**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      
 
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**MARVELENTERPRISES, INC.**2005 STOCK INCENTIVE PLAN**1. **Purpose**. The purpose of this 2005 Stock Incentive Plan (the “Plan”) is to aid MarvelEnterprises, Inc., a Delaware corporation (together with its successors and assigns, the“Company”), in attracting, retaining, motivating and rewarding officers, employees and directors ofthe Company and its subsidiaries and consultants and advisors to the Company or its subsidiaries(“Participants”), to provide for equitable and competitive compensation opportunities, to recognizeindividual contributions and reward achievement of Company goals, and promote the creation oflong-term value for stockholders by closely aligning the interests of Participants with those ofstockholders. The Plan authorizes stock-based incentives for Participants.2. **Definitions**. In addition to the terms defined in Section 1 above and elsewhere in thePlan, the following capitalized terms used in the Plan have the respective meanings set forth inthis 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 bonusor 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 willor the laws of descent and distribution to receive the benefits under a Participant’s Award upon aParticipant’s death, provided that, if and to the extent authorized by the Committee, a Participantmay be permitted to designate a Beneficiary, in which case the “Beneficiary” instead will be theperson, persons, trust or trusts (if any are then surviving) which have been designated by theParticipant in his or her most recent written and duly filed beneficiary designation to receive thebenefits specified under the Participant’s Award upon such Participant’s death. Unless otherwisedetermined by the Committee, any designation of a Beneficiary other than a Participant’s spouseshall 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 theParticipant in effect at the time of Termination of Employment. If, however, there is no suchemployment 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 inthe performance of duties, (iii) involvement in a transaction in connection with the performance ofduties to the Company or any of its Subsidiaries thereof which transaction is adverse to theinterests 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 preparean accounting restatement due to the material noncompliance of the Company with any financialreporting requirement under the securities laws, (v) willful violation of any law, rule orregulation in connection with the performance of duties (other than traffic violations or similaroffenses), or (v) the commission of an act of fraud or intentional misappropriation or conversionof assets or opportunities of the Company or any Subsidiary; provided, however, thatthe Committee may vary the definition of “Cause” in any agreement or document relating to anAward.
 
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(f) “Code” means the Internal Revenue Code of 1986, as amended. References to any provisionof 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 InternalRevenue Service.(g) “Committee” means the Compensation Committee of the Board, the composition and governanceof which is established in the Committee’s Charter as approved from time to time by the Board andsubject to Section 303A.05 of the Listed Company Manual of the New York Stock Exchange, and othercorporate governance documents of the Company. No action of the Committee shall be void or deemedto be without authority due to the failure of any member, at the time the action was taken, to meetany qualification standard set forth in the Committee Charter or this Plan. The full Board mayperform any function of the Committee hereunder, except to the extent limited under Section 303A.05of the Listed Company Manual or by law, in which case the term “Committee” shall refer to theBoard.(h) “Covered Employee” means an Eligible Person who is a Covered Employee as specified inSection 10(j).(i) “Deferred Stock” means a right, granted under this Plan, to receive Stock or other Awardsor 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 paidwith 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 anyprovision of the Exchange Act or rule (including a proposed rule) thereunder shall include anysuccessor provisions and rules.(n) “Fair Market Value” means the fair market value of Stock, Awards or other property asdetermined in good faith by the Committee or under procedures established by the Committee. Unlessotherwise determined by the Committee, the Fair Market Value of Stock shall be the closing salesprice per share of Stock reported on a consolidated basis for securities listed on the principalstock exchange or market on which Stock is traded on the trading day prior to the day such value isbeing determined. Fair Market Value relating to the exercise price or base price of any Non-CodeSection 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 underCode Section 409A and regulations thereunder. “Non-Code Section 409A Awards” means Awards otherthan Code Section 409A Awards. Although the Committee retains authority under the Plan to grantOptions, SARs and Restricted Stock on terms that will qualify those Awards as Code Section 409AAwards, Options, SARs exercisable for Stock, andRestricted Stock are intended to be Non-Code Section 409A Awards unless otherwise expresslyspecified by the Committee.
 
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(p) “Incentive Stock Option” or “ISO” means any Option designated as an incentive stock optionwithin 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 remainsoutstanding, including a person who is no longer an Eligible Person.(t) “Performance Award” means a conditional right, granted to a Participant under Sections6(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 certainrestrictions and to a risk of forfeiture.(w) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable toParticipants, promulgated by the Securities and Exchange Commission under Section 16 of theExchange Act.(x) “Stock” means the Company’s Common Stock, par value $0.01 per share, and any other equitysecurities of the Company that may be substituted or resubstituted for Stock pursuant to Section10(c).(y) “Stock Appreciation Rights” or “SAR” means a right granted to a Participant under Section6(c).3. **Administration**.(a) ***Authority of the Committee***. The Plan shall be administered by the Committee, which shallhave full and final authority, in each case subject to and consistent with the provisions of thePlan, to select Eligible Persons to become Participants; to grant Awards; to determine the type andnumber of Awards, the dates on which Awards may be exercised and on which the risk of forfeiture ordeferral 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 Awardmay be settled, or the exercise price of an Award may be paid, in cash, Stock, other Awards, orother property, and other terms and conditions of, and all other matters relating to, Awards; toprescribe documents evidencing or setting terms of Awards (such Award documents need not beidentical for each Participant), amendments thereto, and rules and regulations for theadministration of the Plan and amendments thereto; to construe and interpret the Plan and Awarddocuments and correct defects, supply omissions or reconcile inconsistencies therein; and to makeall other decisions and determinations as the Committee may deem necessary or advisable for theadministration of the Plan. Decisions of the Committee with respect to the administration andinterpretation of the Plan shall be final, conclusive, and binding upon all persons interested inthe Plan, including Participants, Beneficiaries, transferees underSection 10(b) and other persons claiming rights from or through a Participant, andstockholders. The foregoing notwithstanding, the Board shall perform the functions of theCommittee for purposes of granting Awards under the Plan to non-employee directors (the functionsof the Committee with respect to other aspects of non-employee director awards is not exclusive tothe Board, however).
 
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(b) ***Manner of Exercise of Committee Authority***. The express grant of any specific power to theCommittee, and the taking of any action by the Committee, shall not be construed as limiting anypower or authority of the Committee. The Committee may act through subcommittees, including forpurposes 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 haveauthority under the charter applicable to the Committee, and the acts of the subcommittee shall bedeemed to be acts of the Committee hereunder. The Committee may delegate to officers or managersof the Company or any subsidiary or affiliate, or committees thereof, the authority, subject tosuch terms as the Committee shall determine, to perform such functions, including administrativefunctions, as the Committee may determine, to the extent (i) that such delegation will not resultin the loss of an exemption under Rule 16b-3(d) or (e) for Awards granted to Participants subjectto Section 16 of the Exchange Act in respect of the Company and will not cause Awards intended toqualify 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 GeneralCorporation Law.(c) ***Limitation of Liability***. Each member of the Committee and the Board of Directors, and anyperson 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 otheremployee of the Company or a subsidiary or affiliate, the Company’s independent certified publicaccountants, or any executive compensation consultant, legal counsel, or other professionalretained by the Company to assist in the administration of the Plan. No member of the Board orCommittee, nor any person to whom authority or duties are delegated hereunder, shall be personallyliable for any action, determination, or interpretation taken or made in good faith with respect tothe Plan, and any such person shall, to the extent permitted by law, be fully indemnified andprotected 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 Stockreserved and available for delivery in connection with Awards under the Plan shall be (i) fourmillion 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 subjectto awards under the Preexisting Plan which become available in accordance with Section 4(b) afterthe Effective Date; provided, however, that the total number of shares with respect to which ISOsmay be granted shall not exceed the number specified under clause (i) above. The total number ofshares available is subject to adjustment as provided in Section 10(c). Any shares of Stockdelivered under the Plan shall consist of authorized and unissued shares or treasury shares.
 
