" means the latest to occur of (a) the
thirtieth (30th) day (calculated under Bankruptcy Rule 9006) after the
Confirmation Date if no stay of the Confirmation Order is then in effect, (b)
the first Business Day after any stay of the Confirmation Order expires or
otherwise terminates, and (c) such other date as may be fixed from time to time
after the Confirmation Date by filing a notice thereof by the Proponents with
the Bankruptcy Court upon the consent of the Creditors Committee, the Equity
Committee, High River, Westgate, LaSalle and the Trustee not to be unreasonably
withheld or delayed; provided, however, that in no event shall the Consummation
Date occur earlier than the date of the satisfaction of each of the conditions
precedent to the occurrence of the Consummation Date of this Plan of
Reorganization in Section 11.2 hereof unless waived as provided in Section 11.3
hereof.
4
729939.15
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"Contingent Senior Secured Claim" means any Claim against
Entertainment or any of its Debtor subsidiaries governed by or arising out of
the guaranty provisions contained in the Existing Panini Credit Agreements or
evidenced by any of the promissory notes issued thereunder or any letter of
credit issued by a bank or other financial institution which is a party to the
Existing Panini Credit Agreements for the account of Panini or any of its
subsidiaries and any Claim for adequate protection relating to the Collateral
securing the Claims previously referred to in this definition arising out of
that certain Revolving Credit Guaranty Agreement by and among Entertainment, the
other Debtors and Chase dated December 27, 1996, the order entered by the
Bankruptcy Court on January 24, 1997, or any amendments entered into or further
orders entered by the Bankruptcy Court with respect to either of the foregoing.
"Contribution Bar Party" means any person or entity asserting
claims in the nature of contribution or indemnity in connection with, arising
out of or in any way related to Litigation Claims or Covered Claims.
"Convertible Preferred Stock" means convertible preferred
stock in Newco (a) each share of which shall be convertible into 1.039 shares of
Newco Common Stock, and (b) which shall have the terms set forth in the Charter.
"Convertible Preferred Stock Purchase Agreement" means
a Convertible Preferred Stock Purchase Agreement to be executed
on the Confirmation Date by Toy Biz, Zib Inc. or its assignees
and DPI or its assignees.
"Covered Claims" means any claim or matter as to which
Exculpated Persons are exculpated pursuant to section 12.2(b) of this Plan of
Reorganization, including, without limitation, matters asserted or claims made
in the LaSalle Action.
"Covered Person" means any person or entity asserting a
Covered Claim.
"Creditors Committee" means the Official Committee of
Unsecured Creditors appointed for the Debtors by the United States Trustee for
the District of Delaware on October 22, 1997.
"Debtor" means each of Entertainment, The Asher Candy
Company, Fleer Corp., Frank H. Fleer Corp., Heroes World
Distribution, Inc., Malibu Comics Entertainment, Inc., Marvel
Characters, Inc., Marvel Direct Marketing, Inc., and SkyBox
International Inc., each (other than Marvel Characters, Inc. and
Malibu Comics Entertainment, Inc.) being a Delaware corporation
and Marvel Characters, Inc. and Malibu Comics Entertainment, Inc.
being California corporations, the debtors in Chapter 11 Case
Nos. 96-2069 (HSB) through 96-2077 (HSB), respectively.
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729939.15
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"Debtor in Possession" means each Debtor in its capacity as a
debtor in possession under sections 1107(a) and 1108 of the Bankruptcy Code.
"Designated Competitor" means those entities listed on
Exhibit 6 hereto.
"Designated Contingent Senior Secured Claims" means on any
date all Contingent Senior Secured Claims other than those beneficially owned or
controlled (directly, indirectly or by participation) by any entity purchasing
Convertible Preferred Stock pursuant to the Convertible Preferred Stock Purchase
Agreement other than solely by virtue of the exercise of such entity's rights
pursuant to Section 4.2(b)(i)(A)(6) hereof.
"Designated Fixed Senior Secured Claims" means on any date all
Fixed Senior Secured Claims other than those beneficially owned or controlled
(directly, indirectly or by participation) by any entity purchasing Convertible
Preferred Stock pursuant to the Convertible Preferred Stock Purchase Agreement
other than solely by virtue of the exercise of such entity's rights pursuant to
Section 4.2(b)(i)(A)(6) hereof.
"DIP Claim" shall mean any claim arising under the DIP Credit
Agreement.
"DIP Credit Agreement" means that certain Revolving Credit and
Guaranty Agreement dated as of December 27, 1996 among Marvel Entertainment
Group, Inc., the guarantors named therein, the banks party thereto and The Chase
Manhattan Bank as agent as the same may be amended from time to time in
accordance with the terms thereof or the agreements or other documents
evidencing any successor or replacement post-petition financing facility.
"Disbursing Agent" means any entity in its capacity as a
disbursing agent under Section 8.2 hereof.
"Disputed Claim" means a Claim against a Debtor that is
not an Allowed Claim.
"District Court Complaint" means the complaint in Case
No. 97-586(RRM) filed on October 30, 1997 in the United States
District Court for the District of Delaware.
"DPI" means Dickstein Partners Inc.
"Effective Time" shall have the meaning given to such term in
the Merger Agreement.
"Entertainment" means Marvel Entertainment Group, Inc.
6
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"Equity Committee" means the Official Committee of Equity
Security Holders appointed for Entertainment by the United States Trustee for
the District of Delaware on February 12,1997.
"Equity Interest" means any share of common stock or other
instrument evidencing a present ownership interest in any of the Debtors,
whether or not transferable, or any option, warrant or right, contractual or
otherwise, to acquire any such interest. For purposes of Subclass 6A
(Entertainment) of Class 6 (Equity Interests), the Existing Warrants shall not
be included in such subclass.
"Excess Administration Claims Amount" means the amount, if
any, by which the sum of (a) all Allowed Administration Expense Claims
(exclusive of (i) all DIP Claims through October 7, 1997 and (ii) Allowed
Administration Expenses Claims constituting the actual and necessary expenses of
running the Debtors' business in the ordinary course), and (b) the aggregate
amount of all professional fees, costs and expenses of professionals engaged by
Chase in its capacity as agent or acting on behalf of all of the holders of
Senior Secured Claims including, without limitation, all fees and expenses of
counsel and financial advisors incurred in connection with the Reorganization
Cases, exceeds thirty-five million dollars ($35,000,000).
"Excess Administration Claims Note" means one or more
unsecured notes of Newco and its subsidiaries in the form of Exhibit 7 hereto,
subject to non-substantive changes, in an aggregate original principal amount
equal to the Excess Administration Claims Amount, which shall, at the election
of Newco, be paid semi-annually or accrue and compound, shall have a maturity
date of the fifth anniversary of the Consummation Date, and which shall bear
interest at the rate of two hundred (200) basis points over the rate of interest
for the Term Loan Facility.
"Excess Proceeds" means all net proceeds of a Qualifying
Transaction which closes on the Consummation Date in excess of the aggregate
amount required to satisfy Fixed Senior Secured Claims in full in accordance
with the Existing Fleer Credit Agreements, to pay the Toy Biz Cash Distribution
and all amounts (other than Excess Proceeds) due to holders of Allowed Unsecured
Claims pursuant to Section 4.4(a)(ii) hereof.
"Exculpated Persons" means (a) the Reorganized Debtors, Newco,
all past, present and future holders of DIP Claims, all past, present and future
holders of Senior Secured Claims, Chase, Toy Biz, the New Investors, Dickstein
Partners L.P., Dickstein & Co. L.P., Dickstein Focus Fund, L.P., Dickstein
International Limited, Mark Dickstein, the Creditors Committee, all members of
the Creditors Committee solely in their capacity as members of
7
729939.15
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the Creditors Committee, High River, Carl Icahn, Westgate, Vince Intrieri,
LaSalle, the Equity Committee, all members of the Equity Committee solely in
their capacity as members of the Equity Committee, Affiliates of any of the
foregoing, the Trustee and all officers, directors, employees, shareholders,
limited liability entity members, partners, consultants, advisors, investment
bankers, attorneys, accountants or other representatives or agents of any of the
foregoing acting as such, and (b) the Debtors; provided, however, that the term
"Exculpated Persons" shall not, under any circumstances, include the MAFCO
Defendants.
"Existing Credit Agreements" means, collectively, the
Existing Fleer Credit Agreements and the Existing Panini Credit
Agreements.
"Existing Fleer Credit Agreements" means, collectively, (a)
that certain Amended and Restated Credit and Guarantee Agreement dated as of
August 30, 1994, as amended, among Entertainment, Fleer Corp., the financial
institutions parties thereto, the co-agents named therein and The Chase
Manhattan Bank (formerly named Chemical Bank) as administrative agent, (b) that
certain Credit and Guarantee Agreement dated as of April 24, 1995, as amended,
by and among Entertainment, Fleer Corp., the financial institutions party
thereto, the co-agents named therein and The Chase Manhattan Bank (formerly
named Chemical Bank) as administrative agent, (c) that certain Line of Credit,
dated as of March 27, 1996, as amended, among Fleer Corp., the banks and other
financial institutions parties thereto and The Chase Manhattan Bank as
Administrative Agent,(d)(i)(A) any letter of credit issued for the account of
Entertainment or any of its subsidiaries by a bank or other financial
institution which is a party to any of the Existing Credit Agreements referred
to in clauses (a) or (b) of this definition of "Existing Fleer Credit
Agreements" and (B) any related letter of credit applications and any agreements
governing or evidencing reimbursement obligations relating to any letters of
credit referred to in clause (d)(i)(A) of this definition of "Existing Fleer
Credit Agreements" or (ii) any interest rate agreement between Entertainment or
any of its subsidiaries and a bank or other financial institution which is a
party to any of the Existing Credit Agreements referred to in clauses (a)
through (c), inclusive, of this definition of "Existing Fleer Credit
Agreements", and (e) any guarantees and security documents, including, without
limitation, mortgages, pledge agreements, security agreements and trademark
security agreements, executed and delivered in connection with any of the
foregoing agreements.
