EXHIBIT 10.21

                              EMPLOYMENT AGREEMENT


          EMPLOYMENT  AGREEMENT,  dated as of October 29, 1999,  between  Marvel
Enterprises,  Inc., a Delaware  corporation  (the "Company") and Allen S. Lipson
(the "Executive").

          WHEREAS, the Company wishes to employ the Executive, and the Executive
wishes to accept such employment,  on the terms and conditions set forth in this
Agreement.

          NOW, THEREFORE,  in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived  herefrom,  the parties hereto
agree as follows:

         1.       Employment, Duties and Acceptance.

          1.1 Employment,  Duties.  The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render exclusive and full-time services
to the Company as Executive  Vice  President -- Business and Legal Affairs or in
such other executive  position as may be mutually agreed upon by the Company and
the  Executive.  The  Executive  shall  report  solely  to the  Company's  Chief
Executive  Officer and Board of  Directors  and shall  perform such other duties
consistent  with such  positions  as may be  assigned  to the  Executive  by the
Company's Chief Executive Officer or Board of Directors.

          1.2  Acceptance.  The Executive  hereby  accepts such  employment  and
agrees to render the services  described  above.  During the Term, the Executive
agrees  to serve  the  Company  faithfully  and to the  best of the  Executive's
ability,  to devote the Executive's  entire  business time,  energy and skill to
such  employment  and to use the  Executive's  professional  efforts,  skill and
ability to promote the  Company's  interests.  The Executive  further  agrees to
accept election,  and to serve during all or any part of the Term, as an officer
or director of the Company and of any  subsidiary  or  affiliate of the Company,
without any  compensation  therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be.

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


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         2.       Term of Employment

          2.1 The  Term.  The  term of the  Executive's  employment  under  this
Agreement  (the  "Term")  shall  commence on November  15, 1999 (the  "Effective
Date") and shall end on November  15,  2002 (the  "Expiration  Date").  The Term
shall end earlier  than the  Expiration  Date if sooner  terminated  pursuant to
Section 4 hereof.  The Expiration Date shall be automatically  postponed for one
year, and the Term shall be  automatically  extended by one year,  unless either
party  hereto  provides  the  other  party  with  written  notice(a  "Notice  of
Nonrenewal"),  not later than sixty days prior to the  Expiration  Date,  of its
election not to permit the Term to be so extended, and the Expiration Date shall
thereafter be automatically postponed for one additional year and the Term shall
thereafter be automatically  extended by one additional year, on each subsequent
anniversary  of the date of this  Agreement,  unless  either party  provides the
other  party  with  written  notice,  not later  than  sixty  days prior to such
subsequent  anniversary  of the date of this  Agreement,  of its election not to
permit the Term to be so extended.

         3.       Compensation; Benefits.

          3.1 Salary.  As compensation for all services to be rendered  pursuant
to this  Agreement,  the Company  agrees to pay the Executive  during the Term a
base salary,  payable bi-weekly in arrears,  at the annual rate of $325,000 less
such  deductions  or amounts to be withheld as  required by  applicable  law and
regulations  and  deductions   authorized  by  the  Executive  in  writing.  The
Executive's  base salary shall be reviewed no less  frequently  than annually by
the Board of Directors and may be increased,  but not decreased, by the Board of
Directors.  The  Executive's  base  salary  as in  effect  from  time to time is
referred to in this Agreement as the "Base Salary".

          3.2 Bonus.  In  addition  to the  amounts to be paid to the  Executive
pursuant to Section 3.1 hereof, the Executive will be entitled to receive a cash
bonus in respect  of 1999 in the amount of  $180,000  (the "1999  Bonus").  With
respect  to each  fiscal  year of the Term after  1999,  the  Executive  will be
eligible to receive a cash bonus based upon the attainment of performance  goals
set by the Board of Directors (the "Bonus Performance  Goals").  The Executive's
target  annual bonus  amount  shall be 50% of his base salary for the year.  The
1999 Bonus shall be paid to the Executive no later than  February 1, 2000.  Each
annual  bonus in respect of  subsequent  fiscal  years shall be paid when annual
bonuses are paid generally to the Company's other senior executive  officers but
in no event later than the ninetieth day of the next fiscal year.

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          3.3 Business  Expenses.  The Company  shall pay for or  reimburse  the
Executive  for  all  reasonable  expenses  actually  incurred  by or paid by the
Executive  during the Term in the performance of the Executive's  services under
this Agreement, including the cost and expense associated with the use of a cell
phone,  upon  presentation  of  expense  statements  or  vouchers  or such other
supporting information as the Company customarily may require of its officers.

          3.4 Vacation.  During the Term,  the Executive  shall be entitled to a
vacation  period or periods of four (4) weeks per year taken in accordance  with
the vacation  policy of the Company during each year of the Term.  Vacation time
not used by the end of a calendar year shall be forfeited.

