2005 Stock Incentive Plan





Exhibit 10.2




MARVEL ENTERPRISES, INC.




2005 STOCK INCENTIVE PLAN




As Amended and Restated on December 31, 2008






 


 









 







MARVEL ENTERPRISES, INC.




2005 STOCK INCENTIVE PLAN




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	1. PURPOSE
	 	 	1	 
	 
	 	 	 	 
	2. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	3. ADMINISTRATION
	 	 	3	 
	 
	 	 	 	 
	4. STOCK SUBJECT TO PLAN
	 	 	4	 
	 
	 	 	 	 
	5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS
	 	 	5	 
	 
	 	 	 	 
	6. SPECIFIC TERMS OF AWARDS
	 	 	6	 
	 
	 	 	 	 
	7. PERFORMANCE AWARDS
	 	 	10	 
	 
	 	 	 	 
	8. CERTAIN PROVISIONS APPLICABLE TO AWARDS
	 	 	12	 
	 
	 	 	 	 
	9. CHANGE IN CONTROL
	 	 	13	 
	 
	 	 	 	 
	10. GENERAL PROVISIONS
	 	 	14	 
	 
	 	 	 	 
	EXHIBIT A: COMPLIANCE WITH CODE SECTION 409A
	 	 	20	 
	 
	 	 	 	 
	EXHIBIT B: DEFERRAL ELECTION RULES
	 	 	25	 
	 
	 	 	 	 







 


-i-









 







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.


 


-1-









 





(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,
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.


 


-2-









 





(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).



(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).


 


-3-









 





(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 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.


 


-4-









 





(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
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.


 


-5-









 





(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.



(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).




 


-6-









 











	 	(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
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).




 


-7-









 











	 	(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.





(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.




 


-8-









 











	 	(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 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).


 


-9-









 





(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.




 


-10-









 











	 	(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 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.




 


-11-









 










(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 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).


 


-12-









 





(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.



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 a 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).


 


-13-









 





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 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


 


-14-









 





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. In furtherance of the foregoing, in the event of an equity restructuring, as defined
in FAS 123R, which affects the Stock, a Participant shall have a legal right to an adjustment to
the Participant’s Award which shall preserve without enlarging the value of the Award, with the
manner of such adjustment to be determined by the Committee in its discretion, and subject to any
limitation on this right set forth in the applicable Award agreement. Any fractional share
resulting from such adjustment may be eliminated.



(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 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.





 


-15-









 










(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 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.


 


-16-









 





(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
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).


 


-17-









 





(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 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.


 


-18-









 





(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.


 


-19-









 





Exhibit A




Compliance with Code Section 409A




In furtherance of the provisions of Section 3, Section 10(k) and other applicable provisions
of the 2005 Stock Incentive Plan, the Committee has approved and adopted the following compliance
provisions intended to meet the requirements of Code Section 409A.



(i) Code Section 409A Awards and Deferrals. Other provisions of the Plan notwithstanding, the
terms of any Code Section 409A Award, including any authority of the Company and rights of the
Participant with respect to the Code Section 409A Award, shall be limited to those terms permitted
under Section 409A, and any terms not permitted under Section 409A shall be automatically modified
and limited to the extent necessary to conform with Section 409A but only to the extent that such
modification or limitation is permitted under Code Section 409A and the regulations and guidance
issued thereunder. The following rules will apply to Code Section 409A Awards (which are also
called “409A Awards” herein, with Non-Code Section 409A Awards referred to as “Non-409A Awards”):




	 	(A)	 	Elections. If a Participant is permitted to elect to defer
compensation and in lieu thereof receive an Award, or is permitted to elect to
defer any payment under an Award, such election will be permitted only at
times in compliance with Section 409A (including transition rules thereunder).
Such election shall be made in accordance with Exhibit B hereto;






