Joint Plan of Reorganization - Toy Biz Inc. and Secured Lenders
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. )
SECOND AMENDED JOINT PLAN OF REORGANIZATION PROPOSED BY
THE SECURED LENDERS AND TOY BIZ, INC.
WACHTELL, LIPTON, ROSEN & KATZ BATTLE FOWLER LLP
Attorneys for The Secured Attorneys for Toy Biz, Inc.
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
<PAGE>
March 12, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. DEFINITIONS AND INTERPRETATION.................................. 1
A. Definitions..................................................... 1
B. Interpretation; Application of Definitions
and Rules of Construction ..................................... 18
C. Exhibits and Schedules.......................................... 18
SECTION 2. PROVISIONS FOR PAYMENT OF ADMINISTRATION EXPENSE
CLAIMS AND PRIORITY TAX CLAIMS ................................ 19
2.1 Administration Expense Claims................................... 19
2.2 Compensation and Reimbursement Claims........................... 19
2.3 Priority Tax Claims............................................. 19
SECTION 3. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS................... 20
SECTION 4. PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE
PLAN............................................................ 21
4.1 Priority Non-Tax Claims (Class 1)............................... 21
4.2 Senior Secured Claims (Class 2)................................ 21
(a) Allowance of Senior Secured Claims......................... 21
(b) Treatment of Allowed Fixed Senior Secured
Claims..................................................... 21
(i) No Qualifying.......................................... 21
(A) Distributions................................. 21
(B) Panini Obligations............................ 22
(ii) Qualifying........................................... 22
(c) Treatment of Allowed Contingent Secured Claims
.......................................................... 23
(i) No Panini.............................................. 23
(ii) Panini................................................ 23
4.3 Other Secured Claims (Class 3).................................. 23
4.4 Unsecured Claims (Class 4)...................................... 23
(a) Distributions................................................. 23
(b) Intercompany Claims.................................. 24
(c) Insider Claims....................................... 24
(d) Waiver of Deficiency Claim........................... 25
4.5 Class Securities Litigation Claims (Class 5).................... 25
(a) Distributions........................................ 25
(b) Calculation of Distribution.......................... 25
(c) Parity of and Limitation on Distributions............ 25
4.6 Equity Interests (Class 6)...................................... 26
(a) Entertainment (Subclass 6A).......................... 26
(i) Distributions................................... 26
(ii) Parity of and Limitation on Distributions
......................................... 26
(b) Subsidiary Equity Interest (Subclass 6B)............. 26
4.7 Existing Warrants (Class 7)..................................... 27
i
<PAGE>
Page
----
SECTION 5. IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS
IMPAIRED AND NOT IMPAIRED UNDER THE PLAN; ACCEPTANCE
OR REJECTION OF THE PLAN........................................ 27
5.1 Holders of Claims and Equity Interests Entitled to
Vote.......................................................... 27
5.2 Subtraction and Addition of Classes and Subclasses.............. 27
(a) Subtraction of Classes and Subclasses.................... 27
(b) Addition of Classes and Subclasses....................... 28
5.3 Nonconsensual Confirmation...................................... 28
5.4 Severability of Plan of Reorganization.......................... 28
SECTION 6. MEANS OF IMPLEMENTATION......................................... 28
6.1 Closing of Transaction.......................................... 28
6.2 Derivative Securities Litigation Claims......................... 29
6.3 Board of Directors of the Reorganized Debtors................... 29
6.4 Officers of the Reorganized Debtors............................. 29
6.5 Distribution to New Investors................................... 29
6.6 Toy Biz Distribution............................................ 30
(a) No Qualifying Transaction................................ 30
(b) Qualifying Transaction................................... 30
6.7 Fees to New Investors........................................... 30
6.8 Dissolution of Committees....................................... 30
6.9 Transfer of Panini.............................................. 31
6.10 Newco Financing................................................ 31
6.11 Vote of Characters' Toy Biz Stock.............................. 31
6.12 Forgiveness of Panini Obligations.............................. 31
6.13 Panini Indemnity............................................... 31
6.14 Outstanding Toy Biz Stock Interests............................ 31
SECTION 7. LITIGATION TRUST................................................ 32
7.1 Assignment of Rights............................................ 32
7.2 Control of Litigation........................................... 32
7.3 Liability of Trustee............................................ 32
7.4 Distribution of Net Litigation Proceeds and Net
Avoidance Litigation Proceeds................................... 33
7.5 Professional Fees and Expenses.................................. 33
7.6 Timing of Distributions......................................... 34
SECTION 8. PROVISIONS GOVERNING DISTRIBUTIONS.............................. 34
8.1 Date of Distributions........................................... 34
8.2 Entities to Exercise Function of Disbursing Agent............... 34
8.3 Surrender and Cancellation of Instruments....................... 34
8.4 Delivery of Distributions....................................... 35
8.5 Manner of Payment Under Plan of Reorganization.................. 35
8.6 Reserves and Distributions...................................... 35
ii
<PAGE>
Page
----
8.7 Distributions After Consummation Date......................... 35
8.8 Rights And Powers Of Disbursing Agent......................... 36
(a) Powers of the Disbursing Agent........................... 36
(b) Expenses Incurred on or after the Consummation Date...... 36
(c) Exculpation.............................................. 36
SECTION 9. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER THE
PLAN OF REORGANIZATION........................................ 36
9.1 Objections to Claims.......................................... 36
9.2 No Distributions Pending Allowance............................ 37
9.3 Distributions After Allowance................................. 37
SECTION 10. PROVISION GOVERNING EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN............................... 37
10.1 General Treatment............................................. 37
10.2 Amendments to Schedule; Effect of Amendments.................. 38
10.3 Bar to Rejection Damage Claims................................ 38
10.4 Certain Panini Agreements..................................... 38
(a) Panini Sticker Agreement............................. 38
(b) Panini Comic Distribution Agreement.................. 39
SECTION 11. CONDITIONS PRECEDENT TO CONFIRMATION DATE AND
CONSUMMATION DATE............................................. 39
11.1 Conditions Precedent to Confirmation of Plan of
Reorganization................................................ 39
(a) Confirmation Order................................... 39
11.2 Conditions Precedent to Consummation Date of Plan of
Reorganization................................................ 40
(a) SEC Information Statement................................ 40
(b) HSR ..................................................... 40
(c) Restructured Panini Loan Documents....................... 40
(d) Secured Lender Consummation Date......................... 40
(e) Toy Biz Consummation Date................................ 40
11.3 Waiver of Conditions Precedent................................ 40
SECTION 12. EFFECT OF CONFIRMATION........................................ 40
12.1 General Authority............................................. 40
12.2 Discharge of Debtors.......................................... 41
(a) General Discharge....................................... 41
(b) Exculpations............................................ 41
(c) Treatment of Indemnification Claims..................... 41
12.3 Term of Injunctions or Stays.................................. 42
SECTION 13. WAIVER OF CLAIMS.............................................. 42
13.1 Avoidance Actions............................................. 42
SECTION 14. RETENTION OF JURISDICTION..................................... 43
14.1 Retention of Jurisdiction..................................... 43
iii
<PAGE>
Page
----
14.2 Amendment of Plan of Reorganization.......................44
SECTION 15. MISCELLANEOUS PROVISIONS..................................45
15.1 Payment of Statutory Fees.................................45
15.2 Retiree Benefits..........................................45
15.3 Compliance with Tax Requirements..........................45
15.4 Recognition of Guaranty Rights............................45
15.5 Severability of Plan Provisions...........................45
15.6 Governing Law.............................................46
15.7 Further Assurances........................................46
15.8 Time of the Essence.......................................46
15.9 Counterparts..............................................46
15.10 Notices...................................................46
iv
<PAGE>
EXHIBITS
--------
1. Bylaws for Newco
2. Charter for Newco
3. Confirmation Order
4. Convertible Preferred Stock
5. Designated Competitors
6. Excess Administration Claims Note
7. Intercompany Agreement
8. Litigation Trust Agreement
9. Litigation Trust Professional Fee Guaranty
10. Merger Agreement
11. New Investors
12. Newco Guaranty
13. Panini Indemnity
14. Plan Warrant Agreement
15. Professional Fee Reimbursement Note
16. Secured Lenders
17. Stockholder Warrant Agreement
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 March 12, 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
<PAGE>
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.
"Ballot" means any form or forms distributed to each holder of
a Claim or Equity Interest entitled to vote on this Plan of Reorganization on
which is to be indicated the acceptance or rejection by such holder of this Plan
of Reorganization.
"Ballot Date" means the date fixed by the Bankruptcy Court as
the date by which all Ballots must be received by the Balloting Agent (as such
term is defined in the Disclosure Statement) from holders of impaired Claims and
Equity Interests other than holders of Equity Interests in Subclass 6B (Fleer
Corp.) of Class 6 Equity Interests in Class 7 (Existing Warrants) to be counted
as acceptances or rejections of this Plan of Reorganization.
"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 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 holders of Allowed Unsecured Claims
(other than Intercompany Claims and Insider Claims), holders of Allowed Fixed
Senior Secured Claims and Newco.
