January 3, 2000

Dear Avi:

Reference is made to the Employment  Agreement  between Toy Biz, Inc., now known
as Marvel  Enterprises  Inc.("Marvel")  and yourself  ("Executive")  dated as of
September  30,  1998 (the  "Employment  Agreement").  All terms  defined  in the
Employment Agreement shall have the same meaning as set forth therein.

In   consideration   of  One  Dollar   ($1.00)  and  other  good  and   valuable
consideration,  the receipt  and  sufficiency  of which is hereby  acknowledged,
Marvel and  Executive  hereby  agree that the  Employment  Agreement  is amended
effective January 1, 2001 in the following respects:

1.       Section 1.3 is hereby amended to read as follows:

                  1.3  Location.  The duties to be  performed  by the  Executive
         hereunder  shall be  performed  primarily  at the  principal  executive
         office of the Company in the Los Angeles  metropolitan area, subject to
         reasonable and customary travel requirements on behalf of the Company.

2.       Section  2.1,  The  Term,  is hereby  amended  by  extending  the
            expiration date from December 31, 2000 to December 31, 2002.

3.       Section 4.5, Change in Control, shall be amended to read:

         4.5  Change in Control.

                  (a) If on or after  the date  hereof,  and prior to the end of
         the Term,  there occurs a "Change in Control" the Executive  shall have
         the right,  at any time within thirty (30) days of obtaining  knowledge
         of such Change in Control, to give notice to the Company of termination
         of the Term as of a date (which shall not be earlier than ten (10) days
         from such notice) to be  specified  in such notice,  and the Term shall
         terminate on the date so specified.

                  (b) For purposes of this Agreement,  a Change in Control shall
         be deemed to have  occurred  if (i) any  "person"  or "group"  (as such
         terms are used in Sections 13(d) and 14(d) of the  Securities  Exchange
         Act of 1934, as amended (the "Exchange  Act")),  other than an Excluded
         Person or Excluded  Group (as  defined  below)  (hereinafter,  a "Third
         Party"), is or becomes the "beneficial owner" (as defined in Rule 13d-3


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         promulgated  under  the  Exchange  Act),  directly  or  indirectly,  of
         securities of the Company  representing  fifty percent (50%) or more of
         the combined voting power of the Company's then outstanding  securities
         entitled to vote in the election of directors of the Company,  (ii) the
         Company is a party to any merger,  consolidation or similar transaction
         as a result of which the shareholders of the Company  immediately prior
         to such transaction beneficially own securities of the surviving entity
         representing less than fifty percent (50%) of the combined voting power
         of the surviving entity's  outstanding  securities  entitled to vote in
         the  election  of  directors  of the  surviving  entity or (iii) all or
         substantially  all of the assets of the Company are acquired by a Third
         Party.  "Excluded  Group"  means a  "group"  (as  such  term is used in
         Sections  13(d) and 14(d) of the Exchange Act) that (i) includes one or
         more  Excluded  Persons;  provided  that the voting power of the voting
         stock of the Company "beneficially owned" (as such term is used in Rule
         13d-3  promulgated  under the Exchange  Act) by such  Excluded  Persons
         (without attribution to such Excluded Persons of the ownership by other
         members of the  "group")  represents  a majority of the voting power of
         the  voting  stock  "beneficially  owned" (as such term is used in Rule
         13d-3  promulgated under the Exchange Act) by such group or (ii) exists
         solely by virtue of the fact that the members of such group are parties
         to the  Stockholders'  Agreement,  dated as of October 1, 1998,  by and
         among the Company,  Isaac  Perlmutter,  Avi Arad, Mark  Dickstein,  The
         Chase Manhattan Bank, Morgan Stanley & Co.  Incorporated,  Whippoorwill
         Associates  Incorporated and various other stockholders of the Company,
         as that  agreement may be amended from time to time (the  "Stockholders
         Agreement").   "Excluded  Person"  means  (i)  while  the  Stockholders
         Agreement is in effect in substantially its current form, any person or
         entity who or which is a party to the Stockholders  Agreement as of the
         Effective  Date and any  affiliate of such a party to the  Stockholders
         Agreement who becomes a party to the Stockholders  Agreement,  and (ii)
         Isaac Perlmutter and Avi Arad or any of their affiliates.

4.       Schedule II, Additional Benefits, shall be amended to read as follows:

     1.   The Company  shall  provide the Executive use of a Mercedes 500 SEL or
          similar automobile.

     2.   The Executive shall be entitled to participate in the Company's
               stock option plan at a level commensurate with Executive's salary
               level,   title  and   responsibilities,   as  determined  by  the
               Compensation Committee of the Board of Directors of the Company

     3.   With respect to each media  project for which the  Executive  performs
          significant  services,  the Executive shall be entitled to retain,  in
          addition to the Base Salary and other benefits provided for hereunder,
          the following  Executive  Producer  and/or  Producer fees  customarily
          payable by the licensee under any television or motion picture entered
          into by the Company during the Term:

                    a) $350,000  for any one motion  picture  project

                    b) $10,000  per  episode  for  animated  network  television
               projects

                    c) $7,500 per episode  for  animated  syndicated  television
               projects

                    d) $20,000 per episode for live action  television  projects
               of at least one hour.

     4.   In recognition  of the cost savings to the Company  resulting from the
          Executive  relocating  from  the New  York to Los  Angeles  area,  the
          Company  shall pay  Executive  during the Term a special  bonus at the
          annual rate of $75,000,  payable  bi-weekly,  less such  deductions or
          amounts to be withheld as required by applicable law and regulations.

     Except  as  otherwise  expressly  hereinabove   provided,   the  terms  and
conditions of the E Employment Agreement shall remain in full force and effect.

     If the foregoing  accurately  reflects your understanding of our agreement,
please indicate by signing in the appropriate place below.

Very truly yours,