	 	(B)	 	Changes in Distribution Terms. The Committee may, in its
discretion, require or permit on an elective basis a change in the
distribution terms applicable to 409A Awards (and Non-409A Awards that qualify
for the short-term deferral exemption under Section 409A) in accordance with,
and to the fullest extent permitted by, applicable guidance of the Internal
Revenue Service (including Proposed Treasury Regulation § 1.409A, Preamble §
XI.C and IRS Notice 2005-1), and otherwise in accordance with Section 409A and
regulations thereunder. The General Counsel of the Company is authorized to
modify any such outstanding Awards to permit election of different deferral
periods provided that any such modifications may not otherwise increase the
benefits to Participants or the costs of such Awards to the Company. Other
provisions of this Plan notwithstanding, changes to distribution timing
resulting from amendments to this Plan or changes in Participant elections in
2008 shall not have the affect of accelerating distributions into 2008 or
causing distributions that otherwise would have occurred in 2008 to be
deferred until a year after 2008;






	 	(C)	 	Exercise and Distribution. Except as provided in this
Exhibit A, Section (i)(D) hereof, no 409A Award shall be exercisable (if the
exercise would result in a distribution) or otherwise distributable to a
Participant (or his or her beneficiary) except upon the occurrence of one of
the following (or a date related to the occurrence of one of the following),
which must be specified in a written document governing such 409A Award and
otherwise meet the requirements of Treasury Regulation § 1.409A-3:






	 	(1)	 	Specified Time. A specified time or a
fixed schedule;




 


-20-









 











	 	(2)	 	Separation from Service. The Participant’s
separation from service (within the meaning of Treasury Regulation
§ 1.409A-1(h) and other applicable rules under Code Section 409A);
provided, however, that if the Participant is a “specified employee”
under Treasury Regulation § 1.409A-1(i), settlement under this
Exhibit A, Section (i)(C)(2) shall instead occur at the expiration of
the six-month period following separation from service under Section
409A(a)(2)(B)(i). During such six-month delay period, no
acceleration of settlement may occur, except (1) acceleration shall
occur in the event of death of the Participant, (2) if the
distribution date was specified as the earlier of separation from
service or a fixed date and the fixed date falls within the delay
period, the distribution shall be triggered by the fixed date, and
(3) acceleration may be permitted otherwise if and to the extent
permitted under Section 409A. In the case of installments, this
delay shall not affect the timing of any installment otherwise
payable after the six-month delay period. With respect to any 409A
Award, a reference in any agreement or other governing document to a
“termination of employment” which triggers a distribution shall be
deemed to mean a “separation from service” within the meaning of
Treasury Regulation § 1.409A-1(h);






	 	(3)	 	Death. Unless a specific time otherwise is
stated for payment of a 409A Award upon death, such payment shall
occur in the calendar year in which falls the 30th day
after death;






	 	(4)	 	Disability. The date the Participant has
experienced a 409A Disability (as defined below); and






	 	(5)	 	409A Change in Control. The occurrence of
a 409A Change in Control (as defined below).






	 	(D)	 	No Acceleration. The exercise or distribution of a 409A
Award may not be accelerated prior to the time specified in accordance with
this Exhibit A, Section (i)(C) hereof, except in the case of one of the
following events:






	 	(1)	 	Unforeseeable Emergency. The occurrence of
an Unforeseeable Emergency, as defined below, but only if the net
amount payable upon such settlement does not exceed the amounts
necessary to relieve such emergency plus amounts necessary to pay
taxes reasonably anticipated as a result of the settlement, after
taking into account the extent to which the emergency is or may be
relieved through reimbursement or compensation from insurance or
otherwise or by liquidation of the Participant’s other assets (to the
extent such liquidation would not itself cause severe financial
hardship), or by cessation of deferrals under the Plan. Upon a
finding that an Unforeseeable Emergency has occurred with respect to
a Participant, any election of the Participant to defer compensation
that will be earned in whole or part by services in
the year in which the emergency occurred or is found to continue
will be immediately cancelled.




