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                          AGREEMENT AND PLAN OF MERGER


                                  by and Among


                                 TOY BIZ, INC.,


                        MARVEL ENTERTAINMENT GROUP, INC.



                                       and



                              MEG ACQUISITION CORP.




                                   dated as of


                                 August 12, 1998

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


<PAGE>



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                               Page

<S>                                                                                                              <C>
 ARTICLE I           THE MERGER...................................................................................2
          Section 1.1      The Merger.............................................................................2
          Section 1.2      Closing................................................................................2
          Section 1.3      Effective Time.........................................................................2
          Section 1.4      Certificate of Incorporation and By-Laws...............................................2
          Section 1.5      Directors and Officers of the Surviving Corporation....................................2

 ARTICLE II          CONVERSION OF SECURITIES.....................................................................3
          Section 2.1      Common Stock of Acquisition............................................................3
          Section 2.2      Conversion of Marvel Common Stock......................................................3
          Section 2.3      Stock Transfer Books...................................................................3

 ARTICLE III         REPRESENTATIONS AND WARRANTIES
          OF THE COMPANY AND ACQUISITION..........................................................................4
          Section 3.1      Organization, Standing and Corporation Power...........................................4
          Section 3.2      Authorization; Validity of Agreement; Company Action ..................................4
          Section 3.3      Consents and Approvals; No Violations..................................................4
          Section 3.4      Subsidiary Ownership...................................................................5

 ARTICLE IV          COVENANTS ...................................................................................5
          Section 4.1      Affiliates.............................................................................5

 ARTICLE V           CONDITIONS...................................................................................5
          Section 5.1      Conditions to Each Party's Obligation to Effect the Mergers............................5
          Section 5.2      Conditions to Marvel's Obligations to Effect the Merger................................6

 ARTICLE VI          TERMINATION .................................................................................6
          Section 6.1      Termination............................................................................6
          Section 6.2      Effect of Termination..................................................................7

 ARTICLE VII         MISCELLANEOUS................................................................................7
          Section 7.1      Fees and Expenses......................................................................7
          Section 7.2      Amendment, Modification and Other Action...............................................7
          Section 7.3      Nonsurvival of Representations and Warranties..........................................7
          Section 7.4      Notices................................................................................7
          Section 7.5      Interpretation.........................................................................8
          Section 7.6      Counterparts...........................................................................8
          Section 7.7      Entire Agreement, No Third Party Beneficiaries; Rights of Ownership....................8
          Section 7.8      Severability...........................................................................9
          Section 7.9      Governing Law..........................................................................9
          Section 7.10     Assignment.............................................................................9
          Section 7.11     Enforcement............................................................................9
</TABLE>

639604.12 
                                        i

<PAGE>



                          AGREEMENT AND PLAN OF MERGER

     AGREEMENT  AND PLAN OF MERGER  (this  "Agreement"),  dated as of August 12,
1998, by and among Toy Biz, Inc. a Delaware corporation (the "Company"),  Marvel
Entertainment   Group,  Inc.,  a  Delaware  corporation   ("Marvel"),   and  MEG
Acquisition  Corp.,  a  Delaware  corporation  and a  newly  formed  and  direct
wholly-owned subsidiary of the Company ("Acquisition").

     WHEREAS,  the Board of Directors of Acquisition has  unanimously  approved,
and  deems  it  advisable  and in the  best  interests  of its  stockholders  to
consummate,  the merger (the "Merger") of Acquisition with and into Marvel, with
Marvel to be the Surviving Corporation (as hereinafter defined),  upon the terms
and  subject to the  conditions  set forth in this  Agreement  and in the Fourth
Amended Joint Plan of Reorganization  proposed by the Company and certain senior
creditors  of  Marvel  which is  attached  hereto  as  Exhibit  A (the  "Plan").
Capitalized terms used in this Agreement which are not defined in this Agreement
have the same meaning in this  Agreement as in the Plan. In connection  with the
Merger,  each issued and outstanding  share of common stock, par value $ .01 per
share, of Marvel (the "Marvel Common Stock"), will be canceled,  and Stockholder
Series A Warrants,  Stockholder  Series B  Warrants,  and  Stockholder  Series C
Warrants (collectively,  "Stockholder Warrants") and an interest in a litigation
trust,  all as set forth in the Plan, will be issued to the holders of record of
shares of Marvel  Common Stock as of the  Effective  Time (as defined in Section
1.3 hereof); and