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(b) ***Share Counting Rules***. The Committee may adopt reasonable counting procedures to ensureappropriate counting, avoid double counting (as, for example, in the case of tandem or substituteawards) 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 havebeen delivered and are no longer subject to a risk of forfeiture. Accordingly, (i) to theextent 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 theaward, or otherwise terminated without delivery of shares to the Participant, the shares retainedby or returned to the Company will be available under the Plan; and (ii) shares that are withheldfrom such an award or separately surrendered by the Participant in payment of the exercise price ortaxes relating to such an award shall be deemed to constitute shares not delivered to theParticipant and will be available under the Plan. The Committee may determine that Awards may beoutstanding that relate to more shares than the aggregate remaining available under the Plan solong as such Awards will not in fact result in delivery and vesting of shares in excess of thenumber then available. In addition, in the case of any Award granted in assumption of or insubstitution for an award of a company or business acquired by the Company or a subsidiary oraffiliate or with which the Company or a subsidiary or affiliate combines, shares issued orissuable in connection with such substitute Award shall not be counted against the number of sharesreserved under the Plan.5. **Eligibility; Per-Person Award Limitations**.(a) ***Eligibility***. Awards may be granted under the Plan only to Eligible Persons. For purposesof 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 oraffiliate, and any person who has been offered employment by the Company or a subsidiary oraffiliate, provided that such prospective employee may not receive any payment or exercise anyright relating to an Award until such person has commenced employment with the Company or asubsidiary or affiliate. An employee on leave of absence may be considered as still in the employof the Company or a subsidiary or affiliate for purposes of eligibility for participation in thePlan, to the extent specified by the Committee. Consultants and advisors to the Company or itssubsidiaries or affiliates shall also be eligible for participation in the Plan. For purposes ofthe Plan, a joint venture in which the Company or a subsidiary has a substantial direct or indirectequity investment shall be deemed an affiliate, if so determined by the Committee. Holders ofawards granted by a company or business acquired by the Company or a subsidiary or affiliate, orwith which the Company or a subsidiary or affiliate combines, are eligible for grants of substituteawards granted in assumption of or in substitution for such outstanding awards previously grantedunder the Plan in connection with such acquisition or combination transaction. If a non-employeedirector is required by contract to deliver any compensation from the Company to the director’semployer, the Committee may specify or permit the director to elect that Awards be made ortransferred to such director’s employer; in such case, vesting, exercisability and terminationprovisions and other Award provisions specified by the Committee shall continue to apply to theindividual 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 isin effect, an Eligible Person may be granted Awards intended to qualify as “performance-basedcompensation” 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 eligibleunder the Plan, shall equal two million shares plus the amount of the Participant’s unused AnnualLimit relating to the same type of Award as of the close of the previous year, subject toadjustment as provided in Section 10(c). For this purpose, (i) “earning” means satisfyingperformance conditions so that an amount becomes payable, without regard to whether it is to bepaid currently or on a deferred basis or continues to be subject to any service requirement orother non-performance condition, and (ii) a Participant’s Annual Limit is used tothe 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.
 
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(c) ***Limits on Non-Employee Director Awards****.*Non-employee directors may be granted any type ofAward under the Plan, but the aggregate number of shares that may be delivered in connection withAwards granted to non-employee directors shall be twenty percent of the total reserved under thePlan, and in any five-year period a non-employee director may be granted Awards under the Planrelating 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 orthereafter (subject to Sections 10(e) and 10(k)), such additional terms and conditions, notinconsistent with the provisions of the Plan, as the Committee shall determine, including termsrequiring forfeiture of Awards in the event of termination of employment or service by theParticipant, terms requiring forfeiture of Awards and gains realized upon exercise, vesting orsettlement 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 Committeeshall retain full power and discretion with respect to any term or condition of an Award that isnot mandatory under the Plan, subject to Section 10(k). The Committee shall require the payment oflawful consideration for an Award to the extent necessary to satisfy the requirements of theDelaware General Corporation Law, and may otherwise require payment of consideration for an Awardexcept as limited by the Plan.(b) ***Options***. The Committee is authorized to grant Options to Participants on the followingterms and conditions: (i) Exercise Price. The exercise price per share of Stock purchasable under anOption (including both ISOs and non-qualified Options) shall be determined by theCommittee, provided that such exercise price shall be not less than the Fair MarketValue of a share of Stock on the date of grant of such Option, subject to Section8(a). Notwithstanding the foregoing, any substitute award granted in assumption of orin substitution for an outstanding award granted by a company or business acquired bythe Company or a subsidiary or affiliate, or with which the Company or a subsidiary oraffiliate combines may be granted with an exercise price per share of Stock other thanas required above. (ii) Option Term; Time and Method of Exercise. The Committee shall determine theterm of each Option, provided that in no event shall the term of any Option exceed aperiod of ten years from the date of grant. The Committee shall determine the time ortimes at which or the circumstances under which an Option may be exercised in whole orin part (including based on achievement of performance goals and/or future servicerequirements), the methods by which such exercise price may be paid or deemed to bepaid and the form of such payment (subject to Sections 10(k) and 10(l)), including,without limitation, cash, Stock (including by withholding Stock deliverable uponexercise, if such withholding or withholding feature will not result in additionalaccounting expense to the Company), other Awards or awards granted under other plansof the Company or any subsidiary or affiliate, or other property (including throughbroker-assisted “cashless exercise” arrangements, to the extent permitted byapplicable law), and the methods by or forms in which Stock will be delivered ordeemed to be delivered in satisfaction of Options to Participants (including, inthe case of Code Section 409A Awards, deferred delivery of shares subject to theOption, as mandated by the Committee, with such deferred shares subject to anyvesting, forfeiture or other terms as the Committee may specify).
 