"Breakup Fee" means Cash in the amount of the breakup fee
payable pursuant to the Convertible Preferred Stock Purchase Agreement 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
2
<PAGE>
York, New York are required or authorized to close by law or executive order.
"Bylaws" means the bylaws for Newco in substantially
the form of Exhibit 1 hereto.
"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 in
substantially the form of Exhibit 2 hereto.
"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 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 include, without limitation, any Claim asserted by LaSalle National
Bank on behalf of itself or any holders of bonds) 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.
3
<PAGE>
"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 in substantially the form of the order
annexed as Exhibit 3 hereto.
"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 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.
"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.
"Convertible Preferred Stock" means the one million, six
hundred ninety thousand (1,690,000) shares of convertible preferred stock in
Newco to be issued pursuant to this Plan of
4
<PAGE>
Reorganization which shall (a) be convertible into seventeen million, five
hundred fifty eight thousand, four hundred forty two (17,558,442) shares of
Newco Common Stock, (b) have the terms set forth in the Charter, and (c) be in
substantially the form of Exhibit 4 hereto.
"Convertible Preferred Stock Purchase Agreement" means
a Convertible Preferred Stock Purchase Agreement to be executed
on the Confirmation Date.
"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.
"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 5 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 (a) any entity that
serves or has served as a member of Entertainment's board of directors, or (b)
any entity purchasing Convertible Preferred Stock pursuant to the Convertible
Preferred Stock Purchase Agreement, or if applicable, New Convertible Notes,
other than solely by virtue of the exercise of such entity's rights pursuant to
Section 4.2(b)(i)(A)(7) 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 (a) any entity that serves or has
served as a member of Entertainment's board of directors, or (b) any entity
purchasing Convertible Preferred Stock pursuant to the Convertible Preferred
Stock Purchase Agreement, or if applicable, New Convertible Notes, other than
solely by virtue of the exercise of such entity's rights pursuant to Section
4.2(b)(i)(A)(7) hereof.
5
<PAGE>
"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.
"Disclosure Statement" means that certain Disclosure
Statement, including, without limitation, all exhibits and schedules thereto, in
the form approved by the Bankruptcy Court relating to this Plan of
Reorganization as the same may be amended from time to time.
"Disputed Claim" means a Claim against a Debtor that is
not an Allowed Claim.
"Effective Time" shall have the meaning given to such term in
the Merger Agreement.
"Entertainment" means Marvel Entertainment Group, Inc.
"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 all DIP Claims through October 7, 1997), 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).
6
<PAGE>
"Excess Administration Claims Note" means an unsecured note of
Newco and its subsidiaries in substantially the form of Exhibit 6 hereto in an
original principal amount equal to the Excess Administration Claims Amount
bearing interest at the rate of ten percent (10%) per annum which shall, at the
--- -----
election of Newco, be paid semi-annually or accrue and compound, and shall have
a maturity date of the fifth anniversary of the Consummation Date.
"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 (other than those beneficially owned or
controlled directly, indirectly or by participation by entities or Affiliates of
entities that serve or have served on Entertainment's board of directors),
Chase, Toy Biz, the New Investors, the Creditors Committee, all members of the
Creditors Committee, Affiliates of any of the foregoing, 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.
"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
7
<PAGE>
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.
"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
Isituto 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
8
<PAGE>
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
that certain Entertainment Amended and Restated Stock Option 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 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.
9
<PAGE>
"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.
"Insider Claim" means any Unsecured Claim (other than a Senior
Secured Claim) of an insider (as defined in section 101 of the Bankruptcy Code)
or Affiliate of any Debtor.
"Intercompany Agreement" means those agreements set forth on
Exhibit 7 hereto.
"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.
"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" means the trust created by the Litigation
Trust Agreement to be executed on the Consummation Date pursuant to Section 7.1
hereof by the Debtors and the Litigation Trustee.
"Litigation Trust Agreement" means the trust agreement to be
executed by the Debtors and the Litigation Trustee in substantially the form of
Exhibit 8 hereto.
"Litigation Trustee" means such person or entity as may be
designated by the Creditors Committee on or before the Consummation Date subject
to the consent of the Proponents, and from and after the Consummation Date, any
successor trustee designated in accordance with the Litigation Trust Agreement.
"Litigation Trust Professional Fee Guaranty" means the
guaranty of payment to be executed by Newco in substantially the form of Exhibit
9 hereto.
"Marvel" means, collectively, Entertainment and each of its
subsidiaries other than the Panini Entities.
10
<PAGE>
"Master Agreement" means that certain Master Agreement by and
among the Proponents dated as of October 7, 1997 as the same may be amended from
time to time.
"Merger Agreement" means that certain Agreement and Plan of
Merger dated as of the Consummation Date in substantially the form annexed as
Exhibit 10 hereto.
"NBA License Agreement" means that certain Retail Product
License Agreement dated July 21, 1995 between Entertainment and NBA Properties,
Inc., as amended, supplemented or otherwise modified from time to time.
"Net Avoidance Litigation Proceeds" means the gross proceeds
of all Causes of Action pursuant to sections 510, 544, 545, 547, 548, 549, 550,
551 and 553 of the Bankruptcy Code realized by the Litigation Trust net of
payment of all expenses of the Litigation Trust including, without limitation,
(i) payment without duplication of all sums due and owing pursuant to the
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 Litigation Proceeds" means the gross proceeds realized by
the Litigation Trust (exclusive of Net Avoidance Litigation Proceeds) net of
payment of all expenses of the Litigation Trust including, without limitation,
payment without duplication of all sums due and owing pursuant to the
Professional Fee Reimbursement Note.
"New Convertible Notes" means unsecured notes to be issued by
Newco in lieu of all of the Convertible Preferred Stock at the request of Toy
Biz, which request shall be made not later than the commencement of the hearing
to consider the adequacy of the Disclosure Statement, having priority and other
rights identical to those attendant to the Convertible Preferred Stock and
otherwise reasonably satisfactory to the Proponents.
"New Investors" means the individuals set forth on Exhibit 11
hereto and the holders of Fixed Senior Secured Claims exercising the right to
purchase Convertible Preferred Stock or,
11
<PAGE>
if applicable, New Convertible Notes in accordance with Section 4.2(b)(i)(A)(7)
hereof.
"New Panini Securities" means debt securities of Newco having
a present value as of the Consummation Date of forty million dollars
($40,000,000) as confirmed 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, as applicable, (a) the parent entity resulting
from the combination of Marvel and Toy Biz contemplated by the Merger Agreement,
or (b)(i) in the event that such combination is effected through a merger or
other combination of a subsidiary of Entertainment and Toy Biz, Entertainment
after the Effective Time of such merger and (ii) in the event that such
combination is effected through a merger or other combination of a subsidiary of
Toy Biz and Entertainment, Toy Biz after the Effective Time of such merger.
"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 Confection Business and the Panini
Stock to be executed and delivered by Newco in substantially the form annexed
hereto as Exhibit 12 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), eight
million dollars ($8,000,000) of which shall be payable in Cash and thirty two
million dollars ($32,000,000) 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 thirty two million dollars ($32,000,000) as the latter value
may be confirmed 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.
12
<PAGE>
"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.
"Panini Indemnity" means an indemnity substantially in the
form of Exhibit 13 hereto pursuant to which Newco will indemnify and hold
harmless Panini 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 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
13
<PAGE>
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.
"Panini Stock" means all of the issued and outstanding
capital stock of Panini.
"Petition Date" means December 27, 1996, the date on which
each of the Debtors filed its voluntary petition for relief under the Bankruptcy
Code.
"Plan of Reorganization" means this Plan of Reorganization
dated as of November 19, 1997, 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 substantially the form of Exhibit 14 hereto.
"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.
14
<PAGE>
"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.
"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 Note" means the note to be
executed by the Litigation Trustee on behalf of the Litigation Trust in
substantially the form of Exhibit 15 hereto.
"Proponents" means Toy Biz and the Secured Lenders.
"Qualifying Transaction" means a transaction to be closed on
the Consummation 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, 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 not to be
unreasonably withheld.
"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 (expressed
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.
"Reorganization Cases" means the cases commenced under chapter
11 of the Bankruptcy Code by the Debtors on the Petition Date.
"Reorganized" means, with reference to any Debtor, such Debtor
(unless such Debtor is a Debtor for which this Plan of Reorganization is not
confirmed in accordance with Section 5.4 hereof) or any successor in interest
thereto from and after the Consummation Date, including, without limitation,
Newco.
"Requisite Panini Lender Consent" means the written consent of
holders of Designated Contingent Senior Secured Claims holding a majority in
amount of Designated Contingent Senior Secured Claims.
"Required Secured Lender Consideration" means four
hundred and thirty five million dollars ($435,000,000) in Cash or
15
<PAGE>
such other amount which has been approved by Requisite Secured Lender Consent.
"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 Obligations" means all of the obligations
under the Restructured Panini Loan Documents.
"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.
16
<PAGE>
"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.
"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.
"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.
"Stockholder Warrants" means warrants exercisable not later
than the six (6) month 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 fifteen ($15.00) per
share and otherwise upon the terms and conditions contained in the Stockholder
Warrant Agreement.