     WHEREAS,  the  chapter  11 trustee  of Marvel  has  approved,  and deems it
advisable and in the best interests of the  stockholders and creditors of Marvel
to consummate the Merger of Acquisition with and into Marvel, with Marvel as the
Surviving  Corporation (as hereinafter  defined),  upon the terms and subject to
the conditions set forth in this Agreement and in the Plan; and

     WHEREAS,  Marvel,  together  with  eight of its  wholly-owned  subsidiaries
(collectively  with Marvel,  the "Marvel  Debtors"),  are chapter 11 debtors and
debtors  in  possession  in cases  pending  under  chapter 11 of title 11 of The
United  States  Code (11 U.S.C.  ss.ss.  101 et seq.) (the  "Bankruptcy  Code"),
having  commenced  voluntary  cases (Nos.  96-2066  through  96-2077 (HSB)) (the
"Reorganization  Cases") in the United States  Bankruptcy Court for the District
of Delaware (such  Reorganization  Cases having subsequently been transferred to
the United States  District  Court for the District of Delaware  (the  "District
Court")); and

     WHEREAS,  it is the intention of the parties  hereto that the  transactions
contemplated hereby be implemented in connection with the consummation the Plan.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  respective
representations,  warranties,  covenants and  agreements  set forth herein,  the
parties hereto agree as follows:



639604.12 
                                      

<PAGE>



                                    ARTICLE I

                                   THE MERGER

          Section 1.1 The Merger.  Upon the terms and subject to the  conditions
of this  Agreement and in  accordance  with the General  Corporation  Law of the
State of Delaware (the "DGCL") and the Plan,  and upon the authority  granted by
the order entered by the District Court  confirming the Plan (the  "Confirmation
Order"),  at the Effective  Time (as defined in Section 1.3 hereof),  Marvel and
Acquisition  shall consummate the Merger pursuant to which (a) Acquisition shall
be  merged  with  and into  Marvel,  and the  separate  corporate  existence  of
Acquisition  shall  thereupon  cease,  (b)  Marvel  shall  be the  successor  or
surviving  corporation in the Merger (sometimes  hereinafter  referred to as the
"Surviving  Corporation")  and shall  continue  to be covered by the laws of the
State of Delaware,  including the DGCL,  and (c) all of the rights,  privileges,
immunities,  powers and franchises of Marvel and  Acquisition  shall vest in the
Surviving  Corporation  and all  obligations,  duties,  debts and liabilities of
Marvel  and  Acquisition  shall  become  the  obligations,   duties,  debts  and
liabilities of the Surviving Corporation.

          Section 1.2 Closing.  Unless this Agreement shall have been terminated
and the transactions  herein  contemplated shall have been abandoned pursuant to
Section 6.1 hereof,  and subject to the satisfaction or waiver of the conditions
set forth in Article V hereof,  the closing of the Merger (the "Closing")  shall
take place at 10:00 a.m. on a date to be specified by the parties hereto,  which
shall be no later than the second  business day after  satisfaction or waiver of
all of the conditions set forth in Article V hereof (the "Closing Date"), at the
offices of Battle  Fowler LLP, 75 East 55th  Street,  New York,  New York 10022,
unless another date or place is agreed to in writing, by the parties hereto.