"Existing Panini Credit Agreements" means the Existing
Panini Junior Credit Agreements and the Existing Panini Senior
Credit Agreements.
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"Existing Panini Junior Credit Agreements" means (a) that
certain Term Loan and Guarantee Agreement dated as of August 30, 1994, as
amended, supplemented or otherwise modified from time to time, among
Entertainment, Panini, S.p.A. (formerly named Marvel Comics Italia S.r.l.), and
Istituto Bancario San Paolo di Torino, S.p.A.; (b) the Panini Participation
Agreements; (c)(i)(A) any letter of credit issued for the account of any of the
Panini Entities by a bank or other financial institution pursuant to any of the
Panini Credit Agreements referred to in clauses (a) or (b) and (B) any related
letter of credit applications and any agreements governing or evidencing
reimbursement obligations relating to any letters of credit referred to in
clause (c)(i)(A) or (ii) any interest rate agreement between any of the Panini
Entities and a bank or other financial institution pursuant to any of the Panini
Credit Agreements referred to in clauses (a) and (b); and (d) any guarantees and
security documents, including, without limitation, mortgages, pledge agreements,
security agreements and trademark security agreements, executed and delivered in
connection with any of the foregoing agreements, together in each case with all
related documents, instruments, consents, amendments, modifications and waivers.
"Existing Panini Senior Credit Agreements" means that certain
Italian Lire 27,000,000,000 Term Loan and Guaranty Agreement dated as of August
5, 1997 as amended, supplemented or otherwise modified from time to time, among
Entertainment, Panini, the lenders listed on Schedule 1 thereto as lenders, and
The Chase Manhattan Bank as agent, and the related Panini financing order
entered by the Bankruptcy Court and any guarantees and security documents,
including, without limitation, mortgages, pledge agreements, security agreements
and trademark security agreements, executed and delivered in connection with any
of the foregoing agreements, together in each case with all related documents,
instruments, consents, amendments, modifications and waivers.
"Existing Warrants" means, collectively, all incentive stock
options, non-qualified stock options and stock appreciation rights granted under
any employee benefits plan and any other options, warrants or rights,
contractual or otherwise, if any, to acquire an Equity Interest.
"Final Order" means an order or judgment of the Bankruptcy
Court entered by the Clerk of the Bankruptcy Court on the docket in the
Reorganization Cases, which has not been reversed, vacated or stayed and as to
which (a) the time to appeal, petition for certiorari or move for a new trial,
reargument or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for a new trial, reargument or rehearing shall
then be pending or (b) if an appeal, writ of certiorari, new trial, reargument
or rehearing
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thereof has been sought, such order or judgment of the Bankruptcy Court shall
have been affirmed by the highest court to which such order was appealed, or
certiorari shall have been denied or a new trial, reargument or rehearing shall
have been denied or resulted in no modification of such order, and the time to
take any further appeal, petition for certiorari or move for a new trial,
reargument or rehearing shall have expired; provided, that the possibility that
a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous
rule under the Bankruptcy Rules, may be filed relating to such order, shall not
cause such order not to be a Final Order.
"Fixed Senior Secured Claim" means any Claim governed by any
of the Existing Fleer Credit Agreements or evidenced by any of the promissory
notes issued thereunder or any letter of credit issued by a bank or other
financial institution which is a party to any of the Existing Fleer Credit
Agreements for the account of Entertainment or any of its subsidiaries (other
than the Panini Entities) or any interest rate agreement between Entertainment
or any of its subsidiaries (other than the Panini Entities) and a bank or other
financial institution which is a party to any of the Existing Fleer Credit
Agreements and any Claim for adequate protection relating to the Collateral
securing the Claims previously referred to in this definition arising out of
that certain Revolving Credit Guaranty Agreement by and among Entertainment, the
other Debtors and Chase dated December 27, 1996, the order entered by the
Bankruptcy Court on January 24, 1997, or any amendments entered into or further
orders entered by the Bankruptcy Court with respect to either of the foregoing.
"Fleer" means Fleer Corp., one of the Debtors.
"Fractional Warrant" means a Warrant to acquire a fractional
share of Convertible Preferred Stock or a fractional share of Newco Common
Stock.
"Governance Litigation" means case No. 97-648 (RRM)
pending in the Bankruptcy Court.
"High River" means High River Limited Partnership.
"Holdings I" means Marvel Holdings, Inc.
"Holdings II" means Marvel (Parent) Holdings, Inc.
"Holdings III" means Marvel III Holdings, Inc.
"Holdings I Indenture" means an indenture dated as of April
15, 1993 between Holdings I, as issuer, and NationsBank of Georgia, N.A.
(LaSalle National Bank succeeded Bank of New York, the successor to NationsBank
of Georgia, N.A. as indenture trustee).
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"Holdings II Indenture" means an indenture dated as of October
1, 1993 between Holdings II, as issuer, and NationsBank of Georgia, N.A.
(LaSalle National Bank succeeded Bank of New York, the successor to NationsBank
of Georgia, N.A. as indenture trustee).
"Holdings III Indenture" means an indenture dated as of
February 15, 1994 between Holdings III, as issuer, and NationsBank of Georgia,
N.A. (LaSalle National Bank succeeded Bank of New York, the successor to
NationsBank of Georgia, N.A.
as indenture trustee).
"Holdings Notes" means those certain: (a) Senior Secured
Discount Notes due 1998 issued by Marvel Holdings, Inc. pursuant to the Holdings
I Indenture, which were subsequently exchanged for those certain Series B Senior
Secured Discount Notes due 1998; (b) Senior Secured Discount Notes due 1998
issued by Marvel (Parent) Holdings Inc. pursuant to the Holdings II Indenture;
and (c) 9-1/8% Senior Secured Notes due 1998 issued by Marvel III Holdings Inc.
pursuant to the Holdings III Indenture, which were subsequently exchanged for
those certain Series B 9- 1/8% Senior Secured Notes due 1998.
"Holdings Noteholders" means the registered holders or
beneficial owners of any Holdings Notes.
"Immaterial Debtors" means The Asher Candy Company,
Frank H. Fleer Corp., Heroes World Distribution, Inc. and any
other Debtor which the Proponents, acting reasonably, jointly
determine to have de minimis value.
"Independent Cause of Action" means any cause of action which
(i) arises solely out of an act or omission of an Exculpated Person occurring
after the Consummation Date or (ii) does not arise directly or indirectly in any
manner whatsoever out of an act or omission of an Exculpated Person concerning
or relating to (v) the Debtors or their subsidiaries or Affiliates, (w) the
Reorganization Cases, (x) the creation of the Debtors or any of their
subsidiaries or Affiliates, (y) the relationship between Toy Biz (or its
predecessors in interest) and any of the Debtors or their subsidiaries and
Affiliates, or (z) the LaSalle Action; provided, however, that any claim,
counterclaim or right of offset that any defendant in the LaSalle Action may
have against any plaintiff or against any person on whose behalf plaintiff is
suing in such action shall be deemed to be an Independent Cause of Action.
"Indentures" means, collectively, (a) the Holdings I
Indenture, (b) the Holdings II Indenture, and (c) the Holdings III Indenture.
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"Intercompany Claim" means any Claim held by any Debtor
against any other Debtor, including, without limitation, all derivative Claims
asserted by or on behalf of any one Debtor against any other Debtor.
"LaSalle" means LaSalle National Bank solely in its capacity
as successor indenture trustee pursuant to the Indentures.
"LaSalle Action" means Civ. No. 97-645 pending in the
District Court, or any similar actions asserting similar claims
brought by LaSalle on behalf of the Holdings Noteholders against
the MAFCO Defendants.
"LaSalle Claim" means any and all Claims of LaSalle and
holders of the Holdings Notes against the Debtors whether asserted or not it
being understood that LaSalle has filed the LaSalle Withdrawal, which states
that such claims comprise only a claim for tortious interference with
contractual relations of LaSalle against Entertainment. For the avoidance of any
doubt "LaSalle Claim" shall not include the claims or causes of action asserted
or that could be asserted by LaSalle on behalf of the Holdings Noteholders in
the LaSalle Action against the MAFCO Defendants.
"LaSalle Settlement Amount" means three hundred thousand
(300,000) Stockholder Series A Warrants, two hundred twenty five thousand
(225,000) Stockholder Series B Warrants and five hundred twenty-five thousand
(525,000) Stockholder Series C Warrants.
"LaSalle Withdrawal" means LaSalle National Bank as
Indenture Trustee's Withdrawal of Certain Proofs of Claim, filed
with the District Court on July 31, 1998.
"Lien" means any charge against or interest in property or an
interest in property to secure payment of a debt or performance of an
obligation.
"Litigation Claim" means all Causes of Action (including any
avoidance action pursuant to sections 510, 544, 545, 547, 548, 549, 550, 551 and
553 of the Bankruptcy Code) of the Debtors other than (i) those relating to any
tax sharing or other similar agreement, or (ii) against any person or entity
released or exculpated pursuant to this Plan.