 


-21-









 











	 	(2)	 	Domestic Relations Order. The 409A Award
may permit the acceleration of the exercise or distribution time or
schedule to an individual other than the Participant as may be
necessary to comply with the terms of a domestic relations order (as
defined in Section 414(p)(1)(B) of the Code).






	 	(3)	 	Conflicts of Interest. Such 409A Award may
permit the acceleration of the settlement time or schedule as may be
necessary to comply with an ethics agreement with the Federal
government or to comply with a Federal, state, local or foreign
ethics law or conflict of interest law in compliance with Treasury
Regulation § 1.409A-3(j)(4)(iii).






	 	(4)	 	Change. The Committee may exercise the
discretionary right to accelerate the lapse of the substantial risk
of forfeiture of any unvested compensation deemed to be a 409A Award
upon a 409A Change in Control or to terminate the Plan upon or within
12 months after a 409A Change in Control, or otherwise to the extent
permitted under Treasury Regulation § 1.409A-3(j)(4)(ix), or
accelerate settlement of such 409A Award in any other circumstance
permitted under Treasury Regulation § 1.409A-3(j)(4).






	 	(E)	 	Definitions. For purposes of this Exhibit A, the following
terms shall be defined as set forth below:






	 	(1)	 	“409A Change in Control” shall be deemed to
have occurred if, in connection with a Change in Control (or any
other event defined as a change in control relating to a 409A Award
under any applicable Company document), there occurs a change in the
ownership of the Company, a change in effective control of the
Company, or a change in the ownership of a substantial portion of the
assets of the Company, as defined in Treasury Regulation
§ 1.409A-3(i)(5).






	 	(2)	 	“409A Disability” means an event which
results in the Participant being (i) unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death
or can be expected to last for a continuous period of not less than
12 months, or (ii), by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering
employees of the Company or its subsidiaries.




 


-22-









 











	 	(3)	 	“Unforeseeable Emergency” means a severe
financial hardship to the Participant resulting from an illness or
accident of the Participant, the Participant’s spouse, or a dependent
(as defined in Code Section 152, without regard to Code Sections 152(b)(1),
(b)(2), and (d)(1)(B)) of the Participant, loss of the
Participant’s property due to casualty, or similar extraordinary
and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, and otherwise meeting the
definition set forth in Treasury Regulation § 1.409A-3(i)(3).






	 	(F)	 	Time of Distribution. In the case of any distribution of a
409A Award, if the timing of such distribution is not otherwise specified in
the Plan or an Award agreement or other governing document, the distribution
shall be made within 60 days after the date at which the settlement of the
Award is specified to occur. In the case of any distribution of a 409A Award
during a specified period following a settlement date, the maximum period
shall be 90 days, and the Participant shall have no influence (other than
permitted deferral elections) on any determination as to the tax year in which
the distribution will be made during any period in which a distribution may be
made;






	 	(G)	 	Determination of “Specified Employee.” For purposes of a
distributions under this Exhibit A, Section (i)(C)(2), status of a
Participant as a “specified employee” shall be determined annually under the
Company’s administrative procedure for such determination for purposes of all
plans subject to Code Section 409A.






	 	(H)	 	Non-Transferability. The provisions of Section 10(b)
notwithstanding, no 409A Award or right relating thereto shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant or creditors of
the Participant’s Beneficiary.






	 	(I)	 	Limitation on Setoffs. If the Company has a right of setoff
that could apply to a 409A Award, such right may only be exercised at the time
the 409A Award would have been distributed to the Participant or his or her
Beneficiary.






	 	(J)	 	409A Rules Do Not Constitute Waiver of Other Restrictions.
The rules applicable to 409A Awards under this Exhibit A, Section (i)
constitute further restrictions on terms of Awards set forth elsewhere in this
Plan.






(ii) Separate Payments. Unless otherwise specified in the applicable Award agreement,
each vesting tranche of an Award shall be deemed to be a separate payment for purposes of
Code Section 409A, and any portion of a vesting tranche that would vest on a pro rata basis
in the event of a separation from service on December 31 of a given year, and the remaining
portion of such vesting tranche that would not so vest, each shall be deemed to be a
separate payment for purposes of Code Section 409A.