          Section 1.3 Effective Time. The Company,  Marvel and Acquisition  will
cause a certificate of merger (the  "Certificate  of Merger") to be executed and
filed for the Merger on the Closing  Date (or on such other date as to which the
Company  and  Marvel  may  agree)  with the  Secretary  of State of the State of
Delaware (the  "Secretary  of State") as provided in the DGCL.  The Merger shall
become  effective on the date on which the  Certificate  of Merger has been duly
filed with the Secretary of State or such time after that date as is agreed upon
by the parties hereto and specified in the Certificate of Merger,  and such time
is hereinafter referred to as the "Effective Time."

          Section 1.4 Certificate of Incorporation and By-Laws. At the Effective
Time,  the  certificate  of  incorporation  of  Acquisition  (the   "Acquisition
Certificate"),  as in effect  immediately  prior to the Effective Time, shall be
the certificate of incorporation of the Surviving  Corporation  until thereafter
amended in  accordance  with  applicable  law. The by-laws of  Acquisition  (the
"Acquisition  By-Laws"),  as in effect  immediately prior to the Effective Time,
shall be the by-laws of the Surviving  Corporation  until thereafter  amended in
accordance with applicable law.

          Section 1.5 Directors and Officers of the Surviving  Corporation.  The
individuals  listed on  Exhibit B attached  hereto  shall be the  directors  and
officers,  respectively,  of the Surviving  Corporation  until their  successors
shall have been duly elected or appointed or qualified or until their

639604.12 
                                        2

<PAGE>



earlier  death,   resignation  or  removal  in  accordance  with  the  Surviving
Corporation's Certificate of Incorporation and By-Laws.


                                   ARTICLE II

                            CONVERSION OF SECURITIES

          Section 2.1 Common Stock of Acquisition. Each share of common stock of
Acquisition  issued and outstanding  immediately prior to the Effective Time, by
virtue of the Merger and without  any action on the part of the holder  thereof,
will  be  converted  into  and  become  one  validly  issued,   fully  paid  and
nonassessable  share of common stock, $.01 par value par share, of the Surviving
Corporation.

          Section 2.2  Conversion of Marvel  Common  Stock.  As of the Effective
Time, by virtue of the Merger and without any action on the part of the Company,
Marvel, Acquisition or the holders of shares of Company Common Stock:

          (a) Marvel  Common  Stock.  Each issued and  outstanding  share of the
     Marvel Common Stock shall be canceled,  and each holder of record of shares
     of Marvel  Common  Stock as of the  Effective  Time  (other  than shares of
     Marvel  Common  Stock to be  canceled in  accordance  with  Section  2.2(b)
     hereof) shall thereupon have the right to receive Stockholder  Warrants and
     an  interest in a  litigation  trust,  as set forth in the Plan.  As of the
     Effective  Time,  all  shares of  Marvel  Common  Stock  shall no longer be
     outstanding and shall automatically be canceled and retired and shall cease
     to exist, and each holder of a certificate  representing any such shares of
     Marvel  Common Stock shall cease to have any rights with  respect  thereto,
     except the right to receive the  certificates  representing the Stockholder
     Warrants  (the  "Stockholder   Warrant   Certificates")  to  be  issued  in
     consideration  for the shares  formerly  represented  thereby in accordance
     with this Section 2.2, without interest.

          (b) Cancellation of Treasury Stock and Company-Owned Stock. All shares
     of Marvel  Common  Stock  that are owned by the  Company  and all shares of
     Marvel  Common  Stock  owned by Marvel or any  wholly-owned  subsidiary  of
     Marvel  shall be  canceled  and  retired  and  shall  cease to exist and no
     consideration shall be delivered in exchange therefor.

          Section 2.3 Stock  Transfer  Books.  At the Effective  Time, the stock
transfer  books of  Marvel  shall  be  closed  and  there  shall  be no  further
registration  of  transfers  of Marvel  Common  Stock or options or  warrants to
purchase shares of Marvel thereafter on the records of Marvel.