"Stockholder Warrant Agreement" means that certain Warrant
Agreement in substantially the form of Exhibit 17 hereto.
"Subsidiary Equity Interests" means the Equity Interests in
any of the Debtors held by any of the other Debtors.
"Term Loan Facility" means a term loan facility or facilities
for Newco and its subsidiaries in the amount of one hundred and forty million
dollars ($140,000,000) secured by all of the assets of Newco upon market rate
terms and conditions and otherwise in form and substance reasonably acceptable
to each of the Proponents.
17
<PAGE>
"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.
"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 or any
deficiency Claim in respect of any Senior Secured Claim.
"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.
"Working Capital Facility" means a revolving credit loan
facility for Newco and its subsidiaries in the amount of seventy-five million
dollars ($75,000,000) upon market rate terms and conditions and otherwise in
form and substance reasonably acceptable to each of the Proponents.
18
<PAGE>
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 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
----------------------
The Merger Agreement, Charter and Bylaws are contained in a
separate Exhibit Volume that was filed with the Clerk of the Bankruptcy Court on
November 21, 1997. All other Exhibits and Schedules to this Plan of
Reorganization, including any materially modified or amended Merger Agreement,
Charter or Bylaws, all of which shall be in form and substance reasonably
acceptable to the Proponents, shall be contained in a supplemental Exhibit
Volume that shall be filed with the Clerk of the Bankruptcy Court not later than
ten (10) days prior to the commencement of the Confirmation Hearing or such
later date as the Bankruptcy Court may fix.
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.
19
<PAGE>
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 sections 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 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.
20
<PAGE>
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 -- Insider Claims
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 (other than and to the extent of Claims
beneficially owned or controlled directly, indirectly or by participation by any
entity or Affiliate of any entity that serves or has served as a member of
Entertainment's board of directors) 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 value of the Collateral as of the
Consummation Date securing such Senior Secured Claim
21
<PAGE>
plus 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 on the Consummation Date, in full and complete satisfaction and
discharge of its Fixed Senior Secured Claims, its Ratable Proportion of:
(1) two hundred and thirty million, two hundred and fifty thousand
dollars ($230,250,000) in Cash less the sum of (a) all amounts paid to satisfy
DIP Claims in full (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), and (b) the Excess Administration Claims Amount;
(2) eleven million, six hundred thousand (11,600,000) shares
of Newco Common Stock;
(3) seven hundred ninety thousand (790,000) shares of Convertible
Preferred Stock, or, if applicable, an equivalent amount of New Convertible
Notes;
(4) the Excess Administration Claims Note;
(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 thirty million dollars ($30,000,000) of
Convertible Preferred Stock of Newco, or, if applicable, an equivalent amount of
New Convertible Notes as New Investors that would otherwise be issued to the New
Investors set forth on Exhibit 11; 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.
22
<PAGE>
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, it being understood that(a) to the
extent that there is an Excess Administration Claims Amount, an amount equal to
all or a portion of such fees may be included in the Excess Administration
Claims Note as set forth above, and (b) 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 the value (as of the Consummation Date), of the collateral securing
such Fixed Senior Secured Claims plus 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) Panini Obligations. All Intercompany
------------------
Agreements shall remain in full force and effect unless (a) modified or
terminated in the ordinary course of business or pursuant to the Plan of
Reorganization or (b) the Proponents agree in writing otherwise.
(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, in full and complete
satisfaction and discharge of their Contingent Senior Secured Claims, the Newco
Guaranty of the Restructured Panini Obligations.
23
<PAGE>
(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, in full and complete
satisfaction and discharge of their Contingent Senior Secured Claims, their
Ratable Proportion of the New Panini Securities.
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 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:
(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
Claim in excess of twenty million dollars ($20,000,000) but in no event more
than one million seven
24
<PAGE>
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; and
(4) its Ratable Proportion of the thirty percent (30%) interest in the
Net Litigation Proceeds to be distributed pursuant to Section 7.4(b) hereof.
Notwithstanding anything else contained herein to the contrary, each of the
foregoing Subclasses that does not vote as a Subclass to accept this Plan of
Reorganization shall not receive the distributions provided for in items (2),
(3) and (4) of this Section 4.4(a)(i).
(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. Notwithstanding
anything else contained herein to the contrary, each of the foregoing Subclasses
that does not vote as a Subclass to accept this Plan of Reorganization shall not
receive the right to any distributions in respect of Net Litigation Proceeds or
Net Avoidance Litigation Proceeds and shall not receive any Cash distribution in
lieu of Plan Warrants.
(b) Intercompany Claims. No distribution shall be made on
-------------------
account of Intercompany Claims, and the holders of Intercompany Claims shall not
receive or retain on account of such Claims any property or interest in property
on account of such Claims. At the election of Newco, any Intercompany Claims
25
<PAGE>
shall be treated as contributions to the capital of the obligor on such
Intercompany Claims.
(c) Insider Claims. Each holder of an Allowed
--------------
Insider Claim shall receive, in full and complete satisfaction and discharge of
its Insider Claim, its Ratable Proportion of one dollar ($1) and, in the event a
Qualifying Transaction closes pursuant to which holders of Fixed Senior Secured
Claims and holders of all other Unsecured Claims (other than Intercompany
Claims) are paid in full, all Excess Proceeds not distributed to holders of
Unsecured Claims.
4.5 Class Securities Litigation Claims (Class 5).
(a) Distributions. In the event that each of Subclass
-------------
4A, Class 5 and Subclass 6A vote to accept this Plan of Reorganization and
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 four million ($4,000,000) Stockholder Warrants 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. In the event that each
of Subclass 4A, Class 5 and Subclass 6A do not accept this Plan of
Reorganization, holders of Allowed Class Securities Litigation Claims shall not
receive any distribution hereunder.
(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
26
<PAGE>
(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. In the event that each of
-------------
Subclass 4A, Class 5 and Subclass 6A vote to accept this Plan of Reorganization
and 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 an Allowed Equity Interest in Subclass 6A (Entertainment) of
Class 6 (Equity Interests) shall be distributed, in full and complete
satisfaction and discharge of such Allowed Equity Interest, on account of such
Allowed Equity Interest its Ratable Proportion of four million ($4,000,000)
Stockholder Warrants 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. In the event that each of Subclass 4A, Class 5 and Subclass 6A do not
accept this Plan of Reorganization, holders of Allowed Equity Interests in
Subclass 6A shall not receive any distribution hereunder.
(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
27
<PAGE>
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 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, and the holders of
Claims in each of Class 1 (Priority Non-Tax Claims), Class 2 (Senior Secured
Claims), Class 4 (Unsecured Claims), Class 5 (Class Securities Litigation
Claims) and Subclass 6A (Entertainment) of Class 6 (Equity Interests) and, as
applicable, each subclass thereof, are entitled to vote separately to accept or
reject this Plan of Reorganization as provided in the order of the Bankruptcy
Court fixing the Ballot Date and otherwise governing the balloting procedures
applicable to this Plan of Reorganization. Holders of Claims in Subclass 4J
(Intercompany Claims) of Class 4 (Unsecured Claims) and Equity Interests in
Subclass 6B (Subsidiary Equity Interests) of Class 6 (Equity Interests) and
Class 7 (Existing Warrants) are not entitled to vote on this Plan of
Reorganization and are presumed to have rejected it in accordance with section
1126(g) of the Bankruptcy Code. Notwithstanding anything else contained herein
to the contrary, Class 5 (Class Securities Litigation Claims) and Subclass 6A
(Marvel Entertainment Group) of Class 6 (Equity Interests) shall be conclusively
presumed to have rejected the Plan in accordance with section 1126(g) of the
Bankruptcy Code in the event that Subclass 4A votes to reject the Plan and
Subclass 6A (Marvel Entertainment Group) of Class 6 (Equity Interests) shall be
conclusively presumed to have rejected the Plan in accordance with section
1126(g) of the Bankruptcy Code in the event that Class 5 votes to reject the
Plan.
For purposes of calculating the number of Allowed Claims held
by holders of Allowed Claims that have voted to accept or reject this Plan of
Reorganization under section 1126(c) of the Bankruptcy Code, all Allowed Claims
held by any entity of any Affiliate thereof that acquired record ownership of
such Allowed Claims after the Petition Date shall be aggregated and treated as
one Allowed Claim.
28
<PAGE>
5.2 Subtraction and Addition of Classes and Subclasses.
--------------------------------------------------
(a) Subtraction of Classes and Subclasses. Any
-------------------------------------
class or subclass of Claims that does not contain as an element thereof an
Allowed Claim or a Claim temporarily allowed under Bankruptcy Rule 3018 as of
the date of the commencement of the Confirmation Hearing shall be deemed
subtracted from this Plan of Reorganization for purposes of voting to accept or
reject this Plan of Reorganization and for purposes of determining acceptance or
rejection of this Plan of Reorganization by such class or subclass under section
1129(a)(8) of the Bankruptcy Code.
(b) Addition of Classes and Subclasses. In the
----------------------------------
event that any subclass of Class 3 (Other Secured Claims) would contain as
elements thereof two or more Secured Claims collateralized by different
properties or interests in property or collateralized by Liens against the same
property or interest in property having different priority, such claims shall be
divided into separate subclasses of such subclass of Class 3 (Other Secured
Claims).