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 (iii) ISOs. The terms of any ISO granted under the Plan shall comply in allrespects with the provisions of Code Section 422.(c) ***Stock Appreciation Rights***. The Committee is authorized to grant SAR’s to Participants onthe following terms and conditions: (i) Right to Payment. An SAR shall confer on the Participant to whom it isgranted a right to receive, upon exercise thereof, the excess of (A) the Fair MarketValue of one share of Stock on the date of exercise over (B) the grant price of theSAR, which shall be determined by the Committee but which in any event shall be notless 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, providedthat in no event shall the term of an SAR exceed a period of ten years from the dateof grant. The Committee shall determine at the date of grant or thereafter, the timeor times at which and the circumstances under which a SAR may be exercised in whole orin part (including based on achievement of performance goals and/or future servicerequirements), the method of exercise, method of settlement, form of considerationpayable in settlement, method by or forms in which Stock will be delivered or deemedto be delivered to Participants, whether or not a SAR shall be free-standing or intandem or combination with any other Award, and whether or not the SAR will be a CodeSection 409A Award or Non-Code Section 409A Award (cash SARs will in all cases be CodeSection 409A Awards, except as otherwise provided under applicable Code Section 409Aregulations). The Committee may require that an outstanding Option be exchanged foran SAR exercisable for Stock having vesting, expiration, and other terms substantiallythe same as the Option, so long as such exchange will not result in additionalaccounting expense to the Company.(d) ***Restricted Stock***. The Committee is authorized to grant Restricted Stock to Participantson the following terms and conditions: (i) Grant and Restrictions. Restricted Stock shall be subject to suchrestrictions on transferability, risk of forfeiture and other restrictions, if any, asthe Committee may impose, which restrictions may lapse separately or in combination atsuch times, under such circumstances (including based on achievement of performancegoals and/or future service requirements), in such installments or otherwise and undersuch other circumstances as the Committee may determine at the date of grant orthereafter. Except to the extent restricted under the terms of the Plan and any Awarddocument relating to the Restricted Stock, a Participant granted Restricted Stockshall have all of the rights of a stockholder, including the right to vote theRestricted Stock and the right to receive dividendsthereon (subject to any mandatory reinvestment or other requirement imposed by theCommittee).
 
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 (ii) Forfeiture. Except as otherwise determined by the Committee, upontermination of employment or service during the applicable restriction period,Restricted Stock that is at that time subject to restrictions shall be forfeited andreacquired by the Company; provided that the Committee may provide, by rule orregulation or in any Award document, or may determine in any individual case, thatrestrictions or forfeiture conditions relating to Restricted Stock will lapse in wholeor in part, including in the event of terminations resulting from specified causes. (iii) Certificates for Stock. Restricted Stock granted under the Plan may beevidenced in such manner as the Committee shall determine. If certificatesrepresenting Restricted Stock are registered in the name of the Participant, theCommittee may require that such certificates bear an appropriate legend referring tothe terms, conditions and restrictions applicable to such Restricted Stock, that theCompany retain physical possession of the certificates, and that the Participantdeliver a stock power to the Company, endorsed in blank, relating to the RestrictedStock. (iv) Dividends and Splits. As a condition to the grant of an Award of RestrictedStock, the Committee may require that any dividends paid on a share of RestrictedStock shall be either (A) paid with respect to such Restricted Stock at the dividendpayment date in cash, in kind, or in a number of shares of unrestricted Stock having aFair Market Value equal to the amount of such dividends, or (B) automaticallyreinvested in additional Restricted Stock or held in kind, which shall be subject tothe 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 thereofautomatically deemed reinvested in shares of Deferred Stock, other Awards or otherinvestment vehicles, subject to such terms as the Committee shall determine or permita Participant to elect. Unless otherwise determined by the Committee, Stockdistributed in connection with a Stock split or Stock dividend, and other propertydistributed as a dividend, shall be subject to restrictions and a risk of forfeitureto the same extent as the Restricted Stock with respect to which such Stock or otherproperty 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 thedeferral period specified for an Award of Deferred Stock by the Committee (or, ifpermitted by the Committee, as elected by the Participant). In addition, DeferredStock shall be subject to such restrictions on transferability, risk of forfeiture andother restrictions, if any, as the Committee may impose, which restrictions may lapseat the expiration of the deferral period or at earlier specified times (includingbased on achievement of performance goals and/or future service requirements),separately or in combination, in installments or otherwise, and under such othercircumstances as the Committee may determine at the date of grant or thereafter.Deferred Stock may be satisfied by delivery of Stock, otherAwards, or a combination thereof (subject to Section 10(l)), as determined by theCommittee at the date of grant or thereafter.
 
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 (ii) Forfeiture. Except as otherwise determined by the Committee, upontermination of employment or service during the applicable deferral period or portionthereof to which forfeiture conditions apply (as provided in the Award documentevidencing the Deferred Stock), all Deferred Stock that is at that time subject tosuch forfeiture conditions shall be forfeited; provided that the Committee mayprovide, by rule or regulation or in any Award document, or may determine in anyindividual case, that restrictions or forfeiture conditions relating to Deferred Stockwill lapse in whole or in part, including in the event of terminations resulting fromspecified 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 ofDeferred Stock shall be either (A) paid with respect to such Deferred Stock at thedividend payment date in cash or in shares of unrestricted Stock having a Fair MarketValue equal to the amount of such dividends, or (B) deferred with respect to suchDeferred Stock, either as a cash deferral or with the amount or value thereofautomatically deemed reinvested in additional Deferred Stock, other Awards or otherinvestment 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 Stockas a bonus, or to grant Stock or other Awards in lieu of obligations of the Company or a subsidiaryor affiliate to pay cash or deliver other property under the Plan or under other plans orcompensatory arrangements, subject to such terms as shall be determined by the Committee.(g) ***Dividend Equivalents***. The Committee is authorized to grant Dividend Equivalents to aParticipant, 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 orshall 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 theCommittee may specify.(h) ***Other Stock-Based Awards***. The Committee is authorized, subject to limitations underapplicable 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 factorsthat may influence the value of Stock, including, without limitation, convertible or exchangeabledebt 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 thereofor any other factors designated by the Committee, and Awards valued by reference to the book valueof Stock or the value of securities of or the performance of specified subsidiaries or affiliatesor 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 Section6(h) shall be purchased for such consideration, paid for at such times, by such methods, and insuch forms, including, without limitation, cash, Stock, otherAwards, or other property, as the Committee shall determine. Cash awards, as an element of orsupplement to any other Award under the Plan, may also be granted pursuant to this Section 6(h).
 
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(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 anAward authorized under Section 6(b) — (h) to which performance conditions have been attached. Inaddition, cash-denominated awards that may be settled by delivery of shares of Stock issued underthis 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 sharesof Stock or specified number of other Awards (or a combination) which may be earned uponachievement or satisfaction of performance conditions specified by the Committee. In addition, theCommittee may specify that any other Award shall constitute a Performance Award by conditioning theright of a Participant to exercise the Award or have it settled, and the timing thereof, uponachievement 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 deemappropriate in establishing any performance conditions, and may exercise its discretion to reduceor increase the amounts payable under any Award subject to performance conditions, except aslimited 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 aPerformance Award to be granted to an Eligible Person who is designated by the Committee as likelyto be a Covered Employee should qualify as “performance-based compensation” for purposes of CodeSection 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingentupon achievement of a preestablished performance goal and other terms set forth in this Section7(b). (i) Performance Goal Generally. The performance goal for such Performance Awardsshall consist of one or more business criteria and a targeted level or levels ofperformance with respect to each of such criteria, as specified by the Committeeconsistent with this Section 7(b). The performance goal shall be objective and shallotherwise meet the requirements of Code Section 162(m) and regulations thereunder,including the requirement that the level or levels of performance targeted by theCommittee result in the achievement of performance goals being “substantiallyuncertain.” 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 ormore of the performance goals must be achieved as a condition to grant, exerciseand/or settlement of such Performance Awards. Performance goals may differ forPerformance Awards granted to any one Participant or to different Participants.
 