          3.5 Fringe Benefits.  During the Term, the Executive shall be entitled
to all benefits for which the  Executive  shall be eligible  under any qualified
pension plan,  401(k) plan, group insurance or other so-called  "fringe" benefit
plan which the Company provides to its executive employees  generally,  together
with  executive  medical  benefits  for the  Executive,  as from time to time in
effect for executive employees of the Company generally.

          3.6  Additional  Benefits.  During the Term,  the  Executive  shall be
entitled  to  such  other  benefits  as are  specified  in  Schedule  I to  this
Agreement.

         4.       Termination.

          4.1 Death.  If the Executive shall die during the Term, the Term shall
terminate immediately.

          4.2  Disability.  If  during  the  Term  the  Executive  shall  become
physically or mentally  disabled,  whether  totally or partially,  such that the
Executive is unable to perform the Executive's  principal services hereunder for
(i) a period of six consecutive  months or (ii) for shorter periods  aggregating
six months during any twelve month period, the Company may at any time after the
last day of the six  consecutive  months of  disability  or the day on which the
shorter periods of disability shall have equaled an aggregate of six months,  by
written  notice to the Executive  (but before the  Executive has recovered  from
such disability), terminate the Term.

          4.3 Cause.  The Term may be  terminated  by the Company upon notice to
the Executive upon the occurrence of any event  constituting  "Cause" as defined
herein. As used herein, the term "Cause" means: (i) the Executive's  willful and
intentional failure or refusal to perform or observe any of his material duties,
responsibilities or obligations set forth in this Agreement;  provided, however,

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that the Company  shall not be deemed to have Cause  pursuant to this clause (i)
unless the Company gives the Executive written notice that the specified conduct
has  occurred  and making  specific  reference  to this  Section  4.3(i) and the
Executive  fails to cure the conduct  within  thirty (30) days after  receipt of
such  notice;  (ii)  breach by the  Executive  of any of his  obligations  under
Section 5 hereof;  (iii)  any  willful  and  intentional  acts of the  Executive
involving  fraud,  theft,  misappropriation  of funds,  embezzlement or material
dishonesty  affecting the Company or willful  misconduct by the Executive  which
has, or could  reasonably be expected to have, a material  adverse effect on the
Company;  or (iv) the  Executive's  conviction  of,  or plea of  guilty  or nolo
contendre to, an offense which is a felony in the jurisdiction involved.

          4.4  Permitted  Termination  by the  Executive.  (a) The  Term  may be
terminated by the Executive upon notice to the Company of any event constituting
"Good Reason" as defined  herein.  As used herein,  the term "Good Reason" means
the occurrence of any of the following, without the prior written consent of the
Executive:  (i)  assignment of the Executive to duties  materially  inconsistent
with the  Executive's  positions  as  described  in Section 1.1  hereof,  or any
significant diminution in the Executive's duties or responsibilities, other than
in connection with the  termination of the  Executive's  employment for Cause or
disability  or by the  Executive  other than for Good Reason;  (ii) any material
breach of this  Agreement by the Company which is  continuing;(iii)  a change in
the location of the  Executive's  principal  place of  employment  to a location
other than as specified in Section 1.3 hereof; or (iv) the occurrence of a Third
Party Change in Control (as defined in Section 4.5(d)) provided,  however,  that
the  Executive  shall not be deemed to have Good Reason  pursuant to clauses (i)
and (ii) above unless the Executive  gives the Company  written  notice that the
specified  conduct or event has occurred and making  specific  reference to this
Section 4.4 and the Company  fails to cure such conduct or event  within  thirty
(30) days of receipt of such notice.

          (b) The Term may be  terminated by the Executive at any time by giving
the Company a notice of termination  specifying a termination  date no less than
sixty (60) days after the date the notice is given.

          4.5 Severance.  (a) If the Term is terminated pursuant to Section 4.1,
4.2 or 4.3 hereof,  or by the Executive  other than pursuant to Section  4.4(a),
the  Executive  shall be  entitled  to receive  his Base  Salary,  benefits  and
reimbursements provided hereunder at the rates provided in Sections 3.1, 3.5 and
3.6 hereof to the date on which such termination shall take effect. In addition,
if the Term is terminated  pursuant to Section 4.1 or 4.2, the  Executive  shall
also be entitled to receive any bonus which has been awarded  under  Section 3.2

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in respect of a previously completed fiscal year but which has not yet been paid
and a pro rata portion (based on time) of the annual bonus for the year in which
the  termination  date occurs (a "Pro Rata Bonus").  The Pro Rata Bonus to which
the  Executive  is  entitled,  if any,  for each year  other  than 1999 shall be
determined by reference to the attainment of the  performance  goals referred to
in  Section  3.2 as of the  end of the  fiscal  year  in  which  termination  of
employment  occurs  and shall be paid when  bonuses  in respect of that year are
generally paid to the Company's other  executives but in no event later than the
ninetieth day of the next fiscal year.  If, prior to June 30, 2000,  the Term is
terminated  pursuant  to  Section  4.3  hereof or by the  Executive  other  than
pursuant to Section  4.4(a),  the Executive  shall promptly repay to the Company
the 1999 Bonus and the  Company  shall  have the right to offset  any  severance
amounts due to the Executive by the amount not so repaid.