5.3 Nonconsensual Confirmation.
--------------------------
In the event that any impaired class of Claims or Equity
Interests entitled to vote shall not accept this Plan of Reorganization by the
requisite statutory majorities provided in sections 1126(c) or 1126(d) of the
Bankruptcy Code, as applicable, after giving effect to any vote designated under
section 1126(e) of the Bankruptcy Code, the Proponents shall move to have the
Bankruptcy Court confirm this Plan of Reorganization under section 1129(b) of
the Bankruptcy Code notwithstanding such rejection and notwithstanding the
deemed rejection of this Plan of Reorganization by holders of Claims in Subclass
4J (Intercompany Claims) of Class 4 (Unsecured Claims) and Equity Interests in
Subclass 6B (Subsidiary Equity Interests) of Class 6 (Equity Interests) and
Existing Warrants in Class 7 (Existing Warrants) in accordance with Section 5.1
hereof.
5.4 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.
29
<PAGE>
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.
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.
6.3 Board of Directors of the Reorganized Debtors.
---------------------------------------------
The initial Board of Directors of Newco shall consist of six
(6) individuals designated by Toy Biz and the New Investors and five (5)
individuals designated by the Secured Lenders. The initial members of the Board
of Directors of Newco, assuming its formation, are or shall be stated in the
Disclosure Statement under "GENERAL INFORMATION - Board of Directors and
Executive Officers of the Reorganized Debtors" or an amendment or supplement to
the Disclosure Statement or such other filing as may be made with the Bankruptcy
Court. 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 initial officers of Newco, assuming its formation, are stated in
the Disclosure Statement under "GENERAL INFORMATION - Board of Directors and
Executive Officers of the Reorganized Debtors." The selection of officers of the
Reorganized Debtors after the Consummation Date shall be as provided in the
Charter and Bylaws.
30
<PAGE>
6.5 Distribution to New Investors.
-----------------------------
In the event that no Qualifying Transaction closes, the New
Investors shall receive nine hundred thousand (900,000) shares of Convertible
Preferred Stock, or, if applicable, an equivalent amount of New Convertible
Notes 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 receive on the Consummation
Date twenty million, three hundred fifty-two thousand, one hundred twenty-seven
(20,352,127) shares of Newco Common Stock, and such shares shall be distributed
to holders of Toy Biz common stock on the Consummation Date.
(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.
6.7 Fees to New Investors.
---------------------
(a) Professional Fees. On the Consummation Date,
-----------------
the New Investors (other than any New Investors which are New Investors solely
by virtue of having purchased Convertible Preferred Stock pursuant to section
4.2(b)(i)(A)(7) hereof or are Affiliates of Isaac Perlmutter, Isaac Perlmutter
T.A., Zib Inc. or Avi Arad or any assignee of any of the foregoing) 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 negotiation of the Convertible Preferred Stock Purchase
Agreement and related agreements and documentation, it being understood that
such New Investors shall not be reimbursed for any other professional fees,
costs or expenses relating to these Reorganization Cases including, without
limitation, any litigation relating to the Reorganization Cases, this Plan of
Reorganization, the Convertible Preferred Stock Purchase Agreement or Toy Biz.
31
<PAGE>
(b) Breakup Fee. In the event that a Qualifying
-----------
Transaction closes, the Breakup Fee shall be payable in Cash in immediately
available funds as may be required by the Convertible Preferred Stock Purchase
Agreement.
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 Transfer of Panini. All Intercompany Agreements between
------------------
the Panini Entities and Marvel or any of its Affiliates, including, without
limitation, any material licensing agreement designated by the holders of a
majority of the Senior Secured Claims shall remain in full force and effect
unless modified or terminated in the ordinary course of business or the holders
of the Senior Secured Claims and Toy Biz otherwise agree in writing.
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, or, if applicable, an equivalent amount of the New
Convertible Notes 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.
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.
32
<PAGE>
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 for the sole purpose of monitoring the Claims objection
process 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
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 or 1103 of the
Bankruptcy Code.
SECTION 7. LITIGATION TRUST
----------------
7.1 Assignment of Rights.
--------------------
On the Consummation Date, each of the Debtors and the
Litigation Trustee shall execute and deliver the Litigation Trust Agreement
pursuant to which (i) the Debtors shall grant, assign, transfer, convey and
deliver to the Litigation Trustee, without representation, warranty or recourse,
for the benefit of the Beneficiaries all of the Debtors' right, title and
interest in and to any and all Litigation Claims, and (ii) pursuant to the
Litigation Trust Agreement, the Litigation Trustee shall accept the rights and
properties assigned and transferred to it and the trust imposed upon it, agree
to retain and enforce the Litigation
33
<PAGE>
Claims for the benefit of the Beneficiaries, further agree to be appointed for
such purpose under section 1123(b)(3)(B) of the Bankruptcy Code and hold the Net
Litigation Proceeds and the Net Avoidance Litigation Proceeds in trust for the
Beneficiaries.
7.2 Control of Litigation.
---------------------
Except as set forth in this Section 7.2, the Litigation
Trustee shall have the full power and discretion to select and to hire
professionals, and to initiate, to prosecute, to supervise, to direct, to
compromise and to settle all Litigation Claims. Notwithstanding the foregoing,
Newco may, in its sole and absolute discretion, direct the Trustee to dismiss
with prejudice, to compromise or to settle any Cause of Action against any
person or entity which is a provider of goods or services to Newco or any of its
direct or indirect subsidiaries from and after the Consummation Date which Newco
reasonably believes could have an adverse effect on its business.
7.3 Liability of Trustee.
--------------------
The Trustee shall not have any liability for any of its acts
or omissions in connection with the selection and hiring of professionals, or
the initiation, prosecution, supervision, direction, compromising or settling of
any Litigation Claims, except in the case of its recklessness or its own
intentional or wanton misconduct resulting in personal gain, and in no event
shall be liable for any action taken in reliance upon the advice of
professionals retained by it in respect of the subject matter in question.
Notwithstanding the foregoing, the Litigation Trustee may, without liability
therefor, retain the services of any professional services firm with which the
Litigation Trustee is affiliated.
7.4 Distribution of Net Litigation Proceeds and Net Avoidance
---------------------------------------------------------
Litigation Proceeds. Net Litigation Proceeds and Net Avoidance Litigation
-------------------
Proceeds shall be distributed as follows:
(a) four and nine tenths percent (4.9%) of the Net Avoidance
Litigation Proceeds shall be distributed to the holders of Allowed Fixed Senior
Secured Claims pursuant to Section 4.2(b)(i)(7) hereof.
(b) thirty percent (30%) of Net Litigation Proceeds and thirty
percent (30%) of Net Avoidance Litigation Proceeds shall be distributed to the
holders of Allowed Unsecured Claims pursuant to section 4.4 hereof.
(c) seventy percent (70%) of Net Litigation Proceeds and sixty
five and one tenth percent (65.1%) of Net Avoidance Litigation Proceeds shall be
distributed to Newco.
34
<PAGE>
7.5 Professional Fees and Expenses. On the Consummation Date,
------------------------------
Newco shall execute and deliver to the Litigation Trustee the Litigation Trust
Professional Fee Guaranty pursuant to which it shall guaranty for a period of
five (5) years from and after the Consummation Date, the payment of all
professional fees and expenses of the Litigation Trustee in an amount not to
exceed two million one hundred thousand dollars ($2,100,000) in the aggregate,
it being understood that one hundred thousand dollars of such amount shall be
for the exclusive purpose of paying fees and expenses of the Creditors Committee
which may become due and payable pursuant to Section 6.16 hereof. On the
Consummation Date, the Litigation Trustee shall execute and deliver to Newco the
Professional Fee Reimbursement Note pursuant to which the Litigation Trust shall
be obligated to reimburse Newco for any all sums advanced pursuant to the
Litigation Trust Professional Fee Guaranty together with simple interest at the
rate of ten percent (10%) per annum which obligation shall be secured by a
valid, binding, enforceable, perfected, first priority security interest in and
lien against all assets of the Litigation Trust. On the Consummation Date and
thereafter whenever reasonably requested to do so by Newco, the Litigation
Trustee shall execute and deliver UCC-1 financing statements and any other
documents or interests requested by Newco to evidence a perfected first priority
security interest in and lien against all assets of the Litigation Trust to
secure repayment of the Professional Fee Reimbursement Note. After payment in
full of the Professional Fee Reimbursement Note, the Litigation Trustee shall
have the right, but not the obligation, to reserve all or a portion of any
recoveries realized by the Litigation Trustee to pay for future professional
fees and expenses.
7.6 Commencement of Avoidance Actions. Unless otherwise
---------------------------------
authorized by the Court, the Litigation Trustee may not commence actions under
sections 510, 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code
later than four (4) months after the Consummation Date.
7.7 Reduction of Judgment and Indemnifications. It is the
------------------------------------------
intention of the Proponents and the Creditors Committee that no Exculpated
Person shall have any liability to any person or entity, including, without
limitation, liability with respect to claims in the nature of contribution or
indemnification, however denominated or described, in connection with, arising
out of or in any way related to Litigation Claims asserted or threatened by the
Litigation Trust and that any such claims-over shall be extinguished and/or
satisfied as provided herein.