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 (ii) Business Criteria. One or more of the following business criteria for theCompany, on a consolidated basis, and/or for specified subsidiaries or divisions oraffiliates or other business units of the Company shall be used by the Committee inestablishing the Performance Goal for such Award Opportunities: (1) net sales,revenues or royalties; (2) gross profit or pre-tax profit; (3) operatingincome, earnings before or after taxes, earnings before or after interest,depreciation, amortization, or extraordinary or special items; (4) net income ornet income per common share (basic or fully diluted); (5) return measures,including, but not limited to, return on assets (gross or net), return oninvestment, return on capital, or return on equity; (6) cash flow, free cash flow,cash flow return on investment (discounted or otherwise), net cash provided byoperations, or cash flow in excess of cost of capital; (7) economic value createdor economic profit; (8) operating margin or profit margin; (9) stockholder valuecreation measures, including but not limited to stock price or total stockholderreturn; (10) royalties or revenues from specific assets, projects, fees or paymentsreceived or lines of business; (11) targets relating to expense or operatingexpense, working capital targets, or operating efficiency; and (12) strategicbusiness criteria, consisting of one or more objectives based on meeting specifiedgoals relating to market penetration, new projects, new products, new ventures,geographic business expansion, operating goals, cost targets, customersatisfaction, employee satisfaction, human resources management, supervision oflitigation and information technology, and acquisitions or divestitures ofsubsidiaries, affiliates or joint ventures. The targeted level or levels ofperformance with respect to such business criteria may be established at suchlevels 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, oras a goal compared to the performance of one or more comparable companies or anindex covering multiple companies (iii) Performance Period; Timing for Establishing Performance Goals. Achievementof performance goals in respect of such Performance Awards shall be measured over aperformance period of up to one year or more than one year, as specified by theCommittee. 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 PerformanceAward or (B) the time 25% of such performance period has elapsed. (iv) Settlement of Performance Awards; Other Terms. Settlement of PerformanceAwards shall be in cash, Stock, other Awards or other property, in the discretion ofthe Committee. The Committee may, in its discretion, increase or reduce the amount ofa settlement otherwise to be made in connection with such Performance Awards, but maynot exercise discretion to increase any such amount payable to a Covered Employee inrespect of a Performance Award subject to this Section 7(b). Any settlement whichchanges the form of payment from that originally specified shall be implemented in amanner such that the Performance Award and other related Awards do not, solely forthat reason, fail to qualify as “performance-based compensation” for purposes of CodeSection 162(m). The Committee shall specify the circumstances in which suchPerformance Awards shall be paid or forfeited in the event of termination ofemployment by the Participant or other event (including a change in control) prior tothe end of a performance period or settlement of such Performance Awards.
 
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(c) ***Written Determinations***. Determinations by the Committee as to the establishment ofperformance goals, the amount potentially payable in respect of Performance Awards, the level ofactual achievement of the specified performance goals relating toPerformance Awards, and the amount of any final Performance Award shall be recorded in writingin the case of Performance Awards intended to qualify under Section 162(m). Specifically, theCommittee shall certify in writing, in a manner conforming to applicable regulations under Section162(m), prior to settlement of each such Award granted to a Covered Employee, that the performanceobjective relating to the Performance Award and other material terms of the Award upon whichsettlement 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 Planmay, 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 theCompany, any subsidiary or affiliate, or any business entity to be acquired by the Company or asubsidiary or affiliate, or any other right of a Participant to receive payment from the Company orany subsidiary or affiliate; provided, however, that a Code Section 409A Award may not be grantedin tandem with a Non-Code Section 409A Award. Awards granted in addition to or in tandem withother Awards or awards may be granted either as of the same time as or a different time from thegrant of such other Awards or awards. Subject to Sections 10(k) and (l), the Committee maydetermine that, in granting a new Award, the in-the-money value or fair value of any surrenderedAward or award or the value of any other right to payment surrendered by the Participant may beapplied to reduce the exercise price of any Option, grant price of any SAR, or purchase price ofany other Award.(b) ***Term of Awards***. The term of each Award shall be for such period as may be determined bythe Committee, subject to the express limitations set forth in Sections 6(b)(ii), 6(c)(ii) and 8 orelsewhere 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 theCompany or a subsidiary or affiliate upon the exercise of an Option or other Award or settlement ofan 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, ininstallments, or on a deferred basis. The settlement of any Award may be accelerated, and cashpaid in lieu of Stock in connection with such settlement, in the discretion of the Committee orupon occurrence of one or more specified events, subject to Sections 10(k) and (l). Subject toSection 10(k), installment or deferred payments may be required by the Committee (subject toSection 10(e)) or permitted at the election of the Participant on terms and conditions establishedby the Committee. Payments may include, without limitation, provisions for the payment orcrediting of reasonable interest on installment or deferred payments or the grant or crediting ofDividend Equivalents or other amounts in respect of installment or deferred payments denominated inStock. In the case of any Code Section 409A Award that is vested and no longer subject to a riskof forfeiture (within the meaning of Code Section 83), such Award will be distributed to theParticipant, upon application of the Participant, if the Participant has had an unforeseeableemergency within the meaning of Code Sections 409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), inaccordance with Code Section 409A(a)(2)(B)(ii).
 
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(d) **Additional Award Forfeiture Provisions**. The Committee may condition a Participant’s rightto receive a grant of an Award, to exercise the Award, to retain cash, Stock, other Awards, orother property acquired in connection with an Award, or to retain the profit or gain realized by aParticipant in connection with an Award, including cash or other proceeds received upon sale ofStock acquired in connection with an Award, upon compliance by theParticipant with specified conditions relating to non-competition, confidentiality ofinformation relating to or possessed by the Company, non-solicitation of customers, suppliers, andemployees of the Company, cooperation in litigation, non-disparagement of the Company and itsofficers, directors and affiliates, and other restrictions upon or covenants of the Participant forthe protection of the Company and its business interests, including during specified periodsfollowing termination of a Participant’s employment or service to the Company.9. **Change in Control.**Other provisions of the Plan notwithstanding but subject to thelimitations set forth in this Section 9, the Committee may provide, in an Award agreement or insuch other manner as the Committee may specify, that in the event of a change in control or atermination of employment or service following a change in control, any or all of the followingterms will apply: (i) That an outstanding Award will vest in whole or in part, thereby becomingnon-forfeitable and entitling the Participant to exercise specified rights under theAward, 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 deferredbeyond the date of vesting will immediately end, except as limited under Code Section409A; (iii) That, with respect to an outstanding Award subject to the achievement ofperformance goals and conditions, such performance goals and conditions will be deemedto be met at a specified level (for example, at target level or maximum level), orthat 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, orthe Participant will be permitted during a specified period to elect such a cashsettlement, with the amount of cash payable equal to the intrinsic value or fair valueof the Award, or a value determined in another specified manner, at a specified dateor 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 neednot be the same for all Participants. Any of the terms of Awards relating to a change in controlshall apply to a Non-Code Section 409A Award only to the extent permitted without causing the Awardto become subject to Code Section 409A, and shall apply to a Code Section 409A Award only to theextent permitted under Code Section 409A. For this purpose, Code Section 409A may permit some ofthe terms specified above to apply only if the change in control constitutes a change in theownership or effective control of the Company, or in the ownership of a substantial portion of theassets of the Company, within the meaning of Code Section 409A(a)(2)(A)(v).
 