          (b) Except as provided in Section 4.5(c), if the Term is terminated by
the Executive pursuant to clauses (i), (ii) or (iii) of Section 4.4(a) or by the
Company  other than  pursuant to Section 4.1, 4.2 or 4.3, or if the Term expires
on the Scheduled  Expiration  Date as a result of the Company giving a Notice of
Nonrenewal,  the Company shall continue  thereafter to provide the Executive (i)
payments of Base Salary in the manner and amounts specified in Section 3.1 until
the first  anniversary of the date of  termination,  (ii) if termination  occurs
prior to the time that the 1999 Bonus is paid, a bonus in the amount of $180,000
and if  termination  occurs  at any time  after a bonus has been  awarded  under
Section 3.2 in respect of a  previously  completed  fiscal year and prior to the
time that the bonus has been paid,  the amount of that  bonus,  (iii) a Pro Rata
Bonus for the year in which  termination  occurs and (iv) fringe benefits in the
manner and amounts  specified in Section 3.5 until the earlier of the Expiration
Date, the period ending on the date the Executive  begins work as an employee or
consultant  for any  other  entity  or  twelve  (12)  months  after  the date of
termination.  In addition,  all equity  arrangements  provided to the  Executive
hereunder or under any employee  benefit plan of the Company  shall  continue to
vest for the  period  specified  in clause  (iv) of this  Section  4.5(b)(unless
vesting is accelerated upon the occurrence of a Third Party Change in Control as
described in Schedule I) and shall remain  exercisable for ninety days after the
end of that period.  Bonuses payable pursuant to this Section 4.5(b), other than
the Pro Rata  Bonus,  shall be payable in the manner  described  in Section  3.2
within 30 days  after the date of  termination.  The Pro Rata Bonus to which the
Executive is entitled,  if any, shall be paid within the time period provided in
Section  4.5(a).  The Executive shall have no duty or obligation to mitigate the
amounts or benefits required to be provided pursuant to this Section 4.5(b), nor
shall any such amounts or benefits be reduced or offset by any other  amounts to

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which Executive may become  entitled;  provided,  that if the Executive  becomes
employed  by a new  employer  or  self-employed  prior  to  the  earlier  of the
Expiration  Date or twelve  (12)  months  after the date of  termination,  up to
one-half of the Base Salary  payable to the  Executive  pursuant to this Section
4.5(b)  shall be  reduced  by an amount  equal to the  amount  earned  from such
employment  with respect to that period (and the Executive  shall be required to
return to the  Company,  without  interest,  any amount by which  such  payments
pursuant to Section this 4.5(b) exceed the Base Salary to which the Executive is
entitled after giving effect to that  reduction)  and, if the Executive  becomes
eligible to receive  medical or other welfare  benefits  under another  employer
provided plan, the  corresponding  medical and other welfare  benefits  provided
under this Section 4.5(b) shall be  terminated.  As a condition to the Executive
receiving the payments  under  Section  4.5(b),  the Executive  agrees to permit
verification  of his  employment  records and  Federal  income tax returns by an
independent  attorney or  accountant,  selected  by the  Company but  reasonably
acceptable to the Executive,  who agrees to preserve the  confidentiality of the
information  disclosed by the Executive  except to the extent required to permit
the  Company  to verify the  amount  received  by  Executive  from other  active
employment.

          (c) If the Term is  terminated  by the  Executive  pursuant to Section
4.4(a),  or by the Company other than pursuant to Section 4.1, 4.2 or 4.3, or if
the Term  expires on the  Scheduled  Expiration  Date as a result of the Company
giving a Notice of  Nonrenewal  and, in any such event,  the  termination  shall
occur upon or following  the  occurrence  of a Third Party Change in Control (as
defined  in  Section  4.5(d)  or in  contemplation  of a Third  Party  Change in
Control,  the Company shall thereafter provide the Executive (i) an amount equal
to two (2) times the sum of (x) the then current Base Salary and (y) the average
of the two most recent annual  bonuses paid  (treating any annual bonus which is
not paid as a result of the Executive's  failure to attain the Bonus Performance
Goals as having been paid in an amount  equal to zero) to the  Executive  during
the Term (or if only one annual  bonus has been paid,  the amount of that annual
bonus, and if that  termination  occurs prior to the time at which 1999 Bonus is
paid,$180,000),  to be paid in a lump  sum  within  30 days  after  the  date of
termination,  and (ii)  benefits in the manner and amounts  specified in Section
3.5 until twelve (12) months after the date of  termination  or, with respect to
medical and other  welfare  benefits,  when the  Executive  becomes  eligible to
receive medical or other welfare benefits under another  employer  provided plan
if sooner than twelve (12) months  after the date of  termination.  In addition,
all  equity  arrangements  provided  to the  Executive  hereunder  or under  any
employee  benefit plan of the Company  shall  continue to vest until twelve (12)
months after the date of  termination  unless  vesting is  accelerated  upon the
occurrence of the Third Party Change in Control as described in Schedule I.