35
<PAGE>
(a) No Exculpated Person shall have any liability to any
person or entity for contribution or indemnification with respect to any
Litigation Claim asserted or threatened by the Litigation Trust and the
Litigation Trust (i) shall treat as a reduction or credit against any judgment
or settlement it may obtain against any person or entity the full amount of any
judgment or settlement such person or entity may obtain against any Exculpated
Person on whatsoever theory (whether by way of third- or subsequent
party-complaint, cross-claim, separate action or otherwise) in connection with,
arising out of, or which is any way related to any Litigation Claim; and (ii)
shall obtain from such person or entity for the benefit of any implicated
Exculpated Persons, a satisfaction in full of such entity's or person's judgment
or settlement against any such Exculpated Person.
(b) For good and valuable consideration including the
benefits to be received hereunder by holders of Claims against the Debtors, the
investment by the New Investors and the contribution of all issued and
outstanding common stock of Toy Biz to Newco, the Litigation Trust and Newco
shall indemnify and hold harmless each Exculpated Person from and against any
and all liability (including amounts paid in judgment, settlement, compromise,
penalty or otherwise) with respect to claims-over on whatsoever theory (whether
by way of third- or subsequent party complaint, cross-claim, separate action or
otherwise) by any person or entity to recover in whole or in part any liability,
direct or indirect, whether by way of judgment, settlement, compromise, penalty
or otherwise of any person or entity in connection with, arising out of, or
which is in any way related to any Litigation Claim, it being understood that
the Litigations Trust's indemnity shall be subordinate to its obligation to pay
up to two million one hundred thousand dollars ($2,100,000) of professional fees
and expenses of the professionals for the Litigation Trust and the Creditors
Committee. If separate counsel is required as to any such claim-over, the
Litigation Trust shall pay for the reasonable fees and expenses of competent
counsel selected by the Exculpated Person, subject to the approval of the
Litigation Trustee which will not be unreasonably withheld or delayed. No
settlement of any such claim-over shall require any financial contribution on
the part of any Exculpated Person.
7.8 Timing of Distributions.
-----------------------
Notwithstanding anything contained herein or in the Litigation
Trust Agreement to the contrary, no distributions may be made to any of the
Beneficiaries in their capacity as Beneficiaries of the Litigation Trust unless
and until (a) the Litigation Trustee has paid all sums due and owing pursuant to
the Professional Fee Reimbursement Note, and (b) the Litigation
36
<PAGE>
Trustee has provided Newco with an instrument in form and substance reasonably
satisfactory to Newco releasing Newco from any further liability pursuant to the
Litigation Trust Professional Fee Guaranty.
7.9 Objections to Claims.
--------------------
The Creditors Committee shall have the right to apply to the
Court to direct the Litigation Trustee to object to any Claim not Allowed by
this Plan if the Creditors Committee believes that Newco has not exercised
reasonable business judgement in failing to prosecute or in settling any
specified Claims objections. In the event that the Creditors Committee is
successful in connection with such application, Newco shall pay the reasonable
fees and expenses of the Litigation Trust in connection with the prosecution of
such objection.
SECTION 8. PROVISIONS GOVERNING DISTRIBUTIONS
----------------------------------
8.1 Date of Distributions.
---------------------
Any distributions and deliveries to be made hereunder shall be
made on the Consummation Date or as soon as practicable thereafter and deemed
made on the Consummation Date. In the event that any payment or act under this
Plan of Reorganization is required to be made or performed on a date that is not
a Business Day, then the making of such payment or the performance of such act
may be completed on the next succeeding Business Day, but shall be deemed to
have been completed as of the required date.
8.2 Entities to Exercise Function of Disbursing Agent.
-------------------------------------------------
All distributions under this Plan of Reorganization shall, at
the election of the Proponents, be made by Newco as Disbursing Agent or such
other entity designated by the Proponents prior to the conclusion of the
Confirmation Hearing as a Disbursing Agent. A Disbursing Agent shall not be
required to give any bond or surety or other security for the performance of its
duties unless otherwise ordered by the Bankruptcy Court; and, in the event that
a Disbursing Agent is so otherwise ordered, all costs and expenses of procuring
any such bond or surety shall be borne by Newco.
8.3 Surrender and Cancellation of Instruments.
-----------------------------------------
Each holder of a promissory note, Existing Warrant or other
instrument evidencing a Claim or Equity Interest (other than a holder of a
promissory note issued under any of the
37
<PAGE>
Existing Credit Agreements) shall surrender such promissory note, Existing
Warrant or instrument to the Disbursing Agent, and the Disbursing Agent shall
distribute or shall cause to be distributed to the holder thereof the
appropriate distribution, if any, hereunder. No distribution hereunder shall be
made to or on behalf of any holder of such a Claim unless and until such
promissory note or instrument is received or the unavailability of such note or
instrument is reasonably established to the satisfaction of the Disbursing
Agent. In accordance with section 1143 of the Bankruptcy Code, any such holder
of such a Claim or Equity Interest that fails to (a) surrender or cause to be
surrendered such promissory note or instrument or to execute and deliver an
affidavit of loss and indemnity reasonably satisfactory to the Disbursing Agent
and (b) in the event that the Disbursing Agent requests, furnish a bond in form
and substance (including, without limitation, amount) reasonably satisfactory to
the Disbursing Agent, within one (1) year from and after the Consummation Date
shall be deemed to have forfeited to Newco all rights, claims and interests and
shall not participate in any distribution hereunder.
8.4 Delivery of Distributions.
-------------------------
Subject to Bankruptcy Rule 9010, all distributions to any
holder of an Allowed Claim or an Allowed Equity Interest shall be made at the
address of such holder as scheduled on the Schedules filed with the Bankruptcy
Court unless the Debtors or Reorganized Debtors, as applicable, have been
notified in writing of a change of address, including, without limitation, by
the filing of a proof of claim or interest by such holder that relates an
address for such holder different from the address reflected on such Schedules
for such holder. In the event that any distribution to any holder is returned as
undeliverable, the Disbursing Agent shall use reasonable efforts to determine
the current address of such holder, but no distribution to such holder shall be
made unless and until the Disbursing Agent has determined the then current
address of such holder, at which time such distribution shall be made to such
holder without interest; provided that such distributions shall be deemed
unclaimed property under section 347(b) of the Bankruptcy Code at the expiration
of one year from the Consummation Date. After such date, all unclaimed property
or interests in property shall be the distributed on a pro rata basis to other
holders of Claims or Equity Interests in the same class or subclass and the
Claim or Equity Interest in respect of which such property or interest in
property was not delivered shall be discharged and forever barred. The
distributions to be made on the Consummation Date to each holder of an Allowed
Senior Secured Claim shall be made to the Administrative Agent for distribution
to holders of Allowed Senior Secured Claims in accordance with the provisions of
the Existing Credit Agreements.
38
<PAGE>
8.5 Manner of Payment Under Plan of Reorganization.
----------------------------------------------
At the option of the Disbursing Agent, any Cash payment to be
made hereunder may be made by a check or wire transfer or as otherwise required
or provided in applicable agreements.
8.6 Reserves and Distributions.
--------------------------
The Disbursing Agent shall reserve in a trust account for the
benefit of holders of Allowed Unsecured Claims cash, securities or other
property in an amount determined by the Bankruptcy Court on account of (a)
Disputed Claims in Class 4 (Unsecured Claims) and Class 5 (Class Securities
Litigation Claims) and, as applicable, each subclass thereof and (b) Resulting
Claims. Upon the resolution from time to time of Disputed Claims in Class 4
(Unsecured Claims) and Class 5 (Class Securities Litigation Claims) and, as
applicable, each subclass thereof, the Disbursing Agent may make distributions
on account of such claims in such manner deemed appropriate in the judgment of
the Disbursing Agent.
8.7 Resulting Claims.
----------------
In the event that any person or entity becomes entitled to an
Allowed Unsecured Claim in subclasses 4A through 4I and to receive distributions
on account of such Allowed Unsecured Claim as a result of the compromise,
adjustment, arbitration, settlement or enforcement or other resolution of an
action commenced, asserted or which could have been commenced or asserted by the
Litigation Trustee and such Allowed Unsecured claim is a Resulting Claim, such
person's or entity's only rights with respect to the Cash portions of the
distributions it would otherwise have been entitled to as a holder of such
Allowed Unsecured Claim is to take a set off equal to the aggregate amount of
all such Cash payments against any liability such person has or may have to the
Litigation Trust. Such setoff shall be deemed a distribution under the Plan on
account of such Allowed Claim.
8.8 Distributions After Consummation Date.
-------------------------------------
Distributions made after the Consummation Date to holders of
Disputed Claims that are not Allowed Claims as of the Consummation Date but
which later become Allowed Claims shall be deemed to have been made on the
Consummation Date.
