MARVEL ENTERPRISES, INC.
 
                            2005 STOCK INCENTIVE PLAN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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                            MARVEL ENTERPRISES, INC.
 
                            2005 STOCK INCENTIVE PLAN
 
                                                                            Page
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1.      PURPOSE................................................................1
 
 
2.      DEFINITIONS............................................................1
 
 
3.      ADMINISTRATION.........................................................3
 
 
4.      STOCK SUBJECT TO PLAN..................................................4
 
 
5.      ELIGIBILITY; PER-PERSON AWARD LIMITATIONS..............................4
 
 
6.      SPECIFIC TERMS OF AWARDS...............................................5
 
 
7.      PERFORMANCE AWARDS.....................................................9
 
 
8.      CERTAIN PROVISIONS APPLICABLE TO AWARDS...............................10
 
 
9.      CHANGE IN CONTROL.....................................................11
 
 
10.     GENERAL PROVISIONS....................................................12
 
 
 
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                            MARVEL ENTERPRISES, INC.
 
                            2005 STOCK INCENTIVE PLAN
 
        1. Purpose. The purpose of this 2005 Stock Incentive Plan (the "Plan")
is to aid Marvel Enterprises, Inc., a Delaware corporation (together with its
successors and assigns, the "Company"), in attracting, retaining, motivating and
rewarding officers, employees and directors of the Company and its subsidiaries
and consultants and advisors to the Company or its subsidiaries
("Participants"), to provide for equitable and competitive compensation
opportunities, to recognize individual contributions and reward achievement of
Company goals, and promote the creation of long-term value for stockholders by
closely aligning the interests of Participants with those of stockholders. The
Plan authorizes stock-based incentives for Participants.
 
        2. Definitions. In addition to the terms defined in Section 1 above and
elsewhere in the Plan, the following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
 
        (a) "Annual Limit" shall have the meaning specified in Section 5(b).
 
        (b) "Award" means any Option, SAR, Restricted Stock, Deferred Stock,
Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other
Stock-Based Award, or Performance Award, together with any related right or
interest, granted to a Participant under the Plan.
 
        (c) "Beneficiary" means the legal representatives of the Participant's
estate entitled by will or the laws of descent and distribution to receive the
benefits under a Participant's Award upon a Participant's death, provided that,
if and to the extent authorized by the Committee, a Participant may be permitted
to designate a Beneficiary, in which case the "Beneficiary" instead will be the
person, persons, trust or trusts (if any are then surviving) which have been
designated by the Participant in his or her most recent written and duly filed
beneficiary designation to receive the benefits specified under the
Participant's Award upon such Participant's death. Unless otherwise determined
by the Committee, any designation of a Beneficiary other than a Participant's
spouse shall be subject to the written consent of such spouse.
 
        (d) "Board" means the Company's Board of Directors.
 
        (e) "Cause" means "cause" as defined in an employment agreement between
the Company and the Participant in effect at the time of Termination of
Employment. If, however, there is no such employment agreement or no definition
of "cause" therein, Cause means an individual's (i) intentional failure to
perform reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in connection with the
performance of duties to the Company or any of its Subsidiaries thereof which
transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit, (iv) knowing or
grossly negligent misconduct which results in the Company being required to
prepare an accounting restatement due to the material noncompliance of the
Company with any financial reporting requirement under the securities laws, (v)
willful violation of any law, rule or regulation in connection with the
performance of duties (other than traffic violations or similar offenses), or
(v) the commission of an act of fraud or intentional misappropriation or
conversion of assets or opportunities of the Company or any Subsidiary;
provided, however, that the Committee may vary the definition of "Cause" in any
agreement or document relating to an Award.
 
        (f) "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code or regulation thereunder shall include
any successor provisions and regulations,
 
 
 
 
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including any applicable guidance or pronouncement of the Department of the
Treasury and Internal Revenue Service.
 
        (g) "Committee" means the Compensation Committee of the Board, the
composition and governance of which is established in the Committee's Charter as
approved from time to time by the Board and subject to Section 303A.05 of the
Listed Company Manual of the New York Stock Exchange, and other corporate
governance documents of the Company. No action of the Committee shall be void or
deemed to be without authority due to the failure of any member, at the time the
action was taken, to meet any qualification standard set forth in the Committee
Charter or this Plan. The full Board may perform any function of the Committee
hereunder, except to the extent limited under Section 303A.05 of the Listed
Company Manual or by law, in which case the term "Committee" shall refer to the
Board.
 
        (h) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 10(j).
 
        (i) "Deferred Stock" means a right, granted under this Plan, to receive
Stock or other Awards or a combination thereof at the end of a specified
deferral period.
 
        (j) "Dividend Equivalent" means a right, granted under this Plan, to
receive cash, Stock, other Awards or other property equal in value to all or a
specified portion of the dividends paid with respect to a specified number of
shares of Stock.
 
        (k) "Effective Date" means the effective date specified in Section
10(q).
 
        (l) "Eligible Person" has the meaning specified in Section 5(a).
 
        (m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. References to any provision of the Exchange Act or rule (including a
proposed rule) thereunder shall include any successor provisions and rules.
 
        (n) "Fair Market Value" means the fair market value of Stock, Awards or
other property as determined in good faith by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of Stock shall be the closing sales price per share of Stock
reported on a consolidated basis for securities listed on the principal stock
exchange or market on which Stock is traded on the trading day prior to the day
such value is being determined. Fair Market Value relating to the exercise price
or base price of any Non-Code Section 409A Option or SAR shall conform to
requirements under Code Section 409A.
 
        (o) "Code Section 409A Awards" means Awards that constitute a deferral
of compensation under Code Section 409A and regulations thereunder. "Non-Code
Section 409A Awards" means Awards other than Code Section 409A Awards. Although
the Committee retains authority under the Plan to grant Options, SARs and
Restricted Stock on terms that will qualify those Awards as Code Section 409A
Awards, Options, SARs exercisable for Stock, and Restricted Stock are intended
to be Non-Code Section 409A Awards unless otherwise expressly specified by the
Committee.
 
        (p) "Incentive Stock Option" or "ISO" means any Option designated as an
incentive stock option within the meaning of Code Section 422 and qualifying
thereunder.
 
        (q) "Option" means a right, granted under this Plan, to purchase Stock.
 
        (r) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h).
 
 
 
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        (s) "Participant" means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an Eligible
Person.
 
        (t) "Performance Award" means a conditional right, granted to a
Participant under Sections 6(i) and 7, to receive cash, Stock or other Awards or
payments.
 
        (u) "Preexisting Plan" means the Company's 1998 Stock Incentive Plan.
 
        (v) "Restricted Stock" means Stock granted under this Plan which is
subject to certain restrictions and to a risk of forfeiture.
 
        (w) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to Participants, promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act.
 
        (x) "Stock" means the Company's Common Stock, par value $0.01 per share,
and any other equity securities of the Company that may be substituted or
resubstituted for Stock pursuant to Section 10(c).
 
        (y) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c).
 
        3. Administration.
 
        (a) Authority of the Committee. The Plan shall be administered by the
Committee, which shall have full and final authority, in each case subject to
and consistent with the provisions of the Plan, to select Eligible Persons to
become Participants; to grant Awards; to determine the type and number of
Awards, the dates on which Awards may be exercised and on which the risk of
forfeiture or deferral period relating to Awards shall lapse or terminate, the
acceleration of any such dates, the expiration date of any Award, whether, to
what extent, and under what circumstances an Award may be settled, or the
exercise price of an Award may be paid, in cash, Stock, other Awards, or other
property, and other terms and conditions of, and all other matters relating to,
Awards; to prescribe documents evidencing or setting terms of Awards (such Award
documents need not be identical for each Participant), amendments thereto, and
rules and regulations for the administration of the Plan and amendments thereto;
to construe and interpret the Plan and Award documents and correct defects,
supply omissions or reconcile inconsistencies therein; and to make all other
decisions and determinations as the Committee may deem necessary or advisable
for the administration of the Plan. Decisions of the Committee with respect to
the administration and interpretation of the Plan shall be final, conclusive,
and binding upon all persons interested in the Plan, including Participants,
Beneficiaries, transferees under Section 10(b) and other persons claiming rights
from or through a Participant, and stockholders. The foregoing notwithstanding,
the Board shall perform the functions of the Committee for purposes of granting
Awards under the Plan to non-employee directors (the functions of the Committee
with respect to other aspects of non-employee director awards is not exclusive
to the Board, however).
 
        (b) Manner of Exercise of Committee Authority. The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee. The
Committee may act through subcommittees, including for purposes of perfecting
exemptions under Rule 16b-3 or qualifying Awards under Code Section 162(m) as
performance-based compensation, in which case the subcommittee shall be subject
to and have authority under the charter applicable to the Committee, and the
acts of the subcommittee shall be deemed to be acts of the Committee hereunder.
The Committee may delegate to officers or managers of the Company or any
subsidiary or affiliate, or committees thereof, the authority, subject to such
terms as the Committee shall determine, to perform such functions, including
administrative functions, as the Committee may
 
 
 
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determine, to the extent (i) that such delegation will not result in the loss of
an exemption under Rule 16b-3(d) or (e) for Awards granted to Participants
subject to Section 16 of the Exchange Act in respect of the Company and will not
cause Awards intended to qualify as "performance-based compensation" under Code
Section 162(m) to fail to so qualify, and (ii) permitted under Section 157 and
other applicable provisions of the Delaware General Corporation Law.
 