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          (d) For  purposes of this  Agreement,  a Third Party Change in Control
shall be deemed to have  occurred if (i) any  "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Securities  Exchange Act of 1934, as
amended (the "Exchange  Act")),  other than an Excluded Person or Excluded Group
(as defined below) (hereinafter, a "Third Party"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated  under the Exchange Act),  directly
or indirectly,  of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then  outstanding  securities
entitled to vote in the election of  directors of the Company,  (ii) the Company
is a party to any merger,  consolidation  or similar  transaction as a result of
which the  shareholders  of the Company  immediately  prior to such  transaction
beneficially own securities of the surviving entity representing less than fifty
percent (50%) of the combined voting power of the surviving entity's outstanding
securities entitled to vote in the election of directors of the surviving entity
or (iii) all or substantially all of the assets of the Company are acquired by a
Third Party.  "Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the  Exchange  Act) that (i)  includes  one or more  Excluded
Persons;  provided  that the  voting  power of the voting  stock of the  Company
"beneficially  owned" (as such term is used in Rule 13d-3  promulgated under the
Exchange Act) by such Excluded  Persons  (without  attribution  to such Excluded
Persons of the ownership by other members of the "group")  represents a majority
of the voting  power of the voting stock  "beneficially  owned" (as such term is
used in Rule 13d-3  promulgated  under the  Exchange  Act) by such group or (ii)
exists  solely by virtue of the fact that the  members of such group are parties
to the  Stockholders'  Agreement,  dated as of October 1, 1998, by and among the
Company, Isaac Perlmutter,  Avi Arad, Mark Dickstein,  The Chase Manhattan Bank,
Morgan Stanley & Co.  Incorporated,  Whippoorwill  Associates  Incorporated  and
various other stockholders of the Company, as that agreement may be amended from
time to time (the "Stockholders  Agreement").  "Excluded Person" means (i) while
the Stockholders  Agreement is in effect in substantially  its current form, any
person or entity who or which is a party to the Stockholders Agreement as of the
Effective Date and any affiliate of such a party to the  Stockholders  Agreement
who becomes a party to the Stockholders Agreement, and (ii) Isaac Perlmutter and
Avi Arad or any of their affiliates.

          (e)(i) If any  payment  or  benefit  (within  the  meaning  of Section
280G(b)(2) of the Internal  Revenue Code of 1986, as amended (the  "Code")),  to
the Executive or for the  Executive's  benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, the Executive's employment with the Company or a change
in ownership or effective control of the Company or of a substantial  portion of
its assets (a "Parachute Payment" or "Parachute Payments"),  would be subject to

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the excise tax imposed by Section  4999 of the Code or any interest or penalties
are incurred by the Executive  with respect to such excise tax (such excise tax,
together  with any such interest and  penalties,  are  hereinafter  collectively
referred to as the "Excise Tax"), then the Executive will be entitled to receive
an  additional  payment  (a  "Gross-Up  Payment")  in an amount  such that after
payment by the  Executive of all taxes  (including  any  interest or  penalties,
other than interest and penalties  imposed by reason of the Executive's  failure
to file  timely a tax  return  or pay taxes  shown to be due on the  Executive's
return),  including  any Excise  Tax  imposed  upon the  Gross-Up  Payment,  the
Executive  retains  an amount of the  Gross-Up  Payment  equal to the Excise Tax
imposed upon the Parachute Payments.

          (ii) An initial  determination  as to  whether a  Gross-Up  Payment is
required  pursuant to this  Agreement  and the amount of such  Gross-Up  Payment
shall be made at the Company's expense by the Company's regular outside auditors
(the  "Accounting  Firm").  The Accounting Firm shall provide its  determination
(the  "Determination"),  together  with  detailed  supporting  calculations  and
documentation  to  the  Company  and  the  Executive  within  ten  days  of  the
Termination  Date if  applicable,  or promptly upon request by the Company or by
the  Executive  (provided  the  Executive  reasonably  believes  that any of the
Parachute  Payments may be subject to the Excise Tax) and if the Accounting Firm
determines  that no Excise  Tax is payable by the  Executive  with  respect to a
Parachute Payment or Parachute Payments,  it shall furnish the Executive with an
opinion  reasonably  acceptable  to the  Executive  that no  Excise  Tax will be
imposed with respect to any such Parachute Payment or Parachute Payments. Within
ten days of the delivery of the  Determination  to the Executive,  the Executive
shall have the right to dispute the Determination (the "Dispute").  The Gross-Up
Payment, if any, as determined pursuant to this Section 4.5(e)(ii) shall be paid
by the Company to the Executive within ten days of the receipt of the Accounting
Firm's  determination  notwithstanding the existence of any Dispute. If there is
no Dispute,  the Determination  shall be binding,  final and conclusive upon the
Company and the  Executive  subject to the  application  of Section  4.5(e)(iii)
below.  The Company and the  Executive  shall  resolve any Dispute in accordance
with the terms of this Agreement.