(iii) Distributions Upon Vesting. In the case of any Non-409A Award providing for a
distribution upon the lapse of a substantial risk of forfeiture, if the timing of such
distribution (compliant with Section 409A) is not otherwise specified in the Plan or an
Award agreement or other governing document, the distribution shall be made not later than
March 15 of the year following the year in which the substantial risk of forfeiture lapsed,
and if a determination is to be made promptly following the end of a calendar-year
performance year then the determination of the level of achievement of
performance and the distribution shall be made between January 1 and March 15 of the
year following the performance year. In all cases, the Participant shall have no influence
(aside from any permitted deferral election) on any determination as to the tax year in
which the distribution will be made.


 


-23-









 






(iv) Limitation on Adjustments. Any adjustment under Section 10(c) shall be
implemented in a way that complies with applicable requirements under Section 409A so that
Non- 409A Option/SARs do not, due to the adjustment, become 409A Awards, and otherwise so
that no adverse consequences under Section 409A result to Participants.




(v) Release or Other Termination Agreement. If the Company requires a Participant to
execute a release, non-competition, or other agreement as a condition to receipt of a
payment upon or following a termination of employment, the Company will supply to the
Participant a form of such release or other document not later than the date of the
Participant’s termination of employment, which must be returned within the minimum time
period required by law and must not be revoked by the Participant within the applicable
time period for revocation in order for the Participant to satisfy any such condition. If
any amount payable during a fixed period following termination of employment is subject to
such a requirement and the fixed period would begin in one tax year and end in the next tax
year, the Company, in determining the time of payment of any such amount, will not be
influenced by the timing of any action of the Participant including execution of such a
release or other document and expiration of any revocation period. In particular, the
Company will be entitled in its discretion to deposit any such payment in escrow during
either year comprising such fixed period, so that such deposited amount is constructively
received and taxable income to the Participant upon deposit but with distribution from such
escrow remaining subject to the Participant’s execution and non-revocation of such release
or other document.




(vi) Limit on Authority to Amend. The authority to adopt amendments under Section
10(e) does not include authority to take action by amendment that would have the effect of
causing Awards to fail to meet applicable requirements of Section 409A.




(vii) Scope and Application of this Provision. For purposes of this Exhibit A,
references to a term or event (including any authority or right of the Company or a
Participant) being “permitted” under Section 409A mean that the term or event will not
cause the Participant to be deemed to be in constructive receipt of compensation relating
to the 409A Award prior to the distribution of cash, Shares or other property or to be
liable for payment of interest or a tax penalty under Section 409A.


 


-24-









 





Exhibit B




Deferral Election Rules




If a participant in a plan, program or other compensatory arrangement (a “plan”) of Marvel
Enterprises, Inc. (the “Company”) is permitted to elect to defer awards or other compensation, any
such election relating to compensation deferred under the applicable plan must be received by the
Company prior to the date specified by or at the direction of the administrator of such plan (the
“Administrator,” which in most instances will be the Human Resources Department). For purposes of
compliance with Section 409A of the Internal Revenue Code (the “Code”), any such election to defer
shall be subject to the rules set forth below, subject to any additional restrictions as may be
specified by the Administrator. Under no circumstances may a participant elect to defer
compensation to which he or she has attained, at the time of deferral, a legally enforceable right
to current receipt of such compensation.