"Litigation Trust Agreements" means the Avoidance
Litigation Trust Agreement and the MAFCO Litigation Trust
Agreement.
"Litigation Trust Assets" means all assets of the
Litigation Trusts.
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"Litigation Trustees" means the Avoidance Litigation
Trustee and the MAFCO Litigation Trustees.
"Litigation Trust Loan Agreements" means the Avoidance
Litigation Trust Loan Agreement and the MAFCO Litigation Trust
Loan Agreement.
"Litigation Trusts" means the Avoidance Litigation
Trust and the MAFCO Litigation Trust.
"MAFCO Beneficiaries" means all holders of Allowed Unsecured
Claims (other than Intercompany Claims), holders of Allowed Class Securities
Litigation Claims, and holders of Allowed Equity Interests in Entertainment.
"MAFCO Causes of Action" means all Litigation Claims
(exclusive of all Causes of Action pursuant to sections 544, 545, 547, 548, 549,
550, 551 and 553 of the Bankruptcy Code) asserted in the District Court
Complaint against the MAFCO Defendants or which could have been asserted in the
District Court Complaint against the MAFCO Defendants.
"MAFCO Defendants" means (i) Ronald O. Perelman, (ii) MAFCO
Holdings, Inc., (iii) MacAndrews & Forbes Holdings, Inc., (iv) the Andrews
Group, Inc., (v) Marvel IV Holdings, Inc., (vi) Marvel V Holdings, Inc., (vii)
Four Star Holdings, Inc., (viii) William C. Bevins, (ix) Donald G. Drapkin,(x)
Holdings I, (xi) Holdings II, (xii) Holdings III, (xiii) any individual who
served prior to June 20, 1997 as a director of Entertainment, (xiv) any
individual who served on or prior to April 24, 1997 as to Holdings I and
Holdings II, or is presently serving or has ever served as to Holdings III, as a
director, and (xv) any insider (other than a Releasing Party), Affiliate (other
than a Releasing Party or an officer or director of Holdings I or Holdings II
serving from and after April 24, 1997), director, employee, attorney (other than
a Releasing Party), investment banker (other than a Releasing Party), or agent
of any party identified in clauses (i) through (xiv) of this definition acting
in such capacity in connection with the MAFCO Causes of Action and the LaSalle
Action.
"MAFCO Litigation Trust" means the trust created by the MAFCO
Litigation Trust Agreement to be executed on the Consummation Date pursuant to
Section 7.1 hereof by the Debtors and the MAFCO Litigation Trustees.
"MAFCO Litigation Trust Agreement" means the trust agreement
to be executed by the Debtors and the MAFCO Litigation Trustee in the form of
Exhibit 8 hereto, subject to non-substantive changes.
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"MAFCO Litigation Trust Assets" means all assets of the
MAFCO Litigation Trust.
"MAFCO Litigation Trust Loan Agreement" means the Loan
Agreement to be executed by Newco in the form of Exhibit 9 hereto, subject to
non-substantive changes.
"MAFCO Litigation Trustees" means the three (3) individuals
one of which shall be designated by the Equity Committee, one of which shall be
designated by the Creditors Committee and one of which shall be designated by
the Trustee, and from and after the Consummation Date, any successor trustees
designated in accordance with the MAFCO Litigation Trust Agreement.
"MAFCO Professional Fee Reimbursement Note" means the note to
be executed by the MAFCO Litigation Trustees on behalf of the MAFCO Litigation
Trust in the form of Exhibit 10 hereto, subject to non-substantive changes.
"Marvel" means, collectively, Entertainment and each of its
subsidiaries other than the Panini Entities.
"Master Agreement" means that certain Master Agreement by and
among the Proponents dated as of October 7, 1997 as the same has been or may be
amended from time to time.
"Merger Agreement" means that certain Agreement and Plan of
Merger dated as of the Consummation Date in the form annexed as Exhibit 11
hereto, subject to non-substantive changes.
"NBA" means NBA Properties, Inc.
"NBA License Agreement" means that certain Retail Product
License Agreement dated July 21, 1995 between Entertainment and the NBA, as
amended, supplemented or otherwise modified from time to time.
"NBA Settlement Agreement" means an agreement with the NBA
pursuant to which (i) the NBA shall have consented to the Allowance of the
unsecured component of its Claim in an amount not to exceed twenty million
dollars ($20,000,000) in the aggregate and agreed to waive and release any other
Claims it has or may have in classes 4A through 4I, (ii) the NBA withdraws its
objection to the Creditors Committee motion pursuant to Fed. R. Civ. P. 60(b)
filed on December 23, 1997, and (iii) except as permitted by Paragraph 7 of the
Stipulation and Agreement, the distributions to holders of Allowed Unsecured
Claims in classes 4A through 4I are not otherwise impacted in a manner which has
an impact disproportionate to such classes from the impact, if any, upon the
distributions to any other class of Claims or Equity Interests.
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"Net Avoidance Litigation Proceeds" means the gross proceeds
realized by the Avoidance Litigation Trust in respect of all of the Debtors'
Causes of Action pursuant to sections 510, 544, 545, 547, 548, 549, 550, 551 and
553 of the Bankruptcy Code net of payment of all expenses of the Avoidance
Litigation Trust including, without limitation, (i) payment without duplication
of all sums due and owing pursuant to the Avoidance Professional Fee
Reimbursement Note, and (ii) any set-off effected by the holders of Resulting
Claims pursuant to Section 8.7 hereof.
"Net Cash Proceeds" means the gross proceeds in Cash realized
from the sale of capital stock of Newco net of Cash payments, if necessary to
cause the occurrence of the Consummation Date, in an amount equal to the
aggregate of (i) Administration Expense Claims, including, without limitation,
all DIP Claims, (ii) Priority Non-Tax Claims, (iii) Priority Tax Claims, and
(iv) any other Cash payments necessary to cause the occurrence of the
Consummation Date other than the Toy Biz Cash Distribution and the Required
Secured Lender Consideration.
"Net MAFCO Litigation Proceeds" means the gross proceeds
realized by the MAFCO Litigation Trust in respect of all of the MAFCO Causes of
Action net of payment of all expenses of the MAFCO Litigation Trust including,
without limitation, payment without duplication of all sums due and owing
pursuant to the MAFCO Professional Fee Reimbursement Note.
"New Investors" means the entities set forth on Exhibit 12
hereto and the holders of Fixed Senior Secured Claims exercising the right to
purchase Convertible Preferred Stock in accordance with Section 4.2(b)(i)(A)(6)
hereof.
"New Panini Securities" means debt securities of Newco having
a present value as of the Consummation Date of twenty seven million dollars
($27,000,000) as determined by a fairness opinion (taking into account, inter
alia, the liquidity of the securities) of a nationally recognized investment
banking firm reasonably acceptable to Toy Biz and the Panini Lenders, provided,
however, that such securities may be equity securities with the consent of the
holders two-thirds in amount of the Contingent Senior Secured Claims.
"Newco" means Toy Biz, as its name may be changed, from and
after the Consummation Date.
"Newco Common Stock" means the issued and outstanding shares
of common stock of Newco as of the Consummation Date.
"Newco Guaranty" means an absolute and unconditional guaranty
of Newco and its subsidiaries secured by a valid, binding, enforceable and
perfected first priority lien against the Panini Stock to be executed and
delivered by Newco in the
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form annexed hereto as Exhibit 13 subject to non-substantive changes, pursuant
to which Newco and its subsidiaries shall guaranty the Restructured Panini
Obligations; provided, however, that such guaranty obligation shall be limited
to forty million dollars ($40,000,000), thirteen million dollars ($13,000,000)
of which shall be payable in Cash on the Consummation Date and the remainder of
which shall be payable, at the election of Newco, in the form of either Cash or
debt securities of Newco having a then present value of twenty seven million
dollars ($27,000,000) as the latter value may be determined by a fairness
opinion (taking into account, inter alia, the liquidity of the securities) of a
nationally recognized investment banking firm reasonably acceptable to Newco and
the Panini Lenders; provided, further, that such securities may be equity
securities with the consent of the holders two-thirds in amount of the
Contingent Senior Secured Claims.
"Other Secured Claims" means any Secured Claim not
constituting a Senior Secured Claim.
"Panini" means Panini S.p.A.
"Panini Comic Distribution Agreement" means that certain
agreement to manufacture, reprint, publish and sell Marvel Comics dated December
1995 between Panini and
Entertainment.
"Panini Entities" means Panini and its subsidiaries.
"Panini Indemnified Liabilities" means any and all claims,
liabilities, obligations, losses, damages, distributions, recoveries, penalties,
actions, judgments, suits, costs, expenses (including reasonable fees and
expenses of counsel and other professionals) and disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted against
any Panini Entity in any way relating to, or arising out of, directly or
indirectly, any contracts or other agreements to which any of the Debtors are
party, including, without limitation, the NBA License Agreement, provided,
however, that (i) obligations to repay the Panini Lenders pursuant to the Panini
Credit Agreements shall not constitute Panini Indemnified Liabilities and (ii)
the Debtors shall not be responsible for making any royalty payments owed to or
for the benefit of the National Basketball Association under the NBA License
Agreement solely in respect of sticker sales or card sales made by the Panini
Entities from and after the Consummation Date; provided that Newco shall control
the prosecution, settlement or resolution of such Panini Indemnified Liabilities
and provided further that the Panini Entities shall not assert any claims
against Newco in respect of Panini Indemnified Liabilities that are asserted
outside of any applicable statute of limitations period.