639604.12 
                                        3

<PAGE>



                                   ARTICLE III

          REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ACQUISITION

          The Company and Acquisition  severally represent and warrant to Marvel
as follows:

          Section 3.1 Organization,  Standing and Corporation Power. Each of the
Company and Acquisition is a corporation duly incorporated, validly existing and
in good standing  under the laws of the State of Delaware,  and each of them has
all  requisite   corporate   power  and  authority  to  carry  on  its  business
substantially  as now  conducted,  except  where the  failure to do so would not
have,  individually or in the aggregate, a Material Adverse Effect. For purposes
hereof, the term "Material Adverse Effect" means any change or effect that is or
is reasonably  expected to be materially adverse to the condition  (financial or
otherwise),  business,  assets or results of  operations  of the Company and its
subsidiaries taken as a whole or adversely effects the ability of the Company to
consummate  the  transactions  contemplated  by this  Agreement  in any material
respect or  materially  impairs or delays the  Company's  ability to perform its
obligations hereunder.

          Section 3.2 Authorization;  Validity of Agreement; Company Action. The
execution,  delivery and  performance by each of the Company and  Acquisition of
this Agreement and the consummation of the Merger by the Company and Acquisition
are within  the  corporate  powers  and  authority  of each of the  Company  and
Acquisition and have been duly authorized by all necessary  corporate action, as
the case may be, on the part of each of the Company and Acquisition. Each of the
Company,  as sole  stockholder  of  Acquisition,  and the Board of  Directors of
Acquisition  has  approved the Merger and no further  corporate  or  stockholder
action  is  required  on  the  part  of  Acquisition  in  connection   with  the
consummation of the Merger other than the filing of the Certificate of Merger as
contemplated  by this  Agreement.  This  Agreement  has been duly  executed  and
delivered by each of the Company and  Acquisition  and,  assuming this Agreement
constitutes the valid and binding  agreement of Marvel,  constitutes a valid and
binding obligation of each of the Company and Acquisition,  enforceable  against
each such party in accordance with its terms, subject to applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors'  rights and remedies and to general  principles of equity.
The execution and delivery of this Agreement does not, and the  consummation  of
the  transactions  contemplated  by  this  Agreement  and  compliance  with  the
provisions of this  Agreement,  will not conflict with any of the  provisions of
the Acquisition Certificate or Acquisition By-Laws.

          Section 3.3  Consents and  Approvals;  No  Violations.  Except for the
filings,  permits,  authorizations,  consents  and  approvals as may be required
under, and other applicable  requirements of, (a) the Securities Act of 1933, as
amended (the  "Securities  Act"),  (b) the  Securities  Exchange Act of 1934, as
amended (the  "Exchange  Act"),  (c) the  Bankruptcy  Code (or filings  with, or
authorizations  of, the Bankruptcy Court or District  Court),  and (d) the DGCL,
and  assuming  the  filings  required  under  the  Hart-Scott-Rodino   Antitrust
Improvements  Act of 1976, as amended (the "HSR Act"),  are made and the waiting
period  thereunder  has been  terminated or has expired,  neither the execution,
delivery or performance of this Agreement by the Company and Acquisition nor the
consummation  by the Company and  Acquisition of the  transactions  contemplated
hereby nor

639604.12 
                                        4

<PAGE>



compliance by the Company and Acquisition with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the certificate of
incorporation  or  the  by-laws  of the  Company,  Acquisition  or any of  their
subsidiaries, (ii) require any filing with, or permit, authorization, consent or
approval of, any court,  arbitral tribunal,  administrative agency or commission
or other  governmental  or  regulatory  authority  or  agency  (a  "Governmental
Entity"), or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company and Acquisition,  their subsidiaries or any
of their  properties or assets,  excluding  from the foregoing  clauses (ii) and
(iii) such violations,  breaches or defaults which would not, individually or in
the aggregate,  have a material  adverse effect on the Company,  Acquisition and
their  subsidiaries,  taken as a whole, and which will not materially impair the
ability  of  the  Company  and   Acquisition  to  consummate  the   transactions
contemplated hereby or by the Plan.