          (iii) As a result of the  uncertainty  in the  application of Sections
4999 and 280G of the Code,  the parties  acknowledge  that it is possible that a
Gross-Up  Payment (or a portion thereof) will be paid which should not have been
paid (an "Excess  Payment") or a Gross-Up  Payment (or a portion  thereof) which
should  have  been  paid  will  not  have  been  paid  (an  "Underpayment").  An
Underpayment  shall be  deemed  to have  occurred  (i) upon  notice  (formal  or
informal) to the  Executive  from any  governmental  taxing  authority  that the
Executive's tax liability (whether in respect of the Executive's current taxable

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year or in respect of any prior  taxable year) may be increased by reason of the
imposition of the Excise Tax on a Parachute  Payment or Parachute  Payments with
respect to which the Company has failed to make a sufficient  Gross-Up  Payment,
(ii) upon a determination  by a court,  (iii) by reason of  determination by the
Company  (which shall include the position  taken by the Company,  together with
its  consolidated  group,  on its  federal  income tax  return) or (iv) upon the
resolution of the Dispute to the  Executive's  satisfaction.  If an Underpayment
occurs,  the Executive  shall promptly  notify the Company and the Company shall
promptly,  but in any  event,  at least five days prior to the date on which the
applicable  government  taxing  authority  has  requested  payment,  pay  to the
Executive an additional Gross-Up Payment equal to the amount of the Underpayment
plus any interest and penalties  (other than  interest and penalties  imposed by
reason of the Executive's failure to file timely a tax return or pay taxes shown
to be due on the  Executive's  return)  imposed on the  Underpayment.  An Excess
Payment  shall be  deemed  to have  occurred  upon a "Final  Determination"  (as
hereinafter  defined)  that the Excise Tax shall not be imposed upon a Parachute
Payment or  Parachute  Payments (or portion  thereof)  with respect to which the
Executive had previously  received a Gross-Up Payment.  A "Final  Determination"
shall be  deemed to have  occurred  when the  Executive  has  received  from the
applicable  government  taxing authority a refund of taxes or other reduction in
the  Executive's  tax liability by reason of the Excise  Payment and upon either
(x) the date a  determination  is made by, or an agreement is entered into with,
the applicable  governmental  taxing  authority  which finally and  conclusively
binds the Executive and such taxing  authority,  or in the event that a claim is
brought  before a court of competent  jurisdiction,  the date upon which a final
determination has been made by such court and either all appeals have been taken
and finally  resolved or the time for all appeals has expired or (y) the statute
of  limitations  with  respect  to the  Executive's  applicable  tax  return has
expired. If an Excess Payment is determined to have been made, the amount of the
Excess  Payment  shall be treated as a loan by the Company to the  Executive and
the  Executive  shall pay to the  Company  on demand  (but not less than 10 days
after the  determination  of such Excess  Payment  and  written  notice has been
delivered to the Executive) the amount of the Excess Payment plus interest at an
annual rate equal to the Applicable Federal Rate provided for in Section 1274(d)
of the Code from the date the  Gross-Up  Payment  (to which the  Excess  Payment
relates) was paid to the Executive until the date of repayment to the Company.

          (iv)  Notwithstanding  anything  contained  in this  Agreement  to the
contrary, in the event that, according to the Determination,  an Excise Tax will
be imposed on any Parachute Payment or Parachute Payments, the Company shall pay
to the applicable  government taxing authorities as Excise Tax withholding,  the
amount  of the  Excise  Tax that the  Company  has  actually  withheld  from the

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Parachute Payment or Parachute Payments or the Gross Up Payment.

          (f) Except as provided  in this  Section  4.5,  pursuant to the Marvel
Enterprises,  Inc. Stock Option Plan as provided in Schedule I to this Agreement
and as required  by law,  the Company  shall have no further  obligation  to the
Executive after termination of the Term.

         5.       Protection of Confidential Information; Non-Competition

          5.1 In view of the fact that the Executive's work for the Company will
bring the  Executive  into close contact with many  confidential  affairs of the
Company  not  readily  available  to the  public,  as well as plans  for  future
developments by the Company, the Executive agrees:

          5.1.1 To keep and retain in the strictest  confidence all confidential
matters  of the  Company,  including,  without  limitation,  "know  how",  trade
secrets,  customer  lists,  pricing  policies,  operational  methods,  technical
processes,  formulae,  inventions  and  research  projects,  and other  business
affairs of the Company  ("Confidential  Information"),  learned by the Executive
heretofore  or hereafter,  and not to use or disclose them to anyone  outside of
the Company, either during or after the Executive's employment with the Company,
except in the course of performing the Executive's  duties hereunder or with the
Company's express written consent;  provided,  however, that the restrictions of
this Section 5.1.1 shall not apply to that part of the Confidential  Information
that the Executive  demonstrates is or becomes generally available to the public
other than as a result of a  disclosure  by the  Executive or is  available,  or
becomes available, to the Executive on a non-confidential basis, but only if the
source of such  information is not prohibited from  transmitting the information
to the Executive by a contractual, legal, fiduciary, or other obligation; and