        (c) Limitation of Liability. Each member of the Committee and the Board
of Directors, and any person to whom authority or duties are delegated
hereunder, shall be entitled to, in good faith, rely or act upon any report or
other information furnished to him or her by any officer or other employee of
the Company or a subsidiary or affiliate, the Company's independent certified
public accountants, or any executive compensation consultant, legal counsel, or
other professional retained by the Company to assist in the administration of
the Plan. No member of the Board or Committee, nor any person to whom authority
or duties are delegated hereunder, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and any such person shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
 
        4. Stock Subject To Plan.
 
        (a) Overall Number of Shares Available for Delivery. The total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be (i) four million shares, plus (ii) the number of shares
that, immediately prior to the Effective Date, remain available for new awards
under the Preexisting Plan plus (iii) the number of shares subject to awards
under the Preexisting Plan which become available in accordance with Section
4(b) after the Effective Date; provided, however, that the total number of
shares with respect to which ISOs may be granted shall not exceed the number
specified under clause (i) above. The total number of shares available is
subject to adjustment as provided in Section 10(c). Any shares of Stock
delivered under the Plan shall consist of authorized and unissued shares or
treasury shares.
 
        (b) Share Counting Rules. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards) and make adjustments in
accordance with this Section 4(b). For purposes of the Plan, shares shall be
counted against those reserved to the extent such shares have been delivered and
are no longer subject to a risk of forfeiture. Accordingly, (i) to the extent
that an Award under the Plan or award under a Preexisting Plan is canceled,
expired, forfeited, settled in cash, settled by issuance of fewer shares than
the number underlying the award, or otherwise terminated without delivery of
shares to the Participant, the shares retained by or returned to the Company
will be available under the Plan; and (ii) shares that are withheld from such an
award or separately surrendered by the Participant in payment of the exercise
price or taxes relating to such an award shall be deemed to constitute shares
not delivered to the Participant and will be available under the Plan. The
Committee may determine that Awards may be outstanding that relate to more
shares than the aggregate remaining available under the Plan so long as such
Awards will not in fact result in delivery and vesting of shares in excess of
the number then available. In addition, in the case of any Award granted in
assumption of or in substitution for an award of a company or business acquired
by the Company or a subsidiary or affiliate or with which the Company or a
subsidiary or affiliate combines, shares issued or issuable in connection with
such substitute Award shall not be counted against the number of shares reserved
under the Plan.
 
        5. Eligibility; Per-Person Award Limitations.
 
        (a) Eligibility. Awards may be granted under the Plan only to Eligible
Persons. For purposes of the Plan, an "Eligible Person" means an employee of the
Company or any subsidiary or affiliate, including any executive officer or
non-employee director of the Company or a subsidiary or
 
 
 
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affiliate, and any person who has been offered employment by the Company or a
subsidiary or affiliate, provided that such prospective employee may not receive
any payment or exercise any right relating to an Award until such person has
commenced employment with the Company or a subsidiary or affiliate. An employee
on leave of absence may be considered as still in the employ of the Company or a
subsidiary or affiliate for purposes of eligibility for participation in the
Plan, to the extent specified by the Committee. Consultants and advisors to the
Company or its subsidiaries or affiliates shall also be eligible for
participation in the Plan. For purposes of the Plan, a joint venture in which
the Company or a subsidiary has a substantial direct or indirect equity
investment shall be deemed an affiliate, if so determined by the Committee.
Holders of awards granted by a company or business acquired by the Company or a
subsidiary or affiliate, or with which the Company or a subsidiary or affiliate
combines, are eligible for grants of substitute awards granted in assumption of
or in substitution for such outstanding awards previously granted under the Plan
in connection with such acquisition or combination transaction. If a
non-employee director is required by contract to deliver any compensation from
the Company to the director's employer, the Committee may specify or permit the
director to elect that Awards be made or transferred to such director's
employer; in such case, vesting, exercisability and termination provisions and
other Award provisions specified by the Committee shall continue to apply to the
individual director and his or her service to the Company.
 
        (b) Per-Person Award Limitations. In each calendar year during any part
of which the Plan is in effect, an Eligible Person may be granted Awards
intended to qualify as "performance-based compensation" under Code Section
162(m) under the Plan relating to up to his or her Annual Limit. A Participant's
Annual Limit, in any year during any part of which the Participant is then
eligible under the Plan, shall equal two million shares plus the amount of the
Participant's unused Annual Limit relating to the same type of Award as of the
close of the previous year, subject to adjustment as provided in Section 10(c).
For this purpose, (i) "earning" means satisfying performance conditions so that
an amount becomes payable, without regard to whether it is to be paid currently
or on a deferred basis or continues to be subject to any service requirement or
other non-performance condition, and (ii) a Participant's Annual Limit is used
to the extent an amount or number of shares may be potentially earned or paid
under an Award, regardless of whether such amount or shares are in fact earned
or paid.
 
        (c) Limits on Non-Employee Director Awards. Non-employee directors may
be granted any type of Award under the Plan, but the aggregate number of shares
that may be delivered in connection with Awards granted to non-employee
directors shall be twenty percent of the total reserved under the Plan, and in
any five-year period a non-employee director may be granted Awards under the
Plan relating to no more than 250,000 shares, subject to adjustment as provided
in Section 10(c).
 
        6. Specific Terms Of Awards.
 
        (a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Sections 10(e)
and 10(k)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service by the Participant, terms requiring forfeiture of Awards and gains
realized upon exercise, vesting or settlement of Awards in cases in which the
Participant engages in conduct harmful to the Company, and terms permitting a
Participant to make elections relating to his or her Award. The Committee shall
retain full power and discretion with respect to any term or condition of an
Award that is not mandatory under the Plan, subject to Section 10(k). The
Committee shall require the payment of lawful consideration for an Award to the
extent necessary to satisfy the requirements of the Delaware General Corporation
Law, and may otherwise require payment of consideration for an Award except as
limited by the Plan.
 
 
 
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        (b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
 
        (i)    Exercise Price. The exercise price per share of Stock purchasable
               under an Option (including both ISOs and non-qualified Options)
               shall be determined by the Committee, provided that such exercise
               price shall be not less than the Fair Market Value of a share of
               Stock on the date of grant of such Option, subject to Section
               8(a). Notwithstanding the foregoing, any substitute award granted
               in assumption of or in substitution for an outstanding award
               granted by a company or business acquired by the Company or a
               subsidiary or affiliate, or with which the Company or a
               subsidiary or affiliate combines may be granted with an exercise
               price per share of Stock other than as required above.
 
        (ii)   Option Term; Time and Method of Exercise. The Committee shall
               determine the term of each Option, provided that in no event
               shall the term of any Option exceed a period of ten years from
               the date of grant. The Committee shall determine the time or
               times at which or the circumstances under which an Option may be
               exercised in whole or in part (including based on achievement of
               performance goals and/or future service requirements), the
               methods by which such exercise price may be paid or deemed to be
               paid and the form of such payment (subject to Sections 10(k) and
               10(l)), including, without limitation, cash, Stock (including by
               withholding Stock deliverable upon exercise, if such withholding
               or withholding feature will not result in additional accounting
               expense to the Company), other Awards or awards granted under
               other plans of the Company or any subsidiary or affiliate, or
               other property (including through broker-assisted "cashless
               exercise" arrangements, to the extent permitted by applicable
               law), and the methods by or forms in which Stock will be
               delivered or deemed to be delivered in satisfaction of Options to
               Participants (including, in the case of Code Section 409A Awards,
               deferred delivery of shares subject to the Option, as mandated by
               the Committee, with such deferred shares subject to any vesting,
               forfeiture or other terms as the Committee may specify).
 
        (iii)  ISOs. The terms of any ISO granted under the Plan shall comply in
               all respects with the provisions of Code Section 422.
 
        (c) Stock Appreciation Rights. The Committee is authorized to grant
SAR's to Participants on the following terms and conditions:
 
        (i)    Right to Payment. An SAR shall confer on the Participant to whom
               it is granted a right to receive, upon exercise thereof, the
               excess of (A) the Fair Market Value of one share of Stock on the
               date of exercise over (B) the grant price of the SAR, which shall
               be determined by the Committee but which in any event shall be
               not less than the Fair Market Value of a share of Stock on the
               date of grant of the SAR, subject to Section 8(a).
 
        (ii)   Other Terms. The Committee shall determine the term of each SAR,
               provided that in no event shall the term of an SAR exceed a
               period of ten years from the date of grant. The Committee shall
               determine at the date of grant or thereafter, the time or times
               at which and the circumstances under which a SAR may be exercised
               in whole or in part (including based on achievement of
               performance goals and/or future service requirements), the method
               of exercise, method of settlement, form of consideration payable
               in settlement, method by or forms in which Stock will be
               delivered or deemed to be delivered to Participants, whether or
               not a SAR shall be free-standing or in tandem or combination with
               any other Award, and whether or not the SAR will be a Code
               Section 409A Award or Non-Code Section 409A Award (cash SARs will
               in all cases be Code
 
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               Section 409A Awards, except as otherwise provided under
               applicable Code Section 409A regulations). The Committee may
               require that an outstanding Option be exchanged for an SAR
               exercisable for Stock having vesting, expiration, and other
               terms substantially the same as the Option, so long as such
               exchange will not result in additional accounting expense to the
               Company.
 
        (d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
 
        (i)    Grant and Restrictions. Restricted Stock shall be subject to such
               restrictions on transferability, risk of forfeiture and other
               restrictions, if any, as the Committee may impose, which
               restrictions may lapse separately or in combination at such
               times, under such circumstances (including based on achievement
               of performance goals and/or future service requirements), in such
               installments or otherwise and under such other circumstances as
               the Committee may determine at the date of grant or thereafter.
               Except to the extent restricted under the terms of the Plan and
               any Award document relating to the Restricted Stock, a
               Participant granted Restricted Stock shall have all of the rights
               of a stockholder, including the right to vote the Restricted
               Stock and the right to receive dividends thereon (subject to any
               mandatory reinvestment or other requirement imposed by the
               Committee).
 