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10. **General Provisions**.(a) ***Compliance with Legal and Other Requirements***. The Company may, to the extent deemednecessary 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 anyAward until completion of such registration or qualification of such Stock or other requiredaction under any federal or state law, rule or regulation, listing or other required action withrespect to any stock exchange or automated quotation system upon which the Stock or othersecurities of the Company are listed or quoted, or compliance with any other obligation of theCompany, as the Committee may consider appropriate, and may require any Participant to make suchrepresentations, furnish such information and comply with or be subject to such other conditions asit may consider appropriate in connection with the issuance or delivery of Stock or payment ofother benefits in compliance with applicable laws, rules, and regulations, listing requirements, orother obligations.(b) ***Limits on Transferability; Beneficiaries***. No Award or other right or interest of aParticipant under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to anylien, obligation or liability of such Participant to any party (other than the Company or asubsidiary or affiliate thereof), or assigned or transferred by such Participant otherwise than bywill 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 theParticipant only by the Participant or his or her guardian or legal representative, except thatAwards and other rights (other than ISOs and SARs in tandem therewith) may be transferred to one ormore transferees during the lifetime of the Participant, and may be exercised by such transfereesin accordance with the terms of such Award, but only if and to the extent such transfers arepermitted by the Committee, subject to any terms and conditions which the Committee may imposethereon (which may include limitations the Committee may deem appropriate in order that offers andsales under the Plan will meet applicable requirements of registration forms under the SecuritiesAct of 1933 specified by the Securities and Exchange Commission). A Beneficiary, transferee, orother person claiming any rights under the Plan from or through any Participant shall be subject toall terms and conditions of the Plan and any Award document applicable to such Participant, exceptas otherwise determined by the Committee, and to any additional terms and conditions deemednecessary or appropriate by the Committee.(c) ***Adjustments***. In the event that any large, special and non-recurring dividend or otherdistribution (whether in the form of cash or property other than Stock), recapitalization, forwardor reverse split, Stock dividend, reorganization, merger, consolidation, spin-off, combination,repurchase, share exchange, liquidation, dissolution or other similar corporate transaction orevent affects the Stock such that an adjustment is determined by the Committee to be appropriateand, in the case of any outstanding Award, necessary in order to prevent dilution or enlargement ofthe rights of the Participant,, then the Committee shall, in an equitable manner as determined bythe Committee, adjust any or all of (i) the number and kind of shares of Stock which may bedelivered in connection with Awards granted thereafter, (ii) the number and kind of shares of Stockby which annual per-person Award limitations are measured under Section 5, including the sharelimits applicable to non-employee director Awards under Section 5(c), (iii) the number and kind ofshares of Stock subject to or deliverable in respect of outstanding Awards and (iv) the exerciseprice, grant price or purchase price relating to any Award or, if deemed appropriate, the Committeemay 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 theterms and conditions of, and the criteria included in, Awards (including Performance Awards andperformance goals) in recognition of unusual or nonrecurring events (including, without limitation,events described in the preceding sentence, as well as acquisitions and dispositions of businessesand assets) affecting the Company, any subsidiary or affiliate or other business unit, or thefinancial statements of the Company or any subsidiary or affiliate, or in response to changes inapplicable laws, regulations, accounting principles, tax rates and regulations or businessconditions or in view of the Committee’s assessment of the business strategy of the Company, any subsidiary or
 
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affiliate or business unit thereof, performance ofcomparable organizations, economic and business conditions, personal performance of a Participant,and any other circumstances deemed relevant; provided that no such adjustment shall be authorizedor made if and to the extent that the existence of such authority (i) would cause Options, SARs, orPerformance Awards granted under the Plan to Participants designated by the Committee as CoveredEmployees and intended to qualify as “performance-based compensation” under Code Section 162(m) andregulations thereunder to otherwise fail to qualify as “performance-based compensation” under CodeSection 162(m) and regulations thereunder, or (ii) would cause the Committee to be deemed to haveauthority 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 intendedto qualify as “performance-based compensation” under Code Section 162(m) and regulationsthereunder. In furtherance of the foregoing, in the event of an equity restructuring, as definedin FAS 123R, which affects the Stock, a Participant shall have a legal right to an adjustment tothe Participant’s Award which shall preserve without enlarging the value of the Award, with themanner of such adjustment to be determined by the Committee in its discretion, and subject to anylimitation on this right set forth in the applicable Award agreement. Any fractional shareresulting from such adjustment may be eliminated.(d) Tax Provisions. (i) Withholding. The Company and any subsidiary or affiliate is authorized towithhold 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 aParticipant, amounts of withholding and other taxes due or potentially payable inconnection with any transaction involving an Award, and to take such other action asthe Committee may deem advisable to enable the Company and Participants to satisfyobligations for the payment of withholding taxes and other tax obligations relating toany Award. This authority shall include authority to withhold or receive Stock orother property and to make cash payments in respect thereof in satisfaction of aParticipant’s withholding obligations, either on a mandatory or elective basis in thediscretion of the Committee, or in satisfaction of other tax obligations. Otherprovisions of the Plan notwithstanding, unless consented to by the Committee, only theminimum amount of Stock deliverable in connection with an Award necessary to satisfystatutory withholding requirements will be withheld, unless withholding of anyadditional amount of Stock will not result in additional accounting expense to theCompany. (ii) Required Consent to and Notification of Code Section 83(b) Election. Noelection under Section 83(b) of the Code (to include in gross income in the year oftransfer the amounts specified in Code Section 83(b)) or under a similar provision ofthe laws of a jurisdiction outside the United States may be made unless expresslypermitted by the terms of the Award document or by action of the Committee in writingprior to the making of such election. In any case in which a Participant is permittedto make such an election in connection with an Award, the Participant shall notify theCompany of such election within ten days of filing notice of the election with theInternal Revenue Service or other governmental authority, in addition to any filingand notification required pursuant to regulations issued under Code Section 83(b) orother applicable provision. (iii) Requirement of Notification Upon Disqualifying Disposition Under CodeSection 421(b). If any Participant shall make any disposition of shares of Stockdelivered pursuant to the exercise of an ISO under the circumstances described in CodeSection 421(b) (i.e., a disqualifying disposition), such Participant shall notify theCompany of such disposition within ten days thereof.
 
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(e) ***Changes to the Plan***. The Board may amend, suspend or terminate the Plan or theCommittee’s authority to grant Awards under the Plan without the consent of stockholders orParticipants; provided, however, that any amendment to the Plan shall be submitted to the Company’sstockholders for approval not later than the earliest annual meeting for which the record date isat or after the date of such Board action if such stockholder approval is required by any federalor state law or regulation or the rules of the New York Stock Exchange or any other stock exchangeor automated quotation system on which the Stock may then be listed or quoted, or if such amendmentwould 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 tostockholders for approval; and provided further, that, without the consent of an affectedParticipant, no such Board action may materially and adversely affect the rights of suchParticipant under any outstanding Award (for this purpose, actions that alter the timing of federalincome taxation of a Participant will not be deemed material unless such action results in anincome tax penalty on the Participant). Without the approval of stockholders, the Committee willnot 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 YorkStock Exchange. With regard to other terms of Awards, the Committee shall have no authority towaive or modify any such Award term after the Award has been granted to the extent the waived ormodified term would be mandatory under the Plan for any Award newly granted at the date of thewaiver or modification.(f) ***Right of Setoff***. The Company or any subsidiary or affiliate may, to the extent permittedby applicable law, deduct from and set off against any amounts the Company or a subsidiary oraffiliate may owe to the Participant from time to time, including amounts payable in connectionwith any Award, owed as wages, fringe benefits, or other compensation owed to the Participant, suchamounts as may be owed by the Participant to the Company, including but not limited to amounts owedunder Section 8(d), although the Participant shall remain liable for any part of the Participant’spayment obligation not satisfied through such deduction and setoff. By accepting any Award grantedhereunder, 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 madeto a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Planor any Award shall give any such Participant any rights that are greater than those of a generalcreditor of the Company; provided that the Committee may authorize the creation of trusts anddeposit therein cash, Stock, other Awards or other property, or make other arrangements to meet theCompany’s obligations under the Plan. Such trusts or other arrangements shall be consistent withthe “unfunded” status of the Plan unless the Committee otherwise determines with the consent ofeach affected Participant.(h) ***Nonexclusivity of the Plan***. Neither the adoption of the Plan by the Board nor itssubmission to the stockholders of the Company for approval shall be construed as creating anylimitations on the power of the Board or a committee thereof to adopt such other incentivearrangements, apart from the Plan, as it may deem desirable, including incentive arrangementsand awards which do not qualify under Code Section 162(m), and such other arrangements may beeither applicable generally or only in specific cases.
 