          Section 3.4 Subsidiary  Ownership.  As of the date hereof, the Company
owns all of the outstanding capital stock of Acquisition. Acquisition was formed
by  the  Company  solely  for  the  purpose  of  engaging  in  the  transactions
contemplated  by this  Agreement.  Except  as  contemplated  by this  Agreement,
Acquisition has not engaged, directly or through any subsidiary, in any business
activities of any type or kind whatsoever.


                                   ARTICLE IV

                                    COVENANTS

          Section  4.1  Affiliates.  Prior to the  Closing  Date,  Marvel  shall
deliver to the Company a letter  identifying all persons who are "affiliates" of
Marvel for purposes of Rule 145 under the Securities  Act. The Company shall use
its best  efforts to cause each such  person or entity to deliver to the Company
on or prior to the Closing Date a written  agreement  substantially  in the form
attached  hereto as  Exhibit C. The  Company  shall be  entitled  to cause to be
placed appropriate legends on any certificates  evidencing  Stockholder Warrants
or shares of stock issued on exercise of Stockholder  Warrants to be received by
each such person or entity pursuant to the terms of this Agreement, and to issue
appropriate   stop  transfer   instructions  to  the  transfer  agent  for  such
Stockholder  Warrants or shares, to the effect that such Stockholder Warrants or
shares received or to be received by such person or entity pursuant to the terms
of this Agreement may only be sold,  transferred or otherwise conveyed,  and the
holder  thereof may only reduce such holder's  interest in or risks  relating to
such  shares,   pursuant  to  an  effective  registration  statement  under  the
Securities  Act, in accordance with the provisions of paragraph (d) of Rule 145,
or in a manner not  requiring  registration  under or pursuant  to an  exemption
provided from registration under the Securities Act.

                                    ARTICLE V

                                   CONDITIONS

          Section  5.1  Conditions  to Each  Party's  Obligation  to Effect  the
Mergers.  The respective  obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior

639604.12 
                                        5

<PAGE>



to the Closing Date of each of the  following  conditions,  any and all of which
may be waived in whole or in part by the Company, Marvel or Acquisition,  as the
case may be, to the extent permitted by applicable law:

          (a) HSR Act. Any waiting  period  (including  any  extension  thereof)
     under the HSR Act  applicable  to the  Merger  shall  have  expired or been
     terminated;

          (b) Statutes;  Consents. No statute, rule, order, decree or regulation
     shall have been enacted or  promulgated  by any  Governmental  Entity which
     prohibits the  consummation  of the Merger and all  governmental  consents,
     orders and approvals  required for the  consummation  of the Merger and the
     transactions  contemplated  hereby shall have been obtained and shall be in
     effect at the Effective Time;

          (c)  Injunctions.   There  shall  be  no  order  or  injunction  of  a
     Governmental  Entity  of  competent   jurisdiction  in  effect  precluding,
     restraining, enjoining or prohibiting consummation of the Merger; and

          (d)  Confirmation  Order.  The  District  Court shall have entered the
     Confirmation  Order and its effectiveness and  enforceability  shall not be
     subject to any stay or injunction and all conditions to the consummation of
     the Plan shall have been  satisfied or duly waived in  accordance  with the
     Plan.

          Section 5.2  Conditions to Marvel's  Obligations to Effect the Merger.
Furthermore,  the  obligations of Marvel to consummate the Merger are subject to
the  fulfillment of the  conditions,  which may be waived in whole or in part by
Marvel, that the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects as of the Effective
Time after giving effect to the Merger as if made at and as of such time.