8.9 Rights And Powers Of Disbursing Agent.
-------------------------------------
(a) Powers of the Disbursing Agent. The
------------------------------
Disbursing Agent shall be empowered to (a) effect all actions and execute all
agreements, instruments and other documents necessary
39
<PAGE>
to perform its duties this Plan of Reorganization, (b) make all distributions
contemplated hereby, (c) employ professionals to represent it with respect to
its responsibilities, and (d) exercise such other powers as may be vested in the
Disbursing Agent by order of the Bankruptcy Court, pursuant to this Plan of
Reorganization, or as deemed by the Disbursing Agent to be necessary and proper
to implement the provisions hereof.
(b) Expenses Incurred on or after the Consummation
----------------------------------------------
Date. Except as otherwise ordered by the Bankruptcy Court, the amount of any
----
reasonable fees and expenses incurred by the Disbursing Agent on or after the
Consummation Date (including, without limitation, taxes) and any reasonable
compensation and expense reimbursement claims (including, without limitation,
reasonable fees and expenses of counsel) made by the Disbursing Agent, shall be
paid in Cash by the Reorganized Debtors.
(c) Exculpation. Each Disbursing Agent, from and
-----------
after the Consummation Date, is hereby exculpated by all entities, including,
without limitation, holders of Claims and Equity Interests and other parties in
interest from any and all claims, Causes of Action and other assertions of
liability (including, without limitation, breach of fiduciary duty) arising out
of the discharge by such Disbursing Agent of the powers and duties conferred
upon it hereby or any order of the Bankruptcy Court entered pursuant to or in
furtherance hereof, or applicable law, except solely for actions or omissions
arising out of the gross negligence or willful misconduct of such Disbursing
Agent. No holder of a Claim or an Equity Interest or other party in interest
shall have or pursue any claim or cause of action against the Disbursing Agent
for making payments in accordance herewith or for implementing the terms hereof.
SECTION 9. PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER
THE PLAN OF REORGANIZATION
---------------------------------------------
9.1 Objections to Claims.
--------------------
Subject to Section 7.9 hereof, Newco shall be the sole entity
to object to Claims. Any objections to Claims shall be filed by the latest of
(a) ninety (90) days after the Consummation Date, (b) thirty (30) days after a
proof of claim is filed and (c) such later date as may be fixed by the
Bankruptcy Court.
9.2 No Distributions Pending Allowance.
----------------------------------
Notwithstanding any other provision hereof, if any portion of
a Claim is a Disputed Claim, no payment or distribution provided hereunder shall
be made on account of the
40
<PAGE>
disputed portion of such Claim unless and until such Disputed Claim becomes an
Allowed Claim.
9.3 Cash Reserve.
------------
On the Consummation Date, Newco shall deposit the sum of eight
million dollars ($8,000,000) in an interest bearing trust account for the
benefit of holders of Allowed Unsecured Claims under the Plan.
9.4 Distributions After Allowance.
-----------------------------
Payments and distributions to each holder of a Disputed Claim
or Equity Interest or any other Claim or Equity Interest that is not an Allowed
Claim or Equity Interest, to the extent that such Claim or Equity Interest
ultimately becomes an Allowed Claim or Equity Interest, shall be made in
accordance with the provisions hereof governing the class or subclass of Claims
or Equity Interests in which such Claim or Equity Interest is classified. As
soon as practicable after the date that the order or judgment of the Bankruptcy
Court allowing any Disputed Claim or Equity Interest or any other Claim or
Equity Interest that is not an Allowed Claim or Equity Interest becomes a Final
Order, the Disbursing Agent shall distribute to the holders of such Claim or
Equity Interest any payment or property that would have been distributed to such
holder if the Claim or Equity Interest had been allowed on the Consummation
Date, together with any interest earned thereon.
SECTION 10. PROVISION GOVERNING EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN
-------------------------------------------
10.1 General Treatment.
-----------------
Except as set forth in Section 10.4 below, this Plan of
Reorganization constitutes a motion by the Debtors governed by this Plan of
Reorganization to assume, as of the Consummation Date, all executory contracts
and unexpired leases to which any of the Debtors are parties, except for an
executory contract or unexpired lease that (a) has been assumed or rejected
pursuant to Final Order of the Bankruptcy Court, or (b) is specifically rejected
on Schedule 10.1 hereto filed by the Proponents on or before the commencement of
the Confirmation Hearing or such later date as may be fixed by the Bankruptcy
Court, or (c) is otherwise assumed hereunder. Any executory contract or
unexpired lease assumed hereunder may be freely assigned by any Debtor to any
other Debtor or Reorganized Debtor or Newco and any such assignment shall
constitute a novation of the obligations of the assigning Debtor under any such
executory contract or unexpired lease. Any such assignment shall be effected by
filing a notice thereof with the Bankruptcy Court on or before the commencement
41
<PAGE>
of the Confirmation Hearing. For purposes hereof, each executory contract and
unexpired lease listed on Schedule 10.1 hereto that relates to the use of
occupancy of real property shall include (a) modifications, amendments,
supplements, restatements, or other agreements made directly or indirectly by
any agreement, instrument, or other document that in any manner affects such
executory contract or unexpired lease, without regard to whether such agreement,
instrument or other document is listed on Schedule 10.1 hereto and (b) executory
contracts or unexpired leases appurtenant to the premises listed on Schedule
10.1 hereto, including all easements, licenses, permits, rights, privileges,
immunities, options, rights of first refusal, powers, uses, usufructs,
reciprocal easement agreements, vault, tunnel or bridge agreements or
franchises, and any other interests in real estate or rights in rem relating to
such premises to the extent any of the foregoing are executory contracts or
unexpired leases, unless any of the foregoing agreements are assumed.
10.2 Amendments to Schedule; Effect of Amendments.
--------------------------------------------
The Debtors shall assume each of the executory contracts and
unexpired leases not listed in Schedule 10.1 hereto; provided, that the
Proponents may on or before the last Business Day before the Confirmation Date,
amend Schedule 10.1 hereto to delete or add any executory contract or unexpired
lease thereto, in which event such executory contract or unexpired lease shall
be deemed to be, respectively, assumed and, if applicable, assigned as provided
therein, or rejected. The Proponents shall provide notice of any amendments to
Schedule 10.1 hereto to the parties to the executory contracts or unexpired
leases affected thereby. The fact that any contract or lease is scheduled on
Schedule 10.1 hereto shall not constitute or be construed to constitute an
admission by any Proponent or any Debtor that any Debtor has any liability
thereunder.
10.3 Bar to Rejection Damage Claims.
------------------------------
In the event that the rejection of an executory contract or
unexpired lease by any of the Debtors results in damages to the other party or
parties to such contract or lease, a Claim for such damages, if not heretofore
evidenced by a filed proof of claim, shall be forever barred and shall not be
enforceable against the Debtors, or their properties or interests in property as
agents, successors, or assigns, unless a proof of claim is filed with the
Bankruptcy Court and served upon counsel for each of the Proponents on or before
thirty (30) days after the earlier to occur of (a) the giving of notice to such
party under Section 10.1 or 10.2 hereof and (b) the entry of an order by the
Bankruptcy Court authorizing rejection of a particular executory contract or
lease.
42
<PAGE>
10.4 Certain Panini Agreements.
-------------------------
(a) Panini Sticker Agreement. Notwithstanding
------------------------
anything else contained herein to the contrary, the Panini Sticker Agreement
shall be assumed and all amounts owing by any of the Panini Entities to any of
the Debtors on or prior to December 31, 1997 shall be forgiven. In addition,
Newco shall permit the Panini Entities to assign the Panini Sticker Agreement to
any other entity in connection with any subsequent sale of Panini except to a
Designated Competitor.
(b) Panini Comic Distribution Agreement.
-----------------------------------
Notwithstanding anything else contained herein to the contrary, the Panini Comic
Distribution Agreement shall be assumed and modified as follows: (i) the term
shall be through December 31, 1998, (ii) the royalty rate through December 31,
1998 shall be six percent (6%), (iii) the minimum guaranteed royalty (A) shall
be eliminated for the period from January 1, 1997 through December 31, 1997 and
(B) shall be two million dollars ($2,000,000) for the period from January 1,
1998 through December 31 1998, (iv) the license shall entitle the Panini
Entities to the use of a minimum of fifty (50) titles at all times during 1998,
and (v) any and all amounts owing thereunder to the Debtors on or prior to
December 31, 1997 shall be forgiven. In addition, Newco shall permit the Panini
Entities to assign the Panini Comic Distribution Agreement, as modified, to any
other entity in connection with a sale of the Panini Entities except to a
Designated Competitor. From and after the Consummation Date, any and all
royalties owed to the National Basketball Association in respect of sticker
sales and card sales made by Panini pursuant to the NBA License Agreement shall
be the sole responsibility of Panini.
SECTION 11. CONDITIONS PRECEDENT TO CONFIRMATION DATE
AND CONSUMMATION DATE
-----------------------------------------
11.1 Conditions Precedent to Confirmation of Plan of
-----------------------------------------------
Reorganization.