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(i) ***Payments in the Event of Forfeitures; Fractional Shares***. Unless otherwise determined bythe Committee, in the event of a forfeiture of an Award with respect to which a Participant paidcash consideration, the Participant shall be repaid the amount of such cash consideration. Nofractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. TheCommittee shall determine whether cash, other Awards or other property shall be issued or paid inlieu of such fractional shares or whether such fractional shares or any rights thereto shall beforfeited or otherwise eliminated.(j) ***Compliance with Code Section ******162(m)******.***It is the intent of the Company that Options andSARs granted to Covered Employees and other Awards designated as Awards to Covered Employeessubject to Section 7 shall constitute qualified “performance-based compensation” within the meaningof Code Section 162(m) and regulations thereunder, unless otherwise determined by the Committee atthe time of allocation of an Award. Accordingly, the terms of Sections 7(b) and (c), including thedefinitions of Covered Employee and other terms used therein, shall be interpreted in a mannerconsistent 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 CoveredEmployee with respect to a fiscal year that has not yet been completed, the term Covered Employeeas used herein shall mean only a person designated by the Committee as likely to be a CoveredEmployee with respect to a specified fiscal year. If any provision of the Plan or any Awarddocument relating to a Performance Award that is designated as intended to comply with Code Section162(m) does not comply or is inconsistent with the requirements of Code Section 162(m) orregulations thereunder, such provision shall be construed or deemed amended to the extent necessaryto conform to such requirements, and no provision shall be deemed to confer upon the Committee orany other person discretion to increase the amount of compensation otherwise payable in connectionwith any such Award upon attainment of the applicable performance objectives.(k) ***Certain Limitations on Awards to Ensure Compliance with Code Section 409A.***For purposesof this Plan, references to an award term or event (including any authority or right of the Companyor 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 taxpenalty under Code Section 409A and, for a Non-Code Section 409A Award, that the term or event willnot cause the Award to be treated as subject to Code Section 409A. Other provisions of the Plannotwithstanding, 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 permittedunder Code Section 409A shall be automatically modified and limited to the extent necessary toconform 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 409AAwards in excess of the authority permitted under Code Section 409A, and any distribution subjectto Code Section 409A(a)(2)(A)(i) (separation from service) to a “key employee” as defined underCode Section 409A(a)(2)(B)(i) shall not occur earlier than the earliest time permitted under CodeSection 409A(a)(2)(B)(i).
 
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(l) ***Certain Limitations Relating to Accounting Treatment of Awards***. Other provisions of thePlan 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 Optionor other Award of a type that the Committee has intended to be subject to fixed accountingwith a measurement date at the date of grant or the date performance conditions are satisfied underAPB 25 shall not become subject to “variable” accounting solely due to the existence of suchauthority, unless the Committee specifically determines that the Award shall remain outstandingdespite such “variable” accounting. This provision shall cease to be effective if and at such timeas 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 andregulations or document hereunder shall be determined in accordance with the laws of the State ofNew York, without giving effect to principles of conflicts of laws, and applicable provisions ofthe Delaware General Corporation Law and federal law.(n) ***Awards to Participants Outside the United States***. The Committee may modify the terms ofany Award under the Plan made to or held by a Participant who is then resident or primarilyemployed outside of the United States in any manner deemed by the Committee to be necessary orappropriate in order that such Award shall conform to laws, regulations, and customs of the countryin which the Participant is then resident or primarily employed, or so that the Award otherwisewill have appropriate terms that advance the purposes of the Plan. An Award may be modified underthis Section 10(n) in a manner that is inconsistent with the express terms of the Plan, so long assuch modifications will not contravene any applicable law or regulation or result in actualliability under Section 16(b) for the Participant whose Award is modified.(o) ***Limitation on Rights Conferred Under Plan***. Neither the Plan nor any action takenhereunder shall be construed as (i) giving any Eligible Person or Participant the right to continueas an Eligible Person or Participant or in the employ or service of the Company or a subsidiary oraffiliate, (ii) interfering in any way with the right of the Company or a subsidiary or affiliateto terminate any Eligible Person’s or Participant’s employment or service at any time (subject tothe terms and provisions of any separate written agreements), (iii) giving an Eligible Person orParticipant any claim to be granted any Award under the Plan or to be treated uniformly with otherParticipants and employees, or (iv) conferring on a Participant any of the rights of a stockholderof the Company unless and until the Participant is duly issued or transferred shares of Stock inaccordance with the terms of an Award or an Option is duly exercised. Except as expressly providedin the Plan and an Award document, neither the Plan nor any Award document shall confer on anyperson 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 Awarddocument 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 unenforceablebecause it exceeds the maximum scope determined to be acceptable to permit such provision to beenforceable, such provision shall be deemed to be modified to the minimum extent necessary tomodify such scope in order to make such provision enforceable hereunder. The Plan and any Awarddocuments contain the entire agreement of the parties with respect to the subject matter thereofand supersede all prior agreements, promises, covenants, arrangements, communications,representations and warranties between them, whether written or oral with respect to the subjectmatter thereof.
 
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(q) ***Plan Effective Date and Termination***. The Plan shall become effective if, and at such timeas, the stockholders of the Company have approved it by the affirmative votes of theholders of a majority of the voting securities of the Company present, or represented, andentitled to vote on the subject matter at a duly held meeting of stockholders (provided that thetotal vote cast on the proposal represents over 50% in interest of all securities entitled to voteon the proposal). Upon such approval of the Plan by the stockholders of the Company, no furtherawards shall be granted under the Preexisting Plan, but any outstanding awards under thePreexisting Plan shall continue in accordance with their terms. Unless earlier terminated byaction of the Board of Directors, the authority of the Committee to make grants under the Planshall terminate on the date that is ten years after the latest date upon which stockholders of theCompany have approved the Plan, and the Plan will remain in effect until such time as no Stockremains available for delivery under the Plan and the Company has no further rights or obligationsunder the Plan with respect to outstanding Awards under the Plan.
 