          5.1.2  To  deliver  promptly  to the  Company  on  termination  of the
Executive's  employment  by the  Company,  or at any  time  the  Company  may so
request, all memoranda,  notes, records, reports, manuals, drawings,  blueprints
and other documents (and all copies thereof) relating to the Company's  business
and all property associated  therewith,  which the Executive may then possess or
have under the Executive's control.

          5.2 For a period of one (1) year after he ceases to be employed by the
Company under this Agreement or otherwise,  if such cessation arises pursuant to
Section  4.3,  or as a  result  of  termination  by the  Executive  which is not
pursuant  to  Section  4.4 or is  otherwise  in  breach of this  Agreement,  the
Executive shall not, directly or indirectly,  enter the employ of, or render any

                                       10

<PAGE>

services to, any person, firm or corporation engaged in any business competitive
with the business of the Company or of any of its  subsidiaries  or  affiliates;
the Executive  shall not engage in such business on the Executive's own account;
and the Executive shall not become interested in any such business,  directly or
indirectly,  as  an  individual,   partner,   shareholder,   director,  officer,
principal, agent, employee, trustee, consultant, or in any other relationship or
capacity; provided, however, that nothing contained in this Section 5.2 shall be
deemed to prohibit the Executive from acquiring,  solely as an investment, up to
five  percent  (5%) of the  outstanding  shares of  capital  stock of any public
corporation  or  during  such one (1) year  period,  taking  a  position  with a
business the main business of which is the sale of retail products to customers.

          5.3 If the  Executive  commits  a  breach,  or  threatens  to commit a
breach,  of any of the  provisions  of Sections  5.1 or 5.2 hereof,  the Company
shall have the following rights and remedies:

          5.3.1 The right and remedy to have the  provisions  of this  Agreement
specifically  enforced  by  any  court  having  equity  jurisdiction,  it  being
acknowledged  and agreed  that any such breach or  threatened  breach will cause
irreparable  injury to the  Company and that money  damages  will not provide an
adequate remedy to the Company; and

          5.3.2 The right and remedy to require the Executive to account for and
pay over to the Company all compensation,  profits, monies, accruals, increments
or other benefits (collectively "Benefits") derived or received by the Executive
as the result of any transactions constituting a breach of any of the provisions
of Section 5.2 hereof,  and the  Executive  hereby agrees to account for and pay
over such  Benefits to the Company.  Each of the rights and remedies  enumerated
above shall be independent of the other, and shall be severally enforceable, and
all of such rights and remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity.

          5.4 If any of the  covenants  contained in Sections 5.1 or 5.2 hereof,
or any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.

          5.5 If any of the  covenants  contained in Sections 5.1 or 5.2 hereof,
or any part  thereof,  are held to be  unenforceable  because of the duration of
such  provision or the area covered  thereby,  the parties hereto agree that the
court  making  such  determination  shall have the power to reduce the  duration
and/or area of such  provision and, in its reduced form,  said  provision  shall
then be enforceable.

                                       11

<PAGE>


          5.6 The parties  hereto  intend to and hereby confer  jurisdiction  to
enforce the  covenants  contained in Sections 5.1 and 5.2 hereof upon the courts
of any state within the geographical scope of such covenants.  In the event that
the courts of any one or more of such states  shall hold such  covenants  wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties  hereto that such  determination  not bar or in any way
affect the  Company's  right to the relief  provided  above in the courts of any
other states within the  geographical  scope of such covenants as to breaches of
such covenants in such other  respective  jurisdictions,  the above covenants as
they  relate to each state being for this  purpose  severable  into  diverse and
independent covenants.

          5.7 In the event that any action,  suit or other  proceeding in law or
in equity is brought to enforce the covenants  contained in Sections 5.1 and 5.2
hereof or to obtain  money  damages  for the  breach  thereof,  and such  action
results in the award of a judgment  for money  damages or in the granting of any
injunction  in  favor  of  the  Company,  all  expenses  (including   reasonable
attorneys'  fees) of the Company in such action,  suit or other proceeding shall
(on demand of the  Company) be paid by the  Executive.  In the event the Company
fails to obtain a judgment for money  damages or an  injunction  in favor of the
Company, all expenses (including reasonable attorneys' fees) of the Executive in
such action, suit or other proceeding shall (on demand of the Executive) be paid
by the Company.