        (ii)   Forfeiture. Except as otherwise determined by the Committee, upon
               termination of employment or service during the applicable
               restriction period, Restricted Stock that is at that time subject
               to restrictions shall be forfeited and reacquired by the Company;
               provided that the Committee may provide, by rule or regulation or
               in any Award document, or may determine in any individual case,
               that restrictions or forfeiture conditions relating to Restricted
               Stock will lapse in whole or in part, including in the event of
               terminations resulting from specified causes.
 
        (iii)  Certificates for Stock. Restricted Stock granted under the Plan
               may be evidenced in such manner as the Committee shall determine.
               If certificates representing Restricted Stock are registered in
               the name of the Participant, the Committee may require that such
               certificates bear an appropriate legend referring to the terms,
               conditions and restrictions applicable to such Restricted Stock,
               that the Company retain physical possession of the certificates,
               and that the Participant deliver a stock power to the Company,
               endorsed in blank, relating to the Restricted Stock.
 
        (iv)   Dividends and Splits. As a condition to the grant of an Award of
               Restricted Stock, the Committee may require that any dividends
               paid on a share of Restricted Stock shall be either (A) paid with
               respect to such Restricted Stock at the dividend payment date in
               cash, in kind, or in a number of shares of unrestricted Stock
               having a Fair Market Value equal to the amount of such dividends,
               or (B) automatically reinvested in additional Restricted Stock or
               held in kind, which shall be subject to the same terms as applied
               to the original Restricted Stock to which it relates, or (C)
               deferred as to payment, either as a cash deferral or with the
               amount or value thereof automatically deemed reinvested in shares
               of Deferred Stock, other Awards or other investment vehicles,
               subject to such terms as the Committee shall determine or permit
               a Participant to elect. Unless otherwise determined by the
               Committee, Stock distributed in connection with a Stock split or
               Stock dividend, and other property distributed as a dividend,
               shall be subject to restrictions and a risk of forfeiture to the
               same extent as the Restricted Stock with respect to which such
               Stock or other property has been distributed.
 
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        (e) Deferred Stock. The Committee is authorized to grant Deferred Stock
to Participants, subject to the following terms and conditions:
 
        (i)    Award and Restrictions. Issuance of Stock will occur upon
               expiration of the deferral period specified for an Award of
               Deferred Stock by the Committee (or, if permitted by the
               Committee, as elected by the Participant). In addition, Deferred
               Stock shall be subject to such restrictions on transferability,
               risk of forfeiture and other restrictions, if any, as the
               Committee may impose, which restrictions may lapse at the
               expiration of the deferral period or at earlier specified times
               (including based on achievement of performance goals and/or
               future service requirements), separately or in combination, in
               installments or otherwise, and under such other circumstances as
               the Committee may determine at the date of grant or thereafter.
               Deferred Stock may be satisfied by delivery of Stock, other
               Awards, or a combination thereof (subject to Section 10(l)), as
               determined by the Committee at the date of grant or thereafter.
 
        (ii)   Forfeiture. Except as otherwise determined by the Committee, upon
               termination of employment or service during the applicable
               deferral period or portion thereof to which forfeiture conditions
               apply (as provided in the Award document evidencing the Deferred
               Stock), all Deferred Stock that is at that time subject to such
               forfeiture conditions shall be forfeited; provided that the
               Committee may provide, by rule or regulation or in any Award
               document, or may determine in any individual case, that
               restrictions or forfeiture conditions relating to Deferred Stock
               will lapse in whole or in part, including in the event of
               terminations resulting from specified causes. Deferred Stock
               subject to a risk of forfeiture may be called "restricted stock
               units" or otherwise designated by the Committee.
 
        (iii)  Dividend Equivalents. Unless otherwise determined by the
               Committee, Dividend Equivalents on the specified number of shares
               of Stock covered by an Award of Deferred Stock shall be either
               (A) paid with respect to such Deferred Stock at the dividend
               payment date in cash or in shares of unrestricted Stock having a
               Fair Market Value equal to the amount of such dividends, or (B)
               deferred with respect to such Deferred Stock, either as a cash
               deferral or with the amount or value thereof automatically deemed
               reinvested in additional Deferred Stock, other Awards or other
               investment vehicles having a Fair Market Value equal to the
               amount of such dividends, as the Committee shall determine or
               permit a Participant to elect.
 
        (f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of obligations of the Company or a subsidiary or affiliate to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, subject to such terms as shall be determined by the Committee.
 
        (g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, which may be awarded on a free-standing basis or
in connection with another Award. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment vehicles, and
subject to restrictions on transferability, risks of forfeiture and such other
terms as the Committee may specify.
 
        (h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock or factors that may influence
the value of Stock, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into Stock, purchase
rights for Stock, Awards with value and
 
                                       8
<PAGE>
 
 
 
payment contingent upon performance of the Company or business units thereof or
any other factors designated by the Committee, and Awards valued by reference to
the book value of Stock or the value of securities of or the performance of
specified subsidiaries or affiliates or other business units. The Committee
shall determine the terms and conditions of such Awards. Stock delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards, or other property, as the Committee shall determine. Cash awards,
as an element of or supplement to any other Award under the Plan, may also be
granted pursuant to this Section 6(h).
 
        (i) Performance Awards. Performance Awards, denominated in cash or in
Stock or other Awards, may be granted by the Committee in accordance with
Section 7. A Performance Award constitutes an Award authorized under Section
6(b) - (h) to which performance conditions have been attached. In addition,
cash-denominated awards that may be settled by delivery of shares of Stock
issued under this Plan or other Awards may be authorized under the Company's
2005 Incentive Compensation Plan, subject to the terms and conditions of that
plan.
 
        7. Performance Awards.
 
        (a) Performance Awards Generally. Performance Awards may be denominated
as a number of shares of Stock or specified number of other Awards (or a
combination) which may be earned upon achievement or satisfaction of performance
conditions specified by the Committee. In addition, the Committee may specify
that any other Award shall constitute a Performance Award by conditioning the
right of a Participant to exercise the Award or have it settled, and the timing
thereof, upon achievement or satisfaction of such performance conditions as may
be specified by the Committee. The Committee may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce or increase
the amounts payable under any Award subject to performance conditions, except as
limited under Sections 7(b) and 7(c) in the case of a Performance Award intended
to qualify as "performance-based compensation" under Code Section 162(m).
 
        (b) Performance Awards Granted to Covered Employees. If the Committee
determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance Award shall be contingent upon
achievement of a preestablished performance goal and other terms set forth in
this Section 7(b).
 
        (i)    Performance Goal Generally. The performance goal for such
               Performance Awards shall consist of one or more business criteria
               and a targeted level or levels of performance with respect to
               each of such criteria, as specified by the Committee consistent
               with this Section 7(b). The performance goal shall be objective
               and shall otherwise meet the requirements of Code Section 162(m)
               and regulations thereunder, including the requirement that the
               level or levels of performance targeted by the Committee result
               in the achievement of performance goals being "substantially
               uncertain." The Committee may determine that such Performance
               Awards shall be granted, exercised and/or settled upon
               achievement of any one performance goal or that two or more of
               the performance goals must be achieved as a condition to grant,
               exercise and/or settlement of such Performance Awards.
               Performance goals may differ for Performance Awards granted to
               any one Participant or to different Participants.
 
        (ii)   Business Criteria. One or more of the following business criteria
               for the Company, on a consolidated basis, and/or for specified
               subsidiaries or divisions or affiliates or other
 
 
 
                                       9
<PAGE>
 
 
 
               business units of the Company shall be used by the Committee in
               establishing the Performance Goal for such Award Opportunities:
               (1) net sales, revenues or royalties; (2) gross profit or
               pre-tax profit; (3) operating income, earnings before or after
               taxes, earnings before or after interest, depreciation,
               amortization, or extraordinary or special items; (4) net income
               or net income per common share (basic or fully diluted); (5)
               return measures, including, but not limited to, return on assets
               (gross or net), return on investment, return on capital, or
               return on equity; (6) cash flow, free cash flow, cash flow
               return on investment (discounted or otherwise), net cash
               provided by operations, or cash flow in excess of cost of
               capital; (7) economic value created or economic profit; (8)
               operating margin or profit margin; (9) stockholder value
               creation measures, including but not limited to stock price or
               total stockholder return; (10) royalties or revenues from
               specific assets, projects, fees or payments received or lines of
               business; (11) targets relating to expense or operating expense,
               working capital targets, or operating efficiency; and (12)
               strategic business criteria, consisting of one or more
               objectives based on meeting specified goals relating to market
               penetration, new projects, new products, new ventures,
               geographic business expansion, operating goals, cost targets,
               customer satisfaction, employee satisfaction, human resources
               management, supervision of litigation and information
               technology, and acquisitions or divestitures of subsidiaries,
               affiliates or joint ventures. The targeted level or levels of
               performance with respect to such business criteria may be
               established at such levels and in such terms as the Committee
               may determine, in its discretion, including in absolute terms,
               as a goal relative to performance in prior periods, or as a goal
               compared to the performance of one or more comparable companies
               or an index covering multiple companies
 
        (iii)  Performance Period; Timing for Establishing Performance Goals.
               Achievement of performance goals in respect of such Performance
               Awards shall be measured over a performance period of up to one
               year or more than one year, as specified by the Committee. A
               performance goal shall be established not later than the earlier
               of (A) 90 days after the beginning of any performance period
               applicable to such Performance Award or (B) the time 25% of such
               performance period has elapsed.
 