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Exhibit A**Compliance with Code Section 409A**In furtherance of the provisions of Section 3, Section 10(k) and other applicable provisionsof the 2005 Stock Incentive Plan, the Committee has approved and adopted the following complianceprovisions intended to meet the requirements of Code Section 409A.(i) *Code Section 409A Awards and Deferrals.*Other provisions of the Plan notwithstanding, theterms of any Code Section 409A Award, including any authority of the Company and rights of theParticipant with respect to the Code Section 409A Award, shall be limited to those terms permittedunder Section 409A, and any terms not permitted under Section 409A shall be automatically modifiedand limited to the extent necessary to conform with Section 409A but only to the extent that suchmodification or limitation is permitted under Code Section 409A and the regulations and guidanceissued thereunder. The following rules will apply to Code Section 409A Awards (which are alsocalled “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 defercompensation and in lieu thereof receive an Award, or is permitted to elect todefer any payment under an Award, such election will be permitted only attimes 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 itsdiscretion, require or permit on an elective basis a change in thedistribution terms applicable to 409A Awards (and Non-409A Awards that qualifyfor the short-term deferral exemption under Section 409A) in accordance with,and to the fullest extent permitted by, applicable guidance of the InternalRevenue Service (including Proposed Treasury Regulation § 1.409A, Preamble §XI.C and IRS Notice 2005-1), and otherwise in accordance with Section 409A andregulations thereunder. The General Counsel of the Company is authorized tomodify any such outstanding Awards to permit election of different deferralperiods provided that any such modifications may not otherwise increase thebenefits to Participants or the costs of such Awards to the Company. Otherprovisions of this Plan notwithstanding, changes to distribution timingresulting from amendments to this Plan or changes in Participant elections in2008 shall not have the affect of accelerating distributions into 2008 orcausing distributions that otherwise would have occurred in 2008 to bedeferred until a year after 2008; (C) Exercise and Distribution. Except as provided in thisExhibit A, Section (i)(D) hereof, no 409A Award shall be exercisable (if theexercise would result in a distribution) or otherwise distributable to aParticipant (or his or her beneficiary) except upon the occurrence of one ofthe 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 andotherwise meet the requirements of Treasury Regulation § 1.409A-3: (1) Specified Time. A specified time or afixed schedule;
 
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 (2) Separation from Service. The Participant’sseparation 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 thisExhibit A, Section (i)(C)(2) shall instead occur at the expiration ofthe six-month period following separation from service under Section409A(a)(2)(B)(i). During such six-month delay period, noacceleration of settlement may occur, except (1) acceleration shalloccur in the event of death of the Participant, (2) if thedistribution date was specified as the earlier of separation fromservice or a fixed date and the fixed date falls within the delayperiod, the distribution shall be triggered by the fixed date, and(3) acceleration may be permitted otherwise if and to the extentpermitted under Section 409A. In the case of installments, thisdelay shall not affect the timing of any installment otherwisepayable after the six-month delay period. With respect to any 409AAward, a reference in any agreement or other governing document to a“termination of employment” which triggers a distribution shall bedeemed to mean a “separation from service” within the meaning ofTreasury Regulation § 1.409A-1(h); (3) Death. Unless a specific time otherwise isstated for payment of a 409A Award upon death, such payment shalloccur in the calendar year in which falls the 30th dayafter death; (4) Disability. The date the Participant hasexperienced a 409A Disability (as defined below); and (5) 409A Change in Control. The occurrence ofa 409A Change in Control (as defined below). (D) No Acceleration. The exercise or distribution of a 409AAward may not be accelerated prior to the time specified in accordance withthis Exhibit A, Section (i)(C) hereof, except in the case of one of thefollowing events: (1) Unforeseeable Emergency. The occurrence ofan Unforeseeable Emergency, as defined below, but only if the netamount payable upon such settlement does not exceed the amountsnecessary to relieve such emergency plus amounts necessary to paytaxes reasonably anticipated as a result of the settlement, aftertaking into account the extent to which the emergency is or may berelieved through reimbursement or compensation from insurance orotherwise or by liquidation of the Participant’s other assets (to theextent such liquidation would not itself cause severe financialhardship), or by cessation of deferrals under the Plan. Upon afinding that an Unforeseeable Emergency has occurred with respect toa Participant, any election of the Participant to defer compensationthat will be earned in whole or part by services inthe year in which the emergency occurred or is found to continuewill be immediately cancelled.
 
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 (2) Domestic Relations Order. The 409A Awardmay permit the acceleration of the exercise or distribution time orschedule to an individual other than the Participant as may benecessary to comply with the terms of a domestic relations order (asdefined in Section 414(p)(1)(B) of the Code). (3) Conflicts of Interest. Such 409A Award maypermit the acceleration of the settlement time or schedule as may benecessary to comply with an ethics agreement with the Federalgovernment or to comply with a Federal, state, local or foreignethics law or conflict of interest law in compliance with TreasuryRegulation § 1.409A-3(j)(4)(iii). (4) Change. The Committee may exercise thediscretionary right to accelerate the lapse of the substantial riskof forfeiture of any unvested compensation deemed to be a 409A Awardupon a 409A Change in Control or to terminate the Plan upon or within12 months after a 409A Change in Control, or otherwise to the extentpermitted under Treasury Regulation § 1.409A-3(j)(4)(ix), oraccelerate settlement of such 409A Award in any other circumstancepermitted under Treasury Regulation § 1.409A-3(j)(4). (E) Definitions. For purposes of this Exhibit A, the followingterms shall be defined as set forth below: (1) “409A Change in Control” shall be deemed tohave occurred if, in connection with a Change in Control (or anyother event defined as a change in control relating to a 409A Awardunder any applicable Company document), there occurs a change in theownership of the Company, a change in effective control of theCompany, or a change in the ownership of a substantial portion of theassets of the Company, as defined in Treasury Regulation§ 1.409A-3(i)(5). (2) “409A Disability” means an event whichresults in the Participant being (i) unable to engage in anysubstantial gainful activity by reason of any medically determinablephysical or mental impairment that can be expected to result in deathor can be expected to last for a continuous period of not less than12 months, or (ii), by reason of any medically determinable physicalor mental impairment that can be expected to result in death or canbe expected to last for a continuous period of not less than 12months, receiving income replacement benefits for a period of notless than three months under an accident and health plan coveringemployees of the Company or its subsidiaries.
 
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 (3) “Unforeseeable Emergency” means a severefinancial hardship to the Participant resulting from an illness oraccident 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 theParticipant’s property due to casualty, or similar extraordinaryand unforeseeable circumstances arising as a result of eventsbeyond the control of the Participant, and otherwise meeting thedefinition set forth in Treasury Regulation § 1.409A-3(i)(3). (F) Time of Distribution. In the case of any distribution of a409A Award, if the timing of such distribution is not otherwise specified inthe Plan or an Award agreement or other governing document, the distributionshall be made within 60 days after the date at which the settlement of theAward is specified to occur. In the case of any distribution of a 409A Awardduring a specified period following a settlement date, the maximum periodshall be 90 days, and the Participant shall have no influence (other thanpermitted deferral elections) on any determination as to the tax year in whichthe distribution will be made during any period in which a distribution may bemade; (G) Determination of “Specified Employee.” For purposes of adistributions under this Exhibit A, Section (i)(C)(2), status of aParticipant as a “specified employee” shall be determined annually under theCompany’s administrative procedure for such determination for purposes of allplans 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 toanticipation, alienation, sale, transfer, assignment, pledge, encumbrance,attachment, or garnishment by creditors of the Participant or creditors ofthe Participant’s Beneficiary. (I) Limitation on Setoffs. If the Company has a right of setoffthat could apply to a 409A Award, such right may only be exercised at the timethe 409A Award would have been distributed to the Participant or his or herBeneficiary. (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 thisPlan.(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 ofCode Section 409A, and any portion of a vesting tranche that would vest on a pro rata basisin the event of a separation from service on December 31 of a given year, and the remainingportion of such vesting tranche that would not so vest, each shall be deemed to be aseparate payment for purposes of Code Section 409A.(iii) *Distributions Upon Vesting.*In the case of any Non-409A Award providing for adistribution upon the lapse of a substantial risk of forfeiture, if the timing of suchdistribution (compliant with Section 409A) is not otherwise specified in the Plan or anAward agreement or other governing document, the distribution shall be made not later thanMarch 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-yearperformance year then the determination of the level of achievement ofperformance and the distribution shall be made between January 1 and March 15 of theyear 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 inwhich the distribution will be made.
 