                                   ARTICLE VI

                                   TERMINATION

          Section 6.1  Termination.  This  Agreement may be  terminated  and the
Mergers  contemplated herein may be abandoned at any time prior to the Effective
Time, whether before or after stockholder approval thereof:

          (a)  By  mutual   written   agreement  of  the  Company,   Marvel  and
     Acquisition;

          (b) By Marvel or the Company and Acquisition, if the Closing shall not
     have taken place on or before October 2, 1998; provided that the failure of
     the Closing to occur on or before such date is not the result of the breach
     of any representation or warranty or the failure to perform any covenant or
     agreement or satisfy any  condition  hereunder  by the party  seeking to so
     terminate;

639604.12 
                                        6

<PAGE>




          (c) By Marvel or the  Company and  Acquisition,  upon  written  notice
     given to the other if there shall be any law or regulation of any competent
     authority  that  makes  consummation  of the Merger  illegal  or  otherwise
     prohibited,  or if any governmental entity of competent  jurisdiction shall
     have issued a final  non-appealable  order,  judgment,  injunction or order
     enjoining or otherwise  prohibiting the  transactions  contemplated by this
     Agreement; or

          (d)  By  Marvel  if  the   Company   or   Acquisition   breach   their
     representations  and warranties in any material respect and such breach has
     not been cured to Marvel's  reasonable  satisfaction  within 10 days of the
     notice by Marvel to the Company and Acquisition of such breach.

          Section 6.2 Effect of Termination.  In the event of the termination of
this  Agreement as provided in Section 6.1 hereof,  written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such  termination is made, and this Agreement  shall forthwith
become null and void,  and there shall be no  liability on the part of any party
hereto.


                                   ARTICLE VII

                                  MISCELLANEOUS

          Section  7.1  Fees  and  Expenses.  Except  as  contemplated  by  this
Agreement, all costs and expenses incurred in connection with this Agreement and
the  consummation of the transactions  contemplated  hereby shall be paid by the
party incurring such expenses.

          Section  7.2  Amendment,  Modification  and Other  Action.  Subject to
applicable law, this Agreement may be amended,  modified and supplemented in any
and all respects by written  agreement of the parties hereto,  at any time prior
to the Closing Date with respect to any of the terms contained herein.

          Section 7.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule,  instrument
or other  document  delivered  pursuant  to this  Agreement  shall  survive  the
Effective Time.

          Section 7.4 Notices.  All notices and other  communications  hereunder
shall  be in  writing  and  shall  be  deemed  given  if  delivered  personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal  Express,  to the parties at the  following  addresses (or at such other
address for a party as shall be specified by like notice):


639604.12 
                                        7

<PAGE>



                         if to the Company or Acquisition, to:

                         Toy Biz, Inc.
                         685 Third Avenue
                         New York, New York  10017
                         Attention: Executive Vice President, Business Affairs

                         with a copy to:
                         Battle Fowler, LLP
                         75 East 55th Street
                         New York, New York  10022
                         Attention: Lawrence Mittman, Esq.

                         if to Marvel, to:

                         Marvel Entertainment Group, Inc.
                         387 Park Avenue South
                         9th Floor
                         New York, New York  10016
                         Attention: Joseph Calamari

                         with a copy to:
                         Gibbons, Del Deo, Dolan,
                            Griffinger & Vecchione
                         One Riverfront Plaza
                         Newark, New Jersey  07102
                         Attention: Frank E. Lawatsch, Jr.

          Section 7.5 Interpretation. When a reference is made in this Agreement
to  Sections,  such  reference  shall be to a Section of this  Agreement  unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation".  As used in this Agreement,  the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 under the Exchange Act.

          Section 7.6  Counterparts.  This  Agreement  may be executed in two or
more  counterparts,  all of which shall be considered one and the same agreement
and,  if executed  in  counterparts,  shall  become  effective  when two or more
counterparts have been signed by the parties and delivered to the other parties.

          Section 7.7 Entire Agreement, No Third Party Beneficiaries;  Rights of
Ownership.  This Agreement (including the documents and the instruments referred
to herein):  (a)  constitutes  the entire  agreement  and  supersedes  all prior
agreements  and  understandings,  both written and oral,  among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.