--------------
The confirmation of this Plan of Reorganization is subject to
satisfaction of the following conditions precedent:
(a) Confirmation Order. The Confirmation Order to be entered
------------------
by the Clerk of the Bankruptcy Court shall be in a form that (i) does
not materially and adversely affect the benefits to be received
hereunder by any of (A) the Debtors' estates, (B) Toy Biz, (C) the
holders of Senior Secured Claims, (D) the holders of DIP Claims or (E)
the holders of Unsecured Claims, (ii) determines that the Plan
satisfies each of the applicable requirements of section 1129 of the
43
<PAGE>
Bankruptcy Code, and (iii) is otherwise in form and substance
reasonably acceptable to the Proponents.
11.2 Conditions Precedent to Consummation Date of Plan
-------------------------------------------------
of Reorganization.
-----------------
The occurrence of the Consummation Date of this Plan of
Reorganization is subject to satisfaction of the following conditions precedent:
(a) SEC Information Statement. A combined proxy or information
-------------------------
and registration statement on Form S-4 shall have been declared
effective by the Securities and Exchange Commission and such combined
information and registration statement shall have been delivered to all
holders of Toy Biz common stock in accordance with the rules of the
Securities and Exchange Commission and twenty (20) business days
(computed in accordance with Rule 14C of the Securities and Exchange
Commission) shall have elapsed since such delivery;
(b) HSR. All necessary consents under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have been made
and any specified waiting periods thereunder shall have expired without
challenge;
(c) Restructured Panini Loan Documents. The Restructured
----------------------------------
Panini Loan Documents shall be in full force and effect.
(d) Secured Lender Consummation Date. The Consummation Date
--------------------------------
shall occur not later than July 14, 1998; and
(e) Toy Biz Consummation Date. The Consummation Date shall
-------------------------
occur not later than November 20, 1998.
11.3 Waiver of Conditions Precedent.
------------------------------
Each of the conditions precedent in Sections 11.1 and 11.2
hereof may only effectively be waived, in whole or in part, if waived, by the
Proponents acting jointly except that the consent of Toy Biz is not required to
waive the condition precedent contained in Section 11.2(d) hereof. Any such
waiver of a condition precedent in Section 11.1 or 11.2 hereof may be effected
at any time, without notice, without leave or order of the Bankruptcy Court and
without any formal action other than filing a notice of waiver with the
Bankruptcy Court and otherwise proceeding to consummate this Plan of
Reorganization. Notwithstanding the foregoing, the condition precedent contained
44
<PAGE>
in Section 11.1(a)(i)(E) may only be waived with the consent of
the Creditors Committee.
SECTION 12. EFFECT OF CONFIRMATION
----------------------
12.1 General Authority.
-----------------
Until the completion of all transactions contemplated to occur
on the Consummation Date, the Bankruptcy Court shall retain custody and
jurisdiction of each of the Debtors, its properties and interests in property
and its operations. On the Consummation Date, each of the Debtors, its
properties and interests in property and its operations shall be released from
the custody and jurisdiction of the Bankruptcy Court, except as provided in
Section 14.1 hereof.
12.2 Discharge of Debtors.
--------------------
(a) General Discharge. The treatment of all Claims
-----------------
against or Equity Interests in each of the Debtors hereunder shall be in
exchange for and in complete satisfaction, discharge and release of all Claims
against any Equity Interests in such Debtor of any nature whatsoever, known or
unknown, including, without limitation, any interest accrued or expenses
incurred thereon from and after the Petition Date, or against its estate or
properties or interests in property. Except as otherwise provided herein, upon
the Consummation Date, all Claims against and Equity Interests in each of the
Debtors will be satisfied, discharged and released in full exchange for the
consideration provided hereunder. All entities shall be enjoined and precluded
from asserting against any Debtor, Reorganized Debtor or Newco or their
respective properties or interests in property, any other Claims based upon any
act or omission, transaction or other activity of any kind or nature that
occurred prior to the Consummation Date.
(b) Exculpations. From and after the Consummation Date,
------------
no Exculpated Person shall have or incur any liability to any other Exculpated
Person or any entity receiving any distribution under this Plan of
Reorganization (i) for any act taken or omission made in connection with or in
any manner related to negotiating, formulating, implementing, confirming or
consummating (x) this Plan of Reorganization or the transactions contemplated
hereby, or (y) any agreement, instrument or other documents created in
connection with this Plan of Reorganization, (ii) for the actions or other
participation of such Exculpated Person in respect of any of the Reorganization
Cases (including the negotiation of any other Plan of Reorganization, settlement
or arrangement) and (iii) that relate, directly or indirectly, by implication or
otherwise, to the Existing Credit Documents, the DIP Claims, or the Senior
Secured Claims; provided, however, that
45
<PAGE>
such exculpation shall not affect the rights and obligations of parties to
agreements entered into in connection with the Plan of Reorganization or under
the Plan of Reorganization. All Exculpated Persons as well as all entities
receiving any distribution under this Plan of Reorganization shall be enjoined
and precluded from asserting against the Exculpated Persons or their respective
properties or interests in property, any other Claims based upon liability
exculpated pursuant to the preceding sentence.
(c) Treatment of Indemnification Claims.
Notwithstanding Del. Code Ann. (General Corporation) (S) 145 (1997) or any other
state or local statute or rule, all existing indemnification and other similar
obligations as of the Confirmation Date of any Debtor are released or discharged
except as provided in this Section 12.2(c), and the Confirmation Order shall
contain injunctions enforcing such releases and discharge; provided, that: (i)
existing indemnity obligations may survive to the extent of insurance coverage,
but shall in no event entitle such directors or officers to assert any Claim
(including, without limitation, with respect to any deductible) against Newco,
Toy Biz, Marvel or any of their Affiliates, and (ii) any such directors or
officers shall be entitled to make Claims only against the insurance and the
proceeds thereof. This Section 12.2(c) shall not limit any right of directors or
officers or former directors and officers from asserting Claims against any
Debtor based upon timely filed proofs of claim or requests for payment of
Administration Expense Claims nor shall it limit the right of Newco to object to
any such Claim or request for payment of Administration Expense Claims. To the
extent such Claims are Allowed Claims, such Claims shall be treated under this
Plan of Reorganization with Claims in any class or subclass, as applicable,
having the same legal rights and priority as such Claims; provided, that the
Confirmation Order shall establish a bar date for Administration Expense Claims.
12.3 Term of Injunctions or Stays.
----------------------------
Unless otherwise provided, all injunctions or stays provided
for in the Reorganization Cases under sections 105 or 362 of the Bankruptcy
Code, or otherwise, and in existence on the Confirmation Date, shall remain in
full force and effect through and including the Consummation Date.
SECTION 13. WAIVER OF CLAIMS
----------------
13.1 Avoidance Actions.
-----------------
Effective as of the Consummation Date, Newco shall have
the right to prosecute and release any actions under
46
<PAGE>
sections 510, 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code
that are not Litigation Claims and the Litigation Trust shall have the right to
prosecute and release any actions under sections 510, 544, 545, 547, 548, 549,
550, 551 and 553 of the Bankruptcy Code that are Litigation Claims; provided,
however, that notwithstanding the foregoing, the Litigation Trust, the Debtors
and Newco will be deemed to have waived the right to assert or pursue any
claims, rights, and causes of action to recover preferences or fraudulent
conveyances, or to pursue similar avoidance actions against any current
customers or suppliers of the Panini Entities (solely in such capacities) and,
or otherwise relating, directly or indirectly, to any of the Panini Entities.
SECTION 14. RETENTION OF JURISDICTION
-------------------------
14.1 Retention of Jurisdiction.
-------------------------
The Bankruptcy Court may retain jurisdiction of and, if the
Bankruptcy Court exercises its retained jurisdiction, shall have exclusive
jurisdiction of all matters arising out of, and related to, the Reorganization
Cases and this Plan of Reorganization pursuant to, and for the purposes of,
sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the
following purposes:
(a) To hear and determine pending applications for the
assumption or rejection of executory contracts or unexpired leases, if
any are pending, and the allowance of Claims resulting therefrom;
(b) To determine any and all adversary proceedings,
applications and contested matters including, without limitation,
proceedings relating to Litigation Claims, matters concerning the
Litigation Trust and actions pursuant to Section 7.9 hereof;
(c) To ensure that distributions to holders of Allowed Claims
and Allowed Equity Interests are accomplished as provided herein;
(d) To hear and determine any timely objections to
Administration Expense Claims or to proofs of claim and equity
interests filed, both before and after the Confirmation Date,
including, without limitation, any objections to the classification of
any Claim or Equity Interest, and to allow or disallow any Disputed
Claim or Equity Interest, in whole or in part;
47
<PAGE>
(e) To enter and implement such orders as may be appropriate
in the event the Confirmation Order is for any reason stayed, revoked,
modified, or vacated;
(f) To issue such orders in aide of execution of this Plan of
Reorganization, to the extent authorized by section 1142 of the
Bankruptcy Code;
(g) To consider any amendments to or modifications of this
Plan of Reorganization, to cure any defect or omission, or reconcile
any inconsistency in any order of the Bankruptcy Court, including,
without limitation, the Confirmation Order;
(h) To hear and determine all applications for awards of
compensation for services rendered and reimbursement of expenses
incurred prior to the Consummation Date;
(i) To hear and determine disputes arising in connection with
the interpretation, implementation, or enforcement of this Plan of
Reorganization, the Confirmation Order, any transactions or payments
contemplated hereby or any agreement, instrument or other document
governing or relating to any of the foregoing;
(j) To hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code;
(k) To hear any other matter not inconsistent with the
Bankruptcy Code;
(l) To hear and determine all disputes involving the
existence, scope and nature of the discharges granted under Section
12.2 hereof;
(m) To issue injunctions and effect any other actions that may
be necessary or desirable to restrain interference by any entity with
the consummation or implementation of this Plan of Reorganization;
(n) To hear and determine all disputes regarding the
reasonableness of fees requested pursuant to the Litigation Trust
Professional Fee Guaranty or any other dispute concerning the
administration of the Litigation Trust; and
(o) To enter a final decree closing the Reorganization Cases.