         6.       Inventions and Patents.

          The Executive agrees that all processes,  technologies and inventions,
including  new  contributions,  improvements,  ideas  and  discoveries,  whether
patentable  or not,  conceived,  developed,  invented  or made by him during his
employment   by  the   Company  or  for  one  year   thereafter   (collectively,
"Inventions")  shall belong to the Company,  provided that such  Inventions grew
out of the  Executive's  work with the  Company  or any of its  subsidiaries  or
affiliates,  are related to the business  (commercial  or  experimental)  of the
Company or any of its subsidiaries or affiliates or are conceived or made on the
Company's  time or with the use of the Company's  facilities  or materials.  The
Executive  shall  promptly  disclose  such  Inventions to the Company and shall,
subject to reimbursement by the Company for all reasonable  expenses incurred by
the  Executive  in  connection  therewith,  (a) assign to the  Company,  without
additional compensation,  all patent and other rights to such Inventions for the
United States and foreign countries;  (b) sign all papers necessary to carry out
the  foregoing;   and  (c)  give   testimony  in  support  of  the   Executive's
inventorship.

                                       12

<PAGE>


         7.       Intellectual Property.

          The Company  shall be the sole owner of all the  products and proceeds
of the  Executive's  services  hereunder,  including,  but not  limited  to, all
materials, ideas, concepts, formats,  suggestions,  developments,  arrangements,
packages,  programs and other  intellectual  properties  that the  Executive may
acquire, obtain, develop or create in connection with and during his employment,
free and clear of any  claims by the  Executive  (or anyone  claiming  under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive  payments  hereunder).  The  Executive  shall,  at the request of the
Company,  execute such  assignments,  certificates  or other  instruments as the
Company  may  from  time  to time  deem  necessary  or  desirable  to  evidence,
establish,  maintain,  perfect,  protect,  enforce or defend its right, title or
interest in or to any such properties.

         8.       Indemnification.

          To the fullest extent permitted by applicable law,  Executive shall be
indemnified  and held  harmless for any action or failure to act in his capacity
as an  officer  or  employee  of  the  Company  or  any  of  its  affiliates  or
subsidiaries.  In furtherance of the foregoing and not by way of limitation,  if
Executive is a party or is  threatened to be made a party to any suit because he
is an officer or employee of the Company or such  affiliate  or  subsidiary,  he
shall be indemnified  against expenses,  including  reasonable  attorney's fees,
judgments, fines and amounts paid in settlement if he acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interest of the
Company,  and with  respect  to any  criminal  action or  proceeding,  he had no
reasonable cause to believe his conduct was unlawful. Indemnification under this
Section 8 shall be in  addition to any other  indemnification  by the Company of
its  officers  and  directors.  Expenses  incurred by  Executive in defending an
action,  suit or  proceeding  for  which he claims  the right to be  indemnified
pursuant to this  Section 8 shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf  of  Executive  to repay  such  amount  in the event  that it shall
ultimately  be  determined  that he is not  entitled to  indemnification  by the
Company.  Such undertaking  shall be accepted without reference to the financial
ability of Executive to make  repayment.  The provisions of this Section 8 shall
apply as well to the  Executive's  actions  and  omissions  as a trustee  of any
employee benefit plan of the Company, its affiliates or subsidiaries.

                                       13

<PAGE>


         9.       Arbitration; Legal Fees

          Except  with  respect to  injunctive  relief  under  Section 5 of this
Agreement,  any  dispute  or  controversy  arising  out of or  relating  to this
Agreement  shall be  resolved  exclusively  by  arbitration  in New York City in
accordance  with the Commercial  Arbitration  Rules of the American  Arbitration
Association  then in effect.  Judgment  on the award may be entered in any court
having  jurisdiction  thereof.  The  Company  shall  reimburse  the  Executive's
reasonable  costs and  expenses  incurred  in  connection  with any  arbitration
proceeding  pursuant to this  Section 9 if the  Executive  is the  substantially
prevailing party in that proceeding.

         10.      Notices.

          All notices,  requests,  consents and other communications required or
permitted to be given  hereunder shall be in writing and shall be deemed to have
been duly given if delivered  personally,  sent by  overnight  courier or mailed
first class,  postage  prepaid,  by registered or certified mail (notices mailed
shall be deemed to have been given on the date  mailed),  as follows (or to such
other address as either party shall  designate by notice in writing to the other
in accordance herewith):

                  If to the Company, to:

                           Marvel Enterprises, Inc.
                           387 Park Avenue South
                           New York, New York 10016
                           Attention: President

                  If to the Executive, to:

                           Allen S. Lipson
                           35 Brookwood Drive
                           Woodbridge, CT 06525

         11.      General.

          11.1 This Agreement shall be governed by and construed and enforced in
accordance  with the laws of the State of New York applicable to agreements made
and to be performed  entirely in New York, without regard to the conflict of law
principles of such state.

          11.2 The section headings  contained herein are for reference purposes
only and shall not in any way  affect  the  meaning  or  interpretation  of this
Agreement.