        (iv)   Settlement of Performance Awards; Other Terms. Settlement of
               Performance Awards shall be in cash, Stock, other Awards or other
               property, in the discretion of the Committee. The Committee may,
               in its discretion, increase or reduce the amount of a settlement
               otherwise to be made in connection with such Performance Awards,
               but may not exercise discretion to increase any such amount
               payable to a Covered Employee in respect of a Performance Award
               subject to this Section 7(b). Any settlement which changes the
               form of payment from that originally specified shall be
               implemented in a manner such that the Performance Award and other
               related Awards do not, solely for that reason, fail to qualify as
               "performance-based compensation" for purposes of Code Section
               162(m). The Committee shall specify the circumstances in which
               such Performance Awards shall be paid or forfeited in the event
               of termination of employment by the Participant or other event
               (including a change in control) prior to the end of a performance
               period or settlement of such Performance Awards.
 
        (c) Written Determinations. Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards, the level of actual achievement of the specified performance
goals relating to Performance Awards, and the amount of any final Performance
Award shall be recorded in writing in the case of Performance Awards intended to
qualify under Section 162(m). Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under Section 162(m),
prior to settlement of each such Award granted to a Covered Employee, that the
performance objective relating to the Performance Award and
 
 
                                       10
<PAGE>
 
 
 
other material terms of the Award upon which settlement of the Award was
conditioned have been satisfied.
 
        8. Certain Provisions Applicable To Awards.
 
        (a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
subsidiary or affiliate, or any business entity to be acquired by the Company or
a subsidiary or affiliate, or any other right of a Participant to receive
payment from the Company or any subsidiary or affiliate; provided, however, that
a Code Section 409A Award may not be granted in tandem with a Non-Code Section
409A Award. Awards granted in addition to or in tandem with other Awards or
awards may be granted either as of the same time as or a different time from the
grant of such other Awards or awards. Subject to Sections 10(k) and (l), the
Committee may determine that, in granting a new Award, the in-the-money value or
fair value of any surrendered Award or award or the value of any other right to
payment surrendered by the Participant may be applied to reduce the exercise
price of any Option, grant price of any SAR, or purchase price of any other
Award.
 
        (b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee, subject to the express limitations set forth
in Sections 6(b)(ii), 6(c)(ii) and 8 or elsewhere in the Plan.
 
        (c) Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of the Plan (including Sections 10(k) and (l)) and any applicable Award
document, payments to be made by the Company or a subsidiary or affiliate upon
the exercise of an Option or other Award or settlement of an Award may be made
in such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single payment
or transfer, in installments, or on a deferred basis. The settlement of any
Award may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more
specified events, subject to Sections 10(k) and (l). Subject to Section 10(k),
installment or deferred payments may be required by the Committee (subject to
Section 10(e)) or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock. In the case of any Code Section 409A Award that is vested
and no longer subject to a risk of forfeiture (within the meaning of Code
Section 83), such Award will be distributed to the Participant, upon application
of the Participant, if the Participant has had an unforeseeable emergency within
the meaning of Code Sections 409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), in
accordance with Code Section 409A(a)(2)(B)(ii).
 
        (d) Additional Award Forfeiture Provisions. The Committee may condition
a Participant's right to receive a grant of an Award, to exercise the Award, to
retain cash, Stock, other Awards, or other property acquired in connection with
an Award, or to retain the profit or gain realized by a Participant in
connection with an Award, including cash or other proceeds received upon sale of
Stock acquired in connection with an Award, upon compliance by the Participant
with specified conditions relating to non-competition, confidentiality of
information relating to or possessed by the Company, non-solicitation of
customers, suppliers, and employees of the Company, cooperation in litigation,
non-disparagement of the Company and its officers, directors and affiliates, and
other restrictions upon or covenants of the Participant for the protection of
the Company and its business interests, including during specified periods
following termination of a Participant's employment or service to the Company.
 
 
 
                                       11
<PAGE>
 
 
        9. Change in Control. Other provisions of the Plan notwithstanding but
subject to the limitations set forth in this Section 9, the Committee may
provide, in an Award agreement or in such other manner as the Committee may
specify, that in the event of a change in control or a termination of employment
or service following a change in control, any or all of the following terms will
apply:
 
        (i)    That an outstanding Award will vest in whole or in part, thereby
               becoming non-forfeitable and entitling the Participant to
               exercise specified rights under the Award, and that the Award
               will remain outstanding for specified periods thereafter (but not
               beyond the maximum term of the Award permitted under the Plan);
 
        (ii)   That an period in which settlement of an outstanding Award is to
               be deferred beyond the date of vesting will immediately end,
               except as limited under Code Section 409A;
 
        (iii)  That, with respect to an outstanding Award subject to the
               achievement of performance goals and conditions, such performance
               goals and conditions will be deemed to be met at a specified
               level (for example, at target level or maximum level), or that
               such level of performance will be determined in some other
               manner; and/or
 
        (iv)   That an outstanding Award will be immediately settled by payment
               of cash, or the Participant will be permitted during a specified
               period to elect such a cash settlement, with the amount of cash
               payable equal to the intrinsic value or fair value of the Award,
               or a value determined in another specified manner, at a specified
               date or during a specified period, except as limited under Code
               Section 409A.
 
For purposes of the Plan, the term "change in control" shall be defined by the
Committee, and need not be the same for all Participants. Any of the terms of
Awards relating to a change in control shall apply to a Non-Code Section 409A
Award only to the extent permitted without causing the Award to become subject
to Code Section 409A, and shall apply to a Code Section 409A Award only to the
extent permitted under Code Section 409A. For this purpose, Code Section 409A
may permit some of the terms specified above to apply only if the change in
control constitutes a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the
Company, within the meaning of Code Section 409A(a)(2)(A)(v).
 
        10. General Provisions.
 
        (a) Compliance with Legal and Other Requirements. The Company may, to
the extent deemed necessary or advisable by the Committee acting in good faith,
and subject to Section 10(k), postpone the issuance or delivery of Stock or
payment of other benefits under any Award until completion of such registration
or qualification of such Stock or other required action under any federal or
state law, rule or regulation, listing or other required action with respect to
any stock exchange or automated quotation system upon which the Stock or other
securities of the Company are listed or quoted, or compliance with any other
obligation of the Company, as the Committee may consider appropriate, and may
require any Participant to make such representations, furnish such information
and comply with or be subject to such other conditions as it may consider
appropriate in connection with the issuance or delivery of Stock or payment of
other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations.
 
        (b) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Company or a subsidiary or affiliate
thereof), or assigned or transferred by such Participant otherwise than by will
or the laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her
 
                                       12
<PAGE>
 
 
guardian or legal representative, except that Awards and other rights (other
than ISOs and SARs in tandem therewith) may be transferred to one or more
transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent such transfers are permitted by the Committee, subject to any terms and
conditions which the Committee may impose thereon (which may include limitations
the Committee may deem appropriate in order that offers and sales under the Plan
will meet applicable requirements of registration forms under the Securities Act
of 1933 specified by the Securities and Exchange Commission). A Beneficiary,
transferee, or other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and any
Award document applicable to such Participant, except as otherwise determined by
the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.
 
        (c) Adjustments. In the event that any large, special and non-recurring
dividend or other distribution (whether in the form of cash or property other
than Stock), recapitalization, forward or reverse split, Stock dividend,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or
event affects the Stock such that an adjustment is determined by the Committee
to be appropriate and, in the case of any outstanding Award, necessary in order
to prevent dilution or enlargement of the rights of the Participant,, then the
Committee shall, in an equitable manner as determined by the Committee, adjust
any or all of (i) the number and kind of shares of Stock which may be delivered
in connection with Awards granted thereafter, (ii) the number and kind of shares
of Stock by which annual per-person Award limitations are measured under Section
5, including the share limits applicable to non-employee director Awards under
Section 5(c), (iii) the number and kind of shares of Stock subject to or
deliverable in respect of outstanding Awards and (iv) the exercise price, grant
price or purchase price relating to any Award or, if deemed appropriate, the
Committee may make provision for a payment of cash or property to the holder of
an outstanding Option (subject to Section 10(l)). In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including Performance Awards and performance goals) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence, as well as acquisitions and
dispositions of businesses and assets) affecting the Company, any subsidiary or
affiliate or other business unit, or the financial statements of the Company or
any subsidiary or affiliate, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee's assessment of the business strategy of
the Company, any subsidiary or affiliate or business unit thereof, performance
of comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant;
provided that no such adjustment shall be authorized or made if and to the
extent that the existence of such authority (i) would cause Options, SARs, or
Performance Awards granted under the Plan to Participants designated by the
Committee as Covered Employees and intended to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder to otherwise
fail to qualify as "performance-based compensation" under Code Section 162(m)
and regulations thereunder, or (ii) would cause the Committee to be deemed to
have authority to change the targets, within the meaning of Treasury Regulation
1.162-27(e)(4)(vi), under the performance goals relating to Options or SARs
granted to Covered Employees and intended to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.
 
        (d) Tax Provisions.
 
        (i)    Withholding. The Company and any subsidiary or affiliate is
               authorized to withhold from any Award granted, any payment
               relating to an Award under the Plan, including from a
               distribution of Stock, or any payroll or other payment to a
               Participant, amounts of withholding and other taxes due or
               potentially payable in connection with any transaction involving
               an Award, and to take such other action as the Committee may deem
               advisable
 
                                       13
<PAGE>
 
 
               to enable the Company and Participants to satisfy obligations
               for the payment of withholding taxes and other tax obligations
               relating to any Award. This authority shall include authority to
               withhold or receive Stock or other property and to make cash
               payments in respect thereof in satisfaction of a Participant's
               withholding obligations, either on a mandatory or elective basis
               in the discretion of the Committee, or in satisfaction of other
               tax obligations. Other provisions of the Plan notwithstanding,
               unless consented to by the Committee, only the minimum amount of
               Stock deliverable in connection with an Award necessary to
               satisfy statutory withholding requirements will be withheld,
               unless withholding of any additional amount of Stock will not
               result in additional accounting expense to the Company.
 