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"Panini Indemnity" means an indemnity in the form of Exhibit
14 hereto, subject to non-substantive changes, pursuant to which Newco and its
subsidiaries will indemnify and hold harmless the Panini Entities from and
against any and all claims, liabilities, obligations, losses, damages,
distributions, recoveries, penalties, actions, judgments, suits, costs, expenses
(including reasonable fees and expenses of counsel and other professionals) and
disbursements of any kind whatsoever which may at any time be imposed on,
incurred by or asserted against any Panini Entity in any way relating to, or
arising out of directly or indirectly, any contracts or other agreements to
which any of the Debtors are party, including, without limitation, the NBA
License Agreement, provided, however, that (i) obligations to repay the Panini
Lenders pursuant to the Existing Credit Agreements shall not constitute Panini
Indemnified Liabilities and (ii) Newco shall not be responsible for making any
royalty payments owed to or for the benefit of the National Basketball
Association under the NBA License Agreement solely in respect of sticker sales
or card sales made by Panini from and after the Consummation Date.
"Panini Lenders" means each of the holders of Panini
Obligations arising under the Existing Panini Credit Agreements including any
holder of a Panini Obligation through the Panini
Participation Agreements.
"Panini Liquidation Event" means the commencement of any
insolvency proceeding under the laws of the Republic of Italy or other
applicable law which mandates the liquidation of Panini.
"Panini Obligations" means all of the obligations of the
Panini Entities arising under the Existing Panini Credit Agreements including,
without limitation, outstanding principal, accrued and unpaid interest, fees,
costs, expenses, charges and any other amounts owing under the Existing Panini
Credit Agreements.
"Panini Participation Agreement" means, collectively, (i) the
Participation Agreement dated as of August 30, 1994 among Istituto Bancario San
Paolo di Torino, S.p.A., New York Limited Branch, as Italian Lender, The Chase
Manhattan Bank, as Administrative Agent, and the financial institutions
signatory thereto, as participants and (ii) the Participation Agreement dated as
of August 5, 1997 among The Chase Manhattan Bank, as Lender, The Chase Manhattan
Bank, as Administrative Agent, and the financial institutions signatory thereto,
as participants.
"Panini Sticker Agreement" means that certain License
Agreement dated as of November 15, 1996 by and between Characters and Panini.
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"Panini Stock" means all of the issued and outstanding
capital stock of Panini.
"Panini Subordination Agreement" means the subordination
agreement dated as of August 5, 1997 by and among (a) each of the Junior
Participating Lenders (as defined therein), (b) the Junior Direct Lenders (as
defined therein), and (c) Chase as a Senior Lender (as defined therein) and as
agent on behalf of itself and the other Senior Lenders (as defined therein).
"Perlmutter Capital Contribution" shall mean an amount of Cash
equal to one million five hundred thousand dollars ($1,500,000).
"Petition Date" means December 27, 1996, the date on which
each of the Debtors filed its voluntary petition for relief under the Bankruptcy
Code.
"Pledged Shares" means the shares of common stock of
Entertainment which are owned by Holdings I and Holdings II and pledged to
secure the Holdings Notes pursuant to the Indentures and which have not been
distributed to holders of the Holdings Notes pursuant to orders of court dated
March 3, 1998 (as amended and supplemented by orders dated March 17, 1998 and
April 9, 1998) and which are otherwise subject to the lien in favor of LaSalle
pursuant to the terms of the Indentures.
"Plan of Reorganization" means this Fourth Amended Joint Plan
of Reorganization Proposed By the Secured Lenders and Toy Biz, Inc. dated as of
July__, 1998, including, without limitation, the exhibits and schedules hereto,
as the same may be amended or modified from time to time in accordance with the
terms hereof.
"Plan Warrant Agreement" means that certain Warrant Agreement
in the form of Exhibit 15 hereto, subject to non- substantive changes.
"Plan Warrants" means warrants exercisable not later than the
fourth (4th) anniversary of the Consummation Date entitling the holder thereof
to acquire one share of Newco Common Stock, subject to customary anti-dilution
protections, based upon an exercise price of seventeen dollars and twenty-five
cents ($17.25) per share and otherwise upon the terms and conditions contained
in the Plan Warrant Agreement.
"Priority Non-Tax Claim" means any Claim of a kind specified
in section 507(a)(2), (3), (4), (5), (6), (7) or (9) of the Bankruptcy Code.
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"Priority Tax Claim" means any Claim of a governmental unit of
the kind specified in section 507(a)(8) of the Bankruptcy Code.
"Professional Fee Reimbursement Notes" means the
Avoidance Professional Fee Reimbursement Note and the MAFCO
Professional Fee Reimbursement Note.
"Proponents" means Toy Biz and the Secured Lenders.
"Qualifying Transaction" means a transaction to be closed not
later than ten (10) days after the Confirmation Date to acquire all or a portion
of the capital stock of Newco which transaction generates Net Cash Proceeds
equal to or greater than the sum of (i) the Toy Biz Cash Distribution, (ii) the
Required Secured Lender Consideration, and (iii) the amounts (other than Excess
Proceeds) due to holders of Allowed Unsecured Claims pursuant to Section
4.4(a)(ii) hereof, provides for the issuance and distribution by the purchaser
of warrants substantially identical to the Stockholder Series A Warrants,
Stockholder Series B Warrants, and Stockholder C Warrants otherwise required to
be distributed pursuant to this Plan of Reorganization, is otherwise consistent
with the terms of this Plan of Reorganization and has been approved as to the
Newco Guaranty by Requisite Panini Lender Consent.
"Ratable Proportion" means, with reference to any distribution
on account of any Allowed Claim or Allowed Equity interest in any class or
subclass, as applicable, a distribution equal in amount to the ratio(as a
percentage) that the amount of such Allowed Claim or Allowed Equity interest, as
applicable, bears to the aggregate amount of Allowed Claims or Allowed Equity
Interests of the same class or subclass, as applicable.
"Releasing Party" has the meaning given to it in the
Stipulation and Agreement.
"Reorganization Cases" means the cases commenced under chapter
11 of the Bankruptcy Code by the Debtors.
"Required Secured Lender Consideration" means four hundred and
thirty five million dollars ($435,000,000) in Cash payable in respect of the
Fixed Senior Secured Claims or such other amount which has been approved by
Requisite Secured Lender Consent.
"Requisite Panini Lender Consent" means the written consent of
holders of Designated Contingent Senior Secured Claims holding a majority in
dollar amount of the aggregate Designated Contingent Senior Secured Claims.
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"Requisite Secured Lender Consent" means the written consent
of holders of Designated Fixed Senior Secured Claims holding at least eighty
five percent (85%) in amount of such Designated Fixed Senior Secured Claims.
"Restructured Panini Loan Documents" means loan documents (i)
extending the maturity of the Panini Obligations until thirty-six (36) months
after the earlier of (a) the Consummation Date or (b) March 31, 1998; (ii)
providing that interest in respect of the obligations evidenced by the Existing
Panini Senior Credit Agreements shall be paid monthly at the non-default rate
thereof; (iii) providing that interest in respect of the obligations evidenced
by the Existing Panini Junior Credit Agreements may, at the election of Newco,
be paid in Cash or in kind by the issuance of additional notes on a quarterly
basis on the last day of March, June, September and December until December 31,
1998, in either case at the non-default rate thereof; (iv) containing customary
and reasonable defaults for a transaction of this nature, it being understood
and agreed that all defaults which predate the Consummation Date shall be waived
and that there shall be no events of default which are inconsistent with the
transactions contemplated hereby; (v) requiring Panini to commence paying
interest in respect of the obligations evidenced by the Existing Panini Junior
Credit Agreements, at the non-default rate thereof, in Cash by making one
quarterly Cash interest payment as of January 1, 1999 (on the principal amount
thereof including any capitalized amounts) in advance, and thereafter making
quarterly Cash interest payments (on the principal amount thereof including any
capitalized amounts) in arrears on the last day of March, June, September and
December until maturity, it being understood that the first quarterly interest
payment in arrears will be due on June 30, 1999 and that no payment will be due
on March 31, 1999; (vi) fixing the non-default rate of interest in respect of
the Panini Obligations at the same rate as in the Existing Panini Credit
Agreements; (vii) fixing the default rate of interest in respect of the Panini
Obligations at two hundred (200) basis points above the non-default rate of
interest in the Existing Panini Credit Agreements; (viii) containing cure
periods consistent with those contained in the Existing Panini Credit Agreements
but in no event less than five (5) Business Days; and (ix) which are otherwise
in form and substance reasonably acceptable to Toy Biz and the Panini Lenders.
"Restructured Panini Obligations" means all of the obligations
under the Restructured Panini Loan Documents.
"Resulting Claim" means any Claim arising pursuant to section
502(h) of the Bankruptcy Code from the recovery of property under section 550 of
the Bankruptcy Code.
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"Schedules" means the schedules of assets and liabilities and
the statements of financial affairs filed by the Debtors under section 521 of
the Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules as
such schedules and statements have been or may be supplemented or amended.
"Secured Claim" means a Claim secured by a Lien on Collateral
to the extent of the value of such Collateral, as determined in accordance with
section 506(a) of the Bankruptcy Code or, in the event that such Claim is
subject to setoff under section 553 of the Bankruptcy Code, to the extent of
such setoff.