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(iv) *Limitation on Adjustments*. Any adjustment under Section 10(c) shall beimplemented in a way that complies with applicable requirements under Section 409A so thatNon- 409A Option/SARs do not, due to the adjustment, become 409A Awards, and otherwise sothat no adverse consequences under Section 409A result to Participants.(v) *Release or Other Termination Agreement*. If the Company requires a Participant toexecute a release, non-competition, or other agreement as a condition to receipt of apayment upon or following a termination of employment, the Company will supply to theParticipant a form of such release or other document not later than the date of theParticipant’s termination of employment, which must be returned within the minimum timeperiod required by law and must not be revoked by the Participant within the applicabletime period for revocation in order for the Participant to satisfy any such condition. Ifany amount payable during a fixed period following termination of employment is subject tosuch a requirement and the fixed period would begin in one tax year and end in the next taxyear, the Company, in determining the time of payment of any such amount, will not beinfluenced by the timing of any action of the Participant including execution of such arelease or other document and expiration of any revocation period. In particular, theCompany will be entitled in its discretion to deposit any such payment in escrow duringeither year comprising such fixed period, so that such deposited amount is constructivelyreceived and taxable income to the Participant upon deposit but with distribution from suchescrow remaining subject to the Participant’s execution and non-revocation of such releaseor other document.(vi) *Limit on Authority to Amend*. The authority to adopt amendments under Section10(e) does not include authority to take action by amendment that would have the effect ofcausing 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 aParticipant) being “permitted” under Section 409A mean that the term or event will notcause the Participant to be deemed to be in constructive receipt of compensation relatingto the 409A Award prior to the distribution of cash, Shares or other property or to beliable for payment of interest or a tax penalty under Section 409A.
 
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Exhibit BDeferral Election RulesIf a participant in a plan, program or other compensatory arrangement (a “plan”) of MarvelEnterprises, Inc. (the “Company”) is permitted to elect to defer awards or other compensation, anysuch election relating to compensation deferred under the applicable plan must be received by theCompany 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 ofcompliance with Section 409A of the Internal Revenue Code (the “Code”), any such election to defershall be subject to the rules set forth below, subject to any additional restrictions as may bespecified by the Administrator. Under no circumstances may a participant elect to defercompensation to which he or she has attained, at the time of deferral, a legally enforceable rightto current receipt of such compensation. (1) Initial Deferral Elections. Any initial election to defercompensation (including the election as to the type and amount of compensation to bedeferred and the time and manner of settlement of the deferral) must be made (andshall be irrevocable) no later than December 31 of the year before the participant’sservices are performed which will result in the earning of the compensation, except asfollows: **•** Initial deferral elections with respect to compensation that,absent the election, constitutes a short-term deferral may be made inaccordance with Treasury Regulation § 1.409A-2(a)(4) and (b); **•** Initial deferral elections with respect to compensation thatremains subject to a requirement that the participant provide services for atleast 12 months (a “forfeitable right” under Treasury Regulation§ 1.409A-2(a)(5)) may be made on or before the 30th day after theparticipant obtains the legally binding right to the compensation, providedthat the election is made at least 12 months before the earliest date at whichthe forfeiture condition could lapse and otherwise in compliance with TreasuryRegulation § 1.409A-2(a)(5); **•** Initial deferral elections by a participant in his or herfirst year of eligibility may be made within 30 days after the date theparticipant becomes eligible to participate in the applicable plan, withrespect to compensation paid for services to be performed after the electionand in compliance with Treasury Regulation § 1.409A-2(a)((7); **•** Initial deferral elections by a participant with respect toperformance-based compensation (as defined under Treasury Regulation§ 1.409A-1(e)) may be made on or before the date that is six months before theend of the performance period, provided that (i) the participant was employedcontinuously from either the beginning of the performance period or the laterdate on which the performance goal was established, (ii) the election to deferis made before such compensation has become readily ascertainable (i.e.,substantially certain to be paid), (iii) the performance period is at least 12months in length and the performance goal was established no later than 90days after the commencement of the service period to which the performancegoal relates, (iv) the performance-based compensation is not payable in theabsence of performance except due to death, disability, a 409A Change inControl (as defined in Section 11(a)(v)(A) of the 2004 Stock Award andIncentive Plan) or as otherwise permitted under Treasury Regulation§ 1.409A-1(e), and (v) this initial deferral election must in any event complywith Treasury Regulation § 1.409A-2(a)(8);
 
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 **•** Initial deferral elections resulting in Company matchingcontributions may be made in compliance with Treasury Regulation§ 1.409A-2(a)(9); **•** Initial deferral elections may be made to the fullestpermitted under other applicable provisions of Treasury Regulation§ 1.409A-2(a); and (2) Further Deferral Elections. The foregoing notwithstanding, for any electionto further defer an amount that is deemed to be a deferral of compensation subject toCode Section 409A (to the extent permitted under Company plans, programs andarrangements), any further deferral election made under the Plan shall be subject tothe following, provided that deferral elections in 2005 — 2008 may be made underapplicable transition rules under Section 409A: **•** The further deferral election will not take effect until atleast 12 months after the date on which the election is made; **•** If the election relates to a distribution event other than aDisability (as defined in Treasury Regulation § 1.409A-3(i)(4)), death, orUnforeseeable 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 aperiod of not less than five years from the date such payment would otherwisehave been paid (or in the case of a life annuity or installment paymentstreated as a single payment, five years from the date the first amount wasscheduled to be paid), to the extent required under Treasury Regulation§ 1.409A-2(b); **•** The requirement that the further deferral election be made atleast 12 months before the original deferral amount would be first payable maynot be waived by the Administrator, and shall apply to a payment at aspecified time or pursuant to a fixed schedule (and in the case of a lifeannuity or installment payments treated as a single payment, 12 months beforethe date that the first amount was scheduled to be paid); **•** The further deferral election shall be irrevocable when filedwith the Company; and **•** The further deferral election otherwise shall comply with theapplicable requirements of Treasury Regulation § 1.409A-2(b). (3) Transition Rules. Initial deferral elections and elections to change anyexisting deferred date for distribution of compensation in any transition perioddesignated under Department of the Treasury and IRS regulations may be permitted bythe Company to the fullest extent authorized under transition rules and otherapplicable guidance under Code Section 409A (including transition rules in effect inthe period 2005 — 2008).
 
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