        (ii)   Required Consent to and Notification of Code Section 83(b)
               Election. No election under Section 83(b) of the Code (to include
               in gross income in the year of transfer the amounts specified in
               Code Section 83(b)) or under a similar provision of the laws of a
               jurisdiction outside the United States may be made unless
               expressly permitted by the terms of the Award document or by
               action of the Committee in writing prior to the making of such
               election. In any case in which a Participant is permitted to make
               such an election in connection with an Award, the Participant
               shall notify the Company of such election within ten days of
               filing notice of the election with the Internal Revenue Service
               or other governmental authority, in addition to any filing and
               notification required pursuant to regulations issued under Code
               Section 83(b) or other applicable provision.
 
        (iii)  Requirement of Notification Upon Disqualifying Disposition Under
               Code Section 421(b). If any Participant shall make any
               disposition of shares of Stock delivered pursuant to the exercise
               of an ISO under the circumstances described in Code Section
               421(b) (i.e., a disqualifying disposition), such Participant
               shall notify the Company of such disposition within ten days
               thereof.
 
        (e) Changes to the Plan. The Board may amend, suspend or terminate the
Plan or the Committee's authority to grant Awards under the Plan without the
consent of stockholders or Participants; provided, however, that any amendment
to the Plan shall be submitted to the Company's stockholders for approval not
later than the earliest annual meeting for which the record date is at or after
the date of such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of the New York Stock Exchange
or any other stock exchange or automated quotation system on which the Stock may
then be listed or quoted, or if such amendment would materially increase the
number of shares reserved for issuance and delivery under the Plan, and the
Board may otherwise, in its discretion, determine to submit other amendments to
the Plan to stockholders for approval; and provided further, that, without the
consent of an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under any outstanding Award (for
this purpose, actions that alter the timing of federal income taxation of a
Participant will not be deemed material unless such action results in an income
tax penalty on the Participant). Without the approval of stockholders, the
Committee will not amend or replace previously granted Options or SARs in a
transaction that constitutes a "repricing," as such term is used in Section
303A.08 of the Listed Company Manual of the New York Stock Exchange. With regard
to other terms of Awards, the Committee shall have no authority to waive or
modify any such Award term after the Award has been granted to the extent the
waived or modified term would be mandatory under the Plan for any Award newly
granted at the date of the waiver or modification.
 
        (f) Right of Setoff. The Company or any subsidiary or affiliate may, to
the extent permitted by applicable law, deduct from and set off against any
amounts the Company or a subsidiary or affiliate may owe to the Participant from
time to time, including amounts payable in connection with any Award, owed as
wages, fringe benefits, or other compensation owed to the Participant, such
amounts as may be
 
                                       14
<PAGE>
 
 
owed by the Participant to the Company, including but not limited to amounts
owed under Section 8(d), although the Participant shall remain liable for any
part of the Participant's payment obligation not satisfied through such
deduction and setoff. By accepting any Award granted hereunder, the Participant
agrees to any deduction or setoff under this Section 10(f).
 
        (g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company's obligations under the Plan. Such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant.
 
        (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements, apart from the
Plan, as it may deem desirable, including incentive arrangements and awards
which do not qualify under Code Section 162(m), and such other arrangements may
be either applicable generally or only in specific cases.
 
        (i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash consideration, the Participant
shall be repaid the amount of such cash consideration. No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
 
        (j) Compliance with Code Section 162(m). It is the intent of the Company
that Options and SARs granted to Covered Employees and other Awards designated
as Awards to Covered Employees subject to Section 7 shall constitute qualified
"performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder, unless otherwise determined by the Committee at the time
of allocation of an Award. Accordingly, the terms of Sections 7(b) and (c),
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Committee as likely to be a Covered Employee with respect to a specified fiscal
year. If any provision of the Plan or any Award document relating to a
Performance Award that is designated as intended to comply with Code Section
162(m) does not comply or is inconsistent with the requirements of Code Section
162(m) or regulations thereunder, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer upon the Committee or any other person
discretion to increase the amount of compensation otherwise payable in
connection with any such Award upon attainment of the applicable performance
objectives.
 
        (k) Certain Limitations on Awards to Ensure Compliance with Code Section
409A. For purposes of this Plan, references to an award term or event (including
any authority or right of the Company or a Participant) being "permitted" under
Code Section 409A mean, for a Code Section 409A Award, that the term or event
will not cause the Participant to be liable for payment of interest or a tax
penalty under Code Section 409A and, for a Non-Code Section 409A Award, that the
term or event will not cause the Award to be treated as subject to Code Section
409A. Other provisions of the Plan
 
                                       15
<PAGE>
 
 
 
notwithstanding, the terms of any Code Section 409A Award and any Non-Code
Section 409A Award, including any authority of the Company and rights of the
Participant with respect to the Award, shall be limited to those terms permitted
under Code Section 409A, and any terms not permitted under Code Section 409A
shall be automatically modified and limited to the extent necessary to conform
with Code Section 409A. For this purpose, other provisions of the Plan
notwithstanding, the Company shall have no authority to accelerate distributions
relating to Code Section 409A Awards in excess of the authority permitted under
Code Section 409A, and any distribution subject to Code Section 409A(a)(2)(A)(i)
(separation from service) to a "key employee" as defined under Code Section
409A(a)(2)(B)(i) shall not occur earlier than the earliest time permitted under
Code Section 409A(a)(2)(B)(i).
 
        (l) Certain Limitations Relating to Accounting Treatment of Awards.
Other provisions of the Plan notwithstanding, the Committee's authority under
the Plan (including under Sections 8(c), 10(c) and 10(d)) is limited to the
extent necessary to ensure that any Option or other Award of a type that the
Committee has intended to be subject to fixed accounting with a measurement date
at the date of grant or the date performance conditions are satisfied under APB
25 shall not become subject to "variable" accounting solely due to the existence
of such authority, unless the Committee specifically determines that the Award
shall remain outstanding despite such "variable" accounting. This provision
shall cease to be effective if and at such time as the Company elects to no
longer account for equity compensation under APB 25.
 
        (m) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations or document hereunder shall be determined in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of laws, and applicable provisions of the Delaware
General Corporation Law and federal law.
 
        (n) Awards to Participants Outside the United States. The Committee may
modify the terms of any Award under the Plan made to or held by a Participant
who is then resident or primarily employed outside of the United States in any
manner deemed by the Committee to be necessary or appropriate in order that such
Award shall conform to laws, regulations, and customs of the country in which
the Participant is then resident or primarily employed, or so that the Award
otherwise will have appropriate terms that advance the purposes of the Plan. An
Award may be modified under this Section 10(n) in a manner that is inconsistent
with the express terms of the Plan, so long as such modifications will not
contravene any applicable law or regulation or result in actual liability under
Section 16(b) for the Participant whose Award is modified.
 
        (o) Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or a subsidiary or affiliate, (ii) interfering
in any way with the right of the Company or a subsidiary or affiliate to
terminate any Eligible Person's or Participant's employment or service at any
time (subject to the terms and provisions of any separate written agreements),
(iii) giving an Eligible Person or Participant any claim to be granted any Award
under the Plan or to be treated uniformly with other Participants and employees,
or (iv) conferring on a Participant any of the rights of a stockholder of the
Company unless and until the Participant is duly issued or transferred shares of
Stock in accordance with the terms of an Award or an Option is duly exercised.
Except as expressly provided in the Plan and an Award document, neither the Plan
nor any Award document shall confer on any person other than the Company and the
Participant any rights or remedies thereunder.
 
        (p) Severability; Entire Agreement. If any of the provisions of this
Plan or any Award document is finally held to be invalid, illegal or
unenforceable (whether in whole or in part), such provision shall be deemed
modified to the extent, but only to the extent, of such invalidity, illegality
or unenforceability, and the remaining provisions shall not be affected thereby;
provided, that, if any of such
 
 
                                       16
<PAGE>
 
 
 
provisions is finally held to be invalid, illegal, or unenforceable because it
exceeds the maximum scope determined to be acceptable to permit such provision
to be enforceable, such provision shall be deemed to be modified to the minimum
extent necessary to modify such scope in order to make such provision
enforceable hereunder. The Plan and any Award documents contain the entire
agreement of the parties with respect to the subject matter thereof and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written or
oral with respect to the subject matter thereof.
 
        (q) Plan Effective Date and Termination. The Plan shall become effective
if, and at such time as, the stockholders of the Company have approved it by the
affirmative votes of the holders of a majority of the voting securities of the
Company present, or represented, and entitled to vote on the subject matter at a
duly held meeting of stockholders (provided that the total vote cast on the
proposal represents over 50% in interest of all securities entitled to vote on
the proposal). Upon such approval of the Plan by the stockholders of the
Company, no further awards shall be granted under the Preexisting Plan, but any
outstanding awards under the Preexisting Plan shall continue in accordance with
their terms. Unless earlier terminated by action of the Board of Directors, the
authority of the Committee to make grants under the Plan shall terminate on the
date that is ten years after the latest date upon which stockholders of the
Company have approved the Plan, and the Plan will remain in effect until such
time as no Stock remains available for delivery under the Plan and the Company
has no further rights or obligations under the Plan with respect to outstanding
Awards under the Plan.
 
 
                                       17
<PAGE>
 
 
 
                                                                      APPENDIX B
                                                                      ----------
 
 
                            MARVEL ENTERPRISES, INC.
 
                      2005 Cash Incentive Compensation Plan
 
 
1.      General
 
        This 2005 Cash Incentive Compensation Plan (the "Plan") of Marvel
Enterprises, Inc. (the "Company") authorizes the grant of annual incentive and
long-term incentive awards to executive officers and sets forth certain terms
and conditions of such Awards. The purpose of the Plan is to help the Company
attract and retain executive officers of outstanding ability and to motivate
such persons to exert their greatest efforts on behalf of the Company and its
subsidiaries by providing incentives directly linked to the measures of the
financial success and performance of the Company and its businesses. The Plan is
intended to permit the Committee to qualify certain Awards as
"performance-based" compensation under Code Section 162(m).
 