639604.12 
                                        8

<PAGE>




          Section  7.8  Severability.   If  any  term,  provision,  covenant  or
restriction  of this  Agreement  is held by a  Governmental  Entity of competent
jurisdiction  to be  invalid,  void,  unenforceable  or against  its  regulatory
policy,  the remainder of the terms,  provisions,  covenants and restrictions of
this  Agreement  shall  remain in full  force and  effect and shall in no way be
affected, impaired or invalidated.

          Section 7.9  Governing  Law. This  Agreement  shall be governed by and
construed in accordance  with the laws of the State of Delaware  without  giving
effect to the principles of conflicts of law thereof.

          Section 7.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned,  in whole or in
part,  by operation of law or otherwise by any of the parties  without the prior
written  consent of the other party.  Subject to the  preceding  sentence,  this
Agreement will be binding upon,  inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.

          Section 7.11  Enforcement.  The parties agree that irreparable  damage
would occur in the event that any of the  provisions of this  Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is  accordingly  agreed that the parties  shall be entitled to an  injunction or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and provisions of this Agreement,  this being in addition to any other
remedy to which they are entitled at law or in equity.


639604.12 
                                        9

<PAGE>



          IN WITNESS  WHEREOF,  the Company,  Marvel and Acquisition have caused
this  Agreement  to be  signed  by  their  respective  officers  thereunto  duly
authorized as of the date first written above.

                                  TOY BIZ, INC.


                                  By:/s/WILLIAM H. HARDIE, III
                                     -------------------------------------------

                                      Name:  William H. Hardie, III
                                      Title: Executive Vice President,
                                             Business Affairs and Secretary


                                  MARVEL ENTERTAINMENT GROUP, INC.


                                  By:/s/JOHN J. GIBBONS
                                     -------------------------------------------

                                     John J. Gibbons, as chapter 11 trustee


                                    MEG ACQUISITION CORP.


                                 By:/s/WILLIAM H. HARDIE, III
                                     -------------------------------------------

                                     Name:  William H. Hardie
                                     Title: Vice President and Secretary

639604.12 
                                       10

<PAGE>




                          EXHIBIT A to Merger Agreement






                   Fourth Amended Joint Plan of Reorganization
                Proposed by the Secured Lenders and Toy Biz, Inc.




639604.12 
                                       A-1

<PAGE>










                          EXHIBIT B to Merger Agreement


               Directors and Officers of the Surviving Corporation




                                    Directors

                                Joseph M. Ahearn
                             William H. Hardie, III
                                 David J. Fremed




                                    Officers

                    Joseph M. Ahearn:             President
                    William H. Hardie, III:       Secretary and Vice President
                    David J. Fremed:              Treasurer
                    Sidney Taubman:               Vice President



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                          EXHIBIT C to Merger Agreement





Marvel Enterprises, Inc.
685 Third Avenue
New York, NY  10017

Gentlemen:

          The  undersigned  is a holder of shares of common  stock ("MEG  Common
Stock") of Marvel Entertainment Group, Inc. ("MEG") and will receive Stockholder
Series A  Warrants,  Stockholder  Series B  Warrants  and  Stockholder  Series C
Warrants (the  "Warrants"),  and upon exercise of such Warrants shares of common
stock and preferred stock of Marvel  Enterprises,  Inc. (the "Marvel Enterprises
Securities"),  in connection with the merger (the "Merger") of MEG with and into
MEG Acquisition  Corp., a Delaware  corporation and a wholly owned subsidiary of
Marvel Enterprises,  Inc. The undersigned  acknowledges that the undersigned may
be deemed an  "affiliate"  of MEG  within the  meaning of Rule 145 ("Rule  145")
promulgated  under the Securities Act of 1933, as amended (the "Act"),  although
nothing  contained  herein should be construed as an admission of such fact.

          If, in fact,  the  undersigned  were an  affiliate  under the Act, the
undersigned's  ability  to sell,  assign  or  transfer  the  Marvel  Enterprises
Securities  received in  exchange  for MEG Common  Stock  pursuant to the Merger
might be restricted  unless the  securities  involved in such  transaction  were
registered under the Act or an exemption from such  registration were available.
The undersigned understands that such exemptions are limited and the undersigned

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                                       C-1

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has  obtained  advice  of  counsel  as to the  nature  and  conditions  of  such
exemptions,  including information with respect to the applicability to the sale
of such securities of Rules 144 and 145(d) promulgated under the Act.