"Secured Lenders" means those holders of Senior Secured Claims
set forth on Exhibit 16 hereof.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Secured Claim" means any Contingent Senior
Secured Claim and any Fixed Senior Secured Claim.
"Settlement Amount" means three million five hundred thousand
dollars ($3,500,000) in Cash.
"Shareholder Agreement" means a shareholders' agreement by and
between Isaac Perlmutter, Isaac Perlmutter, T.A., Zib Inc., Avi Arad, the New
Investors and the Secured Lenders in form and substance reasonably acceptable to
each of the foregoing and Toy Biz.
"Standstill Agreements" means the Agreements to be executed
and delivered by High River, Westgate and certain of their Affiliates on the
Consummation Date in the form of Exhibit 17 hereto, subject to non-substantive
changes.
"Stipulation and Agreement" means the Stipulation and
Agreement Effecting Consensual Amendment to the Third Amended
Joint Plan of Reorganization Proposed by the Secured Lenders and
Toy Biz, Inc. dated as of July 30, 1998 by and among Toy Biz,
Isaac Perlmutter, Isaac Perlmutter T.A., Zib Inc., Avi Arad,
Joseph M. Ahearn, James S. Carluccio, Alan Fine, James F. Halpin,
Morton E. Handel, Alfred A. Piergallini, Donald E. Rosenblum,
Paul R. Verkuil, Mark Dickstein, Dickstein & Co. L.P., Dickstein
Focus Fund, L.P., Dickstein International Limited, Dickstein
Partners L.P., DPI, the Trustee, Chase individually and on behalf
of those holders of Senior Secured Claims which authorize Chase
to sign the Stipulation and Agreement on their behalf pursuant to
the Master Agreement Amendment, Chase as a holder of a DIP Claim,
CIBC, Inc. as a holder of a DIP Claim, Goldman Sachs Credit
Partners L.P. as a holder of a DIP Claim, Lehman Commercial Paper
Inc. as a holder of a DIP Claim, The Long Term Credit Bank of
Japan, Ltd., Los Angeles Agency as a holder of a DIP Claim, The
Sumitomo Bank, Limited as a holder of a DIP Claim, High River,
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Carl Icahn, Westgate, Vincent Intrieri, LaSalle, the Creditors
Committee and the Equity Committee.
"Stockholder Series A Warrants" means warrants exercisable on
or before the third (3rd) anniversary of the Consummation Date entitling the
holder thereof to acquire one share of Newco Common Stock, subject to customary
anti-dilution protections, based upon an initial exercise price of twelve
dollars ($12.00) per share and otherwise upon the terms and conditions contained
in the Stockholder Series A Warrant Agreement.
"Stockholder Series B Warrants" means warrants entitling the
holder thereof to acquire one share of Convertible Preferred Stock at an initial
exercise price of ten dollars and sixty-five cents($10.65) per share, subject to
increase as provided in the Stockholder Series B Warrant Agreement and subject
to customary anti-dilution protections, which warrants will be issued in one or
more series, with all such warrants having the same Warrant Distribution Date
constituting the same series and with the warrants in each such series being
exercisable until the first (1st) Business Day occurring more than six months
after the Warrant Distribution Date of such series, and otherwise having the
terms and conditions contained in the Stockholder Series B Warrant Agreement.
"Stockholder Series C Warrants" means warrants exercisable on
or before the fourth (4th) anniversary of the Consummation Date entitling the
holder thereof to acquire one share of Newco Common Stock, subject to customary
anti-dilution protections, based upon an initial exercise price of eighteen
dollars and fifty cents ($18.50) per share and otherwise upon the terms and
conditions contained in the Stockholder Series C Warrant Agreement.
"Stockholder Series A Warrant Agreement" means that certain
Warrant Agreement in the form of Exhibit 18 hereto, subject to non-substantive
changes.
"Stockholder Series B Warrant Agreement" means that certain
Warrant Agreement in the form of Exhibit 19 hereto, subject to non-substantive
changes.
"Stockholder Series C Warrant Agreement" means that certain
Warrant Agreement in the form of Exhibit 20 hereto, subject to non-substantive
changes.
"Subsidiary Equity Interests" means the Equity Interests in
any of the Debtors held by any of the other Debtors.
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"Substantial Contribution Application" means any application
for compensation or reimbursement of expenses pursuant to sections 503(b)(3) or
(4) of the Bankruptcy Code.
"Term Loan Facility" means a term loan facility or other
financing arrangement for Newco and its subsidiaries in the amount of at least
two hundred million dollars ($200,000,000) less any amount by which the Working
Capital Facility exceeds fifty million dollars ($50,000,000) that may be secured
by all or substantially all of the assets of Newco upon market rate terms and
conditions and otherwise in form and substance reasonably acceptable to the
Proponents.
"Toy Biz" means Toy Biz, Inc., a Delaware corporation.
"Toy Biz Cash Distribution" means an amount of Cash equal to
the aggregate of (a) two hundred and eighty million dollars ($280,000,000), (b)
any commitment or facility fees actually paid in connection with obtaining
financing commitments required by this Plan of Reorganization, (c) the fees,
expenses and costs of Toy Biz's attorneys, investment bankers, and other
professionals incurred in connection with the Reorganization Cases and the
transactions contemplated hereby, including, without limitation, in connection
with or related to the preparation of any proxy statement, the making of any
securities registration and the solicitation of any proxies for Toy Biz in an
amount not to exceed in the aggregate (i) three million five hundred thousand
dollars ($3,500,000) for the period through and including November 30, 1997,
(ii) one million dollars ($1,000,000) for a fairness opinion, (iii) one million,
five hundred thousand dollars ($1,500,000) as a success fee, and (iv) an average
of six hundred and twenty-five thousand dollars ($625,000) per month thereafter
through and including the Consummation Date, and (d) the Breakup Fee.
"Transaction" means the transactions contemplated by the
Merger Agreement, and/or, to the extent applicable, the documents governing any
Qualifying Transaction.
"Transmittal Material" shall mean the materials in the form of
Exhibit 21 hereto, subject to non-substantive changes, which shall be
distributed in connection with all Warrants distributed pursuant to this Plan of
Reorganization.
"Trustee" means John J. Gibbons solely in his capacity
as chapter 11 trustee for the Debtors.
"Unsecured Claim" means any Claim against a Debtor that is not
an Administration Expense Claim, a Priority Non-Tax Claim, a Priority Tax Claim,
a DIP Claim, a Secured Claim, a Class Securities Litigation Claim, the LaSalle
Claim or any deficiency Claim in respect of any Senior Secured Claim.
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"Unsecured Creditor Payment" means Cash in an amount equal to
fifteen percent (15%) of the aggregate amount of Allowed Unsecured Claims plus
two million dollars ($2,000,000), but in no event more than eight million
dollars ($8,000,000) in the aggregate.
"U.S. Trustee" means the United States Trustee
appointed under section 581, title 28, United States Code to
serve in the District of Delaware.
"Warrant Liquidation Agent" means a financial institution to
be selected by Toy Biz no later than the Consummation Date subject to the
approval of the Trustee not to be unreasonably withheld or delayed and retained
by Newco pursuant to the Warrant Liquidation Agency Agreement.
"Warrant Liquidation Agency Agreement" means an agreement in
form and substance reasonably satisfactory to the Proponents and the Trustee.
"Warrant Distribution Date" means the first to occur of (i)
the date on which Newco substantially completes the distribution of a series of
Stockholder Series B Warrants to the record holders of the applicable Claims or
Equity Interest in accordance with this Plan of Reorganization, or (ii) the date
on which such Stockholder Series B Warrants are distributed to the Warrant
Liquidation Agent.
"Warrants" means the Plan Warrants, the Stockholder
Series A Warrants, the Stockholder Series B Warrants and the
Stockholder Series C Warrants.
"Westgate" means Westgate International L.P.
"Working Capital Facility" means a revolving credit loan
facility for Newco and its subsidiaries in an amount of at least fifty million
dollars ($50,000,000) less the amount by which the Term Loan Facility exceeds
two hundred million ($200,000,000) upon market rate terms and conditions and
otherwise in form and substance reasonably acceptable to the Proponents.
B. Interpretation; Application of
Definitions and Rules of Construction
-------------------------------------
Unless otherwise specified, all Section, schedule or exhibit
references in this Plan of Reorganization are to the respective Section in,
article of, or schedule or exhibit to, this Plan of Reorganization, as the same
may be amended, waived, or modified from time to time. The words "herein,"
"hereof," "hereto," "hereunder," and other words of similar import refer to this
Plan of Reorganization as a whole and not to any particular
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Section, subsection or clause contained in this Plan of Reorganization. Except
as otherwise expressly provided herein, a term used herein that is not defined
herein shall have the meaning assigned to that term in the Bankruptcy Code. The
rules of construction contained in section 102 of the Bankruptcy Code shall
apply to the construction of this Plan of Reorganization. The headings in this
Plan of Reorganization are for convenience of reference only and shall not limit
or otherwise affect the provisions hereof.
C. Exhibits and Schedules
----------------------
All Exhibits and Schedules to this Plan of Reorganization are
contained in a supplemental Exhibit filed with the Clerk of the Bankruptcy Court
contemporaneously herewith.
SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
----------------------------------------
2.1 Administration Expense Claims.
On the Consummation Date, each holder of an Allowed
Administration Expense Claim (including all DIP Claims) shall be paid by Newco
on account of such Allowed Administration Expense Claim an amount in Cash equal
to the amount of such Allowed Administration Expense Claim, except to the extent
that any entity entitled to payment of any Allowed Administration Expense Claim
agrees to a different treatment of such Administration Expense Claim; provided,
that Allowed Administration Expense Claims representing liabilities incurred in
the ordinary course of business by the Debtors in Possession shall be assumed
and paid by Newco in accordance with the terms and subject to the conditions of
any agreements governing, instruments evidencing or other documents relating to
such transactions.
This Plan of Reorganization constitutes a motion by the
Proponents to fix a bar date for the filing of Administrative Expense Claims
other than the Administration Expense Claims treated under Section 2.2 hereof,
which shall be a date fixed by
order of the Bankruptcy Court.
2.2 Compensation and Reimbursement Claims.
All entities seeking an award by the Bankruptcy Court of
compensation for services rendered or reimbursement of expenses incurred through
and including the Consummation Date under section 330 or 503(b)(2) of the
Bankruptcy Code (a) shall file their respective final applications for
allowances of compensation for services rendered and reimbursement of expenses
incurred by the date that is forty-five (45) days after the Consummation Date
and, if granted such an award by the Bankruptcy Court, (b) shall be paid in full
by Newco in such amounts as are
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allowed by the Bankruptcy Court (i) upon the later of (A) the Consummation Date,
and (B) the date upon which the order relating to any such Administration
Expense Claim becomes a Final Order or (ii) upon such other terms as may be
mutually agreed upon between such holder of an Administration Expense Claim and
the Proponents or, on and after the Consummation Date, Newco.
2.3 Priority Tax Claims.
On the Consummation Date, each holder of an Allowed Priority
Tax Claim shall be distributed on account of such Allowed Priority Tax Claim a
payment in Cash equal to the amount of such Allowed Priority Tax Claim.
SECTION 3. CLASSIFICATION OF CLAIMS
AND EQUITY INTERESTS
------------------------
Claims against and Equity Interests in the Debtors are divided
into the following classes:
Class 1 -- Priority Non-Tax Claims
Class 2 -- Senior Secured Claims
Subclass 2A -- Fixed Senior Secured Claims
Subclass 2B -- Contingent Senior Secured Claims
Class 3 -- Other Secured Claims
Subclass 3A -- Entertainment
Subclass 3B -- The Asher Candy Company
Subclass 3C -- Fleer Corp.
Subclass 3D -- Frank H. Fleer Corp.
Subclass 3E -- Heroes World Distribution, Inc.
Subclass 3F -- Malibu Comics Entertainment, Inc.
Subclass 3G -- Marvel Characters, Inc.
Subclass 3H -- Marvel Direct Marketing Inc.
Subclass 3I -- SkyBox International Inc.
Class 4 -- Unsecured Claims
Subclass 4A -- Entertainment
Subclass 4B -- The Asher Candy Company
Subclass 4C -- Fleer Corp.
Subclass 4D -- Frank H. Fleer Corp.
Subclass 4E -- Heroes World Distribution, Inc.
Subclass 4F -- Malibu Comics Entertainment, Inc.
Subclass 4G -- Marvel Characters, Inc.
Subclass 4H -- Marvel Direct Marketing Inc.
Subclass 4I -- SkyBox International Inc.
Subclass 4J -- Intercompany Claims
Subclass 4K -- LaSalle Claim
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Class 5 -- Class Securities Litigation Claims
Class 6 -- Equity Interests
Subclass 6A -- Entertainment
Subclass 6B -- Subsidiary Equity Interests
Class 7 -- Existing Warrants
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN
-----------------------------------
4.1 Priority Non-Tax Claims (Class 1).
On the Consummation Date, each holder of an Allowed Priority
Non-Tax Claim shall be distributed on account of such Allowed Priority Non-Tax
Claim a payment in Cash equal to the amount of its Allowed Priority Non-Tax
Claim.
4.2 Senior Secured Claims (Class 2).
(a) Allowance of Senior Secured Claims. On the
Consummation Date, the Claims of each holder of a Senior Secured Claim under
each of the Existing Credit Agreements shall be allowed in an amount equal to
the amount owing to such holder under the applicable Existing Credit Agreement
as of the date hereof, together with interest, fees, charges and other amounts
owing under the Existing Credit Agreement through the Consummation Date, but in
no event more than an amount equal to the sum of (i) the value of the Collateral
as of the Consummation Date securing such Senior Secured Claim, and (ii) any
Claim for adequate protection relating to the Collateral, arising out of that
certain Revolving Credit Guaranty Agreement by and among Entertainment, the
other Debtors and Chase dated December 27, 1996, the order entered by the
Bankruptcy Court on January 24, 1997, or any amendments entered into or further
orders entered by the Bankruptcy Court with respect to either of the foregoing.
(b) Treatment of Allowed Fixed Senior Secured
Claims (Subclass 2A).
(i) No Qualifying Transaction.
(A) Distributions. In the event that no Qualifying Transaction
closes, each holder of an Allowed Fixed Senior Secured Claim shall be
distributed, subject to increase or decrease pursuant to Section 9.5 hereof, on
the Consummation Date, in full and complete satisfaction and discharge of its
Fixed Senior Secured Claims, its Ratable Proportion of:
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(1) two hundred thirty one million, seven hundred and fifty thousand
dollars ($231,750,000) in Cash less the sum of (a) the actual amount distributed
to the holders of DIP Claims for permanent application against principal from
the proceeds of the sale of the Confection Business, and (b) all other amounts
paid to satisfy the outstanding principal amount of the DIP Claims (exclusive of
any increase in the amount of the DIP Claims from and after October 7, 1997
including, without limitation, any interest or charges which may accrue and all
amounts advanced under the DIP Credit Agreements);
(2) thirteen million, one hundred thousand (13,100,000)
shares of Newco Common Stock;
(3) seven million nine hundred thousand (7,900,000) shares of
Convertible Preferred Stock;
(4) [intentionally deleted];
(5) one thousand (1,000) shares of new common stock of each of the
Debtors other than Entertainment representing one hundred percent (100%) of the
issued and outstanding stock of such Debtors, which stock shall be transferred
to Newco in accordance with section 6.15 hereof;
(6) the right to purchase up to forty million dollars ($40,000,000) of
Convertible Preferred Stock of Newco as New Investors that would otherwise be
issued to the New Investors set forth on Exhibit 12; and
(7) four and nine tenths percent(4.9%) of the Net Avoidance Litigation
Proceeds to be distributed pursuant to Section 7.4(a) hereof.
Subject to the preceding sentence and without duplication, Chase and the holders
of Senior Secured Claims shall be reimbursed for all of the professional fees,
costs and expenses of professionals engaged by Chase in its capacity as agent or
to act on behalf of all holders of Senior Secured Claims, including, without
limitation, all fees and expenses of counsel and financial advisors incurred in
connection with the Reorganization Cases, provided, however, that in no event
shall the aggregate value (as of the Consummation Date) of the property
distributed to holders of Fixed Senior Secured Claims exceed the amount of such
Fixed Senior Secured Claims or the sum of (i) the value (as of the Consummation
Date), of the collateral securing such Fixed Senior Secured Claims, and (ii) any
Claim for adequate protection relating to the collateral, arising out of that
certain Revolving Credit Guaranty Agreement by and among Entertainment, the
other Debtors and Chase dated December 27, 1996, the order entered by the
Bankruptcy Court on January 24, 1997, or any amendments
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entered into or further orders entered by the Bankruptcy Court with respect to
either of the foregoing.
(B) Intentionally Deleted.
---------------------
(ii) Qualifying Transaction. In the event of a
Qualifying Transaction, each holder of an Allowed Fixed Senior Secured Claim
shall be distributed on the Consummation Date, in full and complete satisfaction
and discharge of its Fixed Senior Secured Claims, its Ratable Proportion of all
consideration received in connection with such transaction other than (i) the
Toy Biz Cash Distribution, and (ii) any property to be distributed pursuant to
Sections 2, 4.1, 4.2(c), 4.3, 4.4, 4.5 and 4.6 hereof; provided, however, that
in no event shall the holders of Allowed Fixed Senior Secured Claims receive
more than payment in full in accordance with the Existing Fleer Credit
Agreements.
(c) Treatment of Allowed Contingent Senior
Secured Claims (Subclass 2B).
(i) No Panini Liquidation Event. If no Panini
Liquidation Event occurs on or prior to Consummation Date, the holders of
Allowed Contingent Senior Secured Claims shall receive, on the Consummation
Date, in full and complete satisfaction and discharge of their Contingent Senior
Secured Claims, the Newco Guaranty of the Restructured Panini
Obligations.
(ii) Panini Liquidation Event. If a Panini
Liquidation Event occurs on or prior to Consummation Date, the holders of
Allowed Contingent Senior Secured Claims shall receive, on the Consummation
Date, in full and complete satisfaction and discharge of their Contingent Senior
Secured Claims, their Ratable Proportion of the New Panini Securities and
thirteen million dollars ($13,000,000) of Cash.
4.3 Other Secured Claims (Class 3).
On the Consummation Date, each holder of an Allowed Other
Secured Claim in each subclass of Class 3 (Other Secured Claims) shall in full
and complete satisfaction and discharge of its Other Secured Claim (a) be
distributed on account of such Allowed Other Secured Claim Cash equal to such
Allowed Other Secured Claim, (b) be distributed on account of such Allowed Other
Secured Claim the Collateral securing such Allowed Other Secured Claim or (c)
have such Allowed Other Secured Claim reinstated as against the applicable
Reorganized Debtor and made unimpaired in accordance with section 1124(2) of the
Bankruptcy Code, notwithstanding any contractual provision or applicable
non-bankruptcy law that entitles the holder of an Allowed Other Secured Claim to
demand and receive payment of such Claim prior
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to the stated maturity of such Claim from and after the
occurrence of a default. Such treatment shall be determined by
the Proponents.