2.      Definitions
 
        In addition to the terms defined in Section 1 and elsewhere in the Plan,
the following are defined terms under this Plan:
 
        (a)...."Annual Incentive Award" means an Award earned based on
performance in a Performance Period of one fiscal year or a portion thereof.
 
        (b)    "Award" means the amount of a Participant's Award Opportunity in
respect of a Performance Period determined by the Committee to have been earned,
and the Participant's rights to current or future payments in settlement
thereof.
 
        (c)    "Award Opportunity" means the Participant's opportunity to earn
specified amounts based on performance during a Performance Period. An Award
Opportunity constitutes a conditional right to receive settlement of an Award.
 
        (d)    "Cause" means "cause" as defined in an employment agreement
between the Company and the Participant in effect at the time of Termination of
Employment. If, however, there is no such employment agreement or no definition
of "cause" therein, Cause means an individual's (i) intentional failure to
perform reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in connection with the
performance of duties to the Company or any of its Subsidiaries thereof which
transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit, (iv) knowing or
grossly negligent misconduct which results in the Company being required to
prepare an accounting restatement due to the material noncompliance of the
Company with any financial reporting requirement under the securities laws, (v)
willful violation of any law, rule or regulation in connection with the
performance of duties (other than traffic violations or similar offenses), or
(vi) the commission of an act of fraud or intentional misappropriation or
conversion of assets or opportunities of the Company or any Subsidiary;
provided, however, that the Committee may vary the definition of "Cause" in any
agreement or document relating to an Award.
 
        (e)    "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code include and successor
provisions thereto and regulations thereunder.
 
 
 
<PAGE>
 
 
 
        (f)    "Committee" means the Compensation Committee of the Board of
Directors, or such other Board committee as the Board may designate to
administer the Plan.
 
        (g)    "Covered Employee" means a person designated by the Committee as
likely, with respect to a given fiscal year of the Company, to be the Chief
Executive Officer or one of the four other most highly compensated executive
officers serving on the last day of such fiscal year. This designation generally
is required at the time an Award Opportunity is authorized. The Committee may
designate more than five persons as Covered Employees with respect to a given
year.
 
        (h)    "Participant" means an employee participating in this Plan.
 
        (i)    "Performance Goal" means the Company or individual performance
objective or accomplishment required as a condition to the earning of an Award
Opportunity.
 
        (j)    "Performance Period" means the period, specified by the
Committee, over which an Award Opportunity may be earned.
 
        (k)    "Retirement" means Termination of Employment deemed a retirement
by the Committee.
 
        (l)    "Termination of Employment" means the termination of a
Participant's employment by the Company or a subsidiary immediately after which
the Participant is not employed by the Company or any subsidiary.
 
3.      Administration
 
        (a)    Administration by the Committee. The Plan will be administered by
the Committee, provided that the Committee may condition any of its actions on
approval or ratification by the Board of Directors or the independent directors
of the Board. The Committee shall have full and final authority to take all
actions hereunder, subject to and consistent with the provisions of the Plan.
This authority includes authority to correct any defect or supply any omission
or reconcile any inconsistency in the Plan and to construe and interpret the
Plan and any plan rules and regulations, authorization of an Award Opportunity,
Award, Award agreement, or other document hereunder; and to make all other
decisions and determinations as may be required under the terms of the Plan or
as the Committee may deem necessary or advisable for the administration of the
Plan.
 
        (b)    Manner of Exercise of Authority. Any action by the Committee or
the Board with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, subsidiaries or affiliates, Participants,
any person claiming any rights under the Plan from or through any Participant,
and stockholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as limiting
any power or authority of the Committee. A memorandum signed by all members of
the Committee shall constitute the act of the Committee without the necessity,
in such event, to hold a meeting. At any time that a member of the Committee is
not an "outside director" as defined under Code Section 162(m), any action of
the Committee relating to an Award intended by the Committee to qualify as
"performance-based compensation" within the meaning of Section 162(m) may be
taken by a subcommittee, designated by the Committee or the Board, composed
solely of two or more "outside directors." Such action shall be the action of
the Committee for purposes of the Plan. The foregoing notwithstanding, no action
of the Committee shall be void or deemed beyond the authority of the Committee
solely because, at the time such action was taken, one or more members of the
Committee failed to qualify as an "outside director." The Committee may delegate
to specified officers or employees of the Company authority to perform
administrative functions under the Plan, to the extent permitted by law.
 
 
 
                                       2
<PAGE>
 
 
 
        (c)    Limitation of Liability. Each member of the Committee and the
Board of Directors, and any person to whom authority or duties are delegated
hereunder, shall be entitled to, in good faith, rely or act upon any report or
other information furnished to him or her by any officer or other employee of
the Company or any subsidiary or affiliate, the Company's independent certified
public accountants, or any executive compensation consultant, legal counsel, or
other professional retained by the Company to assist in the administration of
the Plan. No member of the Board or Committee, nor any person to whom authority
or duties are delegated hereunder, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and any such person shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
 
        4. Eligibility
 
        Employees of the Company or any subsidiary who are or may become
executive officers of the Company may be selected by the Committee to
participate in this Plan.
 
        5. Per-Person Award Limitation
 
        Award Opportunities granted to any one eligible employee shall be
limited such that the amount potentially earnable of performance in any one
calendar year shall not exceed the Participant's Annual Limit. For this purpose,
the Annual Limit shall equal $10 million plus the amount of the Participant's
unused Annual Limit as of the close of the previous fiscal year. For this
purpose, (i) "earning" means satisfying performance conditions so that an Award
Opportunity becomes payable, without regard to whether it is to be paid
currently or on a deferred basis or continues to be subject to any service
requirement or other non-performance condition, and (ii) a Participant's Annual
Limit is used to the extent an amount may be potentially earned or paid under an
Award, regardless of whether such amount is in fact earned or paid.
 
        6. Designation and Earning of Award Opportunities
 
        (a)    Designation of Award Opportunities and Performance Goals. The
Committee shall select employees to participate in the Plan for a Performance
Period and designate, for each such Participant, the Award Opportunity such
Participant may earn for such Performance Period, the nature of the Performance
Goal the achievement of which will result in the earning of the Award
Opportunity, and the levels of earning of the Award Opportunity corresponding to
the levels of achievement of the performance goal. The following terms will
apply to Award Opportunities:
 
               (i) Specification of Amount Potentially Earnable. Unless
        otherwise determined by the Committee, the Award Opportunity earnable by
        each Participant shall range from 0% to a specified maximum percentage
        of a specified target Award Opportunity. The Committee shall specify a
        table, grid, formula, or other information that sets forth the amount of
        a Participant's Award Opportunity that will be earned corresponding to
        the level of achievement of a specified Performance Goal.
 
               (ii) Denomination of Award Opportunity; Payment of Award. Award
        Opportunities will be denominated in cash and Awards will be payable in
        cash, except that the Committee may denominate an Award Opportunity in
        shares of Common Stock and/or to settle an Award Opportunity in shares
        of Common Stock if and to the extent that shares of Common Stock are
        authorized for use in incentive awards and available under the Company's
        1998 Stock Incentive Plan, 2005 Stock Incentive Plan or any other equity
        compensation plan of the Company.
 
        (b)    Limitations on Award Opportunities and Awards for Covered
Employees. If the Committee determines that an Award Opportunity to be granted
to an eligible person who is designated a
 
 
 
                                       3
<PAGE>
 
 
Covered Employee by the Committee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the following provisions will
apply:
 
               (i) Performance Goal. The Performance Goal for such Award
        Opportunities shall consist of one or more business criteria and a
        targeted level or levels of performance with respect to each of such
        criteria, as specified by the Committee consistent with this Section
        6(b). The performance goal shall be objective and shall otherwise meet
        the requirements of Code Section 162(m) and regulations thereunder
        (including Treasury Regulation 1.162-27 and successor regulations
        thereto), including the requirement that the level or levels of
        performance targeted by the Committee result in the achievement of
        performance goals being "substantially uncertain." The Committee may
        determine that the Award Opportunity will be earned, or tentatively
        earned, based upon achievement of any one measure of performance or that
        two or more measures of performance must be achieved. The Committee may
        establish a "gate-keeper" Performance Goal that conforms to this Section
        6(b) while specifying or considering other types of performance (which
        need not meet the requirements of this Section 6(b)) as a basis for
        reducing the amount of the Award deemed earned upon achievement of the
        gate-keeper Performance Goal. Performance Goals may differ for Award
        Opportunities granted to any one Participant or to different
        Participants.
 
               (ii) Business Criteria. One or more of the following business
        criteria for the Company, on a consolidated basis, and/or for specified
        subsidiaries or affiliates, divisions or other business units of the
        Company shall be used by the Committee in establishing the Performance
        Goal for such Award Opportunities: (1) net sales, revenues or royalties;
        (2) gross profit or pre-tax profit; (3) operating income, earnings
        before or after taxes, earnings before or after interest, depreciation,
        amortization, or extraordinary or special items; (4) net income or net
        income per common share (basic or fully diluted); (5) return measures,
        including, but not limited to, return on assets (gross or net), return
        on investment, return on capital, or return on equity; (6) cash flow,
        free cash flow, cash flow return on investment (discounted or
        otherwise), net cash provided by operations, or cash flow in excess of
        cost of capital; (7) economic value created or economic profit; (8)
        operating margin or profit margin; (9) stockholder value creation
        measures, including but not limited to stock price or total stockholder
        return; (10) royalties or revenues from specific assets, projects, fees
        or payments received or lines of business; (11) targets relating to
        expense or operating expense, working capital targets, or operating
        efficiency; and (12) strategic business criteria, consisting of one or
        more objectives based on meeting specified goals relating to market
        penetration, new projects, new products, new ventures, geographic
        business expansion, cost targets, customer satisfaction, employee
        satisfaction, human resources management, supervision of litigation and
        information technology, and acquisitions or divestitures of
        subsidiaries, affiliates or joint ventures. The targeted level or levels
        of performance with respect to such business criteria may be established
        at such levels and in such terms as the Committee may determine, in its
        discretion, including in absolute terms, as a goal relative to
        performance in prior periods, or as a goal compared to the performance
        of one or more comparable companies or an index covering multiple
        companies.
 