48
<PAGE>
14.2 Amendment of Plan of Reorganization.
-----------------------------------
Amendments of this Plan of Reorganization may be proposed in
writing only jointly by the Proponents at any time before confirmation, provided
that this Plan of Reorganization, as amended, satisfies the conditions of
sections 1122 and 1123 of the Bankruptcy Code, and the Debtors shall have
complied with section 1125 of the Bankruptcy Code. This Plan of Reorganization
may be amended only by the Proponents acting jointly at any time after
confirmation and before substantial consummation, provided that this Plan of
Reorganization, as amended, satisfies the requirements of sections 1122 and 1123
of the Bankruptcy Code and the Bankruptcy Court, after notice and a hearing,
confirms this Plan of Reorganization as amended under section 1129 of the
Bankruptcy Code and the circumstances warrant such amendments. A holder of a
Claim or Equity Interest that has accepted this Plan of Reorganization shall be
deemed to have accepted this Plan of Reorganization as amended if the proposed
amendment does not materially and adversely change the treatment of the Claim or
Equity Interest of such holder. Notwithstanding the foregoing, this Plan may not
be amended in a manner which adversely changes the distributions to holders of
Unsecured Claims or otherwise materially and adversely affects the rights of
holders of Unsecured Claims without the consent of the Creditors Committee.
SECTION 15. MISCELLANEOUS PROVISIONS
------------------------
15.1 Payment of Statutory Fees.
-------------------------
All fees payable under section 1930, chapter 123, title 28,
United States Code, as determined by the Bankruptcy Court at the Confirmation
Hearing, shall be paid on the Consummation Date. Any such fees accrued after the
Consummation Date will constitute an Allowed Administration Expenses Claim and
be treated in accordance with Section 2.2 hereof.
15.2 Retiree Benefits.
----------------
On and after the Consummation Date, pursuant to section
1129(a)(13) of the Bankruptcy Code, the Reorganized Debtors or Newco, as
applicable, shall continue to pay all retiree benefits (within the meaning of
section 1114 of the Bankruptcy Code), at the level established in accordance
with subsection (e)(1)(B) or (g) of section 1114 of the Bankruptcy Code, at any
time prior to the Confirmation Date, for the duration of the period each Debtor
has obligated itself to provide such benefits and shall assume such obligations.
49
<PAGE>
15.3 Compliance with Tax Requirements.
--------------------------------
In connection with the consummation of this Plan of
Reorganization, the Debtors shall comply with all withholding and reporting
requirements imposed by any taxing authority, and all distributions hereunder
shall be subject to such withholding and reporting requirements.
15.4 Recognition of Guaranty Rights.
------------------------------
The classification of and manner of satisfying all Claims
hereunder take into account (a) the existence of guaranties by certain Debtors
of obligations of other Debtors and (b) the fact that the Debtors may be joint
obligors with each other or other entities with respect to an obligation. All
Claims against the Debtors based upon any such guaranties or joint obligations
shall be discharged in the manner provided in this Plan of Reorganization;
provided, that no creditor shall be entitled to receive more than a single
satisfaction of its Allowed Claims.
15.5 Severability of Plan Provisions.
-------------------------------
In the event that, prior to the Confirmation Date, any term or
provision of this Plan of Reorganization is held by the Bankruptcy Court to be
invalid, void or unenforceable, the Bankruptcy Court shall, with the consent of
the Proponents, have the power to alter and interpret such term or provision to
make it valid or enforceable to the maximum extent practicable, consistent with
the original purpose of the term or provision held to be invalid, void or
unenforceable, and such term or provision shall then be applicable as altered or
interpreted. Notwithstanding any such holding, alteration or interpretation, the
remainder of the terms and provisions hereof shall remain in full force and
effect and shall in no way be affected, impaired or invalidated by such holding,
alteration or interpretation. The Confirmation Order shall constitute a judicial
determination and shall provide that each term and provision hereof, as it may
have been altered or interpreted in accordance with the foregoing, is valid and
enforceable in accordance with its terms.
15.6 Governing Law.
-------------
Except to the extent that the Bankruptcy Code or other federal
law is applicable, or to the extent an Exhibit hereto provides otherwise, the
rights, duties and obligations arising under this Plan of Reorganization shall
be governed by, and construed and enforced in accordance with, the laws of the
State of New York without regard to the principles of the conflicts of law.
50
<PAGE>
15.7 Further Assurances. All parties in interest shall
------------------
execute and deliver such documents, instruments, certificates, assignments, and
other writings, and do such other acts as may be necessary or desirable to carry
out the intents and purposes of this Plan of Reorganization, including, without
limitation, effecting the Merger Agreement.
15.8 Time of the Essence.
-------------------
Time shall be of the essence relative to any and all dates
contained in this Plan of Reorganization on the Confirmation Date.
15.9 Counterparts.
------------
This Plan of Reorganization may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
15.10 Notices.
-------
All notices, requests, and demands to or upon the Debtors to
be effective shall be in writing (including by facsimile transmission) and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when actually delivered or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, addressed as follows:
If to the Debtors:
MARVEL ENTERTAINMENT GROUP, INC.
387 Park Avenue South
12th Floor
New York, New York 10016
Attn: Mr. Joseph Calamari
Telephone: (212) 696-0808
Telecopier: (212) 576-9260
-and-
YOUNG, CONAWAY, STARGATT & TAYLOR
Rodney Square North
Wilmington, Delaware 19899
Attn: James L. Patton, Jr., Esq.
Laura Davis Jones, Esq.
Telephone: (302) 571-6600
Telecopier: (302) 571-1253
51
<PAGE>
If to Toy Biz:
TOY BIZ, INC.
685 Third Avenue
New York, New York 10017
Attn: Mr. Joseph M. Ahearn
Telephone: (212) 588-5103
Telecopier: (212) 588-5330
-and-
BATTLE FOWLER LLP
75 East 55th Street
New York, New York 10022
Attn: Lawrence Mittman, Esq.
Douglas L. Furth, Esq.
Madlyn Gleich Primoff, Esq.
Telephone: (212) 856-7000
Telecopier: (212) 856-7807
-and-
PEPPER HAMILTON LLP
1201 Market Street, Suite 1600
P.O. Box 1709
Wilmington, Delaware 19899
Attn: David B. Stratton
Telephone: (302) 777-6500
Telecopier: (302) 777-656-8865
If to The Secured Lenders:
THE CHASE MANHATTAN BANK
270 Park Avenue
New York, New York 10017-2070
Attn: Susan E. Atkins
Telephone: (212) 270-7142
Telecopier: (212) 270-5748
-and-
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
Attn: Chaim J. Fortgang, Esq.
Telephone: (212) 403-1000
Telecopier: (212) 403-2000
-and-
52
<PAGE>
ZALKIN, RODIN & GOODMAN LLP
750 Third Avenue
New York, New York 10017-2771
Attn: Richard S. Toder, Esq.
Telephone: (212) 455-0600
Telecopier: (212) 682-6331
If to The Chapter 11 Trustee:
John J. Gibbons
Gibbons, Del Deo, Dolan, Griffinger
& Vechione
One Riverfront Plaza
Newark, New Jersey 07102
Telephone: (973) 596-4521
Telecopier: (973) 639-6250
53
<PAGE>
Dated: Wilmington, Delaware
March 12, 1998
Respectfully submitted,
TOY BIZ, INC.
By:
----------------------------------------
Name: Joseph M. Ahearn
Title: President
BATTLE FOWLER LLP
Attorneys for Toy Biz, Inc.
75 East 55th Street
New York, New York 10022
(212) 856-7000
-and-
PEPPER HAMILTON LLP
1201 Market Street
Wilmington, Delaware 19899
(302) 777-6500
By:
----------------------------------------
<PAGE>
SECURED LENDER EXECUTION PAGE
Name of Secured Lender:
By:
----------------------
Name:
Title:
<PAGE>
WACHTELL, LIPTON, ROSEN, KATZ
Attorneys for The Secured
Lenders
51 West 52nd Street
New York, New York 10019
(212) 403-1000
-and-
RICHARDS, LAYTON & FINGER, P.A.
Attorneys for The
Lenders
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
By:
-------------------------------
<PAGE>
The Bylaws of Newco, Charter for Newco and Merger Agreement have been filed in a
separate exhibit volume.
Pursuant to section 1(C) of the Plan of Reorganization, all other exhibits and
schedules to the Plan will be filed at least ten days prior to the hearing to
consider confirmation of the Plan.
57