          11.3 This Agreement sets forth the entire agreement and  understanding
of the parties  relating to the subject  matter hereof and  supersedes all prior
agreements,  arrangements and  understandings,  written or oral, relating to the

                                       14

<PAGE>


subject matter hereof. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement,  and neither party shall be
bound by or liable for any alleged representation,  promise or inducement not so
set forth. This Agreement expressly supersedes all agreements and understandings
between the parties  regarding the subject  matter hereof and any such agreement
is terminated as of the date first above written.

          11.4  This  Agreement,  and the  Executive's  rights  and  obligations
hereunder,  may not be  assigned  by the  Executive.  The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale,  transfer or other disposition of all
or substantially  all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns,  whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.

          11.5 This Agreement may be amended,  modified,  superseded,  canceled,
renewed or extended and the terms or covenants  hereof may be waived,  only by a
written  instrument  executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to  require  performance  of any  provision  hereof  shall in no manner
affect the right at a later time to enforce the same.  No waiver by either party
of the breach of any term or covenant  contained in this  Agreement,  whether by
conduct or otherwise,  in any one or more  instances,  shall be deemed to be, or
construed as, a further or continuing  waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.

          11.6 This Agreement may be executed in one or more counterparts,  each
of which  will be deemed to be an  original  copy of this  Agreement  and all of
which,  when  taken  together,  will be  deemed to  constitute  one and the same
agreement.

         12.      Subsidiaries and Affiliates.

          As used herein,  the term  "subsidiary"  shall mean any corporation or
other business entity controlled  directly or indirectly by the Company or other
business entity in question, and the term "affiliate" shall mean and include any
corporation  or  other  business  entity  directly  or  indirectly  controlling,
controlled by or under common control with the Company or other business  entity
in question.

                                       15
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.


                                                     COMPANY:

                                                     MARVEL ENTERPRISES, INC.


                                                /s/ F. Peter Cuneo
                                          By:-------------------------------
                                             Name:  F. Peter Cuneo
                                             Title: President & Chief
                                                     Executive Officer


                                                     EXECUTIVE:

                                                       /s/ Allen S. Lipson
                                                -----------------------------
                                                     Allen S. Lipson


<PAGE>


                                                     SCHEDULE I

Additional Benefits:

          1.  Automobile  Allowance.  The  Executive  shall be  eligible  for an
automobile  allowance in the amount of $1,200 per month in  accordance  with the
Company's policy.

          2. Stock Option Plan.  The Executive  shall be eligible to participate
in the Marvel Enterprises,  Inc. Stock Option Plan (the "Stock Option Plan") and
to receive  150,000  options to  purchase  shares (the  "Shares")  of the common
stock, par value $.01 per share ("Common Stock"), of the Company pursuant to the
terms of the Marvel  Enterprises,  Inc.  Stock  Option Plan (the  "Stock  Option
Plan") and related Stock Option  Agreement  subject to the terms and  conditions
approved  by the  committee  of the  Board of  Directors  of the  Company  which
administers  the Stock Option Plan. The options shall be scheduled to vest as to
one-third of the Shares on each of the first,  second and third anniversaries of
the date they are granted, shall vest as to all of the Shares upon a Third Party
Change in Control and shall be subject to all other terms and  conditions of the
Stock Option Plan and the related Stock Option Agreement between the Company and
the Executive. The Executive's  participation in the Stock Option Plan shall not
be, or be deemed to be, a fringe  benefit or additional  benefit for purposes of
Section  4.5(b)(iv) of this Agreement,  and the Executive's  stock option rights
shall be governed  strictly  in  accordance  with the Stock  Option Plan and the
related  Stock  Option  Agreement.  In the event of any  conflict  between  this
Agreement and the Stock Option Plan and the related Stock Option  Agreement,  or
any  ambiguity  in any such  agreements,  the Stock  Option Plan and the related
Stock Option Agreement shall control.

          3. Temporary  Housing  Allowance.  For a period of twelve full months,
commencing  on a date  specified  by the  Executive  which shall be within three
months after the Effective Date, or until the date that the Executive  relocates
his primary residence to a location in the New York City metropolitan  area, the
Company  shall provide the Executive  with a suitable  one-bedroom  apartment in
Manhattan  (and shall pay related  utility  charges,  other than  personal  long
distance  telephone  charges) and shall also provide the Executive  with monthly
parking in a garage in proximity to that apartment. The apartment, utilities and
parking referred to in this paragraph shall be provided to the Executive, or the
Executive shall be reimbursed by the Company for those expenses, on an after-tax
basis so that he shall be  reimbursed  for any  resulting  income tax  liability
(including  any income tax  liability  resulting  from payments made pursuant to
this sentence).

          4. Reimbursement of COBRA Expenses.  The Executive shall be reimbursed
for the cost of continued COBRA coverage under the health insurance plans of his
former employer until he becomes eligible to participate in the Company's health
insurance plan.

          5.  Reimbursement of Legal Fees. The Executive shall be reimbursed for
his reasonable  legal fees and expenses  incurred in connection  with the review
and negotiation of this Agreement.