               (iii) Performance Period and Timing for Establishing Performance
        Goals. The Committee will specify the Performance Period over which
        achievement of the Performance Goal in respect of such Award
        Opportunities shall be measured. A Performance Goal shall be established
        by the date which is the earlier of (A) 90 days after the beginning of
        the applicable Performance Period or (B) the time 25% of such
        Performance Period has elapsed.
 
               (iv) Annual Incentive Awards Granted to Covered Employees. The
        Committee may grant an Annual Incentive Award, intended to qualify as
        "performance-based compensation" for purposes of
 
                                       4
<PAGE>
 
 
        Code Section 162(m), to an eligible person who is designated a Covered
        Employee for a given fiscal year.
 
               (v) Performance Award Pool. The Committee may establish a
        performance Award pool, which shall be an unfunded pool, for purposes of
        measuring performance of the Company in connection with Award
        Opportunities. The amount of such performance Award pool shall be based
        upon the achievement of a Performance Goal or Goals based on one or more
        of the business criteria set forth in Section 6(b)(ii) during the given
        Performance Period, as specified by the Committee. The Committee may
        specify the amount of the performance Award pool as a percentage of any
        of such business criteria, a percentage thereof in excess of a threshold
        amount, or as another amount which need not bear a strictly mathematical
        relationship to such business criteria. The Committee may specify Award
        Opportunities for individual Participants, in accordance with Section
        6(a) and other provisions of this Section 6(b), as a percentage or other
        portion or amount of the performance Award pool.
 
               (vi) Changes to Amounts Payable Under Awards During Deferral
        Periods. Any settlement or other event that would change the form of
        payment from that originally specified shall be implemented in a manner
        such that the Award does not, solely for that reason, fail to qualify as
        "performance-based compensation" for purposes of Code Section 162(m).
 
 
         (c) Additional Participants and Award Opportunity Designations During a
Performance Period. At any time during a Performance Period the Committee may
select a new employee or a newly promoted employee to participate in the Plan
for that Performance Period and/or designate, for any such Participant, an Award
Opportunity (or additional Award Opportunity) amount for such Performance
Period. In determining the amount of the Award Opportunity for such Participant
under this Section 6(c), the Committee may take into account the portion of the
Performance Period already elapsed, the performance achieved during such elapsed
portion of the Performance Period, and such other considerations as the
Committee may deem relevant.
 
        (d) Determination of Award. Within a reasonable time after the end of
each Performance Period, the Committee shall determine the extent to which the
Performance Goal for the earning of Award Opportunities was achieved during such
Performance Period and the resulting Award to the Participant for such
Performance Period. The Committee may adjust upward or downward the amount of an
Award, in its sole discretion, in light of such considerations as the Committee
may deem relevant, except that (i) no such discretionary upward adjustment of an
Award authorized under Section 6(b) is permitted, and (ii) any discretionary
adjustment is subject to Section 5 and other applicable limitations of the Plan.
Unless otherwise determined by the Committee, the Award shall be deemed earned
and vested at the time the Committee makes the determination pursuant to this
Section 6(d).
 
        (e) Written Determinations. Determinations by the Committee as to the
establishment of Performance Goals, the amount potentially payable in respect of
Award Opportunities, the level of actual achievement of the Performance Goals
and the amount of any final Award earned shall be recorded in writing in the
case of Performance Awards intended to qualify under Section 162(m).
Specifically, the Committee shall certify in writing, in a manner conforming to
applicable regulations under Section 162(m), with respect to any Covered
Employee prior to any settlement of each such Award, that the Performance Goal
relating to the Award and other material terms of the Award upon which
settlement was conditioned have been satisfied.
 
        (f) Other Terms of Award Opportunities and Awards. Subject to the terms
of this Plan, the Committee may specify the circumstances in which Award
Opportunities and Awards shall be paid or forfeited in the event of a change in
control, termination of employment in circumstances other than those specified
in Section 8, or other event prior to the end of a Performance Period or
settlement of an Award.
 
                                       5
<PAGE>
 
 
 
With respect to Award Opportunities and Awards under Section 6(b), any payments
resulting from a change in control or termination of employment need not qualify
as performance-based compensation under Section 162(m) if the authorization of
such non-qualifying payments would not otherwise disqualify the Award
Opportunity or Award from Section 162(m) qualification in cases in which no
change in control or termination of employment occurred.
 
        (g) Adjustments. The Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Award Opportunities and
related Performance Goals in recognition of unusual or nonrecurring events,
including stock splits, stock dividends, reorganizations, mergers,
consolidations, large, special and non-recurring dividends, and acquisitions and
dispositions of businesses and assets, affecting the Company and its
subsidiaries or other business unit, or the financial statements of the Company
or any subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
subsidiary or affiliate or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of a
Participant, and any other circumstances deemed relevant; provided, however,
that no such adjustment shall be authorized or made if and to the extent that
the existence or exercise of such authority (i) would cause an Award Opportunity
or Award granted under Section 6(b) and intended to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder to otherwise fail to so qualify, or (ii) would cause the Committee to
be deemed to have authority to change the targets, within the meaning of
Treasury Regulation 1.162-27(e)(4)(vi), under the Performance Goals relating to
an Award Opportunity under Section 6(b) intended to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder.
 
7.      Settlement of Awards.
 
        (a) Deferrals. The Committee may specify, at the time the Award
Opportunity is authorized, that an Award will be deferred as to settlement after
it is earned. In addition, a Participant will be permitted to elect to defer
settlement of an Award if and to the extent such Participant is selected to
participate in a Company deferral program covering such Awards and the
Participant has made a valid deferral election in accordance with that plan.
Deferrals must comply with applicable requirements of Section 409A of the Code.
 
        (b) Settlement of Award. Any non-deferred Award shall be paid and
settled by the Company promptly after the date of determination by the Committee
under Section 6(d) hereof. With respect to any deferred amount of a
Participant's Award, such amount will be credited to the Participant's deferral
account under the governing deferral plan of the Company as promptly as
practicable at or after the date of determination by the Committee under Section
6(d) hereof.
 
        (c) Tax Withholding. The Company shall deduct from any payment in
settlement of a Participant's Award or other payment to the Participant any
Federal, state, or local withholding or other tax or charge which the Company is
then required to deduct under applicable law with respect to the Award. The
Committee may specify other withholding terms relating to an Award that will be
settled by delivery of shares of Stock or other property.
 
        (d) Non-Transferability. An Award Opportunity, any resulting Award,
including any deferred cash amount resulting from an Award, and any other right
hereunder shall be non-assignable and non-transferable, and shall not be
pledged, encumbered, or hypothecated to or in favor of any party or subject to
any lien, obligation, or liability of the Participant to any party other than
the Company or a subsidiary or affiliate.
 
8.      Effect of Termination of Employment.
 
 
 
                                       6
<PAGE>
 
 
        Except to the extent set forth in subsections (a) and (b) of this
Section 8, upon a Participant's Termination of Employment prior to completion of
a Performance Period or, after completion of a Performance Period but prior to
the Committee's determination of the extent to which an Award has been earned
for such Performance Period, the Participant's Award Opportunity relating to
such Performance Period shall cease to be earnable and shall be canceled, and
the Participant shall have no further rights or opportunities hereunder:
 
        (a) Disability, Death or Retirement. If Termination of Employment is due
to the permanent disability, death or Retirement of the Participant, the
Participant or his or her beneficiary shall be deemed to have earned and shall
be entitled to receive an Award for any Performance Period for which termination
occurs prior to the date of determination under Section 6(d) hereof equal to the
Award which would have been earned had Participant's employment not terminated
multiplied by a fraction the numerator of which is the number of calendar days
from the beginning of the Performance Period to the date of Participant's
Termination of Employment and the denominator of which is the number of calendar
days in the Performance Period (but such fraction shall in no event be greater
than one). Such pro rata Award will be determined at the same time as Awards for
continuing Participants are determined (i.e., normally following the end of the
Performance Period in accordance with Section 6(d) hereof). Upon its
determination, such pro rata Award shall be paid and settled promptly in cash,
except to the extent the settlement has been validly deferred in accordance with
Section 7(a). The portion of the Participant's Award Opportunity not earned will
cease to be earnable and will be canceled. For purposes of the Plan, the
existence of a "permanent disability" shall be determined by, or in accordance
with criteria and standards adopted by, the Committee. The foregoing
notwithstanding, the Committee may limit or expand the Participant's rights upon
disability, death or Retirement with respect to a given Award Opportunity.
 
        (b) Other Terminations. In connection with any Termination of Employment
other than due to death, disability or retirement, the Committee may determine
that the Participant shall be deemed to have earned none, a portion, or all of
an Award Opportunity for a Performance Period in which Termination occurred or
for which the Committee has not yet determined the extent to which an Award has
been earned for such Performance Period, in the Committee's sole discretion.
This determination may be specified at the time the Award Opportunity is
established or made at any time thereafter.
 