          The undersigned  hereby covenants with Marvel  Enterprises,  Inc. that
the undersigned will not offer to sell, assign, transfer or otherwise dispose of
any of the Marvel Enterprises  Securities received in exchange for shares of MEG
Common  Stock  pursuant  to the  Merger  except  (i)  pursuant  to an  effective
Registration Statement under the Act, (ii) in compliance with Rule 145 under the
Act or (iii) in a transaction which does not require registration under the Act.
In  the  event  of a sale  or  other  disposition  pursuant  to  Rule  145,  the
undersigned  will supply  Marvel  Enterprises,  Inc. with evidence of compliance
with such  Rule,  in the form of a letter in the form of Exhibit A hereto and an
opinion,  in form and substance  reasonably  acceptable  to Marvel  Enterprises,
Inc., from independent  counsel reasonably  satisfactory to Marvel  Enterprises,
Inc. The undersigned understands that Marvel Enterprises,  Inc. may instruct its
transfer  agent to withhold  the transfer of any  securities  disposed of by the
undersigned except in compliance with this letter. The undersigned  acknowledges
and agrees that appropriate legends will be placed on certificates  representing
Marvel Enterprises  Securities received by the undersigned in the Merger or held
by a transferee thereof, which legends will be removed by delivery of substitute
certificates  upon  receipt  of an  opinion  in form  and  substance  reasonably
satisfactory to Marvel  Enterprises,  Inc. from independent  counsel  reasonably
satisfactory to Marvel Enterprises,  Inc. to the effect that such legends are no
longer required for purposes of the Act.

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                                       C-2

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          The  undersigned  acknowledges  that (i) the undersigned has carefully
read this letter and  understands  the  requirements  hereof and the limitations
imposed upon the  distribution,  sale,  transfer or other  disposition of Marvel
Enterprises Securities and (ii) the receipt by Marvel Enterprises,  Inc. of this
letter  is  an  inducement  and  a  condition  to  Marvel  Enterprises,   Inc.'s
obligations to consummate the Merger.



                                           Very truly yours,



Dated: ____________________



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                                       C-3

<PAGE>



                                                  EXHIBIT A to Rule 145 Letter




                                                                          [DATE]

Marvel Enterprises, Inc.
685 Third Avenue
New York, NY  10017

Gentlemen:

          On  ___________,  I  sold  ________  Stockholder  Series  A  Warrants,
________ Stockholder Series B Warrants, _________ Stockholder Series C Warrants,
_____  shares of common  stock,  par value  $.01 per share  and/or  ____________
shares of  preferred  stock,  par  value  $.01 per  share  ("Marvel  Enterprises
Securities"),  of Marvel  Enterprises,  Inc.  (the  "Company")  which I received
pursuant to the merger of Marvel  Entertainment  Group,  Inc.  with and into MEG
Acquisition Corp., a wholly owned subsidiary of the Company.

          Based upon the most recent  report or  statement  filed by the Company
with the Securities and Exchange Commission,  the Marvel Enterprises  Securities
sold by me were within the prescribed  limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").

          I  hereby  represent  that  the  above-described   Marvel  Enterprises
Securities  were sold in "brokers'  transactions"  within the meaning of Section
4(4) of the Act or in  transactions  directly with a "market maker" as that term
is defined in Section  (3)(a)(38)  of the  Securities  Exchange Act of 1934,  as
amended.  I further  represent  that I have not  solicited  or arranged  for the
solicitation of orders to buy the above-described Marvel Enterprises Securities,
and that I have not made any  payment  in  connection  with the offer or sale of
such  shares to any person  other than to the broker who  executed  the order in
respect of such sale.


                                         Very truly yours,


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                                       C-4

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