4.4 Unsecured Claims (Class 4).
(a) Distributions.
(i) No Qualifying Transaction.
In the event that no Qualifying Transaction
occurs and except as set forth in Sections 4.4(b) and 4.4(c) hereof, in full and
complete satisfaction and discharge of its Allowed Unsecured Claim, each holder
of an Allowed Unsecured Claim in each of Subclass 4A (Entertainment), Subclass
4B (The Asher Candy Company), Subclass 4C (Fleer Corp.), Subclass 4D (Frank H.
Fleer Corp.), Subclass 4E (Heroes World Distribution, Inc.), Subclass 4F (Malibu
Comics Entertainment, Inc.), Subclass 4G (Marvel Characters, Inc.), Subclass 4H
(Marvel Direct Marketing Inc.) and Subclass 4I (Skybox International Inc.)of
Class 4 (Unsecured Claims) shall, to the extent not paid prior to the
Consummation Date, be distributed, subject to increase or decrease pursuant to
Section 9.5 hereof:
(1) its Ratable Proportion of the Unsecured Creditor
Payment;
(2) its Ratable Proportion of one million (1,000,000) Plan Warrants
plus three (3) Plan Warrants for each eighty dollars ($80) of Allowed Unsecured
Claims in excess of twenty million dollars ($20,000,000) but in no event more
than one million seven hundred and fifty thousand (1,750,000) Plan Warrants in
the aggregate;
(3) its Ratable Proportion of the thirty percent (30%) interest in the
Net Avoidance Litigation Proceeds to be distributed pursuant to Section 7.4(b)
hereof;
(4) its Ratable Proportion of the first four million five hundred
thousand dollars ($4,500,000) of Net MAFCO Litigation Proceeds plus a thirty
percent (30%) interest in any Net MAFCO Litigation Proceeds in excess of four
million five hundred thousand dollars ($4,500,000) to be distributed pursuant to
Section 7.4(b) hereof; and
(5) its Ratable Proportion of eight hundred thirty two thousand five
hundred (832,500) Stockholder Series A Warrants, nine hundred thirty six
thousand five hundred sixty three (936,563) Stockholder Series B Warrants, and
one million six hundred eighteen thousand seven hundred fifty (1,618,750)
Stockholder Series C Warrants.
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The number of Warrants to be distributed hereunder is subject to increase or
decrease pursuant to Section 9.5 hereof.
(ii) Qualifying Transaction.
In the event that a Qualifying Transaction
occurs and except as set forth in Sections 4.4(b) and 4.4(c) hereof, in full and
complete satisfaction and discharge of its Allowed Unsecured Claim, each holder
of an Allowed Unsecured Claim in each of Subclass 4A (Entertainment), Subclass
4B (The Asher Candy Company), Subclass 4C (Fleer Corp.), Subclass 4D (Frank H.
Fleer Corp.), Subclass 4E (Heroes World Distribution, Inc.), Subclass 4F (Malibu
Comics Entertainment, Inc.), Subclass 4G (Marvel Characters, Inc.), Subclass 4H
(Marvel Direct Marketing Inc.) and Subclass 4I (Skybox International Inc.) of
Class 4 (Unsecured Claims) shall, to the extent not paid prior to the
Consummation Date, be distributed the same property as set forth in Section
4.4(a)(i) above except that each holder of an Allowed Unsecured Claim shall
receive in lieu of the Plan Warrants to be distributed pursuant to Section
4.4(a)(i)(2) above one dollar and thirty cents ($1.30) for each Plan Warrant
which would have otherwise been distributed to such holder. In addition, holders
of Allowed Unsecured Claims shall receive all Excess Proceeds until all holders
of Allowed Unsecured Claims have received payment in full.
(b) Intercompany Claims. Each holder of an
Allowed Intercompany Claim shall receive, in full and complete satisfaction and
discharge of its Intercompany Claim, its Ratable Proportion of one dollar ($1).
In lieu thereof, at the election of the Proponents, any Intercompany Claims
shall be treated as contributions to the capital of the obligor on such
Intercompany Claims.
(c) LaSalle Claim. LaSalle shall receive the
LaSalle Settlement Amount in full and complete satisfaction and discharge of the
LaSalle Claim; provided, however, that nothing contained herein shall be
construed as a discharge of obligations (other than those of the Debtors and
their subsidiaries) under the Indentures.
4.5 Class Securities Litigation Claims (Class 5).
(a) Distributions. Subject to allocation
between holders of Allowed Class Securities Litigation Claims and holders of
Allowed Equity Interests in Subclass 6A (Entertainment) of Class 6 (Equity
Interests) in accordance with Section 4.5(b) hereof, each holder of an Allowed
Class Securities Litigation Claim shall be distributed, in full and complete
satisfaction and discharge of its Allowed Class Securities Litigation on account
of such Allowed Class Securities Litigation Claim its Ratable Proportion of (i)
two million eight hundred sixty seven thousand
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five hundred (2,867,500) Stockholder Series A Warrants, (ii) one million eight
hundred thirty eight thousand four hundred thirty eight (1,838,438) Stockholder
Series B Warrants, (iii) four million eight hundred fifty six thousand two
hundred fifty (4,856,250) Stockholder Series C Warrants, and (iv) Net MAFCO
Litigation Proceeds in the amounts set forth in Section 7.4 below, and, in the
event a Qualifying Transaction closes pursuant to which holders of Fixed Senior
Secured Claims and holders of Unsecured Claims are paid in full, all Excess
Proceeds not distributed to holders of Unsecured Claims. The number of Warrants
distributed hereunder is subject to increase or decrease pursuant to Section 9.5
hereof.
(b) Calculation of Distribution. For purposes of
effecting distributions hereunder on account of Allowed Class Securities
Litigation Claims and Allowed Equity Interests in Subclass 6A (Entertainment) of
Class 6 (Equity Interests), any judgment evidencing any Allowed Class Securities
Litigation Claim shall be converted into an implied number of shares of common
stock of Entertainment calculated as the quotient of (i) the aggregate amount of
any such judgment, divided by (ii) the average of intraday high and low average
sales prices of a share of common stock of Entertainment on the New York Stock
Exchange, as reported in The Wall Street Journal (National Edition) for the ten
consecutive trading days ending on the trading day immediately preceding the
date of the commencement of any action underlying any Allowed Class Securities
Litigation Claim.
(c) Parity of and Limitation on Distributions.
The distributions to be made under this Section 4.5 on account of Allowed Class
Securities Litigation Claims shall be made on the basis of parity with the
Equity Interests in Subclass 6A (Entertainment) of Class 6 (Equity Interests)
and subject to the limitation that holders of Allowed Class Securities
Litigation Claims and Equity Interests in Subclass 6A (Entertainment) of Class 6
(Equity Interests) shall only be entitled to a single recovery on account of
such Claims and Equity Interests.
4.6 Equity Interests (Class 6).
(a) Entertainment (Subclass 6A).
(i) Distributions. Subject to allocation
between holders of Allowed Class Securities Litigation Claims and holders of
Allowed Equity Interests in Subclass 6A (Entertainment) of Class 6 (Equity
Interests) in accordance with Section 4.5(b) and 4.5(c) hereof, each holder of
record of an Allowed Equity Interest in Subclass 6A (Entertainment) of Class 6
(Equity Interests) as of the Consummation Date shall be distributed, in full and
complete satisfaction and discharge of such Allowed Equity Interest, on account
of such Allowed Equity
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Interest its Ratable Proportion of (i) two million eight hundred sixty seven
thousand five hundred (2,867,500) Stockholder Series A Warrants, (ii) one
million eight hundred thirty eight thousand four hundred thirty eight
(1,838,438) Stockholder Series B Warrants, (iii) four million eight hundred
fifty six thousand two hundred fifty (4,856,250) Stockholder Series C Warrants,
and (iv) Net MAFCO Litigation Proceeds in the amounts set forth in Section 7.4
below, and in the event a Qualifying Transaction closes pursuant to which
holders of Fixed Senior Secured Claims and holders of Unsecured Claims are paid
in full, all Excess Proceeds not distributed to holders of Unsecured Claims. The
number of Warrants distributed hereunder is subject to increase or decrease
pursuant to Section 9.5 hereof.
(ii) Parity of and Limitation on
Distributions. The distributions to be made under this Section 4.6 on account of
Equity Interests in Subclass 6A (Entertainment) of Class 6 (Equity Interests)
shall be made on the basis of parity with the Allowed Class Securities
Litigation Claims and subject to the limitation that holders of Allowed Class
Securities Litigation Claims and Equity Interests in Subclass 6A (Entertainment)
of Class 6 (Equity Interests) shall only be entitled to a single recovery on
account of such Claims and Equity Interests.
(b) Subsidiary Equity Interest (Subclass 6B). On
the Consummation Date, all Subsidiary Equity Interests shall be canceled, and
the holders of Subsidiary Equity Interests shall not be entitled to, and shall
not, receive or retain any property or interest in property on account of such
Subsidiary Equity Interest.
4.7 Existing Warrants (Class 7).
On the Consummation Date, the Existing Warrants shall be
canceled, and the holders of Existing Warrants shall not be entitled to, and
shall not, receive or retain any property or interest in property on account of
such Equity Interests in Class 7 (Existing Warrants).
SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED AND NOT IMPAIRED UNDER THE
PLAN; ACCEPTANCE OR REJECTION OF THE PLAN
---------------------------------------------
5.1 Holders of Claims and Equity Interests Entitled to
Vote.
Each of Class 1 (Priority Non-Tax Claims), Class 2 (Senior
Secured Claims), Class 3 (Other Secured Claims), Class 4 (Unsecured Claims),
Class 5 (Class Securities Litigation Claims), Subclass 6A (Marvel Entertainment
Group) of Class 6 (Equity
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Interests), Subclass 6B (Subsidiary Equity Interests) of Class 6 (Equity
Interests) and Class 7 (Existing Warrants) and, as applicable, each subclass
thereof, are impaired hereunder.
5.2 Nonconsensual Confirmation.
The Proponents hereby move to have the Bankruptcy Court
confirm this Plan of Reorganization under section 1129(b) of the Bankruptcy
Code.
5.3 Severability of Plan of Reorganization.
This Plan of Reorganization is, severally, a plan of
reorganization for each of the Debtors. In the event that this Plan of
Reorganization is not confirmed for all Debtors, then this Plan of
Reorganization may not be confirmed for any Debtor without the consent of each
of the Proponents, provided, however, that this Plan of Reorganization may be
confirmed if it can be confirmed for all Debtors other than Immaterial Debtors.
SECTION 6. MEANS OF IMPLEMENTATION
-----------------------
6.1 Closing of Transaction.
On the Consummation Date, the closing of the Transaction shall
occur in accordance with the Merger Agreement and, in the event of a Qualifying
Transaction, any other applicable document on the terms and subject to the
conditions contained in such Merger Agreement and/or other applicable document,
free and clear of all Liens, claims, encumbrances and interests. In connection
therewith, all outstanding letters of credit or other similar obligations as set
forth on Schedule 6.1 hereto issued for the account of any of the Debtors or the
Debtors in Possession under the Existing Credit Agreements or the DIP Credit
Agreement, as applicable, shall be (a) canceled and terminated with Chase
receiving releases reasonably acceptable to Chase from the beneficiaries
thereof, or (b) Newco shall issue a back to back letter of credit in form and
substance reasonably acceptable to Chase. In the event that any of the letters
of credit set forth on Schedule 6.1 hereto are drawn prior to the Consummation
Date, Newco shall reimburse Chase for all amounts (including interest at the
non-default rate provided for in the Existing Credit Agreements, fees and other
charges) incurred solely in respect of any such letters of credit.
6.2 Derivative Securities Litigation Claims.
Any derivative securities litigation claims are property of
the estate of Entertainment under section 541 of the Bankruptcy Code and shall
become the property of Newco.
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6.3 Board of Directors of the Reorganized Debtors.
The Board of Directors of Newco immediately following the
Consummation Date shall consist of six (6) individuals designated by Toy Biz and
the New Investors and five (5) individuals designated by the Secured Lenders.
The members of the Board of Directors of Newco, assuming its formation, are or
shall be stated in a filing to made with the Bankruptcy Court prior to the
Consummation Date. Thereafter, and subject to the Shareholder Agreement, the
Board of Directors of Newco shall be elected in accordance with the Charter and
Bylaws.
6.4 Officers of the Reorganized Debtors.
The initial officers of Newco shall be determined by the
Proponents. The selection of officers of the Reorganized Debtors after the
Consummation Date shall be as provided in the Charter and Bylaws.
6.5 Distribution to New Investors.
In the event that no Qualifying Transaction closes, the New
Investors shall receive nine million (9,000,000) shares of Convertible Preferred
Stock on the Consummation Date in exchange for ninety million dollars
($90,000,000) in Cash.
6.6 Toy Biz Distribution.
(a) No Qualifying Transaction.
In the event that no Qualifying Transaction closes, holders of
Toy Biz common stock (other than the Debtors) shall continue to hold the twenty
million, three hundred and fifty-two thousand, one hundred twenty-seven
(20,352,127) shares of Toy Biz common stock held by them on the Consummation
Date and Characters shall continue to hold the seven million three hundred
ninety four thousand (7,394,000) shares of Toy Biz common stock held by it.
(b) Qualifying Transaction.
In the event that a Qualifying Transaction closes, holders of
Toy Biz common stock (other than the Debtors) shall receive on the Consummation
Date an amount of Cash equal to the Toy Biz Cash Distribution less the Breakup
Fee and certain professional fees which net amount shall be payable in
immediately available funds in accordance with instructions to be provided to
the Debtors by Toy Biz on or before the Consummation Date.
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6.7 Fees to New Investors.
(a) Professional Fees. On the Consummation Date,
DPI as a New Investor committing to purchase Convertible Preferred Stock under
the Convertible Preferred Stock Purchase Agreement shall be reimbursed by Newco
in an amount not to exceed two hundred thousand dollars ($200,000) for all of
the professional fees, costs and expenses incurred solely in connection with the
preparation and negotiation of the Convertible Preferred Stock Purchase
Agreement and related agreements and documentation, it being understood that DPI
shall not be reimbursed for any other professional fees, costs or expenses
relating to these Reorganization Cases paid to its personal counsel including,
without limitation, any litigation relating to the Reorganization Cases, this
Plan of Reorganization, the Convertible Preferred Stock Purchase Agreement or
Toy Biz.
(b) Breakup Fee. In the event that a Qualifying
Transaction closes, the Breakup Fee shall be payable in Cash in immediately
available funds to DPI or its assignees.
6.8 Dissolution of Committees.
On the Consummation Date, all statutory committees (other than
the Creditors Committee to the extent provided in Section 6.16 hereof) appointed
by the U.S. Trustee in the Reorganization Cases shall automatically dissolve and
such committees shall cease to exercise any functions and be divested of all
rights, powers and duties.
6.9 Intentionally deleted.
6.10 Newco Financing.
In the event that no Qualifying Transaction closes, Toy Biz
shall arrange for Newco to obtain the Term Loan Facility, the Working Capital
Facility and investors to purchase ninety million dollars ($90,000,000) of
Convertible Preferred Stock for ninety million dollars ($90,000,000) in Cash.
6.11 Vote of Characters' Toy Biz Stock.
As of the Consummation Date, Characters shall be deemed to
have voted all of its Toy Biz common stock in favor of the Merger Agreement, any
Qualifying Transaction and the transactions contemplated hereby.
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6.12 Forgiveness of Panini Obligations.
On the Consummation Date, each of the Debtors shall forgive
all monetary obligations of Panini to such Debtor due and payable as of December
31, 1997.
6.13 Panini Indemnity.
On the Consummation Date, Newco shall execute and deliver the
Panini Indemnity.
6.14 Outstanding Toy Biz Stock Interests. Any outstanding Toy
Biz preferred stock or stock options shall be eliminated prior to the
Consummation Date or will only dilute the Newco Common Stock to be distributed
pursuant to Section 6.6 hereof.
6.15 Distribution of Subsidiary Equity Interests.
In connection with and in consideration for the
distributions to be made under section 4.2(b)(i) hereof by Entertainment on
account of the Allowed Fixed Senior Secured Claims, each holder of a Fixed
Senior Secured Claim shall transfer to Entertainment, and Entertainment shall
acquire by subrogation, all Fixed Senior Secured Claims against any Debtor other
than Entertainment. The distributions of shares of new common stock of Debtors
other than Entertainment provided for under section 4.2(b)(i)(A)(5) hereof shall
be made directly to Newco.
6.16 Continuation of Creditors Committee.
From and after the Consummation Date, the Creditors Committee
may continue to exist solely for the purposes of monitoring the Claims objection
process and performing the functions set forth in Section 7.9 hereof and in the
Avoidance Litigation Trust Agreement, it being understood that the reasonable
professional fees and expenses of the Creditors Committee and the expenses of
its members shall be paid by the Avoidance Litigation Trust in an amount not to
exceed one hundred thousand dollars ($100,000) and that neither Newco nor any of
its subsidiaries or affiliates shall have any liability therefor.
6.17 Right to Object to Fees.
Nothing contained herein shall be construed as in any way
limiting the right of any party in interest to object to any of the fees and
expenses of any professionals retained pursuant to sections 327, 328 or 1103 of
the Bankruptcy Code.
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6.18 Certain Securities Law Matters.
In the event that the Confirmation Order does not
determine that the issuance of the beneficial interests in the Litigation
Trusts, Newco Common Stock, the Warrants (including the redistribution of the
Warrants by LaSalle to the holders of the Holdings Notes or the sale thereof by
LaSalle), the Newco Common Stock issuable on exercise of the Plan Warrants,
Stockholder Series A Warrants and the Stockholder Series C Warrants, the
Convertible Preferred Stock issuable on exercise of the Stockholder Series B
Warrants and the Newco Common Stock issuable on exercise of that Convertible
Preferred Stock are exempt from the registration requirements of the Securities
Act pursuant to the exemption afforded by Section 1145 of the Bankruptcy Code,
Newco will either obtain a no action letter from the Securities and Exchange
Commission to the effect that the staff of the Securities and Exchange
Commission will not recommend any enforcement action if those issuances are made
without registration under the Securities Act pursuant to the exemption afforded
by Section 1145 of the Bankruptcy Code or it will register the necessary
issuances under the Securities Act reasonably promptly after the Consummation
Date. Newco shall use its reasonable efforts to cause Newco Common Stock, the
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