9.      Additional Forfeiture Provisions Applicable to Awards.
 
        (a) Forfeiture Resulting from Actions Harmful to the Company. Unless
otherwise determined by the Committee, Award Opportunities Awards, and amounts
paid in settlement of Awards hereunder shall be subject to the following
additional forfeiture conditions, to which the Participant, by participating in
the Plan, agrees. If any of the events specified in Section 9(b)(i), (ii), (iii)
or (iv) occurs (a "Forfeiture Event"), all of the following forfeitures will
result:
 
        (i)    Any outstanding Award Opportunity authorized for the Participant
               and any Award granted to the Participant and not yet settled will
               be immediately forfeited and canceled upon the occurrence of the
               Forfeiture Event; and
 
        (ii)   The Participant will be obligated to repay to the Company, in
               cash, within five business days after demand is made therefor by
               the Company, an amount equal to the total amount of cash plus the
               fair market value of Stock or other property (as of the date of
               occurrence of the Forfeiture Event) previously paid to the
               Participant in settlement of any Award since the date that is 12
               months prior to the occurrence of the forfeiture event or, in the
               case of a Forfeiture Event specified in Section 9(b)(iv), the
               period specified in Section 9(b)(iv).
 
        (b) Events Triggering Forfeiture. The forfeitures specified in Section
9(a) will be triggered upon the occurrence of any one of the following
Forfeiture Events at any time during the Participant's
 
                                       7
<PAGE>
 
 
 
employment by the Company or a subsidiary or affiliate or during the one-year
period following Termination of Employment (except as otherwise provided in
Section 9(b)(iv)):
 
        (i)    The Participant, acting alone or with others, directly or
               indirectly, prior to a Change in Control, (A) engages, either as
               employee, employer, consultant, advisor, or director, or as an
               owner, investor, partner, or stockholder unless the Participant's
               interest is insubstantial, in the United States or in any other
               area or region in which the Company conducts business at the date
               the event occurs, which is directly in competition with a
               business then conducted by the Company or a subsidiary or
               affiliate; (B) induces any customer or supplier of the Company or
               a subsidiary or affiliate, or an entertainment or media company
               with which the Company or a subsidiary or affiliate has a
               business relationship, to curtail, cancel, not renew, or not
               continue his or her or its business with the Company or any
               subsidiary or affiliate; or (C) induces, or attempts to
               influence, any employee of or service provider to the Company or
               a subsidiary or affiliate to terminate such employment or
               service. The Committee shall, in its discretion, determine which
               lines of business the Company conducts on any particular date and
               which third parties may reasonably be deemed to be in competition
               with the Company. For purposes of this Section 9(b)(i), a
               Participant's interest as a stockholder is insubstantial if it
               represents beneficial ownership of less than five percent of the
               outstanding class of stock, and a Participant's interest as an
               owner, investor, or partner is insubstantial if it represents
               ownership, as determined by the Committee in its discretion, of
               less than five percent of the outstanding equity of the entity;
 
        (ii)   The Participant discloses, uses, sells, or otherwise transfers,
               except in the course of employment with or other service to the
               Company or any subsidiary or affiliate, any confidential or
               proprietary information of the Company or any subsidiary or
               affiliate, including but not limited to information regarding the
               Company's current and potential customers, organization,
               employees, finances, and methods of operations and investments or
               its concepts, ideas, products, movies, characters, or toys, so
               long as such information has not otherwise been disclosed to the
               public or is not otherwise in the public domain, except as
               required by law or pursuant to legal process, or the Participant
               makes statements or representations, or otherwise communicates,
               directly or indirectly, in writing, orally, or otherwise, or
               takes any other action which may, directly or indirectly,
               disparage or be damaging to the Company or any of its
               subsidiaries or affiliates or their respective officers,
               directors, employees, advisors, businesses or reputations, except
               as required by law or pursuant to legal process;
 
        (iii)  The Participant fails to cooperate with the Company or any
               subsidiary or affiliate in any way, including, without
               limitation, by making himself or herself available to testify on
               behalf of the Company or such subsidiary or affiliate in any
               action, suit, or proceeding, whether civil, criminal,
               administrative, or investigative, or otherwise fails to assist
               the Company or any subsidiary or affiliate in any way, including,
               without limitation, in connection with any such action, suit, or
               proceeding by providing information and meeting and consulting
               with members of management of, other representatives of, or
               counsel to, the Company or such subsidiary or affiliate, as
               reasonably requested; or
 
        (iv)   The Company is required to prepare an accounting restatement due
               to the material noncompliance of the Company, as a result of
               misconduct, with any financial reporting requirement under the
               securities laws, if the Participant knowingly or grossly
               negligently engaged in the misconduct, or knowingly or grossly
               negligently failed to prevent the misconduct, or if the
               Participant is one of the persons subject to automatic forfeiture
               under Section 304 of the Sarbanes-Oxley Act of 2002. Forfeitures
               under this Section 9(b)(iv)
 
 
 
                                       8
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               shall apply to outstanding Award Opportunities and Awards and to
               amounts paid in settlement of an Award Opportunity earned or
               accrued in whole or in part during the 12-month period following
               the first public issuance or filing with the Securities and
               Exchange Commission (whichever first occurred) of the financial
               document embodying such financial reporting requirement.
 
        (c)    Provision Does Not Prohibit Competition or Other Participant
               Activities. Although the conditions set forth in this Section 9
               shall be deemed to be incorporated into an Award Opportunity and
               Award, a Participant is not thereby prohibited from engaging in
               any activity, including but not limited to competition with the
               Company and its subsidiaries and affiliates. Rather, the
               non-occurrence of the Forfeiture Events set forth in Section
               9(b)(i) - (iii) is a condition to the Participant's right to
               realize and retain value from his or her compensatory Award
               Opportunities and Awards, and the consequence under the Plan if
               the Participant engages in an activity giving rise to any such
               Forfeiture Event are the forfeitures specified herein. The
               Company and the Participant shall not be precluded by this
               provision or otherwise from entering into other agreements
               concerning the subject matter of Sections 9(a) and 9(b).
 
        (d)    Committee Discretion. The Committee may, in its discretion, waive
               in whole or in part the Company's right to forfeiture under this
               Section (except as limited by applicable law), but no such waiver
               shall be effective unless evidenced by a writing signed by a duly
               authorized officer of the Company. In addition, the Committee may
               impose additional conditions on Award Opportunities and Awards,
               by inclusion of appropriate provisions in any document
               authorizing an Award Opportunity or evidencing or governing any
               Award.
 
10.      General Provisions.
 
        (a) Changes to this Plan. The Committee may at any time amend, alter,
suspend, discontinue, or terminate this Plan without the consent of stockholders
or Participants; provided, however, that any such action beyond the scope of the
Committee's authority shall be subject to the approval of the Board of
Directors; provided further, that any such action shall be submitted to the
Company's stockholders for approval not later than the earliest annual meeting
for which the record date is at or after the date of such Committee or Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of the New York Stock Exchange or any other stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other amendments to the Plan to stockholders for approval; and provided further,
that, without the consent of an affected Participant, no such Committee or Board
action may materially and adversely affect the rights of such Participant under
any outstanding Award (this restriction does not apply to an Award Opportunity,
however, which remains subject to the discretion of the Committee).
 
        (b) Long-Term Incentives Not Annual Bonus for Purposes of Other Plans.
Amounts earned or payable under the Plan in connection with Awards not
designated by the Committee as "Annual Incentive Awards" shall not be deemed to
be annual incentive or annual bonus compensation (regardless of whether an Award
is earned in respect of a period of one year or less or disclosed as annual
bonus compensation under Securities and Exchange Commission disclosure rules)
for purposes of any retirement or supplemental pension plan of the Company or
any employment agreement or change in control agreement between the Company and
any Participant, or for purposes of any other plan, unless the Company shall in
writing specifically identify this Plan by name and specify that amounts earned
or payable hereunder shall be considered to be annual incentive or annual bonus
compensation.
 
        (c) Unfunded Status of Participant Rights. Awards, accounts, deferred
amounts, and related rights of a Participant represent unfunded deferred
compensation obligations of the Company for ERISA
 
                                       9
<PAGE>
 
 
 
and federal income tax purposes and, with respect thereto, the Participant shall
have rights no greater than those of an unsecured creditor of the Company.
 
        (d) Nonexclusivity of the Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or Committee to
adopt such other compensation arrangements as it may deem desirable for any
Participant.
 
        (e) No Right to Continued Employment. Neither the Plan, the
authorization of an Award Opportunity, the grant of an Award nor any other
action taken hereunder shall be construed as giving any employee the right to be
retained in the employ of the Company or any of its subsidiaries or affiliates,
nor shall it interfere in any way with the right of the Company or any of its
subsidiaries or affiliates to terminate any employee's employment at any time.
 
        (f) Severability. The invalidity of any provision of the Plan or a
document hereunder shall not deemed to render the remainder of this Plan or such
document invalid.
 
        (g) Successors. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise, and whether or not
the corporate existence of the Company continues) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the Company's obligations under the Plan in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place; provided, however, that such successor may replace
the Plan with a plan substantially equivalent in opportunity and achievability,
as determined by a nationally recognized compensation consulting firm, and
covering the participants at the time of such succession. Any successor and the
ultimate parent company of such successor shall in any event be subject to the
requirements of this Section 10(g) to the same extent as the Company. Subject to
the foregoing, the Company may transfer and assign its rights and obligations
hereunder.
 
        (h) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations or document hereunder shall be determined in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of laws, and applicable provisions of federal law.
 
        (h) Effective Date of Plan; Stockholder Approval; Termination of Plan.
This Plan shall be effective as of January 1, 2005. The Company shall submit the
Plan, including the material terms of the Plan specified in Treasury Regulation
1.162-27(e)(4), to stockholders for approval at the Company's 2005 Annual
Meeting of Stockholders, and the Plan shall be terminated without any Award
being deemed earned in the event stockholders decline to approve it at that
Annual Meeting. If approved by stockholders, the Plan will terminate at such
time as may be determined by the Board of Directors or the Committee.