	 	(1)	 	Initial Deferral Elections. Any initial election to defer
compensation (including the election as to the type and amount of compensation to be
deferred and the time and manner of settlement of the deferral) must be made (and
shall be irrevocable) no later than December 31 of the year before the participant’s
services are performed which will result in the earning of the compensation, except as
follows:






	 	•	 	Initial deferral elections with respect to compensation that,
absent the election, constitutes a short-term deferral may be made in
accordance with Treasury Regulation § 1.409A-2(a)(4) and (b);






	 	•	 	Initial deferral elections with respect to compensation that
remains subject to a requirement that the participant provide services for at
least 12 months (a “forfeitable right” under Treasury Regulation
§ 1.409A-2(a)(5)) may be made on or before the 30th day after the
participant obtains the legally binding right to the compensation, provided
that the election is made at least 12 months before the earliest date at which
the forfeiture condition could lapse and otherwise in compliance with Treasury
Regulation § 1.409A-2(a)(5);






	 	•	 	Initial deferral elections by a participant in his or her
first year of eligibility may be made within 30 days after the date the
participant becomes eligible to participate in the applicable plan, with
respect to compensation paid for services to be performed after the election
and in compliance with Treasury Regulation § 1.409A-2(a)((7);






	 	•	 	Initial deferral elections by a participant with respect to
performance-based compensation (as defined under Treasury Regulation
§ 1.409A-1(e)) may be made on or before the date that is six months before the
end of the performance period, provided that (i) the participant was employed
continuously from either the beginning of the performance period or the later
date on which the performance goal was established, (ii) the election to defer
is made before such compensation has become readily ascertainable (i.e.,
substantially certain to be paid), (iii) the performance period is at least 12
months in length and the performance goal was established no later than 90
days after the commencement of the service period to which the performance
goal relates, (iv) the performance-based compensation is not payable in the
absence of performance except due to death, disability, a 409A Change in
Control (as defined in Section 11(a)(v)(A) of the 2004 Stock Award and
Incentive Plan) or as otherwise permitted under Treasury Regulation
§ 1.409A-1(e), and (v) this initial deferral election must in any event comply
with Treasury Regulation § 1.409A-2(a)(8);




 


-25-









 











	 	•	 	Initial deferral elections resulting in Company matching
contributions may be made in compliance with Treasury Regulation
§ 1.409A-2(a)(9);






	 	•	 	Initial deferral elections may be made to the fullest
permitted under other applicable provisions of Treasury Regulation
§ 1.409A-2(a); and






	 	(2)	 	Further Deferral Elections. The foregoing notwithstanding, for any election
to further defer an amount that is deemed to be a deferral of compensation subject to
Code Section 409A (to the extent permitted under Company plans, programs and
arrangements), any further deferral election made under the Plan shall be subject to
the following, provided that deferral elections in 2005 — 2008 may be made under
applicable transition rules under Section 409A:






	 	•	 	The further deferral election will not take effect until at
least 12 months after the date on which the election is made;






	 	•	 	If the election relates to a distribution event other than a
Disability (as defined in Treasury Regulation § 1.409A-3(i)(4)), death, or
Unforeseeable Emergency (as defined in Treasury Regulation § 1.409A-3(i)(3)),
the payment with respect to which such election is made must be deferred for a
period of not less than five years from the date such payment would otherwise
have been paid (or in the case of a life annuity or installment payments
treated as a single payment, five years from the date the first amount was
scheduled to be paid), to the extent required under Treasury Regulation
§ 1.409A-2(b);






	 	•	 	The requirement that the further deferral election be made at
least 12 months before the original deferral amount would be first payable may
not be waived by the Administrator, and shall apply to a payment at a
specified time or pursuant to a fixed schedule (and in the case of a life
annuity or installment payments treated as a single payment, 12 months before
the date that the first amount was scheduled to be paid);






	 	•	 	The further deferral election shall be irrevocable when filed
with the Company; and






	 	•	 	The further deferral election otherwise shall comply with the
applicable requirements of Treasury Regulation § 1.409A-2(b).






	 	(3)	 	Transition Rules. Initial deferral elections and elections to change any
existing deferred date for distribution of compensation in any transition period
designated under Department of the Treasury and IRS regulations may be permitted by
the Company to the fullest extent authorized under transition rules and other
applicable guidance under Code Section 409A (including transition rules in effect in
the period 2005 — 2008).






 


-26-